G.R. No. L-28569 - J. M. Tuason and Co., Inc. vs. Javier

On September 7, 1954, J.M. Tuason & Co., Inc. (plaintiff) and Ligaya Javier (defendant) entered into a contract whereby the plaintiff agreed to sell Lot No. 28, Block No. 356, PSD-30328, Sta. Mesa Heights Subdivision, for ₱3,691.20 plus 10% annual interest.
Payment terms: ₱396.12 upon execution and ₱43.92 monthly for ten years.
Default clause:

One-month grace period for delayed payment with interest at 10% per annum if both the delayed installment and the grace-month installment were unpaid.
If 90 days elapsed after the grace period without full payment, the plaintiff could rescind the contract unilaterally; payments and improvements would be deemed rent and damages, and the defendant would vacate the property.

The defendant took possession and paid all installments, including the initial payment, totaling ₱4,134.08, up to January 5, 1962.
Thereafter, she defaulted on the monthly installments.

On May 22, 1964, the plaintiff notified the defendant of contract rescission. The defendant refused to vacate.
On July 9, 1964, the plaintiff filed an action for declaration of valid rescission, recovery of the property with improvements, and monthly rental of ₱40 from January 5, 1962, plus costs.
The defendant admitted default, attributed it to unforeseen circumstances, and offered to pay arrears with interest, attorney’s fees, and costs; she argued the plaintiff could not unilaterally rescind.
Pre-trial stipulation:

The defendant had defaulted since January 5, 1962.
The plaintiff rescinded per the contract.
The defendant offered to pay all arrears, interest, attorney’s fees, and costs; the plaintiff refused.

The Court of First Instance applied Article 1592 of the Civil Code and ordered the defendant to pay all installments in arrears with 10% interest from January 5, 1962, attorney’s fees of ₱1,000, and costs within 60 days, and upon payment to execute the deed of sale.

Whether Article 1592 of the Civil Code, which governs the sale of immovable property, applies to contracts to sell.
Whether the plaintiff validly rescinded the contract upon the defendant’s default.
Whether the application of Article 1234 of the Civil Code to award recovery to the plaintiff was appropriate in view of substantial performance by the defendant.