Margarita Suria v. Hon. Intermediate Appellate Court

Summary

Property sellers sued buyers for rescission of a deed of sale with mortgage due to non-payment of installments. The Regional Trial Court and Court of Appeals allowed the rescission action to proceed despite the availability of mortgage foreclosure. The Supreme Court reversed, establishing that once a contract of sale is consummated and a mortgage is executed as security for installment payments, the parties become mortgagor-mortgagee rather than buyer-seller. The breach involves mortgage obligations, not the sale contract. Under Article 1383 of the Civil Code, rescission is a subsidiary remedy that cannot be pursued when other legal remedies like foreclosure exist. The Court emphasized that foreclosure was both a legal remedy and a specific contractual provision, making rescission improper. This case clarifies the distinction between breaches of sale contracts versus mortgage obligations and reinforces the subsidiary nature of rescission actions.