Case Digest (G.R. No. 95511)
Facts:
Spouses Vicente & Salome De Leon (vendors) and spouses Manuel & Priscilla Franco (vendees) entered into an agreement on March 7, 1982 regarding a house and lot, with P50,000.00 paid as consideration and a subsequent Contract to Sell for P530,000.00, payable in monthly installments (P20,000.00) and subject to an automatic rescission clause for failure to pay installments. The contract required the vendees to assume and pay the monthly amortizations to the Development Bank of the Philippines (DBP) for the mortgaged property.
On May 11, 1982, while petitioner Vicente de Leon was confined at the Chinese General Hospital, the parties discussed and concluded the Contract to Sell, and later, on November 22, 1982, the vendors sued for rescission plus damages, alleging default on installments for September, October, and November 1982. The Regional Trial Court dismissed the complaint, and the Court of Appeals affirmed, attributing the delay to the vendors and finding no substantial breach; the Supreme Court resolved the petition challenging timeliness of the motion for reconsideration and the proper computation of the contract’s consideration.
Issues:
- Whether the petitioners’ motion for reconsideration before the Court of Appeals was filed on time.
- Whether the DBP amortizations assumed by the vendees should be deducted from, or added to, the stipulated “total purchase price” of P530,000.00.
Ruling:
On the first issue, the Court held that the petitioners failed to show that their motion for reconsideration was timely filed, and in any event it had been denied for tardiness and for being a mere rehash.
On the second issue, the Court modified the appellate ruling and held that the amortizations payable to the DBP were to be added to the stipulated P530,000.00, making the total consideration P610,000.00.
Ratio:
The Court ruled that the computation issue required interpretation of related provisions of the Contract to Sell, consistent with Article 1374 of the Civil Code, and it rejected an isolated reading of the phrase “total purchase price” that would render the separate amortization stipulation impractical and meaningless. It noted that the vendees paid the vendors the full monthly P20,000.00 without deduction, indicating the parties’ understanding that the DBP amortizations were an additional obligation.
The Court further held that the requested deduction interpretation would create serious practical problems over an extended period before the mortgage was fully discharged, and it treated the alleged sworn admission offered by the vendees as insufficient to prevail over the written contract, applying the principle that ambiguous stipulations are construed against the party who caused the obscurity under Article 1377 of the Civil Code.
Doctrine:
- Rescission requires a substantial and fundamental breach that defeats the object of the contract, not a slight or casual breach.
- (Get Pro to unlock 5 more doctrines)