G.R. No. 80645 August 3, 1993
MARCELINO GALANG and GUADALUPE GALANG, petitioners, vs. COURT OF APPEALS, RAMON R. BUENAVENTURA, ANGELES BUENAVENTURA, CORAZON BUENAVENTURA, and MA. LUISA BUENAVENTURA, respondents.

FACTS

On July 16, 1976, Ramon Buenaventura, on his own behalf and as attorney-in-fact for his co-owners, sold two parcels of land in Tagaytay City to spouses Marcelino and Guadalupe Galang for P192,795.00. The Deed of Sale stipulated the terms of payment: (a) 25% upon signing; (b) 25% within three months, or upon removal of the “encargado” from the premises, with the delivery of the owner’s duplicate certificate of title; and (c) the 50% balance within one year, with 12% interest per annum if not paid after said year. The petitioners paid the first 25% but alleged that the private respondents failed to remove the “encargado” and deliver the title, preventing them from paying the second installment and taking possession. The petitioners filed a complaint for specific performance with damages. The private respondents denied the allegations, stating the contract did not reflect the true intention and that the “encargado” refused to leave. The trial court and the Court of Appeals ruled that the “encargado” was an agricultural tenant who could not be ejected without cause under the Agricultural Land Reform Code. They held that the removal of the “encargado” was a condition precedent to the contract and, being a legally impossible condition (contrary to law and public policy), it annulled the obligation under Article 1183 of the Civil Code. The courts ordered the rescission of the contract, with the private respondents ordered to pay damages to the petitioners.

ISSUE

Was the removal of the “encargado” a condition precedent to the fulfillment of the contract of sale such that finding it to be a legally impossible condition would entitle the buyers to the rescission of the contract?

RULING

No. The Supreme Court reversed the decisions of the lower courts. The contract was a perfected “contract to sell,” where ownership was retained until full payment of the price. The removal of the “encargado” was not a condition precedent to the perfection or fulfillment of the contract. The clause “25% within three months, or upon removal of the ‘encargado'” provided an alternative period for the payment of the second installment, not a condition. Therefore, whether or not the “encargado” was removed, the petitioners could have paid the second 25% within three months and demanded the delivery of the title. The lower courts erred in basing their decision on Article 1183. Furthermore, the Supreme Court found the lower courts’ conclusion that the “encargado” was a tenant to be precipitate and lacking sufficient evidence. The Supreme Court ordered specific performance: petitioners are ordered to pay the full 75% balance of the purchase price within thirty days, and private respondents are ordered to transfer the title upon full payment. The stipulated 12% interest on the balance is dispensed with, in lieu of damages for the private respondents’ possession of the land during the pendency of the case.