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Cortes vs. Villa Esperanza: Contract Rescission

Cortes entered into a contract to sell several lots to Villa Esperanza Development Corporation for P3.7 million. The corporation paid P1.2 million but Cortes refused to deliver the deed, claiming the balance was unpaid. Both parties were found to be in delay of their reciprocal obligations, as Cortes did not deliver the deed in exchange for payment, and the corporation did not pay the full balance. The court ruled that this mutual delay canceled out the effects of default, and affirmed the court of appeals decision to rescind the sale contract.

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Rolan Klyde Kho Yap
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1K views1 page

Cortes vs. Villa Esperanza: Contract Rescission

Cortes entered into a contract to sell several lots to Villa Esperanza Development Corporation for P3.7 million. The corporation paid P1.2 million but Cortes refused to deliver the deed, claiming the balance was unpaid. Both parties were found to be in delay of their reciprocal obligations, as Cortes did not deliver the deed in exchange for payment, and the corporation did not pay the full balance. The court ruled that this mutual delay canceled out the effects of default, and affirmed the court of appeals decision to rescind the sale contract.

Uploaded by

Rolan Klyde Kho Yap
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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CORTES VS.

CA AND VILLA ESPERANZA DEVELOPMENT CORPORATION

G.R. NO. 126083, 12 JULY 2006

FACTS:

Cortes entered into a contract of sale with the Corporation for the sale of several lots
worth P3,700,000 and executed a Deed of Absolute Sale. The Corporation advanced payment of
P1,213,000 but Cortes retained the Deed for notarization. Upon the Corporation’s demand for
specific performance, Cortes refused to deliver the Deed alleging that the balance was yet to be
paid resulting in his failure to pay his lessees the disturbance fees causing the latter’s refusal to
pay their rent. He thus prayed that the Corporation to pay the outstanding balance plus interest
otherwise to cancel the sale.

The trial court rendered a decision rescinding the sale but the Court of appeals reversed
its decision.

ISSUE:

Whether or not there is delay in the performance of the parties’ obligation


that would justify the rescission of the contract.

HELD:

Yes, both parties were in delay. Considering that their obligation was reciprocal,
performance thereof must be simultaneous. The mutual inaction of the parties gave rise to
compensation morae because neither completed their part in their reciprocal obligation this
mutual delay of the parties cancels out the effects of default such that it is as if no one is guilty
of delay.

Wherefore, the petition is DENIED. The decision of the Court of Appeals is affirmed.

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