Adelfa Properties, Inc. vs.

Court of Appeals
(G.R. No. 111238 January 25, 1995)

Facts
Dominador and Jose Jimenez were the registered co-owners of a parcel of land
consisting of 17,710 square meters situated in Barrio Culasi, Las Pias, Metro Manila.
On July 28, 1988, Jose and Dominador Jimenez sold their share consisting of one-half
of said parcel of land, specifically the eastern portion thereof, to petitioner Adelfa
Properties to a "Kasulatan sa Bilihan ng Lupa."

Thereafter, Adelfa Properties expressed
interest in buying the western portion of the property from private respondents herein.
On November 25, 1989, an "Exclusive Option to Purchase was executed between
petitioner and private respondents and an option money os P50,000.00 was given to
the latter. However the owner's copy of the certificate of title issued to respondent
Salud Jimenez had been lost. Eventually, a new owner's copy of the certificate of title
was issued and it was turned over to petitioner Adelfa Properties, Inc.

The petitioner received summons on November 29, 1989, before it could make
payment, together with a copy of a complaint filed by the nephews and nieces of
private respondents against the latter for annulment of the deed of sale in favor of
Household Corporation and recovery of ownership of the property. In a letter dated
November 29, 1989, petitioner informed private respondents that it would hold
payment of the full purchase price and suggested that private respondents settle the
case with their nephews and nieces, adding that ". . . if possible, although November
30, 1989 is a holiday, we will be waiting for you and said plaintiffs at our office up to
7:00 p.m.

On December 7, 1989, petitioner caused to be annotated on the title of the lot its
option contract with private respondents, and its contract of sale with Jose and
Dominador Jimenez, respectively. On December 14, 1989, private respondents inform
the latter that they were cancelling the transaction. Atty. Bernardo offered to pay the
purchase price provided that P500,000.00 will be deducted from for the settlement of
the civil case. The private respondents rejected this and on December 22, 1989, Atty.
Bernardo wrote private respondents on the same matter but this time reducing the
amount from P500,000.00 to P300,000.00 which was also rejected by the latter.

The Regional Trial Court of Makati dismissed the civil case. A few days after,
private respondents executed a Deed of Conditional Sale in favor of Chua, over the
same parcel of land.

Private respondents sent a letter to Adelfa Properties enclosing therein a check
representing the refund of half the option money paid under the exclusive option to
purchase, and requested Adelfa Properties to return the owners duplicate copy of
Salud. Adelfa Properties failed to surrender the certificate of title hence the private
respondents filed a civil case before the Regional Trial Court for annulment of contract
with damages. The trial court directed the cancellation of the exclusive option to
purchase. The Court of Appeals affirmed the decision of the trial court.

ISSUES:

The issues presented for resolution in this case are (1) whether or not Exclusive
Option to Purchase executed between the parties is an option contract, and (2)
Whether or not there was a valid suspension of payment of the purchase price by said
petitioner, and the legal effects thereof on the contractual relations of the parties.

DECISION:

The agreement between the parties is a contract to sell, and not an option
contract or a contract of sale. The Supreme Court reached the same results as that of
the Court of Appeals. The Court of Appeals decision was therefore affirmed.

LAW:

Article 1498 provides that:
Art. 1498. When the sale is made through a public instrument, the execution
thereof shall be equivalent to the delivery of the thing which is the object of the
contract, if from the deed the contrary does not appear or cannot clearly be inferred.

Article 1482 also states that:
Art. 1482. 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.