Manuel v. Carmen de Pascual

Summary

This case involves the rescission of a commercial sale contract and the rights of third parties. Plaintiff sold a bar to defendants who breached payment obligations. When creditors attached and sold the bar property, plaintiff sought rescission against all parties. The Supreme Court held that while mere breach doesn't automatically rescind a contract, the plaintiff successfully rescinded against the sheriff who acted in bad faith. The sheriff knew of plaintiff's ownership claim through written notice but proceeded with the sale after obtaining an indemnity bond. The Court distinguished between third parties acting in good faith (Macke, Chandler & Co.) who were protected, and those acting in bad faith (sheriff) who were liable. This establishes important precedent on third-party rights in contract rescission under Civil Code Articles 1124 and 1295.