Bricktown Development Corp. v Amor Tierra Development Corp. G.R. No.

112182 December 12, 1994

Facts: Two Contracts to Sell were executed by Bricktown Development Corp., represented by ci-
petitioner Mariano Z. Velarde in favor of Amor Tierra Dev't Corp. represented by its Vice President,
Moises G. Petilla coverung a total of 96 residential lots. The parties agreed that the total price
amounting to P21, 639, 875 was to be paid by private respondent in their agreed amounts and maturity
dates. A Supplemental Agreement was thereafter executed wherein private respondent was to
additionally pay to petitioner cooperation the 20% interest on the balance of downpayment for the
period from March 31 to June 30,1981 and of the interest paid by petitioner corporation to the
Philippine Savings Bank. Unfortunately, private respondent was only able to pay petitioner corporation
the sum of P1,334,443.21. Thereafter, a Notive of Cancellation of Ckntract was then sent to private
respondent by petitioner corporation through its legal counsel due to the former's continued failure to
pay the installment due and the interest on the unpaid balance of the initial payment. Petitioner, still,
privided a 30-day grace period for the private respondent to pay otherwise the contract would be
cancelled. Several months later, private respondent demanded the refund.

Issue: W/N the contracts to sell were validly rescinded by petitioner

Held: The terms of payment agreed upon were not met. A notice of cancellation was made months after
the lapse of the contracted grace period. A grace period is a right, not an obligation. When
unconditionally conferred, the grace period is effective without further need of demand either calling
for the payment of the obligation or for honoring the right. The grace period must not be likened to an
obligation, the non-payment of which, under Art.1169 of the Civil Code, would generally still require
judicial or extra-judicial demand before default can be said to arise. The cancellation of the contracts to
sell by petitioner is in accord with the contractual covenants of the parties and hence, must be
respected. Such cancellation of contract is therefore valid.