85.

Bagsic

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.

J. M. TUASON & Co. INC. v. LIGAYA JAVIER

G.R. No. L-28569 ; February 27, 1970
Second Division, CONCEPCION, C.J.
FACTS
The defendant-appellee, Ligaya Javier, and the plaintiff entered into a contract on September
7, 1954, wherein the plaintiff agreed to sell, transfer, and deliver to the defendant a piece of
land designated as Lot No. 28, Block No. 356, PSD 30328, of the Sta. Mesa Heights
Subdivision for a total of P3,691.20, with interest accruing at a rate of 10% annually, payable
as P396.12 at contract execution and P43.92 each month moving forward for a total of P10
years period.
The land was given to the defendant after the contract was signed and the initial installment
of P396.12 was paid. She then made the required monthly installments up until January 5,
1962, amounting P4,134.08 (including the original payment of P396.12). She later fell behind
on the payments for those installments, however, and as a result, plaintiff notified her by
letter that their contract had been terminated on May 22, 1964.
After the defendant failed or refused to leave the property, the plaintiff filed the current
lawsuit against her in the Court of First Instance of Rizal on July 9, 1964. After essentially
alleging the aforementioned fact, the plaintiff requested in its complaint that the
aforementioned contract be declared validly rescinded and that the defendant and all parties
claiming under her be ordered to deliver the relevant lot and all improvements thereon to the
plaintiff and to pay a monthly rental of P40.00, starting on January 5, 1962, until the property
shall have been surrendered to the plaintiff, as well as all costs.
ISSUE:
Whether plaintiff may rescind the contract despite the judgment ordering defendant to fulfill
their obligation?
RULING
No. Despite the legality of applying said Art. 1592 to this case, the honorable court hold that
the plaintiff has not been denied substantial justice, because, pursuant to Art. 1234 of said
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.”
In this regard, it should be noted that, aside from the initial installment of P396.12 paid upon
the execution of the contract on September 7, 1954, the defendant faithfully remitted the
monthly installments accruing therefrom for a period of nearly eight (8) years, or up until
January 5, 1962; that, even though the principal obligation under the contract was P3,691.20,
the defendant's total payments up to January 5, 1962, including stipulated interest, agreed
with the contract's stated interest
Thus, plaintiff will thereby recover everything due thereto, pursuant to its contract with the
defendant, including such damages as the former may have suffered in consequence of the
latter’s default. Under these circumstances, the court believe that, in the interest of justice and
equity, the decision appealed from may be upheld upon the authority of Art. 1234 of the Civil
Code.