ADELFA PROPERTIES, INC vs.

CA et al

the exclusive option to purchase, and requested Adelfa to return

G.R. No. 111238

January 25, 1995

the owners duplicate copy of Salud. Adelfa failed to surrender the

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

FACTS: Private respondents and their brothers Jose and Dominador

were the registered CO-OWNERS of a parcel of land in Las Pinas,

before the RTC Pasay, for annulment of contract with damages. The
trial court directed the cancellation of the exclusive option to

covered by a TCT.
Jose and Dominador sold their share (eastern portion of the land) to

purchase. On appeal, respondent CA affirmed in toto the decision of

the RTC hence this petition.

Adelfa. Thereafter, Adelfa expressed interest in buying the western

portion of the property from private respondents herein.

ISSUE:

Accordingly, an exclusive Option to Purchase was executed

between Adelfa and Private respondents and an option money of

1.

WON the agreement between Adelfa

respondents was strictly an option contract

and

Private

50,000 was given to the latter.

2.

WON Article 1590 applies in this case, thereby justifiying the

refusal by Adelfa to pay the balance of the purchase price

Before Adelfa could make payments, it received summons as a

case was filed (RTC Makati) against Jose and Dominador and

3.

WON Private respondents could unilaterraly and prematurely

terminate the option period, if indeed it is a option contract, as

Adelfa, because of a complaint in a civil case by the nephews and

nieces of private respondents herein. As a consequence, Adelfa,

the option period has not lapsed yet.

HELD: The judgement of the CA is AFFIRMED

through a letter, informed the private respondents that it would

hold payment of the full purchase price and suggested that they

1. NO. The agreement between the parties is a contract to sell, and

not an option contract or a contract of sale.

settle the case with their said nephews and nieces. Salud did not
heed the suggestion; respondents informed Atty. Bernardo that

Contract to SELL
by agreement the ownership is reserved in the vendor and is

they are canceling the transaction. Atty Bernardo made offers but
they were all rejected.

not to pass until the full payment of the price

title is retained by the vendor until the full payment of the
price, such payment being a positive

RTC 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.

Contract of SALE
the title passes to the vendee upon the delivery of the thing

Atty Bernardo wrote private respondents informing them that in

view of the dismissal of the case, Adelfa is willing to pay the

sold
the vendor has lost and cannot recover ownership until and

purchase price, and requested that the corresponding deed of

Absolute Sale be executed. This was ignored by private

unless the contract is resolved or rescinded

respondents.

There are two features which convince us that the parties never
intended to transfer ownership to petitioner except upon the full

Private respondents sent a letter to Adelfa enclosing therein a

check representing the refund of half the option money paid under

payment of the purchase price.

(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 of default, does not mention that

the alleged option money was actually earnest money which was
intended to form part of the purchase price. The amount was not

petitioner is obliged to return possession or ownership of the

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

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

anent reversion or reconveyance of the property to herein private

respondents in the event that petitioner does not comply with its

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

obligation. With the absence of such a stipulation, although there is

a provision on the remedies available to the parties in case of

constitutes an advance payment and must, therefore, be deducted

from the total price. Also, earnest money is given by the buyer to

breach, it may legally be inferred that the parties never intended to

transfer ownership to the petitioner to completion of payment of

the seller to bind the bargain.

the purchase price.

(2)
Secondly, it has not been shown there was delivery of the

There are clear distinctions between earnest money and option

money, viz.:

property, actual or constructive, made to herein petitioner. The

exclusive option to purchase is not contained in a public instrument

(a) earnest money is part of the purchase price, while option money
ids the money given as a distinct consideration for an option

the execution of which would have been considered equivalent to

delivery. Neither did petitioner take actual, physical possession of

contract;
(b) earnest money is given only where there is already a sale, while

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

reconstitution of private respondents certificate of title, it remained

option money applies to a sale not yet perfected; and

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

in the possession of petitioners counsel, Atty. Bayani L. Bernardo,

who thereafter delivered the same to herein petitioner. Normally,

balance, while when the would-be buyer gives option money, he is

not required to buy.

under the law, such possession by the vendee is to be understood

as a delivery. 18 However, private respondents explained that there

The aforequoted characteristics of earnest money are

apparent in the so-called option contract under review,

was really no intention on their part to deliver the title to herein

petitioner with the purpose of transferring ownership to it. They

even though it was called option money by the parties. In

addition, private respondents failed to show that the payment of

claim that Atty. Bernardo had possession of the title only because
he was their counsel in the petition for reconstitution.

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

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.

the contrary, it has been sufficiently established that such payment

was but an element of the performance of petitioners obligation

Article 1478 of the civil code does not require that such a
stipulation be expressly made. Consequently, an implied stipulation

under the contract to sell.

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.

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.

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.

; 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.