Republic of the Philippines
THIRD DIVISIONG.R. No. 108346 July 11, 2001Spouses MARIANO Z. VELARDE and AVELINAD. VELARDE,
COURT OF APPEALS, DAVID A. RAYMUNDO andGEORGE RAYMUNDO,
A substantial breach of a reciprocal obligation, likefailure to pay the price in the manner prescribed bythe contract, entitled the injured party to rescindthe obligation. Rescission abrogates the contractfrom its inception and requires a mutual restitutionof benefits received.
Before us is a Petition for Review on Certiorari
questioning the Decision
of the Court of Appeals(CA) in CA-GR CV No. 32991 dated October 9, 1992,as well as its Resolution
dated December 29, 1992denying petitioner's motion for reconsideration.
The dispositive portion of the assailed Decisionreads:"WHEREFORES the Order dated May 15,1991 is hereby ANNULLED and SET ASIDEand the Decision dated November 14, 1990dismissing the [C]omplaint is RESINSTATED. The bonds posted by plaintiffs-appellees anddefendants-appellants are herebyRELEASED."
The factual antecedents of the case, as found by theCA, are as follows:"x x x. David Raymundo [herein privaterespondent] is the absolute and registeredowner of a parcel of land, together with thehouse and other improvements thereon,located at 1918 Kamias St., DasmariñasVillage, Makati and covered by TCT No.142177. Defendant George Raymundo[herein private petitioners] is David's fatherwho negotiated with plaintiffs Avelina andMariano Velarde [herein petitioners] for thesale of said property, which was, however,under lease (Exh. '6', p. 232, Record of CivilCase No. 15952)."On August 8, 1986, a Deed of Sale withAssumption of Mortgage (Exh. 'A'; Exh. '1',pp. 11-12, Record) was executed bydefendant David Raymundo, as vendor, infavor of plaintiff Avelina Velarde, as vendee,with the following terms and conditions:'x x x x x x x x x'That for and in consideration of theamount of EIGHT HUNDRED THOUSAND PESOS (P800,000.00),Philippine currency, receipt of whichin full is hereby acknowledged by theVENDOR from the VENDEE, to hisentire and complete satisfaction, bythese presents the VENDOR herebySELLS, CEDES, TRANSFERS, CONVEYSAND DELIVERS, freely and voluntarily,with full warranty of a legal and validtitle as provided by law, unto theVENDEE, her heirs, successors andassigns, the parcel of land mentionedand described above, together withthe house and other improvementsthereon.'That the aforesaid parcel of land,together with the house and otherimprovements thereon, weremortgaged by the VENDOR to theBANK OF THE PHILIPPINE ISLANDS,Makati, Metro Manila to secure thepayment of a loan of ONE MILLIONEIGHT HUNDRED THOUSAND PESOS(P1,800,000.00), Philippine currency,as evidenced by a Real EstateMortgage signed and executed by theVENDOR in favor of the said Bank of the Philippine Islands, on _____ andwhich Real Estate Mortgage wasratified before Notary Public forMakati, _____, as Doc. No. ______, PageNo. _____, Book No. ___, Series of 1986of his Notarial Register.'That as part of the consideration of this sale, the VENDEE herebyassumes to pay the mortgageobligations on the property hereinsold in the amount of ONE MILLIONEIGHT HUNDRED THOUSAND PESOS(P1,800,000.00), Philippine currency,in favor of Bank of Philippine Islands,in the name of the VENDOR, andfurther agrees to strictly and faithfullycomply with all the terms andconditions appearing in the RealEstate Mortgage signed and executedby the VENDOR in favor of BPI,including interests and other chargesfor late payment levied by the Bank,as if the same were originally signedand executed by the VENDEE.'It is further agreed and understoodby the parties herein that the capitalgains tax and documentary stamps onthe sale shall be for the account of the VENDOR; whereas, theregistration fees and transfer taxthereon shall be the account of the