MILA A. REYES vs. VICTORIA T.

TUPARAN
[G.R. No. 188064. June 4, 2001]
Facts:
Petitioner alleged that she was the registered owner of 1,274 residential and commercial
located in Valenzuela City where she puts up three-storey commercial building known as RBJ
Building. The petitioner then decided to mortgage they said real property to the Farmers Saving
Bank Loan Inc. to have a loan of 2 million pesos on June 20, 1988 payable in installments. The
petitioners then wanted to liquidate her bank loan and finance her business so she decided to sell
her properties. Respondent verbally offered to conditionally buy the real properties of the
petitioner of 4.2 million pesos on installment basis and without interest. The respondent will also
assume the bank loan. On November 26, 1990, the parties and FSL executed corresponding Deed
of Conditional Sale of Real properties with assumption of mortgage. Under the deal, the
respondent needs to pay the petitioner 1.2 million pesos without interest as part of the purchase.
As of August 31, 1992, respondent had only paid 395k pesos, leaving a balance of 805k pesos.
The petitioner then filed a complaint Rescission of Contract with damage against the respondent
on RTC of Valenzuela. The ruling of the RTC allows the defendant to pay the remaining balance
within 30 days and upon full payment of plaintiff should execute the necessary deed of sale. But
failure to do within the period will result to the rescission of the contract. The C.A. affirmed the
decision of the RTC with modification. Petitioner then filed a petition for review on the decision
of the C.A.
Issue: Whether or not the subject deed of conditional sale is a rescission on the ground of
respondents failure to pay the remaining balance, constituting breach of contract.
Ruling:
The Court, in affirmation of the ruling of the Court, held that the contract cannot be
subject to rescission since there was only a slight or casual breach in the fulfillment of the
obligation. The Court first distinguished a contract of sale from contract to sell. Sale, by nature,
is a consensual contract because it is perfected by mere consent. However, in a contract of Sell,
mere consent is not tantamount to the perfection of the contract. It is only a reservation of the
prospective seller to transfer the title to the prospective buyer. Since the contract is not a contract
of sale, but rather a contract to sell, failure to pay the obligation in full is not a breach of contract.
The obligation of the seller to sell becomes demandable only upon the happening of suspensive
condition. Therefore, there can be no rescission of an obligation that did not take place.
Moreover, it is not a rescission since the breach is not substantial or fundamental to the
fulfillment of the obligation. In the case at bar, petitioner was willing to settle the balance, as
manifested by an offer to pay 751k pesos, therefore, in lieu of her sincerity to comply, the Court
affirmed the decision of the lower Court to allow her to settle the remaining obligation, instead of
rescission of the contract.