JESUS M. MONTEMAYOR v. VICENTE D. MILLORA, GR No.

168251, 2011-07-27
Facts:
On July 24, 1990, respondent Atty. Vicente D. Millora (Vicente) obtained a... loan of P400,000.00 from petitioner Dr. Jesus M. Montemayor (Jesus) as
evidenced by a promissory note [5] executed by Vicente. On August 10, 1990, the parties executed a loan contract [6] wherein it was provided that the
loan has... a stipulated monthly interest of 2% and that Vicente had already paid the amount of P100,000.00 as well as the P8,000.00 representing the
interest for the period July 24 to August 23, 1990.
Subsequently and with Vicente's consent, the interest rate was increased to 3.5% or P10,500.00 a month. From March 24, 1991 to July 23, 1991, or for
a period of four months, Vicente was supposed to pay P42,000.00 as interest but was able to pay only P24,000.00. This... was the last payment Vicente
made. Jesus made several demands [7] for Vicente to settle his obligation but to no avail.
Jesus filed before the RTC of Quezon City a Complaint [8] for Sum of Money against Vicente
Vicente filed his Answer [9] interposing a... counterclaim for attorney's fees of not less than P500,000.00. Vicente claimed that he handled several cases
for Jesus but he was summarily dismissed from handling them when the instant complaint for sum of money was filed.
the RTC ordered Vicente to pay Jesus his monetary obligation amounting to P300,000.00 plus interest of 12% from the time of the filing of the complaint
on August 17, 1993 until fully paid. At the same time,... the trial court found merit in Vicente's counterclaim and thus ordered Jesus to pay Vicente his
attorney's fees which is equivalent to the amount of Vicente's monetary liability, and which shall be set-off with the amount Vicente is adjudged to pay
Jesus
JUDGMENT is hereby rendered ordering defendant Vicente D. Millora to pay plaintiff Jesus M. Montemayor the sum of P300,000.00 with interest at the
rate of 12% per annum counted from the filing of the instant complaint on
August 17, 1993 until fully paid and whatever amount recoverable from defendant shall be set off by an equivalent amount awarded by the court on the
counterclaim representing attorney's fees of defendant on the basis of "quantum meruit" for legal services previously rendered to... plaintiff.
Intending to appeal the portion of the RTC Decision which declared him liable to Jesus for the sum of P300,000.00 with interest at the rate of 12% per
annum counted from the filing of the complaint on August 17, 1993 until fully paid, Vicente filed on July 6, 2000 a Notice of
Appeal. [17] This was however denied by the RTC in an Order [18] dated July 10, 2000 on the ground that the Decision has already become final and
executory on July 1, 2000.
Issues:
WHETHER X X X [DESPITE] THE ABSENCE OF A SPECIFIC AMOUNT IN THE DECISION
REPRESENTING RESPONDENT'S COUNTERCLAIM, THE SAME COULD BE VALIDLY [OFFSET] AGAINST THE SPECIFIC AMOUNT OF AWARD
MENTIONED IN THE DECISION IN FAVOR OF THE PETITIONER.
Ruling:
For legal compensation to take place, the requirements set forth in Articles 1278 and 1279 of the Civil Code
"A debt is liquidated when its existence and amount are determined. It is not necessary that it be admitted by the debtor. Nor is it necessary that the
credit appear in a final judgment in order that it can be considered as liquidated; it is enough that its exact... amount is known. And a debt is considered
liquidated, not only when it is expressed already in definite figures which do not require verification, but also when the determination of the exact amount
depends only on a simple arithmetical operation x x x."
In the instant case, both obligations are liquidated. Vicente has the obligation to pay his debt due to Jesus in the amount of P300,000.00 with interest at
the rate of 12% per annum counted from the filing of the instant complaint on August 17, 1993 until fully paid.
Jesus, on the other hand, has the obligation to pay attorney's fees which the RTC had already determined to be equivalent to whatever amount
recoverable from Vicente. The said attorney's fees were awarded by the RTC on the counterclaim of Vicente on the basis of "quantum... meruit" for the
legal services he previously rendered to Jesus.
Principles:
ARTICLE 1278. Compensation shall take place when two persons, in their own right, are creditors and debtors of each other.
ARTICLE 1279. In order that compensation may be proper, it is necessary:
(1) That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter
has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor.

G.R. No. 190755 November 24, 2010

LAND BANK OF THE PHILIPPINES,
Petitioner,vs.
ALFREDO ONG,
Respondent.
Facts :
On March 18, 1996, spouses Johnson and Evangeline Sy secured a loan from Land Bank Legazpi City in the amount of PhP 16 million. The loan was
secured by three (3) residential lots, five (5) cargo trucks, and a warehouse. Under the loan agreement, PhP 6 million of the loan would be short-term
and would mature on February 28, 1997, while the balance of PhP 10 million would be payable in seven (7) years. The Spouses Sy could no longer pay
their loan which resulted to the sale of three (3) of their mortgaged parcels of land for PhP 150,000 to Angelina Gloria Ong, Evangeline’s mother, under a
Deed of Sale with Assumption of Mortgage.
Evangeline’s father, petitioner Alfredo Ong, later went to Land Bank to inform them about the sale and assumption of mortgage. Land Bank Branch Head
told Alfredo that there was nothing wrong with agreement with the Spouses Sy and provided him requirements for the assumption of mortgage. Alfredo
later found out that his application for assumption of mortgage was not approved by Land Bank. On December 12, 1997, Alfredo initiated an action for
recovery of sum of money with damages against Land Bank, as Alfredo’s payment was not returned by Land Bank. Alfredo said that Land Bank’s
foreclosure without informing him of the denial of his assumption of the mortgage was done in bad faith and that he was made to believed that P750, 000
would cause Land Bank to approve his assumption to the mortgage.
6 He also claimed incurring expenses for attorney’s fees of PhP 150,000, filing fee of PhP 15,000, and PhP 250,000 in moral damages.
7 This prompted Alfredo to file a case with RTC against Land Bank. On its decision to the case, RTC held that the contract approving the assumption of
mortgage was not perfected as a result of the credit investigation conducted on Alfredo where he was disapproved. As such, it ruled that it would be
incorrect to consider Alfredo a third person with no interest in the fulfillment of the obligation under Article1236 of the Civil Code. Although Land Bank
was not bound by the Deed between Alfredo and the Spouses Sy, the appellate court found that Alfredo and Land Bank’s active preparations for
Alfredo’s assumption of mortgage essentially novated the agreement.
Issues :
1) Whether or not the Court of Appeals erred in holding that Art. 1236 of the Civil Code does not apply and in finding that there is novation.
2) Whether or not the Court of Appeals misconstrued the evidence and the law when it affirmed the trial court decision’s ordering Land Bank to pay Ong
the amount of Php750, 000.00 with interest at 12% annum.
Ruling :
The Supreme Court affirmed with modification to the appealed decision that recourse against Land Bank. Land Bank contends that Art.1236 of the Civil
Code backs their claim that Alfredo should have sought recourse against the Spouses Sy instead of Land Bank. The court agreed with Land Bank on the
point mentioned as to the first part of paragraph 1 of Art. 1236. However, Alfredo made a conditional payment so that the properties subject of the Deed
of Sale with Assumption of Mortgage which Land Bank required from him would be approved. Thus, he made payment not as a debtor but as a
prospective mortgagor. Furthermore, the contract between Alfredo and Land Bank was not perfected nor consummated because of the adverse
disapproval of the proposed assumption. The Supreme Court did not agree with the Court of Appeals that there was novation in the contract between
the parties because not all elements of novation were present. The court further stresses that the instant case would not have been litigated had Land
Bank been more circumspect in dealing with Alfredo. The bank chose to accept payment from Alfredo even before a credit investigation was underway
and also failed to informed him of the disapproval. The court found that there was negligence to a certain degree on the part of Land Bank in handling
the transaction with Alfredo. A bank as a business entity should observe a higher standard of diligence when dealing with the public which Land Bank
neglect to observe in this case. The petitioner’s appeal was denied by the Supreme Court and the decision of the Court of Appeals was affirmed with
modification in that the amount of PhP 750,000 will earn interest at 6% per annum and the total aggregate monetary awards will in turn earn 12% per
annum from the finality of this Decision until fully paid.
Boysaw vs. Interphil Promotions
Boxer (P) vs. Promoter (D)
GR L-22590 [T]

Summary: A boxer signed an agreement with a promotions agency to arrange and promote a boxing match with Flash Elorde. The boxer violated the
terms of the contract, but in spite of these, the agency proceeded except it negotiated for a new date for the match. Eventually, the match as originally
stated in the contract did not materialize. Boxer and manager is now suing the promotion agency for breach of contract.

Rule of Law: Where one party did not perform the undertaking which he was bound by the terms of the agreement to perform, he is not entitled to insist
upon the performance of the contract by the other party, or recover damages by reason of his own breach.

Facts: Solomon Boysaw (P), signed with Interphil Promotions, Inc. (D), a contract to engage Gabriel "Flash" Elorde in a boxing contest for the junior
lightweight championship of the world. Thereafter, Interphil (D) signed Gabriel "Flash" Elorde to a similar agreement—that is, to engage Boysaw in a title
fight.

The managerial rights over Boysaw (P) was assigned and eventually reassigned to Alfredo Yulo, Jr. (P) without the consent of Interphil (D) in violation of
their contract. When informed of the change, Interphil (D) referred the matter to the Games and Amusement Board culminating to a decision by the
board to approve a new date for the match. Yulo (P) protested against the new date even when another proposed date was within the 30-day allowable
postponements.

Boysaw (P) and Yulo (P) filed for breach of contract when the fight contemplated in the original boxing contract did not materialize.

Issues: May the offending party in a reciprocal obligation compel the other party for specific performance?

Ruling: No. Evidence established that the contract was violated by Boysaw (P) when, without the approval or consent of Interphil (D), he fought a boxing
match in Las Vegas. Another violation was the assignment and transfer of the managerial rights over Boysaw (P) without the knowledge or consent of
Interphil (D).

While the contract imposed no penalty for such violation, this does not grant any of the parties the unbridled liberty to breach it with impunity. Our law on
contracts recognizes the principle that actionable injury inheres in every contractual breach.
Those who in the performance of their obligations are guilty of fraud, negligence or delay, and those who in any manner contravene the terms thereof,
are liable for damages.
—Article 1170, Civil Code.

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.
—Article 1191, Civil Code.

The contract in question gave rise 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, so that the performance of one is conditioned
upon the simultaneous fulfillment of the other.
—Tolentino, Civil Code of the Philippines, Vol. IV, p. 175.

The power to rescind is given to the injured party.

Where the plaintiff is the party who did not perform the undertaking which he was bound by the terms of the agreement to perform, he is not entitled to
insist upon the performance of the contract by the defendant, or recover damages by reason of his own breach.
—Seva vs. Alfredo Berwin, 48 Phil. 581.

Under the law, when a contract is unlawfully novated by an applicable and unilateral substitution of the obligor by another, the aggrieved creditor is not
bound to deal with the substitute. However, from the evidence, it is clear that the Interphil (D), instead of availing themselves of the options given to them
by law of rescission or refusal to recognize the substitute obligor, really wanted to postpone the fight date owing to an injury that Elorde sustained in a
recent bout. That Interphil (D) had justification to renegotiate the original contract, particularly the fight date is undeniable from the facts. Under the
circumstances, Interphil's (D) desire to postpone the fight date could neither be unlawful nor unreasonable.
__________
* Keywords: rescission, reciprocal obligation
CALIFORNIA BUS LINES INC. vs STATE INVESTMENT HOUSE, INC. G.R. No. 147950. December 11, 2003
QUISUMBING, J:

Facts:
Delta Motors Corporation applied for financial assistance from respondent State Investment House, Inc., a domestic corporation engaged in the business
of quasi-banking. SIHI agreed to extend a credit line to Delta which eventually became indebted to SIHI. Meanwhile, petitioner purchased on installment
basis several buses to Delta. To secure the payment of the obligation petitioner executed promissory notes in favor of Delta. When petitioner defaulted on
the payments of the debts, it entered into an agreement with delta to cover its due obligations. However, petitioner still had trouble meeting its obligations
with delta. Pursuant to the memorandum of agreement delta executed a deed of sale assigning to respondent, the promissory notes from petitioner.
Respondent subsequently sent a demand letter to petitioner requiring remitting payments due on the promissory notes. Petitioner replied informing
respondent of the fact that delta had taken over its management and operations.

Issue:
Whether the Restructuring Agreement dated October 7, 1981, between petitioner CBLI and Delta Motors, Corp. novated the five promissory notes Delta
Motors, Corp. assigned to respondent SIHI,

Held:
The attendant facts do not make out a case of novation. The restructuring agreement between Delta and CBLI executed on October 7, 1981, shows that
the parties did not expressly stipulate that the restructuring agreement novated the promissory notes. Absent an unequivocal declaration of extinguishment
of the pre-existing obligation, only a showing of complete incompatibility between the old and the new obligation would sustain a finding of novation by
implication. 59 However, our review of its terms yields no incompatibility between the promissory notes and the restructuring agreement.

Ajax Marketing v CA

The spouses Marcial See and Lilian Tan constituted three real estate mortgages over their property in Paco Manila in favor of and for the following
amounts: 1. Ylang-Ylang Merchandising Company (partnership b/w Rodriguez and Tan) => for 250,000 2. Ajax Marketing Company (formerly Ylang-
Ylang Merchandising Company, changed name but not its composition) => for 150,000 3. Ajax Marketing and Development Corporation (from
partnership to corporation) for 600,000 All 3 loans were obtained from Metrobank. The 3 loans w/ an aggregate amount of 1M were restructured and
consolidated into 1 loan. Ajax Marketing and Development Co. executed a promissory note. It had these words typewritten: "secured by REM" and
"9.Collateral. This is wholly/partly secured by:(x) real estate" The property was extra-judicially foreclosed in favor of Metrobank for the 1M promissory
note. Petitioners contend: A novation occurred when their 3 loans which were all secured by the same property, were consolidated into a single loan of
1M under the promissory note, thereby extinguishing their monetary obligation and releasing the mortgaged property from liability. ISSUE: W/N there
was indeed a novation in this case? HELD There was no novation. There was no change in the OBJECT of the prior obligation (Objective novation): The
1 million loan still represented the 3 loans obtained. It merely restructured and renewed the 3 previous loans to make the loan current and merely
consolidated such loan. There was no change or substitution in the part of the debtors upon the consolidation of the loans in the promissory note
(Subjective novation): The fact that the petitioners changed from a partnership to a corporation without evidence that they were expressly released from
their obligation did not make petitioner AJAX (w/ it new corporate personality) a 3rd person or the new debtor. AJAX only became a co-debtor. Doctrine:
Novation is juridical action with a dual function. It extinguishes an obligation & creates a new one in lieu of the old one. Novation is never presumed and
will not be allowed unless there was an express agreement or the new obligation is incompatible with the old one. OLD DEBTOR should be released
expressly from an obligation and the 3rd person or new debtor assumed his place. There is no novation if the old debtor would not be released. The new
debtor would only become a co-debtor or surety.

UNIVERSAL FOOD CORPORATION v. CA

33 SCRA 1

FACTS:
This is a petition for certiorari by the UFC against the CA decision of February 13, 1968 declaring the BILL OF ASSIGNMENT rescinded, ordering UFC to
return to Magdalo Francisco his Mafran sauce trademark and to pay his monthly salary of P300.00 from Dec. 1, 1960 until the return to him of said
trademark and formula.

In 1938, plaintiff Magdalo V. Francisco, Sr. discovered a formula for the manufacture of a food seasoning (sauce) derived from banana fruits popularly
known as MAFRAN sauce. It was used commercially since 1942, and in the same year plaintiff registered his trademark in his name as owner and inventor
with the Bureau of Patents. However, due to lack of sufficient capital to finance the expansion of the business, in 1960, said plaintiff secured the financial
assistance of Tirso T. Reyes who, after a series of negotiations, formed with others defendant Universal Food Corporation eventually leading to the
execution on May 11, 1960 of the aforequoted "Bill of Assignment" (Exhibit A or 1).

On May 31, 1960, Magdalo Francisco entered into contract with UFC stipulating among other things that he be the Chief Chemist and Second Vice-
President of UFC and shall have absolute control and supervision over the laboratory assistants and personnel and in the purchase and safekeeping of
the chemicals used in the preparation of said Mafran sauce and that said positions are permanent in nature.

In line with the terms and conditions of the Bill of Assignment, Magdalo Francisco was appointed Chief Chemist with a salary of P300.00 a month. Magdalo
Francisco kept the formula of the Mafran sauce secret to himself. Thereafter, however, due to the alleged scarcity and high prices of raw materials, on
November 28, 1960, Secretary-Treasurer Ciriaco L. de Guzman of UFC issued a Memorandum duly approved by the President and General Manager
Tirso T. Reyes that only Supervisor Ricardo Francisco should be retained in the factory and that the salary of plaintiff Magdalo V. Francisco, Sr., should
be stopped for the time being until the corporation should resume its operation.

On December 3, 1960, President and General Manager Tirso T. Reyes, issued a memorandum to Victoriano Francisco ordering him to report to the factory
and produce "Mafran Sauce" at the rate of not less than 100 cases a day so as to cope with the orders of the corporation's various distributors and dealers,
and with instructions to take only the necessary daily employees without employing permanent employees.

Again, on December 6, 1961, another memorandum was issued by the same President and General Manager instructing the Assistant Chief Chemist
Ricardo Francisco, to recall all daily employees who are connected in the production of Mafran Sauce and also some additional daily employees for the
production of Porky Pops.

On December 29, 1960, another memorandum was issued by the President and General Manager instructing Ricardo Francisco, as Chief Chemist, and
Porfirio Zarraga, as Acting Superintendent, to produce Mafran Sauce and Porky Pops in full swing starting January 2, 1961 with further instructions to hire
daily laborers in order to cope with the full blast operation. Magdalo V. Francisco, Sr. received his salary as Chief Chemist in the amount of P300.00 a
month only until his services were terminated on November 30, 1960.

On January 9 and 16, 1961, UFC, acting thru its President and General Manager, authorized Porfirio Zarraga and Paula de Bacula to look for a buyer of
the corporation including its trademarks, formula and assets at a price of not less than P300,000.00. Due to these successive memoranda, without plaintiff
Magdalo V. Francisco, Sr. being recalled back to work, he filed the present action on February 14, 1961. Then in a letter dated March 20, 1961, UFC
requested said plaintiff to report for duty, but the latter declined the request because the present action was already filed in court.

ISSUES:

1. Was the Bill of Assignment really one that involves transfer of the formula for Mafran sauce itself?
 2. Was petitioner’s contention that Magdalo Francisco is not entitled to rescission valid?

RULING:

1. No. Certain provisions of the bill would lead one to believe that the formula itself was transferred. To quote, “the respondent patentee "assign, transfer
and convey all its property rights and interest over said Mafran trademark and formula for MAFRAN SAUCE unto the Party of the Second Part," and the
last paragraph states that such "assignment, transfer and conveyance is absolute and irrevocable (and) in no case shall the PARTY OF THE First Part
ask, demand or sue for the surrender of its rights and interest over said MAFRAN trademark and mafran formula."

“However, a perceptive analysis of the entire instrument and the language employed therein would lead one to the conclusion that what was actually ceded
and transferred was only the use of the Mafran sauce formula. This was the precise intention of the parties.”

The SC had the following reasons to back up the above conclusion. First, royalty was paid by UFC to Magdalo Francisco. Second, the formula of said
Mafran sauce was never disclosed to anybody else. Third, the Bill acknowledged the fact that upon dissolution of said Corporation, the patentee rights
and interests of said trademark shall automatically revert back to Magdalo
Francisco. Fourth, paragraph 3 of the Bill declared only the transfer of the use of the Mafran sauce and not the formula itself which was admitted by UFC
in its answer. Fifth, the facts of the case undeniably show that what was transferred was only the use. Finally, our Civil Code allows only “the least
transmission of right, hence, what better way is there to show the least transmission of right of the transfer of the use of the transfer of the formula itself.”

2. No. Petitioner’s contention that Magdalo Francisco’s petition for rescission should be denied because under Article 1383 of the Civil Code of the
Philippines rescission can not be demanded except when the party suffering damage has no other legal means to obtain reparation, was of no merit
because “it is predicated on a failure to distinguish between a rescission for breach of contract under Article 1191 of the Civil Code and a rescission by
reason of lesion or economic prejudice, under Article 1381, et seq.” This was a case of reciprocal obligation. Article 1191 may be scanned without disclosing
anywhere that the action for rescission thereunder was subordinated to anything other than the culpable breach of his obligations by the defendant. Hence,
the reparation of damages for the breach was purely secondary. Simply put, unlike Art. 1383, Art. 1191 allows both the rescission and the payment for
damages. Rescission is not given to the party as a last resort, hence, it is not subsidiary in nature.
Vda. de Mistica v. Sps. Naguiat (2003)
Petitioners: FIDELA DEL CASTILLO VDA. DE MISTICA
Respondents: SPOUSES BERNARDINO NAGUIAT AND MARIA PAULINA GERONA-NAGUIAT
Ponente: PANGANIBAN
Topic: Remedies for Breach
SUMMARY: (1-2 sentence summary of facts, issue, ratio and ruling)
FACTS:
- Eulalio Mistica, Fidela’s predecessor-in-interest, is the owner of a parcel of land in Malhacan, Meycauayan, Bulacan. A portion thereof was leased to
Bernardino Naguiat (Naguiat) sometime in 1970.
- On 5 April 1979, Eulalio entered into a contract to sell with Naguiat over a portion of the aforementioned lot containing an area of 200 m2. This agreement
was reduced to writing in a document entitled Kasulatan sa Pagbibilihan.
`Na ang natitirang halagang LABING WALONG LIBONG PISO (P18,000.00) Kualtang Pilipino, ay babayaran ng BUM[I]BILI sa loob ng
Sampung (10) taon, na magsisimula sa araw din ng lagdaan ang kasulatang ito.
`Sakaling hindi makakabayad ang Bumibili sa loob ng panahon pinagkasunduan, an[g] BUMIBILI ay magbabayad ng pakinabang o
interes ng 12% isang taon, sa taon nilakaran hanggang sa ito'y mabayaran tuluyan ng Bumibili
- Naguiat gave a downpayment of P2,000.00. He made another partial payment of P1,000.00 on 7 February 1980. He failed to make any payments
thereafter.
- Eulalio Mistica died sometime in October 1986.
- On 4 December 1991, Fidela filed a complaint for rescission alleging: that Naguiats’ failure and refusal to pay the balance of the purchase price
constitutes a violation of the contract which entitles her to rescind the same.
- Naguiats contended that the contract cannot be rescinded on the ground that it clearly stipulates that in case of failure to pay the balance as stipulated,
a yearly interest of 12% is to be paid. Naguiat likewise alleged that sometime in October 1986, during Eualalio’s wake, he offered to pay the remaining
balance to Fidela but the latter refused and hence, there is no breach or violation committed by them and no damages could yet be incurred by the late
Eulalio, his heirs or assigns pursuant to the said document.
- RTC disallowed rescission. CA affirmed. It held that the conclusion of the ten-year period was not a resolutory term, because the Contract had stipulated
that payment with interest of 12% could still be made if Naguiats failed to pay within the period. Fidela did not disprove the allegation of Naguiats that they
had tendered payment of the balance of the purchase price during her husband's funeral, which was well within the ten-year period. Moreover, rescission
would be unjust to Naguiats, because they had already transferred the land title to their names. The proper recourse, the CA held, was to order them to
pay the balance of the purchase price, with 12% interest.
- Before SC, Fidela claimed that she is entitled to rescind the Contract under A1191, because Naguiats committed a substantial breach when they did not
pay the balance of the purchase price within the 10-year period.
ISSUES:

 WON there is a breach of obligation that warrants rescission under A1191

o NO. The transaction between Eulalio and Naguiats, as evidenced by the Kasulatan, was clearly a Contract of Sale. A deed of sale is
considered absolute in nature when there is neither a stipulation in the deed that title to the property sold is reserved to the seller until
the full payment of the price; nor a stipulation giving the vendor the right to unilaterally resolve the contract the moment the buyer fails
to pay within a fixed period.
o In a contract of sale, the remedy of an unpaid seller is either specific performance or rescission. Under A1191, the right to rescind an
obligation is predicated on the violation of the reciprocity between parties, brought about by a breach of faith by one of them.
Rescission, however, is allowed only where the breach is substantial and fundamental to the fulfillment of the obligation.
o Naguiats’ failure to pay the balance of the purchase price within 10 years from the execution of the Deed did not amount to a substantial
breach. In the Kasulatan, it was stipulated that payment could be made even after ten years from the execution of the Contract,
provided the vendee paid 12 percent interest. The stipulations of the contract constitute the law between the parties; thus, courts have
no alternative but to enforce them as agreed upon and written.
o Moreover, it is undisputed that during the ten-year period, Fidela and her deceased husband never made any demand for the balance
of the purchase price. Fidela even refused the payment tendered by Naguiats during her husband's funeral, thus showing that she
was not exactly blameless for the lapse of the ten-year period. Had she accepted the tender, payment would have been made well
within the agreed period.

NOTES: The issuance of a certificate of title in favor of Naguiats does not determine whether Fidela is entitled to rescission.