Laperal and Filipinas Gold &Country Club Inc. vs Solid Homes Inc.

(June 2005) Facts: Filipinas Golf and Country Club Inc. (FGCCI), Oliverio Laperal, entered into a Development Management Agreement with Solid Homes Inc. Under the terms and conditions of the Agreement and Supplement, Solid Homes Inc., undertook to convert at its own expense the land subject of the agreement into first-class residential subdivision, in consideration of which Solid Homes will get 45% of the lot titles of saleable area. Solid Homes requested Laperal to furnish it with the owners duplicate copies of Torrens titles covering the land in order to facilitate the processing of Solid Homes application for a license to sell. Laperal did not comply. The parties canceled the aforementioned Agreement and in lieu thereof the parties entered into 2 contracts identically denominated Revised Agreements that omitted the obligation to provide for duplicate copies of the titles. Solid Homes persisted in the delivery of the titles. Solid Homes reiterated that without the titles they would not be able to comply with the rest of the undertakings. FGCCI then served Solid Homes notices of rescission of the Revised Agreements with the demand to vacate the subject properties and yield possession thereof to them. Issue: W/N the termination of the Revised Agreement and Addendum, because of contractual breach committed by Solid Homes, carried with it the effect provided under Art. 1385 of the Civil Code that is mutual restitution. Held/Ratio: Yes, Mutual restitution is required in cases involving rescission under Art.1191. Art. 1385 of the Civil Code expressly and clearly states that rescission creates the obligation to return the object of the contract, together with their fruits, and the price with its interest, the court finds no justification to sustain petitioners position that Art. 1385 does not apply to rescission under Art. 1191. As a consequence of the resolution by FGCCI, rights to the lot should be restored to Solid Homes or another acceptable lot should replace the same. Considering that the property has been sold to a third person. Solid Homes is entitled to refund of installments plus interest. Relevant Provisions: Art. 1191. 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 Art. 1385. 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 Prepared by: Abi Continuado and Apple Lentejas