OBLIGATIONS OF THE VENDEE

G.R. No. 185798               January 13, 2014

FIL-ESTATE PROPERTIES, INC. AND FIL-ESTATE NETWORK INC., Petitioners,
vs.
SPOUSES CONRADO AND MARIA VICTORIA RONQUILLO, Respondents.

FACTS:
Respondent Spouses purchased from petitioners an 82-square meter condominium unit for a pre-
selling contract price of ₱5,174,000.00. Respondents executed and signed a Reservation
Application Agreement wherein they deposited ₱200,000.00 as reservation fee. As agreed upon,
respondents paid the full downpayment and had been paying the monthly amortizations but
stopped upon learning that construction works had stopped.

Claiming to have paid a total of ₱2,198,949.96, respondents wrote two successive letters
demanding a full refund of their payment with interest. When their demands went unheeded,
respondents were constrained to file a Complaint for Refund and Damages before the Housing
and Land Use Regulatory Board (HLURB). HLURB rendered judgment in favour of respondent.
Petitioners filed a Notice of Appeal with the Office of the President but was dismissed.
Petitioners sought relief from the CA but again it was denied. Hence, this petition.

ISSUE: WON respondents are entitled to rescind the contract.

HELD:
YES. Asian financial crisis is not a fortuitous event which will exempt petitioners from the
performance of their contractual obligation and failure to develop the condominium project is
tantamount to a substantial breach.

The non-performance of petitioners’ obligation entitles respondents to rescission under Article

1191 of the New Civil Code which states “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
payment of damages in either case. He may also seek rescission, even after he has chosen
fulfillment, if the latter should become impossible.