Estelita Villamar vs.

Balbino Mangaoil
Petitioner: Estelita Villamar Respondent: Balbino Mangaoil
FACTS:
The petitioner Villamar, the registered owner of the property, entered into an agreement with the
respondent Mangaoil to purchase and sale a parcel of land. The terms in their agreement includes the
down payment of P 185,000 pesos, which will be for the payment of a loan secured from the Rural
Bank of Cauayan so that it will be withdrawn and released from the bank and that a deed of absolute
sale will be executed in favor of the respondent Mangaoil which was complied by the parties.
Consequently, the respondent Mangaoil informed the petitioner that he will withdraw from the
agreement for the land was not yet free from encumbrances as there were still tenants who were not
willing to vacate the land without giving them back the amount that they mortgaged the land. Also,
the petitioner failed and refused, despite repeated demands, to handover the Certificate of Title. Then,
the respondent Mangaoil demanded the refund of the down payment that he had secured with the
petitioner and filed a complaint with the RTC to rescind the contract of sale. In the response of the
petitioner, she averred that she had already complied with the obligations and caused the release of
the mortgaged land and the delivery of the Certificate of Title will be facilitated by a certain Atty.
Pedro C. Antonio. The respondent insisted that he can rescind the contract for the petitioner had
failed to deliver the Certificate of Title. The RTC and the CA dismissed the complaints for upon the
deed of absolute sale, there was already a valid and constructive delivery.
ISSUE:

1) Whether or not the failure of delivery of the Certificate of Title will constitute rescission of the
contract?
2) Whether or not the execution of the deed of sale of real property is equivalent to a valid and
constructive delivery?
HELD:
1) No, the Court held that the failure of the petitioner to comply with the obligation to deliver to the
respondent the possession of the property and the certificate of the title.
Based on Article 1191 of the New Civil Code of the Philippines, it is clear that the power to rescind
obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is
incumbent upon him. The respondent cannot be deprived of his right to demand for rescission in
view of the petitioners failure to abide with item nos. 2 and 3 of the agreement. This remains true
notwithstanding the absence of express stipulations in the agreement indicating the consequences of
breaches which the parties may commit. To hold otherwise would render Article 1191 of the NCC as
useless.2) The execution of the deed of absolute sale does not constitute a constructive delivery for
this case falls under to the exception since a mere presumption and not conclusive delivery was
created as the respondent failed to take material possession of the subject property. A person who
does not have actual possession of the thing sold cannot transfer constructive possession by the
execution and delivery of a public instrument. Thus, the respondent can rescind the contract. The
petition was denied and the petitioner is bound return the down payment plus interest to the
respondent