Suria and Joven v. IAC
Petitioner and respondent spouses Crispin entered into a contract of sale of a parcel of land wherein the respondent shall transfer the title to the petitioner, the petitioner shall pay the price, and the petitioner shall executive a deed of mortgage in favor of the respondent.
Consequently, Petitioner executed the deed of mortgage, and the title of the land was transferred to the petitioner. However, the petitioner failed to pay the installments.
After repeated formal demands, the respondent instituted a civil action for rescission under Art 1191 for substantial failure to comply with the reciprocal obligation to pay the purchase price. The petitioner defended that Art 1191 is not applicable but it is Art 1383.
Whether Article 1191 of the Civil Code of the Philippines is applicable in this case
No. Firstly, even though the contract was denominated as a contract to sell, it is clearly a contract of absolute sale as there was a transfer of title. Secondly, Article 1191 shall only be applied if one of the parties failed to comply with their reciprocal obligations.
In a contract of sale, the reciprocal obligation of the seller would be to deliver the thing and the buyer to pay the purchase price. The court ruled that the petitioner as a buyer complied with his reciprocal obligation on paying the purchase price when he executed the deed of mortgage.
Thus, the payment of the land is already secured through the mortgage and the sale is now perfected and consummated. The parties cease to be buyer and seller but are now considered as mortgagor and mortgagee. Therefore, Art 1191 will not lie.
The provision that seems to be applicable is Article 1383 which deals with rescission due to cases of lesion cited under Article 1381. However, Art 1383 has a limitation that it shall not be applied when there are still other available remedies to the creditor.
In the case at bar, a remedy is available to the respondent and that is the foreclosure of the mortgage. Thus, Article 1383 shall also not lie and the proper remedy of the seller-turned-mortgagee is to foreclose the land.