Remedies in Reciprocal Obligations

Remedies in Reciprocal Obligations
1. Choice of remedies.
 If one of the obligors does not comply, the aggrieved party may
choose between 2 remedies.
a. Action for specific performance (fulfillment) of the obligation with damages
Example: A buyer enters into a contract na mag palit og goods from a seller. Then
the buyer pays the agreed price, but the seller fails to deliver the goods. So that
pwd ni buyer ih demanda si the seller kay wala nya na deliver ang purchase ni
buyer, then, asking the court to force the seller to deliver the goods as they agreed.
b. Action for rescission of the obligation also with damages
Example: In a contract for the sale of a house, the seller refuses to transfer
ownership despite having received part of the payment. So,the buyer can file for
rescission, asking the court to cancel the contract, recover the amount paid, and
demand damages for expenses incurred during the transaction.
In other terms Rescission means– is remedy available to oblige when obligor
fails to comply with his obligation, to abrogate contract as if it was never entered,
with the right to recover damages.
2. Remedy of rescission for non-compliance.

The principal action must be distinguished from the subsidiary action for rescission
by reason of lesion or damage under 1381, and from cancellation of a contract
based and not on violation by a party of his obligation.
Example: A buyer and seller agree on the sale of a car. The buyer pays half the
price upfront, but the seller refuses to deliver the car. The buyer can seek
rescission for non-compliance—demanding the return of the money paid and
canceling the contract due to the seller's breach of the agreement.
Limitations on right to demand rescission.

The right to rescind by the injured party (the one who has performed what is
incumbent upon him) is not absolute. Thus –
1. Resort to the courts.
 Rescission contemplated by Article 1191 is a judicial rescission.
No person can take justice in his own hands and decide by himself what are his
rights in the matter.
Other party must also have an opportunity to be heard
Example: A contractor fails to complete a building project for a client, breaching the
contract. The client cannot simply declare the contract rescinded and demand a
refund. Instead, they must file a lawsuit in court to seek a judicial rescission, where
the contractor will have an opportunity to explain or defend their actions.
2. Power of court to fix period

The court has discretionary power to allow a period within which a person in
default may be permitted to perform his obligation if there is a just cause for giving
time to the debtor.
Example: A supplier fails to deliver goods on time due to a natural disaster that
disrupted their operations. The buyer files for rescission, but the court may decide
to grant the supplier an extension to fulfill their obligation, given the just cause for
the delay.
3. Right of third persons.

Rescission creates the obligation of mutual restitution.
if the thing (subject matter of the obligation) is in the hands of a third person who
acted in good faith, rescission is not available as a remedy
Example: A buyer purchases a painting from a seller, but later seeks rescission
because the seller misrepresented the artwork. If the buyer sold the painting to a
third person who had no knowledge of the dispute, the court cannot force the third
person to return the painting as part of the rescission. Instead, the original parties
must resolve their dispute without affecting the third party.
4. Substantial violation.
General rule: rescission will not be granted for slight or casual
breaches of contract; the violation should be substantial and fundamental as to
defeat the object of the parties in making the agreement.
Example: A tenant is late on rent by a few days, but pays in full shortly afterward.
The landlord attempts to rescind the lease. Since the delay was minor and did not
defeat the purpose of the contract, the court is unlikely to grant rescission for such
a slight breach.
5. Waiver of right.
The right to rescind may be waived, expressly or impliedly.
Example: A client repeatedly accepts delayed payments from a contractor over the
course of several months without objection. Later, the client tries to rescind the
contract due to the contractor’s failure to meet deadlines. However, the court may
find that the client waived the right to rescind by consistently accepting late
performance.
Rescission without previous judicial decree

1. Where automatic recissions expressly stipulated.
Explanation: the parties may validy eneter into an agreement that violation of the
terms of the contract would cause cancellation thereof even without judicial
intervention or permission.
2. Where contract still executory.
Explanation: Where there is no performance yet by both parties, but one is ready
and willing to comply what is incumbent upon him and the other is not.
Where both parties guilty of breach.

The article contemplates two situations.
1. First infractor known.
Explanation: One party violated his obligation; subsequently, the other also
violated his part of the obligation; subsequently, the other violated his part of the
obligation.
2. First infractor cannot be determined.
Explanation: One party violated his obligation followed by the other, but it cannot
be determined which of them was the first infractor.

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2. Remedy of rescission for non-compliance.

Limitations on right to demand rescission.

2. Power of court to fix period

3. Right of third persons.

Rescission without previous judicial decree

Where both parties guilty of breach.

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