REMEDY OF RESCISSION IN CONTRACTS COVERING IMMOVABLES

RESCISSION (RESOLUTION) 1191
legal basis is substantial breach

principal remedy, retaliatory vs. unjust party

mutual restitution

RESCISSION – 1385
legal basis is lesion (rescissible contract)

subsidiary remedy – cannot be instituted except when other remedies exhausted

mutual restitution

• Nature: Judicial

• Extra judicial Rescission

• allowed if stipulated; burden to sue shifts to party who does not like rescission

• court still has final say as to propriety of rescission

• Forfeiture of amounts valid being in nature of penal clause

CONTRACT OF SALE
Governed by genus SALE
Ownership passes because of tradition
Non-payment is resolutory condition which may be basis of breach
Perfection gives rise to reciprocal demandable obligation
CONTRACT OF SALE – RESCISSION IS APPLICABLE

CONTRACT TO SELL
Governed by genus SALE
Ownership passes upon full payment
Non payment is suspensive; non-payment extinguishes contract to sell
Perfection gives rise to reciprocal suspensive conditional obligation
CONTRACT TO SELL – RESCISSION NOT APPLICABLE

• Non–payment of purchase price would automatically cancel even without further action for rescission

• Except: If subject matter is residential lots, law on rescission applies when there is substantial breach. Maceda law applies.