SISKA DEVELOPMENT CORPORATION, PETITIONER, VS. OFFICE OF THE PRESIDENT OF THE PHILIPPINES, AND SPOUSES JOSE AND SOCORRO SERING, RESPONDENTS.

This is a petition for certiorari under Rule 65 of the
Revised Rules of Court to review, reverse, and set aside Resolution No. 3376
dated November 25, 1988 and the Order dated December 6, 1989 of the Office of
the President of the Philippines.

In Resolution No. 3376, the Office of the President reversed the
resolution of the Human Settlements Regulatory Commission (HSRC) and directed
petitioner to execute a final deed of sale on the lot covered by the Contract
to Sell in favor of private respondents upon payment of the unpaid balance of P9,341.24.

In the Order dated December 8, 1989, the Office of the President
denied the motion for reconsideration of the said resolution.

We affirm the said Resolution and Order.

I

On April 28, 1967, petitioner, a subdivision owner-developer,
entered into a Contract to Sell with Guadalupe Sering, involving a lot situated
at the Mira-Nila Subdivision in Quezon City.

On August 16, 1968, Guadalupe Sering, with the consent of
petitioner, transferred all her rights and interests over the aforesaid lot in
favor of respondent Socorro Sering, wife of respondent Jose Sering. Thereafter, private respondents assumed the
transferor’s obligation by paying the monthly amortizations for the lot.

On several occasions, private respondents defaulted in the
payment of their monthly amortizations, but petitioner still accepted the late
payments.

On October 18, 1974, petitioner sent private respondents a notice
of rescission of the Contract to Sell for failure to pay the monthly
amortizations on time. Petitioner,
however, cancelled the said notice of rescission on November 12, 1974, after
private respondents updated their payments. Petitioner, however, imposed the condition that private respondents’
account “must be kept current” and that should it be necessary to
rescind the contract for a second
time, the second rescission would be final. Private respondents again defaulted in paying their monthly
amortizations from January to September 1, 1975. When respondent Jose Sering offered to pay the remaining balance
of the purchase price on September 18, 1975, an employee of petitioner refused
to accept the payment, alleging that the contract had already been
cancelled. However, said respondent
protested that he had not received any notice of rescission from petitioner.

To compel the execution by petitioner of the final deed of sale,
private respondents filed an action for specific performance in the Court of
First Instance of Surigao. Petitioner
questioned the order of the trial court, upholding the venue, before the Court
of Appeals, which in turn ruled for petitioner and dismissed the case.

Private respondents filed another case in the Court of First Instance of Quezon City, but
said court dismissed the case on the grounds that under P.D. No. 957, it was
the National Housing Authority (NHA) that had exclusive jurisdiction over the
action. Hence, another complaint was
filed with the NHA.

The case was later transferred to the HSRC by virtue of Executive
Order No. 648 dated Feb. 7, 1981 (HSRC Case No. REM-A-0156). After hearing, the Office of Appeals
Adjudication and Legal Affairs (OAALA) of the HSRC denied private respondents’
request for specific performance of the Contract to Sell and directed
petitioner to refund to private respondents the amount of P15,960.73.

Their motion for reconsideration having been denied, private
respondents appealed the OAALA decision to the HSRC. In a resolution dated May 16, 1986, the HSRC dismissed private
respondents’ appeal for lack of merit and affirmed the decision of the
OAALA. Dissatisfied with the HSRC
resolution, private respondents elevated the case to the Office of the
President.

On November 23, 1988, the Office of the President ruled as
follows:

“Clearly, it could be gleaned from the foregoing payment
record of appellants that appellee tolerated, in not just one but in several
instances, late and delayed payments by the former when it accepted updated
payments covering past due accounts. Thus, it would be grossly unfair and unjustified for appellee to refuse
to accept the last payment for the remaining balance in order to cancel the
contract to sell on the ground of delay. If such be the case, the contract could have been cancelled on several
occasions, yet appellee continued receiving late payments, save for the last
one where it vigorously insisted on cancelling the contract due to delayed
payments by appellants who readily offered to settle the whole balance.

Second, receipt of the notice of rescission adverted to by appellee
as having been sent to appellants remains doubtful, as appellee failed to show
proof of service thereof to appellants. It must be remembered that when Jose Sering went to appellee’s office on
September 18, 1975 to pay the whole unpaid balance of the purchase price,
appellee’s representative, a certain Mr. Valenzuela, did not inform Jose Sering
that a notice of rescission had earlier been prepared. It must be stressed at this point that said
notice of rescission serves no real purpose if the same was not actually
received by appellants. Hence, Jose
Sering would not have gone to appellee’s office to pay the last balance had he
known earlier of the notice of rescission.

Consequently, appellee is now estopped to insist on rescinding the
contract to sell by the mere expedience of refusing to accept the last payment
on the ground of delay when it has, in several instances, accepted delayed
payments from appellants. There is here
an evident bad faith on appellee’s part in taking undue advantage of
appellants’ last delayed payment by invoking Section 6 of the Contract to Sell. To allow such a situation to arise would
enable appellee to enrich itself at the expense of appellants. Under the circumstances, it is but fair that
the original intention of the contracting parties should be made to prevail,
that is, for the vendor subdivision developer to transfer all the rights and
interest on the land to appellants upon payment by the latter of the whole
purchase price” (Rollo, pp. 38-39).

Hence, this petition.

II

Petitioner assigns the following errors:

“FIRST – WHETHER OR NOT THE RESPONDENT
OFFICE OF THE PRESIDENT COMMITTED A GRAVE ABUSE OF DISCRETION IN FINDING THAT
THE NOTICE OF RESCISSION SENT BY THE PETITIONER TO THE RESPONDENT SPOUSES
SERVED NO REAL PURPOSE SINCE IT WAS NOT RECEIVED BY THE LATTER.

SECOND – WHETHER OR NOT THE RESPONDENT
OFFICE OF THE PRESIDENT COMMITTED A GRAVE ABUSE OF DISCRETION IN FINDING THAT
THE PETITIONER IS NOW ESTOPPED FROM INSISTING ON THE RESCISSION OF THE CONTRACT
TO SELL WHEN IT HAD ON SEVERAL OCCASIONS ACCEPTED THE DELAYED PAYMENTS OF THE
RESPONDENT SPOUSES.

THIRD – WHETHER OR NOT THE RESPONDENT
OFFICE OF THE PRESIDENT COMMITTED A GRAVE ABUSE OF DISCRETION IN ORDERING THE
PETITIONER TO ACCEPT THE SUM OF P9,341.24 AS FULL PAYMENT FROM THE RESPONDENT SPOUSES
AND THEREAFTER TO ISSUE THE FINAL DEED OF SALE” (Rollo, pp. 4-5).

The Office of the President found that private respondents never
received the notice of rescission sent by petitioner. This is a finding of fact of an administrative agency which we
shall not disturb (Chong Guan Trading v. National Labor Relations Commission,
172 SCRA 831 [1989]).

Petitioner, however, claims that a notice of rescission is not
necessary under paragraph 6 of the contract, which provides:

“6. Failure to Pay Installments. – In
case the BUYER fails to satisfy any monthly installment, or any other payments
herein agreed upon, an interest of 1% per month will be charged on the amount
he should have paid. Should a period of
ninety (90) days elapse from the time of default, and the BUYER has not paid
all amounts he should have paid with the corresponding interest up to that date
then this contract shall automatically and without any further formality,
become null and void” (Rollo, p. 12).

The sending of a notice of cancellation to the buyer is mandated
by R.A. 6552 entitled “An Act to Provide Protection to Buyers of Real
Estate on Installment Payments,” (the Maceda Law) which took effect on
September 14, 1972 (Jison v. Court of Appeals, 164 SCRA 339 [1988]). In Section 3(b) thereof, it provides that
“the actual cancellation of the contract shall take place thirty days from
receipt of the buyer of the notice of cancellation or the demand for rescission
of the contract by a notarial act and upon full payment of the cash surrender
value to the buyer.”

Petitioner argues that the relationship between the parties is
governed solely by the Contract to Sell because said contract was entered into
long before the passage of the Maceda Law (Rollo, p. 7).

Without expressly stating so, petitioner’s line of argument
invokes the non-impairment clause of the Constitution (Art. III, Sec. 10). The purpose of said clause is to safeguard
the integrity of contracts against unwarranted interference by the State. As a rule, contracts should not be tampered
with by subsequent laws that would change or modify the rights and obligations
of the parties. As noted by Justice
Isagani A. Cruz “[T]he will of the obligor and obligee must be observed;
the obligation of their contract must not be impaired” (Constitutional
Law, 1991 ed., p. 239).

Impairment is anything that diminishes the efficacy of the
contract. There is an impairment if a
subsequent law changes the terms of a contract between the parties, imposes new
conditions, dispenses with those agreed upon or withdraws remedies for the
enforcement of the rights of the parties (Clemons v. Nolting, 42 Phil. 702
[1922]).

The requirement of notice of the rescission under the Maceda Law
does not change the time or mode of performance or impose new conditions or
dispense with the stipulations regarding the binding effect of the
contract. Neither does it withdraw the
remedy for its enforcement. At most, it
merely provides for a procedure in aid of the remedy of rescission.

While the contract was entered into before the effectivity of the
Maceda Law, the rescission took place when the said law was in full force and
effect. But even before the effectivity
of said law, jurisprudence made necessary
a notice of rescission.

While juridical action for the rescission of a contract is not
necessary where the contract provides that it may be revoked and cancelled for
violation of any of its terms and conditions, jurisprudence requires that a
written notice be sent to the defaulter informing him of the rescission (Palay,
Inc. v. Clave, 124 SCRA 638 [1983]). As
stressed in University of the Philippines v.
Walfrido De los Angeles 35 SCRA 102 (1970), the act of the
party in treating a contract as cancelled should be made known to the other.

Anent the second issue, according to petitioner, if ever on
several occasions it accepted the delayed payments of private respondents, then
that must not be considered a waiver or estoppel on its part. Petitioner invokes paragraph 9 of the
contract, which provides:

“9. Effect of
failure to enforce provision. – That whatever consideration the Owner
may concede to the Buyer as not exacting a strict compliance with any of the
terms and conditions of this contract, as well as any other condonation that
the Owner may give to the Buyer with regard to the obligations of the latter,
shall not be interpreted as a renunciation on the part of the Owner of any
rights granted it under this contract in case of any default or non-compliance
by the Buyer” (Rollo, p. 8).

The Contract to Sell entered into by the parties has some
characteristics of a contract of adhesion. The petitioner drafted and prepared the contract. Private respondents, who were eager to
acquire a lot upon which they could build a home, affixed their signatures
thereon and assented to the terms and conditions of the contract. They had no opportunity to question nor
change any of the terms of the agreement. It was offered to them on a take-it-or-­leave-it basis (Angeles v.
Calasanz, 135 SCRA 323 [1985]).

When petitioner accepted and received delayed payments beyond the
grace period mentioned in paragraph 9 of the contract, it waived its right to
rescind and is now estopped from
exercising it (Angeles v. Calasanz, supra).

Anent the third issue, unilateral cancellation of a contract to
sell is not warranted if the breach is slight or casual (Song Fo & Co. v.
Hawaii-Philippine Co., 47 Phil. 821 [1925]). The breach of the contract adverted to by petitioner was so slight
considering that private respondents had already paid P26,601.21 (inclusive of
interests and penalties) out of the total purchase price of P21,328.00 and the
remaining balance was only P9,341.24, which private respondents were willing to
pay. To sanction the rescission made by
petitioner will work injustice to private respondents. It would unjustly enrich petitioner at their
expense (Civil Code of the Philippines, Art. 22).

WHEREFORE, the petition is DISMISSED. Petitioner is ordered to accept the amount
of P9,341.29, the balance of the purchase price and to execute immediately the
final deed of sale in favor of private respondents. No pronouncement as to costs.

SO ORDERED.

Narvasa, C.J., Cruz, Padilla, Bidin, Regalado, Davide, Jr.,
Romero, Bellosillo, Melo, Puno, Vitug, and
Kapunan, JJ., concur.

Feliciano, J., in the result.