Atty. Rogelio B. de Guzman v. Spouses Bartolome

Summary

This Supreme Court case involved a Contract to Sell dispute where lawyer De Guzman sold property to spouses Santos for P1.5 million. After spouses Santos paid the down payment but defaulted on monthly installments and vacated the property, they filed for rescission and recovery of down payment. During litigation, De Guzman sold the property to a third party without court authorization. The RTC and CA ordered rescission and reimbursement based on De Guzman's bad faith. However, the Supreme Court reversed, holding that Contract to Sell cannot be rescinded for non-payment, and that seller's sale to third party before full payment is legally valid. The Court found both parties in pari delicto - spouses Santos for breach and abandonment, De Guzman for selling during litigation. Applying the equal fault doctrine, the Court left parties where it found them and upheld the contractual forfeiture provision. This case clarifies the distinction between Contract to Sell and conditional sale, emphasizing that non-payment in Contract to Sell merely renders it ineffective rather than creating grounds for rescission.