Development Bank of the Philippines v. Hon. Court of Appeals

Summary

The Supreme Court resolved a contract dispute between DBP and spouses De La Peña over a conditional land sale. DBP sold land for P207,000.00 under a deed requiring semi-annual payments at 18% interest. The spouses paid P289,600.00 but not on scheduled dates, incurring additional interest and penalties. When they requested the final deed, DBP claimed they still owed P225,855.86 and threatened rescission. The Court held that while the contract terms were clear, DBP waived its right to rescind by accepting late payments without objection. However, the spouses remained liable for contractual interest and penalties, though the Court reduced the additional interest from 18% to 10% per annum as excessive and unconscionable. The permanent injunction preventing rescission was upheld, protecting the spouses' substantial investments in the property. The decision emphasizes principles of contract interpretation, waiver through conduct, and judicial power to reduce unconscionable penalties while enforcing valid contractual obligations.