C.

Action for Rescission

Art. 1191. The power to rescind obligation 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 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 a 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.
Art. 1192. In case both parties have committed breach of
obligation, the liability of the first infractor shall be equitably,
tempered by the courts. If it cannot be determined which of the
parties first violated the contract, the same shall be extinguished
and each,shall,bear,his,own,damages
The remedy is alternative. Party seeking rescission can only
elect one between fulfillment and rescission. There can be no
partial performance and partial rescission.
Only applies to reciprocal obligations, where there is
reciprocity between the parties i.e. creditor debtor relations
arise from the same cause or identity of cause
Reciprocal obligations have a TACIT,RESOLUTORY,CONDITION.
Power to rescind:
o Pertains to the injured party, party who did not perform
not entitled to insist upon the performance of the contract
by the defendant or recover damages by reason of his own
breach
Rights of injured party subordinated to the rights of a
3rd person to whom bad faith is not imputable
o Not absolute, not permitted in casual/slight breach, may
only be claimed in substantial breach , (Song, Fo, v.,
Hawaiian,Philippines)
o Rescission requires judicial,approval,to,produce,legal,effect
EXCEPTION: object is not yet delivered AND
obligation has not yet been performed
If the obligation has not yet been performed:
extrajudicial declaration of party willing to perform
would suffice; can refuse to perform if the other party
is not yet ready to comply
If the injured party has already performed: cannot
extrajudicially rescind IF the other party opposes the
rescission (otherwise, rescission produces legal
effect). In the case the other party impugns

rescission, the court comes in either to:

a. Declare the rescission as properly made
b. Give a period to the debtor in which to perform
EFFECTS OF RESCISSION:
1. Extinguishes obligatory relation as if it had never been
created, extinction has a retroactive effect. Equivalent to
invalidate the juridical tie, leaving things in their status
before the celebration of the contract
2. Mutual restitution
EXPRESS RESOLUTORY CONDITION: automatic
resolution if one of the parties does not comply with
his obligation. Often found in insurance contracts. Its
nature is a facultative resolutory condition (Taylor,v,
Uy,Tieng)