REPUBLIC OF THE PHILIPPINES

COURT OF APPEALS
MANILA

NEMIA S. ARCILLA,
Plaintiff-Appellee,

~ versus ~ CA G.G. NO. CV 82760

SPS. FABIAN S. DAHAN, SR.

and TERESITA C. DAHAN,
Defendants-Appellants.
x-----------------------------------x

APPELLANTS’ REPLY BRIEF

COME NOW the defendants-appellants, through counsel, in reply

to plaintiff-appellee’s brief, to this Honorable Court, most respectfully

states that:

DISCUSSION

1. The main thrust of plaintiff-appellee’s complaint is that the

defendants-appellants violated the Sale Agreement executed

between the parties to this case, which she believes entitles her to

seek its cancellation.

Appellants’ Reply Brief
Page 2

In considering this issue, it may not be amiss to examine the terms

of the said Sale Agreement (Exhibit B). It provides:

“1. That the total payment of PESOS: TWO HUNDRED

FORTY THOUSAND (P240,000.00) shall be paid in
installment basis:

2. That the initial payment of PESOS: SEVENTY

THOUSAND (P70,000.00) shall be paid on or before
March 23, 1993;

3. That the remaining balance of PESOS: ONE

HUNDRED SEVENTY THOUSAND (P170,000.00)
shall be paid in four (4) payments within 2 years from
the date this contract signed.”

It is immediately apparent that while the parties agreed to a

specific date and amount for the initial payment of the purchase

price, they were not very particular as far as the payment of the

remaining balance of P170,000.00 is concerned. They merely

agreed that said amount should be paid in four (4) payments

within 2 years from March 26, 1993. Significantly, they did not

specify the dates the four installment payments would fall due and

the amounts each installment would be. The ultimate intention of

the parties was for full payment to be made within two years from

May 26, 1993. Thus, when the defendants-appellants paid the

balance of the purchase price in several installments at varying

amounts, defendants-appellants were really doing so in

conformity with the agreement. In fact, the plaintiff-appellee knew

Appellants’ Reply Brief
Page 3

that defendants-appellants were paying in accordance with the

agreement because she accepted the payments without expressing

any protest or objection. She clearly knew that defendants-

appellants were not violating the Sale Agreement. It is significant to

note that in fourteen (14) installments paid by the defendants-

appellants, it was the plaintiff-appellee herself who even requested

for payments which she intended to use to defray the cost of the

ongoing construction of her house (TSN June 23, 2003, pages 50-

51).

Knowing fully well that the defendants-appellants were paying in

accordance with their intention and agreement, the plaintiff-

appellee cannot now turn around and charge the defendants-

appellants with violation of the same agreement before the courts

of law to suit her purposes. It is basic that a person, with full

knowledge of the facts shall not be permitted to act in a manner

inconsistent with his former position or conduct to the injury of

another, a rule of judicial policy, the legal outgrowth of judicial

abhorrence so to speak, of a person's taking inconsistent positions

and gaining advantages thereby through the aid of courts (Joaquin

Lopez vs. Enrique P. Ochoa, G.R. No. L-7955, May 30, 1958).
Appellants’ Reply Brief
Page 4

But even assuming, just for the sake of argument, that

defendants-appellants’ installment payments were irregular or

defective as claimed by plaintiff-appellee, considering that plaintiff-

appellee accommodated defendants-appellants by accepting the

latter's delayed payments, her right to exact strict performance

must be deemed to have been waived under Article 1235 of the

Civil Code, which provides:

“Article 1235. When the obligee accepts the performance,

knowing its incompleteness or irregularity, and without expressing
any protest or objection, the obligation is deemed fully complied
with.”

Indeed, a creditor cannot object because of defects in performance

resulting from his own acts or directions. And where a party makes

particular objections to the sufficiency or performance, he is

estopped to later set up other objections (Tolentino, Civil Code of

the Philippines, Vol. IV, pages 278-279).

2. In the basic brief of defendants-appellants, they argued that the

lower court erred in ruling that they failed to comply with their

obligation considering that -

2.1. Evidence in this case disclose that the defendants-appellants

had paid the plaintiff-appellee the total amount of

Appellants’ Reply Brief
Page 5

P190,370.00, including advances made by defendants-

appellants to plaintiff-appellee in the form of store credits.

2.2. With respect to the balance of P49,630.00, defendants-

appellants proved that they properly tendered the amount to

plaintiff-appellee in September 1994 and in December 2000.

On those two occasions, the plaintiff-appellee refused to

accept the offer.

2.3. Under these circumstances, the defendants-appellants must

be considered to have substantially complied with their part

of the obligation. The modern rule sanctions a substantial

performance of contractual relations. The law now looks to

the spirit of the contract and not to its letter. Even though a

party is not entirely free from fault or omission, the courts

will not turn him away if he has in good faith made

substantial performance (Arthur F. Allen vs. The Province of

Tayabas, G.R. No. L-12283, July 25, 1918). Under Article

1234 of the Civil Code, where the obligation has been

substantially complied with, the obligor may recover as

though there had been strict and complete fulfillment.

Appellants’ Reply Brief
Page 6

3. In attempting to counter the above arguments raised by the

defendants-appellants under their First Assignment of Error, the

plaintiff-appellee harps on the erroneous conclusion that

defendants-appellants’ failure to go to the plaintiff-appellee to pay

their the balance of the purchase price indicates their

unwillingness to pay. This is absolutely misleading. In the first

place, evidence in the case shows that it was always the plaintiff-

appellee who went to the house of the defendants-appellants to

collect the installment payments of the purchase price of the

property in question. In fact, at the risk of being repetitious, in

fourteen (14) installments paid by the defendants-appellants, it

was the plaintiff who requested for said payments that she would

use in the ongoing construction of her house.

Secondly, as early as September 1994, or about six (6) months

before the term of the payment, plaintiff-appellee had already

declared that she is canceling the contract the contract and will get

back the property. For defendants-appellants to go to her and offer

payment would obviously be futile as she is expected to refuse any

offer for payment.

The plaintiff-appellee faults the defendants-appellants for not

making the appropriate payment after the plaintiff-appellee

Appellants’ Reply Brief
Page 7

declared her intention to cancel the agreement. She conveniently

forgets, however, that on three (3) separate occasions (September

1994, December 2000 and during the conference before the Office

of the Barangay Chairperson), the defendants-appellants tendered

payment of the balance of the purchase price, but these offers were

unreasonably refused by the plaintiff-appellee.

4. In their third assignment of error in their basic brief, herein

defendants-appellants argued that the lower court erred in

confirming the rescission of the Sale Agreement by the plaintiff-

appellee because –

4.1. there was no substantial breach of the obligations of the

defendants-appellants, who had always been willing, ready

and able to comply therewith. In support thereof, the

defendants-appellants cited the case of Development Bank of

the Philippines vs. Court of Appeals, October 30, 2000, 344

SCRA 492, where it was ruled that “Rescission of a

contract will not be permitted for a slight or casual

breach, but only such substantial and fundamental

breach as would defeat the very object of the parties in

making the agreement.”

Appellants’ Reply Brief
Page 8

4.2. the plaintiff-appellee cannot extrajudicially and unilaterally

rescind the Sale Agreement, as there is no express

stipulation therein authorizing it. This was the ruling in the

case of Sps. Benito vs. Agapita Saquitan-Ruiz, 394 SCRA 250,

where the Supreme Court pronounced that “A seller cannot

unilaterally and extrajudicially rescind a contract when there

is no express stipulation authorizing it. Unilateral rescission

will not be judicially favored or allowed if the breach is not

substantial or fundamental to the fulfillment of the

obligation.”

5. In attempting to traverse defendants-appellants arguments, the

plaintiff-appellee argued that the defendants-appellants had not

substantially complied with their obligation. First, she claims that

the case of DBP vs. Court of Appeals cited by the defendants-

appellants to support his position that there was substantial

performance of his obligation, is not applicable to this case,

because in the DBP case, the Private Respondents (Spouses Nilo

and Esperenza Dela Peña) therein made regular payments to DBP;

and that the principal obligation involved therein was already paid.

The plaintiff-appellee is wrong on both counts.

Appellants’ Reply Brief
Page 9

5.1. In the same way that the private respondents in the DBP

case made regular payments, so did the defendants-

appellants in this case. They were making regular payments

to the plaintiff-appellee in accordance with the terms of the

contract, and the latter accepted all said payments without

objection.

5.2. The plaintiff-appellee tries to mislead this Honorable Court

when it alleged that in the DBP case, the private respondents

principal obligation was already paid. It must be pointed out

that while the total payment of the private respondents in

that case exceeded the principal obligation, their principal

obligation was by no means paid. Thus, the Supreme Court

ruled:

“Private respondents cannot be allowed to renege on their

obligation on the ground that what they had paid was in
excess of the principal obligation in the amount of
P207,000.00. Nor can private respondents demand
fulfillment of petitioner’s obligation to execute a final deed
of sale and deliver the title to the land in their favor when
they have not yet fully paid their principal obligation with
the accrued interests thereto.” (Underlining ours)

6. The plaintiff-appellee insists that the failure of the defendants-

appellants to pay their obligation in full constitutes a serious

breach that may be a ground for rescission. The supposed

Appellants’ Reply Brief
Page 10

breaches committed by the defendants-appellants, according to the

plaintiff-appellee, is that they paid only P60,000.00 instead of the

agreed P70,000.00 as initial payment; they paid the initial

payment on March 26, 1993, instead of March 23, 1993; they

failed to pay the balance in four (4) installments. The defendants-

appellants have sufficiently contravened and explained the alleged

breaches in their basic brief. However, assuming that the imagined

breaches are true, they do not warrant a resolution of the contract.

These supposed breaches are merely slight or casual breaches

that do not prejudice the sale of the property, especially in the

light of the fact that the plaintiff-appellee accepted all the

payments tendered by the defendants-appellants. While it is

true that in reciprocal obligations, such as the Sale Agreement in

this case, the power to rescind is implied and any of the

contracting party may, upon non-fulfillment by the other party of

his part of the obligation, resolve the contract, rescission will not

be permitted for a slight or casual breach of the contract.

Rescission may be had only for such breaches that are so

substantial and fundamental as to defeat the object of the parties

in making the agreement. The rescission of the contract may not

be allowed on this ground alone (Ernesto R. Ang and Rosalinda Ang

vs. The Court of Appeals and Lee Chuy Realty Corp., G.R. No.

80058, February 13, 1989).

Appellants’ Reply Brief
Page 11

7. The plaintiff-appellee contends that she had already complied with

all her obligation under the Sale Agreement, including the delivery

of the property in question. This is not true. She could not have

conveyed the property to the defendants-appellants because as

March 26, 1995, the time when the latter were supposed to

complete their payment on the purchase price, the certificate of

title over the property was not yet issued in her name. The

certificate of title was issued only on April 26, 1996. Thus, the

defendants-appellants could not have been in delay if the plaintiff-

appellee was not ready to comply in a proper manner with what

was incumbent upon her.

8. As gleaned from the above discussion, there was no legal basis for

the plaintiff-appellee to unilaterally cancel the Sale Agreement for

the reason that this remedy was not stipulated in said agreement

and because there was no legal basis for its exercise. Accordingly,

there is just cause for fixing the period within which defendants

may comply with their obligation. Article 1592 of the Civil Code

does not find application here because said provision presupposes

the existence of valid grounds for rescission, which is not the case

here.
Appellants’ Reply Brief
Page 12

PRAYER

WHEREFORE, premises considered, it is respectfully prayed that

the DECISION appealed from be reversed and that another one be

rendered: (a) DISMISSING the Complaint; and, (b) on the counterclaims,

ordering plaintiff to convey or execute a Deed of Absolute Sale over the

portion of lot covered by Original Certificate of Title NO. 2701 (Exhibit

“A”), with an area of 82 square meters, where defendants-appellants’

house now stands, upon payment by defendants-appellants of the

balance of the purchase price; (c) Ordering plaintiff-appellee to pay the

defendants-appellants moral and exemplary damages in the amounts of

P100,000.00 each, and actual damages in the form of attorney’s fees and

expenses of litigation in the amount of no less than P50,000.00, or in

such amounts as the Honorable Court may find just and equitable.

Appellants pray for such other relief and remedies just and

equitable in the premises.

Quezon City for the City of Manila, June 6, 2005.

NAPOLEON M. MALIMAS
Counsel for Defendants-Appellants
Suite 703 Fil-Garcia Tower, Kalayaan Avenue
Diliman, Quezon City
PTR No. 943814 C – 1/05/05 – Makati City
IBP LRN No. 04465; SC Roll No. 25022
Appellants’ Reply Brief
Page 13
Appellants’ Reply Brief
Page 14

TWO (2) COPIES FURNISHED TO:

Atty. JONATHAN R. AMOROSO

Counsel for Plaintiff-Appellee
Rm. 506 Merchant Square
Condominium
E. Rodriguez cor. Mabolo St.
New Manila, Quezon City

Explanation: Service upon adverse party’s counsel is made through

registered mail, as personal service is not practicable due to
messengerial, personnel and time constraints.

NAPOLEON M. MALIMAS