GR 81158; (May, 1992) (Digest)
G.R. No. 81158 May 22, 1992
OSCAR A. JACINTO and LIBRADA FRANCO-JACINTO, petitioners, vs. ROGELIO KAPARAZ, RAUL KAPARAZ and ROSE MARIET KAPARAZ, respondents.
FACTS
On March 11, 1966, petitioners Oscar A. Jacinto and Librada Franco-Jacinto and private respondents Rogelio Kaparaz, Raul Kaparaz, and Rose Mariet Kaparaz entered into an agreement for the sale of a 600-square-meter portion of a lot covered by TCT No. T-3694 for a total price of P1,800.00. A downpayment of P800.00 was paid upon execution. The balance of P1,000.00 was to be paid by petitioners directly to the Development Bank of the Philippines (DBP) in ten equal monthly installments of P100.00 each, starting May 10, 1966, to be applied to respondents’ loan. The agreement stipulated that respondents would execute the final deed of absolute sale as soon as the settlement of the estate of Narcisa R. Kaparaz was consummated, but not later than March 31, 1967. Petitioners were placed in possession. Petitioners made payments to DBP totaling P700.00, which, with the P800.00 downpayment, amounted to P1,500.00, and they claimed an overpayment of P100.00. Respondents refused to execute the deed of sale, alleging petitioners failed to make timely payments, causing respondents to pay off their DBP loan themselves. Petitioners filed a complaint for specific performance. The trial court ruled in favor of petitioners, declaring them owners and ordering reconveyance. The Court of Appeals reversed, dismissed the complaint, declared the agreement extinguished, and ordered respondents to reimburse P500.00 to petitioners.
ISSUE
Whether the Court of Appeals erred in declaring the agreement extinguished due to petitioners’ alleged breach for failing to make timely installment payments to the DBP.
RULING
Yes. The Supreme Court reversed the Court of Appeals and reinstated the trial court’s decision. The Court held that petitioners’ delay in payment was not a substantial breach warranting rescission. Petitioners had paid P1,400.00 (77.77%) of the purchase price within the stipulated period and were in fact in overpayment. The prompt payment of installments was not a condition precedent to the execution of the final deed. Respondents’ failure to protest the delays and their acceptance of payments constituted a waiver of their right to rescind. The delay was merely casual or slight and did not defeat the object of the agreement. Rescission was not available to respondents. The Court further ruled that the Court of Appeals erred in applying the second sentence of Article 1191 (formerly 1192) of the Civil Code on reciprocal obligations, as that provision applies only when it cannot be determined which party first breached the contract.