G.R. No. L-39378 - Ayson-Simon vs. Adamos

Case Summary (G.R. No. L-39378)

Factual Background

On December 13, 1943, NICOLAS ADAMOS and VICENTA FERIA purchased two contiguous lots forming part of the Piedad Estate in Quezon City from Juan Porciuncula. The lots together measured approximately 56,395 square meters. On May 29, 1946, while the validity of the title to those lots remained subject to litigation, the defendants sold the same two lots to GENEROSA AYSON-SIMON for P3,800.00 each and later received an additional P800.00 allegedly to facilitate issuance of titles in the buyer's name.

Title Litigation and Annulment

Sometime after the defendants' acquisition from Porciuncula, Porciuncula’s successors-in-interest filed Civil Case No. 174 in the Court of First Instance of Quezon City seeking annulment of the sale and cancellation of Transfer Certificate of Title No. 69475, which had been issued to defendants by virtue of the disputed purchase. On December 18, 1963, that court rendered a decision annulling the sale and cancelling TCT No. 69475, and the decision was affirmed by the Appellate Court and ultimately became final as of May 3, 1967.

Sale to Plaintiff and Failure to Deliver

After the May 29, 1946 sale to GENEROSA AYSON-SIMON, the defendants failed to secure approval of a subdivision plan, to deliver titles, and to put the plaintiff in possession. The plaintiff repeatedly sought performance of the defendants' obligations but the defendants did not effect the required subdivision and delivery of title and possession.

Specific Performance Proceeding

On September 4, 1963, GENEROSA AYSON-SIMON filed an action for specific performance in the Court of First Instance of Quezon City (Civil Case No. Q-7275). On January 20, 1964, that court rendered summary judgment in favor of the plaintiff ordering the defendants to cause relocation and resurvey of the subdivision lots and to secure approval of the subdivision plan or, if not possible, to effect the subdivision and deliver titles and possession to the plaintiff. The court deferred determination on damages pending further proceedings.

Impossibility of Performance and Effect of Prior Annulment

Execution of the January 20, 1964 order for specific performance became impossible because the December 18, 1963 judgment in Civil Case No. 174 had declared the sale from Porciuncula to the defendants null and void and ordered cancellation of their title. The annulment of the defendants’ title removed any capacity on their part to secure or deliver valid titles to the plaintiff.

Rescission Suit in Manila and Trial Court Judgment

Because specific performance had become impossible, GENEROSA AYSON-SIMON filed a separate action for rescission with damages in the Court of First Instance of Manila (Civil Case No. 73942) on August 16, 1968. On June 7, 1969, that court rendered judgment in favor of the plaintiff and ordered the defendants, jointly and severally, to pay P7,600.00, representing the total purchase price received from the plaintiff, with legal interest from May 29, 1946 until fully paid; to pay another P800.00 with legal interest from August 1, 1966 until fully paid; to pay P1,000.00 for attorney’s fees; and to pay the costs of suit.

Grounds of Appeal and Issues Presented

The defendants appealed to the Appellate Court on two principal grounds. First, they argued that the plaintiff had already elected the remedy of fulfillment by pursuing specific performance in Civil Case No. Q-7275 and therefore could not later seek rescission, since fulfillment and rescission are alternative remedies. Second, they contended that the plaintiff’s action to rescind had prescribed because the right to rescind accrued at the time of the May 29, 1946 sale and thus expired four years thereafter.

Appellate and Supreme Court Analysis of Election and Impossibility

The Appellate Court, and ultimately the Supreme Court, rejected the defendants’ election argument. The courts applied Article 1191 and held that the rule permitting the injured party to choose between fulfillment and rescission applies only when fulfillment remains possible. Where fulfillment becomes impossible, Article 1191 expressly allows the injured party to seek rescission even after the party has earlier chosen fulfillment. Because the defendants could no longer deliver valid titles or possession after the annulment in Civil Case No. 174, the portion of the earlier judgment ordering fulfillment was rendered without effect as to performance, and the plaintiff was entitled to pursue rescission and damages.

Prescription and Accrual of Cause of Action

On the prescription issue, the courts determined that the cause of action for rescission arose when fulfillment became impossible. That event occurred when the Court of First Instance of Quezon City declared the sale from Porciuncula to the defendants a complete nullity and ordered cancellation of their title. The Court accepted the clerk’s certification that the decision in Civil Case No. 174 became final and executory as per entry of judgment by the Court of Appeals on May 3, 1967

Case Syllabus (G.R. No. L-39378)

Parties and Posture

Generosa Ayson-Simon was the plaintiff-appellee who purchased two lots from the defendants and later sought rescission and damages.
Nicolas Adamos and Vicenta Feria were the defendants-appellants who sold the two lots and appealed the trial court judgment.
The appeal reached the Court of Appeals and was certified to the Supreme Court First Division because the issue presented was a pure question of law.
The case before the Court arose from Civil Case No. 73942 in the Court of First Instance of Manila, which rendered judgment in favor of the plaintiff.

Key Facts

On December 13, 1943, Nicolas Adamos and Vicenta Feria purchased approximately 56,395 square meters of the Piedad Estate from Juan Porciuncula.
On May 29, 1946, the defendants sold two lots of that estate to Generosa Ayson-Simon for P3,800.00 each and later received an additional P800.00 to facilitate issuance of titles.
The sale from Porciuncula to the defendants became the subject of Civil Case No. 174 in the Court of First Instance of Quezon City.
On December 18, 1963, the Court in Civil Case No. 174 declared the sale from Porciuncula to the defendants null and void and ordered cancellation of Transfer Certificate of Title No. 69475.
The decision in Civil Case No. 174 was affirmed and became final as per the Court of Appeals entry of judgment dated May 3, 1967.
Generosa filed an action for specific performance on September 4, 1963 (Civil Case No. Q-7275) and obtained a summary judgment on January 20, 1964 ordering the defendants to effect subdivision and deliver titles and possession.
Because execution became impossible after the finality of Civil Case No. 174, Generosa filed a rescission suit with damages on August 16, 1968 in Civil Case No. 73942.

Procedural History

Civil Case No. 174 (Quezon City) annulled the defendants' title and cancelled TCT No. 69475 by decision dated December 18, 1963, which attained finality on May 3, 1967.
Generosa obtained a summary judgment for specific performance in Civil Case No. Q-7275 on January 20, 1964.
Generosa filed Civil Case No. 73942 for rescission and damages on August 16, 1968 after execution of the earlier summary judgment became impossible.
The Court of First Instance of Manila rendered judgment on June 7, 1969 ordering refund of purchase price, return of the P800.00, legal interest, attorney's fees of P1,000.00, and costs.
The defendants app