Nov 29, 2009

Civil Law 2- ObliCon- Ernesto Ang and Rosalinda Ang vs. Court of Appeals and Lee Chuy Realty Corporation

This case is with regard to Art 1170 of the NCC- Damages

Ernesto Ang and Rosalinda Ang vs. C.A. and Lee Chuy Realty Corporation
GR No 80058 13February 1989

Facts:
On December 1979 Lee Chuy Realty Corporation (buyer) issued in favour of Ernesto and Rosalinda Ang (seller), MBTC check in the amount of 50,000.00 as initial down payment for the purchase of the property. In the receipt that was accompanied the payment it supposedly embodied the terms and conditions of their agreement. This accompanying receipt was not returned and instead the buyers where sent another receipt prepared and signed by the Angs. The first receipt indicated the purchase price of 1.6 million while the new receipt did not. On January 12, 1980 the seller informed the buyer that they only have until January 24,1980 to pay the balance of the purchase price, with which the failure to do so will result in the cancellation of their agreement.
In response the buyers duly informed the sellers that they have been ready to comply with the obligation, while the sellers have not yet complied with their obligation to clear the subject properties of the obstructions thereon. By March 3, 1980 the buyers through their counsel, demanded for the refund of the down payment on account of the failure of the sellers to comply with their obligations, and their subsequent withdrawal from the sale. After the failure of the sellers to return the 50,000.00 the buyers filed a complaint for the collection of a sum of money plus damages before the RTC. The RTC decided in favour of the sellers. On appeal, the Court of Appeals overturned the decision of the RTC and held that it was the sellers that committed the breach of agreement.

Issue:
Was the court of Appeals correct in holding the Angs liable for breach of the agreement?

- Yes, as was shown the sellers breached the agreement when they failed to fulfil the obligation incumbent upon them namely: (1) That seller will undertake to remove and clear the subject property of all occupants and obstructions within the month of December 1979 and (2) That when the subject property is cleared of all occupants and obstructions, the seller shall deliver a deed of absolute sale in favour of private respondent with all pertinent papers necessary for the issuance of a certificate of title in the name of the buyer.
- It was the failure of the seller to comply with aforementioned conditions of the agreement that caused the delay in the payment of the obligation of the buyer (which is to pay the balance of the total payment on or before January 24, 1980).  this was merely a slight breach of agreement and does not merit a rescission of the contract
- Furthermore, the seller refused to proceed with the sale unless the buyer agreed to the higher price of 2,340,000.00 the seller with this action committed a serious breach of agreement. There already existed a perfected contract of sale between the parties and the purchase price was set at 1,600,000.00. The seller cannot increase the price that was agreed upon, without the consent of the buyer.  the disagreement with the price due to the seller’s refusal to sell means that it is a serious breach of contract and that it grants the buyer the right to rescind the agreement

Held:
The decision of the Court of Appeals is Affirmed. (As a consequence of the resolution of the sale, the parties should be restored to their original situation. Seller should refund the down payment with legal interest from the date of the extra-judicial demand made on March 3, 1980.)

Obligations and Contracts terms:
Reciprocal Obligations- The power to rescind is implied and any of the contracting parties may, upon non-fulfilment by the other party of his part of the obligation, resolve the contract. It shall not be permitted for slight or casual breaches of contract. It may only be granted on breaches that are so substantial and fundamental as to defeat the object of the parties making the agreement.

I hope this helps.

Jeff David

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