Civil Law,  Legally Yours

Ramel v. Aquino

Ramel v. Aquino

G.R. No. 133208; July 31, 2006

FACTS:

Respondent mortgaged their property to the Development Bank of the Philippines (DBP). However, their property was on the brink of foreclosure. Thus, the respondent decided to sell the property to the petitioner with the obligation that they will fully pay the mortgage.

Petitioner made partial payments to the respondent and also gave partial payments to the DBP. However, when the deadline for foreclosure was near again, the petitioners filed for a restructuring of the mortgage to extend it to 10 years. The DBP agreed.

Nevertheless, on the next day, the respondent fully paid the mortgage on the property to the DBP. Respondent now avers that he is rescinding the contract with the petitioner under Art 1191 because the latter failed to comply with his reciprocal obligation to pay the purchase price to the respondent and also failed to comply with his obligation to pay the mortgage.

ISSUE:

Whether or not Respondent validly rescinded the contract with Petitioner

HELD:

Yes. With respect to the purchase price paid to the respondent, the amount unpaid by the petitioner is only P400. That is considered a slight breach of contract and cannot be a basis of rescission under Art 1191.

However, with respect to the obligation of the petitioner to pay the mortgage price to the DBP, the petitioner has only paid Php20,000.00 out of the Php85,000.00. This lack of payment is considered substantial.

Petitioner tried to circumvent his failure to pay the mortgage by making a reconstruction of the loan. However, the reconstruction does not erase the fact that the petitioner failed in his reciprocal obligation with the respondent. Thus, this is considered as a breach under Art 1191 which entitles the respondent for rescission

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