FIRST DIVISION
G.R. No. 210215, December 09, 2015
ROGELIO S. NOLASCO, NICANORA N. GUEVARA, LEONARDA N. ELPEDES, HEIRS OF ARNULFO S. NOLASCO, AND REMEDIOS M. NOLASCO, REPRESENTED BY ELENITA M. NOLASCO Petitioners, v. CELERINO S. CUERPO, JOSELITO ENCABO, JOSEPH ASCUTIA, AND DOMILO LUCENARIO, Respondents.
D E C I S I O N
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated June 17, 2013 and the Resolution3 dated November 19, 2013 of the Court of Appeals (CA) in CA-G.R. CV No. 95353, which affirmed in toto the Decision4 dated March 1, 2010 of the Regional Trial Court of Quezon City, Branch 81 (RTC) in Civil Case No. Q-08-63860 ordering the rescission of the Contract to Sell executed by herein parties and the return of the amounts already paid by respondents Celerino S. Cuerpo, Joselito Encabo, Joseph Ascutia, and Domilo Lucenario (respondents) to petitioners Rogelio S. Nolasco, Nicanora N. Guevara, Leonarda N. Elpedes, Heirs of Arnulfo S. Nolasco, and Remedios M. Nolasco, represented by Elenita M. Nolasco (petitioners), as well as the remaining post-dated checks issued by respondent Celerino S. Cuerpo representing the remaining monthly amortizations, all in connection with the said contract.
Art. 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."More accurately referred to as resolution, the right of rescission under Article 1191 is predicated on a breach of faith that violates the reciprocity between the parties to the contract. This retaliatory remedy is given to the contracting party who suffers the injurious breach on the premise that it is 'unjust that a party be held bound to fulfill his promises when the other violates his.'"25 Note that the rescission (or resolution) of a contract will not be permitted for a slight or casual breach, but only for such substantial and fundamental violations as would defeat the very object of the parties in making the agreement.26 Ultimately, the question of whether a breach of contract is substantial depends upon the attending circumstances.27
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.
7. [Petitioners] shall, within ninety (90) days from the signing of [the subject contract], cause the completion of the transfer of registration of title of the property subject of [the subject contract], from Edilberta N. Santos to their names, at [petitioners'] own expense. Failure on the part of [petitioners] to undertake the foregoing within the prescribed period shall automatically authorize [respondents] to undertake the same in behalf of [petitioners] and charge the costs incidental to the monthly amortizations upon due date. (Emphasis and underscoring supplied)A plain reading of paragraph 7 of the subject contract reveals that while the RTC and the CA were indeed correct in finding that petitioners failed to perform their obligation to effect the transfer of the title to the subject land from one Edilberta N. Santos to their names within the prescribed period, said courts erred in concluding that such failure constituted a substantial breach that would entitle respondents to rescind (or resolve) the subject contract. To reiterate, for a contracting party to be entitled to rescission (or resolution) in accordance with Article 1191 of the Civil Code, the other contracting party must be in substantial breach of the terms and conditions of their contract. A substantial breach of a contract, unlike slight and casual breaches thereof, is a fundamental breach that defeats the object of the parties in entering into an agreement.29 Here, it cannot be said that petitioners' failure to undertake their obligation under paragraph 7 defeats the object of the parties in entering into the subject contract, considering that the same paragraph provides respondents contractual recourse in the event of petitioners' non-performance of the aforesaid obligation, that is, to cause such transfer themselves in behalf and at the expense of petitioners.
Indeed, the settled rule in this jurisdiction, according to Mon v. Court of Appeals, is that a party cannot change his theory of the case or his cause of action on appeal. This rule affirms that "courts of justice have no jurisdiction or power to decide a question not in issue." Thus, a judgment that goes beyond the issues and purports to adjudicate something on which the court did not hear the parties is not only irregular but also extrajudicial and invalid. The legal theory under which the controversy was heard and decided in the trial court should be the same theory under which the review on appeal is conducted. Otherwise, prejudice will result to the adverse party. We stress that points of law, theories, issues, and arguments not adequately brought to the attention of the lower court will not be ordinarily considered by a reviewing court, inasmuch as they cannot be raised for the first time on appeal. This would be offensive to the basic rules of fair play, justice, and due process.35 (Emphasis and underscoring supplied)WHEREFORE, the petition is PARTIALLY GRANTED. Accordingly, the Decision dated June 17, 2013 and the Resolution dated November 19, 2013 of the Court of Appeals in CA-G.R. CV No. 95353 are hereby REVERSED and SET ASIDE. The Contract to Sell executed by the parties on July 22, 2008 remains VALID and SUBSISTING.
Endnotes:
1Rollo, pp. 17-54.
2 Id. at 55-62. Penned by Associate Justice Manuel M. Barrios with Associate Justices Remedios A. Salazar-Fernando and Normandie B. Pizarro concurring.
3 Id. at 63-65.
4 Id. at 122-128. Penned by Presiding Judge Ma. Theresa L. De La Torre-Yadao.
5 Id. at 81-85.
6 See id. at 56 and 78.
7 See id. at 82-83.
8 Id. at 88-89.
9 See id.
10 Dated November 21, 2008. Id. at 66-77.
11 See id. at 57 and 69.
12 See Answer with Compulsory Counterclaim and Motion for Summary Judgment dated June 11, 2009; id. at 95-107.
13 Id. at 95-96.
14 Id. at 57.
15 Id. at 122-128.
16 Id. at 127-128.
17 See id. at 126.
18 Id. at 127.
19 See Notice of Appeal dated April 23, 2010; id. at 130-131.
20 Id. at 55-62.
21 See id. at 59-61.
22 Not attached to the rollo.
23Rollo, pp. 63-65.
24Golden Valley Exploration. Inc. v. Pinkian Mining Company, G.R. No. 190080, June 11, 2014, 726 SCRA 259, 265.
25 Id. at 266; citations omitted.
26EDS Manufacturing. Inc. v. Healthcheck International, Inc., G.R. No. 162802, October 9, 2013, 707 SCRA 133, 141.
27Maglasang v. Northwestern University, Inc., G.R. No. 188986, March 20, 2013, 694 SCRA 128, 136.
28 See rollo, pp. 59-61 and 126-127.
29 See Maglasang v. Northwestern University, Inc., supra note 27, at 135-136; citations omitted.
30 See rollo, pp. 33 and 45-51.
31 Id. at 92-107.
32 Id. at 57.
33Commissioner of Internal Revenue v. Mirant Pagbilao Corporation, 535 Phil. 481, 490 (2006), citing Carantes v. CA, 167 Phil. 232, 240 (1977).
34 657 Phil. 312 (2011).
35 Id. at 328-329; citations omitted.