GR 120191; (October, 1997) (Digest)
G.R. No. 120191 October 10, 1997
LORETO ADALIN, CARLOS CALINGASAN, DEMETRIO ADAYA and MAGNO ADALIN, petitioners, vs. THE HON. COURT OF APPEALS, FAUSTINO L. YU, ANTONIO T. LIM, ELENA K. PALANCA, JOSE PALANCA, EDUARDA K. VARGAS, JOSE VARGAS, MERCEDES K. CABALLERO, EBERHARDO CABALLERO, ISABEL K. VILLAMOR, FEDERICO VILLAMOR, JOSE KADO, URSULA KADO, MARIA K. CALONZO, BAYANI L. CALONZO, TEOFILA KADO, NESTOR KADO and LILIA KADO, respondents.
FACTS
The Kado siblings (Elena K. Palanca, et al.), owners of a commercial property in Cotabato City, agreed to sell it to Faustino Yu and Antonio Lim (and initially Loreto Adalin) for P2,600,000.00. The parties executed a “Deed of Conditional Sale” on September 8, 1987, with the buyers paying a P300,000.00 downpayment. A key condition was that the balance would be payable upon the eviction of the existing tenants (the petitioners: Loreto Adalin, Carlos Calingasan, Demetrio Adaya, and Magno Adalin) from the property. The vendors assured they could secure the eviction. However, after receiving notice from the vendors, the tenants expressed their desire to purchase the premises they occupied. The vendors then decided to back out of the sale to Yu and Lim, attempted to return their downpayment, and subsequently executed several deeds of sale over the same property in favor of the tenant-petitioners. Yu and Lim filed an action for specific performance against the vendors and the tenants.
ISSUE
Whether the transaction embodied in the “Deed of Conditional Sale” was an absolute sale or a conditional sale, and whether the vendors were obligated to perform their contractual duties thereunder, specifically to evict the tenants.
RULING
The Supreme Court affirmed the decision of the Court of Appeals. The transaction was a conditional sale, not a mere contract to sell. The condition (eviction of the tenants) was not a suspensive condition that prevented the perfection of the contract, but a suspensive period or a condition imposed on the performance of an obligation. The contract was perfected upon mutual agreement, and the vendors were obligated to fulfill their promise, which included taking steps to evict the tenants. The vendors’ failure to evict the tenants and their subsequent sale of the property to the tenants, who were in gross evident bad faith as they were aware of the prior conditional sale, constituted a breach of contract. The Court upheld the preference to be accorded to the first conditional sale under Article 1544 of the Civil Code, as the subsequent buyers (the tenants) registered their deed in bad faith. The petition was dismissed.