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    GR No. 152092 PILIPINO TELEPHONE Vs RADIOMARINE NETWORK

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    Jovel Layasan
    Piltel agreed to sell a property to Smartnet. Smartnet agreed to pay a down payment and offset the remaining balance against future purchases from Smartnet. Smartnet failed to pay the remaining balance. Piltel returned part of the down payment to Smartnet. Smartnet requested the return of the rest of the down payment. The court held that since Smartnet failed to pay the full purchase price, the contract was automatically rescinded. This placed an obligation on Piltel to return the full down payment, less the forfeited amount due to Smartnet's default. Piltel recognized the rescission by previously returning part of the down payment.

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    GR No. 152092 PILIPINO TELEPHONE Vs RADIOMARINE NETWORK

    Uploaded by

    Jovel Layasan
    78 views1 page
    Piltel agreed to sell a property to Smartnet. Smartnet agreed to pay a down payment and offset the remaining balance against future purchases from Smartnet. Smartnet failed to pay the remaining balance. Piltel returned part of the down payment to Smartnet. Smartnet requested the return of the rest of the down payment. The court held that since Smartnet failed to pay the full purchase price, the contract was automatically rescinded. This placed an obligation on Piltel to return the full down payment, less the forfeited amount due to Smartnet's default. Piltel recognized the rescission by previously returning part of the down payment.

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    GR No. 152092 PILIPINO TELEPHONE vs RADIOMARINE NETWORK

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    Piltel agreed to sell a property to Smartnet. Smartnet agreed to pay a down payment and offset the remaining balance against future purchases from Smartnet. Smartnet failed to pay the remaining balance. Piltel returned part of the down payment to Smartnet. Smartnet requested the return of the rest of the down payment. The court held that since Smartnet failed to pay the full purchase price, the contract was automatically rescinded. This placed an obligation on Piltel to return the full down payment, less the forfeited amount due to Smartnet's default. Piltel recognized the rescission by previously returning part of the down payment.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    78 views1 page

    GR No. 152092 PILIPINO TELEPHONE Vs RADIOMARINE NETWORK

    Uploaded by

    Jovel Layasan
    Piltel agreed to sell a property to Smartnet. Smartnet agreed to pay a down payment and offset the remaining balance against future purchases from Smartnet. Smartnet failed to pay the remaining balance. Piltel returned part of the down payment to Smartnet. Smartnet requested the return of the rest of the down payment. The court held that since Smartnet failed to pay the full purchase price, the contract was automatically rescinded. This placed an obligation on Piltel to return the full down payment, less the forfeited amount due to Smartnet's default. Piltel recognized the rescission by previously returning part of the down payment.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    PILIPINO TELEPHONE CORPORATION vs.

    RADIOMARINE NETWORK (SMARTNET) PHILIPPINES,


    INC. G.R. No. 152092, August 04, 2010

    FACTS:

    Piltel agreed to sell to Smartnet a 3,500-square meter lot, known as the Valgoson Property, in
    Makati City for P 560 million. Smartnet agreed to pay Piltel P 180 million as down payment
    with the balance of P 380 million to be partly set off against the obligations that Piltel was to
    incur from its projected purchase of cellular phones and accessories from Smartnet.
    Smartnet agreed to settle any unpaid portion of the purchase price of the land after the set
    off on or about April 30, 1997.

    The parti es also agreed on a rescission and forfeiture clause which provided that, if
    Smartnet fails to pay the full price of the land within the stipulated period and within five
    days after receipt of a notice of delinquency, it would automatically forfeit to Piltel 10% of
    the P 180 million down payment or P 18 million and the contract shall be without force and
    effect. Smartnet failed to pay the P 380 million balance of the purchase price on or about the
    date it fell due. On December 19, 1997 Piltel returned P 50 million to Smartnet, a
    portion of the P 180 million down payment that it received. Smartnet later requested Piltel
    for the return of the remaining P 130 million but the latter failed to do so. Smartnet filed a
    complaint against Piltel for rescission of their contract to sell involving the Valgoson Property or
    its partial specific performance before the Regional Trial Court (RTC) of Makati. Smartnet
    alleged, among other things, that it withheld payment of the balance of the purchase price of
    the subject property because Piltel reneged on its commitment to purchase from Smartnet
    300,000 units of cellular phones and accessories. Piltel claimed that the agreement to
    purchase cellular phones and accessories was not part of its contract with Smartnet for the
    sale of the Valgoson Property and that Piltel committed to buy equipment from Smartnet
    only on a best effort basis. For this reason, Piltel pointed out, Smartnet did not have the
    power to rescind the contract to sell the Valgoson Property and, hence, cannot invoke that
    contract’s rescission and forfeiture clause.

    ISSUE:

    Whether Smartnet can rescind the contract to sell.

    HELD:

    Smartnet’s allegations respecting fraud and breach of contract referred to what appears to be
    Piltel’s non-binding promise to buy cellular phones and accessories from Smartnet. These are
    matters independent of the parties’ agreement concerning Piltel’s sale of the Valgoson
    Property to Smartnet. All that matters is that since Smartnet failed to pay the balance of
    the purchase price, automatic rescission set in and this placed Piltel under an obligation to
    return the down payment it received, less the portion that it forfeited due to Smartnet’s
    default. Consequently, it is but proper for Piltel to fully abide by such obligation. Piltel
    cannot avoid rescission since it in fact partially abided by rescission’s consequences when it
    returned to Smartnet on December 19, 1997 a P 50 million portion of the down payment it
    received. By returning part of the down payment, it is clear that Piltel recognized that the
    contract to sell the Valgoson Property had reached the point of automatic rescission. Piltel
    argues that Smartnet cannot, as a defaulting buyer, rescind the contract to sell between
    them by the simple act of refusing to pay. But, Smartnet’s nonpayment of the full price of
    the property was not an act of rescission. It was but an event that rendered the contract to
    sell without force and effect. In a contract to sell, the prospective seller binds himself to part
    with his property only upon fulfillment of the condition agreed, in this case, the payment in
    full of the purchase price. If this condition is not fulfilled, the seller is then released from his
    obligation to sell.

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