Ocampo v. Court of Appeals
Tolosa sold his land to Ocampo with a stipulation that the balance shall be paid within 6 months after signing the deed. Ocampo failed to pay some instalments within the 6-month period but Talosa accepted a late payment though there’s still a deficiency. Ocampo caused the annotation of her adverse claim in Tolosa’s certificate of title.
After a year, Tolosa executed a Contract to Sell in favor of Villaruz covering the same lot. Consequently, Tolosa filed an action for “Breach of Contract, Damages and Quieting of Title” against Ocampo.
Whether or not the filing of such action by Tolosa is enough for Article 1592 to apply
No. Under Art. 1592 of the Civil Code, the failure of Ocampo to complete her payment of the purchase price within the stipulated period merely accorded Tolosa the option to rescind the contract of sale upon judicial or notarial demand.
Civil Case filed by Tolosa could not be considered a judicial demand under Art. 1592 of the Civil Code because it did not pray for the rescission of the contract. Although the complaint sought the cancellation of Ocampo’s adverse claim on Tolosa’s OCT and for the refund of the payments made, these could not be equivalent to a rescission. In other words, seeking discharge from contractual obligations and an offer for restitution is not the same as abrogation of the contract. To rescind is “[t]o declare a contract void in its inception and to put an end to it as though it never were.” It is “[n]ot merely to terminate it and release parties from further obligations to each other but to abrogate it from the beginning and restore parties to relative positions which they would have occupied had no contract ever been made.”
In any case, however, the breach on the part of Ocampo was only slight if not outweighed by the bad faith of Tolosa in reneging in his own prestations. Hence, judicial rescission of the contract cannot be justified.