G.R. No. 210215 - ROGELIO S. NOLASCO, NICANORA N. GUEVARA, LEONARDA N. ELPEDES, HEIRS OF ARNULFO S. NOLASCO, AND REMEDIOS M. NOLASCO, REPRESENTED BY ELENITA M. NOLASCO, VS. CELERINO S. CUERPO, JOSELITO ENCABO, JOSEPH ASCUTIA, AND DOMILO LUCENARIO.D E C I S I O N - Supreme Court E-Library

Ruling

accordingly, ordered: ( a ) the rescission of the subject contract; and ( b ) the return of the amounts already paid by respondents to petitioners, as well as the remaining post-dated checks issued by respondent Celerino S. Cuerpo representing the remaining monthly amortizations. [16] It found petitioners to have substantially breached paragraph 7 of the subject contract which states that "[t]he [petitioners] shall, within ninety (90) days from the signing of [the subject contract] cause the completion of the transfer of registration of title of the property subject of [the said contract], from Edilberta N. Santos to their names, at [petitioners'] own expense." [17] As such, respondents were entitled to rescission under Article 1191 of the Civil Code. [18] Dissatisfied, petitioners appealed [19] to the CA. The CA Ruling In a Decision [20] dated June 17, 2013, the CA affirmed the RTC ruling. It agreed with the RTC that petitioners substantially breached paragraph 7 of the subject contract when they did not effect the transfer of the subject land from Edilberta N. Santos to petitioners' names within ninety (90) days from the execution of said contract, thus, entitling respondents to rescind the same. In this relation, the CA held that under the present circumstances, the forfeiture of the payments already made by respondents to petitioners is clearly improper and unwarranted. [21] Aggrieved, petitioners moved for reconsideration, [22] which was denied in a Resolution [23] dated November 19, 2013; hence, this petition. The Issue Before the Court The core issue for the Court's resolution is whether or not the CA correctly affirmed the rescission of the subject contract and the return of the amounts already paid by respondents to petitioners, as well as the remaining post-dated checks issued by respondent Celerino S. Cuerpo representing the remaining monthly amortizations. The Court's Ruling The petition is partially meritorious. In reciprocal obligations, either party may rescind - or more appropriately, resolve - the contract upon the other party's substantial breach of the obligation/s he had assumed thereunder. [24] This is expressly provided for in Article 1191 of the Civil Code which states: 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. 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. "More accurately referred to as resolution, the right of rescission under Article 1191 is predi