Iriñgan v. Court of Appeals

G.R. No. 129107, September 26, 2001, 366 SCRA 41

FACTS:

Private respondent sold to petitioner Alfonso Iringan, an undivided portion of Lotlocated at the Poblacion of Tuguegarao and covered by Transfer Certificate of Title. The parties executed a Deed of Sale on the same date with the purchase price of P295,000.00,payable as follows:(a) P10,000.00 upon the execution of this instrument ;(b) P140,000.00 on or before April 30, 1985;(c) P145,000.00 on or before December 31, 1985.

When the second payment was due, Iringan paid only P40,000. Respondent sent a letter to Iringan stating that he considered the contract as rescinded and that he would not accept any further payment considering that Iringan failed to comply with his obligation to pay the full amount of the second installment. Iringan through his counsel, replied that they were not opposing the revocation of the Deed of Sale but asked for the reimbursement of the following amounts:(a) P50,000.00 cash received;(b) P3,200.00 geodetic engineers fee;(c) P500.00 attorneys fee;(d) the current interest on P53,700.00. In response,respondent sent a letter to the counsel, stating that he was not amenable to the reimbursements claimed by Iringan.

On February 21, 1989, Iringan, now represented by a new counsel, proposed that the P50,000 which he had already paid Palao be reimbursed or Palao could sell to Iringan, an equivalent portion of the land. Respondent instead wrote Iringan that the latters standing obligation had reached P61,600, representing payment of arrears for rentals from October 1985 up to March 1989. The parties failed to arrive at an agreement. On 1991, Palao filed a Complaint for Judicial Confirmation of Rescission of Contract and Damages against Iringan and his wife.

ISSUE:

Whether or not the contract of sale was validly rescinded.

RULING:

The court applied Article 1592. In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the court may not grant him a new term.

Clearly, a judicial or notarial act is necessary before a valid rescission can take place, whether or not automatic rescission has been stipulated. It is to be noted that the law uses the phrase “even though” 20 emphasizing that when no stipulation is found on automatic rescission, the judicial or notarial requirement still applies.

Consequently, even if the right to rescind is made available to the injured part, 22 the obligation is not ipso facto erased by the failure of the other party to comply with what is incumbent upon him. The party entitled to rescind should apply to the court for a decree of rescission. 23 The right cannot be exercised solely on a party’s own judgment that the other committed a breach of the obligation. 24 The operative act which produces the resolution of the contract is the decree of the court and not the mere act of the vendor. 25 Since a judicial or notarial act is required by law for a valid rescission to take place, the letter written by respondent declaring his intention to rescind did not operate to validly rescind the contract.

Notwithstanding the above, however, in our view when private respondent filed an action for Judicial Confirmation of Rescission and Damages 26 before the RTC, he complied with the requirement of the law for judicial decree of rescission. The complaint 27 categorically stated that the purpose was 1) to compel appellants to formalize in a public document, their mutual agreement of revocation and rescission; and/or 2) to have a judicial confirmation of the said revocation/rescission under terms and conditions fair, proper and just for both parties.

*Case digest by Lowel Dave D. Manuel, JD-4, Andres Bonifacio Law School, S.Y. 2019-2020

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