ADALIN V. CA (October 10, 1997)

FACTS:

Appellee-Vendors sold their 5-door commercial building to Appellants Yu and Lim located in front of Imperial Hotel in Cotabato City.

Since there are lessees in the property, the vendors offered it first to them twice but they refused both offers. As such, appellee-vendors and appellants executed a deed of conditional sale. The contract states that they appellants will pay the down payment of 300K first and the remaining balance after the appellee-vendors completely evicted the lessees occupying the property.

After the vendors and the tenants made known their intention to buy the property for a higher price. As such, the vendors executed three deeds of sale of registered land in  favor of the lessees.

The vendors offered to return the downpayment paid by the appellants but the latter refused. The vendors contend that they can rescind the contract because the condition to evict the tenants was not completed.

HELD:

Although the contract was a conditional sale, what was subject to the condition is the payment of the balance. Both parties have their respective obligations yet to be fulfilled, the seller the eviction of the tenants and the buyer, the payment of the balance of the purchase price. The choice of who to sell the property to, however, had already been made by the sellers and is thus no longer subject to any condition nor open to any change. In that sense, the sale to the appellants was definitive and absolute. A clear breach of contract was made by the vendors.

A case double sale occurred when the vendors sold the property to the tenants. When the tenants bought the property, they are fully aware of its prior sale to the appellants. Though the second sale to the said tenants was registered, such prior registration cannot erase the gross bad faith that characterized such second sale, and as such, there is no legal basis to rule that such second sale prevails over the first sale of the said property.