COLE V VDA.

DE GREGORIO 116 SCRA 670 (1982)
FACTS: In August 1963, parents of plaintiffs (William Cole Sr.
and Angelina Cole) entered into an agreement to buy and sell
a parcel of land with spouses Angel Gregorio and Potenciana
Casuga. Said lot was priced at P6,000 but P1,000 was paid in
advance by Cole and the balance of P5,000 was to be paid in
full after the preliminary survey of the land by a private
surveyor for the purpose of ascertaining the exact size of
the lot.

In the same month, Salanga, a land surveyor, was hired. He
conducted a survey of the land on September 24 and October
7, 1963 and submitted his survey plans to the Bureau of Lands
on June 22, 1964. Salanga left for the US. He received the
approval only on June 29, 1965.

Cole Sr. wrote two demand letters to Salanga to speed up the
process (October 20, 1964 and April 1, 1965).

William Cole Sr. – died on April 12, 1965
Angel Gregorio – died on June 3, 1965
Angelina Cole – died on January 10, 1966

May 31, 1966 – plaintiffs Cole found out that their parents had
an unpaid balance on the subject property; they tried to pay off
the balance but discovered that the property was transferred to
Gregorio’s daughter, Josefina Hufano

Gregorio’s argument: When Cole discovered that the lot only
contained an area of 23,408 square meters instead of 32,976
as stated in the Tax Declaration, Cole rescinded the contract
and Gregorio returned the P1,000 advanced payment. Cole
never took possession of the land nor registered it under their
names.

ISSUE: W/N the rescission is valid
HELD: NO. In the instant case, the Agreement to Buy and
Sell constitutes a conditional obligation (Art. 1181) since it
clearly stipulates that the balance will be paid AFTER a
surveyor has ascertained the exact size of the subject
property. The accomplishment, then, of said survey gives rise
to the acquisition of rights by the contracting party (Cole) and
the acquisition of said rights depends upon the results of the
survey. (SUSPENSIVE OBLIGATION)

If the contract was really rescinded and the P1,000 returned to
Cole a few days after the surveyor was hired, William Cole
would not have written demand letters to Salanga to finish the
survey. Furthermore, no receipt was presented by Potenciana
proving their allegations.

The prescriptive period cannot be counted from the date of
execution of the deed of promise to buy and sell where it was
stipulated that the balance of the price shall be paid after the
results of the land survey. According to the deed of promise to
buy and sell, the balance of P5,000 of the purchase price of
subject property was to be “paid in full after the preliminary
survey of the land by a private surveyor, for the purpose
of verifying whether or not said parcel of land contains
the same area as declared in the Tax declaration. Because
of this stipulation, it cannot be said that the prescriptive period
of the petitioner’s action begins on the date of they entered
into the agreement.









JACINTO V KAPARAZ 209 SCRA 246 (1992)

FACTS: Petitioner Jacinto and respondent Kaparaz entered
into an agreement in which Kaparaz agreed to sell and convey
to Jacinto a parcel of land consisting of 600 square meters for
a total amount of P1,800. Based on the agreement, Jacinto
will pay P800 as down payment upon execution of the
agreement and the balance of P1,000 shall be paid in 10
monthly installments at the rate of P100 to DBP (to take care
of the existing loans Kaparaz had with the said bank)
beginning May 10, 1966.

Paragraph 9 of the same agreement also stipulates that the
final deed of absolute sale will be executed as soon as the
estate of the Narcisa Kaparaz is settled but not later than
March 31, 1967

Upon the execution of the agreement, Jacinto paid the down
payment of P800 and was in placed in possession of the
subject property.

Jacinto’s schedule of payment:
1
st
payment: P400 paid to DBP under Domingo Kaparaz’
account
2
nd
payment: P200 on November 29, 1966
3
rd
payment: P300 on December 5, 1968
4
th
payment: P200 on December 9, 1968

Kaparaz’ argument: the sale did not materialize because
Jacinto failed to fulfill his promise to make timely payments of
the stipulated price to DBP (and as a result, Kaparaz failed to
secure the release of the mortgage on the said property). They
moved for the dismissal of the case and the annulment of sale

ISSUE: W/N respondents are entitled to rescind the
agreement
HELD: NO. In a contract of sale, the non-payment of the price
is a resolutory condition; as such, the remedy of the seller
under Art. 1191 is to exact fulfillment or rescind the contract.
However, if the object is an immovable property, said article
must be read in consonance with Art. 1592: In the sale of
immovable property, even though it may have been stipulated
that upon failure to pay the price at the agreed upon the
rescission of the contract shall of right take place, the vendee
may pay even after the expiration of that 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 instant case, Kaparaz did not complain about the delay
of the payments nor rejected their application to their account.
The claim that the payments were applied to a wrong account
is untenable. There is nothing in the agreement that stipulates
that the unpaid balance should be applied exclusively to the
agricultural loan of Kaparaz.

Finally, the delay incurred by Jacinto was but a casual or slight
breach of the agreement, which did not defeat the object of the
parties in entering into the agreement. A mere breach does
not justify rescission. The prompt payment of the monthly
amortizations of the unpaid balance of P1,000 was not a
condition precedent to the execution of the final deed of
sale.









RUSTAN PULP V CA 214 SCRA 665 (1992)
FACTS: Petitioner Rustan established a pulp and paper mill in
Baloi, Lanao Del Norte in 1966. In March 1967, respondent
Lluch (a supplier of pulp wood) proposed to supply raw
material to the company. As a result, both parties executed a
contract of sale in April 1968, whereby Rustan Pulp agrees to
buy from Lluch pulp wood raw material at the price of P30 per
cubic meter under the following conditions:
1. Rustan shall have the option to buy form other sellers
who are equally qualified and are holding valid license
to sell or dispose said material. Likewise, it shall not
buy from any other seller whose pulp woods originated
from Lluch’s lumber and/or firewood
2. Lluch has the priority to supply materials
3. Rustan shall have the right to stop delivery of the said
raw materials by the seller when supply becomes
sufficient unless the need arises, in which case Lluch is
to be given sufficient notice

In the installation of the plant’s facilities, the technical staff
recommended other suppliers. But during the test run of the
pulp mill, the machines had technical issues; as a result, the
raw material piled up and the supplier of the machinery
recommended stopping the deliveries. The suppliers were
informed to stop delivers and the letter of similar advice was
sent to the suppliers by the petitioners

Lluch sought to clarify the tenor of the letter as to whether
stoppage of delivery or termination of the contract of sale was
intended, but the query was not answered by Rustan.
Meanwhile, Lluch and the other suppliers resumed deliveries
after the series of talks between Romeo Vergara (resident
manager of Rustan) A complaint for contractual breach was
then filed.
NOTE: Even after September 30, 1968 (when the letter
advising the suppliers to stop delivery was sent), Rustan
continued accepting raw materials from other suppliers
ISSUE: W/N the stoppage of the deliveries was proper and
valid

HELD: NO. Said stipulation in the contract suggests a
condition solely dependent upon the will of the petitioners. A
purely potestative imposition such as this must be
removed from the contract without affecting the rest of
the stipulations considering that the condition relates to
the fulfillment of an already existing obligation and not to
its inception.

It is a truism in legal jurisprudence that a condition which is
both potestative and resolutory may be valid, even though the
saving clause is left to the will of the obligor as in the case of
Taylor vs. Uy Tieng Pao and Tan Liuan. However, in the
Taylor case, the factual milieu (that the machinery to be
installed in the factory did not arrive in Manila) which provided
the condition for unilateral cancellation of the contract
suggests that the proviso relates to the birth of the undertaking
and not to the fulfillment of an existing obligation.

It is true that the contract talks about the petitioner’s
prerogative but what diminishes the legal efficacy of such right
is the condition attached to it, which is dependent exclusively
on their will for which reason, the SC held that said stipulation
is inoperative pursuant to Art. 1306. It is also very unlikely that
the suspension of delivery was merely temporary since the
nature of the suspension itself is conditioned upon the
petitioner’s determination of the sufficiency of supplies at the
plant.

Lastly, petitioner’s may not avail of Art. 1267 as they continued
accepting deliveries from the suppliers. This conduct will estop
Rustan from claiming that the breakdown of the machinery
was an extraordinary obstacle to their compliance to the
prestation.





































































AGCAOILI V GSIS 165 SCRA 484 (1988)

FACTS: GSIS approved the application of appellee Agcaoili
for the purchase of a house and lot in the GSIS Housing
Project in Marikina. Said application was subject to the
conditions that he should immediately occupy said house
failure to comply would mean revocation of his award.
Agcaoili lost no time in occupying the house but he could not
stay in it because the house was uninhabitable (no ceiling,
stairs, double walling, lighting facilities, water connection,
bathroom, toilet, kitchen, drainage). Agcaoili, then, asked a
homeless friend (a certain Villanueva) to stay in the premises
as a watchman, pending the completion of the construction of
the house.

Subsequently, GSIS asked Agcaoili to pay monthly
amortizations in the amount of P35.56 and other fees.
Agcaoili paid the first monthly amortizations and incidental
fees, but refused to make further payments until and unless
GSIS completed the housing unit. Thereafter, GSIS cancelled
the award and required Agcaoili to vacate the premise. The
house and lot was consequently awarded to another applicant.
Agcaoili, then, filed before the CFI an action for specific
performance and damages. The CFI rendered in favor of
Agcaoili. GSIS appealed said judgment.

GSIS argument:
1. Said unit was sold “in the condition and state of
completion,” Agcaoili is deemed to have accepted the
same in the condition he found it when he accepted
the reward
2. Perfection of the contract of sale between GSIS and
Agcaoili was conditioned upon the latter’s immediate
occupancy of the house. Since Agcaoili failed to
comply with this condition, no contract was perfected
between them
3. Agcaoili’s act of placing Villanueva as watchman over
the premises without prior or subsequent knowledge or
consent of GSIS was a repudiation on the part of
Agcaoili of the award and a deprivation of GSIS of
reasonable rental value of the property

ISSUE: W/N the cancellation by GSIS of the award in favor of
Agcaoili just and proper

HELD: NO.It was the duty of the GSIS, as seller, to deliver the
thing sold in a condition suitable for its enjoyment by the buyer
for the purpose contemplated. There would be no sense to
require the awardee to immediately occupy and live in a shell
of a house, structure consisting only of four walls with
openings, and a roof. GSIS had an obligation to deliver to
Agcaoili a reasonably habitable dwelling in return for his
undertaking to pay the stipulated price. Since GSIS did not
fulfill that obligation, and was not willing to put the house in
habitable state, it cannot invoke Agcaoili’s suspension of
payment of amortizations as cause to cancel the contract
between them. It is axiomatic that “In reciprocal obligations,
neither party incurs in delay if the other does not comply
in a proper manner with what is incumbent upon him.

The clause in the contract the Agcaoili is supposed to occupy
said property presupposes that said property is inhabitable.
Since GSIS did not fulfill that obligation, and was not willing to
put the house in habitable state, it cannot invoke Agcaoili’s
suspension of payment of amortizations as cause to cancel
the contract between them.

Likewise, GSIS cannot blame Agcaoili for the imprecision and
vagueness of the contract since it was GSIS which caused the
contract to come into being by its written acceptance of
Agcaoili’s offer to purchase. If there is any ambiguity in the
said contract, it should be resolved against the one who
prepared it (GSIS) contracts of adhesion.


UNIVERSITY OF THE PHILIPPINES V DE LOS ANGELES
35 SCRA 102 (1970)
FACTS: On November 2, 1960, UP and ALUMCO entered
into a logging agreement whereby ALUMCO was granted
exclusive authority to cut, collect and remove timber from Land
Grant beginning December 31, 1965, extendible for a period of
5 years by mutual agreement.

As of December 8, 1964, ALUMCO incurred an unpaid amount
of P219,362.94 but despite repeated demands, it failed to pay.
UP, then, sent a notice to terminate or rescind the logging
agreement. Subsequently, ALUMCO executed an
Acknowledgment of Debt and Proposed Manner of Payments
on December 9, 1964 with the following stipulations:
3. In the event that the payments called for in Nos.1 and 2 of
this paragraph are not sufficient to liquidate the foregoing
indebtedness of the DEBTOR in favor of the CREDITOR, the
balance outstanding after said payments have been applied
shall be paid by the DEBTOR in full no later than June 30,
1965;

5. In the event that the debtor fails to comply with any of its
promises, the Debtor agrees without reservation that
Creditor shall have the right to consider the Logging
Agreement rescinded, without the necessity of any
judicial suit…

ALUMCO continued its logging operations, but again incurred
an unpaid account. On July 19,1965, UP informed ALUMCO
that it had, as of that date, considered rescinded and of no
further legal effect the logging agreement, and that UP had
already taken steps to have another concessionaire take over
the logging operation. ALUMCO filed a petition to enjoin UP
from conducting the bidding. The lower court ruled in favor of
ALUMCO, hence, this appeal.

ISSUE: W/N a court decree is necessary before UP can
rescind the contract

HELD: YES. In the first place, UP and ALUMCO had
expressly stipulated that upon default by the debtor, UP
has the right and the power to consider the Logging
Agreement of December 2, 1960 as rescinded without the
necessity of any judicial suit. As to such special stipulation
and in connection with Article 1191 of the Civil Code, the
Supreme Court, stated in Froilan vs. Pan Oriental Shipping
Co:

“There is nothing in the law that prohibits the parties from
entering into agreement that violation of the terms of the
contract would cause cancellation thereof, even without court
intervention. In other words, it is not always necessary for the
injured party to resort to court for rescission of the contract.”

The party who deems the contract violated may consider it
resolved or rescinded, and act accordingly, without previous
court action, but it proceeds at its own risk. For it is only the
final judgment of the corresponding court that will conclusively
and finally settle whether the action taken was or was not
correct in law. But the law definitely does not require that the
contracting party who believes itself injured must first file suit
and wait for a judgment before taking extrajudicial steps to
protect its interest. Otherwise, the party injured by the other's
breach will have to passively sit and watch its damages
accumulate during the pendency of the suit until the final
judgment of rescission is rendered when the law itself requires
that he should exercise due diligence to minimize its own
damages (Civil Code, Article 2203).
PALAY INC V CLAVE 124 SCRA 638 (1983)
FACTS: In March 1965, petitioner Palay Inc (through its
president Albert Onstott) and private respondent Nazario
Dumpit entered into a contract to sell a parcel of land in
Antipolo. The sale price was P23,300 with 9% interest per
annum, payable with a down payment of P4,660 and monthly
installments of P246.42 until fully paid. Said contract
provided for automatic extrajudicial rescission upon
default in payment of any monthly installment after the
lapse of 90 days from the expiration of the grace period of
one month, without need of notice and with forfeiture of
all installments paid.

Dumpit paid the down payment and several installments
amounting to P13,722.50 with the last payment made on
December 5, 1967

In 1973, Dumpit wrote petitioner offering to update all his
overdue accounts with interest and sought its written consent
to the assignment of his rights to Lourdes Dizon. However,
Palay Inc informed Dumpit that his contract to sell had long
been rescinded pursuant to paragraph 6 of the contract and
that the lot had already been resold.

Dumpit filed a complaint letter with NHA for reconveyance or
refund. NHA rendered in favor of Dumpit, finding the
rescission void in the absence of either judicial or notarial
demand

ISSUE: W/N notice or demand is not mandatory under the
circumstances and, therefore, may be dispensed with by
stipulation in a contract to sell

HELD: As held in previous jurisprudence, the judicial action
for rescission of a contract is not necessary where the contract
provides that it may be revoked and cancelled for violation of
any of its terms or conditions. However, there has to be at
least a written notice sent to the defaulter informing him of the
rescission, as stressed in the case of UP vs. Delos Angeles.

In Zulueta vs. Mariano, it was held that the extrajudicial
rescission has legal effect where the other party does not
oppose it. Reciprocal contracts may be made extrajudicially
unless successfully impugned in court. If the debtor impugns
the declaration, it shall be subject to judicial determination.

In this case, the resolution by petitioners is ineffective and
inoperative against Dumpit for lack of notice of resolution.
This is later emphasized in Section 3(b) of RA 6551 (An Act to
Provide Protection to Buyers of Real Estate on Installment
Payments).

The contention that Dumpit had waived his right to be notified
pursuant to paragraph 6 of the contract is invalid due to the
fact that the contract in question was a contract of adhesion, a
standard form of Palay Inc which Dumpit had no freedom to
stipulate. A waiver must be certain and unequivocal and
intelligently made; such waiver follows only where liberty
of choice has been fully accorded. Furthermore, it is a
matter of public policy to protect buyers of real estate on
installment payments against onerous and oppressive
conditions such as waiver of notice.

On the issue of refund, Art. 1385 provides that:
Rescission creates the obligation to return the things
which were the object of the contract, together with
their fruits, and the price with its interest;
consequently, it can be carried out only when he
who demands rescission can return whatever he
may be obliged to restore.
Neither sham rescission take place when the things
which are the object of the contract are legally in the
possession of third persons who did not act in bad
faith.
In this case, indemnity for damages may be
demanded from the person causing the loss

As consequence of the resolution by Palay Inc, rights to the lot
should be restored to Dumpit or the same should be replaced
by another acceptable lot. Since the subject property had
already been sold to a third person and there is no evidence
that other lots are still available, Dumpit is entitled to the
refund of the installments paid plus interest at 12% computed
from the date of the institution of the action.


























































AGUSTINA LIQUETTE TAN V. C.A. & SPS. SINGSON 175
SCRA 657 (1989)

FACTS: Private respondents Singsons are the owners of a
house and lot which were then for sale. Petitioner Tan together
with her agent went to see said spouses at their residence
regarding the property. After Singsons had shown Tan around
the house and had conversation about the encumbrances
and/or liens on the property, the parties finally agreed on the
price of P1.8M, with Tan to advance earnest money of
P200,000 to enable Singsons to secure the cancellation of the
mortgage and lien annotated on the title of the property and
the balance of the price to be paid by Tan on June 21, 1984.
Forthwith, Tan handed to Singsons a check for P200,000.

In turn, appellants handed to appellee a xerox copy of the title
and other papers pertaining to the property as well as an
inventory of the furnishings of the house that are included in
the sale. 3 days thereafter, Tan returned to Singsons' house
together with her daughter Corazon and one Ines, to ask for a
reduction of the price to P1.75M and Singson spouses agreed,
and so another receipt entitled "Agreement" was signed by the
parties.

The very same day that Singsons received the earnest money
of P200k, they started paying their mortgage loan with the
DBP to clear up the title of the subject property. DBP then
executed a cancellation of mortgage, which was registered
with the Registry of Property. Spouses also paid all the taxes
due and in arrears on the property.

Appellee accompanied by her daughter Corazon and her
lawyer, Atty. Vicente Quitoriano, went to Baguio City to inquire
about the status of the property and Singsons told her that the
DBP was taking some time processing their payments and
preparing the deed of cancellation of the mortgage. On that
occasion, the parties agreed on an extension of 2 weeks for
the execution of the deed of sale. Here, the parties' respective
versions on the matter parted ways. According to appellants, it
was appellee who asked for the extension because she was
not yet ready to pay the balance of P1.55M. On the other
hand, appellee said that it was appellants who asked for it
because the title of the property was not yet cleared. The court
below believed appellee because on said date the DBP had
not yet executed the deed of cancellation of mortgage, and no
title has yet been issued for the driveway although already fully
paid for.

Immediately, upon execution by the DBP of the deed of
cancellation of mortgage, Singsons tried to contact Tan and/or
her daughter Corazon to come to Baguio City for the formal
execution of the deed of sale, but to no avail. Instead,
appellants received a telegram from Atty. Quitoriano cancelling
the sale and demanding the return of the P200,000 earnest
money. Appellants countered with a letter of their lawyer, Atty.
Tiofisto Rodes, calling on appellee to perform her part of the
contract because "the title to the house and lot right now
suffers no imperfection or doubt.

Tan then filed a case for recovery of sum of money with
damages.

ISSUE: W/N there was substantial breach by the spouses,
meriting rescission of the contract

HELD: NO. That the power to rescind obligations is implied in
reciprocal ones in case one of the obligors should not comply
with what is incumbent upon him is clear from a reading of the
Civil Code provisions. However, it is equally settled that, in the
absence of a stipulation to the contrary, this power must be
invoked judicially; it cannot be exercised solely on a party's
own judgment that the other has committed a breach of the
obligation. Where there is nothing in the contract empowering
the petitioner to rescind it without resort to the courts, the
petitioner's action in unilaterally terminating the contract in this
case is unjustified.

Petitioner, in rescinding the sale, claims that a substantial
breach of the obligation has been committed by the private
respondents.

Nevertheless, the alleged breach of the obligation by the
private respondents, which consists in a mere delay for a
few days in clearing the title to the property, cannot be
considered substantial enough to warrant rescission of
the contract.

A thorough review of the records clearly indicates that private
respondents had substantially complied with their undertaking
of clearing the title to the property. It is a settled principle of
law that rescission will not be permitted for a slight or casual
breach of the contract but only for such breaches as are so
substantial and fundamental as to defeat the object of the
parties in making the agreement. A court, in determining
whether rescission is warranted, must exercise its discretion
judiciously considering that the question of whether a breach
of a contract is substantial depends upon the attendant
circumstances.

In this case, it is true that as of the date set for the execution of
the final deed of sale, the mortgage lien in favor of DBP
annotated in the title has not yet been cancelled as it took DBP
some time in processing the papers relative thereto. However,
just a few days after, the cancellation of the DBP mortgage
was entered by the Register of Deeds and duly noted on the
title. Time not being of the essence in the agreement, a slight
delay on the part of the private respondents in the
performance of their obligation, is not sufficient
ground for the resolution of the agreement, more so when the
delay was not totally attributable to them.

Inasmuch as the private respondents are ready, willing and
able to comply with their obligation to deliver title to the
property subject of the sale and had already demanded that
petitioner pay the full amount of the purchase price, the
petitioner must be considered as having incurred in delay. This
conclusion is warranted by the clear provision of Article 1169
of the Civil Code.

In reciprocal obligations, neither party incurs in delay if the
other does not comply or is not ready to comply in a proper
manner with what is incumbent upon him. From the moment
one of the parties fulfills his obligation, delay by the other
begins. It is basic that the breach of a contract gives the
aggrieved party under the law and even under general
principles of fairness, the right to rescind the contract or to ask
for specific performance. Petitioner having failed to comply
with her obligation of paying the balance of the purchase price
despite demands by private respondents, private respondents
were clearly entitled to their counterclaim for specific
performance, as correctly adjudged by the respondent court.

One final point, the decision of the respondent Court of
Appeals ordered execution by private respondents of the
absolute deed of sale conveying the subject property to
petitioner and payment by petitioner of the balance of the
purchase price immediately upon finality of such judgment.
However, under the third paragraph of Article 1191 of the Civil
Code, the Court is given a discretionary power to allow a
period within which a person in default may be permitted to
perform his obligation. Considering the huge amount of money
involved in this sale, the Court, in the exercise of its sound
discretion, hereby fixes a period of 90 days within which
petitioner shall pay the balance of the purchase price
amounting to Pl.55M plus interest thereon at the legal rate
from finality of this judgment until fully paid. After such
payment has been made, the private respondents are ordered
to sign and execute the necessary absolute deed of sale in
favor of petitioner.

12

MARGARITA SURIA V IAC 151 SCRA 661 (1987)

FACTS: Respondents are the owners of a parcel of land. They
entered into a contract denominated as DEED OF SALE WITH
MORTGAGE, with herein petitioner Suria. They allege that the
petitioners violated the terms and conditions of the contract by
failing to pay the stipulated installments and in fact only one
installment due in July 1975 (paid very late in the month of
September, 1975) was made. Respondents claim that repeated
verbal and written demands were made by them upon the
petitioners for the payment of the installments, but petitioner for no
justifiable reason failed to comply.

Petitioners filed a motion to dismiss complaint, alleging that
respondents are not entitled to the subsidiary remedy of rescission
because of the presence of remedy of foreclosure in the Deed of
Sale with Mortgage

ISSUE: W/N rescission is proper

HELD: NO. The respondent court rejected the petitioners' reliance
on paragraph (H) of the contract which grants to the vendors
mortgagees the right to foreclose "in the event of the failure of the
vendees-mortgagors to comply with any provisions of this
mortgage." According to the appellate court, this stipulation merely
recognizes the right of the vendors to foreclose and realize on the
mortgage but does not preclude them from availing of other
remedies under the law, such as rescission of contract and
damages under Articles 1191 and 1170 of the Civil Code in
relation to Republic Act No. 6552. The appellate court
committed reversible error. Art. 1191 on reciprocal
obligations is not applicable under the facts of this case.

RESOLUTION V. RESCISSION
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, and
Article 1191 may be scanned without disclosing anywhere that the
action for rescission thereunder is subordinated to anything other
than the culpable breach of his obligations by the defendant. 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. As expressed in the old Latin aphorism: "Non
servanti fidem, non est fides servanda," Hence, the reparation of
damages for the breach is purely secondary.

On the contrary, in the rescission by reason of lesion or
economic prejudice, the cause of action is subordinated to the
existence of that prejudice, because it is the raison d 'etre as well
as the measure of the right to rescind. Hence, where the
defendant makes good the damages caused, the action cannot be
maintained or continued, as expressly provided in Articles 1383
and 1384. But the operation of these two articles is limited to the
cases of rescission for lesion enumerated in Article 1381 of the
Civil Code of the Philippines, and does not apply to cases under
Article 1191.

The petitioners' breach of obligations in this case is not with
respect to the perfected contract of sale but in the obligations
created by the mortgage contract. The remedy of rescission is not
a principal action retaliatory in character but becomes a subsidiary
one which by law is available only in the absence of any other
legal remedy. (Art. 1384, Civil Code). Foreclosure here is not only
a remedy accorded by law but, as earlier stated, is a specific
provision found in the contract
between the parties.

The petitioners are correct in citing this Court's ruling in Villaruel v.
Tan King where we Stated: At the outset it must be said that since
the subject-matter of the sale in question is real property, it does
not come strictly within the provisions of article 1124 of the Civil
13

Code, but is rather subjected to the stipulations agreed upon by
the contracting parties and to the provisions of Article 1504 of the
Civil Code. The "pacto comisorio" of "ley comisoria" is nothing
more than a condition subsequent of the contract of purchase and
sale. Considered carefully, it is the very condition subsequent that
is always attached to all bilateral obligations according to article
1124; except that when applied to real property it is not within the
scope of said article 1124, and it is subordinate to the stipulations
made by the contracting parties and to the provisions of the article
on which we are now commenting" (article 1504).

Now, in the contract of purchase and sale before us, the parties
stipulated that the payment of the balance of P1,000 was
guaranteed by the mortgage of the house that was sold. This
agreement has the two-fold effect of acknowledging indisputably
that the sale had been consummated, so much so that the vendee
was disposing of it by mortgaging it to the vendor, and of waiving
the pacto comisorio, that is, the resolution of the sale in the event
of failure to pay the P1,000 such waiver being proved by the
execution of the mortgage to guarantee the payment, and in
accord therewith the vendor's adequate remedy, in case of
nonpayment, is the foreclosure of such mortgage.

There is, therefore, no cause for the resolution of the sale as
prayed for by the plaintiff. His action, at all events, should have
been one for the foreclosure of the mortgage, which is not the
action brought in this case. Article 1124 of the Civil Code, as we
have seen, is not applicable to this case.
































Sign up to vote on this title
UsefulNot useful