JOSE B. ESCUETA, PLAINTIFF AND APPELLEE, VS. AQUILINO PANDO, DEFENDANT AND APPELLANT.

OZAETA, J.:

The facts of this iase are not disputed. On February 14, 1933, Eleuteria
Magsarile, the wife of the plaintiff Jose B. Escueta, purchased from the
defendant three lots of the Pasay Obrero Subdivision at a price payable in
monthly installments spread over a period of ten years, with the stipulation
that if the buyer should fail to pay any of the monthly installments within
thirty days after maturity the contract of sale could be rescinded and annulled
and the vendor would be at liberty to dispose of and sell said lots to another
person as if the contract had never been entered into, and that in case of such
rescission all the sums of money paid in virtue of the contract should be
considered as rents for the use of the property.

On May 28, 1934, the present plaintiff instituted civil case No. 5863 of the
Court of First Instance of Rizal to annul the aforesaid contract of sale entered
into by and between his wife and the defendant and to recover all sums paid by
her on account of said contract. That case was decided by the court on June 19,
1935, in accordance with the stipulation of the parties which read as
follows:

“Las partes convienen y estipulan:

“Primero: Que el demandado reconoce que la esposa del demandante ha
hecho pagos a cuenta de los contratos referidos en la demanda en la suma total
de P787.89;

“Segundo: Que of rece al demandante y a sn esposa Eleuteria
Magsarile acreditar dicha cantidad de P787.89 a uno de los lotes en cuestion u
otro mas barato de la subdivision que escogieran dichos esposos;

“Tercero: Que el demandante acepta la oferta del demandado y previa
consulta con su senora, va a cscoger de entre los tantos lotes de la subdivision
un. Lote para que las partes puedan ejecutar u otorgar el contrato
correspondiente igua) al formulario unido a la demanda como Exhibit ‘A.’

“Cuarto: Que la proxima mensualidad para el pago de dicho Lote que
escogiera el demandante comenzara el dia 15 de julio de 1935, segun y conformc a
la suma que resultare del compute correspondiente igual al compute que
ordinariamente hace la subdivision.

“Por tanto, las partes renuncian a seguir este asunto, y bajo las bases
arriba estipuladas, piden que se dictc sentencia de acuerdo con las mismas, sin
especial pronunciamiento en cuanto a las costas.”

On August 6, 1936, a writ of execution of the judgment entered in said case
was issued at the instance of the defendant. Said writ was not accomplished
because the plaintiff could not be located by the sheriff. On October 9, 1936,
an alias writ of execution was issued, of which the plaintiff was notified;
whereupon he chose lot No. 12, block No. 2, of the Pasay Obrero Subdivision.
Informed by the sheriff of that choice, the defendant advised the plaintiff
through the sheriff that the price of the lot chosen by him was P1,590, that the
monthly installment thereon was P13.25 and that after crediting the plaintiff
with the sum of P787.89, the balance of the purchase price was P802.11, of which
the total sum of P198.75 corresponding to the monthly installments from July 15,
1935, to October 15, 1936, was already due at that time. The sheriff requested
the plaintiff to deposit in his office the last-mentioned sum, but the plaintiff
refused to do so on the ground that he was not under obligation to begin paying
the installments until after the contract of sale was signed, and that he would
prefer to pay the balance of the purchase price in one lump sum provided he was
given a discount in consideration of the cash pay ment. On November 21, 1936,
the sheriff returned to the court the alias writ of execution together with the
letters he had received from the attorneys of the parties in the sense above
indicated. The formal contract of sale of the lot chosen by the plaintiff, which
the parties were bound to sign by their agreement and by the judgment, was never
signed.

On July 6, 1937, the defendant sold the said lot No. 12 to Abundia Romero and
Dionisio Bravo.

In 1940 the plaintiff on his part procured an alias writ of execution to
compel the defendant to sell to him the said lot No. 12 or any other unsold lot
of the subdivision, but the sheriff was informed by the defendant that all the
lots had already been sold.

Based upon the foregoing facts the plaintiff, on April 7, 1941, commenced the
present action against the defendant to recover the sum of P787.89, with legal
interest thereon from April 15, 1940, in view of the impossibility on the part
of the defendant to sell to him lot No. 12 or any other lot of the subdivision.
The theory of the plaintiff is ‘that the defendant had no right to dispose of
all his lots without the knowledge of the plaintiff and without the authority of
the court.

The defendant pleaded that he sold all the lots of his subdivision in good
faith and only after the plaintiff had refused to comply with the agreement and
the judgment entered in civil case No. 5863; and that under paragraph 7 of the
contract of sale entered into on February 14, 1933, by and between the defendant
and plaintiff’s wife, the defendant had the right to rescind the contract and
keep the payments made thereon as rents of the property.

The trial court sustained the plaintiff’s contention and rendered judgment in
his favor, ordering the defendant to pay to the plaintiff the sum of P787, with
interest thereon from July 6, 1937, and the costs. From that judgment the
defendant appealed to the Court of Appeals. On August 25, 1943, the First
Division of that court certified the case to the Supreme Court on the ground
that the same involved questions of law only.

The question to decide is whether upon the facts above stated the plaintiff
is entitled to recover from the defendant the sum of f787.89 which his wife had
paid on account of the purchase price of certain lots and which the defendant
subsequently agreed to credit to the plaintiff as part of the purchase price of
another lot to be chosen and bought by the plaintiff from the defendant.

The contract between plaintiff’s wife and the defendant, which the latter
invokes in his defense, was novated and extinguished by the agreement of the
parties which was submitted to and approved by the court on June 19, 1935, in
civil case No. 5863. (See articles 1203 and 1204, Civil Code.) It is
therefore the latter agreement that governs the rights of the parties in this
case. Under that agreement the defendant was bound to credit the plaintiff with
the sum of P787.89, and the plaintiff in turn was bound to choose one of the
lots of defendant’s subdivision, to sign the corresponding contract of purchase
and sale on instalments upon the same terms as those contained in the contract
form Exhibit A and to begin paying the monthly instalments on July 15, 1935.
After choosing lot No. 12 the plaintiff had no right to refuse to sign the
formal contract and to pay the instalments beginning July 15, 1935, nor to
demand other terms than those already agreed upon. Upon his refusal to do so in
spite of the writ of execution issued by the court to enforce the agreement, the
defendant could and should have moved the court to punish him for contempt
unless he complied with the judgment. But the defendant did not do that. He did
not insist upon his right under his agreement with the plaintiff and the
judgment of the court.

The defendant could not, by himself alone and without judicial intervention,
resolve or annul the agreement. Under article 1124 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.”

By the agreement in question the defendant bound himself to credit the
plaintiff with the sum of P787.89 on the purchase price of the lot to be
selected by the latter, and the plaintiff on his part bound himself to sign the
corresponding contract. There is no stipulation to the effect that should the
plaintiff fail or refuse to fulfill his part of the agreement he would forfeit
said sum to the defendant.

While it is true that the plaintiff agreed to sign a contract containing
among others the following stipulations embodied in^ne contract form Exhibit A,
to wit:

“5. El Propietario cntrcgara la poscsion de dicha parcela de terreno al
comprador al firmarsc este documento y pagarse el primer plazo.

*          *          *          *          *          *          *

“7. Si el comprador deja de hacer cualquiera de los pagos mensuales
convenidos dentro de los 30 dias de su vencimiento este con-trato podra ser
considerado como rcscindido y anulado, y el propietario quedara en libertad de
disponer dc dicha parcela de terrciio a otra persona, en la misma forma como si
este contrato nunca se hubicra eclebrado. En ese caso de rescision, todas las
sumas de tlincro pagadas en virtud de este contrato scran consideradas como
rentas por el uso de la propicdad y el comprador por la presente rcnuncia a todo
derecho a reclamar la devolucion de las mismas, y se obliga a vacar el
terreno.”

And while it is clear that under article 1279 of the Civil Code the defendant
had the right to compel the plaintiff to sign such contract, it is evident that
until and unless that contract was signed the defendant could not invoke the
stipulation of forfeiture due to the failure of the buyer to pay any instalment.
It is true that article 1258 of the Civil Code provides as follows:

“ART. 1258. Contracts are perfected by mere consent, and from that time the
parties ave bound,, not only to the performance of that which has been expressly
stipulated, but also with respect to all the consequences which, according- to
the character of the contract, are in accordance with good faith, custom, and
law.”

But in the instant case the execution of a formal contract of sale containing
a description of the property sold and the agreed price thereof, was an
indispensable prerequisite to the operation of the forfeiture clause agreed upon
by the parties. That clause was based on the assumption that the buyer had been
given the possession and enjoyment of the lot he agreed to buy and that the
payments already made thereon were to be considered as rents in case he
defaulted in any subsequent payment; but since by the terms of the agreement the
delivery of the possession of the lot was to be made only upon the signing of
the contract and the payment of the first instalment, it is evident that such
assumption did not hold true in this case. The defendant cannot claim the sum in
question as rent of a lot which he has never delivered to the plaintiff.

The only legal basis upon which the defendant could claim the right to retain
the sum in question would be that he suffered damages in that amount by reason
of the failure or refusal of the plaintiff to fulfill his part of the agreement.
But since he did not claim and prove such damages in this case, we find no
ground upon which to sustain his contention that he is not bound to refund the
said sum.

We find, however, that defendant and appellant’s fourth assignment of error
with respect to the date from which legal interest on the sum adjudged is to
run, is well taken. Interest should have been awarded from the date of the
filing of the complaint and not from the date the defendant sold lot No. 12 to
somebody else. Indeed, the plaintiff himself did not so claim in his
complaint.

Wherefore, with the modification that legal interest on the sum awarded by
the trial court shall be computed from De la Fuente and Teodoro vs. Jugo and
Borromeo April 7, 1941, the date of the filing of the complaint, the judgment is
affirmed. We make no pronouncement as to costs in this instance, considering
that the plaintiff himself was not free from blame.

De Joya, Perfecto, Hilado, and Bengzon, J.J., concur.