FACTS:

Spouses Mahusay purchased several

lots. The transactions were covered by 2
contracts: Contracts to sell no 831,
executed on May 14, 1973 for 33k and
Contract to Sell No. 874 dated August 1,
1975, for the price of P197,040.00, plus
interest of 12% per annum, payable in
monthly installments.
Due to buyer's nonpayment of the
monthly amortization since Oct 1978,
the seller was const rained to file a case
for
cancellation
of
contracts.
A
Compromise Agreement was entered
into by the parties, whereby the buyer
agreed to pay the seller the remaining
balance of the purchase price of all the
lots in the manner and under the terms
agreed upon by the parties. The buyers
failed to comply with the terms
embodied
in
the
Compromise
agreement which compelled the seller
to file a complaint for Specific
Performance.
ISSUE: Whether or not the unpaid seller
is entitled to payment plus legal interest
HELD:
The buyers (San Diego) are in
actual/physical
possession
of
the
properties and enjoying the beneficial
use thereof, despite the payment of only
P133, 872.76, as of January 30, 1979.

[19] It would be grossly unfair for the

seller to be deprived of the amount it
would have received from the sale of
their properties, while the buyers
benefited from the use and continued
possession of the properties even if no
payments were made by them since
October 1978. It is a basic rule in law
that no one shall unjustly enrich oneself
at the expense of another. Indeed, to
allow the buyers to keep the properties
without paying for them in full amounts
to unjust enrichment on their part. The
fair market value of the land has
tremendously increased over the past
years. It is, therefore, just, fair, and
equitable that petitioners be made to
pay interest/penalty for the delay in
their payments.
Undeniably, the instant case is a sale of
real property where the purchase price
is not paid in full. The unpaid sellers
remedy is either an action to collect the
balance or to rescind the contract within
the time allowed by law.
Since
rescission is no longer an option
considering that petitioners have been
in possession of the properties for a
considerable period of time, substantial
justice dictates that respondent be
entitled to receive the unpaid balance of
the purchase price, plus legal interest
thereon.

14. DUARTE V DURAN

Duarte- buyer
Duran- seller
FACTS:
Duran offered to sell a laptop to the
buyer for 15k thru the help of a
common friend, Dy. Duarte said that
she was willing to buy the laptop on
installment. The Duran agreed thus the
buyer gave 5k as initial payment and
promised to pay 3k on Feb and 7k on
March.
Duarte
paid
her
second
installment of 3k to Dy who signed a
handwritten receipt allegedly made by
the buyer as proof of payment. But
when Dy returned to get the remaining
balance on March, the Duarte offered to
pay 2k only claiming that the laptop
was worth 10k only. This prompted the
Duran to send a demand letter thru
counsel to the buyer.

Later on, Duarte informed the seller

that she decided not to buy the laptop.
Duran refused to pay and insisted that
the Duarte purchase the laptop.

Duarte denied writing the receipt and

receiving the demand letter. She
claimed that there was no contract of
sale. Duarte said that Dy offered to sell
the seller's laptop but because she was
not interested to buy it, Dy asked if the
Duarte could instead lend the seller the
amount of P5, 000.00. When Dy came
to get the laptop, Duarte refused since
the loan was not paid yet. Dy then
again asked the Duarte to lend another
3k to seller who was allegedly in need
of money. Duarte gave the money
under agreement that the amounts she
lent to seller would be considered as
partial payments for the laptop in case
she decides to buy it.

Contrary to the view of the buyer, the

Statute of Frauds does not apply in the
present case as this provision applies
only to executory, and not to
completed,
executed
or
partially
executed contracts. In this case, the
contract of sale had been partially
executed because the possession of the
laptop was already transferred to buyer
and the partial payments had been
made by her. Thus, the absence of a
written contract is not fatal to sellers
case. The seller only needed to show by
a preponderance of evidence that there
was an oral contract of sale, which he
did by submitting in evidence his own
affidavit, the affidavit of his witness Dy,
the receipt dated February 18, 2002

ISSUE: whether or not there was a

contract of sale
HELD:
YES. There was a contract of sale even
without the written contract of sale. A
contract of sale is perfected the
moment the parties agree upon the
object of the sale, the price, and the
terms of payment. Once perfected, the
parties are bound by it whether the
contract is verbal or in writing because
no form is required.

and the demand letter dated July 29,

2002.

15. CALILAP AMERICANV DEVELOPMENT BANK OF THE PHILIPPINES

FACTS:
the court to fix the period within which
Calilap constituted a real estate mortgage the obligor may comply with the
over two parcels of land to secure obligation.
performance of their loan a\obligation
with DBP. DBP foreclosed the mortgage
due to the failure of mortgagee to pay the ISSUE: Whether or not DBP validly
obligation. The mortgaged parcels of land exercised its right to rescind the deed of
were awarded to DBP as the highest conditional sale upon Calilap's default
bidder. The one year redemption then
expired.
HELD:
YES. DBP validly exercise its right to
Calilap contended that she intended to rescind the deed of conditional sale upon
buy back only one property. But later on Calilap's default due to her failure to pay
signed a deed of conditional covering the six monthly amortization, and after her
two properties. Due to Calilap's failure to being given due notice of the notarial
pay her remaining amortizations, DBP rescission. As a consequence of the valid
rescinded the deed of conditional sale.
rescission, DBP had the legal right to
thereafter sell the property to a person
DBP then sold the property to Cruz which other than the petitioner, like Cruz. In
prompted Calilap to file a complaint for turn, Cruz could validly sell the property
the rescission of sale against Cruz. Cruz to Cabantog and Trinidad.
then sold the property to other buyers.
Article 1191 of the Civil Code did not
On the other hand, DBP contended that prohibit the parties from entering into an
the stipulations in the deed of conditional agreement whereby a violation of the
sale and by virtue of the letters sent to terms of the contract would result to its
DBP by Calilap, the latter had intended to cancellation.
repurchase both properties and her failure
to pay six quarterly amortizations; DBP Article 1191 of the Civil Code] makes it
rescinded the deed of conditional sale.
available to the injured party alternative
remedies such as the power to rescind or
Calilap argues that DBP could not exercise enforce fulfillment of the contract, with
its right because her nonpayment of an damages in either case if the obligor does
obligation constituted only a slight or not comply with what is incumbent upon
casual breach that did not warrant him. There is nothing in this law which
rescission. Moreover, she posits that prohibits the parties from entering into an
Article 1191 of the Civil Code empowers agreement that a violation of the terms of

the contract would cause its cancellation

even without court intervention.
The
rationale for the foregoing is that in
contracts
providing
for
automatic
revocation,
judicial
intervention
is
necessary not for purposes of obtaining a
judicial declaration rescinding a contract
already deemed rescinded by virtue of an
agreement providing for rescission even
without judicial intervention, but in order
to determine whether or not the
rescission was proper. Where such
propriety is sustained, the decision of the
court will be merely declaratory of the
revocation, but it is not itself the
revocatory act. Moreover, the vendors
right in contracts to sell with reserved

title to extrajudicially cancel the sale upon

failure of the vendee to pay the stipulated
installments and retain the sums and
installments already received has long
been recognized by the well-established
doctrine of 39 years standing. The validity
of the stipulation in the contract providing
for automatic rescission upon nonpayment cannot be doubted. It is in the
nature of an agreement granting a party
the right to rescind a contract unilaterally
in case of breach without need of going to
court. Thus, rescission under Article 1191
was inevitable due to petitioners failure
to pay the stipulated price within the
original period fixed in the agreement.