FACTS:
David Raymund executed a Deed of Sale with Assumption of
Mortgage in favor if Avelina Velarde for a parcel of land under TCT 142177. The
land together with the house and improvements thereon were mortgaged by David
Raymundo to BPI to secure a loan of 1.8M. As part of the consideration of the sale, the
Avelina Velarde assumes to pay the mortgage obligations on the property. The Application for Assumption of Mortgage
with BPI was not approved. This prompted
plaintiffs not to make any further payment.
David and George
Raymundo, thru counsel, wrote Sps. Velarde informing the latter that their
non-payment to the mortgage bank constitute[d] non-performance of their
obligation
Sps. Velarde, thru
counsel, responded, as follows:
“This is to advise you, therefore, that our client is willing to pay the balance in cash not later than January 21, 1987 provided:
(a) you deliver actual possession of the property to her not later than January 15, 1987 for her immediate occupancy;
(b)
you cause the re- lease of title and mortgage from the Bank of P.I. and make
the title available and free from any liens and encumbrances; and
(c) you execute an absolute deed of sale in her favor free from any liens or encumbrances not later than January”
David and George Raymundo sent Sps. Velarde a notarial notice of cancellation/rescission of the intended sale of the subject property allegedly due to the latter’s failure to comply with the terms and conditions of the Deed of Sale with Assumption of Mortgage and the Undertaking.
Issues:
- Whether there was a breach of contract.
- Whether the defendant has the right to rescind the contract.
Ruling:
First Issue:
Yes. In a contract of sale, the seller obligates itself to transfer the ownership of and deliver a determinate things, and the buyer to pay therefor a price certain in money or its equivalent.
Private respondents had already performed their obligation
through the execution of the Deed of Sale, which effectively transferred ownership
of the property to petitioner through constructive delivery. Prior physical delivery
or possession is not legally required, and the execution of the Deed of Sale is
deemed equivalent to delivery.
Petitioners, on the other hand, did not perform their
correlative obligation of paying the contract price in the manner agreed upon. Worse,
they wanted private respondents to perform obligations beyond those stipulated
in the contract before fulfilling their own obligation to pay the full purchase
price.
Second Issue:
Yes. Private respondents validly exercised their right to
rescind the contract, because of the failure of petitioners to comply with
their obligation to pay the balance of the purchase price. Indubitably, the
latter violated the very essence of reciprocity in the contract of sale, a
violation that consequently gave rise to private respondent’s right to rescind
the same in accordance with law.
True, petitioners expressed their willingness to pay the
balance of the purchase price one month after it became due; however, this was
not equivalent to actual payment as would constitute a faithful compliance of
their reciprocal obligation. Moreover, the offer to pay was conditioned on the
performance by private respondents of additional burdens that had not been
agreed upon in the original contract. Thus, it cannot be said that the breach
committed by petitioners was merely slight or casual as would preclude the exercise
of the right to rescind.
Lawyereering 