Spouses Alfredo E. Gimenez v. The Honorable Court of Appeals

Summary

This case involves a conditional contract of sale where buyer Jose T. Mercado Jr. failed to pay the balance of P400,000 on a P500,000 house and lot purchase within the stipulated one-year period and subsequent extensions. Despite occupying the property for over 12 years, Mercado still owed P156,800. The Supreme Court reversed the Court of Appeals and granted the sellers' right to rescind the contract under Article 1191 of the Civil Code, distinguishing the case from Angeles vs. Calasanz. The Court emphasized that requiring sellers to execute a deed of sale would penalize their magnanimity in granting extensions and reward the buyer's contractual breaches. The decision established that material breach of a contract to sell justifies rescission despite acceptance of delayed payments, particularly when the breach is substantial and prolonged.