### Facts:
This case involves Julio C. Abella, the plaintiff and appellant, and Guillermo B. Francisco, the defendant and appellee. Guillermo B. Francisco purchased on installments from the Government lots 937 to 945 of the Tala Estate in Novaliches, Caloocan, Rizal but was behind on some payments. On October 31, 1928, Francisco and Abella entered into an agreement where Abella paid Francisco P500 as part of a deal to buy these lots at P100 per hectare, with a balance due by December 15, 1928, extendable by fifteen days.
Abella then proposed to sell the lots to George C. Sellner at a higher price, collecting P10,000 on account on December 29, 1928. Subsequently, Abella made another payment of P415.31 on November 13, 1928, upon Francisco’s demand. However, when Abella attempted to complete the payment after the agreed period, Francisco, through his attorney-in-fact Roman Mabanta, refused the payment considering the contract rescinded and returned the sum of P915.31 to Abella.
Abella filed an action to compel Francisco to execute a deed of sale for the lots, claiming ownership. The court absolved Francisco, based on Abella’s failure to pay within the stipulated time, considering the contract an option for purchase where time was of the essence.
### Issues:
1. Whether the agreement between Abella and Francisco constituted an option contract or a sale.
2. Whether time was of the essence in fulfilling the contract.
3. The applicability of Article 1124 of the Civil Code in resolving the contract due to failure in timely payment.
### Court’s Decision:
The Supreme Court affirmed the lower court’s decision, holding that even if the contract was construed as a sale rather than an option, time was indeed an essential element of the transaction. Francisco had intended to sell the lots within a specific timeframe to settle obligations due in December 1928. The court found that the firm period for payment highlighted by Francisco’s instructions to his representative to consider the contract rescinded if the payment was not completed timely validated the rescission of the contract under Article 1124 of the Civil Code due to failure in timely payment.
### Doctrine:
This case reiterates the principle that in contracts where time is stipulated as an essential element, failure to adhere to the agreed timeline allows for the rescission of the contract under Article 1124 of the Civil Code.
### Class Notes:
– **Contracts and Essential Elements**: An understanding of the significance of time as an essential element in contracts is crucial. If parties designate a specific performance time as essential, failure to adhere to this can result in rescission.
– **Article 1124 of the Civil Code**: Allows contracting parties to ask for the rescission of the contract upon the failure of the other party to perform the obligations assumed within the stipulated timeframe.
– **Option vs. Sale**: The distinction between an option contract and a sale influences the obligations and expectations of the involved parties. While an option gives the holder the right to buy, a sale constitutes an agreement to transfer ownership upon agreed terms.
### Historical Background:
At the time of this decision, the Philippines was under American colonial rule. The legal system incorporated both the newfound American influences and the existing Spanish civil law. The Civil Code, inherited from Spain, still governed contracts, making cases like Abella vs. Francisco pivotal in understanding the transition of legal principles and their application in a colonial context.
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