Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 111238 January 25, 1995
ADELFA PROPERTES, NC., petitioner,
vs.
COURT OF APPEALS, ROSARO JMENE!"CASTA#EDA an$ SALUD
JMENE!, respondents.

REGALADO, J.:
he !ain issues presented for resolution in this petition for revie" on certiorari of the
#ud$!ent of respondent Court of appeals, dated %pril &, '((), in C%*+.R. CV No. ),-&-
1
are
.'/ "hether of not the 0E1clusive Option to Purchase0 e1ecuted bet"een petitioner %delfa
Properties, Inc. and private respondents Rosario 2i!ene3*Casta4eda and Salud 2i!ene3 is
an option contract5 and .6/ "hether or not there "as a valid suspension of pa7!ent of the
purchase price b7 said petitioner, and the le$al effects thereof on the contractual relations of
the parties.
he records disclose the follo"in$ antecedent facts "hich cul!inated in the present appellate
revie", to "it8
'. 9erein private respondents and their brothers, 2ose and Do!inador 2i!ene3, "ere the
re$istered co*o"ners of a parcel of land consistin$ of '-,-': s;uare !eters, covered b7
ransfer Certificate of itle .C/ No. ):(--),
2
situated in <arrio Culasi, =as Pi4as, Metro
Manila.
6. On 2ul7 6>, '(>>, 2ose and Do!inador 2i!ene3 sold their share consistin$ of one*half of
said parcel of land, specificall7 the eastern portion thereof, to herein petitioner pursuant to a
0Kasulatan sa Bilihan ng Lupa.0
3
Subse;uentl7, a 0Confir!ator7 E1tra#udicial Partition
%$ree!ent0
%
"as e1ecuted b7 the 2i!ene3es, "herein the eastern portion of the sub#ect lot,
"ith an area of >,>?? s;uare !eters "as ad#udicated to 2ose and Do!inador 2i!ene3, "hile
the "estern portion "as allocated to herein private respondents.
). hereafter, herein petitioner e1pressed interest in bu7in$ the "estern portion of the
propert7 fro! private respondents. %ccordin$l7, on Nove!ber 6?, '(>(, an 0E1clusive Option
to Purchase0
5
"as e1ecuted bet"een petitioner and private respondents, under the follo"in$
ter!s and conditions8
'. he sellin$ price of said >,&?? s;uare !eters of the sub#ect propert7 is
@O MI==ION EI+9 9ANDRED BIBC SID 9OAS%ND ONE
9ANDRED BIBC PESOS ON=C .P6,>?&,'?:.::/
6. he su! of P?:,:::.:: "hich "e received fro! %DE=B%
PROPERIES, INC. as an option !one7 shall be credited as partial
pa7!ent upon the consu!!ation of the sale and the balance in the su!
of @O MI==ION EI+9 9ANDRED SID 9OAS%ND ONE 9ANDRED
BIBC PESOS .P6,>:&,'?:.::/ to be paid on or before Nove!ber ):,
'(>(5
). In case of default on the part of %DE=B% PROPERIES, INC. to pa7
said balance in accordance "ith para$raph 6 hereof, this option shall be
cancelled and ?:E of the option !one7 to be forfeited in our favor and "e
"ill refund the re!ainin$ ?:E of said !one7 upon the sale of said
propert7 to a third part75
,. %ll e1penses includin$ the correspondin$ capital $ains ta1, cost of
docu!entar7 sta!ps are for the account of the VENDORS, and e1penses
for the re$istration of the deed of sale in the Re$istr7 of Deeds are for the
account of %DE=B% PROPERIES, INC.
Considerin$, ho"ever, that the o"nerFs cop7 of the certificate of title issued to respondent
Salud 2i!ene3 had been lost, a petition for the re*issuance of a ne" o"nerFs cop7 of said
certificate of title "as filed in court throu$h %tt7. <a7ani =. <ernardo, "ho acted as private
respondentsF counsel. Eventuall7, a ne" o"nerFs cop7 of the certificate of title "as issued but
it re!ained in the possession of %tt7. <ernardo until he turned it over to petitioner %delfa
Properties, Inc.
,. <efore petitioner could !aGe pa7!ent, it received su!!ons
&
on Nove!ber 6(, '(>(,
to$ether "ith a cop7 of a co!plaint filed b7 the nephe"s and nieces of private respondents
a$ainst the latter, 2ose and Do!inador 2i!ene3, and herein petitioner in the Re$ional rial
Court of MaGati, docGeted as Civil Case No. >(*??,', for annul!ent of the deed of sale in
favor of 9ousehold Corporation and recover7 of o"nership of the propert7 covered b7 C
No. ):(--).
'
?. %s a conse;uence, in a letter dated Nove!ber 6(, '(>(, petitioner infor!ed private
respondents that it "ould hold pa7!ent of the full purchase price and su$$ested that private
respondents settle the case "ith their nephe"s and nieces, addin$ that 0. . . if possible,
althou$h Nove!ber ):, '(>( is a holida7, "e "ill be "aitin$ for 7ou and said plaintiffs at our
office up to -8:: p.!.0
8
%nother letter of the sa!e tenor and of even date "as sent b7
petitioner to 2ose and Do!inador 2i!ene3.
9
Respondent Salud 2i!ene3 refused to heed the
su$$estion of petitioner and attributed the suspension of pa7!ent of the purchase price to
0lacG of "ord of honor.0
&. On Dece!ber -, '(>(, petitioner caused to be annotated on the title of the lot its option
contract "ith private respondents, and its contract of sale "ith 2ose and Do!inador 2i!ene3,
as Entr7 No. ',)-*, and entr7 No. ',)>*,, respectivel7.
1
-. On Dece!ber ',, '(>(, private respondents sent Brancisca 2i!ene3 to see %tt7.
<ernardo, in his capacit7 as petitionerFs counsel, and to infor! the latter that the7 "ere
cancellin$ the transaction. In turn, %tt7. <ernardo offered to pa7 the purchase price provided
that P?::,:::.:: be deducted therefro! for the settle!ent of the civil case. his "as
re#ected b7 private respondents. On Dece!ber 66, '(>(, %tt7. <ernardo "rote private
respondents on the sa!e !atter but this ti!e reducin$ the a!ount fro! P?::,:::.:: to
P)::,:::.::, and this "as also re#ected b7 the latter.
>. On Bebruar7 6), '((:, the Re$ional rial Court of MaGati dis!issed Civil Case No. >(*
??,'. hus, on Bebruar7 6>, '((:, petitioner caused to be annotated ane" on C No.
):(--) the e1clusive option to purchase as Entr7 No. ,,,6*,.
(. On the sa!e da7, Bebruar7 6>, '((:, private respondents e1ecuted a Deed of Conditional
Sale
1(
in favor of E!7lene Chua over the sa!e parcel of land for P),:6(,6?:, of "hich
P',?::,:::.:: "as paid to private respondents on said date, "ith the balance to be paid
upon the transfer of title to the specified one*half portion.
':. On %pril '&, '((:, %tt7. <ernardo "rote private respondents infor!in$ the latter that in
vie" of the dis!issal of the case a$ainst the!, petitioner "as "illin$ to pa7 the purchase
price, and he re;uested that the correspondin$ deed of absolute sale be e1ecuted.
11
his
"as i$nored b7 private respondents.
''. On 2ul7 6-, '((:, private respondentsF counsel sent a letter to petitioner enclosin$ therein
a checG for P6?,:::.:: representin$ the refund of fift7 percent of the option !one7 paid
under the e1clusive option to purchase. Private respondents then re;uested petitioner to
return the o"nerFs duplicate cop7 of the certificate of title of respondent Salud
2i!ene3.
12
Petitioner failed to surrender the certificate of title, hence private respondents
filed Civil Case No. -?)6 in the Re$ional rial Court of Pasa7 Cit7, <ranch ''), for annul!ent
of contract "ith da!a$es, pra7in$, a!on$ others, that the e1clusive option to purchase be
declared null and void5 that defendant, herein petitioner, be ordered to return the o"nerFs
duplicate certificate of title5 and that the annotation of the option contract on C No. ):(--)
be cancelled. E!7lene Chua, the subse;uent purchaser of the lot, filed a co!plaint in
intervention.
'6. he trial court rendered #ud$!ent
13
therein on Septe!ber ?, '((' holdin$ that the
a$ree!ent entered into b7 the parties "as !erel7 an option contract, and declarin$ that the
suspension of pa7!ent b7 herein petitioner constituted a counter*offer "hich, therefore, "as
tanta!ount to a re#ection of the option. It liGe"ise ruled that herein petitioner could not validl7
suspend pa7!ent in favor of private respondents on the $round that the vindicator7 action
filed b7 the latterFs Gin did not involve the "estern portion of the land covered b7 the contract
bet"een petitioner and private respondents, but the eastern portion thereof "hich "as the
sub#ect of the sale bet"een petitioner and the brothers 2ose and Do!inador 2i!ene3. he
trial court then directed the cancellation of the e1clusive option to purchase, declared the sale
to intervenor E!7lene Chua as valid and bindin$, and ordered petitioner to pa7 da!a$es and
attorne7Fs fees to private respondents, "ith costs.
'). On appeal, respondent Court of appeals affir!ed in toto the decision of the court a
quo and held that the failure of petitioner to pa7 the purchase price "ithin the period a$reed
upon "as tanta!ount to an election b7 petitioner not to bu7 the propert75 that the suspension
of pa7!ent constituted an i!position of a condition "hich "as actuall7 a counter*offer
a!ountin$ to a re#ection of the option5 and that %rticle '?(: of the Civil Code on suspension
of pa7!ents applies onl7 to a contract of sale or a contract to sell, but not to an option
contract "hich it opined "as the nature of the docu!ent sub#ect of the case at bar. Said
appellate court si!ilarl7 upheld the validit7 of the deed of conditional sale e1ecuted b7 private
respondents in favor of intervenor E!7lene Chua.
In the present petition, the follo"in$ assi$n!ent of errors are raised8
'. Respondent court of appeals acted "ith $rave abuse of discretion in !aGin$ its findin$ that
the a$ree!ent entered into b7 petitioner and private respondents "as strictl7 an option
contract5
6. +rantin$ arguendo that the a$ree!ent "as an option contract, respondent court of
%ppeals acted "ith $rave abuse of discretion in $rievousl7 failin$ to consider that "hile the
option period had not lapsed, private respondents could not unilaterall7 and pre!aturel7
ter!inate the option period5
). Respondent Court of %ppeals acted "ith $rave abuse of discretion in failin$ to appreciate
full7 the attendant facts and circu!stances "hen it !ade the conclusion of la" that %rticle
'?(: does not appl75 and
,. Respondent Court of %ppeals acted "ith $rave abuse of discretion in confor!in$ "ith the
sale in favor of appellee Ma. E!7lene Chua and the a"ard of da!a$es and attorne7Fs fees
"hich are not onl7 e1cessive, but also "ithout in fact and in la".
1%
%n anal7sis of the facts obtainin$ in this case, as "ell as the evidence presented b7 the
parties, irresistibl7 leads to the conclusion that the a$ree!ent bet"een the parties is a
contract to sell, and not an option contract or a contract of sale.
I
'. In vie" of the e1tended dis;uisition thereon b7 respondent court, it "ould be "orth"hile at
this #uncture to briefl7 discourse on the rationale behind our treat!ent of the alle$ed option
contract as a contract to sell, rather than a contract of sale. he distinction bet"een the t"o is
i!portant for in contract of sale, the title passes to the vendee upon the deliver7 of the thin$
sold5 "hereas in a contract to sell, b7 a$ree!ent the o"nership is reserved in the vendor and
is not to pass until the full pa7!ent of the price. In a contract of sale, the vendor has lost and
cannot recover o"nership until and unless the contract is resolved or rescinded5 "hereas in a
contract to sell, title is retained b7 the vendor until the full pa7!ent of the price, such pa7!ent
bein$ a positive suspensive condition and failure of "hich is not a breach but an event that
prevents the obli$ation of the vendor to conve7 title fro! beco!in$ effective. hus, a deed of
sale is considered absolute in nature "here there is neither a stipulation in the deed that title
to the propert7 sold is reserved in the seller until the full pa7!ent of the price, nor one $ivin$
the vendor the ri$ht to unilaterall7 resolve the contract the !o!ent the bu7er fails to pa7
"ithin a fi1ed period.
15
here are t"o features "hich convince us that the parties never intended to transfer
o"nership to petitioner e1cept upon the full pa7!ent of the purchase price. Birstl7, the
e1clusive option to purchase, althou$h it provided for auto!atic rescission of the contract and
2
partial forfeiture of the a!ount alread7 paid in case of default, does not !ention that
petitioner is obli$ed to return possession or o"nership of the propert7 as a conse;uence of
non*pa7!ent. here is no stipulation anent reversion or reconve7ance of the propert7 to
herein private respondents in the event that petitioner does not co!pl7 "ith its obli$ation.
@ith the absence of such a stipulation, althou$h there is a provision on the re!edies
available to the parties in case of breach, it !a7 le$all7 be inferred that the parties never
intended to transfer o"nership to the petitioner to co!pletion of pa7!ent of the purchase
price.
In effect, there "as an i!plied a$ree!ent that o"nership shall not pass to the purchaser until
he had full7 paid the price. %rticle ',-> of the civil code does not re;uire that such a
stipulation be e1pressl7 !ade. Conse;uentl7, an i!plied stipulation to that effect is
considered valid and, therefore, bindin$ and enforceable bet"een the parties. It should be
noted that under the la" and #urisprudence, a contract which contains this kind of stipulation
is considered a contract to sell.
Moreover, that the parties reall7 intended to e1ecute a contract to sell, and not a contract of
sale, is bolstered b7 the fact that the deed of absolute sale "ould have been issued onl7
upon the pa7!ent of the balance of the purchase price, as !a7 be $leaned fro! petitionerFs
letter dated %pril '&, '((:
1&
"herein it infor!ed private respondents that it 0is no" read7 and
"illin$ to pa7 7ou si!ultaneousl7 "ith the e1ecution of the correspondin$ deed of absolute
sale.0
Secondl7, it has not been sho"n there "as deliver7 of the propert7, actual or constructive,
!ade to herein petitioner. he e1clusive option to purchase is not contained in a public
instru!ent the e1ecution of "hich "ould have been considered e;uivalent to
deliver7.
1'
Neither did petitioner taGe actual, ph7sical possession of the propert7 at an7 $iven
ti!e. It is true that after the reconstitution of private respondentsF certificate of title, it
re!ained in the possession of petitionerFs counsel, %tt7. <a7ani =. <ernardo, "ho thereafter
delivered the sa!e to herein petitioner. Nor!all7, under the la", such possession b7 the
vendee is to be understood as a deliver7.
18
9o"ever, private respondents e1plained that
there "as reall7 no intention on their part to deliver the title to herein petitioner "ith the
purpose of transferrin$ o"nership to it. he7 clai! that %tt7. <ernardo had possession of the
title onl7 because he "as their counsel in the petition for reconstitution. @e have no reason
not to believe this e1planation of private respondents, aside fro! the fact that such
contention "as never refuted or contradicted b7 petitioner.
6. Irrefra$abl7, the controverted docu!ent should le$all7 be considered as a perfected
contract to sell. On this particular point, therefore, "e re#ect the position and ratiocination of
respondent Court of %ppeals "hich, "hile a"ardin$ the correct relief to private respondents,
cate$ori3ed the instru!ent as 0strictl7 an option contract.0
he i!portant tasG in contract interpretation is al"a7s the ascertain!ent of the intention of
the contractin$ parties and that tasG is, of course, to be dischar$ed b7 looGin$ to the "ords
the7 used to pro#ect that intention in their contract, all the "ords not #ust a particular "ord or
t"o, and "ords in conte1t not "ords standin$ alone.
19
Moreover, #ud$in$ fro! the
subse;uent acts of the parties "hich "ill hereinafter be discussed, it is undeniable that the
intention of the parties "as to enter into a contract to sell.
2(
In addition, the title of a contract
does not necessaril7 deter!ine its true nature.
21
9ence, the fact that the docu!ent under
discussion is entitled 0E1clusive Option to Purchase0 is not controllin$ "here the te1t thereof
sho"s that it is a contract to sell.
%n option, as used in the la" on sales, is a continuin$ offer or contract b7 "hich the o"ner
stipulates "ith another that the latter shall have the ri$ht to bu7 the propert7 at a fi1ed price
"ithin a certain ti!e, or under, or in co!pliance "ith, certain ter!s and conditions, or "hich
$ives to the o"ner of the propert7 the ri$ht to sell or de!and a sale. It is also so!eti!es
called an 0unaccepted offer.0 %n option is not of itself a purchase, but !erel7 secures the
privile$e to bu7.
22
It is not a sale of propert7 but a sale of propert7 but a sale of the ri$ht to
purchase.
23
It is si!pl7 a contract b7 "hich the o"ner of propert7 a$rees "ith another person
that he shall have the ri$ht to bu7 his propert7 at a fi1ed price "ithin a certain ti!e. 9e does
not sell his land5 he does not then a$ree to sell it5 but he does sell so!ethin$, that it is, the
ri$ht or privile$e to bu7 at the election or option of the other part7.
2%
Its distin$uishin$
characteristic is that it i!poses no bindin$ obli$ation on the person holdin$ the option, aside
fro! the consideration for the offer. Antil acceptance, it is not, properl7 speaGin$, a contract,
and does not vest, transfer, or a$ree to transfer, an7 title to, or an7 interest or ri$ht in the
sub#ect !atter, but is !erel7 a contract b7 "hich the o"ner of propert7 $ives the optionee the
ri$ht or privile$e of acceptin$ the offer and bu7in$ the propert7 on certain ter!s.
25
On the other hand, a contract, liGe a contract to sell, involves a !eetin$ of !inds t"o persons
"hereb7 one binds hi!self, "ith respect to the other, to $ive so!ethin$ or to render so!e
service.
2&
Contracts, in $eneral, are perfected b7 !ere consent,
2'
"hich is !anifested b7 the
!eetin$ of the offer and the acceptance upon the thin$ and the cause "hich are to constitute
the contract. he offer !ust be certain and the acceptance absolute.
28
he distinction bet"een an 0option0 and a contract of sale is that an option is an unaccepted
offer. It states the ter!s and conditions on "hich the o"ner is "illin$ to sell the land, if the
holder elects to accept the! "ithin the ti!e li!ited. If the holder does so elect, he !ust $ive
notice to the other part7, and the accepted offer thereupon beco!es a valid and bindin$
contract. If an acceptance is not !ade "ithin the ti!e fi1ed, the o"ner is no lon$er bound b7
his offer, and the option is at an end. % contract of sale, on the other hand, fi1es definitel7 the
relative ri$hts and obli$ations of both parties at the ti!e of its e1ecution. he offer and the
acceptance are concurrent, since the !inds of the contractin$ parties !eet in the ter!s of
the a$ree!ent.
29
% perusal of the contract in this case, as "ell as the oral and docu!entar7 evidence
presented b7 the parties, readil7 sho"s that there is indeed a concurrence of petitionerFs offer
to bu7 and private respondentsF acceptance thereof. he rule is that e1cept "here a for!al
acceptance is so re;uired, althou$h the acceptance !ust be affir!ativel7 and clearl7 !ade
and !ust be evidenced b7 so!e acts or conduct co!!unicated to the offeror, it !a7 be
!ade either in a for!al or an infor!al !anner, and !a7 be sho"n b7 acts, conduct, or "ords
of the acceptin$ part7 that clearl7 !anifest a present intention or deter!ination to accept the
offer to bu7 or sell. hus, acceptance !a7 be sho"n b7 the acts, conduct, or "ords of a part7
reco$ni3in$ the e1istence of the contract of sale.
3(
he records also sho" that private respondents accepted the offer of petitioner to bu7 their
propert7 under the ter!s of their contract. %t the ti!e petitioner !ade its offer, private
respondents su$$ested that their transfer certificate of title be first reconstituted, to "hich
petitioner a$reed. %s a !atter of fact, it "as petitionerFs counsel, %tt7. <a7ani =. <ernardo,
"ho assisted private respondents in filin$ a petition for reconstitution. %fter the title "as
reconstituted, the parties a$reed that petitioner "ould pa7 either in cash or !ana$erFs checG
the a!ount of P6,>?&,'?:.:: for the lot. Petitioner "as supposed to pa7 the sa!e on
Nove!ber 6?, '(>(, but it later offered to !aGe a do"n pa7!ent of P?:,:::.::, "ith the
balance of P6,>:&,'?:.:: to be paid on or before Nove!ber ):, '(>(. Private respondents
3
a$reed to the counter*offer !ade b7 petitioner.
31
%s a result, the so*called e1clusive option to
purchase "as prepared b7 petitioner and "as subse;uentl7 si$ned b7 private respondents,
thereb7 creatin$ a perfected contract to sell bet"een the!.
It cannot be $ainsaid that the offer to bu7 a specific piece of land "as definite and certain,
"hile the acceptance thereof "as absolute and "ithout an7 condition or ;ualification. he
a$ree!ent as to the ob#ect, the price of the propert7, and the ter!s of pa7!ent "as clear and
"ell*defined. No other si$nificance could be $iven to such acts that than the7 "ere !eant to
finali3e and perfect the transaction. he parties even "ent be7ond the basic re;uire!ents of
the la" b7 stipulatin$ that 0all e1penses includin$ the correspondin$ capital $ains ta1, cost of
docu!entar7 sta!ps are for the account of the vendors, and e1penses for the re$istration of
the deed of sale in the Re$istr7 of Deeds are for the account of %delfa properties, Inc.0
9ence, there "as nothin$ left to be done e1cept the perfor!ance of the respective
obli$ations of the parties.
@e do not subscribe to private respondentsF sub!ission, "hich "as upheld b7 both the trial
court and respondent court of appeals, that the offer of petitioner to deduct P?::,:::.::,
.later reduced to P)::,:::.::/ fro! the purchase price for the settle!ent of the civil case
"as tanta!ount to a counter*offer. It !ust be stressed that there alread7 e1isted a perfected
contract bet"een the parties at the ti!e the alle$ed counter*offer "as !ade. hus, an7 ne"
offer b7 a part7 beco!es bindin$ onl7 "hen it is accepted b7 the other. In the case of private
respondents, the7 actuall7 refused to concur in said offer of petitioner, b7 reason of "hich the
ori$inal ter!s of the contract continued to be enforceable.
%t an7 rate, the sa!e cannot be considered a counter*offer for the si!ple reason that
petitionerFs sole purpose "as to settle the civil case in order that it could alread7 co!pl7 "ith
its obli$ation. In fact, it "as even indicative of a desire b7 petitioner to i!!ediatel7 co!pl7
there"ith, e1cept that it "as bein$ prevented fro! doin$ so because of the filin$ of the civil
case "hich, it believed in $ood faith, rendered co!pliance i!probable at that ti!e. In
addition, no inference can be dra"n fro! that su$$estion $iven b7 petitioner that it "as totall7
abandonin$ the ori$inal contract.
More i!portantl7, it "ill be noted that the failure of petitioner to pa7 the balance of the
purchase price "ithin the a$reed period "as attributed b7 private respondents to 0lacG of
"ord of honor0 on the part of the for!er. he reason of 0lacG of "ord of honor0 is to us a clear
indication that private respondents considered petitioner alread7 bound b7 its obli$ation to
pa7 the balance of the consideration. In effect, private respondents "ere de!andin$ or
e1actin$ fulfill!ent of the obli$ation fro! herein petitioner. "ith the arrival of the period
a$reed upon b7 the parties, petitioner "as supposed to co!pl7 "ith the obli$ation incu!bent
upon it to perfor!, not !erel7 to e1ercise an option or a ri$ht to bu7 the propert7.
he obli$ation of petitioner on Nove!ber ):, '(() consisted of an obli$ation to $ive
so!ethin$, that is, the pa7!ent of the purchase price. he contract did not si!pl7 $ive
petitioner the discretion to pa7 for the propert7.
32
It "ill be noted that there is nothin$ in the
said contract to sho" that petitioner "as !erel7 $iven a certain period "ithin "hich to
e1ercise its privile$e to bu7. he a$reed period "as intended to $ive ti!e to herein petitioner
"ithin "hich to fulfill and co!pl7 "ith its obli$ation, that is, to pa7 the balance of the purchase
price. No evidence "as presented b7 private respondents to prove other"ise.
he test in deter!inin$ "hether a contract is a 0contract of sale or purchase0 or a !ere
0option0 is "hether or not the a$ree!ent could be specificall7 enforced.
33
here is no doubt
that the obli$ation of petitioner to pa7 the purchase price is specific, definite and certain, and
conse;uentl7 bindin$ and enforceable. 9ad private respondents chosen to enforce the
contract, the7 could have specificall7 co!pelled petitioner to pa7 the balance of
P6,>:&,'?:.::. his is distinctl7 !ade !anifest in the contract itself as an inte$ral stipulation,
co!pliance "ith "hich could le$all7 and definitel7 be de!anded fro! petitioner as a
conse;uence.
his is not a case "here no ri$ht is as 7et created nor an obli$ation declared, as "here
so!ethin$ further re!ains to be done before the bu7er and seller obli$ate the!selves.
3%
%n
a$ree!ent is onl7 an 0option0 "hen no obli$ation rests on the part7 to !aGe an7 pa7!ent
e1cept such as !a7 be a$reed on bet"een the parties as consideration to support the option
until he has !ade up his !ind "ithin the ti!e specified.
35
%n option, and not a contract to
purchase, is effected b7 an a$ree!ent to sell real estate for pa7!ents to be !ade "ithin
specified ti!e and providin$ forfeiture of !one7 paid upon failure to !aGe pa7!ent, "here
the purchaser does not a$ree to purchase, to !aGe pa7!ent, or to bind hi!self in an7 "a7
other than the forfeiture of the pa7!ents !ade.
3&
%s hereinbefore discussed, this is not the
situation obtainin$ in the case at bar.
@hile there is #urisprudence to the effect that a contract "hich provides that the initial
pa7!ent shall be totall7 forfeited in case of default in pa7!ent is to be considered as an
option contract,
3'
still "e are not inclined to confor! "ith the findin$s of respondent court
and the court a quo that the contract e1ecuted bet"een the parties is an option contract, for
the reason that the parties "ere alread7 conte!platin$ the payment of the balance of the
purchase price, and "ere not !erel7 ;uotin$ an a$reed value for the propert7. he ter!
0balance,0 connotes a re!ainder or so!ethin$ re!ainin$ fro! the ori$inal total su! alread7
a$reed upon.
In other "ords, the alle$ed option !one7 of P?:,:::.:: "as actuall7 earnest !one7 "hich
"as intended to for! part of the purchase price. he a!ount of P?:,:::.:: "as not distinct
fro! the cause or consideration for the sale of the propert7, but "as itself a part thereof. It is
a statutor7 rule that "henever earnest !one7 is $iven 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 pa7!ent and !ust, therefore, be deducted fro! the total price. %lso, earnest
!one7 is $iven b7 the bu7er to the seller to bind the bar$ain.
here are clear distinctions bet"een earnest !one7 and option !one7, viz.8 .a/ earnest
!one7 is part of the purchase price, "hile option !one7 ids the !one7 $iven as a distinct
consideration for an option contract5 .b/ earnest !one7 is $iven onl7 "here there is alread7 a
sale, "hile option !one7 applies to a sale not 7et perfected5 and .c/ "hen earnest !one7 is
$iven, the bu7er is bound to pa7 the balance, "hile "hen the "ould*be bu7er $ives option
!one7, he is not re;uired to bu7.
39
he afore;uoted characteristics of earnest !one7 are apparent in the so*called option
contract under revie", even thou$h it "as called 0option !one70 b7 the parties. In addition,
private respondents failed to sho" that the pa7!ent of the balance of the purchase price "as
onl7 a condition precedent to the acceptance of the offer or to the e1ercise of the ri$ht to bu7.
On the contrar7, it has been sufficientl7 established that such pa7!ent "as but an ele!ent of
the perfor!ance of petitionerFs obli$ation under the contract to sell.
%(
4
II
'. his brin$s us to the second issue as to "hether or not there "as valid suspension of
pa7!ent of the purchase price b7 petitioner and the le$al conse;uences thereof. o #ustif7 its
failure to pa7 the purchase price "ithin the a$reed period, petitioner invoGes %rticle '?(: of
the civil Code "hich provides8
%rt. '?(:. Should the vendee be disturbed in the possession or o"nership
of the thin$ ac;uired, or should he have reasonable $rounds to fear such
disturbance, b7 a vindicator7 action or a foreclosure of !ort$a$e, he !a7
suspend the pa7!ent of the price until the vendor has caused the
disturbance or dan$er to cease, unless the latter $ives securit7 for the
return of the price in a proper case, or it has been stipulated that,
not"ithstandin$ an7 such contin$enc7, the vendee shall be bound to
!aGe the pa7!ent. % !ere act of trespass shall not authori3e the
suspension of the pa7!ent of the price.
Respondent court refused to appl7 the afore;uoted provision of la" on the erroneous
assu!ption that the true a$ree!ent bet"een the parties "as a contract of option. %s "e have
hereinbefore discussed, it "as not an option contract but a perfected contract to sell. Veril7,
therefore, %rticle '?(: "ould properl7 appl7.
<oth lo"er courts, ho"ever, are in accord that since Civil Case No. >(*??,' filed a$ainst the
parties herein involved onl7 the eastern half of the land sub#ect of the deed of sale bet"een
petitioner and the 2i!ene3 brothers, it did not, therefore, have an7 adverse effect on private
respondentsF title and o"nership over the "estern half of the land "hich is covered b7 the
contract sub#ect of the present case. @e have $one over the co!plaint for recover7 of
o"nership filed in said case
%1
and "e are not persuaded b7 the factual findin$s !ade b7 said
courts. %t a $lance, it is easil7 discernible that, althou$h the co!plaint pra7ed for the
annul!ent onl7 of the contract of sale e1ecuted bet"een petitioner and the 2i!ene3 brothers,
the sa!e liGe"ise pra7ed for the recover7 of therein plaintiffsF share in that parcel of land
specificall7 covered b7 C No. ):(--). In other "ords, the plaintiffs therein "ere clai!in$ to
be co*o"ners of the entire parcel of land described in C No. ):(--), and not onl7 of a
portion thereof nor, as incorrectl7 interpreted b7 the lo"er courts, did their clai! pertain
e1clusivel7 to the eastern half ad#udicated to the 2i!ene3 brothers.
Such bein$ the case, petitioner "as #ustified in suspendin$ pa7!ent of the balance of the
purchase price b7 reason of the aforesaid vindicator7 action filed a$ainst it. he assurance
!ade b7 private respondents that petitioner did not have to "orr7 about the case because it
"as pure and si!ple harass!ent
%2
is not the Gind of $uarant7 conte!plated under the
e1ceptive clause in %rticle '?(: "herein the vendor is bound to !aGe pa7!ent even "ith the
e1istence of a vindicator7 action if the vendee should $ive a securit7 for the return of the
price.
6. <e that as it !a7, and the validit7 of the suspension of pa7!ent not"ithstandin$, "e find
and hold that private respondents !a7 no lon$er be co!pelled to sell and deliver the sub#ect
propert7 to petitioner for t"o reasons, that is, petitionerFs failure to dul7 effect the
consi$nation of the purchase price after the disturbance had ceased5 and, secondaril7, the
fact that the contract to sell had been validl7 rescinded b7 private respondents.
he records of this case reveal that as earl7 as Bebruar7 6>, '((: "hen petitioner caused its
e1clusive option to be annotated ane" on the certificate of title, it alread7 Gne" of the
dis!issal of civil Case No. >(*??,'. 9o"ever, it "as onl7 on %pril '&, '((: that petitioner,
throu$h its counsel, "rote private respondents e1pressin$ its "illin$ness to pa7 the balance
of the purchase price upon the e1ecution of the correspondin$ deed of absolute sale. %t
!ost, that "as !erel7 a notice to pa7. here "as no proper tender of pa7!ent nor
consi$nation in this case as re;uired b7 la".
he !ere sendin$ of a letter b7 the vendee e1pressin$ the intention to
pa7, "ithout the acco!pan7in$ pa7!ent, is not considered a valid tender of
pa7!ent.
%3
<esides, a !ere tender of pa7!ent is not sufficient to co!pel private
respondents to deliver the propert7 and e1ecute the deed of absolute sale. It is consi$nation
"hich is essential in order to e1tin$uish petitionerFs obli$ation to pa7 the balance of the
purchase price.
%%
he rule is different in case of an option contract
%5
or in le$al rede!ption
or in a sale "ith ri$ht to repurchase,
%&
"herein consi$nation is not necessar7 because these
cases involve an e1ercise of a ri$ht or privile$e .to bu7, redee! or repurchase/ rather than
the dischar$e of an obli$ation, hence tender of pa7!ent "ould be sufficient to preserve the
ri$ht or privile$e. his is because the provisions on consi$nation are not applicable "hen
there is no obli$ation to pa7.
%'
% contract to sell, as in the case before us, involves the
perfor!ance of an obli$ation, not !erel7 the e1ercise of a privile$e of a ri$ht. conse;uentl7,
perfor!ance or pa7!ent !a7 be effected not b7 tender of pa7!ent alone but b7 both tender
and consi$nation.
Burther!ore, petitioner no lon$er had the ri$ht to suspend pa7!ent after the disturbance
ceased "ith the dis!issal of the civil case filed a$ainst it. Necessaril7, therefore, its obli$ation
to pa7 the balance a$ain arose and resu!ed after it received notice of such dis!issal.
Anfortunatel7, petitioner failed to seasonabl7 !aGe pa7!ent, as in fact it has deposit the
!one7 "ith the trial court "hen this case "as ori$inall7 filed therein.
<7 reason of petitionerFs failure to co!pl7 "ith its obli$ation, private respondents elected to
resort to and did announce the rescission of the contract throu$h its letter to petitioner dated
2ul7 6-, '((:. hat "ritten notice of rescission is dee!ed sufficient under the circu!stances.
%rticle '?(6 of the Civil Code "hich re;uires rescission either b7 #udicial action or notarial act
is not applicable to a contract to sell.
%8
Burther!ore, #udicial action for rescission of a
contract is not necessar7 "here the contract provides for auto!atic rescission in case of
breach,
%9
as in the contract involved in the present controvers7.
@e are not una"are of the rulin$ in University of the Philippines vs. e los !ngeles"
etc.
5(
that the ri$ht to rescind is not absolute, bein$ ever sub#ect to scrutin7 and revie" b7
the proper court. It is our considered vie", ho"ever, that this rule applies to a situation "here
the e1tra#udicial rescission is contested b7 the defaultin$ part7. In other "ords, resolution of
reciprocal contracts !a7 be !ade e1tra#udiciall7 unless successfull7 i!pu$ned in court. If the
debtor i!pu$ns the declaration, it shall be sub#ect to #udicial deter!ination
51
other"ise, if said
part7 does not oppose it, the e1tra#udicial rescission shall have le$al effect.
52
In the case at bar, it has been sho"n that althou$h petitioner "as dul7 furnished and did
receive a "ritten notice of rescission "hich specified the $rounds therefore, it failed to repl7
thereto or protest a$ainst it. Its silence thereon su$$ests an ad!ission of the veracit7 and
validit7 of private respondentsF clai!.
53
Burther!ore, the initiative of institutin$ suit "as
transferred fro! the rescinder to the defaulter b7 virtue of the auto!atic rescission clause in
the contract.
5%
<ut then, the records bear out the fact that aside fro! the lacGadaisical
5
!anner "ith "hich petitioner treated private respondentsF latter of cancellation, it utterl7 failed
to seriousl7 seeG redress fro! the court for the enforce!ent of its alle$ed ri$hts under the
contract. If private respondents had not taGen the initiative of filin$ Civil Case No. -?)6,
evidentl7 petitioner had no intention to taGe an7 le$al action to co!pel specific perfor!ance
fro! the for!er. <7 such cavalier disre$ard, it has been effectivel7 estopped fro! seeGin$ the
affir!ative relief it no" desires but "hich it had theretofore disdained.
@9EREBORE, on the fore$oin$ !odificator7 pre!ises, and considerin$ that the sa!e result
has been reached b7 respondent Court of %ppeals "ith respect to the relief a"arded to
private respondents b7 the court a quo "hich "e find to be correct, its assailed #ud$!ent in
C%*+.R. CV No. ),-&- is hereb7 %BBIRMED. SO ORDERED.
6