Lily S. Villamil Substituted By Her Heirs Rudy E. Villamil v. Spouses Juanito Erguiza

Summary

This case involves a 1972 contract to sell real property in Dagupan City between the Villamil family and the Erguiza spouses. The agreement contained a suspensive condition requiring court approval for the sale of minor owners' shares before executing the final deed of sale. If court approval was denied, the down payment would be treated as 20-year lease rental. The sellers never filed the required petition and instead consolidated ownership in Lily Villamil's name. When she demanded possession in 2001 claiming the lease period expired, the buyers refused to vacate. The Supreme Court applied the principle of constructive fulfillment under Article 1186 of the Civil Code, ruling that since the sellers prevented fulfillment of the suspensive condition, it was deemed fulfilled. The Court held that the respondent-spouses remain entitled to possession as prospective buyers under the contract to sell, since the sellers have not yet complied with their obligation to execute a deed of sale. The case was not converted to a lease agreement since no court petition was filed to trigger a disapproval. This decision clarifies the distinction between contracts to sell and contracts of sale, and the application of constructive fulfillment when obligors prevent condition compliance.