FACTS:

Spouses Fabrigas entered into an agreement denominanted as Contract to S

ell No. 2482-V with San Francisco Del Monte, Inc. a parcel of residential lot si
tuated in Barrio Almanza, Las Pias, Manila for a consideration of P109,200,00. T
he agreement includes that the spouses shall pay a downpayment of P30,000 with b
alance within 10 years in successive instalments of P1,285.69 and a contract con
taining an automatic cancellation clause, in the event the purchaser fail to pay
any installments and in the event of forfeiture, all sums of money paid will be
treated as rentals and waives all right to ask or demand the return of the amou
nt and agrees to peaceably vacate the premises.
Fabrigas paid the downpayment and took possession of the property but fa
iled to pay any installments. Del Monte sent demand letters on 4 occasions to Fa
brigas as final letter sent on December 7, 1983 having grace period of 15 days a
nd otherwise will forfeit all payments maid and the rescission however letter wa
s received by Fabrigas on December 23, 1983 but the contract was considered canc
elled by Del Monte but did not notice Fabrigas on the cacellation.
Marcelina Fabrigas continued remitting money to Del Monte until on Janua
ry 21, 1985, parties enter into another contract to sell of No. 2491-V but under
different terms. Between March 1985 and January 1986, spouses Fabrigas made irr
egular payments for the second contract then on February 3, 1986 Del Monte sent
a demand letter to Fabrigas for overdue account.
A petition for review was made in assailment for the decision made by the Court
of Appeals in CA-G.R. CV No. 45203 and its resolution denying petitioners motion
for reconsideration. In the decision, the spouses Fabrigas, as defendants, cons
idered paid by the amount of P78,152.00 were ordered (a) to make complete paymen
t under the conditions of Contract to Sell No. 2491-V dated January 21, 1985 wit
hin 20 days from the receipt of the decision and in the event of failure or refu
sal, all persons claiming right and possession or occupation are ordered to vaca
te and leave the premises of the house and lot, (b) if defendants chose to surre
nder possession of the property will be ordered to pay San Francisco, the plaint
iff, P206,223.80 as unpaid installments on the land inclusive of interests (c) o
rdering defendants to jointly and severally pay plaintiff the amount of P10,000.
00 for attorneys fees and (d) to pay the costs of suit.
ISSUES:
1. Whether or not Contract to Sell No. 2482-V, the first contract entered i
nto by the parties, has really been cancelled and no longer valid.
2. Whether or not consent by the husband needed for novation was achieved.
RULINGS:
1. Yes, Contract to Sell No. 2482-V has really been cancelled and replaced
by Contract to Sell No. 2491-V. It is already novated by the second contract bec
ause of the ratification made by the Fabrigas.
According to the Maceda Law Sec 4, the cancellation of the contract is a
two-step process. First, the seller should extend the buyer a grace period of a
t least sixty days from the due date of the instalment . Second, at the end of t
he grace period, the seller shall furnish the buyer with a notice of cancellatio
n or demand for rescission through a notarial act, effective thirty days fro the
buyers receipt thereof. The mere notice or letter will not suffice.
Del Monte did not comply with this but applied automatic rescission clau
se of the contract, but rescission is not the only mode of extinguishing obligat
ions. In this case Novation was applied. Novation takes place when an old obliga
tion is terminated by the creation of a new obligation or when the old obligatio
n subsists to the extent it remains compatible with the amendatory agreement. Re
quisites for novation are a previous valid obligation, an agreement of all parti
es concerned to a new contract, the extinguishment of the old obligation and the
birth of a valid new obligation. These requisites were complied with by the bot
h parties even though a question of consent takes place.
2. Yes, consent for novation was achieved.
On article 172 of the civil code expressly classifies a contract executed by th
e husband without the consent of the wife as merely annullable at the instance o
f the wife. However, there is no comparable provision covering an instance where
the wife alone consented to a contract involving conjugal property. Art. 168, t
he wife may, by express authority of the husband embodied in a public instrument
, administer the conjugal partnership property. Art. 169, the wife may also, my
express authority of the husband appearing in a public instrument, administer th
e latter s estate. Any transaction entered by the wife without the court or the hu
sbands authority is unenforceable in accordance with Art. 1317.
Being unenforceable, Contract to Sell No. 2491- is susceptible to ratifi
cation. In here, Isaias Fabrigas, the husband continued remitting payments for t
he satisfaction of the obligation under Contract to Sell No. 2491-V, constitute
ratification of the contract.
Therefore, Contract to Sell No. 2482-V was novated by Contract to Sell N
o. 2491-V due to ratification, then the spouses Fabrigas shall follow the decisi
on of the Court of Appeals.