Invalid Rescission of contract Legarda Hermanos vs.

Saldana FACTS: Respondent contracted with petitioner to pay in instalment the 2 parcels of lot for Php 1,500 each a total of Php 3,000.00 payable in 10 years with 10% interest per annum of PhP 19.83 a month but respondent paid only up to 8 years then nothing follows, thereby owing petitioner the sum of Php 1,317.72 as balance when complaint was filed. Respondent wrote petitioner stating that his desire to build a house on the lots was prevented by the latters failure to introduce improvements on said subdivision as there still no rodas on these lots. Petitioner replied that pursuant to provision of contract all the amounts paid and improvement shall be considered as rent in payment for damages suffered from respondents default in payment. ISSUE: Whether Hermanos action to rescind the contract due to Saldanas default in payment is valid HELD: No, Supreme Court ruled that even though it was stipulated that failure to complete the payment would result to the cancellation of the contract, it was still not valid. As clearly shown in the statement of account, Saldaa was able to pay one of the two said lots. Under Article 1234 of the New Civil Code, if the obligation has been substantially performed in good faith, the obligor may recover as though there had been a strict and complete fulfillment, less damages suffered by the obligee. Hence, under the authority of Article 1234 of the New Civil Code, Saladaa is entitled to one of the two lots of his choice and the interest paid shall be forfeited in favor of the petitioners. Thus, Saldanas substantial compliance of the obligation entitles him to the transfer of ownership of one lot.