Casiño v. Octagon Realty
REITERATIONFacts
The Antecedents: Respondent Octagon Realty Development Corporation (Octagon) entered into a contract with petitioner Bienvenido M. Casiño, Jr. (Casiño) for the supply and installation of narra wood parquet for Octagon's condominium project. The contract stipulated full delivery by May 1990, with Octagon making a 40% advance payment. Octagon alleged that Casiño failed to complete the delivery and installation, misrepresented his qualifications, and lacked the necessary funds, leading to significant damages. Octagon subsequently contracted another company to finish the work. Procedural History: Octagon filed a complaint for rescission of contract with damages against Casiño before the Regional Trial Court (RTC) of Pasig City. The RTC ruled in favor of Octagon, upholding the rescission and ordering Casiño to pay damages and attorney's fees. Casiño appealed to the Court of Appeals (CA), which affirmed the RTC's decision but modified the awarded damages. Upon reconsideration, the CA amended its decision, affirming the RTC's ruling in its entirety. Casiño then filed the present petition for review on certiorari. The Petition: Petitioner Casiño seeks the annulment of the CA's decision and resolution through a petition for review on certiorari under Rule 45 of the Rules of Court. He argues that the CA's decision declaring the rescission of the contract valid and holding him liable for breach of contract is contrary to Article 1191 of the Civil Code. Furthermore, he contends that the award of actual and compensatory damages was not legally justified or proven with reasonable certainty, and that the CA issued its decision with grave abuse of discretion.
Issue(s)
Whether the rescission of the contract by respondent was valid under Article 1191 of the Civil Code. Whether the award of actual and compensatory damages was legally justified and proven with reasonable certainty. Whether the CA issued its decision with grave abuse of discretion.
Ruling
The petition is denied. The assailed Decision and Resolution of the Court of Appeals are affirmed.
Ratio Decidendi
On the validity of rescission: The Court affirmed that petitioner breached the contract by failing to complete the delivery and installation of wood parquet within the stipulated period. The breach was considered substantial and fundamental, not slight or casual, given the significant undelivered volume and the respondent's need to hire another contractor at a higher cost. The Court reiterated that under Article 1191 of the Civil Code, the power to rescind is implied in reciprocal obligations, and the injured party may consider the contract rescinded and act accordingly without prior court action, though this is done at their own risk, subject to final judicial determination. The Court found that petitioner's claim of respondent's unsuitability of premises was unsubstantiated and contradicted by evidence showing available space. On the award of actual and compensatory damages: The Court found the award of damages justified. Citing jurisprudence, the Court explained that actual or compensatory damages aim to repair loss or injury. For unrealized profits (lucrum cessans), absolute certainty is not required; the best evidence available must be produced, and damages can be inferred from known circumstances. The Court upheld the trial court's finding that respondent was entitled to P912,452.39 for estimated losses and P1,198,609.30 for the cost of engaging another contractor to complete the work, as these were substantiated by evidence. On grave abuse of discretion: The Court found no grave abuse of discretion. The CA's decision was based on the evidence presented and the applicable law, affirming the factual findings of the RTC, which are generally binding on the Supreme Court. The Court reiterated that it is not a trier of facts and will not disturb findings of lower courts unless there is a clear showing that such findings are not supported by evidence or were arrived at through a misapprehension of facts, which was not the case here.
Main Doctrine
In reciprocal obligations, the power to rescind is implied, and the injured party may choose between fulfillment and rescission. A substantial and fundamental breach, not a slight or casual one, warrants rescission. The injured party may consider the contract rescinded and act accordingly without prior court action, but proceeds at their own risk, subject to final judicial determination.