J, M. TUASON & Co., INC., plaintiff-appellant, vs. LIGAYA JAVIER, defendant-appellee.

J.M. TUASON & CO., INC. VS. JAVIER

G.R. NO. L-28569 February 27, 1970

FACTS:
September 1954 – JM Tuason entered a contract to sell with Ms Javier for a parcel of land for sum of Php3,691.20 with 10% interest per
annum, payable in monthly instalment of Php43.92 a month for a period of ten (10) years.
Further stipulated in the contract, that upon failure of Ms Javier to pay the monthly instalment, a one-month grace period to pay such installment
will be given together with the monthly instalment falling on the said grace period.
Failure to pay both monthly instalments shall be additional penalty of 10% interest.
90 days from the end of the grace period, JM Tuason can rescind the contract, and the payments made by respondent will be considered as
rentals.

Ms Javier paid only until Jan. 5, 1962. Ms Javier failed to pay until grace period.
Consequently JM Tuason rescind the contract then asked respondent to vacate the said land.
Ms Javier didn’t vacate.

JM Tuason filed an action to the CFI for rescission of contract.

JM Tuason Javier
CFI: ruled in favor of Ms Javier applying Art. 1592 of NCC.

CA: affirmed CFI decision

JM Tuason: appealed to SC contending that Art. 1592 is applicable
only to contract of sale not in contract to sell.

ISSUE: WoN contract can be rescinded. – NO, there had been substantial compliance by Javier.

RULING:
Lower Court ruled: in favour of Javier, applying Art 1592 of NCC.
Art 1592 provides -- "In the sale of immovable property, even though it may have been stipulated that upon the failure to pay the price at
the time agreed upon the rescission of the contract shall take place, the vendee (buyer) may pay, even after the expiration of the period, as
long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the court
may not grant him a new term."

(ELAM: Even if stipulated that upon failure to pay price at time agreed, rescission takes place, buyer may pay even after exp period, and
no rescission shall take place, as long as no demand for rescission of contract has been made)

Dispositive of CFI: "WHEREFORE, declaring that the contract to sell has not yet been rescinded, and ordering the Javier to pay JM
Tuason w/in 60 days from receipt hereof all installment payments in arrears together with interest thereon at 10% per annum from January
5, 1962, the date of default. Upon payment of same, the plaintiff is ordered to execute in favor of the defendant the necessary deed to
transfer."

JM Tuason averred: CFI erroneously apply Art 1592 of NCC. Art. 1592 is applicable only to contract of sale not in contract to sell. This is a
contract to sell.
Art 1592 provides -- "In the sale of immovable property, even though it may have been stipulated that upon the failure to pay the price at
the time agreed upon the rescission of the contract shall take place, the vendee (buyer) may pay, even after the expiration of the period, as
long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the court
may not grant him a new term."

(ELAM: Art 1592 applies only to contract of sale, and not contract to sell, which is the case in this.)

Court ruled (with Ms Javier):

Regardless, of the propriety of applying Article 1592, plaintiff JM Tuason has not been denied substantial justice under Article 1234 of the New
Civil Code, which provides.
Art 1234 - "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."

(ELAM: Court said whether application of Art 1592 is correct, JM Tuason was not denied justice because of Art 1234. Since Javier made
substantial payment in good faith, obligor may recover (that is, payments she made are retained as payments in the contract to sell, as though
there had been a strict and complete fulfilment.)

Ms Javier religiously satisfied the monthly instalments for almost eight (8) years or up to January 5, 1962. It has been shown that respondent
had already paid Php4,134.08 as of January 5, 1962 which is beyond the stipulated amount of Php3,691.20. Also, respondent has offered to
pay all instalments overdue including the stipulated interest, attorney’s fees and the costs which the CFI accordingly sentenced respondent to
pay such instalment, interest, fees and costs.

Thus, petitioner will be able recover everything that was due. Under these circumstances, the SC feel that, in the interest of justice and equity,
the decision appealed from may be upheld upon the authority of Article 1234 of the New Civil Code.

DISPOSITION:
WHEREFORE, said decision is hereby affirmed, without special pronouncement as to costs in this instance. It is so ordered.