Pre-Maceda Law Period

Prior to the passage of the Maceda Law, the legal provisions governing the remedies of parties covering
sales of immovable were Articles 1191, 1591 and 1592 of the Civil Code.

Article 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 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 Articles 1385 and 1388 and the Mortgage Law. (1124)

Article 1591- Should the vendor have reasonable grounds to fear the loss of immovable property sold
and its price, he may immediately sue for the rescission of the sale. Should such ground not exist, the
provisions of article 1191 shall be observed. (1503)

Article 1592- In the sale of immovable property, even though it may have been stipulated that upon
failure to pay the price at the time agreed upon the rescission of the contract shall of right take place,
the vendee may pay, even after the expiration of the period, as long as no demand for rescission of the
contract has been made upon him either judicially or by a notarial act. After the demand, the court may
not grant him a new term. (1504a)

Although Article 1191 provides for the power of rescission in reciprocal contracts in general, it is
Articles 1591 and 1592 which specifically govern the power to rescind contracts of sale covering
immovables. Article 1591 states that “[s]hould the vendor have reasonable grounds to fear the loss of
immovable property sold and its price, he may immediately sue for the rescission of the sale;”
otherwise, if no such grounds exist, the provisions of Article 1191 must be observed.

As discussed above, Article 1592 provides that even when automatic rescission may have been
expressly stipulated, nonetheless, the buyer may still remove the default by payment of what is due as
long as no demand for rescission of the contract has been made upon him either judicially or by
notarial act. Therefore, Article 1592 contains the principle that the remedy of rescission requires the
taking of a positive act on the part of the non-defaulting party.
Remedy of Rescission under Articles 1191 and 1592 Have No Application to Contracts to Sell

Articles 1191 and 1592, which require rescission either by judicial action, or notarial act, do not apply

to contracts to sell.113 Likewise, the remedy of rescission under Articles 1380 et seq. have no
application to a contract to sell, not being included within the enumerated contracts therein, nor is
lesion or damage the basis upon which remedy can be sought under a contract to sell.

Equity Resolution for Contracts to Sell

Prior to the applicability of the Maceda Law, although the principle of substantial breach and the
remedies of rescission found in Articles 1191 and 1592 have no application to contracts to sell
involving immovable

Formal Notice Required to Cancel Contracts to Sell

Although legal provisions requiring notarial rescission, such as Article 1592, have no application to
contracts to sell involving real property, nevertheless, the Court has required as a minimum procedural
rule for the “rescission” (i.e., cancellation) of a contract to sell that at least notice be given by the seller
to the buyer

Rescission Principles Applied to Contracts to Sell

By the nature of a contract to sell, the remedy of rescission is irrelevant to contracts to sell because
the non-fulfillment of the suspensive condition of full payment of the purchase price prevents a
contract of sale from even materializing, and therefore there is really nothing to resolve or rescind.
And certainly, any stipulation authorizing the seller to “rescind” the contract to sell in the event the
buyer fails to fully pay the purchase price is a mere surplusage.
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