VIRGILIO R.
ROMERO, nonfulfillment,asthecasemaybe,ofthe
petitioner,vs.HON. COURT OF
APPEALS and ENRIQUETA CHUA
VDA.DEONGSIONG,respondents.
CivilLaw;Sales;Aperfectedcontract
of sale may either be absolute or
conditional.Aperfected contract of sale
may either be absolute or conditional
depending on whether the agreement is
devoid of, or subject to, any condition
imposed on thepassingof title of the
thing to be conveyed or on
theobligationof a party thereto. When
ownershipisretaineduntilthefulfillment
of a positive condition the breach of the
conditionwillsimplypreventthedutyto
conveytitlefromacquiringanobligatory
force.If the condition is imposed on
anobligationof a party which is not
compliedwith,theotherpartymayeither
refusetoproceedorwaivesaidcondition
(Art.1545,CivilCode).Where,ofcourse,
the condition is imposed upon
theperfectionof the contract itself, the
failure of such condition would prevent
the juridical relation itself from coming
intoexistence.
Same;Same;Indeterminingthereal
characterofthecontract,thetitlegivento
itbythepartiesisnotasmuchsignificant
asitssubstance.Indeterminingthereal
characterofthecontract,thetitlegivento
itbythepartiesisnotasmuchsignificant
asitssubstance.Forexample, adeedof
sale,althoughdenominatedasadeedof
conditional sale, may be treated as
absoluteinnature,iftitletotheproperty
soldisnotreservedinthevendororifthe
vendor is not granted the right to
unilaterally rescind the contract
predicated on the fulfillment or
prescribedcondition.
Same;Same;Thetermconditionin
thecontextofaperfectedcontractofsale
pertains in reality to the compliance by
one party of an undertaking the
fulfillmentofwhichwouldbeckoninturn
the demandability of the reciprocal
prestation of the other party.The term
condition in the context of a perfected
contractofsalepertains,inreality,tothe
compliance by one party of an
undertaking the fulfillment of which
wouldbeckon,inturn,thedemandability
of the reciprocal prestation of the other
party.Thereciprocalobligationsreferred
to would normally be, in the case of
vendee, the payment of the agreed
purchase price and, in the case of the
vendor,thefulfillmentofcertainexpress
warranties(which,inthecaseatbenchis
thetimelyevictionofthesquattersonthe
property).
Same;Same;A sale is at once
perfectedwhenapersonobligateshimself
for a price certain to deliver and to
transferownershipofaspecifiedthingor
right to another over which the latter
agrees.It would be futile to challenge
the agreement here in question as not
beingadulyperfectedcontract.Asaleis
at once perfected when a person (the
seller) obligates himself, for a price
certain, to deliver and to transfer
ownershipofaspecifiedthingorrightto
another(thebuyer)overwhichthelatter
agrees.
Same;Same;From the moment the
contractisperfected,thepartiesarebound
not only to the fulfillment of what has
been expressly stipulated but also to all
theconsequenceswhichaccordingtotheir
naturemaybeinkeepingwithgoodfaith,
usage and law.From the moment the
contract is perfected, the parties are
boundnotonlytothefulfillmentofwhat
hasbeenexpresslystipulatedbutalsoto
all the consequences which, according to
theirnature,maybeinkeepingwithgood
faith, usage and law. Under the
agreement, private respondent is
obligated to evict the squatters on the
property. The ejectment of the squatters
is aconditionthe operative act of which
setsintomotiontheperiodofcompliance
bypetitionerofhisownobligation,i.e.,to
pay the balance of the purchase price.
Private respondents failure to remove
the squatters from the property within
thestipulatedperiodgivespetitionerthe
righttoeitherrefusetoproceedwiththe
agreement or waive that condition in
consonancewithArticle1545oftheCivil
Code. This option clearly belongs to
petitionerandnottoprivaterespondent.
Same;Same;Where the socalled
potestativecondition is imposed not on
the birth of the obligation but on its
fulfillment,onlytheconditionisavoided
leaving unaffected the obligation itself.
We share the opinion of the appellate
court that the undertaking required of
private respondent does not constitute a
potestativeconditiondependentsolelyon
hiswillthatmight,otherwise,bevoidin
accordancewithArticle1182oftheCivil
Codebutamixedconditiondependent
not on the will of the vendor alone but
also of third persons like the squatters
and government agencies and personnel
concerned. We must hasten to add,
however, that where the socalled
potestativeconditionisimposednoton
the birth of the obligation but on its
fulfillment,onlytheconditionisavoided,
leavingunaffectedtheobligationitself.
Same;Same;Rescission;Therightof
rescission of a party to an obligation
under Article 1191 of the Civil Code is
predicated on a breach of faith by the
other party that violates the reciprocity
between them.In any case, private
respondents action for rescission is not
warranted. Sheis not theinjured party.
The right of resolution of a party to an
obligationunderArticle1191oftheCivil
Codeispredicatedonabreachoffaithby
the other party that violates the
reciprocity between them. It is private
respondent who has failed in her
obligation under the contract. Petitioner
did not breach the agreement. He has
agreed,infact,toshouldertheexpenses
of the execution of the judgment in the
ejectmentcaseandtomakearrangements
withthesherifftoeffectsuchexecution.
PETITIONforreviewoncertiorariofa
decisionoftheCourtofAppeals.
Thefactsarestatedintheopinionof
theCourt.
AntonioC.Cabreras,Jr.&Peter
M. Porras Law OfficesandYap,
Apostol, Gumaru & Balguafor
petitioner.
Joaquin Yusecofor private
respondent.
VITUG,J.:
The parties pose this question: May
thevendordemand the rescission of a
contractforthesaleofaparcelofland
foracausetraceabletohisownfailure
to have the squatters on the subject
property evicted within the
contractuallystipulatedperiod?
 Petitioner Virgilio R. Romero, a
civil engineer, was engaged in the
business of production, manufacture
and exportation of perlite filter aids,
permalite insulation and processed
perliteore.In1988,petitionerandhis
foreign partners decided to put up a
centralwarehouseinMetroManilaon
a land area of approximately 2,000
squaremeters.Theprojectwasmade
knowntoseveralfreelancerealestate
brokers.
A day or so after the
announcement,AlfonsoFloresandhis
wife,accompaniedbyabroker,offered
a parcel of land measuring 1,952
square meters. Located in Barangay
San Dionisio, Paraaque, Metro
Manila, the lot was covered by TCT
No. 361402 in the name of private
respondent Enriqueta Chua vda. de
Ongsiong. Petitioner visited the
propertyand,exceptforthepresence
ofsquattersinthearea,hefoundthe
placesuitableforacentralwarehouse.
Later,theFloresspousescalledon
petitionerwithaproposalthatshould
headvancetheamountofP50,000.00
which couldbeused in taking up an
ejectment case against the squatters,
privaterespondentwouldagreetosell
the property for only P800.00 per
squaremeter.Petitionerexpressedhis
concurrence. On 09 June 1988, a
contract, denominated Deed of
Conditional Sale, was executed
between petitioner and private
respondent. The simplydrawn
contractread:
DEEDOFCONDITIONALSALE
KNOWALLMENBYTHESE
PRESENTS:
ThisContract,madeandexecutedinthe
Municipality of Makati, Philippines this
9thdayofJune,1988byandbetween:
ENRIQUETA CHUA VDA. DE
ONGSIONG,oflegalage,widow,Filipino
and residing at 105 Simoun St., Quezon
City, Metro Manila, hereinafter referred
toastheVENDOR;
and
VIRGILIO R. ROMERO, married to
SeverinaL.Lat,oflegalage,Filipino,and
residingat110SanMiguelSt.,Plainview
Subd., Mandaluyong, Metro Manila,
hereinafterreferredtoastheVENDEE:
WITNESSETH:That
WHEREAS, the VENDOR is the
owner of One (1) parcel of land with a
total area of ONE THOUSAND NINE
HUNDRED FIFTY TWO (1,952)
SQUAREMETERS,moreorless,located
in Barrio San Dionisio, Municipality of
Paraaque,ProvinceofRizal,coveredby
TCTNo.361402issuedbytheRegistryof
Deeds of Pasig and more particularly
describedasfollows:
xxxxxxxxx.
WHEREAS, the VENDEE, for (sic)
hasofferedtobuyaparceloflandandthe
VENDORhas acceptedtheoffer,subject
to the terms and conditions hereinafter
stipulated:
NOW,THEREFORE, for and in
consideration of the sum of ONE
MILLIONFIVEHUNDREDSIXTYONE
THOUSAND SIX HUNDRED PESOS
(P1,561,600.00) ONLY, Philippine
Currency, payable by VENDEE to in to
(sic) manner set forth, the VENDOR
agreestoselltotheVENDEE,theirheirs,
successors, administrators, executors,
assign,allherrights,titlesandinterestin
and to the property mentioned in the
FIRST WHEREAS CLAUSE, subject to
thefollowingtermsandconditions:
1. 1.That the sum of FIFTY
THOUSANDPESOS(P50,000.00)
ONLYPhilippineCurrency,isto
be paid upon signing and
executionofthisinstrument.
2. 2.The balance of the purchase
price in the amount of ONE
MILLION FIVE HUNDRED
ELEVEN THOUSAND SIX
HUNDRED PESOS
(P1,511,600.00) ONLY shall be
paid45daysaftertheremovalof
all squatters from the above
describedproperty.
3. 3.Uponfullpaymentoftheoverall
purchase price as aforesaid,
VENDOR without necessity of
demand shall immediately sign,
execute, acknowledged (sic) and
deliverthecorrespondingdeedof
absolute sale in favor of the
VENDEEfreefromallliensand
encumbrancesandallRealEstate
taxesareallpaidandupdated.
It is hereby agreed, covenanted and
stipulated by and between the parties
heretothatifafter60daysfromthedate
of the signing of this contract the
VENDORshallnotbeabletoremovethe
squatters from the property being
purchased,thedownpaymentmadebythe
buyershallbereturned/reimbursedbythe
VENDORtotheVENDEE.
ThatintheeventthattheVENDEE
shallnotbeabletopaytheVENDORthe
balance of the purchase price of ONE
MILLION FIVE HUNDRED ELEVEN
THOUSAND SIX HUNDRED PESOS
(P1,511,600.00)ONLYafter45daysfrom
writtennotificationtotheVENDEEofthe
removal of the squatters from the
property being purchased, the FIFTY
THOUSAND PESOS (P50,000.00)
previouslypaidasdownpaymentshallbe
forfeitedinfavoroftheVENDOR.
Expensesfortheregistrationsuchas
registration fees, documentary stamp,
transfer fee, assurances and such other
feesandexpensesasmaybenecessaryto
transfer the title to the name of the
VENDEEshallbefortheaccountofthe
VENDEEwhilecapitalgainstaxshallbe
paidbytheVENDOR.
IN WITNESS WHEREOF, the
parties hereunto signed those (sic)
presents in the City of Makati, MM,
Philippinesonthis9thdayofJune,1988.
(Sgd.) (Sgd.)
VIRGILIO ENRIQUETA
R. CHUA VDA.
ROMERO DE
ONGSIONG
Vendee Vendor
SIGNED IN THE
PRESENCE OF:
(Sgd.) (Sgd.)
Rowena C. Jack M. Cruz 1
Ongsiong
Alfonso Flores, in behalf of private
respondent, forthwith received and
acknowledged a check for
P50,000.00 from petitioner. Pursuant
2 3
to the agreement, private respondent
filed a complaint for ejectment (Civil
CaseNo.7579)againstMelchorMusa
and 29 other squatter families with
the Metropolitan Trial Court of
Paraaque.Afewmonthslater,oron
21 February 1989, judgment was
rendered ordering the defendants to
vacatethepremises.Thedecisionwas
handed down beyond the 60day
period (expiring 09 August 1988)
stipulatedinthecontract.Thewritof
executionofthejudgmentwasissued,
stilllater,on30March1989.
In a letter, dated 07 April 1989,
private respondent sought to return
the P50,000.00 she received from
petitioner since, she said, she could
not get rid of the squatters on the
lot.Atty.SergioA.F.Apostol,counsel
forpetitioner,inhisreplyof17April
1989,refusedthetenderandstated:
Ourclientbelievesthatwiththeexercise
of reasonable diligence considering the
favorabledecisionrenderedbytheCourt
andthewritofexecutionissuedpursuant
thereto, it is now possible to eject
squattersfromthepremisesofthesubject
property, for which reason, he proposes
thatheshalltakeituponhimselftoeject
the squatters, provided, that expenses
whichshallbeincurredbyreasonthereof
shallbechargeabletothepurchaseprice
oftheland. 4
Meanwhile, the Presidential
Commission for the Urban Poor
(PCUP), through its Regional
DirectorforLuzon,FarleyO.Viloria,
askedtheMetropolitanTrialCourtof
Paraaque for a grace period of 45
daysfrom21April1989withinwhich
to relocate and transfer the squatter
families. Acting favorably on the
request, the court suspended the
enforcement of the writ of execution
accordingly.
On 08 June 1989, Atty. Apostol
reminded private respondent on the
expiryofthe45daygraceperiodand
hisclientswillingnesstounderwrite
theexpenses fortheexecutionofthe
judgment and ejectment of the
occupants. 5
Inhisletterof19June1989,Atty.
Joaquin Yuseco, Jr., counsel for
private respondent, advised Atty.
Apostol that the Deed of Conditional
Salehadbeenrenderednullandvoid
byvirtueofhisclientsfailuretoevict
the squatters from the premises
within the agreed 60day period. He
added that private respondent had
decidedtoretaintheproperty. 6
On 23 June 1989, Atty. Apostol
wrotebacktoexplain:
Thecontractofsalebetweentheparties
wasperfectedfromtheverymomentthat
therewasameetingofthemindsofthe
partiesuponthesubjectlotandtheprice
intheamountofP1,561,600.00.Moreover,
the contract had already been partially
fulfilledandexecuteduponreceiptofthe
downpayment of your client. Ms.
Ongsiong is precluded from rejecting its
bindingeffectsrelyinguponherinability
toejectthesquattersfromthepremisesof
subjectpropertyduringtheagreedperiod.
Sufficeittostatethat,theprovisionofthe
DeedofConditionalSaledonotgranther
the option or prerogative to rescind the
contractandtoretainthepropertyshould
shefailtocomplywiththeobligationshe
hasassumedunderthecontract.Infact,a
perusalofthetermsandconditionsofthe
contract clearly shows that the right to
rescind the contract and to demand the
return/reimbursement of the
downpaymentisgrantedtoourclientfor
hisprotection.
Instead, however, of availing himself
ofthepowertorescindthecontractand
demandthereturn,reimbursementofthe
downpayment, our client had opted to
takeituponhimselftoejectthesquatters
fromthepremises.Precisely,wereferyou
to our letters addressed to your client
datedApril17,1989andJune8,1989.
Moreover,itisbasicunderthelawon
contracts that the power to rescind is
giventotheinjuredparty.Undoubtedly,
underthecircumstances,ourclientisthe
injuredparty.
Furthermore, your client has not
compliedwithherobligationundertheir
contract in good faith. It is undeniable
thatMs.Ongsiongdeliberatelyrefusedto
exert efforts to eject the squatters from
thepremisesofthesubjectpropertyand
her decision to retain the property was
broughtaboutbythesuddenincreasein
the value of realties in the surrounding
areas.
Pleaseconsiderthisletterasatender
ofpaymenttoyourclientandademandto
executetheabsoluteDeedofSale. 7
Afewdayslater(oron27June1989),
private respondent, prompted by
petitionerscontinuedrefusaltoaccept
thereturnoftheP50,000.00advance
payment,filedwiththeRegionalTrial
Court of Makati, Branch 133, Civil
CaseNo.894394forrescissionofthe
deed of conditional sale, plus
damages, and for the consignation of
P50,000.00cash.
Meanwhile,on25August1989,the
Metropolitan Trial Court issued
analiaswritofexecutioninCivilCase
No. 7579on motion of private
respondent but the squatters
apparentlystillstayedon.
BacktoCivilCaseNo.894394,on
26 June 1990, the Regional Trial
Court of Makati rendered decision
8 The lower court, accordingly,
holding that private respondent had
norighttorescindthecontractsinceit
was she who violated her obligation
toejectthesquattersfromthesubject
property and that petitioner, being
theinjuredparty,wasthepartywho
could,underArticle1191oftheCivil
Code, rescind the agreement. The
courtruledthattheprovisionsinthe
contract relating to (a) the
return/reimbursement of the
P50,000.00ifthevendorweretofailin
her obligation to free the property
from squatters within the stipulated
periodor(b),upontheotherhand,the
sums forfeiture by the vendor if the
vendee were to fail in paying the
agreed purchase price, amounted to
penaltyclauses.Thecourtadded:
ThisCourtisnotconvincedoftheground
relieduponbytheplaintiffinseekingthe
rescission,namely:(1)he(sic)isafraidof
the squatters; and (2) she has spent so
muchtoejectthemfromthepremises(p.
6, tsn, ses. Jan. 3, 1990). Militating
against her profession of good faith is
plaintiffsconductwhichisnotinaccord
with the rules of fair play and justice.
Notably, she caused the issuance of an
aliaswritofexecutiononAugust25,1989
(Exh.6)intheejectmentsuitwhichwas
almost two months after she filed the
complaint before this Court on June 27,
1989. If she were really afraid of the
squatters, then she should not have
pursued the issuance of an alias writ of
execution. Besides, she did not even
report to the police the alleged phone
threatsfromthesquatters.Tothemindof
theCourt,thesocalledsquatterfactoris
simplyfactuitous(sic). 9
dismissedthecomplaintandordered,
instead,privaterespondenttoejector
cause the ejectment of the squatters
fromthepropertyandtoexecutethe
absolute deed of conveyance upon
paymentofthefullpurchasepriceby
petitioner.
Privaterespondentappealedtothe
CourtofAppeals.On29May1992,the
appellate court rendered its
decision. It opined that the contract
10
enteredintobythepartieswassubject
to a resolutory condition, i.e., the
ejectment of the squatters from the
land, the nonoccurrence of which
resultedinthefailureoftheobjectof
the contract; that private respondent
substantially complied with her
obligationtoevictthesquatters;that
itwaspetitionerwhowasnotreadyto
pay the purchase price and fulfil his
part of the contract, and that the
provision requiring a mandatory
return/reimbursement of the
P50,000.00incaseprivaterespondent
wouldfailtoejectthesquatterswithin
the 60day period was not a penal
clause.Thus,itconcluded:
WHEREFORE, the decision appealed
fromisREVERSEDandSETASIDE,and
anewoneentereddeclaringthecontract
of conditional sale dated June 9, 1988
cancelled and ordering the
defendantappelleetoacceptthereturnof
the downpayment in the amount of
P50,000.00 which was deposited in the
court below. No pronouncement as to
costs.11
Failing to obtain a reconsideration,
petitionerfiledthispetitionforreview
oncertiorariraising issues that, in
fine, center on the nature of the
contract adverted to and the
P50,000.00 remittance made by
petitioner.
A perfected contract of sale may
either be absolute or
conditional dependingonwhetherthe
12
agreement is devoidof,orsubject to,
any condition imposed on
thepassingof title of the thing to be
conveyed or on theobligationof a
party thereto. When ownership is
retained until the fulfillment of a
positive condition the breach of the
conditionwillsimplypreventtheduty
to convey title from acquiring
anobligatory force.Ifthe condition is
imposed on anobligationof a party
whichisnotcompliedwith,theother
partymayeitherrefusetoproceed or
waivesaidcondition(Art.1545,Civil
Code).Where,ofcourse,thecondition
is imposed upon theperfectionof the
contract itself, the failure of such
condition would prevent the juridical
relation itself from coming into
existence. 13
Indeterminingtherealcharacterof
thecontract,thetitlegiventoitbythe
parties is not as much significant as
itssubstance.Forexample,adeedof
sale,althoughdenominatedasadeed
ofconditionalsale,maybetreatedas
absolute in nature, if title to the
property sold is not reserved in the
vendororifthevendorisnotgranted
the right to unilaterally rescind the
contractpredicatedonthefulfillment
ornonfulfillment,asthecasemaybe,
oftheprescribedcondition. 14
Thetermconditioninthecontext
ofaperfectedcontractofsalepertains,
in reality, to the compliance by one
party of an undertaking the
fulfillmentofwhichwouldbeckon,in
turn, the demandability of the
reciprocal prestation of the other
party. The reciprocal obligations
referredtowouldnormallybe,inthe
case of vendee, the payment of the
agreedpurchasepriceand,inthecase
ofthevendor,thefulfillmentofcertain
expresswarranties(which,inthecase
atbenchisthetimelyevictionofthe
squattersontheproperty).
Itwouldbefutiletochallengethe
agreement here in question as not
beingadulyperfectedcontract.Asale
isatonceperfectedwhenaperson(the
seller) obligates himself, for a price
certain, to deliver and to transfer
ownershipofaspecifiedthingorright
toanother(thebuyer)overwhichthe
latteragrees. 15
The object of the sale, in the case
beforeus,wasspecificallyidentifiedto
be a 1,952square meter lot in San
Dionisio,Paraaque,Rizal,coveredby
Transfer Certificate of Title No.
361402 of the Registry of Deeds for
Pasig and therein technically
described. The purchase price was
fixed at P1,561,600.00, of which
P50,000.00 was to be paid upon the
executionofthedocumentofsaleand
the balance of P1,511,600.00 payable
45 days after the removal of all
squatters from the above described
property.
From the moment the contract is
perfected, the parties are bound not
only to the fulfillment of what has
been expressly stipulated but also to
alltheconsequenceswhich,according
to their nature, may be in keeping
withgoodfaith,usageandlaw.Under
the agreement, private respondent is
obligatedtoevictthesquattersonthe
property. The ejectment of the
squatters is aconditionthe operative
act of which sets into motion the
period of compliance by petitioner of
his own obligation, i.e., to pay the
balanceofthepurchaseprice.Private
respondents failure to remove the
squatters from the property within
the stipulated period gives petitioner
the right to either refuse to proceed
with the agreement or waive that
condition in consonance with Article
1545 of the Civil Code. This option
16
clearlybelongstopetitionerandnotto
privaterespondent.
We share the opinion of the
appellate court that the undertaking
required of private respondent does
notconstituteapotestativecondition
dependent solely on his will that
might, otherwise, be void in
accordance with Article 1182 of the
Civil Code but a mixed condition
17
dependent not on the will of the
vendoralonebutalsoofthirdpersons
like the squatters and government
agencies and personnel
concerned. We must hasten to add,
18
however, that where the socalled
potestativeconditionisimposednot
onthebirthoftheobligationbutonits
fulfillment, only the condition is
avoided, leaving unaffected the
obligationitself. 19
In contracts of sale particularly,
Article 1545 of the Civil Code,
aforementioned, allows the obligee to petitioner or forfeitable by private
choose between proceeding with the respondent,since,onthebasisofour
agreementorwaivingtheperformance foregoing conclusions,thematterhas
of the condition. It is this provision ceasedtobeanissue.Sufficeittosay
whichisthepertinentruleinthecase that petitioner having opted to
at bench. Here, evidently, petitioner proceed with the sale, neither may
has waived the performance of the petitioner demand its reimbursement
condition imposed on private from private respondent nor may
respondent to free the property from private respondent subject it to
squatters. 20
forfeiture.
In any case, private respondents WHEREFORE, the questioned
actionforrescissionisnotwarranted. decision of the Court of Appeals is
Sheisnottheinjuredparty. Theright
21
herebyREVERSEDANDSETASIDE,
ofresolutionofapartytoanobligation and another is entered ordering
underArticle1191oftheCivilCodeis petitioner to pay private respondent
predicatedonabreachoffaithbythe thebalanceofthepurchasepriceand
other party that violates the the latter to execute the deed of
reciprocity between them. It is 22
absolutesaleinfavorofpetitioner.No
private respondent who has failed in costs.
her obligation under the contract. SOORDERED.
Petitioner did not breach the
agreement.Hehasagreed,infact,to
shouldertheexpensesoftheexecution
ofthejudgmentintheejectmentcase
and to make arrangements with the
sherifftoeffectsuchex+ecution.Inhis
letter of 23 June 1989, counsel for
petitioner has tendered payment and
demanded forthwith the execution of
the deed of absolute sale.
Parenthetically, this offer to pay,
havingbeenmadepriortothedemand
forrescission,assumingforthesakeof
argument that such a demand is
properunderArticle1592 oftheCivil
23

Code,wouldlikewisesufficetodefeat
private respondents prerogative to
rescindthereunder.
Thereisnoneedtostillbelaborthe
question of whether the P50,000.00
advance payment is reimbursable to