Edgardo P. Torres v. Leosalve F. Miranda

Summary

This case involves a land sale contract dispute that evolved into a compromise agreement rescission case. Torres and Pulmones purchased land from Leosalve Miranda for P1,350,000 but defaulted on payments. After Leosalve's death, parties entered a 2001 compromise agreement allowing defendants to sell the property with shared proceeds. Salustiana Miranda later sought to rescind the compromise, alleging defendants imposed P1,458,600 interest on P580,000 received without basis. The Supreme Court applied Article 2041 of the Civil Code, allowing rescission when parties fail to comply with compromise agreements. The Court distinguished this from Reyes v. Lim, holding that equity cannot favor parties acting in bad faith. The case was remanded for trial on the original pleadings, emphasizing that restitution is not a precondition for rescission when the other party breaches the compromise agreement in bad faith.