Tan vs CA and Sps Mariano Singson and Visitacion

Singson

Facts:
Defendant-appellants (private respondents) spouses owned
the house and lot at Baguio City which was offered for sale.
Plaintiff-appellee (petitioners) decided to purchase the said
property on the agreed amount of P1.8M which was reduced
to P1.75M later on, in which appellee to advance earnest
P200k to enable appellants to secure the cancellation of the
mortgage and lien associated to the property. Spouses
appellants upon receipt of the P200k immediately paid the
mortgage loan with DBP to clear up title of the property,
paid all taxes due, and paid in full the cost price of the
public land awarded to spouse Visitacion Singson (wife).
Balance will be paid upon execution of the deed of sale.
However, when appellee together with her daughter and
lawyer came to the appellants to inquire the status of the
property, appellants informed her that they cannot execute
yet the deed of sale for the reason that DBP has not yet
finished processing the cancellation of mortgage. They
asked for 2-week extension. Appellants contacted appellee
for the execution of the deed of sale after DBP executed the
deed of cancellation of mortgage. Instead appellee informed
them thru her lawyer that she is cancelling the contract and
demanding the return of the P200k earnest money. She then
filed in the court a case for recovery of sum of money with
damages. She alleges that appellants dealt the sale in bad
faith.
RTC decided in favor of plaintiff-appellee (petitioner Tan) by
ordering rescission of the contract and return of the P200k

with 12% interest plus damages. CA reversed and set aside

decision of RTC and ruled in favor of defendant-appellant
(private respondents). Petitioner alleges that CA erred in its
decision that private respondents had not breached the
contract thereby no basis for her in rescinding the contract
pursuant to Article 1191 of the Civil Code.
Issue: WON plaintiff-appellee (petitioner) can rescind
contract on the ground that defendant-appellant (private
respondent) breached the same?
Ruling: No, petitioner cannot rescind contract. SC ruled in
favor of private respondents, modified decision of CA by
giving petitioner 90 days to pay balance of the contract
price.
Grounds:

Alleged breach of obligation of private respondent

which consists of mere delay for a few days
cannot be considered substantial enough to
warrant rescission of the contract.
It is a settled principle that the rescission of
contract will not be permitted if its only a slight or
casual breach of contract as in the case at bench,
not substantial enough as to defeat the object of
the parties in making the agreement. It has been
established that private respondents complied
with their obligation by immediately processing
the deed of cancellation of mortgage in DBP,
paying all taxes accrued and payment in full of the
public land awarded to the wife. The delay for a
few days was not attributed to the private
respondents but to DBP and is stated that if the
fulfillment of a conditional obligation depends
upon a third party and not on the will of the

obligor, the obligors part of the contract is

deemed complied with. In this case, it is the
petitioner that has incurred delay not the private
respondents.

Petitioners consent was not vitiated by fraud

Private respondents did not represent to petitioner

that the property was free from encumbrances
and liens. In fact, petitioner was informed of the
mortgage in DBP that is why she was asked to
give earnest money P200k and was given a copy
of the title with memorandums of encumbrances
written at the back of the title.