Magdalena Estate vs Myrick, 71 Phil 344
Subject: Obligations and Contracts
FACTS
Magdalena Estate, Inc. sold to Louis Myrick lots No.
28 and 29 of Block 1, Parcel 9 of the San Juan Subdivision, San Juan, Rizal.
Their contract of sale provides that the price of P7,953 shall be payable in
120 equal monthly installments of P96.39 each on the day of every month
beginning the date of execution of the agreement.
In pursuance of said agreement, the vendee made
several payments amounting to P2,596.08, the last being due and unpaid was that
of May 2, 1930. By the reason of this, the vendor, through its president,
notified the vendee in view of his inability to comply with the terms of their
contract, said agreement had been cancelled relieving of any further obligation
thereunder, and that all amounts paid by him had been forfeited in favor of the
vendor. To this communication, the vendee did not reply, and it appears
likewise that the vendor thereafter did not require him to make any further
disbursements on account of the purchase price.
ISSUE
Whether or not the petitioner was authorized to forfeit
the purchase price paid.
RULING
No, the petitioner was not authorized to forfeit the
purchase price paid.
Under the law (Art 1191), the power to rescind
obligations is implied in reciprocal ones, in case one of the obligors should
not comply with what is incumbent upon him. The injured party may choose
between fulfillment and the rescission of the obligation, with the payment of
damages in either case. He may also seek rescission even after he has chosen
fulfillment. If the latter should become impossible.
In this case, the contract of sale contains no
provision authorizing the vendor, in the event of failure of the vendee to
continue in the payment of the stipulated monthly installments, to retain the
amounts paid to him on account of the purchase price. The claim, therefore, of
the petitioner that it has the right of forfeit said sums in its favor is
untenable. Under the law, however, he may choose between demanding the
fulfillment of the contract or its resolution. These remedies are alternative
and not cumulative, and the petitioner in this case having elected to cancel
the contract cannot avail himself of the other remedy of exacting performance.
As a consequence of the resolution, the parties should be restored, as far as
practicable, to their original situation which can be approximated only be
ordering the return of the things which were the object of the contract, with
their fruits and of the price, with its interest, computed from the date of
institution of the action.
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