GR 112330; (August, 1999) (Digest)
G.R. No. 112330 , August 17, 1999
SPS. HENRY CO AND ELIZABETH CO AND MELODY CO, petitioners, vs. COURT OF APPEALS AND MRS. ADORACION CUSTODIO, represented by her Attorney-in-fact, TRINIDAD KALAGAYAN, respondents.
FACTS
On October 9, 1984, respondent Adoracion Custodio entered into a verbal contract with petitioners, the spouses Henry and Elizabeth Co, for the purchase of a house and lot for $100,000.00. Custodio paid earnest money of $1,000.00 and P40,000.00. The purchase price was payable in two installments: $40,000.00 on December 4, 1984, and $60,000.00 on January 5, 1985. Custodio failed to pay on these dates but paid $30,000.00 on January 25, 1985. Through counsel, the Co spouses sent a letter on March 15, 1985, demanding payment of the $70,000.00 balance. A subsequent letter dated August 8, 1986, informed Custodio she had lost her “option to purchase” the property and offered to sell her another property instead, applying her previous payments thereto. On September 5, 1986, Custodio’s counsel informed the Co spouses that Custodio was ready to pay the remaining $70,000.00 balance. The Co spouses refused. Custodio filed a complaint. The Regional Trial Court ordered the forfeiture of the earnest money and directed the Co spouses to return the $30,000.00 to Custodio. The Court of Appeals affirmed this decision.
ISSUE
Whether the Court of Appeals erred in ordering the petitioners (Co spouses) to return the $30,000.00 paid by the respondent (Custodio).
RULING
No, the Court of Appeals did not err. The Supreme Court ruled that the transaction between the parties was a perfected contract of sale, not merely an option contract, as there was a meeting of minds on the object and price, evidenced by the payment of earnest money. The petitioners could not unilaterally and extrajudicially rescind the contract in the absence of an express stipulation authorizing such rescission. Consequently, the contract remained subsisting when Custodio offered to pay the balance. When the petitioners refused to accept payment and deliver the property, Custodio was entitled to seek rescission. Under Article 1385 of the Civil Code, rescission creates an obligation to return what was given. Therefore, the order for the petitioners to return the $30,000.00 to Custodio was proper.