GR. No. 96643, April 23, 1993

FACTS:

Spouses Carungay entered into a contract with Deiparine for the construction of a 3-story dormitory in Cebu. Carungay agreed to pay Php970,000 inclusive of contractor’s fee, and Deiparine bound himself to erect the building “in strict accordance to plans and specifications.” Trinidad, a civil engineer, was designated as Carungays’ representative, with powers of inspection and coordination with the contractor.

Trinidad reported to Carungay that Deiparine had been deviating from the plans and specifications, thus impairing the strength and safety of the building. Carungay ordered Deiparine to first secure approval from him before pouring cement. This order was not heeded, prompting Carungay to send Deiparine another memorandum complaining that the construction works are faulty and done haphazardly mainky due to lax supervision coupled with inexperienced and unqualified staff.

Carungay then filed a complaint for the rescission of the construction contract for damages.

ISSUE:

Whether or not the rescission of contract is valid due to breach.

RULING:

Yes. Article 1385 states that rescission creates the obligation to return the things which were the object of the contract, together with the fruits, and the price with its interest; consequently, it can be carried out only when he who demands rescission can return whatever he may be obliged to restore.

The construction contract falls squarely under Article 1191 because it imposes upon Deiparine the obligation to build the structure and upon the Carungays the obligation to pay for the project upon its completion. Article 1191 is not predicated on economic prejudice to one of the parties but on breach of faith by one of them that violated the reciprocity between them. The violation of reciprocity between Deiparine and Carungay spouses, to wit, the breach caused by Deiparine’s failure to follow the stipulated plans and specifications, has given the Carungay spouses the right to rescind or cancel the contract.

 * Case digest by Prince Dave Santiago, LLB-1, Andres Bonifacio Law School, SY 2017-2018