I first sued to force the other party to perform, but performance has now become impossible - can I switch to cancelling the contract instead?

The right to rescind reciprocal obligations

Article 1191 governs reciprocal obligations — where each party owes the other. It provides that 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. When the other side breaches, you as the injured party are given a choice: The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. So from the outset you had two roads — force performance, or cancel — and either one carries a claim for damages. You initially took the first road and sued for fulfilment.

You may switch to rescission if performance becomes impossible

The article anticipates exactly your predicament. It continues: He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible. Ordinarily, choosing one remedy is meant to be a committed choice. But the law makes a sensible exception: if the fulfilment you demanded can no longer be carried out, you are not left holding a useless judgment for something that cannot happen. You may change course and seek rescission instead. Your earlier election to compel performance does not bar you, precisely because supervening impossibility has defeated that remedy.

What rescission involves

Rescission unwinds the contract and, as a rule, requires the parties to give back what they received. The Code ties this to mutual restitution — rescission creates the obligation to return the things that were the object of the contract, with their fruits, and the price with its interest, so it can generally be carried out only when the party demanding it can return whatever he is obliged to restore. You should therefore be ready to give back what you got under the contract. Rescission is not simply walking away with everything; it aims to restore both sides, so far as possible, to where they stood before.

The court's role and third parties

Rescission under this article is not automatic self-help. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period — so a court may, in a proper case, grant more time to perform instead of cancelling outright. And rescission is without prejudice to the rights of third persons who have acquired the thing in good faith under the related rules. So if the object has passed to an innocent third person, your remedy may shift toward damages rather than recovery of the thing. Within those limits, though, switching from fulfilment to rescission is squarely allowed once performance has become impossible.

Cases citing this provision

These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.

• Camp John Hay Development Corporation vs. Charter Chemical and Coating Corporation, G.R. No. 198849, August 7, 2019 — read the decision on LawPhil →
• The Wellex Group, Inc. vs. U-Land Airlines, Co., Ltd, G.R. No. 167519, January 14, 2015 — read the decision on LawPhil →
• Darrel Cordero, et al. vs. F.S. Management & Development Corporation, G.R. No. 167213, October 31, 2006 — read the decision on LawPhil →
• Heirs of Mary Lane R. Kim, represented by Kim Sung II, Janice Kim, G.R. No. 249247, March 15, 2021 — read the decision on LawPhil →

Related provisions

• Civil Code, Article 1191 — Rescission of Reciprocal Obligations