G.R. No. 39496; January 30, 1934
C.N. HODGES, plaintiff-appellee, vs. ALBERTO GRANADA, defendant-appellant.

FACTS

On April 24, 1929, C.N. Hodges sold his rights to certain parcels of land and buildings to Alberto Granada for P15,000, payable in ten years with 12% annual interest payable in advance. Granada paid Hodges P1,800 as advance interest and P236.21 for insurance premiums on the buildings. Granada, however, could not take possession of the properties because third parties (Leopoldo Escalante, et al.) asserted adverse claims and were in actual possession. At the time of the sale, a civil case involving these same properties (where Hodges was a defendant) was pending. Hodges filed an action, and Granada counterclaimed for rescission, alleging fraud for non-disclosure of the pending suit and failure to deliver possession.

ISSUE

Whether the contract of sale should be rescinded due to the vendor’s (Hodges) failure to deliver the properties to the purchaser (Granada).

RULING

Yes, the contract is rescinded. The Supreme Court affirmed, with modification, the trial court’s judgment ordering rescission. The Court found no fraud but held that Hodges failed to fulfill his essential obligation as a vendor under Articles 1461 and 1462 of the Civil Code to deliver and place the properties in the purchaser’s control and possession. Since the obligations in the contract of sale are reciprocal, Granada, as the aggrieved party, had the right to choose resolution (rescission) under Article 1124. By opting for rescission in his counterclaim, Granada was entitled to the return of the sums he paid. Hodges must return the P1,800 advance interest with legal interest from April 24, 1929, and the P236.21 insurance premium. Granada was not entitled to damages for lost fruits or profits from the properties, as delivery never occurred.

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