Aquino v. Tañedo
REITERATIONFacts
The Antecedents: Plaintiff Servillano Aquino purchased several parcels of land from defendant Emeterio Tañedo for P45,000. Aquino paid P10,000 as down payment and took possession of the lands. The parties stipulated the payment of the remaining balance in installments. Procedural History: On March 28, 1914, Aquino and Tañedo agreed to rescind the contract of sale. Aquino returned the lands and documents to Tañedo. In lieu of returning the P10,000 paid, Tañedo executed a document (Exhibit A) acknowledging a debt of P12,000 to Aquino, with P2,000 representing interest for one year, payable on May 31, 1915, and the remaining P10,000 to be paid at a date to be fixed later. Tañedo paid the P2,000 on May 28, 1915. Subsequently, Aquino filed a case (Civil Case No. 792) to collect the P10,000. Before judgment, the parties stipulated that if the court found the obligation not due, it should merely fix a period for payment, after which Aquino could sue for collection if not paid. The Appeal: In Civil Case No. 792, the court fixed a three-month period for Tañedo to pay the P10,000. The present case involves Tañedo's counterclaim for the value of the products of the lands collected by Aquino during his possession from May 5, 1913, to March 28, 1914. Tañedo invokes Article 1295 of the Civil Code, arguing that rescission obliges the return of the things with their fruits. Aquino contends that the previous judgment resolved all issues, including the counterclaim, and that he is not obligated to return the fruits as he was a possessor in good faith.
Issue(s)
Whether the rescission of the contract by mutual agreement of the parties invokes Article 1295 of the Civil Code, obligating the plaintiff to return the fruits collected from the land. Whether the plaintiff, as a possessor in good faith, is obliged to return the fruits of the land collected during his possession.
Ruling
The Supreme Court affirmed the judgment of the lower court, absolving the plaintiff from the counterclaim. The Court ruled that the plaintiff is not obligated to return the fruits of the land collected during his possession.
Ratio Decidendi
On Issue 1: The Supreme Court held that the rescission agreed upon by the parties in Exhibit Z was not the rescission contemplated by Article 1295 of the Civil Code. Article 1295 applies to rescission granted by law in specific cases to protect contracting parties or third persons from injury. The rescission in this case was a mutual agreement for the dissolution of a previous contract, and its effects should be determined by the parties' agreement or other applicable legal provisions, not by Article 1295. The Court emphasized that the term "rescind" used by the parties did not carry the legal scope and meaning of rescission as defined in Articles 1291 and 1292 of the Civil Code. Therefore, the plaintiff was not legally bound to return the fruits of the land based on this provision. On Issue 2: The Supreme Court ruled that the plaintiff, Servillano Aquino, was a possessor in good faith of the lands from May 5, 1913, until March 28, 1914, when the contract was rescinded and the lands were returned. As a possessor in good faith, the fruits collected by him during his possession became his own property under Article 451 of the Civil Code. The Court found no stipulation in the contract of rescission that obliged Aquino to return these fruits. Furthermore, the Court noted that the interest paid by Tañedo on the P10,000 was for the period subsequent to the rescission, not for the period of Aquino's possession. The Court also considered that Aquino incurred expenses for the improvement of the land and production of fruits, which, coupled with the interest paid by Tañedo, made equity lie on Aquino's side, further supporting the conclusion that he was not obliged to return the fruits.
Main Doctrine
The Supreme Court clarified that a rescission of contract agreed upon by the parties for their mutual convenience is distinct from a rescission granted by law under Article 1295 of the Civil Code. Such mutual rescission is governed by the terms of the parties' agreement or other applicable legal provisions. The Court also affirmed that a possessor in good faith, who acquired possession by virtue of a contract of sale, is entitled to the fruits collected from the property during their possession, as provided by Article 451 of the Civil Code, unless there is a stipulation to the contrary.