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81158 May 22, 1992)

On 11 March 1966, petitioners and private respondents entered into an
agreement under which the private respondents agreed to sell and convey
to petitioners a portion consisting of 600 square meters of a lot located in
Davao Oriental for a total amount of P1,800.00 with a downpayment of
P800.00 upon execution of the Agreement. The balance of P1,000.00 was
to be paid by petitioners on installment at the rate of P100.00 a month to
the Development Bank of the Philippines to be applied to private
respondents' loan accounts. The pertinent portions of the Agreement read
as follows:
6. That the PARTY OF THE FIRST PART hereby agrees, promises and binds
himself to sell, cede, transfer, and convey absolutely to the PARTY OF THE
SECOND PART 600 -square meter portion of the property together with all
the improvements thereon
9. That the PARTY OF THE FIRST PART agrees and binds himself to
acknowledge receipt of every and all monthly payments remitted to the
Development Bank of the Philippines by the PARTY OF THE SECOND PART
and further agrees and binds himself to execute the final deed of absolute
sale of the 600 square meters herein above referred to in favor of the
PARTY OF THE SECOND PART as soon as the settlement or partition of the
estate of the deceased Narcisa Kaparaz shall have been consummated and
effected, but not later than March 31, 1967.
Upon the execution of the agreement, petitioners paid the downpayment
of P800.00 and were placed in possession of the portion described therein.
As to the P1,000.00 which was to be paid directly to the DBP, petitioners
claim that they had even made an excess payment of P100.00.In view of
the refusal of private respondents to execute the deed of sale, petitioners
filed against them a complaint for specific performance with the Court of
First Instance.Private respondents alleged that the sale did not materialize

because of the failure of petitioners to fulfill their promise to make timely

payments on the stipulated price to the DBP; as a result of such failure,
they (private respondents) failed to secure the release of the mortgage on
the property. They then prayed for the dismissal of the case and a
declaration that the agreement is null and void.
Are respondents entitled to rescind the agreement?
No. Since in a contract of sale, the non-payment of the price is a resolutory
condition, 13 the remedy of the seller under Article 1191 of the Civil Code
is to exact fulfillment or to rescind the contract. In respect, however, to the
sale of immovable property, this Article must be read together with Article
1592 of the same Code:
Art. 1592. In the sale of immovable property, even though it may have
been stipulated that upon failure to pay the price at the time agreed upon
the rescission of the contract shall of right take place, the vendee may pay,
even after the expiration of the period, as long as no demand for rescission
of the contract has been made upon him either judicially or by a notarial
act. After the demand, the court may not grant him a new term.
In the case at bar, there was non-compliance with the requirements
prescribed in there provisions. It is not controverted that private
respondents had neither filed an action for specific performance nor
demand the rescission of the agreement either judicially or by a notarial
act before the filing of the complaint. It is only in their Answer that they
belatedly raised the defense of resolution of the contract pursuant to
Article 1191 by reason of petitioners breach of their obligation. Moreover,
the delay incurred by petitioners was but a casual or slight breach of the
agreement, which did not defeat the object of the parties in entering in the
agreement. A mere casual breach does not justify rescission. Rescission of
the agreement was not available to private respondents.