G.R. No. L-21876 September 29, 1967

PHILIPPINE AMUSEMENT ENTERPRISES, INC., plaintiff-appellant,
vs.
SOLEDAD NATIVIDAD and MARIANO NATIVIDAD, defendants-appellees.

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First. 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. So the Civil Code provides.³ But it is equally settled that, in the absence of a stipulation to the contrary, this power must be invoked judicially; it cannot be exercised solely on a party's own judgment that the other has committed a breach of the obligation.⁴ Hence, as there is nothing in the contract of lease empowering the defendants to rescind it without resort to the courts, the defendants' action in unilaterally terminating the contract is unjustified. As this Court said in Escueta v. Pando:⁵

The defendant could not, by himself alone and without judicial intervention, resolve or annul the agreement. Under article 1124 [now art. 1191] of the Civil Code, the right to resolve reciprocal obligations, in case one of the obligors shall fail to comply with that which is incumbent upon him, is deemed to be implied. But that right must be invoked judicially for the same article also provides: "The court shall decree the resolution demanded, unless there should be grounds which justify the allowance of a term for the performance of the obligation."

Second. Rescission will be ordered only where the breach complained of is substantial as to defeat the object of the parties in entering into the agreement. It will not be granted where the breach is slight or casual.⁶ The defendants asked the plaintiff to retrieve its phonograph, claiming that there were times when the coins dropped into the slot would get stuck, resulting in its failure to play the desired music. But apart from this bare statement, there is nothing in the evidence which shows the frequency with which the jukebox failed to function properly. The expression "there are times" connotes occasional failure of the phonograph to operate, not frequent enough to render it unsuitable and unserviceable. As a matter of fact, there is not even a claim that, as a result of unsatisfactory performance thereof, the income therefrom dropped to such a level that the defendants could not even pay the plaintiff its guaranteed share of P50 a week. On the contrary, the evidence (Stipulation of Facts, Annexes J, K, L, M, N, and O) shows that, during the period complained of, the operation of the jukebox was quite profitable to both parties.⁷

Third. We believe that the defendants actually bought a jukebox only in 1961 after they had signed the lease contract in question, although they might have expressed a desire to buy one the year before, for otherwise they would not have entered into a three-year lease. But certainly their decision to buy a jukebox and operate it themselves was made long before they ever complained in July, 1961 of any defect in the rented jukebox. To be sure, it is not shown when the rented phonograph supposedly developed trouble; presumably it was early in July, 1961, since the defendants' first letter of complaint was written on July 17. But if, as defendants admit, they began operating their own jukebox "sometime in July, 1961" (presumably on July 24, 1961 when they removed the rented jukebox from where it was installed), then the defendants' pretense that they decided to buy their own jukebox only after the rented one had failed to function properly becomes highly improbable. The jukebox which they ordered from the United States could not have arrived in so short a time as to enable them to operate it on July 24.