G.R. No.

L-25885 January 31, 1972

LUZON BROKERAGE CO., INC., plaintiff-appellee,

vs.
MARITIME BUILDING CO., INC., and MYERS BUILDING CO., INC., defendants,
MARITIME BUILDING CO., INC., defendant-appellant

FACTS:

Myers Building Co. entered into a conditional contract of sale with Maritime Building Co.
whereby three parcels of land located in the City of Manila was sold for Php 1 Million, with
an initial payment of Php 50,000 upon execution and the balance to be paid in monthly
installments. One of the stipulations in the said contract was that in case on the part of the
vendee to pay any of the installments due and payable, the contract shall be annulled at the
option of the vendor and all payments already made by vendee shall be forfeited and the
vendor shall have right to re-enter the property and take possession thereof. In March
1961, Maritime failed to pay the installment due and requested for a moratorium, which
was denied by Myers. The latter then demanded Maritime to vacate the said property,
which is under the lease of Luzon Brokerage, Inc. Maritime contended that the non-
payment of the installment does not constitute a breach of contract upon its part and that
Myers cannot extrajudicially rescind the contract relying to Article 1592 of the Civil Code.

ISSUE:

Whether or not Myers building was entitled to rescind or resolve the conditional contract
of sale extrajudicially

RULING:

Yes, an extrajudicial action for the rescission of a contract is allowed when the contract
itself provides that it may be revoked or cancelled for breach thereof. It is erroneous to
argue that Article 1592 is applicable in this case, wherein the parties executed a deed of
conditional contract of sale. In this type of sale, the transfer of ownership of the property is
reserved to the seller until the complete fulfillment of the condition set by the parties,
which in this case the payment purchase price of the property sold.