FACTS OF THE CASE: On December 22, 1989, Octagon Realty Development entered into a contract with Casino Wood

Parquet and Sanding Services (operated and owned by Bienvenido M. Casino Jr.) for the installation by the latter of narra wood parquet (kiln dried) to the Manila Luxury Condominium Project by the former. This is a total consideration of P1,158,487 with the amount ofP463,394.50 representing 40% of the total contract price serving as downpayment, and was paid by the respondent. This is for a total area of 60,973 square feet. The petitioner having delivered 26,727.02 square feet of wood incurred in delay for the remaining materials of 34,245.98 square feet of wood parquet. In order to minimize losses, the respondent contracted Hilvano Wood Parquet & Sanding Services. The respondent filed a case against Mr. Casino in the Pasig Regional Trial Court for the rescission of contract plus damages. For the actual damages, reimbursement of amount paid to Hilvano, moral damages and attorneys fees plus a fee per appearance and other expenses for the suit. But the petitioner answered the complaint with his counter claims stating the respondent failed to provide safe & secure area for materials, failing to pay second & third billings for deliveries and the filing of case is premature, it has no cause of action and pleaded counterclaims of rescission of contract & payment by the respondent of P597,392.90 with legal interest from the filing of complaint, or in the alternative payment of cost of the billings for plus interest, actual & compensatory damages, moral damages & attorneys fees, litigation expenses & costs of the suit. The Pasig Regional Trial Court holds the rescission of contract effected by respondent valid and orders the petitioner payment of P2,111,061.69 as actual and compensatory damages and P50, 000 as attorneys fees. The petitioners appeal to the Court of Appeals reduces the amount of damages awarded by affirming the decision of the Trial Court but modifying the amount with only P1,622,003.80 with legal interest as of January 21, 1997. The petitioner and the respondent filed their respective Motion for Reconsideration and Motion for Partial Reconsideration. In its resolution on May 20, 1998, the Court of Appeals (CA) amended its original decision by affirming in toto the decision of the Trial Court, thus petitioners appeal is dismissed. ISSUES: 1. Whether or not holding the petitioner liable for Breach of Contract is in contrary to or in violation of Article 1191 of the New Civil Code. 2. Whether or not the damages of P,162,003.80 with legal interest awarded to the respondent is legally justified, or proven with reasonable degree of certainty.

3. Whether or not the damages awarded to the respondent was issued with grave abuse of discretion amounting from lack of or in excess of jurisdiction, and/or contrary to the facts, evidence, jurisprudence and law. RULINGS: 1. Binding upon the Supreme Court are the factual findings settled by rule of jurisprudence of the court of appeals, particularly when affirmatory of those of the trial court. 2. Supreme court as not as liberty to disturb what has been found below and supplant them with its own unless the evidence of record clearly do not support such findings or that the same were arrived at based on a patent misunderstanding of facts, situations which do not obtain in this case. 3. The respondent is vested by law with the right to rescind the parties agreement, conformably with article 1191 of the civil code, which partly reads: The power to rescind the obligation is implied in reciprocal oned, in case one of the obligors should not comply with what is incumbent upon him. That the injured party may choose between the rescission and fulfilment of the obligation, with the payment of damages in either case. He may also seek rescission even after he has chosen fulfilment, If the latter should become impossible. 4. Supreme court, in fine, thus rule and so hold that respondent acted well within its rights in unilaterally terminating its contract with petitioner and in entering into a new one with a third person in order to minimize its losses, without prior need of resorting to judicial action. 5. Supreme court sees no conflict between their ruling and the previous jurisprudence invoked by respondent declaring that judicial action is necessary for the resolution of a reciprocal obligation; since in every case where the extrajudicial resolution in contested only the final award of the court of competent jurisdiction can conclusively settle whether the resolution was proper or not. 6. The evidence adduced by respondent is sufficient enough to substantiate its claim for actual or compensatory damages in the amount of P2, 111, 061.69 as found by the trial court and affirmed by the court of appeals. 7. Respondent must be indemnified for the following damages it sustained by reason of petitioners breach of contract.

8.

Supreme court awards the following: P912, 452.39---Estimated losses on new price, unliquidated damages and cost of money

P1, 198, 609.30---Cost incurred by respondent in engaging the services of Hilvano Quality parquet and sanding services for the completion of work unfinished by petitioner. 9. Supreme court denied the instant petition and affirmed the assailed decision and resolution of the appellate court. 10. Costs against the petitioner as so ordered by the Supreme court.

Articles:

Article 1165:
If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same interest, he shall be responsible for fortuitous event until he has effected the delivery Remedies of the creditor in real obligations in specific real obligation (A) Demans specific performance of fulfilment (if still possible) of the obligation with a right to indemnity for damages (B) Demand rescission or cancellation (in certain cases) of the obligation also with a right to recover damages (C) Demand payment of damages only, where it is the only feasible remedy.

Article 1167:
If a person obliged to do something fails to do it, the same shall be executed at his cost. The same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore, it may be decreed that what has been poorly done be undone.

Article 1169: Par 1 and Par 6

Those obliged to deliver or to do something incur in delay from the time the oblige judicially or extra-judicially demands from them the fulfilment of their obligation. 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 party fulfils his obligation, delay by the other begins.

Article 1170:
Those who in the performance of their obligations are guilty of fraud, negligence or delay, and those who in any manner contravene the tenor thereof, are liable for damages.

Article 1171:
Responsibility arising from negligence in the performance of every kind of obligation is also demandable, but such liability may be regulated by the courts, according to the circumstances. Culpa contractual- negligence in contracts resulting in their breach.

ARTICLES:

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 fulfilment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfilment if the latter should become impossible. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of the period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with articles 1385, 1388 and the mortgage law (1124)

1247: unless otherwise stipulated, the extrajudicial expenses required by the payment
shall be for the account of the debtor. With regard to judicial costs, the rules of court shall govern; losing party pays judicial cost.

INSIGHT: We realize how long it takes for a case to be resolved and how much money there is at stake, including all the legal fees. We also learned that its difficult to prepare defenses in a case because of the extensiveness of the articles and their interpretations. We highly agree with the decision of the Supreme Court because the ultimate judgement is given to them and it must be followed. Bringing the case in the Supreme Court will also increase risk, especially when you lose in the lower court because when you lose your case in the lower courts, the greater the chance that you will lose in the Supreme court. The Supreme Court is not a venue for the questioning of facts; rather it is only a venue for the questioning of law. In relation to the judgement of the Supreme Court, we realized that the responsibility of the lower court to supply the premature judgement of the case is very crucial in determining the ultimate judgement made by the supreme court, therefore making the proceedings in the lower court very extensive on order for them to provide proper information needed by the Supreme court to render their final judgement.