UNIVERSAL ROBINA SUGAR MILLING CORPORATION
v. HEIRS OF ANGEL TEVES
Petitioner: Universal Robina Sugar Milling Corporation
Respondent: Heirs of Angel Teves
Date of Promulgation: September 8, 2002
Ponente: Sandoval-Gutierrez, J.
Facts:
 Andres Abanto owned two parcels of land. He
died on Feb. 16, 1973.
o One lot is registered in his name and
the other lot is unregistered.
 Andres Abanto's heirs executed an
Extrajudicial Settlement of the Estate of the
Deceased Andres Abanto and Simultaneous
Sale. It adjudicated unto themselves the two
lots and sold the: (a) unregistered lot to the
United Planters Sugar Milling Company, Inc.
(UPSUMCO), and (b) the registered lot covered
by TCT No. H-37 to Angel M. Teves, for a total
sum of P115,000.00. The sale was not register.
 Out of respect for his uncle Ignacio
Montenegro (UPSUMCO's founder &
president), Teves verbally allowed UPSUMCO
to use the lot covered by TCT No. H-37 for pier
and loading facilities, free of charge, subject to
the condition that UPSUMCO shall shoulder
the payment of real property taxes and that its
occupation shall be co-terminus with its
corporate existence.
 UPSUMCO then built a guesthouse and pier
facilities on the property.
 Years later, UPSUMCOs properties were
acquired by the Philippine National Bank
(PNB). Later, PNB transferred the same
properties to the Asset Privatization Trust
(APT) which, in turn, sold the same to the
Universal Robina Sugar Milling Corporation
(URSUMCO).
 URSUMCO then took possession of UPSUMCOs
properties, including Teves' lot covered by
TCT No. H-37.
 Upon learning of URSUMCO's acquisition of his
lot, Teves formally asked the corporation to
turn over to him possession thereof or the
corresponding rentals. He stated in his
demand letters that he merely allowed
UPSUMCO to use his property until its
corporate dissolution; and that it was not
mortgaged by UPSUMCO with the PNB and,
therefore, not included among the foreclosed
properties acquired by URSUMCO.
 RSUMCO refused to heed Teves' demand,
claiming that it acquired the right to occupy
the property from UPSUMCO which purchased
it from Andres Abanto; and that it was merely
placed in the name of Angel Teves, as shown
by the Deed of Transfer and Waiver of Rights
and Possession.
 Under this document, UPSUMCO transferred
to URSUMCO its application for agricultural
and foreshore lease. The same document
partly states that the lands subject of the
foreshore and agricultural lease applications
are bounded on the north by the "titled
property of Andres Abanto bought by the
transferor (UPSUMCO) but placed in the name
of Angel Teves". URSUMCO further claimed
that it was UPSUMCO, not Teves, which has
been paying the corresponding realty taxes.
 Teves filed with RTC a complaint for recovery
of possession of real property with damages
against URSUMCO.
 Teves died and was substituted by his heirs.
 RTC: In favor of Teves.
o URSUMCO has no personality to
question the validity of the sale of the
property between the heirs of
Andres Abanto and Angel Teves since
it is not a party thereto;
o Teves' failure to have the sale
registered would not vitiate his right
of ownership, unless a third party
has acquired the land in good faith
and for value and has registered the
subsequent deed
o the list of properties acquired by
URSUMCO from the PNB does not
include the disputed lot and,
therefore, was not among those
conveyed by UPSUMCO to URSUMCO.
 CA: Affirm RTC decision. (In favor of Teves)
o transaction between Angel Teves and
Andres Abanto's heirs is a contract of
sale, not one to sell, because
ownership was immediately
conveyed to the purchaser upon
payment of P115,000.00.
o Teves' failure to cause the
registration of the sale is not fatal
since a contract of sale is perfected
by mere consent of the contracting
parties and has the force of law
between them. Besides, his failure to
refer the case to the barangay cannot
affect the jurisdiction already
acquired by the court over the
subject matter and the person of
"defendant-appellant" URSUMCO.
 Hence, this petition.
Issue: (1) W/N the transaction entered by Angel
Teves and Abanto’s heir is a contract of sale.
(2) W/N petitioner is an innocent purchaser
for value of the lot and its current possessor, thus it has
the personality to assail the validity of the sale in
question.
Held: (1) Yes, it’s a contract of sale. In a contract of
sale, title to the property passes to the vendee upon
delivery of the thing sold; while in a contract to sell,
ownership is, by agreement, reserved in the vendor and
is not to pass to the vendee until full payment of the
purchase price. In the case at bar, the subject contract,
duly notarized provides: "EXTRA-JUDICIAL
SETTLEMENT OF THE ESTATE OF THE DECEASED
ANDRES ABANTO AND SIMULTANEOUS SALE x x x”
It is clear from the recitals of the contract that it is an
extrajudicial settlement of the estate of the deceased
Andres Abanto, and simultaneous sale of the properties
described therein, including the subject lot. Clearly
indicated therein is that the Abanto heirs sold to Teves
the lot covered by TCT No. H-37. There is no showing
that the Abanto heirs merely promised to sell the said
lot to Teves.
That absolute ownership over the land (TCT No. H-37)
was indeed transferred to Teves is further shown by his
acts subsequent to the execution of the contract. As
found by the trial court, it was Teves, not Andres
Abanto's heirs, who allowed UPSUMCO to construct pier
facilities and guesthouse on the land. When the
property was erroneously included among UPSUMCO's
properties that were transferred to petitioner
URSUMCO, it was Teves, not the heirs of Andres Abanto,
who informed petitioner that he owns the same and
negotiated for an arrangement regarding its use. Teves
even furnished petitioner documents and letters
showing his ownership of the lot, such as a copy of the
"Extrajudicial Settlement of the Estate of the Deceased
Andres Abanto and Simultaneous Sale" and a certified
true copy of TCT No. H-37 covering the disputed lot.
Indeed, the trial court and the CA correctly ruled that
Teves purchased the lot from the Abanto heirs.
If was not a contract to sell, as ownership of the lot
would have remained with the Abanto heirs, not with
UPSUMCO. Consequently, UPSUMCO would not have
transferred any right over the property to petitioner
URSUMCO.
We are likewise unconvinced by petitioner's assertion
that the price or consideration of the contract is not
certain. In a contract of sale, one of the contracting
parties obligates himself to transfer the ownership of
and to deliver a determinate thing, and the other to pay
a price certain in money or its equivalent. The subject of
the sale embodied in the Extrajudicial Settlement of
Estate of the Deceased Andres Abanto and
Simultaneous Sale consists of two parcels of land. It is
clear from the said instrument that the amount of
P115,000.00 refers to the price for the two lots as a
whole. Thus, contrary to petitioner's claim, the price of
the subject property is not uncertain.
That the contract of sale was not registered does not
affect its validity. Being consensual in nature, it is
binding between the parties, the Abanto heirs and
Teves. Article 1358 of the New Civil Code, which
requires the embodiment of certain contracts in a public
instrument, is only for convenience, and the registration
of the instrument would merely affect third persons.
Formalities intended for greater efficacy or convenience
or to bind third persons, if not done, would not
adversely affect the validity or enforceability of the
contract between the contracting parties themselves.
Thus, by virtue of the valid sale, Angel Teves stepped
into the shoes of the heirs of Andres Abanto and
acquired all their rights to the property.
(2) No, Petitioner has no sufficient cause of
action not being a party to the contract of sale
between Abanto's heirs and Angel Teves, and not
being a subsequent innocent purchaser for value,
petitioner cannot claim any right of possession over
the land in question. Surely, petitioner is proscribed
from questioning Teves' ownership.
An innocent purchaser is one who acquired the
property for a valuable consideration, not knowing that
the title of the vendor or grantor is null and void. He is
also one who buys the property of another without
notice that some other person has a right to, or interest
in, such property and pays a full and fair price for the
same, at the time of such purchase, or before he has
notice of the claim or interest of some other persons in
the property. The concept underscores two important
factors: (1) the property which is bought for
consideration, and (2) the lack of knowledge or notice
of adverse claim or interest prior to the sale. Both
factors are not present insofar as petitioner URSUMCO
is concerned.
For one, petitioner acquired almost all of UPSUMCOS
properties for a consideration but failed to prove that
the lot covered by TCT No. H - 37 was included therein.
In fact, the lot was not among the properties acquired
by petitioner from the APT whose holdings were limited
only to those UPSUMCO properties foreclosed by the
PNB. Also, the Deed of Transfer and Waiver of Rights
and Possession shows that only a certain properties and
rights of UPSUMCO were transferred to petitioner
URSUMCO.
Petitioner cannot likewise assert that it has no adequate
notice of any adverse claim over the lot in controversy.
Teves informed petitioner of his ownership and
demanded that he be placed in possession thereof or, in
the alternative, that he be paid the corresponding
rentals. Moreover, petitioner should have been
sufficiently forewarned of a probable anomaly or
irregularity in the ownership of the subject lot,
considering that it was registered not in the name of
UPSUMCO, but in the name of Andres Abanto. A
purchaser cannot close his eyes to facts which should
put a reasonable man upon his guard, and then claim
that he acted in good faith under the belief that there
was no defect in the title of the vendor.
 MANUEL v. RODRIGUEZ
Petitioner: Eusebio Manuel
Respondent: Eulogio Rodriguez
Date of Promulgation: July 27, 1960
Ponente: Reyes, JBL, J.
Facts:
 It appears that Januaria Rodriguez was the
original registered owner of a big tract of land
(part of which is the land in question).
 Januara Rodriguez ceded and transferred said
land to the Payatas Subdivision Inc., to be
administered by said firm, subdivided, sold,
leased or otherwise disposed of. Defendant-
appellee Eulogio Rodriguez was then the
Secretary-Treasurer of said Payatas
Subdivision Inc.
 Plaintiff-appellant offered to buy the lot in
question. The Company agreed to sell said lot
(Lot 51) for P2,240 in cash, or by installments
with 10% interest. (Exhibit "C")
 Plaintiff-appellant made a counter-offer for
P2,000, which the Payatas Subdivision
accepted, provided it was paid in each.
 Plaintiff-appellant wanted to pay in
installments. The Company wrote him that it
was agreeable to a down-payment of P1,500,
the balance to be paid within 9 to 10 months
without interest, or if the down-payment be
less than P1,500, with interest at 10% on the
balance. (Exhibit "F")
 Plaintiff-appellant then requested that the
down-payment be reduced to P1,300, and
through the intercession of defendant-
appellee Eulogio Rodriguez, Sr. who was
plaintiff-appellant's friend, this was granted.
 After making the initial payment of P1,300, a
provisional receipt was issued which was
substituted by the official receipt sent by
Casiano M. de Vera, the Company's
bookkeeper. (Exhibits "G" & "G"-1)
 Plaintiff-appellant was placed in the
possession of the lot.
 It appears that plaintiff-appellant did not make
any payments within the 9 to 10-month
period.
 Payatas Subdivision Inc. sent him a letter
urging immediate payment of his unpaid
account with the Company, which, including
interest, amounted to P819.23, and asking him
to answer within 10 days.
 Plaintiff-appellant made another payment of
P300 for which a receipt dated June 20, 1928
was issued to him. So far as the record
discloses, this appears to be the last payment
made by plaintiff-appellant on Lot 51, the
property in question.
 Payatas Subdivision Inc. sent plaintiff-
appellant a detailed statement of his unpaid
account amounted to P596.21, urging
immediate payment thereof, so that title could
be transferred to him as per agreement.
 Still, plaintiff-appellant did not pay his
account, despite the fact that thereafter, on
several occasions, the Company sent to his
residence its acting secretary, Conrado
Vicente, to collect the balance.
 Defendants-appellees advance the theory that
in view of plaintiff-appellant's repeated
default in paying his outstanding account, the
Payatas Subdivision Inc. then considered his
contract cancelled and extinguished, and the
amounts already paid (P1,600), forfeited to
the Company, the transaction being merely a
contract to sell or promise to sell; that the
Payatas Subdivision Inc., having sold all its
properties (except some properties it was
administering for Januaria Rodriguez), was
extrajudically dissolved, but its papers of
dissolution were lost or destroyed during the
war; that after said dissolution, all unsold
properties belonging to Januaria Rodriguez
were returned to her.
 Januaria Rodriguez, who was the aunt of
defendant-appellee Eulogio Rodriguez, sold
several properties to the latter, including Lot
51 in question, in consideration of the monthly
advances, support, services, care,
maintenance, medical expenses, etc. which she
received from the said Eulogio Rodriguez. TCT
was issued to Eulogio Rodriguez, Sr
 Likewise, it appears that Eulogio Rodriguez,
Sr., then Mayor of Manila, instructed his
secretary to write plaintiff-appellant to urge
him to pay his unsettled account with the
Payatas Subdivision, Inc. As per instructions,
his secretary wrote plaintiff-appellant. Still,
there was no payment.
 Eulogio Rodriguez, Sr. then sold Lot 51(among
others) to John Landahl (represented in the
transaction by Carlos Landahl as attorney-in-
fact), for and in consideration of P157,192.80,
in Japanese war notes. The sale was duly
registered and TCT was issued in Landahl's
name.
 A little less than 23 years after the alleged sale
to him of Lot 51 in 1926, plaintiff-appellant
brought the instant case, as aforesaid, to
compel the execution of a formal deed of
conveyance in his favor covering the
purported sale in 1926; to compel receipt of
the unpaid balance of the price which plaintiff-
appellant consigned in court; and to annul the
subsequent sales to Eulogio Rodriguez and to
John Landahl, and the corresponding transfer
certificates to title issued to them.
Issue: W/N the transaction was mere contract to sell or
promise to sell of Lot 51 to plaintiff-appellant, the
understanding being that upon failure to pay the
installments as demanded, the vendor corporation had
the right to consider the contract cancelled and the
amounts already paid, forfeited.
Held: Yes, the transaction was a mere contract to
sell. Exhibits reveal that only the price and the terms of
payments were in writing. The most important, the
alleged transfer of title, and the other matters alluded to
in some of the communications, were not reduced to
any written document. It is generally recognized that to
be a written contract, all its terms must be in writing; so
that a contract partly in writing and partly oral, is, in
legal effect, an oral contract. Apart from whether the
letters negotiating the transaction could constitute a
written contract of sale, the absence of a formal deed of
conveyance strongly indicates that the parties did not
intend immediate transfer of title, but only a transfer
after full payment of the price. As observed by the trial
court, if the contract were an absolute sale, it is unlikely
that plaintiff-appellant would not have insisted that the
same be reduced to a public document, considering that
Lot 51 is covered by a Torrens title. On the other hand,
it is unlikely for the Payatas Subdivision Inc. to have
agreed to an immediate transfer of ownership without
guaranty of the balance being ever paid.
One other evidence of the true character of the
transaction is the statement contained in Exhibit "J": "at
ng kayo naman ay mabigyan na ng katibayan, alinsunod
sa pinagkayarian", strengthening the conclusion that
what transpired was a mere contract to sell, transfer of
title being conditioned on full payment of the price.
Plaintiff-appellant tries to refute this by citing El Banco
Nacional Filipino vs. Ah Sing, 69 Phil. 611, wherein the
contract captioned "Promesa De Venta" was held to be
an absolute sale. Suffice it to say that comparison will
not hold, because in the cited case, the contract was
reduced to a formal deed conveyance and the court
found that the parties had agreed to and actually
effectuated a delivery. In the instant case, there was a
formal deed of conveyance, and, as the land is covered
by the Torrens title, there could be no delivery except
by the act of registration of the deed or instrument.
Adding to the pile of circumstances, the fact that
plaintiff-appellant did not file this action to enforce the
contract until after more than 20 years from the alleged
absolute sale in 1926 induces no other conclusion than
that the transaction was a mere contract to sell, for it if
were an absolute sale, it was unlikely for plaintiff-
appellant to wait as long as he did before commencing
the present action, considering that as the land was
covered by a Torrens title, it could have been very easy
for the Payatas Subdivision to dispose or encumber the
same to another party. Considering the steady increase
in land values since 1926. Plaintiff's laches and his
neglect to comply with his own obligations are powerful
indicia against the merits of his case rendering his case
highly inequitable.
Although this dissolution of Payatas Subdivision Inc.
cannot be determinative of the character of the sale in
1926 (as to whether conditional or absolute), it must
really have been the occasion which prompted the
termination of the contract, as the corporation had to
wind up its affairs and close all pending business.
Plaintiff-appellant, however, argues (Errors I-IV; VI;
VIII) that the Payatas Subdivision had no right to cancel
the contract, as there was no demand by suit or notarial
act, as provided by Article 1504 of the Old Code (Art.
1592, N. C. C.). This is without merit, because Article
1504 requiring demand by suit or notarial act in case
the vendor of realty wants to rescind, does not apply to
a contract to sell or promise to sell, where title remains
with the vendor until fulfillment to a positive
suspensive condition, such as full payment of the price.
The contention of plaintiff-appellant that Payatas
Subdivision Inc. had no right to cancel the contract as
there was only a "casual breach" is likewise untenable.
In contracts to sell, where ownership is retained by the
seller and is not to pass until the full payment of the
price, such payment, as we said, is a positive suspensive
condition, the failure of which is not a breach, casual or
serious, but simply an event that prevented the
obligation of the vendor to convey title from acquiring
binding force, in accordance with Article 1117 of the
Old Civil Code. To argue that there was only a casual
breach is to proceed from the assumption that the
contract is one of absolute sale, where non-payment is a
resolutory condition, which is not the case.
From a different perspective, there is yet another
reason why the purported sale to plaintiff-appellant
could not have transferred title to him, and could not
have prevented the subsequent sale of the property to
another party. The land in question being covered by a
Torrens title, only the act of registration of the deed or
instrument could effect transfer of ownership. In the
instant case, there is not even a deed or instrument that
could possibly be registered.
PADILLA v. SPOUSES PAREDES
Petitioner: Albert Padilla
Respondent: Spouses Floresco & Adelina Paredes ; CA
Date of Promulgation: March 17, 2000
Ponente: Quisimbing, J.
Facts:
 Petitioner Albert R. Padilla and private
respondents Floresco and Adelina Paredes
 entered into a contract to sell involving a
parcel of land in San Juan, La Union. At that
time, the land was untitled although private
respondents were paying taxes thereon.
 Under the contract, petitioner undertook to
secure title to the property in private
respondents' names. Of the P312,840.00
purchase price, petitioner was to pay a
downpayment of P50,000.00 upon signing of
the contract, and the balance was to be paid
within ten days from the issuance of a court
order directing issuance of a decree of
registration for the property.
 Subsequently, the court ordered the issuance
of a decree of land registration for the subject
property. The property was titled in the name
of private respondent Adelina Paredes.
 Private respondents then demanded payment
of the balance of the purchase price, per the
second paragraph of the contract to sell.
 Petitioner made several payments to private
respondents, some even before the court
issued an order for the issuance of a decree of
registration. Still, petitioner failed to pay the
full purchase price even after the expiration of
the period set.
 In a letter, private respondents, through
counsel, demanded payment of the remaining
balance within five days from receipt of the
letter. Otherwise, private respondents would
consider the contract rescinded.
 Petitioner made a payment of P100,000.00 to
private respondents, still insufficient to cover
the full purchase price.
 Shortly thereafter, in a letter, private
respondents offered to sell to petitioner one-
half of the property for all the payments the
latter had made, instead of rescinding the
contract. If petitioner did not agree with the
proposal, private respondents said they would
take steps to enforce the automatic rescission
of the contract.
 Petitioner did not accept private respondents'
proposal. Instead he offered to pay the balance
in full for the entire property, plus interest and
attorney's fees. Private respondents refused
the offer.
 Petitioner instituted an action for specific
performance against private respondents,
alleging that he had already substantially
complied with his obligation under the
contract to sell. He claimed that the several
partial payments he had earlier made, upon
private respondents' request, had impliedly
modified the contract. He also averred that he
had already spent P190,000.00 in obtaining
title to the property, subdividing it, and
improving its right-of-way.
 Private respondents claimed that petitioner
maliciously delayed payment of the balance of
the purchase price, despite repeated demand
and despite his knowledge of private
respondents' need therefor. According to
private respondents, their acceptance of
partial payments did not at all modify the
terms of their agreement, such that the failure
of petitioner to fully pay at the time stipulated
was a violation of the contract; and that this
violation led to the rescission of the contract,
of which petitioner was formally informed.
 RTC: In favor of petitioner.
o it was only a casual and slight breach
that did not warrant rescission of the
contract.
o private respondents themselves
breached the contract when they
requested and accepted installment
payments from petitioner, even
before the land registration court
ordered issuance of a decree of
registration for the property.
According to the trial court, this
constituted modification of the
contract, though not reduced into
writing as required by the contract
itself. The payments, however, were
evidenced by receipts duly signed by
private respondents. Acceptance of
delayed payments estopped private
respondents from exercising their
right of rescission, if any existed.
 CA: reversed trial court’s ruling and confirmed
private respondents' rescission of the contract
to sell. (in favor of private respondents)
o private respondents are entitled to
rescission under Article 1191 of the
Civil Code, but with the obligation to
return to petitioner the payments the
latter had made, including expenses
incurred in securing title to the
property and in subdividing and
improving its right of way. Whatever
damages private respondents had
suffered should be deemed duly
compensated by the benefits they
derived from the payments made by
petitioner.
 Hence, this petition.
Issue: W/N the contract is “contract to sell” and that
the private respondents are entitled to rescind their
“contract to sell”.
Held: Yes, It is a contract to sell. But private
respondents may not rescind it, but they can cancel
it. It is clearly inferable from the following provisions of
the contract:
"xxx
That the VENDORS hereby agree and bind themselves
not to allienate (sic) encumber, or in any manner
modify the right of title to said property.
xxx
That the VENDORS agree to pay real estate taxes of said
subject property until the same will have been
transferred to the VENDEE.
That on payment of the full purchase price of the above-
mentioned property the VENDORS will execute and
deliver a deed conveying to the VENDEE the title in fee
simple of said property free from all lien and
encumbrances..."(Underscoring supplied.)
These provisions signify that title to the property
remains in the vendors until the vendee should have
fully paid the purchase price, which is a typical
characteristic of a contract to sell.
Admittedly, petitioner failed to comply with his
obligation to pay the full purchase price within the
stipulated period. Under the contract, petitioner was to
pay the balance of the purchase price within 10 days
from the date of the court order for the issuance of the
decree of registration for the property. Private
respondents claim, and petitioner admits, that there
was delay in the fulfillment of petitioner's obligation.
The order of the court was dated December 27, 1989.
By April 1990, or four months thereafter, petitioner still
had not fully paid the purchase price, clearly in violation
of the contract.
Petitioners offer to pay is clearly not the payment
contemplated in the contract. While he might have
tendered payment through a check, this is not
considered payment until the check is encashed.
Besides, a mere tender of payment is not sufficient.
Consignation is essential to extinguish petitioner's
obligation to pay the purchase price.
CA was right that private respondents may validly
cancel the contract to sell their land to petitioner.
However, the reason for this is not that private
respondents have the power to rescind such contract,
but because their obligation thereunder did not arise.
Article 1191 of the Civil Code, on rescission, is
inapplicable in the present case. This is apparent from
the text of the article itself:
"Art. 1191. The power to rescind obligations is implied
in reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him.
The injured party may choose between the fulfillment
and the rescission of the obligation, with the payment of
damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should
become impossible.
The court shall decree the rescission claimed, unless
there be just cause authorizing the fixing of a period.
This is understood to be without prejudice to the rights
of third persons who have acquired the thing, in
accordance with articles 1385 and 1388 and the
Mortgage Law."
Article 1191 speaks of obligations already existing,
which may be rescinded in case one of the obligors fails
to comply with what is incumbent upon him. However,
in the present case, there is still no obligation to convey
title of the land on the part of private respondents.
There can be no rescission of an obligation that is non-
existent, considering that the suspensive condition
therefor has not yet happened.
In Rillo v. Court of Appeals, we ruled:
"The respondent court did not err when it did not apply
Articles 1191 and 1592 of the Civil Code on rescission to
the case at bar. The contract between the parties is not
an absolute conveyance of real property but a contract
to sell. In a contract to sell real property on
installments, the full payment of the purchase price is a
positive suspensive condition, the failure of which is not
considered a breach, casual or serious, but simply an
event which prevented the obligation of the vendor to
convey title from acquiring any obligatory force. The
transfer of ownership and title would occur after full
payment of the purchase price."
We reiterated this rule in Odyssey Park, Inc. v. Court of
Appeals, 280 SCRA 253 (1997). Moreover, we held in
Odyssey:
"The breach contemplated in Article 1191 of the Code is
the obligors failure to comply with an obligation already
extant, not a failure of a condition to render binding that
obligation."
Under the parties contract, the property will be
transferred to petitioner only upon the latter's
"complete compliance of his obligation provided in [the]
contract." Because of petitioners failure to fully pay the
purchase price, the obligation of private respondents to
convey title to the property did not arise. Thus, private
respondents are under no obligation, and may not be
compelled, to convey title to petitioner and receive the
full purchase price.
Petitioner's reliance on Article 1592 of the Civil Code is
misplaced. Clearly, what this provision contemplates is
an absolute sale and not a contract to sell as in the
present case.
Private respondents acceptance of several partial money upon the sale of said property
payments did not modify the parties' contract as to to a third party;
exempt petitioner from complying with his obligation to o All expenses including the
pay within the stipulated period. corresponding capital gains tax, cost
of documentary stamps are for the
Acceptance of the partial payments is, at best, an act of account of the VENDORS, and
tolerance on the part of private respondents that could expenses for the registration of the
not modify the contract, absent any written agreement deed of sale in the Registry of Deeds
to that effect signed by the parties. are for the account of ADELFA
PROPERTIES, INC.
 Considering, however, that the owner's copy
of the certificate of title issued to respondent
ADELFA PROPERTIES INC. v. CA
Salud Jimenez had been lost, a petition for the
re-issuance of a new owner's copy of said
Petitioner: Adelfa Properties Inc.
certificate of title was filed in court through
Respondent: CA ; Rosario Jimenez-Castañeda & Salud
Atty. Bayani L. Bernardo, who acted as private
Jimenez (private respondents)
respondents' counsel. Eventually, a new
Date of Promulgation: January 25, 1995
owner's copy of the certificate of title was
Ponente: Regalado, J.
issued but it remained in the possession of
Atty. Bernardo until he turned it over to
Facts:
petitioner Adelfa Properties, Inc.
 Private respondents Rosario Jimenez-
 Before petitioner could make payment, it
Castañeda & Salud Jimenez and their brothers,
received summons and a complaint filed by
Jose and Dominador Jimenez, were the
the nephews and nieces of private
registered co-owners of a parcel of land in Las
respondents against the latter, Jose and
Piñas.
Dominador Jimenez, and herein petitioner for
 Jose and Dominador Jimenez sold their share
annulment of the deed of sale in favor of
consisting of 1/2 of said parcel of land,
Household Corporation and recovery of
specifically the eastern portion, to petitioner
ownership of the property.
Adelfa Properties Inc. pursuant to a "Kasulatan
 Petitioner informed private respondents that
sa Bilihan ng Lupa."
it would hold payment of the full purchase
 Subsequently, a "Confirmatory Extrajudicial
price and suggested that private respondents
Partition Agreement" was executed by the
settle the case with their nephews and nieces.
Jimenezes.
Respondent Salud Jimenez refused to heed the
o Eastern portion – Jose and
suggestion of petitioner and attributed the
Dominador Jimenez
suspension of payment of the purchase price
o Western portion – Rosario Jimenez-
to "lack of word of honor."
Castañeda & Salud Jimenez
 Private respondents sent Francisca Jimenez to
 Petitioner expressed interest in buying the
see Atty. Bernardo, in his capacity as
western portion of the property from private
petitioner's counsel, and to inform the latter
respondents. Accordingly, an "Exclusive
that they were cancelling the transaction. In
Option to Purchase" was executed between
turn, Atty. Bernardo offered to pay the
petitioner Adelfa Properties and private
purchase price provided that P500,000.00 be
respondents, under the following terms and
deducted therefrom for the settlement of the
conditions:
civil case. This was rejected by private
o The selling price of the subject
respondents. On December 22, 1989, Atty.
property is P2,856,150.00.
Bernardo wrote private respondents on the
o P50,000.00 which we received from
same matter but this time reducing the
ADELFA PROPERTIES, INC. as an
amount from P500,000.00 to P300,000.00, and
option money shall be credited as
this was also rejected by the latter.
partial payment upon the
 RTC dismissed the case. Thus, petitioner
consummation of the sale and the
caused to be annotated anew on TCT No.
balance of P2,806,150 to be paid on
309773 the exclusive option to purchase as
or before November 30, 1989;
Entry No. 4442-4.
o In case of default on the part of
ADELFA PROPERTIES, INC. to pay  Private respondents executed a Deed of
said balance, this option shall be Conditional Sale in favor of Emylene Chua over
cancelled and 50% of the option the same parcel of land for P3,029,250, of
money to be forfeited in our (private which P1,500,000.00 was paid to private
respondents) favor and we will respondents on said date, with the balance to
refund the remaining 50% of said be paid upon the transfer of title to the
specified one-half portion.
 Atty. Bernardo wrote private respondents
informing the latter that in view of the
dismissal of the case against them, petitioner
was willing to pay the purchase price, and he
requested that the corresponding deed of
absolute sale be executed. This was ignored by
private respondents.
 Private respondents' counsel sent a letter to
petitioner enclosing a check for P25,000.00
representing the refund of fifty percent of the
option money paid under the exclusive option
to purchase. Private respondents then
requested petitioner to return the owner's
duplicate copy of the certificate of title of
respondent Salud Jimenez. Petitioner failed to
surrender the certificate of title, hence private
respondents filed a complaint for annulment
of contract with damages, praying, among
others, that the exclusive option to purchase
be declared null and void; that defendant,
(herein petitioner) be ordered to return the
owner's duplicate certificate of title; and that
the annotation of the option contract on TCT
No. 309773 be cancelled. Emylene Chua, the
subsequent purchaser of the lot, filed a
complaint in intervention.
 RTC: agreement entered into by the parties
was merely an option contract, and declaring
that the suspension of payment by herein
petitioner constituted a counter-offer which,
was tantamount to a rejection of the option. It
likewise ruled that herein petitioner could not
validly suspend payment in favor of private
respondents on the ground that the
vindicatory action filed by the latter's kin did
not involve the western portion of the land
covered by the contract between petitioner
and private respondents, but the eastern
portion thereof which was the subject of the
sale between petitioner and the brothers Jose
and Dominador Jimenez. The trial court then
directed the cancellation of the exclusive
option to purchase, declared the sale to
intervenor Emylene Chua as valid and binding.
 CA: Affirmed. It held that failure of petitioner
to pay the purchase price within the period
agreed upon was tantamount to an election by
petitioner not to buy the property; that the
suspension of payment constituted an
imposition of a condition which was actually a
counter-offer amounting to a rejection of the
option; and that Article 1590 of the Civil Code
on suspension of payments applies only to a
contract of sale or a contract to sell, but not to
an option contract which it opined was the
nature of the document subject of the case at
bar. It upheld the validity of the deed of
conditional sale executed by private
respondents in favor of intervenor Emylene
Chua.
Issue: W/N the contract entered by the parties is
contract to sell.
Held: Yes, it was a contract to sell. The distinction
between the two is important for in contract of sale, the
title passes to the vendee upon the delivery of the thing
sold; whereas in a contract to sell, by agreement the
ownership is reserved in the vendor and is not to pass
until the full payment of the price. In a contract of sale,
the vendor has lost and cannot recover ownership until
and unless the contract is resolved or rescinded;
whereas in a contract to sell, title is retained by the
vendor until the full payment of the price, such payment
being a positive suspensive condition and failure of
which is not a breach but an event that prevents the
obligation of the vendor to convey title from becoming
effective. Thus, a deed of sale is considered absolute in
nature where there is neither a stipulation in the deed
that title to the property sold is reserved in the seller
until the full payment of the price, nor one giving the
vendor the right to unilaterally resolve the contract the
moment the buyer fails to pay within a fixed period.
There are two features which convince us that the
parties never intended to transfer ownership to
petitioner except upon the full payment of the purchase
price. Firstly, the exclusive option to purchase, although
it provided for automatic rescission of the contract and
partial forfeiture of the amount already paid in case of
default, does not mention that petitioner is obliged to
return possession or ownership of the property as a
consequence of non-payment. There is no stipulation
anent reversion or reconveyance of the property to
herein private respondents in the event that petitioner
does not comply with its obligation. With the absence of
such a stipulation, although there is a provision on the
remedies available to the parties in case of breach, it
may legally be inferred that the parties never intended
to transfer ownership to the petitioner to completion of
payment of the purchase price.
In effect, there was an implied agreement that
ownership shall not pass to the purchaser until he had
fully paid the price. Article 1478 of the civil code does
not require that such a stipulation be expressly made.
Consequently, an implied stipulation to that effect is
considered valid and, therefore, binding and
enforceable between the parties. It should be noted that
under the law and jurisprudence, a contract which
contains this kind of stipulation is considered a contract
to sell.
Moreover, that the parties really intended to execute a
contract to sell, and not a contract of sale, is bolstered
by the fact that the deed of absolute sale would have
been issued only upon the payment of the balance of the
purchase price, as may be gleaned from petitioner's
letter dated April 16, 1990 wherein it informed private
respondents that it "is now ready and willing to pay you
simultaneously with the execution of the corresponding
deed of absolute sale."
Secondly, it has not been shown there was delivery of
the property, actual or constructive, made to herein
petitioner. The exclusive option to purchase is not
contained in a public instrument the execution of which
would have been considered equivalent to delivery.
Neither did petitioner take actual, physical possession
of the property at any given time. It is true that after the
reconstitution of private respondents' certificate of title,
it remained in the possession of petitioner's counsel,
Atty. Bayani L. Bernardo, who thereafter delivered the
same to herein petitioner. Normally, under the law, such
possession by the vendee is to be understood as a
delivery. However, private respondents explained that
there was really no intention on their part to deliver the
title to herein petitioner with the purpose of
transferring ownership to it. They claim that Atty.
Bernardo had possession of the title only because he
was their counsel in the petition for reconstitution.
Irrefragably, the controverted document should legally
be considered as a perfected contract to sell. On this
particular point, therefore, we reject the position and
ratiocination of respondent Court of Appeals which,
while awarding the correct relief to private
respondents, categorized the instrument as "strictly an
option contract."
The important task in contract interpretation is always
the ascertainment of the intention of the contracting
parties and that task is, of course, to be discharged by
looking to the words they used to project that intention
in their contract, all the words not just a particular word
or two, and words in context not words standing alone.
Moreover, judging from the subsequent acts of the
parties which will hereinafter be discussed, it is
undeniable that the intention of the parties was to enter
into a contract to sell. In addition, the title of a contract
does not necessarily determine its true nature. Hence,
the fact that the document under discussion is entitled
"Exclusive Option to Purchase" is not controlling where
the text thereof shows that it is a contract to sell.
An option, as used in the law on sales, is a continuing
offer or contract by which the owner stipulates with
another that the latter shall have the right to buy the
property at a fixed price within a certain time, or under,
or in compliance with, certain terms and conditions, or
which gives to the owner of the property the right to
sell or demand a sale. It is also sometimes called an
"unaccepted offer." An option is not of itself a purchase,
but merely secures the privilege to buy. It is not a sale
of property but a sale of property but a sale of the right
to purchase. It is simply a contract by which the owner
of property agrees with another person that he shall
have the right to buy his property at a fixed price within
a certain time. He does not sell his land; he does not
then agree to sell it; but he does sell something, that it
is, the right or privilege to buy at the election or option
of the other party. Its distinguishing characteristic is
that it imposes no binding obligation on the person
holding the option, aside from the consideration for the
offer. Until acceptance, it is not, properly speaking, a
contract, and does not vest, transfer, or agree to
transfer, any title to, or any interest or right in the
subject matter, but is merely a contract by which the
owner of property gives the optionee the right or
privilege of accepting the offer and buying the property
on certain terms.
On the other hand, a contract, like a contract to sell,
involves a meeting of minds two persons whereby one
binds himself, with respect to the other, to give
something or to render some service. Contracts, in
general, are perfected by mere consent, which is
manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to
constitute the contract. The offer must be certain and
the acceptance absolute.
The distinction between an "option" and a contract of
sale is that an option is an unaccepted offer. It states the
terms and conditions on which the owner is willing to
sell the land, if the holder elects to accept them within
the time limited. If the holder does so elect, he must give
notice to the other party, and the accepted offer
thereupon becomes a valid and binding contract. If an
acceptance is not made within the time fixed, the owner
is no longer bound by his offer, and the option is at an
end. A contract of sale, on the other hand, fixes
definitely the relative rights and obligations of both
parties at the time of its execution. The offer and the
acceptance are concurrent, since the minds of the
contracting parties meet in the terms of the agreement.
A perusal of the contract in this case, as well as the oral
and documentary evidence presented, readily shows
that there is indeed a concurrence of petitioner's offer
to buy and private respondents' acceptance thereof. The
rule is that except where a formal acceptance is so
required, although the acceptance must be affirmatively
and clearly made and must be evidenced by some acts
or conduct communicated to the offeror, it may be made
either in a formal or an informal manner, and may be
shown by acts, conduct, or words of the accepting party
that clearly manifest a present intention or
determination to accept the offer to buy or sell. Thus,
acceptance may be shown by the acts, conduct, or
words of a party recognizing the existence of the
contract of sale.
The records also show that private respondents
accepted the offer of petitioner to buy their property
under the terms of their contract. At the time petitioner
made its offer, private respondents suggested that their
transfer certificate of title be first reconstituted, to
which petitioner agreed. After the title was
reconstituted, the parties agreed that petitioner would
pay either in cash or manager's check the amount of lot.
Petitioner was supposed to pay the same but it later
offered to make a down payment , and the balance to be
paid on or before Nov, 1989. Private respondents
agreed to the counter-offer made by petitioner. As a
result, the so-called exclusive option to purchase was
prepared by petitioner and was subsequently signed by
private respondents, thereby creating a perfected
contract to sell between them.
It cannot be gainsaid that the offer to buy a specific
piece of land was definite and certain, while the
acceptance thereof was absolute and without any
condition or qualification. The agreement as to the
object, the price of the property, and the terms of
payment was clear and well-defined. No other
significance could be given to such acts that than they
were meant to finalize and perfect the transaction.
Hence, there was nothing left to be done except the
performance of the respective obligations of the parties.
We do not subscribe to private respondents'
submission, which was upheld by both the trial court
and respondent court of appeals, that the offer of
petitioner to deduct P500,000.00, (later reduced to
P300,000.00) from the purchase price for the
settlement of the civil case was tantamount to a
counter-offer. It must be stressed that there already
existed a perfected contract between the parties at the
time the alleged counter-offer was made. Thus, any new
offer by a party becomes binding only when it is
accepted by the other. In the case of private
respondents, they actually refused to concur in said
offer of petitioner, by reason of which the original terms
of the contract continued to be enforceable.
More importantly, it will be noted that the failure of
petitioner to pay the balance of the purchase price
within the agreed period was attributed by private
respondents to "lack of word of honor" on the part of
the former. The reason of "lack of word of honor" is to
us a clear indication that private respondents
considered petitioner already bound by its obligation to
pay the balance of the consideration. In effect, private
respondents were demanding or exacting fulfillment of
the obligation from herein petitioner. with the arrival of
the period agreed upon by the parties, petitioner was
supposed to comply with the obligation incumbent
upon it to perform, not merely to exercise an option or a
right to buy the property.
The obligation of petitioner on November 30, 1993
consisted of an obligation to give something, that is, the
payment of the purchase price. The contract did not
simply give petitioner the discretion to pay for the
property. 32 It will be noted that there is nothing in the
said contract to show that petitioner was merely given a
certain period within which to exercise its privilege to
buy. The agreed period was intended to give time to
herein petitioner within which to fulfill and comply with
its obligation, that is, to pay the balance of the purchase
price. No evidence was presented by private
respondents to prove otherwise.
The test in determining whether a contract is a
"contract of sale or purchase" or a mere "option" is
whether or not the agreement could be specifically
enforced. 33 There is no doubt that the obligation of
petitioner to pay the purchase price is specific, definite
and certain, and consequently binding and enforceable.
Had private respondents chosen to enforce the contract,
they could have specifically compelled petitioner to pay
the balance of P2,806,150.00. This is distinctly made
manifest in the contract itself as an integral stipulation,
compliance with which could legally and definitely be
demanded from petitioner as a consequence.
This is not a case where no right is as yet created nor an
obligation declared, as where something further
remains to be done before the buyer and seller obligate
themselves. 34 An agreement is only an "option" when
no obligation rests on the party to make any payment
except such as may be agreed on between the parties as
consideration to support the option until he has made
up his mind within the time specified. 35 An option, and
not a contract to purchase, is effected by an agreement
to sell real estate for payments to be made within
specified time and providing forfeiture of money paid
upon failure to make payment, where the purchaser
does not agree to purchase, to make payment, or to bind
himself in any way other than the forfeiture of the
payments made. 36 As hereinbefore discussed, this is
not the situation obtaining in the case at bar.
While there is jurisprudence to the effect that a contract
which provides that the initial payment shall be totally
forfeited in case of default in payment is to be
considered as an option contract, 37 still we are not
inclined to conform with the findings of respondent
court and the court a quo that the contract executed
between the parties is an option contract, for the reason
that the parties were already contemplating the
payment of the balance of the purchase price, and were
not merely quoting an agreed value for the property.
The term "balance," connotes a remainder or something
remaining from the original total sum already agreed
upon.
In other words, the alleged option money of P50,000.00
was actually earnest money which was intended to form
part of the purchase price. The amount of P50,000.00
was not distinct from the cause or consideration for the
sale of the property, but was itself a part thereof. It is a
statutory rule that whenever earnest money is given in
a contract of sale, it shall be considered as part of the
price and as proof of the perfection of the contract. 38 It
constitutes an advance payment and must, therefore, be
deducted from the total price. Also, earnest money is
given by the buyer to the seller to bind the bargain.
There are clear distinctions between earnest money and
option money, viz.: (a) earnest money is part of the
purchase price, while option money ids the money
given as a distinct consideration for an option contract;
(b) earnest money is given only where there is already a
sale, while option money applies to a sale not yet
perfected; and (c) when earnest money is given, the
buyer is bound to pay the balance, while when the
would-be buyer gives option money, he is not required
to buy. 39

The aforequoted characteristics of earnest money are

apparent in the so-called option contract under review,
even though it was called "option money" by the parties.
In addition, private respondents failed to show that the
payment of the balance of the purchase price was only a
condition precedent to the acceptance of the offer or to
the exercise of the right to buy. On the contrary, it has
been sufficiently established that such payment was but
an element of the performance of petitioner's obligation
under the contract to sell.