REVA RAZ, PETITIONER, VS. THE INTERMEDIATE APPELLATE COURT, FOURTH CIVIL CASES DIVISION AND ENCARNACION VILLANUEVA, RESPONDENTS.

Raz versus Villanueva

The Case

This is a petition for review filed by Reva Raz against the Intermediate Appellate Court and Encarnacion Villanueva, arising from a Conditional Assignment of Rights and Interests over a foreclosure judgment. Raz seeks to overturn the appellate court's affirmance of the trial court's ruling, which upheld the rescission of the agreement between the parties. The case matters because it clarifies the requisites for extrajudicial rescission of reciprocal obligations, the evidentiary standards for private writings, and the binding effect of judicial admissions.

Procedural History

Raz filed a complaint for specific performance and damages against Villanueva before the trial court, seeking to compel delivery of the property subject of their agreement. The trial court ruled in favor of Villanueva, sustaining the rescission of the Conditional Assignment. Raz appealed to the Intermediate Appellate Court, Fourth Civil Cases Division, which affirmed the trial court's decision. Raz then filed this petition for review before the Supreme Court.

Facts

On February 5, 1969, a judgment was rendered in favor of Encarnacion Villanueva ordering certain defendants to pay her 35,000 pesos with 12 percent per annum interest from August 7, 1965, and other amounts, failing which a parcel of land in Quezon City would be sold at public auction. The judgment was pending appeal when, on August 7, 1972, Villanueva entered into a Conditional Assignment of Rights and Interests with Reva Raz, transferring all her rights in the judgment to Raz for 75,000 pesos payable in three installments: 22,000 pesos upon signing, 20,000 pesos within one year, and 33,000 pesos within two years, not later than August 7, 1974.

Raz paid the first two installments but refused to pay the third, claiming Villanueva had not complied with her obligation to deliver the property. Villanueva sent two letters, dated April 22, 1975 and May 13, 1975, demanding payment of the 33,000 pesos and tendering refund of the 42,000 pesos already paid, in view of rescission. On April 13, 1978, Raz filed a complaint for specific performance and damages, alleging Villanueva had reneged on her duty to deliver the property. Villanueva countered that Raz had defaulted in payment, justifying rescission under paragraph 3(h) of their agreement.

Raz argued that Villanueva incurred delay in executing the judgment and registering the property in her name, and that the two letters should not have been admitted in evidence for lack of proof of receipt and authenticity. The trial court ruled for Villanueva, and the appellate court affirmed.

Issues

• Whether or not the two letters sent by Villanueva to Raz were admissible in evidence despite the lack of proof of receipt and authenticity.
• Whether or not the rescission of the Conditional Assignment was proper, given Raz's refusal to pay the third installment and Villanueva's alleged delay in delivering the property.
• Whether or not Raz was notified of the rescission.

Applicable Provisions

Section 21 of Rule 132 provides:

Section 21. Private writing, its execution and authenticity, how proved. - Before any private writing may be received in evidence, its due execution and authenticity must be proved either: a) By anyone who saw the writing executed; b) By evidence of the genuineness of the handwriting of the maker; or c) By a subscribing witness.

This provision governs the admissibility of the two letters, which Raz challenged as private writings.

Section 23 of Rule 132 provides:

Evidence respecting the handwriting may also be given by a comparison, made by the witness or the court, with writings admitted or treated as genuine by the party against whom the evidence is offered or proved to be genuine to the satisfaction of the judge.

This provision allows the court to compare signatures to establish authenticity, which the Court applied to the letters.

Ruling

On the first issue, the Court held that the letters were admissible. Raz's invocation of Section 21 was self-defeating, because one of the modes prescribed therein is proof by evidence of the genuineness of the handwriting of the maker. The Court compared the signature of Villanueva on the Conditional Assignment, which was not disputed, with the signatures on the two letters, and found them similar. Thus, the authenticity and execution of the letters were established, making them admissible as evidence.

On the second issue, the Court held that the rescission was proper. Raz refused to pay the third installment of 33,000 pesos, which was due not later than August 7, 1974. The Court found that Raz was invoking a right not stipulated in the Conditional Assignment, namely, that the property be registered first in her name before she paid the balance. The agreement clearly provided that the balance would be paid within two years from the date of the agreement. For her refusal to pay, the contract was, pursuant to its terms, properly rescinded. The Court also noted that while there was some delay in the registration of the property in Villanueva's name, this was not entirely imputable to her, and good faith is presumed. Raz, having made a substantial investment, should have been more vigilant in protecting her interests.

On the third issue, the Court held that Raz was notified of the rescission. Even if the letters were not transmitted to her, Raz was bound by her own admission in her complaint, where she alleged that Villanueva offered to return the 42,000 pesos already paid and have the contract rescinded. This was a judicial admission that Raz could not disavow. The Court quoted Raz's allegation:

In view of plaintiff's insistence that the 33,000 pesos would be paid only after defendant had obtained ownership of the subject property and would thus be ready to execute the corresponding deed of sale, defendant instead offered to return the amount of 42,000 pesos already paid to her by plaintiff and have the contract rescinded, clearly revealing her interest not to recognize the aforesaid contract.

This admission belied Raz's claim that she had not been notified of the rescission.

Doctrine

The rescission of reciprocal obligations may be done extrajudicially where the contract expressly authorizes it, provided the party seeking rescission gives proper notice to the other party. A party who refuses to comply with a clear contractual obligation cannot invoke a right not stipulated in the agreement to justify non-performance. Private writings may be authenticated by evidence of the genuineness of the handwriting of the maker, including comparison by the court of signatures with writings admitted or treated as genuine. A judicial admission in a party's pleadings is binding and cannot be disavowed.

Disposition

The petition is denied and the challenged decision of the respondent court is affirmed, with costs against the petitioner.

Remember This

A party who refuses to pay a clearly stipulated installment cannot later claim rescission was improper by invoking a condition not found in the contract. Examiners use this case to test the requisites of extrajudicial rescission, the binding effect of judicial admissions, and the rules on authentication of private writings.