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Art. 1191. The power to rescind obligations isimplied in reciprocal ones, in case one of theobligors should not comply with what isincumbent upon him.

The injured party may choose between thefulfillment and the rescission of the obligation,with the payment of damages in either case.He may also seek rescission, even after he has

chosen fulfillment, if the latter should becomeimpossible.

The court shall decree the rescission claimed,unless there be just cause authorizing thefixing of a period.

This is understood to be without prejudice tothe rights of third persons who have acquiredthe thing, in accordance with Articles 1385 and1388 and the Mortgage Law. (1124)

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 115966 March 20, 2003

JUANA ALMIRA, RENATO GARCIA, ROGELIOGARCIA, RODOLFO GARCIA, ROSITA

GARCIA, RHODORA GARCIA, ROSALINDAGARCIA, ROLANDO GARCIA and RAFAEL

GARCIA Represented in this suit byEDGARDO ALVAREZ, petitioners,

vs.

COURT OF APPEALS AND FEDERICOBRIONES, respondents.

AZCUNA, J.:

Before us is a petition for review on certiorariassailing the decision rendered by the Court ofAppeals in C.A. G.R. CV No. 409541 whichreversed the decision of the Regional TrialCourt, Branch 32, of San Pedro, Laguna thatrescinded the Kasunduan ng Pagbibilihan2entered into between petitioners and privaterespondent over a portion of a parcel of land

situated in Sta. Rosa, Laguna.

The facts of the case are as follows:

Petitioners are the wife and the children of thelate Julio Garcia who inherited from his mother,Maria Alibudbud, a portion of a 90,655 square-meter property denominated as Lot 1642 ofthe Sta. Rosa Estate in Barangay Caingin, Sta.Rosa, Laguna and covered by TCT No. RT-1076.Lot 1642 was co-owned and registered in the

names of three persons with the followingshares: Vicente de Guzman (), EnriqueHemedes (1/4), and Francisco Alibudbud, thefather of Maria Alibudbud (). Although therewas no separate title in the name of JulioGarcia, there were tax declarations in his nameto the extent of his grandfathers sharecovering an area of 21,460 square meters. OnJuly 5, 1984, petitioners, as heirs of JulioGarcia, and respondent Federico Brionesentered into a Kasunduan ng Pagbibilihan(Kasunduan for brevity) over the 21,460square-meter portion for the sum ofP150,000.00. Respondent paid P65,000.00upon execution of the contract while thebalance of P85,000.00 was made payablewithin six (6) months from the date of theexecution of the instrument. At the time of theexecution of the Kasunduan, petitionersallegedly informed respondent that TCT No. RT-1076 was in the possession of their cousin,Conchalina Alibudbud who having boughtVicente de Guzmans share, owned thebigger portion of Lot 1642. Thisnotwithstanding, respondent willingly enteredinto the Kasunduan provided that the fullpayment of the purchase price will be made

upon delivery to him of the title.3The Kasunduan provides:

Na ang UNANG BAHAGI ay siyangmagkakamayari (co-owners), bilangtagapagmana ng yumaong Julio Garcia sa isanglagay na lupang taniman ng palay,matatagpuan sa nayon ng Caingin, Santa Rosa,Laguna, may buong lawak na 21,460 metrongparisukat, humigit kumulang, na lalongmakikilala sa mga katangiang inilalahad sapahayag ng Buwis Bilang 3472 na ganito angnatutunguhan: Mga kahanggan: Hilaga-1641-

Nazario Lauriles; Timog-Barique Hemedez;Silangan- Vicente de Guzman; at Kanluran-

Francisco Alibudbod; hinalagahan para sapagbabayad ng buwis pampamahalaan ngP12,720.00; at kasalukuyang may nabibinbingkahilingan sa hukuman upang magkaroon ngsariling titulo; nalilibot ng batong mohon nanagsisilbing hanganan sa bawat sulok.

Na ang UNANG BAHAGI ay inialok saIKALAWANG BAHAGI upang bilihin ang lupang

nabanggit sa kabuuang halagang ISANG DAANAT LIMAMPUNG LIBONG (P150,000.00) PISO,Salaping Pilipino, at ang IKALAWANG BAHAGIay sumangayon na bilhin ang naulit na lupabatay sa sumusunod na mga pasubali atKasunduan:

(1) Na pinatutunayan ng UNANG BAHAGI natinanggap nila sa buong kasiyahan ng kaloobanbuhat sa IKALAWANG BAHAGI ang halagangANIMNAPU AT LIMANG LIBONG (P65,000.00)PISO, salaping Pilipino, bilang paunang bayad,at ang nalalabing WALUMPU AT LIMANGLIBONG (85,000.00) PISO, ay babayaran ngIKALAWANG BAHAGI sa UNANG BAHAGI sa loobng anim na buwan simula sa takda nkasulatang ito, sa pasubali na ang kaukulangtitulo sa lupang nabanggit ay maipagkakaloobng UNANG BAHAGI;

(2) Na ang UNANG BAHAGI ang siyangmananagot tungkol sa anumang kasulatanginihanda ukol sa pagbibilihang ito, gayundin sagastos sa notaryo publiko, capital gains tax atpagpapatala ng kasulatan sa lalawigan ngLaguna;

(3) Na ang UNANG BAHAGI ay lalagda sa isang"Kasulatan ng Bilihang Tuluyan" matapos namabayarang lahat ng IKALAWANG BAHAGI angkaukulang kabuuang halaga ng lupangnabanggit.

Respondent took possession of the propertysubject of the Kasunduan and made variouspayments to petitioners amounting toP58,500.00. However, upon failure ofpetitioners to deliver to him a separate title tothe property in the name of Julio Garcia, herefused to make further payments, prompting

petitioners to file a civil action before theRegional Trial Court of San Pedro, Laguna,

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Branch 32, on May 13, 1991 for (a) rescissionof the Kasunduan; (b) return by respondent topetitioners of the possession of the subjectparcel of land; and (c) payment by respondentof damages in favor of petitioners.Petitioners alleged that respondent was boundto pay the balance of the purchase price withinsix (6) months from the date of the executionof the Kasunduan and upon delivery to him of

TCT No. RT-1076. Petitioners claimed that theyapproached respondent several times todeliver TCT No. RT-1076 but respondent toldthem that he did not have money to pay thebalance of the purchase price.4 Respondent,on the other hand, filed a counterclaim fordamages and averred that he refused to makefurther payments because of petitionersfailure to deliver to him a separate title in thename of Julio Garcia.

On November 26, 1992, the trial courtrendered a decision, the dispositive portion ofwhich reads:

WHEREFORE, judgment is hereby rendered infavor of the plaintiffs and against thedefendant decreeing the rescission of the"Kasunduan ng Pagbibilihan" dated July 5, 1984and ordering the defendant to return andrestore possession of the property subject ofthe Kasunduan ng Pagbibilihan to the plaintiffs.For paucity of evidence, no judgment can berendered on the other reliefs prayed for in thecomplaint.

On the other hand, plaintiffs are hereby

ordered to refund to the defendant thedownpayment of P65,000.00 and the partialpayment of the balance totaling to P58,500.00plus legal interest. Defendants counterclaim ishereby dismissed for lack of merit. Costsagainst defendant.5

In its decision, the trial court noted thatproceedings for the issuance of a separate titlecovering the property subject of sale entailtime and the parties could not have intendeddelivery by petitioners to respondent of aseparate title in the name of Julio Garcia as a

condition for respondents payment of the fullpurchase price within six months from the time

of the execution of the Kasunduan. Said courtobserved that even if petitioners were obligedto deliver a separate title in the name of JulioGarcia to respondent, the latter appeared tohave insufficient funds to settle his obligationas indicated by the fact that his paymentsamounting to P58,500.00 were made in"trickles," having been given on thirty-nineoccasions within a span of two years from the

time of the execution of the Kasunduan. Itconcluded that respondent refused to completepayment of the full purchase price not becauseof the failure of petitioners to deliver aseparate title in the name of Julio Garcia butbecause respondent simply did not havesufficient funds at hand.

The Court of Appeals, however, noting that theKasunduan made no reference to TCT No. RT-1076, reversed the decision of the trial court,and dismissed the complaint. The appellatecourt opined that the parties intended to referto a separate title over the 21,460 squaremeter lot when the Kasunduan mentioned a"kaukulang titulo ng lupang nabanggit" since itwas the portion which was covered by aseparate tax declaration in the name of JulioGarcia and it was the portion that petitionerscould sell. The appellate court noted that theactuations of the parties subsequent to theexecution of the Kasunduan confirmedrespondents claim that a separate title to theproperty subject of the Kasunduan should bedelivered to him. Nevertheless, respondentscounterclaim for damages was dismissed onthe ground that the filing of the complaint for

rescission was not attended by malice, therebeing an honest difference of opinion betweenthe parties as to the interpretation of theKasunduan.

Feeling aggrieved by the aforesaid decision,petitioners filed before us the instant petitionfor certiorari, raising issues which mayessentially be summarized as follows: (1)whether payment of the balance of thepurchase price is conditioned upon delivery ofa separate title in the name of Julio Garcia; (2)whether petitioners are entitled to rescind the

Kasunduan for failure of respondent tocomplete payment of the purchase price; and

(3) whether the Court of Appeals should havedismissed respondents appeal for failure tocomply with Circular 28-91.

Petitioners contend that the Kasunduannever made a reference to a "title in the nameof Julio Garcia" and that there was nothing inthe actuations of the parties which wouldindicate that full payment of the purchase priceis conditioned upon the delivery to respondent

of said title. Petitioners allege that respondentrefused to give further payments not becauseof their failure to deliver a separate title in thename of Julio Garcia but because he simply didnot have sufficient funds to complete paymentof the purchase price. Petitioners ask forrescission of the Kasunduan pursuant to Article1191 of the Civil Code on the ground thatrespondent failed to complete payment of thepurchase price. They further aver that theappellate court should have dismissedrespondents appeal in the first place for failureof respondent to comply with Circular No. 28-916 requiring parties to submit a certificationof non-forum shopping in petitions filed beforethe Supreme Court and the Court of Appeals.Petitioners lament that although they raisedthe issue regarding respondents procedurallapse early on at the appellate court, the latterstill entertained respondents appeal.

As a rule, our jurisdiction in casesbrought before us from the Court of Appealsunder Rule 45 of the Rules of Court is limited toreviewing errors of law. Factual findings of theappellate court are generally binding on us.7However, this principle is subject to certainexceptions such as the situation in this case

where the trial court and the appellate courtarrived at diverse factual findings.8

The subject of conflictinginterpretations between the parties pertains tothe provision in the Kasunduan which states:

(1) Na pinatutunayan ng UNANGBAHAGI na tinanggap nila sa buong kasiyahanng kalooban buhat sa IKALAWANG BAHAGI anghalagang ANIMNAPU AT LIMANG LIBO(P65,000.00) PISO, Salaping Pilipino, bilangpaunang bayad, at ang nalalabing WALUMPUAT LIMANG LIBONG (85,000.00) PISO aybabayaran ng IKALAWANG BAHAGI sa UNANG

BAHAGI sa loob ng anim na buwan simula satakda ng kasulatang ito, sa pasubali na ang

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kaukulang titulo ng lupang nabanggit aymaipagkakaloob ng UNANG BAHAGI saIKALAWANG BAHAGI"

Petitioners allege that the kaukulangtitulo ng lupang nabanggit refers to TCT No.RT-1076 and not to a separate title in the nameof Julio Garcia. Petitioners stress theimplausibility of delivering the separate title torespondent within six (6) months from the time

of the execution of the Kasunduan consideringthat issuance of the title required priorsettlement of the estates of FranciscoAlibudbud, Vicente de Guzman and EnriqueHemedes; partition of Lot 1642; andsegregation of the portion pertaining to theshare acquired by Julio Garcia. Respondent, forhis part, insists that the kaukulang titulo nglupang nabanggit refers to a separate title inthe name of Julio Garcia. He argues that heonly acceded to the Kasunduan upon havingbeen assured by petitioners that they would beable to deliver to him a separate title in thename of Julio Garcia. Petitioners allegedly toldrespondent that there was a pending petitionin the court of Bian for the issuance of aseparate title to the subject property.9

It is basic in the interpretation and constructionof contracts that the literal meaning of thestipulations shall control if the terms of thecontract are clear and leave no doubt on theintention of the contracting parties. However, ifthe terms of the agreement are ambiguous,resort is made to contract interpretation whichis the determination of the meaning attachedto written or spoken words that make the

contract.10 To ascertain the true intention ofthe parties, their subsequent orcontemporaneous actions must be principallyconsidered.

The tenor of the correspondence betweenpetitioners and respondent shows that theparties intended that a separate title to theproperty in the name of Julio Garcia shall bedelivered to respondent as a condition for thelatters payment of the balance of the purchaseprice. Thus, petitioner Juana Almiras letterdated July 24, 1986 to respondent reads:

Ang totoo po ngayon ay kailangan naming anghalagang LABING LIMANG LIBO (P15,000.00)PISO, yan po ang dahilan kung bakit kami aysumulat sa inyo, sapagkat sa mga unangnaghawak at nag-ayos ng papeles ng lupangito ay hindi nila naayos at hindi nila natapos,kaya po kami ay nakakita at malaki po angnagastos naming sa una na walang nangyari,kaya nga itong huli ay lalong lumaki

Unawain po naman ninyo kami sa halagangkailangan naming para sa huling gumagawa ngTitulo ng lupa para naman po maayos na ito.11

Respondent signified his willingness to pay thebalance of the purchase price but remindedpetitioners of their obligation to deliver title tothe property in the following reply:

Hindi lingid sa inyong kaalaman na sa ilalim ngnaubit na "Kasunduan ng Pagbibilihan" aymaliwanag ang inyong tungkulin naipagkaboob sa amin ang kaukulang titulo nglupa sa boob ng anim (6) na buwan simula satakda ng nasabing kasulatan at kami naman aynahahandang magbayad ng lahat ngnalababing kabayaran x x x at tuwing kayo aykukuha ng pera ang lagi niyong idinadahilan ayang diumano ay paglalakad tungkol sa titulo. xx x12

Had the parties intended that petitionersdeliver TCT No. RT-1076 instead of a separatetitle in the name of Julio Garcia to respondent,then there would have been no need forpetitioners to ask for partial sums on the

ground that this would be used to pay for theprocessing of the title to the property.Petitioners had only to present the existingtitle, TCT No. RT-1076, to respondent anddemand the balance of the purchase price.This, petitioners did not do. Instead, they werecontent to ask small sums from respondent onthirty-nine occasions for two years before filingan action in court for rescission of theKasunduan another five years later. It is readilydiscernible from the tenor of various receipts13issued by petitioners that the sums given byrespondent on these thirty-nine occasions were

made upon request of petitioners seekingrespondents indulgence. A letter14 dated

October 11, 1984 and addressed torespondents father, Tata Omy, whomrespondent authorized to give payments duringthe time he was working abroad reads:

Tata Omy,

Ako si Rogelio A. Garcia ang sumulat nito atang maydala ay si Rolando Garcia na kapatid

kong bunso at ito ay pinagawa ng aking ina siJuana Garcia. Ang dahilan ay mayroon silangnabiling t.v. 17 inches at ngayon ay naririto saamin. Kaya ako ay labis na nahihiya sa inyo niViring ngunit ano ang magagawa ko para diyankaya kayo na ang bahalang magpasensiya saamin. Ang kailangan nila ay halagang P800.00at para mabili nila ang T. V. + P200.00

Ang gumagalang,(Sgd.) Rogelio GarciaReceived: P1,000.00By( Sgd). Rosita Garcia

There is thus no basis to conclude thainsufficiency of funds rather than failure ofpetitioners to deliver a separate title in thename of Julio Garcia prevented respondentfrom completing payment of the purchaseprice.

That the parties agreed on delivery of separate title in the name of Julio Garcia as acondition for respondents payment of thebalance of the purchase price is bolstered bythe fact that there was already an approvedsubdivision plan of the 21,460 square-meter lot

years before petitioners filed an action in courtfor rescission.15 The parties evidently assumedpetitioners would be able to deliver a separatetitle in the name of Julio Garcia to respondentwithin six (6) months from the time of theexecution of the Kasunduan since there wasalready a pending petition in court for theissuance of a separate title to 21,460 square-meter lot at that time. Unfortunately, thepetitioners were not able to secure a separatetitle in the name of Julio Garcia within thestipulated period.

Finally, we note that, as quoted earlier, theKasunduan itself in its opening paragraph

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refers to the subject property being sold as"buong lawak na 21,640 metrong parisukat, x xx at sa kasalukuyan may nabibinbingkahilingan sa hukuman upang magkaroon ngsariling titulo; x x x." The next paragraph of theKasunduan, therefore, which speaks of "angkaukulang titulo sa lupang nabanggit," clearlyrefers to the separate title being applied for,even without resort to extraneous evidence.

Petitioners, however, insist that it wasrespondents counsel who prepared theKasunduan and any ambiguity therein shouldbe construed against respondent pursuant toArticle 1377 of the Civil Code which states thatthe interpretation of obscure words orstipulations in a contract shall not favor theparty who caused the obscurity.

We find no reason to apply Article 1377 of theCivil Code in this case where the evidentintention of the parties can be readilydiscerned by their subsequent andcontemporaneous acts. While it is true that theKasunduan was prepared by the counsel ofrespondent, there is no indication thatrespondent took unfair advantage ofpetitioners when he had the terms of theKasunduan drawn by his counsel. Petitionersfreely assented to the Kasunduan which iswritten entirely in a language spoken andunderstood by both parties. That petitionerswere fully aware of the terms of the Kasunduanis evidenced by their attempts to comply withtheir obligation by securing a subdivision planand technical description16 of the property

subject of sale.

Having ruled that the kaukulang titulo nglupang nabanggit refers to a separate title inthe name of Julio Garcia, we proceed to theissue as to whether petitioners may rescind theKasunduan pursuant to Article 1191 of the CivilCode for failure of respondent to give fullpayment of the balance of the purchase price.

The rights of the parties are governed by theterms and the nature of the contract they enterinto. Hence, although the nature of the

Kasunduan was never placed in dispute byboth parties, it is necessary to ascertain

whether the Kasunduan is a contract to sell ora contract of sale before the issue as towhether petitioners may ask for rescission ofthe contract may be resolved. In a contract tosell, ownership is, by agreement, reserved tothe vendor and is not to pass until full paymentof the purchase price; whereas, in contract ofsale, title to the property passes to the vendeeupon delivery of the thing sold.17 Non-

payment by the vendee in a contract of saleentitles the vendor to demand specificperformance or rescission of the contract, withdamages, under Article 1191 of the Civil Code.

Although both parties have consistentlyreferred to the Kasunduan as a contract to sell,a careful reading of the provisions of theKasunduan reveals that it is a contract of sale.A deed of sale is absolute in nature in theabsence of any stipulation reserving title to thevendor until full payment of the purchase price.In such cases ownership of the thing soldpasses to the vendee upon actual orconstructive delivery thereof.18 There isnothing in the Kasunduan which expresslyprovides that petitioners retain title orownership of the property, until full payment ofthe purchase price. The absence of suchstipulation in the Kasunduan coupled with thefact that respondent took possession of theproperty upon the execution of the Kasunduanindicate that the parties have contemplated acontract of absolute sale.

Stated otherwise, there was a perfectedcontract of sale. The parties agreed on the sale

of a determinate object, i.e., 21, 460 squaremeters of Lot 1642, covered by a taxdeclaration in the name of Julio Garcia, and theprice certain therefor, without any reservationof title on the part of petitioners. Ownershipwas effectively conveyed by petitioners torespondent, who was given possession of theproperty. The delivery of a separate title in thename of Julio Garcia was a condition imposedon respondents obligation to pay the balanceof the purchase price. It was not a conditionimposed on the perfection of the contract ofsale. In Laforteza v. Machuca,19 we stated that

the fact that the obligation to pay the balanceof the purchase price was made subject to the

condition that the seller first deliver thereconstituted title of the property does notmake the agreement a contract to sell for suchcondition is not inconsistent with a contract ofsale.

Addressing now the issue as to whetherrescission of the Kasunduan by petitioners mayprosper, we rule in the negative. The power to

rescind is only given to the injured party. Theinjured party is the party who has faithfullyfulfilled his obligation or is ready and willing toperform with his obligation. In the case at bar,petitioners were not ready, willing and able tocomply with their obligation to deliver aseparate title in the name of Julio Garcia torespondent. Therefore, they are not in aposition to ask for rescission of the Kasunduan.Moreover, respondents obligation to pay thebalance of the purchase price was madesubject to delivery by petitioners of a separatetitle in the name of Julio Garcia within six (6)months from the time of the execution of theKasunduan, a condition with which petitionersfailed to comply. Failure to comply with acondition imposed on the performance of anobligation gives the other party the optioneither to refuse to proceed with the sale or towaive that condition under Article 1545 of theCivil Code.20 Hence, it is the respondent whohas the option either to refuse to proceed withthe sale or to waive the performance of thecondition imposed on his obligation to pay thebalance of the purchase price.

It follows that, not having established that they

were ready, able and willing to comply withtheir obligation to deliver to respondent aseparate title in the name of Julio Garcia,petitioners may not ask for rescission of theKasunduan nor recover damages.

As regards the issue that the appellate courtshould have dismissed respondents appeal forfailure of respondent to comply with CircularNo. 28-91 requiring the submission of acertificate of non-forum shopping in petitionsfiled before us and the Court of Appeals, sufficeit to say that when technicality deserts its

function of being an aid to justice, the courtsare justified in exempting from its operations a

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particular case.21 Procedural rules areintended to insure the orderly conduct oflitigation, because of the higher objective theyseek, which is to protect the partiessubstantive rights.22

WHEREFORE, the petition is DENIED and thedecision rendered by the Court of Appeals inCA G.R. No. 40954 entitled, "Juana Almira, et

al., plaintiffs-appellees v. Federico Briones,defendant-appellant" is AFFIRMED. No costs.

SO ORDERED.Davide, Jr., C.J. (Chairman), Vitug, and Carpio,JJ., concur.Ynares-Santiago, J., on leave.