Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 107207 November 23, 1995
VIRGILIO R. ROMERO, petitioner,
vs.
HON. COURT O !PPE!LS "#$ ENRI%UET! CHU! V&!. &E ONGSIONG,
respondents.

VITUG, J.:
The parties pose this uestion! Ma" the vendor de#and the rescission of a contract for
the sale of a parcel of land for a cause traceable to his o$n failure to have the
suatters on the sub%ect propert" evicted $ithin the contractuall"&stipulated period'
Petitioner Vir(ilio R. Ro#ero, a civil en(ineer, $as en(a(ed in the business of
production, #anufacture and e)portation of perlite filter aids, per#alite insulation and
processed perlite ore. In *+,,, petitioner and his forei(n partners decided to put up a
central $arehouse in Metro Manila on a land area of appro)i#atel" -,... suare
#eters. The pro%ect $as #ade /no$n to several freelance real estate bro/ers.
0 da" or so after the announce#ent, 0lfonso 1lores and his $ife, acco#panied b" a
bro/er, offered a parcel of land #easurin( *,+2- suare #eters. 3ocated in 4aran(a"
San Dionisio, Para5aue, Metro Manila, the lot $as covered b" T6T No. 78*9.- in the
na#e of private respondent :nriueta 6hua vda. de On(sion(. Petitioner visited the
propert" and, e)cept for the presence of suatters in the area, he found the place
suitable for a central $arehouse.
3ater, the 1lores spouses called on petitioner $ith a proposal that should he advance
the a#ount of P2.,...... $hich could be used in ta/in( up an e%ect#ent case a(ainst
the suatters, private respondent $ould a(ree to sell the propert" for onl" P,..... per
suare #eter. Petitioner e)pressed his concurrence. On .+ ;une *+,,, a contract,
deno#inated <Deed of 6onditional Sale,< $as e)ecuted bet$een petitioner and private
respondent. The si#pl"&dra$n contract read!
DEED OF CONDITIONAL SALE
=NO> 033 M:N 4? TH:S: PR:S:NTS!
This 6ontract, #ade and e)ecuted in the Municipalit" of Ma/ati, Philippines this +th da"
of ;une, *+,, b" and bet$een!
:NRI@A:T0 6HA0 VD0. D: ONBSIONB, of le(al a(e, $ido$, 1ilipino and residin( at
*.2 Si#oun St., @ueCon 6it", Metro Manila, hereinafter referred to as the V:NDORD
&and&
VIRBI3IO R. ROM:RO, #arried to Severina 3. 3at, of 3e(al a(e, 1ilipino, and residin(
at **. San Mi(uel St., Plainvie$ Subd., Mandalu"on( Metro Manila, hereinafter
referred to as the V:ND::!
> I T N : S S : T H ! That
>H:R:0S, the V:NDOR is the o$ner of One E*F parcel of land $ith a total area of
ON: THOAS0ND NIN: HANDR:D 1I1T? T>O E*,+2-F S@A0R: M:T:RS, #ore or
less, located in 4arrio San Dionisio, Municipalit" of Para5aue, Province of RiCal,
covered b" T6T No. 78*9.- issued b" the Re(istr" of Deeds of Pasi( and #ore
particularl" described as follo$s!
))) ))) )))
>H:R:0S, the V:ND::, for EsicF has offered to bu" a parcel of land and the
V:NDOR has accepted the offer, sub%ect to the ter#s and conditions hereinafter
stipulated!
NO>, TH:R:1OR:, for and in consideration of the su# of ON: MI33ION 1IV:
HANDR:D SIGT? ON: THOAS0ND SIG HANDR:D P:SOS EP*,28*,8.....F ON3?,
Philippine 6urrenc", pa"able b" V:ND:: to in to EsicF #anner set forth, the V:NDOR
a(rees to sell to the V:ND::, their heirs, successors, ad#inistrators, e)ecutors,
assi(n, all her ri(hts, titles and interest in and to the propert" #entioned in the 1IRST
>H:R:0S 630AS:, sub%ect to the follo$in( ter#s and conditions!
1
*. That the su# of 1I1T? THOAS0ND P:SOS EP2.,......F ON3? Philippine
6urrenc", is to be paid upon si(nin( and e)ecution of this instru#ent.
-. The balance of the purchase price in the a#ount of ON: MI33ION 1IV: HANDR:D
:3:V:N THOAS0ND SIG HANDR:D P:SOS EP*,2**,8.....F ON3? shall be paid 92
da"s after the re#oval of all suatters fro# the above described propert".
7. Apon full pa"#ent of the overall purchase price as aforesaid, V:NDOR $ithout
necessit" of de#and shall i##ediatel" si(n, e)ecute, ac/no$led(ed EsicF and deliver
the correspondin( deed of absolute sale in favor of the V:ND:: free fro# all liens and
encu#brances and all Real :state ta)es are all paid and updated.
It is hereb" a(reed, covenanted and stipulated b" and bet$een the parties hereto that if
after 8. da"s fro# the date of the si(nin( of this contract the V:NDOR shall not be
able to re#ove the suatters fro# the propert" bein( purchased, the do$npa"#ent
#ade b" the bu"er shall be returnedHrei#bursed b" the V:NDOR to the V:ND::.
That in the event that the V:ND:: shall not be able to pa" the V:NDOR the balance
of the purchase price of ON: MI33ION 1IV: HANDR:D :3:V:N THOAS0ND SIG
HANDR:D P:SOS EP*,2**,8.....F ON3? after 92 da"s fro# $ritten notification to the
V:ND:: of the re#oval of the suatters fro# the propert" bein( purchased, the 1I1T?
THOAS0ND P:SOS EP2.,......F previousl" paid as do$npa"#ent shall be forfeited
in favor of the V:NDOR.
:)penses for the re(istration such as re(istration fees, docu#entar" sta#p, transfer
fee, assurances and such other fees and e)penses as #a" be necessar" to transfer
the title to the na#e of the V:ND:: shall be for the account of the V:ND:: $hile
capital (ains ta) shall be paid b" the V:NDOR.
IN >ITN:SS >H:R:O1, the parties hereunto si(ned those EsicF presents in the 6it" of
Ma/ati MM, Philippines on this +th da" of ;une, *+,,.
ES(d.F ES(d.F
VIRBI3IO R. ROM:RO :NRI@A:T0 6HA0 VD0.
D: ONBSIONB
Vendee Vendor
SIBN:D IN TH: PR:S:N6: O1!
ES(d.F ES(d.F
Ro$ena 6. On(sion( ;ac/ M. 6ruC
1
0lfonso 1lores, in behalf of private respondent, forth$ith received and ac/no$led(ed a
chec/ for P2.,......
2
fro# petitioner.
3
Pursuant to the a(ree#ent, private respondent filed a co#plaint for e%ect#ent E6ivil
6ase No. I2I+F a(ainst Melchor Musa and -+ other suatter fa#ilies $ith the
Metropolitan Trial 6ourt of Para5aue. 0 fe$ #onths later, or on -* 1ebruar" *+,+,
%ud(#ent $as rendered orderin( the defendants to vacate the pre#ises. The decision
$as handed do$n be"ond the 8.&da" period Ee)pirin( .+ 0u(ust *+,,F stipulated in the
contract. The $rit of e)ecution of the %ud(#ent $as issued, still later, on 7. March
*+,+.
In a letter, dated .I 0pril *+,+, private respondent sou(ht to return the P2.,...... she
received fro# petitioner since, she said, she could not <(et rid of the suatters< on the
lot. 0tt". Ser(io 0.1. 0postol, counsel for petitioner, in his repl" of *I 0pril *+,+, refused
the tender and stated!.
Our client believes that $ith the e)ercise of reasonable dili(ence considerin( the
favorable decision rendered b" the 6ourt and the $rit of e)ecution issued pursuant
thereto, it is no$ possible to e%ect the suatters fro# the pre#ises of the sub%ect
propert", for $hich reason, he proposes that he shall ta/e it upon hi#self to e%ect the
suatters, provided, that e)penses $hich shall be incurred b" reason thereof shall be
char(eable to the purchase price of the land.
'
Mean$hile, the Presidential 6o##ission for the Arban Poor E<P6AD<F, throu(h its
Re(ional Director for 3uCon, 1arle" O. Viloria, as/ed the Metropolitan Trial 6ourt of
Para5aue for a (race period of 92 da"s fro# -* 0pril *+,+ $ithin $hich to relocate
and transfer the suatter fa#ilies. 0ctin( favorabl" on the reuest, the court suspended
the enforce#ent of the $rit of e)ecution accordin(l".
On ., ;une *+,+, 0tt". 0postol re#inded private respondent on the e)pir" of the 92&
da" (race period and his clientJs $illin(ness to <under$rite the e)penses for the
e)ecution of the %ud(#ent and e%ect#ent of the occupants.<
5
In his letter of *+ ;une *+,+, 0tt". ;oauin ?useco, ;r., counsel for private respondent,
advised 0tt". 0postol that the Deed of 6onditional Sale had been rendered null and
void b" virtue of his clientJs failure to evict the suatters fro# the pre#ises $ithin the
a(reed 8.&da" period. He added that private respondent had <decided to retain the
propert".<
(
2
On -7 ;une *+,+, 0tt". 0postol $rote bac/ to e)plain!
The contract of sale bet$een the parties $as perfected fro# the ver" #o#ent that
there $as a #eetin( of the #inds of the parties upon the sub%ect lot and the price in the
a#ount of P*,28*,8...... Moreover, the contract had alread" been partiall" fulfilled
and e)ecuted upon receipt of the do$npa"#ent of "our client. Ms. On(sion( is
precluded fro# re%ectin( its bindin( effects rel"in( upon her inabilit" to e%ect the
suatters fro# the pre#ises of sub%ect propert" durin( the a(reed period. Suffice it to
state that, the provision of the Deed of 6onditional Sale do not (rant her the option or
prero(ative to rescind the contract and to retain the propert" should she fail to co#pl"
$ith the obli(ation she has assu#ed under the contract. In fact, a perusal of the ter#s
and conditions of the contract clearl" sho$s that the ri(ht to rescind the contract and to
de#and the returnHrei#burse#ent of the do$npa"#ent is (ranted to our client for his
protection.
Instead, ho$ever, of availin( hi#self of the po$er to rescind the contract and de#and
the return, rei#burse#ent of the do$npa"#ent, our client had opted to ta/e it upon
hi#self to e%ect the suatters fro# the pre#ises. Precisel", $e refer "ou to our letters
addressed to "our client dated 0pril *I, *+,+ and ;une ,, *+,+.
Moreover, it is basic under the la$ on contracts that the po$er to rescind is (iven to the
in%ured part". Andoubtedl", under the circu#stances, our client is the in%ured part".
1urther#ore, "our client has not co#plied $ith her obli(ation under their contract in
(ood faith. It is undeniable that Ms. On(sion( deliberatel" refused to e)ert efforts to
e%ect the suatters fro# the pre#ises of the sub%ect propert" and her decision to retain
the propert" $as brou(ht about b" the sudden increase in the value of realties in the
surroundin( areas.
Please consider this letter as a tender of pa"#ent to "our client and a de#and to
e)ecute the absolute Deed of Sale.
7
0 fe$ da"s later Eor on -I ;une *+,+F, private respondent, pro#pted b" petitionerJs
continued refusal to accept the return of the P2.,...... advance pa"#ent, filed $ith
the Re(ional Trial 6ourt of Ma/ati, 4ranch *77, 6ivil 6ase No. ,+&97+9 for rescission of
the deed of <conditional< sale, plus da#a(es, and for the consi(nation of P2.,......
cash.
Mean$hile, on -2 0u(ust *+,+, the Metropolitan Trial 6ourt issued an alias $rit of
e)ecution in 6ivil 6ase No. I2I+ on #otion of private respondent but the suatters
apparentl" still sta"ed on.
4ac/ to 6ivil 6ase No. ,+&97+9, on -8 ;une *++., the Re(ional Trial 6ourt of Ma/ati
)

rendered decision holdin( that private respondent had no ri(ht to rescind the contract
since it $as she $ho <violated her obli(ation to e%ect the suatters fro# the sub%ect
propert"< and that petitioner, bein( the in%ured part", $as the part" $ho could, under
0rticle **+* of the 6ivil 6ode, rescind the a(ree#ent. The court ruled that the
provisions in the contract relatin( to EaF the returnHrei#burse#ent of the P2.,...... if
the vendor $ere to fail in her obli(ation to free the propert" fro# suatters $ithin the
stipulated period or EbF, upon the other hand, the su#Js forfeiture b" the vendor if the
vendee $ere to fail in pa"in( the a(reed purchase price, a#ounted to <penalt"
clauses<. The court added!
This 6ourt is not convinced of the (round relied upon b" the plaintiff in see/in( the
rescission, na#el"! E*F he EsicF is afraid of the suattersD and E-F she has spent so
#uch to e%ect the# fro# the pre#ises Ep. 8, tsn, ses. ;an. 7, *++.F. Militatin( a(ainst
her profession of (ood faith is plaintiffs conduct $hich is not in accord $ith the rules of
fair pla" and %ustice. Notabl", she caused the issuance of an alias $rit of e)ecution on
0u(ust -2, *+,+ E:)h. 8F in the e%ect#ent suit $hich $as al#ost t$o #onths after she
filed the co#plaint before this 6ourt on ;une -I, *+,+. If she $ere reall" afraid of the
suatters, then she should not have pursued the issuance of an alias $rit of e)ecution.
4esides, she did not even report to the police the alle(ed phone threats fro# the
suatters. To the #ind of the 6ourt, the so&called suatter factor is si#pl" factuitous
EsicF.
9
The lo$er court, accordin(l", dis#issed the co#plaint and ordered, instead, private
respondent to e%ect or cause the e%ect#ent of the suatters fro# the propert" and to
e)ecute the absolute deed of conve"ance upon pa"#ent of the full purchase price b"
petitioner.
Private respondent appealed to the 6ourt of 0ppeals. On -+ Ma" *++-, the appellate
court rendered its decision.
10
It opined that the contract entered into b" the parties $as
sub%ect to a resolutor" condition, i.e., the e%ect#ent of the suatters fro# the land, the
non&occurrence of $hich resulted in the failure of the ob%ect of the contractD that private
respondent substantiall" co#plied $ith her obli(ation to evict the suattersD that it $as
petitioner $ho $as not read" to pa" the purchase price and fulfill his part of the
contract, and that the provision reuirin( a #andator" returnHrei#burse#ent of the
P2.,...... in case private respondent $ould fail to e%ect the suatters $ithin the 8.&
da" period $as not a penal clause. Thus, it concluded.
>H:R:1OR:, the decision appealed fro# is R:V:RS:D and S:T 0SID:, and a ne$
one entered declarin( the contract of conditional sale dated ;une +, *+,, cancelled
and orderin( the defendant&appellee to accept the return of the do$npa"#ent in the
a#ount of P2.,...... $hich $as deposited in the court belo$. No pronounce#ent as
to costs.
11
3
1ailin( to obtain a reconsideration, petitioner filed this petition for revie$ on certiorari
raisin( issues that, in fine, center on the nature of the contract adverted to and the
P2.,...... re#ittance #ade b" petitioner.
0 perfected contract of sale #a" either be absolute or conditional
12
dependin( on
$hether the a(ree#ent is devoid of, or sub%ect to, an" condition i#posed on the
passing of title of the thin( to be conve"ed or on the obligation of a part" thereto. >hen
o$nership is retained until the fulfill#ent of a positive condition the breach of the
condition $ill si#pl" prevent the dut" to conve" title fro# acuirin( an obligatory force.
If the condition is i#posed on an obligation of a part" $hich is not co#plied $ith, the
other party #a" either refuse to proceed or $aive said condition E0rt. *292, 6ivil 6odeF.
>here, of course, the condition is i#posed upon the perfection of the contract itself, the
failure of such condition $ould prevent the %uridical relation itself fro# co#in( into
e)istence.
13
In deter#inin( the real character of the contract, the title (iven to it b" the parties is not
as #uch si(nificant as its substance. 1or e)a#ple, a deed of sale, althou(h
deno#inated as a deed of conditional sale, #a" be treated as absolute in nature, if title
to the propert" sold is not reserved in the vendor or if the vendor is not (ranted the ri(ht
to unilaterall" rescind the contract predicated
on the fulfill#ent or non&fulfill#ent, as the case #a" be, of the prescribed condition.
1'
The ter# <condition< in the conte)t of a perfected contract of sale pertains, in realit", to
the co#pliance b" one part" of an underta/in( the fulfill#ent of $hich $ould bec/on, in
turn, the de#andabilit" of the reciprocal prestation of the other part". The reciprocal
obli(ations referred to $ould nor#all" be, in the case of vendee, the pa"#ent of the
a(reed purchase price and, in the case of the vendor, the fulfill#ent of certain e)press
$arranties E$hich, in the case at bench is the ti#el" eviction of the suatters on the
propert"F.
It $ould be futile to challen(e the a(ree#ent here in uestion as not bein( a dul"
perfected contract. 0 sale is at once perfected $hen a person Ethe sellerF obli(ates
hi#self, for a price certain, to deliver and to transfer o$nership of a specified thin( or
ri(ht to another Ethe bu"erF over $hich the latter a(rees.
15
The ob%ect of the sale, in the case before us, $as specificall" identified to be a *,+2-&
suare #eter lot in San Dionisio, Para5aue, RiCal, covered b" Transfer 6ertificate of
Title No. 78*9.- of the Re(istr" of Deeds for Pasi( and therein technicall" described.
The purchase price $as fi)ed at P*,28*,8....., of $hich P2.,...... $as to be paid
upon the e)ecution of the docu#ent of sale and the balance of P*,2**,8..... pa"able
<92 da"s after the re#oval of all suatters fro# the above described propert".<
1ro# the #o#ent the contract is perfected, the parties are bound not onl" to the
fulfill#ent of $hat has been e)pressl" stipulated but also to all the conseuences
$hich, accordin( to their nature, #a" be in /eepin( $ith (ood faith, usa(e and la$.
Ander the a(ree#ent, private respondent is obli(ated to evict the suatters on the
propert". The e%ect#ent of the suatters is a condition the operative act of $hich sets
into #otion the period of co#pliance b" petitioner of his o$n obli(ation, i.e., to pa" the
balance of the purchase price. Private respondentJs failure <to re#ove the suatters
fro# the propert"< $ithin the stipulated period (ives petitioner the ri(ht to either refuse
to proceed $ith the a(ree#ent or $aive that condition in consonance $ith 0rticle *292
of the 6ivil 6ode.
1(
This option clearl" belon(s to petitioner and not to private
respondent.
>e share the opinion of the appellate court that the underta/in( reuired of private
respondent does not constitute a <potestative condition dependent solel" on his $ill<
that #i(ht, other$ise, be void in accordance $ith 0rticle **,- of the 6ivil 6ode
17
but a
<#i)ed< condition <dependent not on the $ill of the vendor alone but also of third
persons li/e the suatters and (overn#ent a(encies and personnel concerned.<
1)
>e
#ust hasten to add, ho$ever, that $here the so&called <potestative condition< is
i#posed not on the birth of the obli(ation but on its fulfill#ent, onl" the obli(ation is
avoided, leavin( unaffected the obli(ation itself.
19
In contracts of sale particularl", 0rticle *292 of the 6ivil 6ode, afore#entioned, allo$s
the obli(ee to choose bet$een proceedin( $ith the a(ree#ent or $aivin( the
perfor#ance of the condition. It is this provision $hich is the pertinent rule in the case
at bench. Here, evidentl", petitioner has $aived the perfor#ance of the condition
i#posed on private respondent to free the propert" fro# suatters.
20
In an" case, private respondentJs action for rescission is not $arranted. She is not the
in%ured part".
21
The ri(ht of resolution of a part" to an obli(ation under 0rticle **+* of
the 6ivil 6ode is predicated on a breach of faith b" the other part" that violates the
reciprocit" bet$een the#.
22
It is private respondent $ho has failed in her obli(ation
under the contract. Petitioner did not breach the a(ree#ent. He has a(reed, in fact, to
shoulder the e)penses of the e)ecution of the %ud(#ent in the e%ect#ent case and to
#a/e arran(e#ents $ith the sheriff to effect such e)ecution. In his letter of -7 ;une
*+,+, counsel for petitioner has tendered pa"#ent and de#anded forth$ith the
e)ecution of the deed of absolute sale. Parentheticall", this offer to pa", havin( been
#ade prior to the de#and for rescission, assu#in( for the sa/e of ar(u#ent that such
a de#and is proper under 0rticle *2+-
23
of the 6ivil 6ode, $ould li/e$ise suffice to
defeat private respondentJs prero(ative to rescind thereunder.
There is no need to still belabor the uestion of $hether the P2.,...... advance
pa"#ent is rei#bursable to petitioner or forfeitable b" private respondent, since, on the
basis of our fore(oin( conclusions, the #atter has ceased to be an issue. Suffice it to
4
sa" that petitioner havin( opted to proceed $ith the sale, neither #a" petitioner
de#and its rei#burse#ent fro# private respondent nor #a" private respondent sub%ect
it to forfeiture.
>H:R:1OR:, the uestioned decision of the 6ourt of 0ppeals is hereb" R:V:RS:D
0ND S:T 0SID:, and another is entered orderin( petitioner to pa" private respondent
the balance of the purchase price and the latter to e)ecute the deed of absolute sale in
favor of petitioner. No costs.
SO ORD:R:D.
5