1191 – RESOLUTION/RESCISSION Issues:

1. Did the Court of Appeals err in reducing the

Yamauchi v. Suñiga amount of actual damages awarded to
G.R. No. 199513 Yamauchi?

Ruling:
Facts:

The Supreme Court partially granted the petition,

On December 13, 2002, Teresa Gutierrez Yamauchi
reinstating the award of P500,000.00 as temperate
(hereinafter referred to as "Yamauchi") filed a
damages to Yamauchi.
complaint against Romeo F. Suñiga (hereinafter
referred to as "Suñiga") for rescission of contract with
Ratio:
a prayer for damages. The case originated from a
renovation agreement concerning Yamauchi's house
The rule is that when it is no longer possible to return
located at Block 88, Lot 23, Laguna Bel-Air, Sta. Rosa,
the object of the contract, an indemnity for damages
Laguna. In September 2000, Yamauchi consulted
operates as restitution. The important consideration is
Suñiga, who is related to her by marriage, regarding
that the indemnity for damages should restore to the
renovations for her home. After discussing the
injured party what was lost.
intended renovations and receiving an estimated cost,
Yamauchi made two (2) partial payments. However, by
In the instant case, the CA reduced the award for
January 2001, the renovation work had ceased, as
damages because Suñiga had already completed
Suñiga was also engaged in constructing his own
47.02% of the renovations on the subject house; thus,
house.
awarding full compensation would result in unjust
enrichment for Yamauchi. However, the CA failed to
Yamauchi later received a billing summary from
consider the fact that the house became uninhabitable
Suñiga, claiming he had completed 47.02% of the
because the renovation was left unfinished. Yamauchi
renovations and demanding an additional payment.
took pictures showing the physical condition of the
Further complications arose when Suñiga requested
house nine (9) months after the supposed renovation.
more funds to continue the renovation, which led to a
confrontation between the parties. Following this,
Putting together the pictures showing the actual
Yamauchi, feeling deceived and shortchanged, sent a
physical condition of the house and Yamauchi's
letter to Suñiga terminating their contract and
testimony, we cannot but conclude that Yamauchi
demanding the return of her payments. Suñiga
suffered great losses because the renovation was not
countered, claiming that the renovation was halted due
completed. Contrary to findings of the CA, that SuAiga
to Yamauchi's failure to pay the required amounts.
would receive unjust enrichment if she were given full
reimbursement. Yamauchi gained practically nothing
In her complaint, Yamauchi alleged several grounds for
from the partial renovation made by Suñiga.
rescission, including Suñiga’s misrepresentation of
being a licensed architect, failure to complete the
The performance or shall we say, non-performance of
renovations as agreed, and the uninhabitability of the
Suñiga left must to be desired and Yamauchi was
house due to the incomplete work. According to
better off with the house prior to its renovation. We can
Yamauchi, these circumstances constituted
only surmise that given the state of the house it will
substantial breach of Suñiga's contractual obligations,
probably cost Yamauchi a fortune to repair it.
entitling her to seek for the rescission of the contract,
Yamauchi is thus entitled to rescission and damages
plus award of damages and attorney's fees.
under Article 1191 of the Civil Code on account of
culpable breach of obligation by Suñiga.
The RTC ruled in favor of Yamauchi, ordering Suñiga to
pay her P400,000.00 in actual damages, along with
Henceforth, having established that Yamauchi had
moral and exemplary damages, attorney's fees, and
suffered actual losses, we now have to consider if the
costs of suit. Suñiga appealed to the CA, which
amount of losses were accurately proven, bearing in
affirmed the RTC's decision to rescind the contract.
mind that the ultimate effect of rescission is to restore
Yamauchi subsequently filed a petition for review on
the parties to their original status before they entered
certiorari to contest the CA's ruling.
into the contract.