G.R. No. 32336, December 20, 1930
JULIO C. ABELLA, plaintiff-appellant, vs. GUILLERMO B. FRANCISCO, defendant-appellee.

FACTS

Defendant Guillermo B. Francisco, who was purchasing lots from the government on installments, executed a document on October 31, 1928, acknowledging receipt of P500 from plaintiff Julio C. Abella as partial payment for the lots. The document stipulated that the balance of the purchase price was due “on or before the fifteenth day of December, 1928, extendible fifteen days thereafter.” Plaintiff made an additional payment of P415.31 on November 13, 1928. Defendant, through his attorney-in-fact Roman Mabanta, demanded payment of the balance. Mabanta, following defendant’s instructions, gave plaintiff until January 5, 1929, to pay. Plaintiff failed to pay by that date and only attempted to pay on January 9, 1929, which Mabanta refused, considering the contract rescinded, and returned the total payments of P915.31 to plaintiff. Plaintiff filed an action to compel defendant to execute the deed of sale.

ISSUE

Whether the defendant validly rescinded the contract due to the plaintiff’s failure to pay the balance of the purchase price within the agreed period.

RULING

Yes. The Supreme Court affirmed the lower court’s decision absolving the defendant. The Court held that time was an essential element of the contract. Whether the agreement is characterized as an option or a contract of sale, the stipulated period for payment was crucial. The defendant needed the payment by December to settle his own obligations, as evidenced by his instructions to his agent. Under Article 1124 of the Civil Code (now Article 1191 of the Civil Code), the obligor has the right to resolve the contract upon the other party’s failure to comply with his obligation. Since the plaintiff failed to pay the balance within the agreed period (even with the extension granted until January 5), the defendant was entitled to rescind the contract. The plaintiff’s tender of payment on January 9 was untimely and properly refused.