P. J. SALAS RODRIGUEZ, PLAINTIFF AND APPELLANT, VS. MARIANO P. LEUTERIO, DEFENDANT AND APPELLEE.

On
September 24, 1920, the parties to this action entered into a contract
by which the defendant agreed to sell, and the plaintiff to buy, seven
thousand square meters of land in the barrio of Tuliahan, municipality
of Caloocan, Rizal, for the consideration of P5,600, which was paid by
the plaintiff in the act of transfer. At the time of this sale the
particular lots Contemplated as the subject of the sale had not been
segregated, but the seller agreed to establish the lots with a
specified frontage on a principal thoroughfare as soon as the streets
should be laid out in a projected new subdivision of the city. As time
passed the seller was unable to comply with this part of the agreement
and was therefore unable to place the purchaser in possession. The
present action was accordingly instituted by the purchaser in the Court
of First Instance of the Province of Rizal for the resolution (in the
complaint improperly denominated rescission) of the contract
and a return of double the amount delivered to the defendant as the
purchase price of the land. The trial court decreed a rescission
(properly resolution) of the contract and ordered the defendant to
return to the plaintiff the amount received, or the sum of P5,600, with
legal interest from the date of the filing of the complaint. From this
judgment the plaintiff appealed.

As no transcript of the
evidence has been brought to this court, our revision of the case is
confined to the questions of law involved, which are two in number,
namely, first, whether the plaintiff is entitled to recover double the
amount paid out by him as the purchase price of the land; and,
secondly, whether he is entitled to interest from the date upon which
the money was paid to the defendant, instead of from the date of the
filing of the complaint only.

As suggested by the trial
judge in the appealed decision the provisions of the Civil Code
applicable to the case are found in articles 1451 and 1124. By the
latter of these articles a person prejudiced by the nonfulfilment of a
contract may demand its resolution, with indemnity for damages and
payment of interest. Article 1454 of the Civil Code is relied upon by
plaintiff-appellant as authority for claiming double the amount paid
out by him. In this article it is declared that when earnest money or
pledge is given to bind a contract of purchase and sale, the contract
may be rescinded if the vendee should be willing to forfeit the earnest
money or pledge or the vendor to return double the amount.
This provision is clearly not pertinent to the case, for the reason
that where the purchase price is paid in whole or in part, the payment
cannot be considered to be either earnest money or pledge. In this
connection the commentator Manresa observes that the delivery of part
of the purchase price should not be understood as constituting earnest
money unless it be shown that such was the intention of the parties.
(Manresa, Commentaries on the Civ. Code, 2d ed., vol. 10, p. 85.) In
the case before us there is nothing to indicate that the parties
intended that the cash price paid by the purchaser should be treated
merely as earnest money; and such could not possibly have been their
intention. The evident purpose was that said payment should be taken as
a fulfilment of the contract on the part of the purchaser.

The contention of the plaintiff-appellant with respect to interest is,
we think, meritorious. In case of the resolution of a contract of sale
under article 1124, the purchaser is declared to be entitled to
indemnity for damages and payment of interest. As pointed out by
Manresa interest is here conceded in lieu of damages. (Manresa,
Commentaries on the Spanish Civil Code, 3d ed., vol. 8, p. 157); and it
is familiar doctrine that interest at the legal rate is the accepted
measure of damages for the detention of money. Moreover, as the
resolution of a contract has the effect of dissolving the obligation ab initio,
it follows that interest should be allowed on the purchase money during
the entire period that the defendant has had it in his possession, that
is, in this case from the. date of the contract. If the plaintiff had
had possession of the land during this period, he would be entitled to
no damages, and hence to no interest. It will not escape notice that a
similar provision with respect to interest is found in article 1295 of
the Civil Code, which deals with rescission, properly so called, and in
article 1303, which deals with annulment of contracts.

The
judgment appealed from will be modified by giving interest at the legal
rate on the amount awarded by the trial court from September 24, 1920,
until paid.

As thus modified the judgment will be affirmed, and it is so ordered, without special pronouncement as to costs.

Avanceña, C. J., Malcolm, Villamor, Ostrand, Johns, Romualdez, and Villa-Real, JJ., concur.

Johnson, J., dissents.