OBLICON

Maglasang v Northwestern Inc, Univ

Facts: On 10 June 2004, respondent Northwestern University (Northwestern), an educational
institution offering maritime-related courses, engaged the services of a Quezon City-based firm,
petitioner GL Enterprises, to install a new IBS in Laoag City. The installation of an IBS, used as the
students training laboratory, was required by the Commission on Higher Education (CHED) before a
school could offer maritime transportation programs.
Since its IBS was already obsolete, respondent required petitioner to supply and install specific
components in order to form the most modern IBS that would be acceptable to CHED and would be
compliant with the standards of the International Maritime Organization (IMO). For this purpose, the
parties executed two contracts.
Common to both contracts are the following provisions: (1) the IBS and its components must be
compliant with the IMO and CHED standard and with manuals for simulators/major equipment; (2) the
contracts may be terminated if one party commits a substantial breach of its undertaking; and (3) any
dispute under the agreement shall first be settled mutually between the parties, and if settlement is
not obtained, resort shall be sought in the courts of law.
Subsequently, Northwestern paid P1 million as down payment to GL Enterprises. The former then
assumed possession of Northwesterns old IBS as trade-in payment for its service. Thus, the balance
of the contract price remained at P1.97 million.

Two months after the execution of the contracts, GL Enterprises technicians delivered various
materials to the project site. However, when they started installing the components, respondent halted
the operations. GL Enterprises then asked for an explanation. 8

Northwestern justified the work stoppage upon its finding that the delivered equipment were
substandard.9 It explained further that GL Enterprises violated the terms and conditions of the
contracts, since the delivered components (1) were old; (2) did not have instruction manuals and
warranty certificates; (3) contained indications of being reconditioned machines; and (4) did not meet
the IMO and CHED standards. Thus, Northwestern demanded compliance with the agreement and
suggested that GL Enterprises meet with the formers representatives to iron out the situation.

Instead of heeding this suggestion, GL Enterprises filed on 8 September 2004 a Complaint 10 for breach
of contract and prayed for the following sums: P1.97 million, representing the amount that it would
have earned, had Northwestern not stopped it from performing its tasks under the two contracts; at
least P100,000 as moral damages; at least P100,000 by way of exemplary damages; at
least P100,000 as attorneys fees and litigation expenses; and cost of suit. Petitioner alleged that
Northwestern breached the contracts by ordering the work stoppage and thus preventing the
installation of the materials for the IBS.

Northwestern denied the allegation. In its defense, it asserted that since the equipment delivered were
not in accordance with the specifications provided by the contracts, all succeeding works would be
futile and would entail unnecessary expenses. Hence, it prayed for the rescission of the contracts and
made a compulsory counterclaim for actual, moral, and exemplary damages, and attorneys fees.

The RTC held both parties at fault. It found that Northwestern unduly halted the operations, even if
the contracts called for a completed project to be evaluated by the CHED. In turn, the breach
committed by GL Enterprises consisted of the delivery of substandard equipment that were not
compliant with IMO and CHED standards as required by the agreement.
The CA, applying Art 1191 of the Civil Code, declared the rescission of the contracts. It then proceeded
to affirm the RTCs order of mutual restitution.
Issue: Whether CA gravely erred in finding substantial breach on the part of GL Enterprises.

Held: The power to rescind the obligations of the injured party is implied in reciprocal obligations, such
as in this case. On this score, the CA correctly applied Article 1191, which provides thus:
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 impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a
period.

The two contracts require no less than substantial breach before they can be rescinded. Since the
contracts do not provide for a definition of substantial breach that would terminate the rights and
obligations of the parties, we apply the definition found in our jurisprudence.

This Court defined in Cannu v. Galang that substantial, unlike slight or casual breaches of contract, are
fundamental breaches that defeat the object of the parties in entering into an agreement, since the
law is not concerned with trifles.

The question of whether a breach of contract is substantial depends upon the attending circumstances.
In the case at bar, the parties explicitly agreed that the materials to be delivered must be compliant
with the CHED and IMO standards and must be complete with manuals. Aside from these clear
provisions in the contracts, the courts a quo similarly found that the intent of the parties was to
replace the old IBS in order to obtain CHED accreditation for Northwesterns maritime-related courses.
According to CHED Memorandum Order (CMO) No. 10, Series of 1999, as amended by CMO No. 13,
Series of 2005, any simulator used for simulator-based training shall be capable of simulating the
operating capabilities of the shipboard equipment concerned. The simulation must be achieved at a
level of physical realism appropriate for training objectives; include the capabilities, limitations and
possible errors of such equipment; and provide an interface through which a trainee can interact with
the equipment, and the simulated environment.

Given these conditions, it was thus incumbent upon GL Enterprises to supply the components that
would create an IBS that would effectively facilitate the learning of the students.

However, GL Enterprises miserably failed in meeting its responsibility. As contained in the findings of
the CA and the RTC, petitioner supplied substandard equipment when it delivered components that (1)
were old; (2) did not have instruction manuals and warranty certificates; (3) bore indications of being
reconditioned machines; and, all told, (4) might not have met the IMO and CHED standards.
Highlighting the defects of the delivered materials.

In contrast, Northwesterns breach, if any, was characterized by the appellate court as slight or
casual. By way of negative definition, a breach is considered casual if it does not fundamentally defeat
the object of the parties in entering into an agreement. Furthermore, for there to be a breach to begin
with, there must be a "failure, without legal excuse, to perform any promise which forms the whole or
part of the contract."

Here, as discussed, the stoppage of the installation was justified. The action of Northwestern
constituted a legal excuse to prevent the highly possible rejection of the IBS. Hence, just as the CA
concluded, we find that Northwestern exercised ordinary prudence to avert a possible wastage of time,
effort, resources and also of the P2.9 million representing the value of the new IBS.

Swire Realty v Yu
Evidently, the materials delivered were less likely to pass the CHED standards, because the navigation
system to be installed might not accurately point to the true north; and the steering wheel delivered
was one that came from an automobile, instead of one used in ships. Logically, by no stretch of the
imagination could these form part of the most modern IBS compliant with the IMO and CHED
standards.

Even in the instant appeal, GL Enterprises does not refute that the equipment it delivered was
substandard. However, it reiterates its rejected excuse that Northwestern should have made an
assessment only after the completion of the IBS. Thus, petitioner stresses that it was Northwestern
that breached the agreement when the latter halted the installation of the materials for the IBS, even
if the parties had contemplated a completed project to be evaluated by CHED. However, as aptly
considered by the CA, respondent could not just "sit still and wait for such day that its accreditation
may not be granted by CHED due to the apparent substandard equipment installed in the bridge
system." The appellate court correctly emphasized that, by that time, both parties would have incurred
more costs for nothing.

Additionally, GL Enterprises reasons that, based on the contracts, the materials that were hauled all
the way from Quezon City to Laoag City under the custody of the four designated installers might not
have been the components to be used. Without belaboring the point, we affirm the conclusion of the
CA and the RTC that the excuse is untenable for being contrary to human experience.

Facts: Respondent Jayne Yu and petitioner Swire Realty Development Corporation entered into a
Contract to Sell covering one residential condominium unit in Makati City for the total contract price of
P7,519,371.80, payable in equal monthly installments until September 24, 1997. Respondent likewise
purchased a parking slot in the same condominium building for P600,000.00.
Respondent paid the full purchase price of P7,519,371.80 for the unit while making a down payment of
P20,000.00 for the parking lot. However, notwithstanding full payment of the contract price, petitioner
failed to complete and deliver the subject unit on time. This prompted respondent to file a Complaint
for Rescission of Contract with Damages before the Housing and Land Use Regulatory Board (HLURB)
Expanded National Capital Region Field Office (ENCRFO).
On October 19, 2004, the HLURB ENCRFO rendered a Decision 3 dismissing respondents complaint. It
ruled that rescission is not permitted for slight or casual breach of the contract but only for such
breaches as are substantial and fundamental as to defeat the object of the parties in making the
agreement.

Respondent then elevated the matter to the HLURB Board of Commissioners. In a Decision 5 dated
March 30, 2006, the HLURB Board of Commissioners reversed and set aside the ruling of the HLURB
ENCRFO and ordered the rescission of the Contract to Sell, ratiocinating:

We find merit in the appeal. The report on the ocular inspection conducted on the subject
condominium project and subject unit shows that the amenities under the approved plan have not yet
been provided as of May 3, 2002, and that the subject unit has not been delivered to [respondent] as
of August 28, 2002, which is beyond the period of development of December 1999 under the license to
sell. The delay in the completion of the project as well as of the delay in the delivery of the unit are
breaches of statutory and contractual obligations which entitles [respondent] to rescind the contract,
demand a refund and payment of damages.

Given that petitioner, without justification, supplied substandard components for the new IBS, it is
thus clear that its violation was not merely incidental, but directly related to the essence of the
agreement pertaining to the installation of an IBS compliant with the CHED and IMO standards.
Consequently, the CA correctly found substantial breach on the part of petitioner.

The delay in the completion of the project in accordance with the license to sell also renders
[petitioner] liable for the payment of administrative fine.

Petitioner moved for reconsideration, but the same was denied by the HLURB Board of Commissioners.
Petitioner appealed to the Office of the President (OP) but was denied. But when petitioner filed for
motion for reconsideration, it was granted by the OP. The Respondent now sought for reconsideration
but was denied by the CA. Thus, the present petition.

breach of contract as it failed to finish and deliver the unit to respondent within the stipulated period.
The delay in the completion of the project as well as of the delay in the delivery of the unit are
breaches of statutory and contractual obligations which entitle respondent to rescind the contract,
demand a refund and payment of damages.

Issue: Whether rescission of the contract is proper in the instant case.

Fong v Duenas

Held: [Second issue,] Article 1191 of the Civil Code sanctions the right to rescind the obligation in the
event that specific performance becomes impossible, to wit:
George Fong
Article 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 impossible.

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.

Basic is the rule that the right of rescission of a party to an obligation under Article 1191 of the Civil
Code is predicated on a breach of faith by the other party who violates the reciprocity between them.
The breach contemplated in the said provision is the obligors failure to comply with an existing
obligation. When the obligor cannot comply with what is incumbent upon it, the obligee may seek
rescission and, in the absence of any just cause for the court to determine the period of compliance,
the court shall decree the rescission.

In the instant case, the CA aptly found that the completion date of the condominium unit was
November 1998 pursuant to License No. 97-12-3202 dated November 2, 1997 but was extended to
December 1999 as per License to Sell No. 99-05-3401 dated May 8, 1999. However, at the time of the
ocular inspection conducted by the HLURB ENCRFO, the unit was not yet completely finished as the
kitchen cabinets and fixtures were not yet installed and the agreed amenities were not yet available.
[From the foregoing,] it is evident that the report on the ocular inspection conducted on the subject
condominium project and subject unit shows that the amenities under the approved plan have not yet
been provided as of May 3, 2002, and that the subject unit has not been delivered to respondent as of
August 28, 2002, which is beyond the period of development of December 1999 under the license to
sell. Incontrovertibly, petitioner had incurred delay in the performance of its obligation amounting to

Jose Duenas

Facts: Dueas is engaged in the bakery, food manufacturing, and retailing business, which are all
operated under his two companies, D.C. DANTON, Inc. (Danton) and Bakcom Food Industries, Inc.
(Bakcom). He was an old acquaintance of Fong as they were former schoolmates at the De La Salle
University.

Sometime in November 1996, Dueas and Fong entered into a verbal joint venture contract where
they agreed to engage in the food business and to incorporate a holding company under the name
Alliance Holdings, Inc. (Alliance or the proposed corporation). Its capitalization would be Sixty Five
Million Pesos (P65 Million), to which they would contribute in equal parts.

The parties agreed that Fong would contribute Thirty Two Million and Five Hundred Thousand Pesos
(P32.5 Million) in cash while Dueas would contribute all his Danton and Bakcom shares which he
valued at P32.5 Million.8 Fong required Dueas to submit the financial documents supporting the
valuation of these shares.

Fong started remitting in tranches his share in the proposed corporations capital. He made the
remittances under the impression that his contribution would be applied as his subscription to fifty
percent (50%) of Alliances total shareholdings. On the other hand, Dueas started processing the
Boboli9international license that they would use in their food business.

On June 13, 1997, Fong sent a letter to Dueas informing him of his decision to limit his total
contribution from P32.5 Million to P5 Million. This is because of the delays in implementing their joint
venture, that had also turn down a number of business opportunities for Fong, thus, caused them to
rethink their position in the joint venture.

Fong observed that despite his P5 Million contribution, Dueas still failed to give him the financial
documents on the valuation of the Danton and Bakcom shares. Thus, except for Dueas
representations, Fong had nothing to rely on to ensure that these shares were really valued at P32.5
Million. Moreover, Dueas failed to incorporate and register Alliance with the Securities and Exchange
Commission (SEC).

These circumstances convinced Fong that Dueas would no longer honor his obligations in their joint
venture agreement.13 Thus, on October 30, 1997, Fong wrote Dueas informing him of his decision to
cancel the joint venture agreement. He also asked for the refund of the P5 Million that he
advanced.14 In response, Dueas admitted that he could not immediately return the money since he
used it to defray the business expenses of Danton and Bakcom.

Held: The court Granted the Petition. An examination of Fongs complaint shows that although it was
labeled as an action for a sum of money and damages, it was actually a complaint for rescission. The
following allegations in the complaint support this finding:

9. Notwithstanding the aforesaid remittances, defendant failed for an unreasonable length of time to
submit a valuation of the equipment of D.C. Danton and Bakcom x x x.
10. Worse, despite repeated reminders from plaintiff, defendant failed to accomplish the organization
and incorporation of the proposed holding company, contrary to his representation to promptly do so.
xxxx

To meet Fongs demand, Dueas proposed several schemes for payment of the P5 Million.16 However,
Fong did not accept any of these proposed schemes. On March 25, 1998, Fong wrote a final letter of
demand17 informing Dueas that he would file a judicial action against him should he still fail to pay
after receipt of this written demand.
Since Dueas did not pay, Fong filed a complaint against him for collection of a sum of money and
damages.

17. Considering that the incorporation of the proposed holding company failed to materialize, despite
the lapse of one year and four months from the time of subscription, plaintiff has the right to revoke
his pre-incorporation subscription. Such revocation entitles plaintiff to a refund of the amount
of P5,000,000.00 he remitted to defendant, representing advances made in favor of defendant to be
considered as payment on plaintiffs subscription to the proposed holding company upon its
incorporation, plus interest from receipt by defendant of said amount until fully paid. [Emphasis
supplied.]

RTC ruled in favor of Fong and held that a careful examination of the complaint shows that although it
was labeled as an action for collection of a sum of money, it was actually an action for rescission.
The trial court noted that Dueas failure to furnish Fong with the financial documents on the valuation
of the Danton and Bakcom shares, as well as the almost one year delay in the incorporation of
Alliance, caused Fong to rescind the joint venture agreement. According to the trial court, these are
adequate and acceptable reasons for rescission. Since Dueas was unjustly enriched by Fongs
advance capital contributions, the trial court ordered him to return the money amounting to P5 Million
and to pay ten percent (10%) of this amount in attorneys fees, as well as the cost of the suit.

CA reversed the RTCs ruling. The CA ruled that Fongs June 13, 1997 letter evidenced his intention to
convert his cash contributions from "advances" to the proposed corporations shares, to mere
"investments." Thus, contrary to the trial courts ruling, Dueas correctly invested Fongs P5 Million
contribution to Bakcom and Danton. This did not deviate from the parties original agreement as
eventually, the shares of these two companies would form part of Alliances capital.

Fongs allegations primarily pertained to his cancellation of their verbal agreement because Dueas
failed to perform his obligations to provide verifiable documents on the valuation of the Dantons and
Bakcoms shares, and to incorporate the proposed corporation. These allegations clearly show that
what Fong sought was the joint venture agreements rescission.

As a contractual remedy, rescission is available when one of the parties substantially fails to do what
he has obligated himself to perform.32 It aims to address the breach of faith and the violation of
reciprocity between two parties in a contract. 33 Under Article 1191 of the Civil Code, the right of
rescission is inherent in reciprocal obligations, viz:

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. [Emphasis supplied.]
Lastly, the CA held that the June 13, 1997 letter showed that Fong knew all along that he could not
immediately ask for the return of his P5 Million investment. Thus, whether the action filed was a
complaint for collection of a sum of money, or rescission, it must still fail.

Issue: Whether petitioner herein has the right for its rescission.

Dueas submits that Fongs prayer for the return of his cash contribution supports his claim that
Fongs complaint is an action for collection of a sum of money. However, Dueas failed to appreciate
that the ultimate effect of rescission is to restore the parties to their original status before they
entered in a contract. As the Court ruled in Unlad Resources v. Dragon: 34 Rescission has the effect of
"unmaking a contract, or its undoing from the beginning, and not merely its termination." Hence,
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 it from
the beginning and restore the parties to their relative positions as if no contract has been made.

Accordingly, when a decree for rescission is handed down, it is the duty of the court to require both
parties to surrender that which they have respectively received and to place each other as far as
practicable in his original situation.
The Court agrees with the trial court that Dueas violated his agreement with Fong (that instead, the
money should have been used in processing Alliances registration. Its incorporation would not
materialize if there would be no funds for its initial capital). Aside from unilaterally applying Fongs
contributions to his two companies, Dueas also failed to deliver the valuation documents of the
Danton and Bakcom shares to prove that the combined values of their capital contributions actually
amounted to P32.5 Million. These acts led to Dueas delay in incorporating the planned holding
company, thus resulting in his breach of the contract.

Following the terms of the Deed of Conditional Sale, Pacific paid a down payment of P1,792,590
leaving a balance of P4,182,710, to be paid upon the fulfillment of certain conditions, namely: (1) the
completion of all documents necessary for the transfer of the certificate of title of the land; (2) the
vendors (the Ascanos) shall guarantee removal of the tenants, squatters and other occupants on the
land, with the disturbance compensation to said tenants to be paid by vendors; and (3) submission by
vendors to Pacific of the Affidavit of Non-Tenancy and the land operation transfer documents.

On 13 February 1995, petitioners submitted to Pacific a Barangay Agrarian Reform Council Certification
stating that the property was untenanted. They also informed Pacific that the other necessary
documents were being processed and more expected to be completed the following month.

The following month, however, petitioners failed to submit the necessary documents despite several
demands from Pacific to do so. Instead, they informed Pacific that they wanted to rescind the contract
and refused to accept Pacific's tender of additional payments amounting to P1,005,180.
On this basis, Dueas breach justified Fongs rescission of the joint venture agreement under Article
1191.

The right of rescission of a party to an obligation under Article 1191 of the Civil Code is predicated on
a breach of faith by the other party who violates the reciprocity between them. The breach
contemplated in the said provision is the obligors failure to comply with an existing obligation. When
the obligor cannot comply with what is incumbent upon it, the obligee may seek rescission and in the
absence of any just cause for the court to determine the period of compliance, the court shall decree
the rescission.

In the present case, private respondents validly exercised their right to rescind the contract, because
of the failure of petitioners to comply with their obligation to pay the balance of the purchase price.
Indubitably, the latter violated the very essence of reciprocity in the contract of sale, a violation that
consequently gave rise to private respondents right to rescind the same in accordance with law.

Ascano-Cupino v Pacific Rehouse

Facts: On 1 October 1994. Honorlita Ascano-Cupino 4 and Flaviana Ascano-Colocado (petitioners), and
their sister, Noeminia Ascano, (collectively, the Ascanos) 5 entered into a Deed of Conditional Sale with
Pacific Rehouse Corporation (Pacific). The latter obliged itself to purchase from the Ascanos a parcel of
land with an area of 59,753 square meters located in General Trias, Cavite for P5,975,300.

Pacific, through Melecio P. Fortuno, Jr. (Fortuno), opened a savings account with the Capitol Bank of
General Trias, Cavite, in the names of petitioners, depositing in said account the amount of
P1,005,180.11 Pacific then informed petitioners of the deposit and that "they were authorized to
withdraw the same at [their] convenience."

Thereafter, Pacific learned that petitioners were negotiating the sale of the property with other buyers
allegedly for a higher consideration. In September 1995, Pacific effected an annotation of an adverse
claim
on
the
property's
title. 13redarclaw
Pacific made several demands on petitioners to fulfill their obligations under the Deed of Conditional
Sale. Instead of heeding the demands, petitioners, through a certain Atty. Fojas, began negotiating
with Pacific for the rescission of the Deed of Conditional Sale. Pacific made another demand on
petitioners to fulfill all their obligations, Petitioners continued to ignore the demand.

Pacific then filed a Complaint for Cancellation of Contract, Sum of Money and Damages before the RTC
of Trece Martires City. However, before pre-trial, Pacific discovered that petitioners had withdrawn the
PI,005,180 it had deposited with Capitol Bank of General Trias. In view of petitioners' action, Pacific
filed an Amended Complaint changing its cause of action from cancellation to specific performance.

Petitioners alleged that it was Pacific that defaulted in its payment. They maintained that the real
purchase price they agreed upon was P200 per square meter, or a total of P11,950,600, and that

allegedly the much lower amount stated in the Deed of Conditional Sale was put there at Pacific's
request in order to lower the taxes they would need to pay.
Pacific is entitled to ask
for specific performance.
The RTC ruled for the cancellation of the contract and ordering defendants (Ascanos) to return the
amount of Two Million Six Hundred Two Thousand (P2,602,000.00) Pesos to the plaintiff; while Plaintiff
is hereby ordered to pay defendants who incurred the following in defending their
rights:LawlibraryofCRAlaw
1. The amount of One Hundred Fifty Thousand (P150,000.00) Pesos as damages;
2. The amount of One Hundred Thousand (P100,000.00) Pesos as attorney's fees; and
3. The litigation expenses.

Article 1191 of the Civil Code states:LawlibraryofCRAlaw

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 fulfillment and the rescission of the obligation, with 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 just cause authorizing the fixing of a
period.

The CA granted the appeal by Pacific. The CA held that "the trial court erred in deciding the case on
the basis of the original complaint." The CA noted that Pacific amended its complaint from cancellation
of contract to specific performance, which was done with leave of and allowed by the RTC.
The CA also held that rescission was not warranted in this case. It ruled that petitioners "were clearly
the ones who failed in their obligation under the contract."28 Pacific then is the injured party entitled to
choose between rescission of the contract and fulfillment of the obligation. Pacific chose the latter, as
stated in their Amended Complaint for specific performance.darclaw
Lastly, the CA found that it was proven and undisputed that a total of P4,497,770 had already been
paid by Pacific leaving only a balance of P4,577,530.

Issue: Whether Rescission is a valid action in the case at bar.

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.
As previously discussed, the Deed of Conditional Sale clearly spells out the obligations of each party.
Based on the allegations of the parties and the findings of the lower courts, Pacific has already
partially fulfilled its obligation while petitioners have not.
The obligation of petitioners under the Deed of Conditional Sale is to "guarantee removal of tenants"
and not merely to pay disturbance compensation. It is an undertaking specifically given to petitioners
under the Deed of Conditional Sale, considering that Pacific is not yet the owner of the property and
will have no personality to evict the property's present occupants. Petitioners failed to fulfill this
obligation, as well as the obligation to deliver the necessary documents to complete the sale.
As previously held by the Court, "the injured party is the party who has faithfully fulfilled his obligation
or is ready and willing to perform his obligation."64 From the foregoing, it is clear that Pacific is the
injured party, entitled to elect between rescinding of the contract and exacting fulfillment of the
obligation. It has opted for the remedy of specific performance, as embodied in its Amended
Complaint.
Moreover, rescission must not be allowed in favor of petitioners, since they themselves failed to
perform their obligations under the Deed of Conditional Sale. 65redarclaw
As to the purchase price, both the RTC and the CA held that, given no other evidence to conclude
otherwise, the true purchase price agreed upon by the parties is P5,975,300, the amount stipulated in
the Deed of Conditional Sale.

Held: The Court affirmed the decision of CA. It is clear that the RTC erred in deciding the case based
on the original complaint and not on the Amended Complaint, thus:LawlibraryofCRAlaw
[Pacific] in [its] complaint prays for the rescission or cancellation of contract and to this allegation, the
Court has no recourse but to grant this prayer x x x.

The Court agrees.