G.R. No. 73010 . April 27, 1990.
REVA RAZ, petitioner, vs. THE INTERMEDIATE APPELLATE COURT, FOURTH CIVIL CASES DIVISION and ENCARNACION VILLANUEVA, respondents.

FACTS

Petitioner Reva Raz and respondent Encarnacion Villanueva entered into a Conditional Assignment of Rights and Interests over a foreclosure judgment. Raz agreed to pay Villanueva P75,000.00 in three installments, with the final payment of P33,000.00 due on or before August 7, 1974. In exchange, Villanueva assigned her rights in the judgment and agreed, upon full payment and after becoming the owner of the foreclosed property, to execute a deed of sale in favor of Raz. Raz paid the first two installments totaling P42,000.00 but refused to pay the final P33,000.00 installment.
Raz filed a complaint for specific performance, alleging Villanueva reneged on her duty to deliver the property. Villanueva countered that Raz defaulted on the final payment, justifying rescission under the contract’s terms. Villanueva presented two letters as evidence: an April 22, 1975 letter demanding payment of the final installment and a May 13, 1975 letter tendering a refund of the P42,000.00, thereby rescinding the contract.

ISSUE

Whether the respondent court erred in ruling that the petitioner defaulted in her payment obligation, thereby justifying the rescission of the Conditional Assignment.

RULING

The Supreme Court denied the petition and affirmed the appellate court’s decision. The legal logic centers on the explicit terms of the contract and the principle of reciprocal obligations. The contract unambiguously required Raz to pay the final installment by August 7, 1974. Her refusal to pay constituted a clear breach. The Court found that Raz’s justification—that Villanueva had not yet delivered the property—was untenable because the contract did not make her final payment conditional upon prior transfer of title. The obligation to pay by a fixed date was absolute.
Furthermore, Villanueva’s act of tendering a refund via the May 13, 1975 letter constituted a valid exercise of the contractual right to rescind under Paragraph 3(h) due to Raz’s breach. This tender was a judicial admission of Villanueva’s offer to return the payments, binding her to that position. While delays occurred in the foreclosure proceedings, the Court attributed no bad faith to Villanueva, noting Raz herself failed to vigilantly protect her interests. Consequently, Raz’s breach gave Villanueva a lawful cause to rescind the agreement.