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Article 1191

March 25, 2016


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.

The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek
rescission, even after he has chosen fulfillment, if the latter should become
impossible.

The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period.

This is understood to be without prejudice to the rights of third persons who have
acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage
Law. (1124)

May kapangyarihang bawiin o ipawalang bisa ang isang kasunduan na ipinapahayag sa


palitan ng obligasyon, kung ang isa sa may pananagutan ay hindi tumupad sa mga
nrarapat niyang gawin.

Ang nasugatang partido ay maaring pumili sa pagsasakatuparan o ang pag-bawi ng


obligasyon na may parehas na katapat na kabayaran para sa danyos. Maaring piliin
ang ikalawa kung an ang pagsasakatuparan ng obligasyon ay imposible.

Ang hukuman ang mag uutos ng pagpapawalang bisa na hinihingi maliban kung may
makatarungang dahilan para payagan ang pagtatakda ng tiyak ng panahon.

Ito ay nauunawaan ng walang pinsala sa karapatan ng taong walang kinalaman na


siyang nakakuha ng pag mamay-ari ng bagay na naaayon sa Article 1385 at 1388 at ng
Mortgage Law.

Rescission referred to in this Article is RESOLUTION or cancellation of the


contract which is:

A principal action that is based on breach of a party, (while rescission under Art.
1383 is a subsidiary action limited to cases of rescission for lesion under Art. 1381 of
the New Civil Code).
Abrogate and undo a contract from the beginning

Annul the contract and Restore the parties to the relative positions which they
would have occupied if no such contract had ever been made.

Requires mutual restitution of the benefits received

Breach of Contract – Failure of a party without legal reason/excuse to comply


with the terms of a contract incumbent upon him.

Breach of Faith – the obligor’s failure to comply with an obligation already extant,
not a failure of a condition to render binding that obligation. There can be no
rescission of an obligation that is non-existent, considering that
the suspensive condition therefore has not yet happened.

Application:

-Article on applies to Reciprocal Obligations where both parties are mutually Debtor &
Creditor of each other in the same transaction.

[ill. A Contract of Sale of a Brand New Laptop is entered into between Jericho (Buyer)
and Jayson (Seller) at the price of P50,000.00. In absence of stipulation, the delivery
of the laptop by Jayson is conditioned upon the payment of the purchase price by
Jericho or vice versa. Jayson, being the owner and seller of the laptop is the creditor
as to the purchase price and debtor as to the laptop. Whereas, Jordan being the buyer,
is the creditor as to the laptop and debtor as to the purchase price.]

Non-Payment of the purchase price constitute a very good reason to rescind a contract
of sale.

Article 1191 is not Applicable to the ff:

 Sales of Real Property by Installments (Maceda Law RA 6552 governs)


 Sales of Personal Property by Installments (Recto Law) ** If the sale is not
by installment Art 1191 applies**
 Contracts of Partnership (Law on Partnership)

Remedies Available to the Aggrieved Party


1.Specific performance or fulfillment of the obligation with damages;

2.Rescission of the contract with damages

*The injured party cannot seek both, except:

If fulfillment had been chosen but the the same had become impossible, rescission may
still be sought.(Art 1191 par 2)

If there is a valid basis for the extension of the performance of reciprocal obligation, the
court will not decree rescission but will rather fix a period for the fulfillment of the
obligation. (Art. 1191 par 3)

The Power to Rescind an Obligation

ü The party who has the right to cancel or resolve the reciprocal obligation in
case of non-fulfillment on the part of one contracting parties.

ü The party who is ready, willing and able to comply with his own obligations

ü The party who is in the position to return whatever he may be obliged to return
to the other party

In reciprocal obligations, the power to (rescind) resolve is given to the


injured/aggrieved party because the party who is at wrong cannot use his own wrong for
his own benefit or protection.

**RTC has the jurisdiction over cases of rescission**

Restrictions:

1.Due Process must be observed; “the court shall decree the rescission , unless, there
be a just cause authorizing a period fixing it” (Art 1191 par 3)

2. Right to rescind is subordinated to the rights of third persons who acquired the thing in
good faith (Art 1191 par4)
3. He must respect the power of the Court to fix period in lieu of decreeing decision
4. Slight breaches of the contract will not justify rescission
Article 1169 discusses that as a GENERAL RULE, a judicial and extra-judicial
demand by the creditor signals the delay to deliver something by the debtor.

The exceptions to the rule are also listed in Art. 1169: Demand may not be
necessary in the following circumstances:

1. When the obligation or the law expressly stipulates (example: a newborn


should have its Fact of Birth registered immediately, otherwise, penalty will be
imposed for its late registration
2. From the nature and circumstances of the obligation –When the choosing of
the time of delivery of the obligation is the controlling factor for the
creation of the contract or the obligation. (example: when there is an
obligation to build a convention hall as the site of an international event that
will be help on a specific date. Time is of the essence)
3. When the demand would be useless (example: When on performs the
prestation impossible of performance (like an impossible crime) as the very
thing to be delivered has already been destroyed)
4. When the debtor admits he is in default (No need to further demand to put
the debtor in default)
However: Asking for an extension is not indicative of acknowledging default.
In reciprocal obligations, neither party incurs default when the other does not
comply in a proper manner required of him (when one fulfills his obligation,
delay by the other begins)

***Without DEMAND, the effects of default shall not arise***

Example: One cannot be ordered to vacate a leased property for non-payment


of dues when the lessor’s collector fails to collect the same (when there is no
agreement on place of payment, collection must be made in the domicile of
the lessee)

EFFECT of LACK OF DEMAND


When there is NO DATE fixed for delivery, time is NOT considered essential.
In this case, delivery must be done within a reasonable timeframe to be fixed
by the court based on the circumstances of the case.

When the TIME is fixed for the fulfillment of the obligation, no further demand
or notice by the obligee or creditor is needed.
In case of DOUBT on whether a debtor is in default of his obligation, the doubt
shall be resolved in the debtor’s favor because dispensing the required
demand is just an exception to the general rule.

Classes of MORA
1. Mora Solvendi – default on the part of the debtor/obligor
Requisites:
 Obligation pertains to the debtor/obligor
 Obligation is determinate (susceptible of particular designation) or liquidated;
due and demandable
 Obligation has not been performed on its maturity date