1) Article 1191 of the Civil Code allows an aggrieved party to extrajudicially rescind a contract if the other party fails to comply, even if the contract does not expressly provide for this right.
2) A party may consider a contract rescinded due to the other party's breach and act accordingly, but it does so at its own risk until a court issues a final ruling.
3) In this case, the court held that while the contract did not contain an express provision for extrajudicial rescission, the aggrieved party could rescind the contract without prior court approval based on Article 1191 and to mitigate damages from the other party's breach.
1) Article 1191 of the Civil Code allows an aggrieved party to extrajudicially rescind a contract if the other party fails to comply, even if the contract does not expressly provide for this right.
2) A party may consider a contract rescinded due to the other party's breach and act accordingly, but it does so at its own risk until a court issues a final ruling.
3) In this case, the court held that while the contract did not contain an express provision for extrajudicial rescission, the aggrieved party could rescind the contract without prior court approval based on Article 1191 and to mitigate damages from the other party's breach.
1) Article 1191 of the Civil Code allows an aggrieved party to extrajudicially rescind a contract if the other party fails to comply, even if the contract does not expressly provide for this right.
2) A party may consider a contract rescinded due to the other party's breach and act accordingly, but it does so at its own risk until a court issues a final ruling.
3) In this case, the court held that while the contract did not contain an express provision for extrajudicial rescission, the aggrieved party could rescind the contract without prior court approval based on Article 1191 and to mitigate damages from the other party's breach.
TOPIC Remedies in case of breach – Judicial Remedies DOCTRINE Art. 1191 provides that the power to rescind is implied in reciprocal obligations, in cases where one of the obligors should fail to comply with what is incumbent upon him. Otherwise stated, an aggrieved party is not prevented from extrajudicially rescinding a contract to protect its interests, even in the absence of any provision expressly providing for such right. Whether a contract provides for it or not, the remedy of rescission is always available as a remedy against a defaulting party. The act of a party in treating a contract as cancelled or resolved on account of infractions by the other contracting party must be made known to the other and is always provisional, being ever subject to scrutiny and review by the proper court. If the other party denies that rescission is justified, it is free to resort to judicial action in its own behalf, and bring the matter to court. Then, should the court, after due hearing, decide that the resolution of the contract was not warranted, the responsible party will be sentenced to damages. The party who deems the contract violated may consider it resolved or rescinded, and act accordingly, without previous court action , but it proceeds at its own risk. For it is only the final judgment of the corresponding court that will conclusively and finally settle whether the action taken was or was not correct in law The only practical effect of a contractual stipulation allowing extrajudicial rescission is "merely to transfer to the defaulter the initiative of instituting suit, instead of the rescinder." FACTS S ISSUE/s Whether or not LMI can unilaterally and extrajudicially rescind their Contract of Lease in the absence of an express provision in their Contract to that effect? HELD It is true that NCLP1 and LMI's Contract of Lease does not contain a provision expressly authorizing extrajudicial rescission. LMI can nevertheless rescind the contract, without prior court approval, pursuant to Art. 1191 of the Civil Code. The law definitely does not require that the contracting party who believes itself injured must first file suit and wait for a judgment before taking extrajudicial steps to protect its interest. Otherwise, the party injured by the other's breach will have to passively sit and watch its damages accumulate during the pendency of the suit until the final judgment of rescission is rendered when the law itself requires that he should exercise due diligence to minimize its own damages.