CRISPULO VILLARUEL, plaintiff-appellee, vs. TAN KING, defendant-appellant.
FACTS
On April 14, 1918, Crispulo Villaruel and Tan King entered into a contract for the sale of two contiguous sublots with improvements in Manila for P2,700. Tan King paid P1,700 upon execution and agreed to pay the P1,000 balance within one year, extendible for another year at the parties’ option. As security for the balance, the property was mortgaged back to Villaruel. In lieu of interest on the debt, Villaruel was given the right to occupy one of the houses (No. 216) rent-free until full payment. Tan King failed to pay the P1,000 balance within the agreed period. Villaruel filed an action for resolution (rescission) of the sale, offering to return the P1,700. Tan King, in his answer, claimed ownership and deposited the P1,000 balance with the court. He also counterclaimed for Villaruel to vacate the house and pay rent from the date of deposit, and to reimburse him for merchandise taken. The trial court ordered the resolution of the sale, requiring Villaruel to return the P1,700 to Tan King.
ISSUE
Whether the plaintiff-appellee, Crispulo Villaruel, is entitled to the resolution (rescission) of the contract of sale due to the defendant-appellant’s failure to pay the balance of the purchase price.
RULING
No. The Supreme Court reversed the trial court’s decision. The contract was an absolute sale, not a conditional one subject to resolution for non-payment of the balance. The provision for a mortgage back to the vendor as security for the unpaid balance indicated that the sale was perfected and consummated, transferring ownership to the buyer. The remedy for the vendor was to foreclose the mortgage, not to demand resolution of the sale. The Court absolved Tan King from the complaint. It ordered Villaruel to accept the balance (adjusted for deductions) deposited in court, and further ordered Villaruel to vacate the property and pay rent to Tan King from the date of the deposit (May 21, 1920) until he vacates, at the rate of P30 per month, and to reimburse Tan King P47.77 for merchandise taken.
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