C. N. HODGES, PLAINTIFF AND APPELLANT, VS. SALVACION LOCSIN ET AL., DEFENDANTS AND APPELLEES.

The
plaintiff herein brought this action against the defendants to recover
from them the amount of the promissory note executed by them jointly
and severally on December 25, 1930, together with interest thereon, and
the costs.

The aforesaid plaintiff appealed from the
judgment rendered by the trial court absolving the defendants, with the
costs, on the ground that the action was premature, inasmuch as the
promissory note in question had not yet fallen due.

On
October 21, 1930, the plaintiff herein and the defendant spouses,
Clemente M. Zulueta and Salvacion Locsin de Zulueta, executed Exhibit 5
by virtue of which the former sold to the latter lot. No. 155 of the
cadastral survey of Iloilo, together with the improvements thereon
consisting in a house of strong materials, for the sum of P26,000. This
amount was to be paid in ten (10) years, that is, on or before October
20, 1940, with interest thereon at the rate of 10 per cent per annum.
The parties further stipulated a certain additional sum as a penalty.
On October 21, 1930, Salvacion Locsin de Zulueta paid the sum of P2,000
(Exhibit 1) on account of the purchase price and of the interest
thereon. On December 3, 1930, she paid the sum of P200 as premium on a
fire insurance policy on the house, pursuant to the provision of the
contract which specified that it should be paid by the purchaser
thereof. On December 30, 1930, the same parties, that is, the plaintiff
herein and the Zulueta spouses, executed Exhibit 6 by virtue of which
they voluntarily and by mutual consent rescinded, cancelled and set
aside the deed of sale (Exhibit 5) executed on October 21, 1930. On
December 25, 1930, the defendants jointly and severally executed the
promissory note Exhibit A in favor of the plaintiff, whereby they bound
themselves to pay on or before December 25, 1935, the sum of P16,417.25
together with interest thereon at the rate of 12 per cent computable
and payable annually. It was further agreed in this contract that upon
failure to pay the interest on the date set therefor the obligation
would become due and payable. The plaintiff herein bases his action on
this clause, alleging that inasmuch as the defendants failed to pay the
stipulated interest on or before December 25, 1931, the promissory note
has fallen due and the full amount is demandable.

The
defendants claim that they have paid the sum of P3,160 on account of
the purchase price stipulated in the cancelled and rescinded contract
of sale as evidenced by Exhibits 1, 2, 3 and 4, and that inasmuch as
the aforesaid sale was rescinded, the defendant Zulueta and the
plaintiff herein agreed that the amount in question would be applied to
the payment of the interest due on the promissory note. This defense
was admitted by the trial court and for this reason it held that the
action was premature on the ground that the promissory note had not yet
fallen due, and absolved the defendants from the complaint.

The plaintiff alleged that he did not enter into any agreement to that
effect with the defendant Zulueta and that the only payments made by
Salvacion Locsin de Zulueta on account of the deed of sale Exhibit 5
were those evidenced by Exhibits 1 and 2 amounting to P2,200, inasmuch
as Exhibits 3 and 4 refer to different transactions. He claimed that he
was entitled to retain the amount of P2,200 under the eighth clause of
the aforesaid deed of sale which provided that upon failure of the
vendee to comply with the terms thereof, the contract would be
rescinded and the partial payment made thereon would be forfeited to
the vendor.

Even taking for granted that the only payments
made by the defendant Salvacion Locsin de Zulueta on account of the
deed of sale were those evidenced by Exhibits 1 and 2, amounting to
P2,200, we cannot accept the plaintiff’s claim that he is entitled to
retain the amount in question on the ground that the eighth clause
invoked by the plaintiff is applicable only in case the sale had been
rescinded through non-compliance by the purchaser with the terms of the
contract, which is not the case herein, inasmuch as the contract had
been rescinded by mutual agreement of the parties. Neither can the
plaintiff retain the P2,200 by virtue of the terms of the contract of
rescission or cancellation on the ground that there is nothing therein
conferring such right to him. The only stipulation made in the document
in question was that the purchaser was bound to restore to the vendor
the property which has been the subject matter of the contract of sale.
In the absence of any stipulation regarding the effects of rescission,
the general provisions of the Civil Code should govern and the things
should be restored to their original status quo. As the
purchaser, the defendant Salvacion Locsin de Zulueta should return the
property and pay a reasonable rent for the use thereof during the two
months and some days, which, at the rate of P200 a month, would amount
to around P400. As the vendor, the plaintiff should return what he has
received on account of the purchase price, together with legal interest
thereon for one year. By making the computation in accordance with the
above premises, it appears that the plaintiff should have delivered to
the aforementioned purchaser the sum of P1,800 with legal interest
thereon for one year. Moreover this amount should further be applied to
take care of the greater part of the interest due on the promissory
note for one year, that is until December 25, 1931.

Wherefore, we hereby hold that the right of action has been prematurely
exercised by the plaintiff because the total amount of the promissory
note has not yet fallen due inasmuch as the defendants had made
payments which should have been applied to the interest which had
fallen due and was demandable.

With the modification
hereinbefore stated and with the understanding that the defendants have
already paid the plaintiff the said sum of P1,800 with legal interest
thereon for one year on account of the interest due on the promissory
note, which is the subject matter of the complaint, the judgment
appealed from is hereby affirmed in all other respects, with the costs
of this suit against the appellant. So ordered.

Avanceña, C. J., Malcolm, Villa-Real, and Hull, JJ., concur.