You are on page 1of 1

CASE # 10

Supercars Management and Development Corporation vs. Flores

Facts: Respondent Flores bought an Isuzu Carter Crew Cab from petitioner. The
RCBC financed the balance of the purchase price. Its payment was secured by a
chattel mortgage of the same vehicle. However, defects of the car emerged when
respondent was using it. These defects persuaded respondent Flores to rescind the
contract with petitioner and stop the payment of the balance for the aforesaid car.
As a result, RCBC bank opted to file a petition for Extrajudicial Foreclosure of Chattel
Mortgage. The car was then sold at a public auction and RCBC acquired the same. It
was later sold to a third person.

Petitioner contends that respondent has "no right to rescind the contract of sale"
because the motor vehicle in question is already in the hands of a third party.
Hence, Article 1191 can no longer be availed of by the respondent.

Issue: Whether or not, from the facts presented, Article 1191 can no longer be
availed of by respondent Flores ?

Ruling: Article 1191 is applicable. Rescission is proper if one of the parties to a


contract commits a substantial breach of its provision. It creates an obligation to
return the object of the contract. It can be carried out only when the one who
demands rescission can return whatever he may obliged to restore. Rescission
abrogates the contract from its inception and requires a mutual restitution of the
benefits received. Respondent is not obliged to return the car; while petitioner is
obliged to return what has been paid.

You might also like