G.R. No. L-32811. March 31, 1980.
FELIPE C. ROQUE, petitioner, vs. NICANOR LAPUZ and THE COURT OF APPEALS, respondents.

FACTS

Petitioner Felipe C. Roque and respondent Nicanor Lapuz entered into an agreement of sale in 1954 for three subdivision lots, payable in 120 monthly installments. Lapuz made an initial deposit and paid for the first four months. Subsequently, with Roque’s consent, the agreement was modified to cover two different lots (Lots 4 and 12, Block 2) at a uniform price, also payable in 120 monthly installments with annual interest. Lapuz took possession of these lots, enclosed them, and built a house.
After the initial payments covering July to October 1954, Lapuz failed to make any further monthly installment payments despite repeated demands from Roque. Lapuz made promises to pay and to sign a formal contract but ultimately defaulted. In 1957, Roque formally demanded that Lapuz vacate the lots and pay reasonable rentals. Lapuz failed to comply, leading Roque to file a complaint in 1960 for rescission of the agreement, recovery of possession, and payment of rentals and attorney’s fees.

ISSUE

Whether the respondent court erred in amending its original decision to grant Lapuz an extension to pay the balance of the purchase price, thereby denying rescission to Roque, despite Lapuz’s prolonged and complete default in payment.

RULING

The Supreme Court reversed the Court of Appeals’ amended resolution and reinstated its original decision affirming the trial court’s judgment in favor of Roque. The legal logic is anchored on Article 1191 of the Civil Code, which grants the injured party the right to seek rescission in case of breach of a reciprocal obligation. The breach committed by Lapuz was not slight or casual; it was substantial and fundamental. His default began with the fifth monthly installment in November 1954 and persisted continuously for years, encompassing the entire ten-year payment period and beyond, without him paying anything beyond the initial 7% of the total price.
The Court rejected the appellate court’s application of equity to grant an extension. Equity cannot be invoked to relieve a party from the consequences of his own gross negligence and bad faith. One who seeks equity must do so with clean hands, a condition not met by Lapuz. Furthermore, the argument that substantial improvements (the house) on the land warranted an extension was dismissed. Under the principle of accession (omnia quae solo inaedificantur solo cedit), buildings are accessories to the land, which is the principal. To grant an extension based on the value of the house would unjustly make the land accessory to the improvement. Therefore, rescission was proper. The Court affirmed the award of reasonable rentals as damages from August 1955 until vacation, plus attorney’s fees, and ordered Lapuz to vacate and remove his house.