ADELFA PROPERTIES, INC vs.

CA et al

ISSUE:

G.R. No. 111238

1.

WON the agreement between Adelfa and Private respondents was strictly an

January 25, 1995

option contract

FACTS: Private respondents and their brothers Jose and Dominador were the

2.

WON Article 1590 applies in this case, thereby justifiying the refusal by Adelfa

registered CO-OWNERS of a parcel of land in Las Pinas, covered by a TCT.

to pay the balance of the purchase price

Jose and Dominador sold their share (eastern portion of the land) to Adelfa.

3.

WON Private respondents could unilaterraly and prematurely terminate the

Thereafter, Adelfa expressed interest in buying the western portion of the property

option period, if indeed it is a option contract, as the option period has not

from private respondents herein. Accordingly, an exclusive Option to Purchase

lapsed yet.

was executed between Adelfa and Private respondents and an option money of

HELD: The judgement of the CA is AFFIRMED

50,000 was given to the latter.

1. NO. The agreement between the parties is a contract to sell, and not an option
contract or a contract of sale.

Before Adelfa could make payments, it received summons as a case was filed (RTC

Contract to SELL

Makati) against Jose and Dominador and Adelfa, because of a complaint in a civil

case by the nephews and nieces of private respondents herein. As a consequence,

the full payment of the price

Adelfa, through a letter, informed the private respondents that it would hold

payment of the full purchase price and suggested that they settle the case with

being a positive

by agreement the ownership is reserved in the vendor and is not to pass until
title is retained by the vendor until the full payment of the price, such payment

their said nephews and nieces. Salud did not heed the suggestion; respondents
informed Atty. Bernardo that they are canceling the transaction. Atty Bernardo

Contract of SALE

made offers but they were all rejected.

the title passes to the vendee upon the delivery of the thing sold

the vendor has lost and cannot recover ownership until and unless the contract

RTC Makati dismissed the civil case. A few days after, private respondents executed

is resolved or rescinded

a Deed of Conditional Sale in favor of Chua, over the same parcel of land.
Atty Bernardo wrote private respondents informing them that in view of the

There are two features which convince us that the parties never intended to

dismissal of the case, Adelfa is willing to pay the purchase price, and requested that

transfer ownership to petitioner except upon the full payment of the purchase

the corresponding deed of Absolute Sale be executed. This was ignored by private

price.

respondents.

(1)

the exclusive option to purchase, although it provided for automatic

rescission of the contract and partial forfeiture of the amount already paid in case
Private respondents sent a letter to Adelfa enclosing therein a check representing

of default, does not mention that petitioner is obliged to return possession or

the refund of half the option money paid under the exclusive option to purchase,

ownership of the property as a consequence of non-payment. There is no

and requested Adelfa to return the owners duplicate copy of Salud. Adelfa failed to

stipulation anent reversion or reconveyance of the property to herein private

surrender the certificate of title, hence the private respondents filed a civil case

respondents in the event that petitioner does not comply with its obligation. With

before the RTC Pasay, for annulment of contract with damages. The trial court

the absence of such a stipulation, although there is a provision on the remedies

directed the cancellation of the exclusive option to purchase. On appeal,

available to the parties in case of breach, it may legally be inferred that the parties

respondent CA affirmed in toto the decision of the RTC hence this petition.

never intended to transfer ownership to the petitioner to completion of payment of

the purchase price.

(2)

Secondly, it has not been shown there was delivery of the property, actual or

(c) when earnest money is given, the buyer is bound to pay the balance, while when

constructive, made to herein petitioner. The exclusive option to purchase is not

the would-be buyer gives option money, he is not required to buy.

contained in a public instrument the execution of which would have been

The aforequoted characteristics of earnest money are apparent in the so-called

considered equivalent to delivery. Neither did petitioner take actual, physical

option contract under review, even though it was called option money by the

possession of the property at any given time. It is true that after the reconstitution

parties. In addition, private respondents failed to show that the payment of the

of private respondents certificate of title, it remained in the possession of

balance of the purchase price was only a condition precedent to the acceptance of

petitioners counsel, Atty. Bayani L. Bernardo, who thereafter delivered the same to

the offer or to the exercise of the right to buy. On the contrary, it has been

herein petitioner. Normally, under the law, such possession by the vendee is to be

sufficiently established that such payment was but an element of the performance

understood as a delivery.

18

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.
In effect, there was an implied agreement that ownership shall not pass to the
purchaser until he had fully paid the price in this case. 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.
the alleged option money was actually earnest money which was intended to form
part of the purchase price. The amount 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. 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

of petitioners obligation under the contract to sell.

Abalos

vs.

Macatangay,

G.R.

No.

155043,

September

30,

2004

FACTS: Spouses Arturo and Esther Abalos are the registered owners of a parcel of
land with improvements located at Azucena St., Makati City, covered by Transfer
Certificate of Title (TCT) No. 145316 of the Registry of Deeds of Makati. Arturo
executed a Receipt and Memorandum of Agreement (RMOA), in favor for the
respondent, binding himself to sell to respondent the subject property and not to
offer the same to any other party within 30 days from date.
Respondent sent a letter to Arturo and Esther informing them of his readiness and
willingness to pay the full amount of the purchase price and demanded upon the
spouses to comply with their obligation to turn over possession of the property to
him. Esther agreed to surrender possession of the property to respondent within 20
days, while the latter promised to pay the balance of the purchase price for P1, 290,
000.00 after being placed in possession of the property. Esther also obligated
herself to execute and deliver to respondent a deed of absolute sale upon full
payment.
Respondent informed the spouses that he had set aside P1, 290, 000.00 as
evidenced by Citibank Check No. 278107 as full payment of the purchase price. But
Arturo and Esther failed to deliver the property which prompted respondent to file
a complaint for specific performance with damages against petitioners.
; In a contract of sale, the seller must consent to transfer ownership in exchange for
the price, the subject matter must be determinate, and the price must be certain in
money or its equivalent.Until the contract is perfected, it cannot, as an
independent source of obligation, serve as a binding juridical relation. In a contract
of sale, the seller must consent to transfer ownership in exchange for the price, the
subject matter must be determinate, and the price must be certain in money or its
equivalent. Being essentially consensual, a contract of sale is perfected at the
moment there is a meeting of the minds upon the thing which is the object of the
contract and upon the price. However, ownership of the thing sold shall not be
transferred to the vendee until actual or constructive delivery of the property.
Same; Same; An accepted unilateral promise which specifies the thing to be sold and
the price to be paid, when coupled with a valuable consideration distinct and
separate from the price, is what may properly be termed a perfected contract of
option.An accepted unilateral promise which specifies the thing to be sold and
the price to be paid, when coupled with a valuable consideration distinct and
separate from the price, is what may properly be termed a perfected contract of
option. An option merely grants a privilege to buy or sell within an agreed time and

at a determined price. It is separate and distinct from that which the parties may
enter into upon the consummation of the option. A perfected contract of option
does not result in the perfection or consummation of the sale; only when the option
is exercised may a sale be perfected. The option must, however, be supported by a
consideration distinct from the price.
Same; Same; As a rule, the holder of the option, after accepting the promise and
before he exercises his option, is not bound to buy.As a rule, the holder of the
option, after accepting the promise and before he exercises his option, is not bound
to buy. He is free either to buy or not to buy later. In Sanchez v. Rigos we ruled that
in an accepted unilateral promise to sell, the promissor is not bound by his promise
and may, accordingly, withdraw it, since there may be no valid contract without a
cause or consideration. Pending notice of its withdrawal, his accepted promise
partakes of the nature of an offer to sell which, if acceded or consented to, results
in a perfected contract of sale.