Mila Reyes Vs. Victoria Tuparan Digest

Mila A. Reyes Vs. Victoria Tuparan FACTS Petition etitioner er Mila Mila Reyes eyes owns a threethree-stor storey ey commer commercial cial buildin building g in Valenzu alenzuela ela City. Respondent, Victoria Tuparan leased a space on said building for a monthly rental of P, !!!. " close friendship friendship de#eloped between between the two which led the respondent respondent to in#est in petitioner$s %nancing business. &n 'une (!, )*++, Petitioner borrowed P( Million from armers a#ings and oan /an0 1 /an02 and mortgaged the building and lot 1sub3ect real properties2. Reyes decided to sell the property for P4.5 Million to li6uidate her loan and %nance her business. Respondent o7ered to conditionally buy the real properties for P.( Million on installment basis without interest and to assume the ban0 loan. The conditions are the following8 ). ale will be cancelled cancelled if the petitioner can %nd %nd a buyer of said properties properties for the amount of P4.5 Million within the ne9t three months. "ll payments made by the respondent to the petitioner and the ban0 will be refunded to Tuparan with an additional 4: monthly interest. (. Petitioner Reyes will continue using the space occupied occupied by her drug store without rentals for the duration of the installment payments. ;. There will be a lease for )5 years in fa#or of Reyes Reyes for a monthly rental rental of P+, !!! after full payment has been made by the defendant. . The defendant defendant will underta0e the renewal and payment of the %re insurance policies of the ( buildings, following the e9piration of the current policies, up to the time the respondent has fully paid the purchase price.  They presented the proposal proposal for Tuparan Tuparan to assume the mortgage to  /an0. The ban0 appro#ed on the condition that the petitioner would remain as co-ma0er of the mortgage obligation.  /an0 and and the parties e9ecuted t was of the opinion that although the petitioner was entitled to a rescission of the contract, it could not be permitted because her non-payment in full of the purchase price @may not be considered as substantial and fundamental breach of the contract as to defeat the ob3ect of the parties in entering into the contract.A The RTC belie#ed that respondent showed her sincerity and willingness to settle her obligation. Bence, it would be more e6uitable to gi#e respondent a chance to pay the balance plus interest within a gi#en period of time. The court ordered the respondent to pay the petitioner the unpaid balance of the purchase price within ;! days from the %nality, failure to pay said amount will cause automatic rescission. CA  The C" armed but modi%ed RTCDs decision. They ruled that the remedy of rescission could not apply because the respondentDs failure to pay the petitioner the balance of  the purchase price in the total amount of E+!5,!!!.!! was not a breach of contract, but merely an e#ent that pre#ented the seller 1petitioner2 from con#eying title to the purchaser 1respondent2. ince respondent had already paid a substantial amount of the purchase price, it was but right and 3ust to allow her to pay the unpaid balance of the purchase price plus interest. T$e rullin& o% t$e RTC on t$e autoatic rescission o%  t$e (eed )% Conditional Sale is deleted.

SC  The C agrees that the conditional sale is a contract to sell. The title and ownership of  the sub3ect properties remains with the petitioner until the respondent fully pays the balance of the purchase price and the assumed mortgage obligation. Fithout respondentDs full payment, there can be no breach of contract to spea0 of because petitioner has no obligation yet to turn o#er the title. The court agrees that a substantial amount of the purchase price has already been paid. >t is only right and 3ust to allow  Tuparan to pay the said unpaid balance of the purchase price to Reyes. Granting that a rescission can be permitted under "rticle ))*), the Court still cannot allow it for the reason that, considering the circumstances, there was only a slight or casual breach in the ful%llment of the obligation. The court considered ful%llment of (!: of the purchase

price is H&T a substantial breach. =nless the parties stipulated it, rescission is allowed only when the breach of the contract is substantial and fundamental to the ful%llment of  the obligation. Fhether the breach is slight or substantial is largely determined by the attendant circumstance. "s for the 4: interest, petitioner failed to substantiate her claim that the respondent committed to pay it. Petition is denied.

>n a contract to sell, title is retained by the #endor until the full payment of  the purchase price. Thus, the non-payment of the purchase price is an e#ent which terminates the contract to sell. ince title has not transferred, there is no need of 3udicial action to terminate the contract. >n a contract of sale, the seller con#eys ownership o#er the property and cannot reco#er it until and unless the contract is resol#ed or rescinded. >f the contract is silent on the manner of rescission, the seller must %le an action for rescission in court. Bowe#er, it is permissible to stipulate in the contract of sale that default by the buyer shall result to automatic rescission without need of 3udicial action. Thus, it is ad#isable to include an automatic rescission clause in a contract of sale in order to a#oid unnecessary litigation.