Antonio M. Pabalan v. Feliciano Velez

Summary

This case involved the dissolution of a mercantile partnership and rescission of a real property sale due to breach of contract. Pabalan sold two properties to his business partner Fitton for P6,000, receiving P3,000 upfront while Fitton was to contribute the remaining P3,000 as Pabalan's partnership capital. When Fitton failed to pay and left the Philippines, Pabalan sought rescission. The Supreme Court affirmed the lower court's judgment ordering dissolution and rescission, applying Civil Code provisions on mutual obligations and Code of Commerce partnership principles. The decision established that when one partner fails to fulfill contractual obligations, the non-breaching partner may seek rescission and partnership dissolution. Both parties having died during litigation, their estate administrators continued the case, with the court ordering return of the properties upon payment of P2,700 less proportional land tax reimbursement.