Lim vs.

Court of Appeals
G.R. No. 118347. October 24, 1996
MENDOZA, J.:
Facts:
On Sept 2, 1988, private respondent Liberty Luna sold the land covered by TCT No.
193230 to petitioners Vicente and Michale Lim for P3,547,600.00. In the agreement, private
respondent assumes full responsibility to eject squatters within 60 days from the date of the
receipt of earnest money and failure to do so, private respondent shall refund. However, private
respondent failed to eject the squatters and alleged that her failure to remove the squatters  the
contract of sale ceased to exist and she no longer had the obligation to sell and deliver her
property to petitioners. The trial court held that there was a perfected contract of sale and private
respondent’s failure to eject the squatters was a breach of warranty, acting in bad faith by not
exerting earnest efforts to eject. Upon appeal, CA reversed the decision of RTC and described
the sale in this case as a “contract with a conditional obligation” whereby the private
respondent’s obligation to sell and deliver and the petitioners’ obligation to pay the balance of
the purchase price depended on the fulfillment of the condition that the squatters be removed
within 60 days. Thus, this petition.
Issue:
Whether as a result of private respondent’s failure to eject the squatters from the
land, petitioners lost the right to demand that the land be sold to them?
Rule of law:
Art 1475 and 1482
Application:
The agreement, as quoted above, shows a perfected contract of sale. Under Art. 1475 of
the Civil Code, a sale is a consensual contract requiring only the consent of the parties on these
two points. In this case, the parties agreed on the subject, the 1,013.6 square meter lot and on the
purchase price of P4,000,000.00. No particular form is required for the validity of their contract
and, therefore, upon its perfection, the parties can reciprocally demand performance of their
respective obligations. Indeed, the earnest money given is proof of the perfection of the contract.
This perfected contract imposed reciprocal obligations on the parties. Petitioners’ obligation was
to pay the balance of the price, while private respondent’s obligation was to deliver the property
to petitioners upon payment of the price.
Conclusion:
WHEREFORE, the decision of the Court of Appeals is REVERSED and that of the
Regional Trial Court is REINSTATED.