16 June 2000, 333 SCRA 643
Roberto Laforteza and Gonzalo Laforteza, Jr. entered into a MOA (Contract to Sell) with Alonzo Machuca over a house and lot registered in the name of the late Francisco Laforteza in their capacities as attorneys-in-fact of Dennis Laforteza. Machuca failed to pay the balance on time but was able to pay an earnest money. Machuca sent the petitioner heirs a letter requesting for an extension and later informed petitioner heirs that the balance was already covered, but the latter refused to accept the balance and told the former that the subject property was no longer for sale and even insisted on the rescission of the Memorandum of Agreement (Contract to Sell).
Thereafter, respondent filed the instant action for specific performance which the lower court rendered judgment in his favor and ordering the petitioner heirs to accept the balance, to execute a registrable deed of absolute sale over the subject property in favor of the respondent and for the petitioners to be jointly and severally liable to pay respondent the attorney’s fees plus cost of suit. Such ruling was affirmed by the CA.
The petitioners contended that the MOA was merely a lease agreement with “option to purchase”; hence, it only gave the respondent a right to purchase the subject property within a limited period without imposing upon them any obligation to purchase it. And since the respondent’s tender of payment was made after the lapse of the option agreement, his tender did not give rise to the perfection of a contract of sale. It is further maintained by the petitioners that the Court of Appeals erred in ruling that rescission of the contract was already out of the question. Rescission implies that a contract of sale was perfected unlike the Memorandum of Agreement in question which as previously stated is allegedly only an option contract.
Whether the courts a quo correctly ruled that rescission will not lie in the instant case.
Yes, the courts a quo are correct that rescission of the contract will not prosper.
The rescission of a sale of an immovable property is specifically governed by Article 1592 of the New Civil Code, which reads:
“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.”
It is not disputed that the petitioners did not make a judicial or notarial demand for rescission. The letter of the petitioners informing the respondent of the automatic rescission of the agreement did not amount to a demand for rescission, as it was not notarized. It was also made five days after the respondents attempt to make the payment of the purchase price.
This offer to pay prior to the demand for rescission is sufficient to defeat the petitioners right under article 1592 of the Civil Code. Besides, the Memorandum Agreement between the parties did not contain a clause expressly authorizing the automatic cancellation of the contract without court intervention in the event that the terms thereof were violated. A seller cannot unilaterally and extrajudicially rescind a contract of sale where there is no express stipulation authorizing him to extrajudicially rescind. Neither was there a judicial demand for the rescission thereof.
Thus, when the respondent filed his complaint for specific performance, the agreement was still in force inasmuch as the contract was not yet rescinded. At any rate, considering that the six-month period was merely an approximation of the time it would take to reconstitute the lost title and was not a condition imposed on the perfection of the contract and considering further that the delay in payment was only thirty days which was caused by the respondents justified but mistaken belief that an extension to pay was granted to him, we agree with the Court of Appeals that the delay of one month in payment was a mere casual breach that would not entitle the respondents to rescind the contract. Rescission of a contract will not be permitted for a slight or casual breach, but only such substantial and fundamental breach as would defeat the very object of the parties in making the agreement.
*Case digest by Rezeile S. Morandarte, JD – 4, Andres Bonifacio College, SY 2019–2020