Case Summary (G.R. No. 137909)
Trial Court Ruling
The Regional Trial Court dismissed petitioner’s rescission claim, ordering her to pay respondents P10,000 in attorney’s fees and costs. It directed respondents to pay the outstanding P17,000 balance plus 12% interest from April 5, 1989, and to reconvey an extra 58 square meters or pay its market value.
Court of Appeals Ruling
The Court of Appeals affirmed the trial court as modified:
• Rescission was denied because the contract allowed payment with interest beyond ten years.
• Respondents’ tender during the funeral demonstrated willingness to comply.
• Issuance of a certificate of title to respondents precluded rescission as unjust.
• Reconveyance of the extra 58 square meters was infeasible; instead, respondents were to pay fair market value.
Issues on Appeal
- Whether failure to pay within ten years constituted a substantial breach under Article 1191 of the Civil Code.
- Whether issuance of a certificate of title barred rescission.
- Whether reconveyance or compensation for the extra 58 square meters remained proper.
Supreme Court Ruling on Rescission
Under Article 1191, rescission requires a substantial and fundamental breach. The Court found that the ten-year term was not resolutory because the parties expressly provided for deferred payment with interest. Petitioner’s refusal of respondents’ tender during the funeral negated any claim of strict breach. The stipulation did not render the obligation purely potestative and therefore valid.
Supreme Court Ruling on Land Title Effects
The Court held that registration confers an indefeasible title but does not determine contractual rescission. A certificate of title cannot be collaterally attacked outside a direct proceeding. The propriety of respondents’ registered title was not subject to a rescission action.
Reconveyance of Extra Lot Portion
Although registration does not create ownership, the removal of erroneo
...continue readingCase Syllabus (G.R. No. 137909)
Facts
- Eulalio Mistica owned a parcel in Malhacan, Meycauayan, Bulacan; he leased a portion to Bernardino Naguiat in 1970.
- On April 5, 1979, Mistica and Naguiat executed a written “Kasulatan sa Pagbibilihan” for 200 sq. m. at ₱20,000:
- Downpayment of ₱2,000 upon signing.
- Balance of ₱18,000 payable over ten years.
- Failure to pay within ten years would incur 12% annual interest thereafter.
- Naguiat paid ₱2,000 on signing and another ₱1,000 on February 7, 1980; no further payments followed.
- Mistica died in October 1986.
- On December 4, 1991, petitioner (Mistica’s successor-in-interest) sued for rescission, recovery of possession, rental (₱200/month), and litigation expenses (₱20,000).
- Respondents argued the contract’s interest clause permitted payment beyond ten years, alleged tender of payment during Mistica’s funeral (refused by petitioner), and claimed an indefeasible free patent title over the land; they counterclaimed for damages and attorney’s fees.
- The RTC denied the motion to dismiss, proceeded to trial, and on January 27, 1995 rendered judgment:
- Dismissed petitioner’s complaint.
- Ordered petitioner to pay respondents’ attorney’s fee (₱10,000) and costs.
- Ordered respondents to pay remaining purchase price (₱17,000 plus 12% interest from April 5, 1989) and to return the extra 58 sq. m. or its market value.
Procedural History
- RTC Branch 12, Malolos, Bulacan (January 27, 1995): Judgment dismissing rescission, awarding fees and balance recovery.
- Court of Appeals (CA-GR CV No. 51067):
- October 31, 1997 Decision: Modified RTC judgment, disallowed rescission, affirmed payment order, and awarded fair market value of 58 sq. m.; rejected reconveyance.
- February 23, 1999 Resolution: Denied petitioner’s motion for reconsideration.
- Supreme Court (G.R. No. 137909): Petition for review under Rule 45 filed by petitioner; case deemed submitted December 13, 2001; decided December 11, 2003.
Issues
- Whether CA erred in applying C