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Tayag vs CA

In a contract of purchase, both parties are mutually obligors and also obligees, and
any of the contracting parties may, upon non-fulfillment by the other privy of his
part of the prestation, rescind the contract or seek fulfillment (Article 1191, Civil
In short, it is puerile for petitioners to say that they are the only obligees under the
contract since they are also bound as obligors to respect the stipulation in
permitting private respondent to assume the loan with the Philippine Veterans Bank
which petitioners impeded when they paid the balance of said loan. As vendors,
they are supposed to execute the final deed of sale upon full payment of the
balance as determined hereafter.
Ong vs Bognalbal

Enriquez vs Ramos
As to be alleged lack of previous notice completion and demand for payment, the
filing of the case below is sufficient notice to the defendant-appellee of the
completion of the roads in question and of the plaintiffs-appellee's desire to be paid
the purchase price of the questioned lots. The effect of such demand retroacts to
the day of the constitution of the defendant-appellee's obligation. Thus, Article
1187 provides the "The effects of a conditional obligation to give, once the
condition has been fulfilled, shall retroact to the day of the constitution obligation..."
The contacted obligation of the defendant-appellee under the facts of the case at

bar was to pay the balance of P200,000 within two years from the date the roads in
question are completed.
Tan vs CA
(Rescission of the contract of insurance)
The period to consider in a life insurance poiicy is two years from the date of issue
or of the last reinstatement. So if for example the policy was issued/reinstated on
Jan 1, 2000, the insurer can still exercise his right to rescind up to Jan. 1, 2003 or
two years from the date of issue/reinstatement, REGARDLESS of whether the
insured died before or after Jan. 1, 2003. (Art. 1191 of the Civil Code)
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
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)

Velarde vs CA
Mr. Raymundos source of right to rescind the contract is Art. 1191 of the Civil Code
predicated on a breach of faith by the other party who violates the reciprocity
between them. Moreover, the new obligations as preconditions to the performance
of the petitioners own obligation were repudiation of an existing obligation, which
was legally due and demandable under the contract of sale.
The breach committed by the petitioners was the non-performance of a reciprocal
obligation. The mutual restitution is required to bring back the parties to their
original situation prior to the inception of the contract. The initial payment and the
mortgage payments advanced by petitioners should be returned by private
respondents, lest the latter unjustly enriched at the expense of the other. Rescission
creates the obligation to return the obligation of contract. To rescind, is to declare a
contract void at its inception and to put an end to it as though it never was.
Siy vs CA

Article 1191 of the New Civil Code provides that 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. There is no
dispute that all the contracts entered into by the parties herein are reciprocal ones.
There is, likewise, no question that the plaintiff is guilty of delay and the
defendants- spouses are entitled to damages occasioned by it in the light of the
provisions of Article 1170 of the New Civil Code providing that those who, in the
performance of their obligations, are guilty of delay and those who, in any manner,
contravene the tenor thereof, are liable for damages. The defendants-spouses
elected rescission of their agreement of purchase and sale with damages.
UP vs De los Angeles
In the first place, UP and ALUMCO had expressly stipulated in the "Acknowledgment
of Debt and Proposed Manner of Payments" that, upon default by the debtor
ALUMCO, the creditor (UP) has "the right and the power to consider, the Logging
Agreement dated 2 December 1960 as rescinded without the necessity of any
judicial suit." As to such special stipulation, and in connection with Article 1191 of
the Civil Code, this Court stated in Froilan vs. Pan Oriental Shipping Co., et al., L11897, 31 October 1964, 12 SCRA 276:
there is 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. In other words, it is not always necessary
for the injured party to resort to court for rescission of the contract.
Palay Inc. vs Clave
ART. 1385. Rescission creates the obligation to return the things which were the
object of the contract, together with their fruits, and the price with its interest;
consequently, it can be carried out only when he who demands rescission can
return whatever he may be obliged to restore.
Neither sham rescission take place when the things which are the object of the
contract are legally in the possession of third persons who did not act in bad faith.
In this case, indemnity for damages may be demanded from the person causing the
Camus vs Price, Inc.
It was then held that the obligations of the parties in the contract being reciprocal,
the Lessee did not incur in delay until the Lessor complies with what was incumbent
upon him, applying Article 1169 of the Civil Code:

Those obliged to deliver or to do something incur in delay from the time the
obligee judicially or extrajudicially demands from them the fulfillment of their
However, the demand by the creditor shall not be necessary in order that
delay may exist:
(1) When the obligation or the law expressly so declare; or
(2) When from the nature and the circumstances of the obligation it appears
that the designation of the time when the thing is to be delivered or the service is to
be rendered was a controlling motive for the establishment of the contract; or
(3) When demand would be useless, as when the obligor has rendered it
beyond his power to perform.
In reciprocal obligations, neither party incurs in delay if the other does not comply
or is not ready to comply in a proper manner with what is incumbent upon him.
From the moment one of the parties fulfills his obligation, delay by the other begins.
Gaite vs Fonacier
Under paragraphs 2 and 3 of Article 1198 of the Civil Code of the Philippines: ART.
1198. The debtor shall lose every right to make use of the period: (2) When he
does not furnish to the creditor the guaranties or securities which he has promised.
(3) When by his own acts he has impaired said guaranties or securities after their
establishment, and when through fortuitous event they disappear, unless he
immediately gives new ones equally satisfactory.
Fernandez vs CA
Art. 1196. Whenever in an obligation a period is designated, it is presumed to have
been established for the benefit of both the creditor and the debtor, unless from the
tenor of the same or other circumstances it should appear that the period has been
established in favor of one or of the other.
Abesamis vs Woodcraft Works, Inc.
The obligation between the parties was a reciprocal one, appellant to furnish the
vessel and appellee to furnish the logs. It was also an obligation with a term, which
obviously was intended for the benefit of both parties, the period having been
agreed upon in order to avoid the stormy weather in Dolores, Samar, during the
months of January to March. The obligation being reciprocal and with a period,
neither party could demand performance nor incur in delay before the expiration of
the period. Consequently, when the typhoon struck on May 5, 1951 there was yet

no delay on the part of appellant, and the corresponding loss must be shouldered by
It may be observed in this respect that although the obligation would not become
due until July 31, 1951 appellant waived the benefit of the period by assuring
appellee that it would take delivery of the logs on June 25, 1951. On that date
appellee was ready to comply, but appellant failed on his commitment, without any
satisfactory explanation for such failure. Therefore, appellant should bear the
corresponding loss.

Gregorio Araneta, Inc. vs Phil. Sugar Estates Development

It must be recalled that Article 1197 of the Civil Code involves a two-step process.
The Court must first determine that "the obligation does not fix a period" (or that
the period is made to depend upon the will of the debtor)," but from the nature and
the circumstances it can be inferred that a period was intended" (Art. 1197, pars. 1
and 2). This preliminary point settled, the Court must then proceed to the second
step, and decide what period was "probably contemplated by the parties" (Do., par.
3). So that, ultimately, the Court can not fix a period merely because in its opinion it
is or should be reasonable, but must set the time that the parties are shown to have
intended. As the record stands, the trial Court appears to have pulled the two-year
period set in its decision out of thin air, since no circumstances are mentioned to
support it. Plainly, this is not warranted by the Civil Code.
Radiowealth Finance Company vs Del Rosario
Respondents theorize that the action for immediate enforcement of their obligation
is premature because its fulfillment is dependent on the sole will of the
debtor. Hence, they consider that the proper court should first fix a period for
payment, pursuant to Articles 1180 and 1197 of the Civil Code.
Art. 1180. When the debtor binds himself to pay when his means permit him
to do so, the obligation shall be deemed to be one with a period, subject to the
provisions of Article 1197. (n)
Art. 1197. If the obligation does not fix a period, but from its nature and the
circumstances it can be inferred that a period was intended, the courts may fix the
duration thereof.
Allen vs Province of Albay
The provision for liquidated damages having been waived by defendants' delay, the
contractor was bound only to complete the bridge within a reasonable time. If he

failed so to do, the defendants might set off against the contract price any actual
damage proven to have caused them by his delay beyond such a period. They have
produced no such proof of damage, but rather have rested their case squarely upon
the penalty clause.
Ong Guan Can vs Century Insurance Company
The policies made by the Insurance Co., in its effect, is to make its obligation to the
plaintiff as an alternative one, that it may either pay the insured value or rebuild it.
It must be noted that insurance company must notify Ong Guan Can on his election,
stating which of the 2 prestations he is disposed to fulfill so as to give creditor
opportunity to express his consent or impugn the election made by the insurance
company and only after said notice shall the election take legal effect when
consented by the creditor. This is provided for in Art. 1199 of the Civil Code: A
person alternatively bound by different prestations shall completely perform one of
them. The creditor cannot be compelled to receive part of one and part of the other
Palmares vs CA
A creditor's right to proceed against the surety exists independently of his right to
proceed against the principal. 39Under Article 1216 of the Civil Code, the creditor
may proceed against any one of the solidary debtors or some or all of them
simultaneously. The rule, therefore, is that if the obligation is joint and several, the
creditor has the right to proceed even against the surety alone. 40 Since, generally,
it is not necessary for the creditor to proceed against a principal in order to hold the
surety liable, where, by the terms of the contract, the obligation of the surety is the
same that of the principal, then soon as the principal is in default, the surety is
likewise in default, and may be sued immediately and before any proceedings are
had against the principal. Perforce, in accordance with the rule that, in the absence
of statute or agreement otherwise, a surety is primarily liable, and with the rule that
his proper remedy is to pay the debt and pursue the principal for reimbursement,
the surety cannot at law, unless permitted by statute and in the absence of any
agreement limiting the application of the security, require the creditor or obligee,
before proceeding against the surety, to resort to and exhaust his remedies against
the principal, particularly where both principal and surety are equally bound.
Sesbreno vs CA
Accordingly, petitioner's theory that Pilipinas had assumed a solidary obligation to
pay the amount represented by a portion of the Note assigned to him by
Philfinance, appears to be a new theory constructed only after the trial court had
ruled against him. The solidary liability that petitioner seeks to impute Pilipinas
cannot, however, be lightly inferred. Under article 1207 of the Civil Code, "there is a
solidary liability only when the law or the nature of the obligation requires

PNB vs Sta.Maria
Valeriana's liability for the loans secured by Maximo is not joint and
several or solidary as adjudged by the trial court, but only joint, pursuant to the
provisions of Article 1207 of the Civil Code that "the concurrence ... of two or more
debtors in one and the same obligation does not imply that ... each one of the
(debtors) is bound to render entire compliance with the prestation. There is a
solidary liability only when the obligation expressly so states, or when the law or the
nature of the obligation requires solidarity." It should be noted that in the additional
special power of attorney, Exh. E-1, executed by Valeriana, she did not grant
Maximo the authority to bind her solidarity with him on any loans he might secure
Pacific Banking Corp. vs Intermediate Appellate Court
The undertaking signed by Roberto Regala, Jr. although denominated "Guarantor's
Undertaking," was in substance a contract of surety. As distinguished from a
contract of guaranty where the guarantor binds himself to the creditor to fulfill the
obligation of the principal debtor only in case the latter should fail to do so, in a
contract of suretyship, the surety binds himself solidarily with the principal debtor
(Art. 2047, Civil Code of the Philippines).
Ronquillo vs CA
Article 1207 and 1208 of the Civil Code provides
Art. 1207. The concurrence of two or more debtors in one and the same
obligation does not imply that each one of the former has a right to demand, or that
each one of the latter is bound to render, entire compliance with the prestation.
Then is a solidary liability only when the obligation expressly so states, or when the
law or the nature of the obligation requires solidarity.
Art. 1208. If from the law,or the nature or the wording of the obligation to
which the preceding article refers the contrary does not appear, the credit or debt
shall be presumed to be divided into as many equal shares as there are creditors
and debtors, the credits or debts being considered distinct from one another,
subject to the Rules of Court governing the multiplicity of quits.
Quiombing vs CA
A joint obligation is one in which each of the debtors is liable only for a
proportionate part of the debt, and each creditor is entitled only to a proportionate
part of the credit.
A solidary obligation is one in which each debtor is liable for the entire obligation,
and each creditor is entitled to demand the whole obligation.

Hence, in the former, each creditor can recover only his share of the obligation, and
each debtor can be made to pay only his part; whereas, in the latter, each creditor
may enforce the entire obligation, and each debtor may be obliged to pay it in
full.made to pay only his part; whereas, in the latter, each creditor may enforce the
entire obligation, and each debtor may be obliged to pay it in full.
Rule of Law: Either one of the solidary creditors my file a claim against the debtor.
Inciong vs CA
A solidary or joint and several obligation is one in which each debtor is liable for the
entire obligation, and each creditor is entitled to demand the whole obligation. In a
joint obligation each obligor answers only for a part of the whole liability and to
each obligee belongs only a part of the correlative rights. (Art. 1207, Civil Code)