G.R. No. 130403 ; July 30, 2007
FRANCISCO GONZALES, Petitioner, vs. SEVERINO C. LIM and TOYOTA SHAW, INC., Respondents.

FACTS

Petitioner Francisco Gonzales and his siblings, owners of Motown Vehicles, Inc., sold its shares to respondents Severino Lim and Toyota Shaw, Inc. The Agreement stipulated a purchase price of ₱6,746,000, payable in two installments. The first installment of ₱6,246,000 was due upon signing. The second installment of ₱500,000 was due upon the petitioner’s procurement of an official communication from the lessor, Tanglaw Realty, confirming Motown’s “continuing and unhampered use” of the leased premises for the original lease term at a reasonable rate. This condition was stated as a central part of the agreement.
After paying the first installment, respondents filed a case for declaratory relief, seeking release from the obligation to pay the ₱500,000 balance. They alleged the petitioner falsely warranted the subsistence of two lease contracts, one of which had been terminated. The petitioner countered that respondents were aware of the terminated lease and that his only undertaking was to help negotiate a new lease. The Regional Trial Court dismissed respondents’ complaint and granted the petitioner’s counterclaim, ordering payment of the ₱500,000 balance. The Court of Appeals affirmed the dismissal but deleted the order for payment, ruling the condition for the second installment—the official communication from Tanglaw—was not fulfilled.

ISSUE

Whether respondents are obligated to pay the ₱500,000 balance despite the petitioner’s failure to procure the specified official communication from Tanglaw Realty.

RULING

Yes. The Supreme Court reinstated the RTC decision, ordering respondents to pay the balance. The legal logic centers on the doctrine of constructive fulfillment and waiver of a suspensive condition. The Court found the condition (procuring the official communication) was imposed for the sole benefit of the respondents-vendees. The evidence showed that after the sale, respondents directly negotiated with Tanglaw and successfully secured a new lease contract for the premises. By dealing directly with the lessor and finalizing a new lease, respondents effectively rendered the petitioner’s procurement of the communication unnecessary and impossible. Their conduct constituted a waiver of the specific condition precedent. Consequently, the condition is deemed constructively fulfilled, and the obligation to pay the second installment became due and demandable. The Court emphasized that a party who prevents the fulfillment of a condition cannot benefit from its non-performance.