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C A
EN SAVOIR PLUS
NOK ! N O T R E
S U P R E M E C O
. . . ' C A U S E I D O N ' T K N O W H

T H U R S D A Y , N O V E M W B E E L R C O 2 M3 E, T1 O9 9 L5 A W

Romero vs. Court of Appeals Lawpedia is a collection of study


materials for law students in
Buyer (P) vs. Seller (D)
Philippine universities and is part
GR 107207 [T]
of the Law School Survivor
Project. The collection is based
Summary: A seller of a property invokes the right to rescind on the curriculum of the
the contract citing as a ground her own failure to comply with University of San Carlos College
a condition in the agreement to eject the squatters occupying of Law, but supplemented with
the property. materials from other law schools.

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) 1 S T Y E A R S U B J E


and Ongsiong (D) where they agreed that the seller has the
111, 123, 114, 126, 124,
obligation to remove the squatters from the property. While
125, 127
Ongsiong (D) got a favorable judgment on her eviction case
117, 118, 128, 132, 420
against the squatters, she did so at a much later date than the
131, 116
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 2 N D Y E A R S U B J E
execution of the writ. 201, 221, 213, 214, 224,
210, 239, 225, 241
On the expiry of the grace period, Romero (P) reminded 226, 218, 227, 228N, 229,
Onsiong (D) of her obligation to which Ongsiong (D) 230, 431
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. 3 R D Y E A R S U B J E

322, 211,330, 331, 327,


Romero (P) responded that the contract of sale between the 212, 332, 425
parties was perfected from the very moment that there was a 438, 316, 443, 319, 444,
meeting of the minds upon the subject lot and the price. The 413, 318
contract had already been partially fulfilled and executed
upon receipt of the down payment. Ongsiong (D) is precluded
4 T H Y E A R S U B J E
from rejecting its binding effects relying upon her inability to
eject the squatters from the premises of subject property 422, 436, 421, 414, 442, 440
during the agreed period. Furthermore, the provisions in the 418, 435, 441, 340N, 419
contract do not grant Ongsiong (D) the option or prerogative
to rescind and retain the property should she fail to comply
M O D E R A T E D B Y
with the obligation she has assumed under the contract. The
contract clearly shows that the right to rescind and to demand Hannibal L. Bawagan
the return/reimbursement of the down payment is granted to LLB2, University of San Carlos
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 obligation to
eject the squatters from the subject property" 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.
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P O S T A C O M M E N T

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