ADELFAPROPERTIES,INC.

VCOURTOFAPPEALS
REGALADO;January25,1995
NATURE:PetitionforreviewoncertiorariofthejudgmentoftheCourtofAppeals.
FACTS
PrivaterespondentRosarioJimenezCastaedaandSaludJimenezandtheirbrothers,Joseand
DominadorJimenez,weretheregisteredcoownersofaparceloflandconsistingof17,710sqm.,
situatedinLasPias.
OnJuly28,1988,JoseandDominadorJimenezsoldtheirshareconsistingofonehalfofsaid
parcelofland,specificallytheeasternportionthereof,toAdelfaPropertiespursuanttoa
"KasulatansaBilihanngLupa."Thewesternportionwasallocatedtoprivaterespondents.
AdelfaexpressedtheirintenttoalsobuythewesternportionofthepropertyfromRosarioand
Salud.OnNovember25,1989,an"ExclusiveOptiontoPurchase"wasexecutedbetween
petitionerandprivaterespondents,underthefollowingtermsandconditions:
1. Thesellingpriceofsaid8,655sqm.ofthesubjectpropertyisP2,856,150;
2. The50,000pesosoptionmoneyshallbecreditedaspartialpaymentuponthe
consummationofthesale,andthebalanceshallbepaidonorbeforeNovember30,
1989
3. IncaseofdefaultonthepartofADELFAPROPERTIES,INC.theoptionshallbe
cancelledand25,000oftheoptionmoneyshallbeforfeietedinfavoroftheJimenezes
andtheother25,000shallbegivenbacktoAdelfauponthesaleofthepropertytoathird
person
4. AllexpensesexceptfortheregistrationofthedeedofsaleintheRegistryofDeedsshall
bepaidbytheVendors(Jimenzes).

ThecopyofSaludJimenezoftheTitleofthepropertyhadbeenlostthusshefileda
petitionforthereissuanceofanewcopythroughhislawyer,Atty.BayaniBernardo.A
newcopywasissuedbutAtty.BernanrdoturnedoverthesaidtitletoAdelfaProperties.
BeforeAdelfacouldmakepayment,itreceivedsummonsfromtheniecesandnephews
oftheprivaterespondentsfortheannulmentofthedeedofsaleandtherecoveryof
ownershipoftheproperty.
AsaconsequenceAdelfainformedrespondentsthatitwouldholdpaymentofthefullpurchase
priceandsuggestedthattheysettlethematterfirstwiththeirnephewsandnieces.Respondent
SaludJimenezrefusedtoheedthesuggestionofpetitionerandattributedthesuspensionof
paymentofthepurchasepriceto"lackofwordofhonor."
OnDecember7,1989(aftertheprescribeddateofpaymentNov.30,1989),petitionercausedto
beannotatedonthetitleofthelotitsoptioncontractwithprivaterespondents.
OnDecember14,1989,privaterespondentssentFranciscaJimeneztoseeAtty.Bernardoto

informhimthattheytheywerecancellingthetransaction.Bernardoofferedtopaythepurchase
pricebuttheJimenezesrejectedsaidoffer.
OnFebruary23,1990,theRTCofMakatidismissedcivilcase.Thus,onFebruary28,1990,
petitionercausedtobeannotatedanewontheTCTtheexclusiveoptiontopurchase.
Onthesameday,privaterespondentsexecutedaDeedofConditionalSaleinfavorofEmylene
ChuaoverthesameparceloflandforP3,029,250,ofwhichP1,500,000waspaidtoprivate
respondentsonsaiddate,withthebalancetobepaiduponthetransferoftitletothespecified
onehalfportion.
OnApril16,1990,Atty.Bernardowroteprivaterespondentsinformingthelattersincethecase
wasdismissed,Adelfawaswillingtopaythepurchaseprice.Thiswasignoredbyprivate
respondents.
OnJuly27,1990,JimenezessenttoAdelfaaletterenclosingthereinacheckforP25,000
representingtherefundof50%oftheoptionmoneypaidundertheexclusiveoptionto
purchase.
Privaterespondentsaskedthatthecopyofthetitlewhichtheyhavebereturned.Adelfafailedto
surrendersaidCertificateofTitle.JimenezesfiledacivilcaseintheRTCofPasayCityfor
annulmentofcontractwithdamages,praying,amongothers,thattheexclusiveoptionto
purchasebedeclarednullandvoid;thatAdelfa,beorderedtoreturnthetitle;andthatthe
annotationoftheoptioncontractontheTCTbecancelled.
RTCruledinfavoroftheJimenezes.Theagreementwasmerelyanoptioncontract;the
suspensionofpaymentbyhereinpetitionerwasonlyacounteroffer,whichwasrejectedbythe
Jimenezes.Adelfacouldnotvalidlysuspendpaymentbecausethecaseagainstthesalefiledby
thenephewsandniecesoftheJimenezesdidnotactuallyinvolvethewesternsectionofthelot
whichwasthesubjectoftheagreementofthetwoparties.RTCdirectedthecancellationofthe
exclusiveoptiontopurchase,declaredthesaletointervenorEmyleneChuaasvalidand
binding,andorderedpetitionertopaydamagesandattorney'sfeestoprivaterespondents,
withcosts.
CAaffirmedintotothedecisionoftheRTCbecAdelfafailedtopaythepurchasepricewithin
theperiodprescribedintheoptioncontract;thesuspensionofpaymentconstitutedan
impositionofaconditionwhichwasactuallyacounterofferamountingtoarejectionofthe
option;andthatArticle1590oftheCivilCodeonsuspensionofpaymentsappliesonlytoa
contractofsaleoracontracttosell,butnottoanoptioncontract.
ISSUES
1.WONthe"ExclusiveOptiontoPurchase"executedbetweenAdelfaProperties,Inc.andprivate
respondentsisacontracttosell,ratherthanacontractofsale?
2.WONtherewasavalidsuspensionofpaymentofthepurchasepricebysaidpetitioner,andthe
legaleffectsthereofonthecontractualrelationsoftheparties?

HELD
1.YES.Itisacontracttosell.Inacontractofsale,thetitlepassestothevendeeuponthe
deliveryofthethingsold;whereasinacontracttosell,byagreementtheownershipis
reservedinthevendorandisnottopassuntilthefullpaymentoftheprice.Suchpayment
beingapositivesuspensivecondition.Thepartiesneverintendedtotransferownershipto
Adelfaexceptuponfullpaymentofthepurchaseprice.Firstly,theexclusiveoptionto
purchasedoesnotmentionthatpetitionerisobligedtoreturnpossessionorownershipofthe
propertyasaconsequenceofnonpayment.Withtheabsenceofsuchastipulation,itmay
legallybeinferredthatthepartiesneverintendedtotransferownershiptothepetitioner
priortocompletionofpaymentofthepurchaseprice.
Moreover,thatthepartiesreallyintendedtoexecuteacontracttosellisbolsteredbythefactthat
thedeedofabsolutesalewouldhavebeenissuedonlyuponthepaymentofthebalanceof
thepurchaseprice.
Secondly,ithasnotbeenshownthattherewasdeliveryoftheproperty,actualor
constructive,madetohereinpetitioner.Theexclusiveoptiontopurchaseisnotcontainedin
apublicinstrumenttheexecutionofwhichwouldhavebeenconsideredequivalenttodelivery.
Neitherdidpetitionertakeactual,physicalpossessionofthepropertyatanygiventime.
Anoption,asusedinthelawonsales,isacontinuingofferorcontractbywhichtheowner
stipulateswithanotherthatthelattershallhavetherighttobuythepropertyatafixedprice
withinacertaintime,orunder,orincompliancewith,certaintermsandconditions,orwhich
givestotheownerofthepropertytherighttosellordemandasale.Anoptionisnotofitselfa
purchase,butmerelysecurestheprivilegetobuy..Itissimplyacontractbywhichtheowner
ofpropertyagreeswithanotherpersonthatheshallhavetherighttobuyhispropertyata
fixedpricewithinacertaintime.
Ontheotherhand,acontracttosell,involvesameetingofmindsbetweentwopersons
wherebyonebindshimself,withrespecttotheother,togivesomethingortorendersome
service.Contracts,ingeneral,areperfectedbymereconsent,whichismanifestedbythe
meetingoftheofferandtheacceptanceuponthethingandthecausewhicharetoconstitutethe
contract.Theoffermustbecertainandtheacceptanceabsolute.
Thedistinctionbetweenan"option"andacontractofsaleisthatanoptionisan
unacceptedoffer.Acontractofsale,ontheotherhand,fixesdefinitelytherelativerightsand
obligationsofbothpartiesatthetimeofitsexecution..
Therecordsalsoshowthatprivaterespondentsacceptedtheofferofpetitionertobuytheir
propertyunderthetermsoftheircontract.Atthetimepetitionermadeitsoffer,private
respondentssuggestedthattheirtransfercertificateoftitlebefirstreconstituted,towhich
petitioneragreed.
PetitionerwassupposedtopaythethepurchasepriceonNovember25,1989,but,itlater
offeredtomakeadownpaymentofP50,000,withthebalanceofP2,806,150tobepaidonor
beforeNovember30,1989.Privaterespondentsagreedtothecounteroffermadeby

petitioner.
Therealreadyexistedaperfectedcontractbetweenthepartiesatthetimethealleged
counterofferwasmade.Thus,anynewofferbyapartybecomesbindingonlywhenitis
acceptedbytheother.Inthecaseofprivaterespondents,theyactuallyrefusedtoconcurin
saidofferofpetitioner,byreasonofwhichtheoriginaltermsofthecontractcontinuedtobe
enforceable.Infactitwasevenindicativeofadesirebypetitionertoimmediatelycomply
therewith,exceptthatitwasbeingpreventedfromdoingsobecauseofthefilingofthecivil
casewhich,itbelievedingoodfaith,renderedcomplianceimprobableatthattime.
Thetestindeterminingwhetheracontractisa"contractofsaleorpurchase"oramere"option"is
whetherornottheagreementcouldbespecificallyenforced.Thereisnodoubtthatthe
obligationofpetitionertopaythepurchasepriceisspecific,definiteandcertain,and
consequentlybindingandenforceable
2.YES.Ataglance,itiseasilydiscerniblethat,thenephewsandniecesoftheJimenezeswere
claimingtobecoownersoftheentireparcelofland.Suchbeingthecase,petitionerwas
justifiedinsuspendingpaymentofthebalanceofthepurchasepricebyreasonofthe
aforesaidvindicatoryactionfiledagainstit.
However,petitionernolongerhadtherighttosuspendpaymentafterthedisturbanceceased
withthedismissalofthecivilcasefiledagainstit.Necessarily,therefore,itsobligationtopay
thebalanceagainaroseandresumedafteritreceivednoticeofsuchdismissal.
Unfortunately,petitionerfailedtoseasonablymakepayment,asinfactithasfailedtodosoupto
thepresenttime,oreventodepositthemoneywiththetrialcourtwhenthiscasewasoriginally
filedtherein.
Inthecaseatbar,ithasbeenshownthatalthoughpetitionerwasdulyfurnishedanddid
receiveawrittennoticeofrescissionwhichspecifiedthegroundstherefor,itfailedtoreply
theretoorprotestagainstit.Itssilencethereonsuggestsanadmissionoftheveracityand
validityofprivaterespondents'claim.Bysuchcavalierdisregard,ithasbeeneffectively
estoppedfromseekingtheaffirmativereliefitnowdesiresbutwhichithadtheretofore
disdained.