Case Summary (G.R. No. 32336)
Factual Background
Julio C. Abella sought to acquire lots Nos. 937 to 945 of the Tala Estate in the barrio of Novaliches, Caloocan, Rizal, which Guillermo B. Francisco had purchased from the Government on the installment plan and upon which some installments remained unpaid. On October 31, 1928, Francisco signed a written receipt stating that he had received P500 from Abella as payment on account of those lots, that the balance was due on or before December 15, 1928, and that that date was extendible by fifteen days.
Payments and Subsequent Transactions
Abella made an additional payment of P415.31 on November 13, 1928, at the defendant’s demand. After executing the above instrument, Abella proposed to sell the lots at a higher price to George C. Sellner and collected P10,000 from Sellner on December 29, 1928.
Authority Given to Mabanta and Instructions
On December 27, 1928, while in Cebu, Francisco transmitted to Roman Mabanta in Manila a power of attorney authorizing Mabanta to sign on his behalf all documents required by the Bureau of Lands to effect transfer of the lots to Abella. In the same communication Francisco instructed Mabanta that, if Abella failed to pay the remainder of the purchase price within the time fixed, the option would be considered cancelled and the sum of P915.31 then received should be returned to Francisco.
Attempted Completion and Return of Payment
On January 3, 1929, Mabanta informed Abella that he possessed the power of attorney and was willing to execute the deed of sale upon payment of the balance. Abella requested a few additional days, and Mabanta, following instructions he had received, permitted payment only until January 5, 1929. Abella did not tender payment on January 5, but on January 9 he attempted to pay. Mabanta refused to accept payment, treated the agreement as rescinded, and on January 9 returned P915.31 to Abella by check.
Trial Court Proceedings and Findings
Abella brought an action to compel Francisco to execute the deed of sale and to be judicially declared the owner of the lots and entitled to their delivery upon payment of the balance. The court below absolved Francisco from the complaint. The trial court found that Abella had failed to pay within the stipulated time and that the agreement between the parties constituted an option for purchase in which time was an essential term. The court further observed that even if the transaction were construed as a sale, the time fixed for payment was essential because Francisco intended the sale to secure funds to meet obligations falling due in December 1928. The court relied on the defendant’s letter to Mabanta and applied article 1124 of the Civil Code to conclude that Francisco was entitled to resolve the contract for failure to pay within the time agreed.
Parties’ Contentions on Appeal
Abella contended that Mabanta, as attorney-in-fact, had extended the payment period until January 9, 1929, and that his tender on that date should have been accepted. Francisco and Mabanta maintained that Mabanta had only extended the period to January 5, 1929, and that the contract had expired when payment was not timely made.
Evidence on the Extension Question
Mabanta testified that he extended time only until January 5, 1929. That testimony was corroborated by Paz Vicente and by Abella’s own admission to Narciso Javier that his option expired on January 5, 1929. The trial court accepted this evidence and concluded that no valid extension to January 9 had been granted by Mabanta.
Supreme Court’s Analysis and Ruling
The Court affirmed the judgment of the court below. It agreed that time was an essential element of the transaction and that Abella failed to complete payment within the period stipulated and extended to January 5, 1929. The Court noted a division of opinion below on whether the agreement was strictly an option or a sale, but held that the distinction did not alter the result because the fixed time for payment was essential in either characterization given Francisco’s need t
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Case Syllabus (G.R. No. 32336)
Parties and Procedural Posture
- JULIO C. ABELLA, PLAINTIFF AND APPELLANT, filed an action to compel specific performance and to be judicially declared owner of certain lots after payment of the balance of the price.
- GUILLERMO B. FRANCISCO, DEFENDANT AND APPELLEE, was the vendor who purchased lots Nos. 937 to 945 of the Tala Estate from the Government and who answered that the contract had been rescinded.
- The trial court absolved GUILLERMO B. FRANCISCO, DEFENDANT AND APPELLEE, from the complaint and the plaintiff appealed to the higher court.
- The judgment of the lower court was affirmed by the Court with costs against the appellant.
Key Factual Allegations
- GUILLERMO B. FRANCISCO, DEFENDANT AND APPELLEE, purchased on installments lots 937 to 945 of the Tala Estate in Novaliches, Caloocan, Rizal, and was in arrears on some installments.
- On October 31, 1928, GUILLERMO B. FRANCISCO, DEFENDANT AND APPELLEE, signed a receipt acknowledging P500 from JULIO C. ABELLA, PLAINTIFF AND APPELLANT, as payment on account and stating the balance was due on or before December 15, 1928, extendible fifteen days.
- JULIO C. ABELLA, PLAINTIFF AND APPELLANT, paid an additional P415.31 on November 13, 1928, upon demand by the defendant.
- On December 27, 1928, while in Cebu, GUILLERMO B. FRANCISCO, DEFENDANT AND APPELLEE, sent a power of attorney to Roman Mabanta with instructions to consider the option cancelled and to return P915.31 if the balance was not paid.
- On December 29, 1928, JULIO C. ABELLA, PLAINTIFF AND APPELLANT, collected P10,000 from a proposed purchaser, George C. Sellner, in connection with the intended resale.
- Roman Mabanta notified JULIO C. ABELLA, PLAINTIFF AND APPELLANT, on January 3, 1929, that he had authority to execute the deed upon payment of the balance and he gave an extension only until January 5, 1929.
- JULIO C. ABELLA, PLAINTIFF AND APPELLANT, did not tender the balance on January 5, 1929, and his attempted tender on January 9, 1929, was refused by Mabanta, who returned P915.31 by check the same day.
Issues
- Whether the agreement between the parties constituted an option or a sale of the lots.
- Whether time for payment was an essential term of the agreement.
- Whether the defendant validly rescinded the agreement for failure to pay within