Cannu vs.

CA (Requisites for Rescission)

495 Scra 80
Galang sold a house and lot to Cannu for P120,000. In addition to the money paid, Cannu also assumed
the mortgage on said house and lot. Cannus were only able to pay P75, 000 and they also failed
to regularly pay NHMFC, the mortgagee of said house and lot.
Galang paid NHMFC in full amount to settle the obligation. Cannu opposed the release of title to Galang
in view of their sale.
Was the breach substantial to warrant rescission and is this a rescission under 1383? YES, NO
In the case at bar, we find petitioners failure to pay the remaining balance of P45,000.00 to be
substantial. Even assuming arguendo that only said amount was left out of the supposed consideration of
P250,000.00, or eighteen (18%) percent thereof, this percentage is still substantial.
Taken together with the fact that the last payment made was eighteen months before Galang paid the
outstanding balance of the mortgage loan with NHMFC, the intention of Cannu to renege on their
obligation is utterly clear.
The rescission on account of breach of stipulations is not predicated on injury to economic interests of the
party plaintiff but on the breach of faith by the defendant, that violates the reciprocity between the parties.
It is not a subsidiary action. (Art. 1383) Article 1191 rescission applies.
This rescission is a principal action retaliatory in character, it being unjust that a party be held bound to
fulfill his promises when the other violates his.