Goldloop Properties, Inc. v. Government Service Insurance System, G.R.No.

171076, 1 August
2012.

First Division
Del Castillo, J.

FACTS: Goldloop Properties executed a Memorandum of Agreement (MOA) with

Government Service Insurance System (GSIS) undertaking the construction of a
condominium on the parcel of land and the renovation of the façade of Philcomcen
Building at its own expense, both owned by the GSIS, with the terms of their
agreement stating that the Goldloop will pay GSIS for the land in eight installments
and the parties will share for the profits of every condominium sold with a certain
percentage. Goldloop then performed the preparatory works, such as selling the
condominiums, but was not able to proceed because the building permits were not yet
approved and there were still accrued real property taxes that were unpaid. After
some time, Goldloop received a letter from GSIS to rescind the MOA and Goldloop
replied that the work stoppage was caused of the pending approval of the building
permits. Despite this, GSIS sent a notice of rescission stating that Goldloop still have
pending obligations under their MOA which prompted Goldloop to file a complaint
with the RTC contending that it had begun with the preparatory works and such
MOA should not be rescinded.

ISSUE: W/N the Memorandum of Agreement may be rescinded.

HELD: YES. Both Goldloop and GSIS failed in their obligations – Goldloop for
failing to complete its payment of the guaranteed amount in the manner prescribed in
the MOA, and GSIS for failing to deliver the property free from burden. Thus, the
rescissory action taken by GSIS is pursuant to Article 1191 of the Civil Code. In cases
involving rescission under the said provision, mutual restitution is required. It is the
duty of the court to require both parties to surrender that which they have
respectively received and to place each other as far as practicable in [their] original
situation. Thus, Goldloop should return to GSIS the possession and control of the
property subject of their agreements while GSIS should reimburse Goldloop whatever
amount it had received from the latter by reason of the MOA and the Addendum.