G.R. No. L-59980 October 23, 1984
BERLIN TAGUBA AND SEBASTIANA DOMINGO, SPOUSES PEDRO ASUNCION AND MARING ASUNCION, petitioners, vs. MARIA PERALTA VDA. DE DE LEON AND THE HONORABLE COURT OF APPEALS, respondents.

FACTS

Petitioner Berlin Taguba owned a residential lot. Private respondent Maria Peralta Vda. de De Leon and intervenors Spouses Pedro Asuncion were lessees occupying portions of it. On August 27, 1972, Taguba sold a 400-square-meter portion, encompassing the areas occupied by both lessees, to De Leon under a “Deed of Conditional Sale.” The price was P18,000.00, payable with a down payment and monthly installments, with full payment due on or before December 3, 1972. The contract provided that failure to pay the balance by December 31, 1972, would grant De Leon a six-month extension with interest, after which Taguba could increase the price to P50.00 per square meter. De Leon paid P12,500.00 and tendered the P5,500.00 balance in May 1973 within the grace period, but Taguba refused acceptance. After failed negotiations, De Leon filed a complaint for specific performance.
Taguba admitted the sale but claimed De Leon defaulted. He alleged that with De Leon’s knowledge and consent, he sold a portion of the subject property to the Asuncion spouses, who were in possession. The Asuncions intervened, claiming they bought their portion in good faith after De Leon’s default. The trial court ordered a survey to determine the actual areas occupied and required Taguba to execute a deed of sale only for the area De Leon actually occupied. The Court of Appeals reversed, ordering Taguba to execute a deed for the entire 400 square meters, declaring the subsequent sale to the Asuncions void, and ordering possession delivered to De Leon.

ISSUE

Whether the Court of Appeals erred in ordering specific performance of the entire 400-square-meter sale to De Leon and nullifying the subsequent sale to the Asuncion spouses.

RULING

The Supreme Court affirmed the Court of Appeals. The contract between Taguba and De Leon was an absolute contract of sale, not a conditional one. Applying Article 1592 of the Civil Code, the Court held that even with a stipulation for automatic rescission upon failure to pay, the vendor must make a judicial or notarial demand for rescission before the contract can be rescinded. Taguba never made such a demand. Therefore, the contract remained in force, and De Leon, having tendered payment within the grace period, was entitled to specific performance. Time was not of the essence, and her slight delay did not warrant rescission, especially given her substantial payments.
Regarding the subsequent sale to the Asuncion spouses, they could not be considered buyers in good faith as they were aware of the prior sale to De Leon. A prior sale prevails over a subsequent sale involving the same property. Thus, the sale to the Asuncions was correctly declared void. The Court ordered Taguba to execute a deed of absolute sale for the 400 square meters to De Leon upon her payment of the balance.