Congregation of the Religious of the Virgin Mary v.

Orola

G.R. No. 169790, April 30, 2008

FACTS:

Petitioner, through Sr. Fe Enhenco, local Superior of St. Mary’s Academy of

Capiz, bought the property of the respondents adjacent to the said school. A

contract to sell dated in June 2, 1999 was made out in the names of the petitioner

and the respondents. The total amount of the property is P 5, 550, 000.00 with 10%

of the total payable upon the execution of the contract.

On June 7, 1999 respondents received a check bearing the amount of P 555,

500.00 as 10% down payment for the property from the petitioner with the

“conforme” signed by Sr. Enhenco. After the respondents had transferred the

property into their names, they scheduled a meeting with the petitioner at the RVM

Headquarters in Quezon City to finalize the sale. However, the latter did not meet

with respondents. In an exchange of correspondence between the parties’

respective counsels, petitioner denied respondent’s demand for payment because

the Contract to Sell was not signed by their head of corporation and RVM will only

be in a financial position to pay the balance of the purchase in two years’ time.

Thus, respondents filed in RTC a complaint with alternative causes of action of

specific performance or rescission. The trial court ruled that there was indeed a
perfected contract of sale between parties and granted respondent’s prayer for

rescission.

On appeal, the Court of Appeals rendered judgment setting aside the RTC

decision and ordered petitioner to pay the respondents the balance of the total

consideration for the subject property in the amount of P 4, 999, 500.00 with

interest of 6% per annum computed from June 7, 2000 or one year from the down

payment of the 10% of the total consideration until such time when the whole

obligation has been fully satisfied. On the other hand, respondents were likewise

ordered to deliver the title of the property as soon as RVM has complied.

Dissatisfied, petitioner brought the matter to the Supreme Court.

ISSUE:

Whether or not petitioner is liable for interest on the balance of the purchase

price?

HELD:

Yes. Article 2210 of the Civil Code explicitly expresses that “interest may,

in the discretion of the court, be allowed upon damages awarded for breach of

contract.” In the case at bar, the petitioner breached the contract of sale by refusing

to pay the balance of the purchase price despite the transfer to respondent’s names

of the title to the property. The two-year period petitioner relies on had long passed

and expired, yet, it still failed to pay. Hence, petitioner’s refusal to pay gives the
respondents to avail rightfully the alternative remedies provided in the Civil Code.

Accordingly, respondents are entitled to damages regardless of whichever relief,

rescission or specific performance, would be granted by the lower courts.

With all the foregoing, the Court denied the petition and granted the specific

performance and payment of the balance of the purchase price plus 6% interest per

annum from June 7, 2000 until completed satisfactorily.