VIRGILIO R.

ROMERO, petitioner,
vs.
HON. COURT OF APPEALS and ENRIQUETA CHUA VDA. DE ONGSIONG,
respondents.
G.R. No. 107207 November 23, 1995
DOCTRINE: The term "condition" in the context of a perfected contract of sale
pertains, in reality, to the compliance by one party of an undertaking the
fulfillment of which would beckon, in turn, the demandability of the reciprocal
prestation of the other party. The reciprocal obligations referred to would normally
be, in the case of vendee, the payment of the agreed purchase price and, in the
case of the vendor, the fulfillment of certain express warranties.
FACTS:
Romero, a civil engineer, was engaged in the business of production,
manufacture and exportation of perlite filter aids, permalite insulation and
processed perlite ore. In 1988, he decided to put up a central warehouse in
Metro Manila.
Flores and his wife offered a parcel of land measuring 1,952 square meters.
The lot was covered in a TCT in the name of private respondent Enriqueta
Chua vda. de Ongsiong. Petitioner visited the property and, except for
the presence of squatters in the area, he found the place suitable for a
central warehouse.
Flores called on petitioner with a proposal that should he advance the
amount of P50,000.00 which could be used in taking up an ejectment case
against the squatters, private respondent would agree to sell the property for
only P800/square meter. Romero agreed. Later, a "Deed of Conditional Sale"
was executed between Flores and Ongsiong. Purchase price: P1,561,600.00;
Down payment: P50K; Balance to be paid 45 days after the removal of all the
squatters; upon full payment, Ongsiong shall execute deed of absolute sale
in favor of Romero.
Ongsiong 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. She opted to
rescind the sale in view of her failure to get rid of the squatters.
RTC of Makati: private respondent had no right to rescind the contract since
it was she who "violated her obligation to eject the squatters from the
subject property" and that petitioner, being the injured party, was the party
who could, under Article 1191 of the Civil Code, rescind the agreement.
CA: reversed TC: It opined that the contract entered into by the parties was
subject to a resolutory condition, i.e., the ejectment of the squatters from the
land, the non-occurrence of which resulted in the failure of the object of the
contract; that private respondent substantially complied with her obligation
to evict the squatters; that it was petitioner who was not ready to pay the
purchase price and fulfill his part of the contract, and that the provision

requiring a mandatory return/reimbursement of the P50,000.00 in case

private respondent would fail to eject the squatters within the 60-day period
was not a penal clause. Thus, it concluded.
ISSUE: Whether the contract of sale was perfected? Yes. Decision of CA was
reversed.
RATIO:
A perfected contract of sale may either be absolute or conditional depending on
whether the agreement is devoid of, or subject to, any condition imposed on the
passing of title of the thing to be conveyed or on the obligation of a party thereto.
When ownership is retained until the fulfillment of a positive condition the breach
of the condition will simply prevent the duty to convey title from acquiring an
obligatory force. If the condition is imposed on an obligation of a party which is not
complied with, the other party may either refuse to proceed or waive said
condition (Art. 1545, Civil Code). Where, of course, the condition is imposed upon
the perfection of the contract itself, the failure of such condition would prevent the
juridical relation itself from coming into existence.
In determining the real character of the contract, the title given to it by the parties
is not as much significant as its substance. For example, a deed of sale, although
denominated as a deed of conditional sale, may be treated as absolute in nature, if
title to the property sold is not reserved in the vendor or if the vendor is not
granted the right to unilaterally rescind the contract predicated on the fulfillment
or non-fulfillment, as the case may be, of the prescribed condition.
The term "condition" in the context of a perfected contract of sale pertains, in
reality, to the compliance by one party of an undertaking the fulfillment of which
would beckon, in turn, the demandability of the reciprocal prestation of the other
party. The reciprocal obligations referred to would normally be, in the case of
vendee, the payment of the agreed purchase price and, in the case of the vendor,
the fulfillment of certain express warranties (which, in the case at bench is the
timely eviction of the squatters on the 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 all the consequences
which, according to their nature, may be in keeping with good faith, usage and law.
Under the agreement, private respondent is obligated to evict the squatters on
the property. The ejectment of the squatters is a condition the operative act of
which sets into motion the period of compliance by petitioner of his own obligation,
i.e., to pay the balance of the purchase price. 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 clearly belongs to petitioner and not to private respondent. There was
no potestative condition on the part of Ongsiong but a "mixed" condition
"dependent not on the will of the vendor alone but also of third persons like the
squatters and government agencies and personnel concerned."