Adelfa v.

CA

Facts: Rosario Jimenez-Castañeda, Salud Jimenez, and their brothers Jose and
Dominador Jimenez were registered owners of a parcel of land in Las Piñas.

Jose and Dominador Jimenez sold their share consisting of one-half of said parcel of
land, specifically the eastern portion thereof, to Adelfa Properties, Inc. pursuant to a
"Kasulatan sa Bilihan ng Lupa."

Thereafter, petitioner Adelfa Properties expressed interest in buying the western portion
of the property from private respondents. "Exclusive Option to Purchase" was thus
executed between the petitioner and Rosario Jimenez-Castañeda with Salud Jimenez. P
50,000.00 was paid as option money.

Before petitioner could make payment, it received summons with complaint that the
nephews and nieces of private respondents filed an annulment of deed of sale. As a
result, petitioner withheld payment of full purchase price. Salud attributed the
suspension of payment to “lack of word of honor.” Francisca Jimenez was sent to see
the counsel of petitioner to inform him that they were cancelling the transactions.

Subsequently, a Deed of Conditional Sale was executed in favor of Emylene Chua.

Private respondents’ counsel sent ₱25,000.00 refund of the option money.

According to the Regional Trial Court, agreement entered into was merely an option
contract and the suspension of payment by petitioner is a counter-offer which is
tantamount to a rejection of option. Thus, the sale to Chua was valid. Court of Appeals
ruled that failure of petitioner to pay the purchase price in the period agreed upon was
tantamount to election not to buy such land.

Issues: - whether of not the "Exclusive Option to Purchase" executed between

petitioner Adelfa Properties, Inc. and private respondents Rosario Jimenez-Castañeda
and Salud Jimenez is an option contract (No.)
- whether or not there was a valid suspension of payment of the purchase price by said
petitioner (Yes.)

Held: The contract between the parties is a contract to sell and not an option contract
nor a contract of sale. Two features which convince that parties never intended to
transfer ownership except upon full payment of purchase price: (1) the exclusive option
to purchase does not mention that petitioner is obliged to return possession or
ownership of property as consequence of non-payment; and (2) no delivery, actual or
constructive, was made to petitioner; option to purchase was not included in a public
instrument which would have effect of delivery. Neither did petitioner take actual,
physical possession of the property at any given time. With this regard, there was an
implied agreement that ownership shall not pass to the purchaser until he had fully paid
the price. Also, the alleged option money was actually earnest money since the amount
was not distinct from the cause or consideration for the sale of the property, but was
itself a part thereof.

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.

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. Meanwhile, a contract of sale, 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.

Regarding the second issue, by reason of petitioner's failure to comply with its
obligation, private respondents elected to resort to and did announce the rescission.
That written notice of rescission is deemed sufficient under the circumstances. Article
1592 of the Civil Code which requires rescission either by judicial action or notarial act
is not applicable to a contract to sell.

A contract to sell, as in the case before us, involves the performance of an obligation,
not merely the exercise of a privilege of a right. Consequently, performance or payment
may be effected not by tender of payment alone, but by both tender and consignation.