Articles 1179 to 1192

EMIKO ANTONETTE ESCOVILLA

Nolasco vs. Culapo

FACTS:
In the case of Nolasco vs. Culapo, the Culapo entered into a contract to sell whereby the
Nolascos agreed to transfer the title over certain land from Santos to their name. And should
they fail to do so, the Culapos could cause the transfer and charge the costs of the transfer
against the monthly amortizations that they were supposed to pay to Nolasco and that if the
Culapos fully paid the purchase price, then the Nolasco then shall transfer the title of the land to
them.

ISSUE:
Whether the Nolasco’s failure to transfer the title to their name constitute substantial breach
entitling the Culapos to a recession of the contract?

RULING:
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:
xxx
“More accurately referred to as resolution the right of rescission under article 1191 is
predicated on a breach of faith that violates the reciprocity between the parties to the contract.
This retaliatory remedy is given to the contracting party who suffers the injurious breach on the
premise that it is unjust that the party be held bound to fulfill his promises when the other
violates his. Note rescission or resolution of a contract will not be permitted for a slight or
causal breach, but only for such substantial and fundamental violations as would defeat the
very object of the parties in making the agreement. Ultimately, the question of whether a
breach of contract is substantial depends upon the attending circumstances.

In the instant case, both the RTC and the CA held that petitioners were in substantial breach of
paragraph seven of the subject contract as they did not cause the transfer of the property to
their names from 1 Edilberta N. Santos within 90 days from the execution of said contract.

The courts a quo are mistaken. paragraph seven of the subject contract state in full:

7. (Petitioners) shall, within 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 subject
contract], from Edilberta N. Santos to their names, at [petitioners] own expense. Failure on the
part of the [petitioners] to undertake the foregoing within the prescribed. She'll automatically
authorize [respondents] to undertake the same in behalf of [petitioners], and charge the costs
incidental to the monthly amortizations upon due date. (emphasis and underscoring supplied)
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EMIKO ANTONETTE ESCOVILLA

A plain reading of paragraph seven of the subject contract reveals that while the RTC and the
CA we're indeed correct in finding that petitioners failed to perform their obligation to affect
the transfer of the title to the subject land from one Edilberta N. Santos to their names within
the prescribed period, said courts erred in concluding that such failure constituted a substantial
breach that would entitle respondents to rescind or resolve the subject contract. To reiterate,
for a contracting party to be entitled to recession or resolution in accordance with article 1191
off the Civil Code, the other contracting party must be in substantial breach of the terms and
conditions of their contract. A substantial breach of contract, unlike slight and causal breaches
thereof, is a fundamental breach that defeats the object of the parties in entering into an
agreement. Here, it cannot be said that Nolascos failure to undertake their obligation under
paragraph 7 defeats the object of the parties and entering into the subject contract, considering
that the same paragraph provides respondents contractual recourse in the event of Nolascos
nonperformance of the aforesaid obligation, that is, to cause such transfer themselves in behalf
and at the expense of the petitioners.

Indubitably, there is no substantial breach of paragraph 7 on the part of the petitioners that
would necessitate a recission or resolution of the subject contract. As such, a reversal of the
rulings of the RTC and the CA is in order.

The Supreme Court said that the purpose of the contract was not defeated by the failure to
transfer because the Culapos could still transfer the property in their name but at the expense of
the Nolascos so there is no substantial reach that would warrant the resolution of the contract
to sell.

Golden Valley vs. Pinkian Mining

FACTS:
Now this case introduces us to the concept of extrajudicial rescission. The PMC is the owner of
81 mining claims located in Nueva Vizcaya. PMC entered into an operating agreement with
Golden Valley or GVI granting Golden Valley full, exclusive and irrevocable possession, use,
occupancy, and control over the mining claims of PMI. So in exchange for that Golden Valley
would pay PMC royalties once they were able to make use of the mining claims. Now
unfortunately Golden Valley failed to pay these royalties so PMC extrajudicially rescinded the
operations agreement extra judicially. Of course Golden Valley questioned the extrajudicial
rescission.

ISSUE:
Whether or not the PMC is entitled to extrajudicially rescind the operating agreement and if so
on what grounds?

RULING:
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EMIKO ANTONETTE ESCOVILLA

As a general rule, the power to rescind an obligation must be invoked judicially and cannot be
exercised solely on a party's own judgment that the other has committed a breach of the
obligation. This is so because rescission of a contract will not be permitted for a slight or
casual breach, but only for such substantial and fundamental violations as would defeat the
very object of the parties in making the agreement. As a well-established exception, however,
an injured party need not resort to court action in order to rescind a contract when the
contract itself provides that it may be revoked or cancelled upon violation of its terms and
conditions. As elucidated in Froilan v. Pan Oriental Shipping Co., "there is xxx nothing in the law
that prohibits the parties from entering into agreement that violation of the terms of the
contract would cause cancellation thereof, even without court intervention." Similarly, in Dela
Rama Steamship Co., Inc. v. Tan, it was held that judicial permission to rescind an obligation is
not necessary if a contract contains a special provision granting the power of cancellation to a
party.

With this in mind, the Court therefore affirms the correctness of the CA's Decision upholding
MC's unilateral rescission of the OA due to GEl's non-payment of royalties considering the
parties' express stipulation in the OA that said agreement may be cancelled on such ground.
This is found in Section 8.01, Article VIll33 in relation to Section 5.01, Article V34 of the OA
which provides:

ARTICLE VIII
CANCELLATION/TERMINATION OF AGREEMENT
8.01 This Agreement may be cancelled or terminated prior to the expiration of the period,
original or renewal mentioned in the next preceding Section only in either of the following
ways:

a. By written advance notice of sixty (60) days from OPERATOR to PINKIAN with or without
cause by registered mail or personal delivery of the notice to PINKIAN.

b. By written notice from PINKIAN by registered or personal deliver of the notice to OPERATOR
based on the failure to OPERATOR to make any payments determined to be due PINKIAN under
Section 5.01 hereof after written demand for payment has been made on OPERATOR: Provided
that OPERATOR shall have a grace period of ninety (90) days from receipt of such written
demand within which to make the said payments to PINKIAN.

By expressly stipulating in the OA that GEl's non-payment of royalties would give PMC sufficient
cause to cancel or rescind the OA, the parties clearly had
considered such violation to be a substantial breach of their agreement. Thus, in view of the
above-stated jurisprudence on the matter, MC's extra-judicial
rescission of the OA based on the said ground was valid.

When is there an allowance for extrajudicial rescission?

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EMIKO ANTONETTE ESCOVILLA

It is when the contract itself provides that it may be revoked or cancelled upon violation of its
terms and conditions.

While it remains apparent that PMC had not judicially invoked the other grounds to rescind in
this case, the only recognizable effect, however, is with respect to the reckoning point as to
when the contract would be formally regarded as rescinded. Where parties agree to a
stipulation allowing extra-judicial rescission, no judicial decree is necessary for rescission to
take place; the extra-judicial rescission immediately releases the party from its obligation under
the contract, subiect only to court reversal if found improper. On the other hand, without a
stipulation allowing extra-judicial rescission, it is the judicial decree that rescinds, and not the
will of the rescinding party. This may be gathered from previous Court rulings on the matter.

For instance, in Ocejo, Perez & Co. v. International Banking Corporation, where the seller,
without having reserved title to the thing sold, sought to re-possess the subject matter of the
sale through an action for replevin after the buyer failed to pay its purchase price, the Court
ruled that the action of replevin (which operates on the assumption that the plaintiff is the
owner of the thing subject of the suit) "will not lie upon the theory that the rescission has
already taken place and that the seller has recovered title to the thing sold." It held that the
title which had already passed by delivery to the buyer is not ipso facto re-vested in the seller
upon the latter's own determination to rescind the sale because it is the judgment of the court
that produces the rescission.

On the other hand, in De Luna v. Abrigo (De Luna), the Court upheld the validity of a stipulation
providing for the automatic reversion of donated property to the donor upon non-compliance
of certain conditions therefor as the same was akin to an agreement granting a party the right
to extra-judicially rescind the contract in case of breach. The Court ruled, in effect, that a
subsequent court judgment does not rescind the contract but merely declares the fact that the
same has been rescinded, viz.:

Judicial intervention is necessary not for purposes of obtaining a judicial declaration rescinding
a contract already deemed rescinded by virtue of an agreement providing for rescission even
without judicial intervention, but in order to determine whether or not the rescission was
proper. (Emphases and underscoring supplied)

A similar agreement in Roman Catholic Archbishop of Manila v. CA41 allowing the ipso facto
reversion of the donated property upon non- compliance with the conditions was likewise
upheld, with the Court reiterating De Luna and declaring in unmistakable terms that:

Where the propriety of the automatic rescission is sustained, the decision of the court will be
merely declaratory of the revocation, but it is not in itself the revocatory act. (Emphasis and
underscoring supplied)
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EMIKO ANTONETTE ESCOVILLA

This notwithstanding, jurisprudence still indicates that an extra-judicial rescission based on

grounds not specified in the contract would not preclude a party to treat the same as
rescinded. The rescinding party, however, by such course of action, subjects himself to the risk
of being held liable for damages when the extra-judicial rescission is questioned by the
opposing party in court.

So if the party exercises extrajudicial rescission, the other party who wants to reverse that
recession will be the one compelled to go to court. But if the party who exercised extrajudicial
recission still goes to court, and the court affirms his right to receive that declaration is not
recession but rather a confirmation of the extrajudicial rescission.

Now what if the grounds for the extrajudicial rescission or not laid down in the agreement?
The party can still extrajudicially rescind and the mode agreed upon, the only catch is that
because it's not a specified ground in the agreement it's possible that the courts can reverse
their decision being that it can assess that the ground you use to rescind the agreement does
not constitute substantial breach sufficient to entitle you to recission.

The Wellex Group vs. U-Land

FACTS:
The facts are complicated but what I want you to take note of in this case is the distinction
between 1381 and 1191. 1381 is what we call actually pauliana but also recession, because
remember 1191 is technically resolution not recession. and in 1381 there are only five instances
where one party can ask for the cancellation of the contract and the during the following:

1. Those which are entered into by guardians whenever the wards whom they represent suffer
lesion by more than 1/4 of the value of the things which are the object thereof;

2. those agreed upon in representation of absentees, the latter suffer the lesion stated in the
preceding number;

3. those undertaken in fraud of creditors when the latter cannot in any manner collect the
claims due them;

4. those which refer to things under litigation if they have been entered into by the defendant
without the knowledge and approval of the litigants or of competent judicial authority; and

5. all other contracts specially declared by law to be subject to rescission.

ISSUE:
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EMIKO ANTONETTE ESCOVILLA

Supreme Court here said that U-land correctly availed of 1191 and not 1381. Why? because the
agreement to enter into a share purchase agreement was a reciprocal obligation on the part of
Wellex and U land. Section 2 or the first memorandum of agreement clearly provides that the
execution of a share purchase agreement containing mutually agreeable terms and conditions
must first be accomplished by the parties before U land purchases any of the shares owned by
wellex a perusal participation on its face allows for no other interpretation so the need for a
share purchase agreement to be entered into before payment of the full purchase price can
further be discerned from the other stipulation to the first memorandum of agreement; so given
that it's a reciprocal obligation 1191 applies.

To 1191 again only applies to reciprocal obligations.

RULING:
For Article 1191 to be applicable, however, there must be reciprocal prestations as distinguished
from mutual obligations between or among the parties. A prestation is the object of an
obligation, and it is the conduct required by the parties to do or not to do, or to give. Parties
may be mutually obligated to each other, but the prestations of these obligations are not
necessarily reciprocal. The reciprocal prestations must necessarily emanate from the same
cause that gave rise to the existence of the contract. This distinction is best illustrated by an
established authority in civil law, the late Arturo Tolentino:

This article applies only to reciprocal obligations. It has no application to every case where
two persons are mutually debtor and creditor of each other. There must be reciprocity
between them. Both relations must arise from the same cause, such that one obligation is
correlative to the other.
Thus, a person may be the debtor of another by reason of an agency, and his creditor by
reason of a loan. They are mutually obligated, but the obligations are not reciprocal.
Reciprocity arises from identity of cause, and necessarily the two obligations are created at
the same time. (Citation omitted)

Ang Yu Asuncion v. Court of Appeals provides a clear necessity of the cause in perfecting the
existence of an obligation:

An obligation is a juridical necessity to give, to do or not to do (Art. 1156, Civil Code). The
obligation is constituted upon the concurrence of the essential elements thereof, viz. (a) The
vinculum juris or juridical tie which is the efficient cause established by the various sources of
obligations [law, contracts, quasi contracts, delicts and quasi-delicts): (b) the object which is the
prestation or conduct, required to be observed (to give, to do or not to do; and (c) the subject-
persons who, viewed from the demandability of the obligation, are the active (oblige) and the
passive (obligor) subjects.
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EMIKO ANTONETTE ESCOVILLA

The cause is the vinculum juris or juridical tie that essentially binds the parties to the obligation.
This linkage between the parties is a binding relation that is the result of their bilateral actions,
which gave rise to the existence of the contract.

The failure of one of the parties to comply with its reciprocal prestation allows the wronged
party to seek the remedy of Article 1191. The wronged party is entitled to rescission or
resolution under Article 1191, and even the payment of damages. It is a principal action
precisely because it is a violation of the original reciprocal prestation.

Article 1381 and Article 1383, on the other hand, pertain to rescission where creditors or even
third persons not privy to the contract can file an action due to lesion or damage as a result of
the contract. In Ong v. Court of Appeals, 181 this court defined rescission:

Rescission, as contemplated in Articles 1380, et seq., of the New Civil Code, is a remedy granted
by law to the contracting parties and even to 3rd persons, to secure the preparation of
damages caused to them by a contract, even if this should be valid, by restoration of things to
their condition at the moment prior to the celebration of the contract. It implies a contract,
which even if initially valid, produces a lesion or a pecuniary damage to someone. (Citations
omitted)

Ong elaborated on the confusion between "rescission" or resolution under Article 1191 and
rescission under Article 1381:

On the other hand, Article 1191 of the New Civil Code refers to rescission applicable to
reciprocal obligations. Reciprocal obligations are those which arise from the same cause, and in
which each party is a debtor and a creditor of the other, such that the obligation of one is
dependent upon the obligation of the other. They are to be performed simultaneously such
that the performance of one is conditioned upon the simultaneous fulfillment of the other.
Rescission of reciprocal obligations Under article 1191 of the new Civil Code should be
distinguished from rescission of contracts under article 1383. Although both presuppose
contracts badly entered into and subsisting and both require mutual restitution when proper,
they are not entirely identical.

While article 1191 uses the term “recession”, the original term which was used in the old Civil
Code, from which the article was based, what's “resolution”. Resolution is the principal action
which is based on a breach of a party, while rescission under article 1383 it is subsidiary action
limited to cases of recession for lesion under article 1381 of the new Civil Code, which expressly
enumerates the following rescissible contracts:
Xxx
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EMIKO ANTONETTE ESCOVILLA

The rescission on account of breach of stipulations is not predicated on injury to economic

interests of the party plaintiff but on the breach of faith by the defendant, that violates the
reciprocity between the parties. It is not a subsidiary action, and Article 1191 may be scanned
without disclosing anywhere that action for rescission thereunder is subordinated to anything
other than the culpable breach of his obligations by the defendant. This recission is a principle
action retaliatory in character, it being unjust that a party be held bound to fulfill his promises
when the other violates his. As expressed in the old Latin aphorism: “non servanti fidem, non
est fides servanda”. Hence, the reparation of damages for the breach is purely secondary.

How then do we distinguish 1191 from 1381?

Remember that 1191 only applies to reciprocal obligations but in 1381 it is not necessary that
the obligation be reciprocal. In 1191 the cause of the recission is substantial breach, but in 1381
the cost of the recession is predicated on lesion or economic injury. 1191 is broader in a sense
because the nature of the breach is determined by the courts, but in 1381 the grounds are
limited to the enumeration therein. And finally 1191 is a principal action on the other hand 1381
is a subsidiary action meaning it's an action of last resort the parties can only avail of it when
they show that there are no other options to recover what has been taken from them.

PEZA vs Pilhino

FACTS:
The two things that we need to emphasize, is first, Article 1191 means mutual restitution as
well.
So whatever the parties received by virtue of the agreement have to be returned to restore the
parties to their original state prior to their execution of the agreement.

ISSUE:
The next question is does that mean once a contract has been rescinded you can no longer be
awarded liquidated damages? Because liquidated damages was not there originally diba prior
to entering into the contract.

The Supreme Court said liquidated damages may still be awarded. So contrary to respondents
assertion, mutual restitution is no license for the negation of contractually stipulated liquidated
damages 1191 itself clearly states that the options of recission and specific performance “come
with the payment of damages in either case”. The very same breach or delay in performance
that triggers recession is what makes damages due.

When the contracting parties bring their own free acts agreed on what these damages ought to
be they established the law between themselves. Their contemplation of the consequences
proper in the event of a breach has been articulated.
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EMIKO ANTONETTE ESCOVILLA

When courts or thereafter confronted with the need to award damages in tandem with with the
recession courts must not lose sight of how the parties have explicitly stated in their own
language these consequences and part of that is, diba, the stipulation on liquidated damages.
So 1191 does not bar the award of liquidated damages it even recognizes the damages may
be awarded in addition to recession so the answer to our question is YES liquidated damages
may be awarded in addition to recession. Otherwise the intent of liquidated damages being
punitive in nature will be obliterated in cases of breach.

FINDINGS:
A contract of sale, such as that entered into by petitioner and respondent, entails reciprocal
obligations. As explained in Spouses Velarde v. Court of Appeals, in a contract of sale, the seller
obligates itself to transfer the ownership of and deliver a determinate thing, and the buyer to
pay therefor a price certain in money or its equivalent.

Respondent correctly notes that recission under Article 1191 results in mutual restitution.
Jurisprudence has long settled that the restoration of the contracting parties to their original
state is the very essence of rescission. In Spouses Velarde:

Considering that the rescission of the contract is based on Article 1191 of the Civil Code, mutual
restitution is required to bring back the parties to their original situation prior to the inception
of the contract. Accordingly, the initial payment of P800,000 and the corresponding mortgage
payments... should be returned by private respondents, lest the latter unjustly enrich
themselves at the expense of the former.

Rescission creates the 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 be obliged to restore. To
rescind is to declare a contract void at its inception and to put an end to it as though it never
was. It is not merely to terminate it and release the parties from further obligations to each
other, but to abrogate if from the beginning and restore the parties to their relative positions as
if no contract has been made. (Citations omitted)

Laperal v. Solid Homes, Inc. has explained how the restitution spoken of in rescission under
Article 1385 of the Civil Code equally holds true for rescission under Article 1191 of the Civil
Code:

Despite the fact that Article 1124 of the old Civil Code from whence Article 1191 was taken,
used the term "resolution", the amendment there to (presently, article 1191) explicitly and
clearly used the term “recission”. Unless article 1191 is subsequently amended to revert back to
the term “resolution”, this court has no alternative but to apply the law, as it is written.

Again, since Article 1385 of the Civil Code expressly and clearly states that "rescission creates
the obligation to return the things which were the object of the contract, together with their
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EMIKO ANTONETTE ESCOVILLA

fruits, and the price with its interest." the Court finds no justification to sustain petitioners'
position that said Arficle 1385 does not apply to rescission under Article 1191.

Yamauchi vs. Suniga

This case demonstrates to us how the courts may award temperate damages in view of actual
damages to restore the complaining party to his original state prior to the execution of the
contract.

FACTS:
Yamauchi here commissioned Suniga to make repairs to her house in Bel Air which Suniga
unfortunately failed to accomplish. So she was left with an uninhabitable house which is
Supreme Court found to be sufficient ground to entitle her to rescission. The problem however is
that yamauchi could not provide a precise computation of the losses that she incurred.

ISSUE:
So how did the Supreme Court return her to her original state as if no renovation happened?

So this is a demonstration of how temperate damages is awarded in lieu of actual damages

when the amount of loss cannot be proved with certainty. in this case the fact that there has
been loss on the part of yamauchi was established and thus the Supreme Court awarded
500,000 pesos in temperate damages to Yamauchi.

RULING:
The performance or shall we say, nonperformance of suniga left must be to be desired and
yamauchi was better off with the house prior to its renovation. we can only surmise that given
the state of the house it will probably cost yamauchi a fortune to repair it. [Yamauchi] is thus
entitled to rescission and damages under Article 1191 of the Civil Code on account of culpable
breach of obligation by [Suniga].

Henceforth, having established that yamauchi had suffered actual losses, we now have to
consider if the amount of losses were actually accurately proven, bearing in mind that the
ultimate effect of rescission is to restore the parties to the original status before they entered
into the contract. Rescission has the effect of “unmaking a contract, or it's undoing from the
beginning, and not merely its termination”. Hence, rescission creates the obligation to return
the object of the contract because to resend is to declare a contract void at its inception, and to
put an end to it as though it never existed. Our objective now is to bring yamauchi back, as far
as practicable, to a state as if no renovation happened.

Our problem, however, is that we cannot ascertain the amount of loss suffered by Yamauchi.
First, there were indeed some renovation done that may have benefited Yamauchi and which
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EMIKO ANTONETTE ESCOVILLA

we have to consider and deduct the "added" value from the monetary award given her.
Second, we do not have the exact amount of loss on the Laguna Bel-Air house because
yamauchi did not present any evidence on the values of the house before and after the
incomplete renovation. Under article 2199 of the Civil Code, one is entitled to adequate
compensation only for such pecuniary loss suffered as one has duly proved.

Nonetheless, in the absence of competent proof on the amount of actual damages suffered, a
party is entitled to temperate damages. The amount of loss of Yamauch cannol be proved with
certainty, butthe jaci thal there has been loss on her part was established. Thus, we find it
proper to award temperate damages in lieu of actual or compensatory damages.

Such amount is usually left to the discretion of the courts but the same should be reasonable,
bearing in mind that temperate damages should be more that nominal but less than
compensatory. To our mind, and in view of the circumstances obtaining in this case, an award
of temperate damages equivalent to P500,000.00 is just and reasonable. This amount is in
consideration of the following: [1] Yamauchi can no longer use the subject house unless she
starts a new renovation; [2] the amount she gave Suniga, to some extent, was lost because she
was never able to use the house; and [3] the depreciation cost of the house due to being left
exposed and unused.

Camp John Hay v. Charter

FACTS:
For this case we are given the principles on when should the court fix a period instead of
ordering rescission. Now in determining whether to fix a period, or grant recission:

RULING:
The power of this Court to fix a period is discretionary. The surrounding facts of each case
must be taken into consideration in deciding whether the fixing of a period is sanctioned. The
discretion to fix an obligation's period is addressed to this Court's judgment and is tempered by
equitable considerations.

In central Philippine university v. Court of Appeals, this court refused to fix a period because of
the years that had already been allowed for the party to comply with the condition of the
obligation. Doing so, it held, would be a mere technicality and formality, and would only cause
further delay. This court ruled:

This general rule however cannot be applied considering the different set of circumstances
existing in the instant case. More then a reasonable period of 50 years has already been
allowed petitioner to avail of the opportunity to comply with the condition even if it be
burdensome, to make the donation in its favor forever valid. But unfortunately, it failed to do
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EMIKO ANTONETTE ESCOVILLA

so. Hence, there is no more need to fix the duration of a term of the obligation when such
procedure would only be a mere technicality and formality and would serve no purpose that to
delay or lead to an unnecessary and expensive multiplication of suits. Moreover, under article
1191 of the Civil Code, when one of the obligors cannot comply with what is incumbent upon
him, the oblige may seek rescission and the court shall decree the same Unless there is just
cause authorizing the fixing of a period. In the absence of any just cause for the court to
determine the period of the compliance, there is no more obstacle for the court to decree the
rescission claimed. (Citation omitted)

In Gregorio araneta inc. v. Philippine sugar estates development company, ltd., This court held
that if a reasonable was agreed upon a contract, all that the court should have done what's to
determine if that reasonable time had already elapsed:

If the contract so provided, then there was a period fixed, a "reasonable time"; and all that the
court should have done was to determine if that reasonable time had already elapsed when
suit was filed. If it had passed, then the court should declare that petitioner had breached the
contract, as averred in the complaint, and fix the resulting damages. On the other hand, if the
reasonable time had not yet elapsed, the court perforce was bound to dismiss the action for
being premature. But in no case can it be logically held that under the plea above quoted, the
intervention of the court to fix the period for performance was warranted, for Article 1197 is
precisely predicated on the absence of any period fixed by the parties.

There is no just cause for this Court to determine the period of compliance. As can be gleaned
from the records of this case, the obligation of petitioner to build the Camp John Hay Suites had
been dragging for years even before it entered into the Contractor's Agreement with
respondent.

The Memorandum of Agreement that petitioner executed with the Bases Conversion and
Development Authority shows that the construction of the camp John hay suits began in 1996.
When respondent demanded the units transfer in 2007, more than 10 years had lapsed; yet
within those years, petitioner was still not able to complete the construction of the camp John
hay suites.

To tolerate petitioner's excuses would only cause more delay and burden to respondent.
Petitioner failed to forward any just cost to convince this court to set a period. It merely
reasoned force majeure and mutual delays with bases conversion and development authority
without offering any explanation for its alleged difficulty in building the units.

Two belatedly fixed the period for petitioners compliance would mean refusing immediate
payment to respondent. The petitioners noncompliance with its obligation to deliver the two
units as payment to respondent can no longer be excused.
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EMIKO ANTONETTE ESCOVILLA

The law and jurisprudence are clear. When the obligor cannot comply with its obligation, the
obligee may exercise its right to rescind the obligation, and this court will order the rescission in
the absence of any just cause to fix the period. Here, lacking any reasonable explanation and
just cause for the fixing of the period for petitioners noncompliance, the rescission of the
obligation is justified.

So recession this neutral restitution was granted subject to the payment to charter chemicals for
the painting works it did in 2003. As this was already accepted by Camp John Hay as
satisfactory and the service cannot be undone and Camp John Hay have already enjoyed the
value of the services over the years, then charter chemical is entitled to the payment of the
painting services in accordance with 1191 and 2210 of the civil code.