Republic of the Philippines

First Judicial Region

REGIONAL TRIAL COURT
Branch 60
Baguio City

ARISTOTLE AMINO and SPOUSES

EUNICE AMINO and ABRAHAM
AMINO, Civil Case No. 8813-R
Plaintiffs,
For:
-versus-
RESCISSION AND/ OR
CELIA PILIZ-BAYLON and ANNULMENT OF CONTRACT
ERLINDA PALAT,
Defendant-Movants.
x- - - - - - - - - - - - - - - - - - - - - x

RESOLUTION
This resolves the Motion to Dismiss and Rejoinder filed by defendants-
movants Celia Piliz-Baylon and Erlinda Palaton, seeking the dismissal of
plaintiffs’ Complaint for Rescission and/or Annulment of Contract, and the
latter’s Comment/Opposition (to the Motion to Dismiss), respectively.

The Case for the Defendants-Movants:

The defendants-movants allege that the action for the Rescission and/or
Annulment of Contract should be dismissed on the following grounds:

First, that the action is barred by prescription.

The defendants-movants seek the dismissal of the instant case on the

ground that it is barred by prescription, the case for rescission of contract being
filed beyond the prescriptive period of four (4) years from the date of its
execution pursuant to Article 1389 of the Civil Code.

Article 1389 of the Civil Code provides:

“The action to claim rescission must be commenced within four

years.”1
According to the defendants-movants, the Agreement2 subject of this
case was executed on October 15, 2002, or almost sixteen (16) years ago;
however, this action to rescind was filed only on March 1, 2018, or long after
the prescriptive period to file which had expired on October 16, 2006.

1
Article 1389 of the Civil Code
2
Agreement, Annex “A”

Civil Case No. 8813-R Page 1

 Second, that the claim of plaintiffs has been waived, abandoned or
otherwise extinguished.

The defendants-movants allege that sometime on March 31, 2008,

plaintiff Eunice Amino, with the conformity of her co-plaintiffs Aristotle
Amino and Abraham Amino executed an Affidavit3 categorically declaring that
on October 15, 2002 she and her family had “freely and voluntarily waived,
transferred and conveyed their right over a tract of land consisting of 251
square meters to Erlinda Palat and Celia Piliz.´Further, Eunice Amino
categorically said that she was executing the said Affidavit to “confirm and
affirm the previous waiver of said parcel of land” in favor of Erlinda Palat and
Celia Piliz.

Thus, whatever right plaintiffs might have had to claim rescission of the
said Agreement was deemed to have been waived, abandoned or otherwise
extinguished by their execution of said Affidavit.

Also, defendants-movants allege that it is now a legal and practical

impossibility for the plaintiffs to return the 130-square meter lot that they took
by virtue of the questioned Agreement. This is because the said 130-square
meter lot, upon defendants’ behest and upon execution of a Deed of Absolute
Sale4, was transferred to their buyers, Engr. Camilo Colcol, Jr. and his wife
Julieta Colcol and was subsequently registered in their names as evidenced by
a Transfer Certificate of Title5 issued to them.

Citing Article 1385 of the Civil Code, which provides:

“Art. 1385. Rescission creates the obligation to return things which

were the object of the contract… Neither shall rescission take place when
things which are the object of the contract are legally in the possession of
third persons who did not act in bad faith.”6

Defendants-movants aver that rescission is impossible as it is futile.

Restoring the parties to their positions prior to the execution of the Agreement
has become legally and actually impossible. There has been an intervening
event, that is, the acquisition in good faith of spouses Colcol of the subject lot.

The Case for the Plaintiffs:

The Plaintiffs, by way of Comment and Opposition to Defendants’

Motion to Dismiss, aver that the action is not at all barred by prescription since
the plaintiffs’ resort to judicial rescission is based on Art. 1191 of the Civil
Code, not Article 1389 of the Civil Code. Hence, the period of prescription is
ten (10) years reckoned not from the execution of the agreement, but from the
date of the breach. This is pursuant to Article 1144 of the Civil Code which
provides –
3
See Defendants’ Motion to Dismiss, Annex “1”
4
Deed of Absolute Sale, Annex “5”
5
Copy of TCT No. T-95496, Annex “8”
6
Article 1385 of the Civil Code

Civil Case No. 8813-R Page 2

 “Art. 1144. The following actions must be brought within ten years
from the time the right of action accrues: [1] Upon a written contract; [2]
Upon an obligation created by law; [3] Upon a judgment.”

Plaintiffs, therefore, have ten (10) years commencing from January 18,
2017 or until about January 19, 2028 within which to prosecute this instant
civil action.

The plaintiffs also aver that there is no basis for defendants’ declaration
that rescission is supposedly “impossible as it is futile” since law and
jurisprudence provides that when there is rescission, the parties become
obliged to effect either restitution or reparation of damages as equity and
justice may warrant. To support this claim, they cited Article 1400 of the Civil
Code which states that:

“Art. 1400. Whenever the person is obliged by the decree of

annulment to return the thing cannot do so because it has been lost through
his fault, he shall return the fruits received and the value of the thing at the
time of the loss, with interest from the same date.”

The Defendants-Movants’ Case on the Rejoinder:

The defendants-movants assert that the alleged “encroachment” by the

defendants is not the kind of breach in reciprocal obligations that Article 1191
contemplates.

Under Article 1191 of the Civil Code, the power to rescind comes into
play only when “one of the obligors should not comply with what is incumbent
upon him.”

Under the said Agreement executed by parties, the obligation of the

defendants was to deliver their title 130-square meter lot to the plaintiffs, while
the correlative duty of the plaintiffs was to deliver the 251 untitled lot to the
defendants. Undeniably, this exchange of parcels of land was fully performed
by the parties and this was done sixteen (16) years ago.

Clearly then, in the context of Article 1191, there was no breach of

contract on the part of the defendants. They had delivered the 130-square meter
land to plaintiffs, thus fully performing their obligation under the said
Agreement. Hence, the obligation of the defendants has been extinguished by
performance.

Defendants-movants also claim that the proper remedy in this case is not
an action for rescission but rather an ejectment case or a case for recovery of
possession simply because the alleged breach does not pertain to the correlative
obligation of the defendants under the Agreement to deliver to the plaintiffs the
said 13-square meter titled land.

Apropos the above is Article 1383 of the Civil Code states:

Civil Case No. 8813-R Page 3

 “Art. 1383. The action for rescission is subsidiary; it cannot be
instituted except when the party suffering damage has no other legal means
to obtain reparation for the same.”

In Suria vs. IAC (G.R. No. 73893, June 30, 1987), the Hon. Supreme
Court said that the plaintiff was not entitled to the subsidiary remedy of
rescission under Art. 1191 because of the presence of the remedy of
foreclosure.

Defendants-movants also dismiss the plaintiffs’ comment that rescission

could still take place despite the fact that they could not restitute the titled lot
that was delivered to them by the defendants. Citing Laperal, et al. vs Solid
Homes, Inc. & Southridge Village Homeowners Association (G.R. No.130913,
June 21, 2005), the Hon. Supreme Court said:

“Mutual restitution is required in cases involving rescission under

Article 1191. In Velarde vs Court of Appeals, this court, in no uncertain
terms, squarely ruled on this matter:

Considering that the rescission of the contract is based on Article

1191 of the Civil Code, mutual restitution is required to bring back the
parties to their original situation prior to the inception of the contract…

Again, since Article 1385 of the Civil Code expressly and clearly
states that the 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, the Court finds no justification to sustain petitioner’s position that
said Article 1385 does not apply to rescission under Article 1191. xxx”
The Issues for Resolution:

Whether or not the Complaint for Rescission and/or Annulment of

Contract based on Article 1191 of the Civil Code should be dismissed.

The Resolution of this Court:

This court rules in the affirmative.

Plaintiffs assert that the rescission referred to in Article 1191, as basis

for their action to rescind in this case, is on the breach of faith by defendants
which is violative of the reciprocity between them.

Article 1191 of the Civil Code7 provides:

“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

7
Civil Code, Art. 1191

Civil Case No. 8813-R Page 4

 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 Article 1385 and
1388 and the Mortgage Law.”8

Plaintiffs now assert that defendants-movants have recently encroached

upon the former’s lot by 105 square meters. This is from the supposed 251
square meter lot to 356 square meters. Such encroachment, according to
plaintiffs, gave rise to the filing of their action for rescission of said
Agreement.

The question now is, whether the encroachment of said lot constitutes
the breach contemplated in rescission under Article 1191 of the Civil Code.
This court does not agree.

Pursuant to the Agreement9 entered into by defendants and plaintiffs, an

enumeration of the parties’ respective obligations to be fulfilled is provided as
follows:

“XXX
1. The Second Party [Plaintiffs] hereby agrees to cede, waive and convey
unto the First Party [Defendants] apportion of his land x x x which
consists of two Hundred & Fifty one (251) square meters x x x same to
be used as access road to the land of the First Party and to other lands
therein belonging to the First Party and their family;

2. In return, the First Party hereby agrees to cede, waive and convey unto
the Second Party, a portion of their lot x x x which consists of one
hundred thirty (130) square meters x x x;

3. X X X; and

4. Each party will shoulder all expenses and taxes, if any, to eventually
effect transfer to their respective names the lands that they will swap as
stated above x x x.”

The above-mentioned Agreement clearly states that the reciprocal

obligations of the parties are to deliver their respective subject lots to each
other, namely, the defendants’ titled 130 square meter lot and the plaintiffs’
251 untitled lot.

From the plaintiffs' Affidavit, Letters and Contract of Sale entered into
by them and third parties, Spouses Colcol, we note that the defendants have
fully complied with their part of the reciprocal obligation of delivering the 130

8
Article 1191, Civil Code
9
Agreement, Annex “A”

Civil Case No. 8813-R Page 5

square meter lot. As a matter of fact, they have already parted with the title as
evidenced by the transfer certificate of title in the third party's name. Hence,
there was no breach to speak of.

In Velarde vs. Court of Appeals10, the Court ruled 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 obligor’s 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, we find no failure on the part of defendants to

comply with their obligation to deliver said property since there was actual
transfer of the lots. It, therefore, follows that no breach of contract ever took
place.

This court further rules that the supposed encroachment of the

defendants on the lot owned by plaintiffs does not at all warrant the action for
rescission of said agreement when in fact, the agreement was already perfected
and fully consummated.

WHEREFORE, in view of the foregoing, defendant-movants’ Motion to

Dismiss is granted. This Civil Case No. 8813-R is DISMISSED, without
prejudiced.

Furnish copies of this Resolution to all counsels and parties for their
information and guidance.
SO ORDERED.
DONE IN CHAMBERS, this 24th day of February 2020 at Baguio
City, Philippines.

RUFUS G. MALECDAN, JR.

Presiding Judge

10
413 Phil. 360 (2001)

Civil Case No. 8813-R Page 6

RGM,Jr./aaa

Civil Case No. 8813-R Page 7