Romero vs.
Court of Appeals obligation to eject the squatters from the subject property"
Summary: A seller of a property invokes the right to
rescind the contract citing as a ground her own failure to
comply with a condition in the agreement to eject the
squatters occupying the property.
Rule of Law: Under the law on contracts, the power to
rescind is given to the injured party.
Facts: Buyer Virgilio Romero (P) together with his foreign
partners decided to put up a central warehouse in Metro
Manila. They contacted several real estate brokers and
thereafter, were contacted by Alfonso Flores and spouse to
offer a parcel of land of the seller Enriqueta Ongsiong (D).
Romero (P) found the property suitable for a warehouse,
except for the presence of squatters in the area.
A Deed of Conditional Sale was executed between Romero
(P) and Ongsiong (D) where they agreed that the seller has
the obligation to remove the squatters from the property.
While Ongsiong (D) got a favorable judgment on her
eviction case against the squatters, she did so at a much
later date than the agreed upon 60-day period in the
contract. She offered to return the down payment to
Romero (P), but he refused to accept and instead offer to
underwrite the expenses for the execution of the writ.
On the expiry of the grace period, Romero (P) reminded
Onsiong (D) of her obligation to which Ongsiong (D)
responded that the Deed of Conditional Sale had been
rendered null and void by virtue of her failure to evict the
squatters from the premises.
Romero (P) responded that the contract of sale between
the parties was perfected from the very moment that there
was a meeting of the minds upon the subject lot and the
price. The contract had already been partially fulfilled and
executed upon receipt of the down payment. Ongsiong (D)
is precluded from rejecting its binding effects relying upon
her inability to eject the squatters from the premises of
subject property during the agreed period. Furthermore,
the provisions in the contract do not grant Ongsiong (D)
the option or prerogative to rescind and retain the
property should she fail to comply with the obligation she
has assumed under the contract. The contract clearly
shows that the right to rescind and to demand the
return/reimbursement of the down payment is granted to
Romero (P) for his protection.
Instead of availing of the power to rescind the contract and
demand the return of the down payment, Romero (P) had
opted to assume the ejectment of the squatters from the
premises. And he pointed out that it is basic under the law
on contracts that the power to rescind is given to the
injured party.
Finally, Romero (P) told Ongsiong (D) that she has not
complied with her obligation under their contract in good
faith. It is undeniable that she deliberately refused to exert
efforts to eject the squatters and retain the property
because of the sudden increase in the value of properties in
the surrounding areas.
The lower court held that Ongsiong (D) had no right to
rescind the contract since it was she who "violated her
and that Romero (P), being the injured party, was the
party who could, under Article 1191 of the Civil Code,
rescind the agreement. The court further ruled that the
provision calling for the reimbursement of the down
payment amounted to a "penalty clause".
But the decision was reversed on appeal where the court
decided that the agreement was a contract with a
resolutory condition.
Issues: May the vendor demand the rescission of a
contract for the sale of a parcel of land for a cause
traceable to his/her own failure?
Ruling: No. Ongsiong's (D) action for rescission is not
warranted because she is not the injured party. The right
of resolution 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. It is
Ongsiong (D) who has failed in her obligation under the
contract.
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 (Article 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.
—Asuncion vs. Court of Appeals, 238 SCRA 602.
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.
—Dignos v. Court of Appeals, GR L-59266, February 29,
1988, 158 SCRA 375.
The term "condition" in a perfected contract of sale
pertains to the compliance to a prestation by one party and
upon fulfillment, the demand of the reciprocal prestation
by the other party. The reciprocal obligations referred to
would normally be, in the case of Romero (P), the payment
of the agreed purchase price and, in the case of the
Ongsiong (D), the fulfillment of certain express warranties
(which, in this case, is the timely eviction of the squatters
on the property).
It is futile to challenge the agreement here as not being a
duly perfected contract. A sale is at once perfected when a
person (the seller) obligates himself, for a price certain, to
deliver and to transfer ownership of a specified thing or
right to another (the buyer) over which the latter agrees.