Facts:

The case involves a petition for review on certiorari filed by Berlin Taguba and Sebastiana Domingo, along with spouses Pedro Asuncion and Marita Lungab, as petitioners against Maria Peralta Vda. de De Leon and the Honorable Court of Appeals, as respondents. The events leading to this case began on August 27, 1972, when Berlin Taguba sold a 400-square meter portion of his residential lot in Cauayan, Isabela, to Maria Peralta Vda. de De Leon for a total price of P18,000. The sale was documented in a "Deed of Conditional Sale," which outlined payment terms, including an initial payment of P3,500 and monthly installments of P1,000 starting September 1972, with a grace period extending to June 1973.

Maria Peralta claimed to have paid P12,500 and attempted to pay the remaining P5,500 within the grace period, but Taguba refused to accept the payment. Following failed negotiations mediated by Governor Faustino N. Dy, Maria Peralta filed a complaint for specific performa...

Facts:

1. Ownership and Lease of the Property

   • Berlin Taguba, married to Sebastiana Domingo, owned a residential lot of 3,129 square meters in Cauayan, Isabela.
   • Spouses Pedro Asuncion and Marita Lungab, as well as Maria Peralta Vda. de De Leon, were occupying portions of the lot as lessees.

2. Sale of the Property

   • On August 27, 1972, Berlin Taguba sold a 400-square-meter portion of the lot to Maria Peralta Vda. de De Leon for P18,000.00 (P45.00 per square meter).
   • The sale was documented in a "Deed of Conditional Sale," which stipulated:
     • A down payment of P3,500.00 upon signing.
     • Monthly payments of at least P1,000.00 starting September 1972, with full payment due by December 3, 1972.
     • A six-month grace period with legal interest if payment was not completed by December 31, 1972.
     • An increase in the purchase price to P50.00 per square meter if payment was not made within the grace period.

3. Dispute Over Payment

   • Maria Peralta claimed she had paid P12,500.00 and tendered the balance of P5,500.00 in May 1973, but Berlin Taguba refused to accept it.
   • Negotiations mediated by Governor Dy failed, leading Maria Peralta to file a complaint for Specific Performance with Preliminary Mandatory Injunction with Damages on April 29, 1976.

4. Defense and Intervention

   • Berlin Taguba admitted the sale but claimed Maria Peralta failed to comply with the payment terms despite extensions.
   • He sold a portion of the property to the Asuncion spouses, who intervened in the case, claiming they bought the land in good faith after Maria Peralta defaulted.

5. Lower Court Decision

   • The trial court ordered:
     • A cadastral survey of the occupied areas.
     • Berlin Taguba to execute a deed of absolute sale for the area occupied by Maria Peralta.
     • Reimbursement of excess payments.
     • The cost of the survey to be shared by Maria Peralta and the Asuncion spouses.

6. Court of Appeals Decision

   • The appellate court reversed the lower court’s decision, ruling:
     • Berlin Taguba must execute a deed of absolute sale for the 400-square-meter portion upon payment of P7,500.00 by Maria Peralta.
     • The sale to the Asuncion spouses was declared null and void.
     • Berlin Taguba must reimburse the Asuncion spouses and deliver possession of the property to Maria Peralta.

Issue:

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Ruling:

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Ratio:

1. Nature of the Contract

   • The "Deed of Conditional Sale" was deemed an absolute sale because it did not reserve title in the vendor or allow unilateral rescission upon default. The only remedies for the vendor were to collect interest and increase the price after the grace period.

2. Rescission of the Contract

   • Under Article 1592 of the New Civil Code, rescission of a sale of immovable property requires a formal demand either judicially or by notarial act. Since Berlin Taguba did not comply with this requirement, rescission was not valid.

3. Buyers in Good Faith

   • The Asuncion spouses could not claim good faith because they were aware of the prior sale to Maria Peralta. Their purchase of a portion of the property already sold to her was invalid.

4. Equity and Justice

   • Maria Peralta had already paid a significant portion of the purchase price and tendered the balance within the grace period. Equity and justice required that she be allowed to complete payment.