OCAMPO vs. CA GR. No. 97442 30 June 1994

TITLE: OCAMPO vs.
CA
G.R. No. 97442, 30 June 1994
DATE: June 30, 1994
PONENTE: BELLOSILLO, J.
A. FACTS
 On 21 April 1975, the parties entered into an "Agreement to Sell Real Property", Tolosa "sells, cedes and
transfers" the land to Ocampo in consideration of P25,000.00, P12,500.00 of which was paid upon signing of the
deed and the balance to be due within six (6) months thereafter. Before the six-month period to complete the
payment of the purchase price expired, Ocampo paid but only the total of P16,700.00. Nevertheless Tolosa
accepted her subsequent late payments amounting to P3,900.00.
 On 3 June 1977, Tolosa and Magdalena S. Villaruz executed a "Contract to Sell” whereby Tolosa "sells, cedes,
transfers, and conveys" to Villaruz the same land in consideration of P94,300.00.
 Upon learning of the mortgage lien, Ocampo caused her adverse claim to be annotated on Tolosa’s certificate of
title.
 The Private respondent seller’s land, a 18,260-square meter lot located at Poblacion, Tigbauan, Iloilo was on a
mortgage, notwithstanding such the latter sold the same to petitioner under an “Agreement to Sell Property”, and
initial payment was paid.
 Before the six-month period to complete the payment of the purchase price expired, petitioner failed to complete
the payment. Nevertheless, seller accepted her subsequent late payments. Meanwhile, the subject property was
involved in a boundary dispute. Upon learning of the mortgage lien, petitioner caused her adverse claim to be
annotated on the Certificate of title.
 In seller’s letter to petitioner, former sought the cancellation of petitioner’s adverse claim and presented her with
two options, namely, a refund of payments made, or a share from the net proceeds if sold to a third party. On
even date, petitioner through counsel wrote seller expressing her readiness to pay the balance of the purchase
price, should be ready to deliver to her the deed of absolute sale and the owner’s duplicate of OCT for purposes
of registration.
 Meanwhile seller and third party executed a "Contract to Sell" whereby former "sells, cedes, transfers, and
conveys" to the third party the same land. The contract stipulated the immediate conveyance of the physical
possession of the land to the latter, although no deed of definite sale would be delivered to her unless the price
was fully paid. The contract noted the supposed judicial termination of the boundary dispute over the land.
 Tolosa filed a petition in the Court of First Instance of Iloilo to cancel the adverse claim of Ocampo. On 30 July
1977.
LOWER COURT:
RTC Iloilo, Branch 27, rendered a decision in Civil Case No. 12163 dismissing the complaint of Tolosa as well as the
complaint in intervention of Villaruz. It further held that the contract to sell executed between plaintiff Severino Tolosa and
third-party defendant Magdalena Villaruz as null and void as well as the Transfer of Certificate of Title issued in
connection therewith. MR was denied.
COURT OF APPEALS:
Reversed and set aside the lower court’s decision, upholding the sale in favor of Villaruz on the theory that the 21 April
1975 agreement of Tolosa and Ocampo was merely a contract to sell.
B. ISSUE:
W/N petitioner Ocampo has the better right over the property.
C. RULING:
Yes. The failure of the buyer to pay the price in full within a fixed period does not, by itself, bar the transfer of the
ownership or possession, much less dissolve the contract of sale.Under Art. 1592 of the Civil Code, the failure of
petitioner to complete her payment of the purchase price within the stipulated period merely accorded seller the option to
rescind the contract of sale upon judicial or notarial demand. However, the letter claimed to have been sent by seller to
petitioner rescinding the contract of sale was defective because it was not notarized and, more importantly, it was not
proven to have been received by petitioner.
Likewise, the Civil Case filed by the seller could not be considered a judicial demand under Art. 1592 of the Civil Code
because it did not pray for the rescission of the contract. Although the complaint sought the cancellation of petitioner’s
adverse claim on seller’s OCT and for the refund of the payments made, these could not be equivalent to a rescission. In
other words, seeking discharge from contractual obligations and an offer for restitution is not the same as abrogation of
the contract. To rescind is "[t]o declare a contract void in its inception and to put an end to it as though it never were." It is
"[n]ot merely to terminate it and release parties from further obligations to each other but to abrogate it from the beginning
and restore parties to relative positions which they would have occupied had no contract ever been made." Seller, on the
other hand, is now precluded from raising the issue of late payments. His unqualified acceptance of payments after the
six-month period expired constitutes waiver of the period and, hence, of the ground to rescind under Art. 1592.
WHEREFORE, the decision of the Court of Appeals is REVERSED and SET ASIDE and the decision dated 7 January
1988 of the Regional Trial Court of Iloilo, Branch 27, in Civil Case No. 12163 is REINSTATED, with the modification that
respondent Magdalena S. Villaruz is directed to reconvey the subject land now covered by TCT No. T-100021 in her
name to petitioner Pilar T. Ocampo, without prejudice to Severino Tolosa collecting from petitioner Pilar T. Ocampo the
balance of the purchase price of P4,400.00 which nevertheless may be deducted from the monetary awards made by the
trial court in favor of petitioner Ocampo.

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