OBLIGATIONS AND CONTRACTS WEEK 1 | Cae ! of "#
Breach of Obligation
Velarde, Velard e, et.al. vs. CA [361 SCRA 56 GR No. 108346. July 11, 2001
!a"ts# David Raymundo (private respondent) is the absolute and registered o wner of a parcel of land, located at 1918 Kamias t!, Dasmari"as #illage $a%ati, together with the house and other improvements, which was under lease! &t was negotiated by David's father with plaintiffs velina and $ariano #elarde (petitioners)! Deed of ale with ssumption of $ortgage was eecuted eecuted in favor favor of the plaintiff plaintiffs! s! *art of the consideratio consideration n of the sale was the vendee's vendee's assumption assumption to pay the mortgage mortgage obligations of the property sold in the amount of * 1,8++,+++!++ in favor of the an% of the *hilippine&slands! nd while their application for the assumption of the mortgage obligations is not yet approved by the mortgagee ban%, they have agreed to pay the mortgage obligations on the property with the ban% in the name of $r! David Raymundo! &t was further stated that -in the event #elardes violate any of the terms and conditions of the said Deed of Real .state $ortgage, they agree that the downpayment *8++,+++!++, plus all the payments made with the *& on the mortgage loan, shall be forfeited in /avor of $r! Raymundo, as and by way of li0uidated damages, wout necessity of notice or any 2udicial declaration to that effect, and $r! Raymundo Raymundo shall shall resume resume total total and complete complete ownership ownership and possessi possession on of the property property,, and the same shall be deemed deemed automatically cancelled3, signed by the #elardes! #elardes!
*ursuant to said agreements, plaintiffs paid *& the monthly interest loan for three months but stopped in paying the mortgage when informed that their application for the assumption of mortgage was not approved! 4he defendants through a counsel, wrote plaintiffs plaintiffs informing informing the latter latter that their non5payme non5payment nt to the mortgagee mortgagee ban%const ban%constitut ituted ed non5perfor non5performance mance of their their obligation and the cancellation and rescission of the intended sale! nd after two days, the plaintiffs responded and advised the vendor that he is willing to pay provided that $r! Raymundo6 (1) delivers actual possession of the property to them not later than 7anuary 1, 198 for their occupancy (:) causes the release of title and mortgage from the *& and ma%e the title available and free from any liens and encumbrances (;) eecutes an absolute deed of sale in their favor free from any liens and encumbrances not later than 7an! :1, 198!
4he R4< of $a%ati dismissed the complaint of the petitioners against $r! Raymundo for specific performance, nullity of cancellation, writ of possession and damages! =owever, their $otion for Reconsideration was granted and the
>pon the appeal of the private respondent to the <, the court upheld the earlier decision of the R4< regarding the validity of the rescission made by private respondents!
$ssue# %&et&er t&e res"'ss'o( o) "o(tra"t *ade +y t&e r'vate reso(de(t 's val'd.
-eld# &ere 's a +rea"& o) "o(tra"t because the petitioners did not merely stopped paying the mortgage obligations but they also also failed failed to pay the balanc balance e purcha purchase se price! price! 4heir condit condition ional al offer offer to $r! $r! Raymun Raymundo do cannot cannot ta%e ta%e the place place of actual payment as would discharge the obligation of the buyer under contract of sale!
$r! Raymundo's source of right to rescind the contract is rt! 1191 of the
4he breach committed by the petitioners was the non5performance of a reciprocal obligation! 4he mutual restitution is re0uired to bring bring bac% bac% the partie parties s to their their origin original al situat situation ion prior prior to the incept inception ion of the contra contract ct!! 4he initia initiall paymen paymentt and the mortgage payments advanced advanced by petitioners should be returned by private respondents, lest the latter un2ustly enriched at the epense of the other! Rescission creates the obligation to return the obligation of contract! 4o 4o rescind, is to declare a contract void at its inception and to put an end to it as though it never was!
4he decision of the < is affirmed with modification that private respondents are ordered to return to petitioners, the amount they have received in advanced payment!
Velarde v CA 31 SCRA 56
