C. N. HODGES, PLAINTIFF AND APPELLEE, VS. ALBERTO GRANADA, DEFENDANT AND APPELLANT.

This is an appeal taken by the defendant
Alberto Granada from the judgment rendered by the Court of First
Instance of Occidental Negros, the dispositive part of which reads as
follows:

“In view of the foregoing facts and considerations, the court hereby renders judgment in this case:

” (a)
Declaring the rescission of the contract Exhibit A, which was entered
into by the plaintiff and the defendant on April 24, 1929;

” (b)
Ordering the plaintiff to return to the defendant the sum of Pl,800,
which the latter had paid to the former as advance interest on the sum
of P15,000, at the rate of 12 per cent per annum, and the further sum
of P236.21, which the defendant had likewise paid to the plaintiff for
the insurance of the buildings which were the subject matter of the
contract, according to Exhibit A, and which had never been in the
defendant’s possession;

” (c) Disallowing the damages prayed for by the defendant by way of counterclaim, for lack of evidence, without costs. So ordered.”

In support of his appeal, the appellant assigns four alleged errors as committed by the court a quo in its decision appealed from, which we shall discuss in the course of this decision.

The following undisputed facts are stated in the decision appealed from, to wit:

“The evidence shows conclusively that on April 24,
1929, the plaintiff C. N. Hodges sold all his rights, title and
interest in the parcels of land and building described in the contract
of purchase and sale, Exhibit A, to the defendant Alberto Granada, for
the sum of P15,000 payable in ten (10) years from the date of the
contract, with interest thereon at the rate of 1 per cent per month,
payable annually in advance. On the said date of the contract, the
defendant paid to the plaintiff the sum of P1,800 representing the
advance interest on the aforesaid sum of P15,000 at 1 per cent per
month, in accordance with the stipulation of the contract in question.
The defendant likewise paid to the plaintiff the sum of PP236.21 as
premium on the insurance of the buildings on lots Nos. 1599 and 1205 of
the cadastre of Bacolod, which were sold by the plaintiff.

“Upon execution of the contract Exhibit A, the defendant tried and
resorted to every means in his power to take possession of the lots and
buildings sold to him under the contract Exhibit A, but failed in his
attempt in view of the stubborn opposition thereto of Leopoldo
Escalante, Cristeta Ibanez and Esteban Vasquez, who alleged that they
held an adverse claim against the improvements on lot No. 1599, and the
opposition of Jose Benares and Jose Benares Fernandez, who likewise,
alleged that they held an adverse claim against the house and garage
built on lot No. 1205 and against every right, title and interest in
the lease of lot No. 1205, which was executed by Jose Benares in favor
of Cristeta Ibanez.”

At the time of the execution of the deed of sale Exhibit A, civil
case No. 4656 of the Court of First Instance of Occidental Negros,
wherein Leopoldo Escalante and others were plaintiffs and C. N. Hodges
was defendant, and in which the same properties which were the subject
matter of the contract of purchase and sale Exhibit A, now under
consideration, was pending.

The defendant-appellant claims that inasmuch as the
plaintiff-appellee C. N. Hodges had not informed him of the pendency of
the aforesaid suit, the latter committed fraud by leading him to
believe that the properties, which were sold to him, were free from all
liens and charges. However, the plaintiff-appellee, testifying in his
favor, stated that the defendant-appellant Alberto Granada was aware of
the existence of the aforesaid suit at the time of the execution of the
deed of sale Exhibit A.

We agree with the trial court that there was no fraud in the
transaction in question but rather a non-fulfillment by the
plaintiff-appellee C. N. Hodges of his obligation, as vendor, to
deliver the things, which were the subject matter of the contract, to
the defendant-appellant Alberto Granada, as purchaser thereof (article
1461, Civil Code), and place them in the latter’s control and
possession (article 1462, Civil Code) which was not done. Inasmuch as
the obligations arising from the contract of purchase and sale, Exhibit
A, which was entered into by the plaintiff-appellee and the
defendant-appellant, are reciprocal, and the former had failed to
comply with that which was incumbent upon him, the latter has the
implied right to resolve them, and he may choose between exacting from
the vendor the fulfillment of the obligation or its resolution with
indemnity for damages and payment of interest in either case (article
1124, Civil Code). Inasmuch as the defendant-appellant had chosen to
rescind the aforesaid contract of purchase and sale in his
cross-complaint, there arose the necessity, on the part of the
plaintiff-appellee, to return the purchase price with interest thereon,
and on the part of the defend-antappellant, to restore the things which
were the subject matter thereof, in case he had received them (article
1295, Civil Code). As the plaintiff-appellee received the sum of P1,800
as interest on the price of P15,000, for one year at the rate of 1 per
cent a month, payable annually in advance, he is bound to return said
sum to the defendant-appellant, with the legal interest of 6 per cent
per annum thereon, from April 24, 1929, the date on which he received
it. The said plaintiff-appellee is further required to return to the
defendant-appellant the sum of P236.21, which the latter had paid to
him for the insurance of the buildings sold, for the reason that,
inasmuch as said buildings had not been delivered to him, he did not
acquire any real right over them (article 1095, Civil Code).

With respect to the damages claimed by the defendant-appellant by
reason of the non-delivery to him of the buildings sold, inasmuch as he
had chosen to rescind the contract instead of exacting the fulfillment
thereof, he is entitled only to the damages provided in the above-cited
article 1295 of the Civil Code, and not to the fruits thereof from the
date on which the contract was executed which takes place only when
delivery of the thing sold has been made (article 1468, Civil Code).

Inasmuch as the payment of the premium on the insurance policy by
the defendant-appellant corresponded to the plaintiff-appellee, for the
reason that the latter did not deliver the buildings sold and which
were insured against fire, the return thereof to the former becomes one
of the consequences of the rescission.

In view of the foregoing considerations, we are of the opinion and
so hold that judgment should be, as it is hereby, rendered modifying
the judgment appealed from to the effect that the plaintiff-appellee
should pay legal interest on the sum of P1,800 from April 24, 1929, and
on the sum of P236.21 from the year 1929, and affirming it in all other
respects, without special pronouncement as to costs. So ordered.

Malcolm, Hull, Imperial, and Goddard, JJ., concur.