Case Digest: Ang, et.al. vs CA, et.al., GR No. 80058

Ang, et.al. vs Court of Appeals and Lee Chuy Realty Corp., GR No. 80058, February 13, 1989

Subject: Obligations and Contracts

FACTS

Ernesto and Rosalinda Ang, brother and sister, are the owners of 3 parcels of land located at Quezon City with an aggregate area of 2,096 sq. m which they purchased at a price of P680,000.00. Negotiations were undertaken for the sale of the properties between the Ang as sellers and Lee Chuy Realty Corporation, through its president Henry Lee Chuy as buyer.

Lee Chuy issued in favor of Ang a check in the amount of P50,000.00 together with a receipt embodying the terms and conditions of their agreement indicating the agreed total price of P1,600,000. The accompanying receipt was not returned by Ang and instead another receipt prepared and signed by Ang which did not state the agreed price and forwarded to Lee Chuy. Ang demanded to Lee Chuy to pay the balance of the purchase price and failure to do so will result in the cancellation of their agreement. Lee Chuy replied that they had been ready since December to perform its part of the agreement while Ang had not yet complied with their undertaking to clear the subject properties of the obstructions thereon. Ang demanded the refund of the P 50,000.00 down payment on account of the failure of Ang to comply with their undertaking and their subsequent withdrawal from the sale.

Upon the failure of Ang to return the down payment, Lee Chuy filed a complaint for the collection of a sum of money with damages before RTC. The trial court rendered its decision in favor of Ang while CA reversed the RTC decision and held that Ang were the ones who breached the agreement.

ISSUE

Whether or not Ang breach the agreement.

RULING

Yes, Ang breach the agreement.

Under the law (Art 1191), 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 injured party may choose between fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission even after he has chosen fulfillment. If the latter should become impossible.

In this case however, such breach of the agreement by petitioner does not warrant a resolution of the contract. Rescission wig is not permitted for a slight or casual breach of the contract. Rescission may be had only for such breaches that are so substantial and fundamental as to defeat the object of the parties in making the agreement. SC holds that when petitioners refused to proceed with the sale unless private respondent agreed to pay the higher price, the petitioners thereby committed a serious breach of the agreement. Petitioners cannot increase the purchase price agreed upon without the consent of private respondent. As private respondent was willing to buy the subject property at the price of P1,600,000.00 as agreed upon and petitioners were not willing to sell unless the price is increased to P2,340,000.00, private respondent had the right to rescind the agreement as petitioners committed a serious breach of the terms of the same. But since petitioners had already sold the subject properties to Dolora Chua, they can no longer perform what was incumbent upon them under the terms of the agreement, that is, to deliver the subject property to private respondent which is another breach of their agreement, a case of "double-dealing." As a consequence of the resolution of the contract of sale, the parties should be restored to their original situation. Petitioners should, therefore, be liable to refund the P50,000.00 down payment they have received from private respondent with legal interest computed from the date of the extrajudicial demand made on March 3, 1980.