Adelfa Properties vs.

CA
[G.R. No. 111238. January 25, 1995.]
PARTIES: Roasrio and Salud Jimenez Seller
Adelfa Properties Buyer
Subject:: western portion of a parcel of land 8855 sq. ms. Covered by TCT 309773 situated in Barrio
Culasi, Las Pinas, Metro Manila

Facts: Rosario Jimenez-Castaneda, Salud Jimenez and their brothers, Jose and Dominador Jimenez, were
the registered co-owners of a parcel of land consisting of 17,710 sq. ms (TCT 309773) situated in Barrio
Culasi, Las Pias, Metro Manila. On 28 July 1988, Jose and Dominador Jimenez sold their share consisting
of 1/2 of said parcel of land, specifically the eastern portion thereof, to Adelfa Properties pursuant to a
Kasulatan sa Bilihan ng Lupa. Subsequently, a Confirmatory Extrajudicial Partition Agreement was
executed by the Jimenezes, wherein the eastern portion of the subject lot, with an area of 8,855 sq. ms. was
adjudicated to Jose and Dominador Jimenez, while the western portion was allocated to Rosario and Salud
Jimenez.
Thereafter, Adelfa Properties expressed interest in buying the western portion of the property from Rosario
and Salud. Accordingly, on 25 November 1989, an Exclusive Option to Purchase was executed between
the parties, with the condition that the selling price shall be P2,856,150, that the option money of P50,000
shall be credited as partial payment upon the consummation of sale, that the balance is to be paid on or
before 30 November 1989, and that in case of default by Adelfa Properties to pay the balance, the option is
cancelled and 50% of the option money shall be forfeited and the other 50% refunded upon the sale of the
property to a third party.
Before Adelfa Properties could make payment, it received summons on 29 November 1989, together with a
copy of a complaint filed by the nephews and nieces of Rosario and Salud against the latter, Jose and
Dominador Jimenez, and Adelfa Properties in the RTC Makati (Civil Case 89-5541), for annulment of the
deed of sale in favor of Household Corporation and recovery of ownership of the property covered by TCT
309773.
As a consequence, in a letter dated 29 November 1989, Adelfa Properties informed Rosario and Salud that
it would hold payment of the full purchase price and suggested that the latter settle the case with their
nephews and nieces. . Salud Jimenez refused to heed the suggestion of Adelfa Properties and attributed
the suspension of payment of the purchase price to lack of word of honor
. On 14 December 1989, Rosario and Salud sent Francisca Jimenez to see Atty. Bernardo, in his capacity as
Adelfa Properties counsel, and to inform the latter that they were cancelling the transaction. In turn, Atty.
Bernardo offered to pay the purchase price provided that P500,000.00 be deducted therefrom for the
settlement of the civil case. This was rejected by Rosario and Salud. On 22 December 1989, Atty. Bernardo
wrote Rosario and Salud on the same matter but this time reducing the amount from P500,000.00 to
P300,000.00, and this was also rejected by the latter. On 23 February 1990, the RTC dismissed Civil Case
89-5541.
On 16 April 1990, Atty. Bernardo wrote Rosario and Salud informing the latter that in view of the dismissal of
the case against them, Adelfa Properties was willing to pay the purchase price, and he requested that the
corresponding deed of absolute sale be executed. This was ignored by Rosario and Salud. On 27 July 1990,
Jimenez counsel sent a letter to Adelfa Properties enclosing therein a check for P25,000.00 representing
the refund of 50% of the option money paid under the exclusive option to purchase. Rosario and Salud then
requested Adelfa Properties to return the owners duplicate copy of the certificate of title of Salud Jimenez.
Adelfa Properties failed to surrender the certificate of title.
Rosario and Salud Jimenez filed Civil Case 7532 in the RTC Pasay City (Branch 113) for annulment of
contract with damages, praying, among others, that the exclusive option to purchase be declared null and
void; that Adelfa Properties be ordered to return the owners duplicate certificate of title; and that the
annotation of the option contract on TCT 309773 be cancelled.

RTC: On 5 September 1991, the trial court rendered judgment holding that the agreement entered into by
the parties was merely an option contract, and declaring that the suspension of payment by Adelfa
Properties constituted a counter-offer which, therefore, was tantamount to a rejection of the option. It
likewise ruled that Adelfa Properties could not validly suspend payment in favor of Rosario and Salud on the
ground that the vindicatory action filed by the latters kin did not involve the western portion of the land
covered by the contract between the parties, but the eastern portion thereof which was the subject of the
sale between Adelfa Properties and the brothers Jose and Dominador Jimenez. The trial court then directed
the cancellation of the exclusive option to purchase.
On appeal,
RTC: the Court of appeals affirmed in toto the decision of the court a quo. That Article 1590 of the Civil Code
on suspension of payments applies only to a contract of sale or a contract to sell, but not to an option
contract which it opined was the nature of the document subject of the case at bar.
Hence, the petition for review on certiorari.
Adelfa properties posits that the contract is a Contract of Sale and not an Option Contract or Contract to
Sell, making the suspension of payment applicable in the case.
ISSUE: Whether or not the contract is a Contract of Sale , Option Contract or Contract to Sell.
SC: The Supreme Court affirmed the assailed judgment of the Court of Appeals in CA-GR CV 34767, with
modificatory premises.
Agreement between parties a contract to sell and not an option contract or a contract of sale
The alleged option contract is a contract to sell, rather than a contract of sale. The distinction between the
two is important for in contract of sale, the title passes to the vendee upon the delivery of the thing sold;
whereas in a contract to sell, by agreement the ownership is reserved in the vendor and is not to pass until
the full payment of the price. In a contract of sale, the vendor has lost and cannot recover ownership until
and unless the contract is resolved or rescinded; whereas in a contract to sell, title is retained by the vendor
until the full payment of the price Thus, a deed of sale is considered absolute in nature where there is
neither a stipulation in the deed that title to the property sold is reserved in the seller until the full payment of
the price, nor one giving the vendor the right to unilaterally resolve the contract the moment the buyer fails to
pay within a fixed period.
That the parties really intended to execute a contract to sell is bolstered by the fact that the deed of absolute
sale would have been issued only upon the payment of the balance of the purchase price, as may be
gleaned from Adelfa Properties letter dated 16 April 1990 wherein it informed the vendors that it is now
ready and willing to pay you simultaneously with the execution of the corresponding deed of absolute sale.
Contract interpreted to ascertain intent of parties; Title not controlling if text shows otherwise
The important task in contract interpretation is always the ascertainment of the intention of the contracting
parties and that task is to be discharged by looking to the words they used to project that intention in their
contract, all the words not just a particular word or two, and words in context not words standing alone.
Moreover, judging from the subsequent acts of the parties which will hereinafter be discussed, it is
undeniable that the intention of the parties was to enter into a contract to sell. In addition, the title of a
contract does not necessarily determine its true nature. Hence, the fact that the document under discussion
is entitled Exclusive Option to Purchase is not controlling where the text thereof shows that it is a contract
to sell.
Test to determine contract as a contract of sale or purchase or mere option
The test in determining whether a contract is a contract of sale or purchase or a mere option is whether
or not the agreement could be specifically enforced. There is no doubt that Adelfas obligation to pay the
purchase price is specific, definite and certain, and consequently binding and enforceable. Had the
Jimenezes chosen to enforce the contract, they could have specifically compelled Adelfa to pay the balance

of P2,806,150.00. This is distinctly made manifest in the contract itself as an integral stipulation, compliance
with which could legally and definitely be demanded from petitioner as a consequence.
Adelfa Properties justified in suspending payment of balance by reason of vindicatory action filed
against it
In Civil Case 89-5541, it is easily discernible that, although the complaint prayed for the annulment only of
the contract of sale executed between Adelfa Properties and the Jimenez brothers, the same likewise
prayed for the recovery of therein Jimenez share in that parcel of land specifically covered by TCT 309773.
In other words, the Jimenezes were claiming to be co-owners of the entire parcel of land described in TCT
309773, and not only of a portion thereof nor did their claim pertain exclusively to the eastern half
adjudicated to the Jimenez brothers. Therefore, Adelfa Properties was justified in suspending payment of the
balance of the purchase price by reason of the aforesaid vindicatory action filed against it. The assurance
made by the Jimenezes that Adelfa Properties did not have to worry about the case because it was pure and
simple harassment is not the kind of guaranty contemplated under the exceptive clause in Article 1590
wherein the vendor is bound to make payment even with the existence of a vindicatory action if the vendee
should give a security for the return of the price.
Jimenezes may no longer be compelled to sell and deliver subject property
Be that as it may, and the validity of the suspension of payment notwithstanding, the Jimenezes may no
longer be compelled to sell and deliver the subject property to Adelfa Properties for two reasons, that is,
Adelfas failure to duly effect the consignation of the purchase price after the disturbance had ceased; and,
secondarily, the fact that the contract to sell had been validly rescinded by the Jimenezes.
Rescission in a contract to sell
Article 1592 of the Civil Code which requires rescission either by judicial action or notarial act is not
applicable to a contract to sell. Furthermore, judicial action for rescission of a contract is not necessary
where the contract provides for automatic rescission in case of breach, as in the contract involved in the
present controversy. By Adelfas failure to comply with its obligation, the Jimenezes elected to resort to and
did announce the rescission of the contract through its letter to Adelfa dated 27 July 1990. That written
notice of rescission is deemed sufficient under the circumstances.
WHEREFORE, on the foregoing modificatory premises, and considering that the same result has been
reached by respondent Court of Appeals with respect to the relief awarded to private respondents by the
court a quo which we find to be correct, its assailed judgment in CA-G.R. CV No. 34767 is hereby
AFFIRMED.

SPOUSES JULIO D. VILLAMOR AND MARINA VILLAMOR vs THE HON. COURT OF APPEALS AND
SPOUSES MACARIA LABINGISA REYES AND ROBERTO REYES
G.R. No. 97332 October 10, 1991
FACTS:
Macaria sold 300 square meters from her 600 square meter lot to the spouses Villamor which is located at
Baesa, Caloocan City, for the total amount of P21,000.00.
Earlier, Macaria borrowed P2,000.00 from the spouses which amount was deducted from the total purchase
price of the 300 square meter lot sold.
Macaria executed a "Deed of Option" in favor of Villamor in which the remaining 300 square meter portion
(TCT No. 39934) of the lot would be sold to Villamor under the conditions stated therein.
Included in the Deed of Option is:
That the only reason why the Spouses-vendees Julio Villamor and Marina V. Villamor, agreed to buy the
said one-half portion at the above-stated price of about P70.00 per square meter, is because I, and my
husband Roberto Reyes, have agreed to sell and convey to them the remaining one-half portion still owned
by me and now covered by TCT No. 39935 of the Register of Deeds for the City of Caloocan, whenever the
need of such sale arises, either on our part or on the part of the spouses (Julio) Villamor and Marina V.
Villamor, at the same price of P70.00 per square meter, excluding whatever improvement may be found the
thereon;
In 1984, when the husband of Macaria retired, wanted to repurchased the said 300 square meter of lot from
the petitioners. However, petitioners rejected the said offer and expresses their desire to purchase the
remaining half of the lot.
Trial Court rendered judgment in favor of Villamor.
Court of Appeals reversed the decision premised on the finding of respondent court that the Deed of Option
is void for lack of consideration.
ISSUE:
Whether there is a Separate Consideration for the Option Contract? YES
RULING:
As expressed in Gonzales v. Trinidad, 67 Phil. 682, consideration is "the why of the contracts, the essential
reason which moves the contracting parties to enter into the contract." The cause or the impelling reason on
the part of private respondent executing the deed of option as appearing in the deed itself is the petitioner's
having agreed to buy the 300 square meter portion of private respondents' land at P70.00 per square meter
"which was greatly higher than the actual reasonable prevailing price."
The respondent appellate court failed to give due consideration to petitioners' evidence which shows that in
1969 the Villamor spouses bough an adjacent lot from the brother of Macaria Labing-isa for only P18.00 per
square meter which the private respondents did not rebut. Thus, expressed in terms of money, the
consideration for the deed of option is the difference between the purchase price of the 300 square
meter portion of the lot in 1971 (P70.00 per sq.m.) and the prevailing reasonable price of the same lot
in 1971. Whatever it is, (P25.00 or P18.00) though not specifically stated in the deed of option, was
ascertainable. Petitioner's allegedly paying P52.00 per square meter for the option may, as opined by
the appellate court, be improbable but improbabilities does not invalidate a contract freely entered into by
the parties
The "deed of option" entered into by the parties in this case had unique features. Ordinarily, an optional
contract is a privilege existing in one person, for which he had paid a consideration and which gives him the
right to buy, for example, certain merchandise or certain specified property, from another person, if he
chooses, at any time within the agreed period at a fixed price (Enriquez de la Cavada v. Diaz, 37 Phil. 982).
If We look closely at the "deed of option" signed by the parties, We will notice that the first part covered the
statement on the sale of the 300 square meter portion of the lot to Spouses Villamor at the price of P70.00
per square meter "which was higher than the actual reasonable prevailing value of the lands in that place at

that time (of sale)." The second part stated that the only reason why the Villamor spouses agreed to buy the
said lot at a much higher price is because the vendor (Reyeses) also agreed to sell to the Villamors the
other half-portion of 300 square meters of the land. Had the deed stopped there, there would be no dispute
that the deed is really an ordinary deed of option granting the Villamors the option to buy the remaining 300
square meter-half portion of the lot in consideration for their having agreed to buy the other half of the land
for a much higher price. But, the "deed of option" went on and stated that the sale of the other half would be
made "whenever the need of such sale arises, either on our (Reyeses) part or on the part of the Spouses
Julio Villamor and Marina V. Villamor. It appears that while the option to buy was granted to the Villamors,
the Reyeses were likewise granted an option to sell. In other words, it was not only the Villamors who were
granted an option to buy for which they paid a consideration. The Reyeses as well were granted an option to
sell should the need for such sale on their part arise.
A contract of sale is, under Article 1475 of the Civil Code, "perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price. From that moment, the parties
may reciprocally demand perform of contracts." Since there was, between the parties, a meeting of minds
upon the object and the price, there was already a perfected contract of sale. What was, however, left to be
done was for either party to demand from the other their respective undertakings under the contract. It may
be demanded at any time either by the private respondents, who may compel the petitioners to pay for the
property or the petitioners, who may compel the private respondents to deliver the property.
However, the Deed of Option did not provide for the period within which the parties may demand the
performance of their respective undertakings in the instrument. The parties could not have contemplated
that the delivery of the property and the payment thereof could be made indefinitely and render uncertain the
status of the land. The failure of either parties to demand performance of the obligation of the other for an
unreasonable length of time renders the contract ineffective.
Under Article 1144 (1) of the Civil Code, actions upon written contract must be brought within ten (10) years.
The Deed of Option was executed on November 11, 1971. The acceptance, as already mentioned, was also
accepted in the same instrument. The complaint in this case was filed by the petitioners on July 13, 1987,
seventeen (17) years from the time of the execution of the contract. Hence, the right of action had
prescribed. There were allegations by the petitioners that they demanded from the private respondents as
early as 1984 the enforcement of their rights under the contract. Still, it was beyond the ten (10) years period
prescribed by the Civil Code.

Nicolas Sanchez vs. Severina Rigos

45 SCRA 368 June 1972
FACTS:
In an instrument entitled "Option to Purchase," executed on April 3, 1961, defendant-appellant Severina
Rigos "agreed, promised and committed ... to sell" to plaintiff-appellee Nicolas Sanchez for the sum of
P1,510.00 within two (2) years from said date, a parcel of land situated in the barrios of Abar and Sibot, San
Jose, Nueva Ecija. It was agreed that said option shall be deemed "terminated and elapsed," if Sanchez
shall fail to exercise his right to buy the property" within the stipulated period. On March 12, 1963, Sanchez
deposited the sum of Pl,510.00 with the CFI of Nueva Ecija and filed an action for specific performance and
damages against Rigos for the latters refusal to accept several tenders of payment that Sanchez made to
purchase
the
subject
land.
Defendant Rigos contended that the contract between them was only a unilateral promise to sell, and the
same being unsupported by any valuable consideration, by force of the New Civil Code, is null and void."
Plaintiff Sanchez, on the other hand, alleged in his compliant that, by virtue of the option under
consideration, "defendant agreed and committed to sell" and "the plaintiff agreed and committed to buy" the
land described in the option. The lower court rendered judgment in favor of Sanchez and ordered Rigos to
accept the sum Sanchez judicially consigned, and to execute in his favor the requisite deed of conveyance.
The Court of Appeals certified the case at bar to the Supreme Court for it involves a question purely of law.
ISSUE:
Was there a contract to buy and sell between the parties or only a unilateral promise to sell?
RULING:
The option did not impose upon plaintiff the obligation to purchase defendant's property. Annex A is not a
"contract to buy and sell." It merely granted plaintiff an "option" to buy. And both parties so understood it, as
indicated by the caption, "Option to Purchase," given by them to said instrument. Under the provisions
thereof, the defendant "agreed, promised and committed" herself to sell the land therein described to the
plaintiff for P1,510.00, but there is nothing in the contract to indicate that her aforementioned agreement,
promise and undertaking is supported by a consideration "distinct from the price" stipulated for the sale of
the land.
There is no question that under article 1479 of the new Civil Code "an option to sell," or "a promise to buy or
to sell," as used in said article, to be valid must be "supported by a consideration distinct from the price."
This is clearly inferred from the context of said article that a unilateral promise to buy or to sell, even if
accepted, is only binding if supported by consideration. In other words, "an accepted unilateral promise can
only have a binding effect if supported by a consideration which means that the option can still be
withdrawn, even if accepted, if the same is not supported by any consideration. It is not disputed that the
option is without consideration. It can therefore be withdrawn notwithstanding the acceptance of it by
appellee.
In other words, since there may be no valid contract without a cause or consideration, the promisor is not
bound by his promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted
promise partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract
of sale.
Indeed, the presumption is that, in the process of drafting the Code, its author has maintained a consistent
philosophy or position. Moreover, the decision in Southwestern Sugar & Molasses Co. v. Atlantic Gulf &
Pacific Co., holding that Art. 1324 is modified by Art. 1479 of the Civil Code, in effect, considers the latter as
an exception to the former, and exceptions are not favored, unless the intention to the contrary is clear, and

it is not so, insofar as said two (2) articles are concerned. What is more, the reference, in both the second
paragraph of Art. 1479 and Art. 1324, to an option or promise supported by or founded upon a consideration,
strongly suggests that the two (2) provisions intended to enforce or implement the same principle.
In the present case the trial court found that the "Plaintiff (Nicolas Sanchez) had offered the sum of
Pl,510.00 before any withdrawal from the contract has been made by the Defendant (Severina Rigos)."
Since Rigos' offer sell was accepted by Sanchez, before she could withdraw her offer, a bilateral reciprocal
contract to sell and to buy was generated

PERCELINO DIAMANTE, petitioner, vs.

HON. COURT OF APPEALS and GERARDO DEYPALUBUS, respondents.
FACTS: A fishery lot, encompassing an area of 9.4 hectares and designated as Lot No. 518-A of the
Cadastral Survey of Dumangas, Iloilo, was previously covered by Fishpond Permit No. F-2021 issued in the
name of Anecita Dionio. Upon Anecita's death, her heirs, petitioner Diamante and Primitivo Dafeliz, inherited
the property which they later divided between themselves; petitioner got 4.4. hectares while Dafeliz got 5
hectares. It is the petitioner's share that is the subject of the present controversy. Primitivo Dafeliz later sold
his share to private respondent.
On 21 May 1959, petitioner sold to private respondent his leasehold rights over the property in question for
P8,000.00 with the right to repurchase the same within three (3) years from said date.
On 16 August 1960, private respondent filed an application with the Bureau of Fisheries, dated 12 July 1960,
for a fishpond permit and a fishpond lease agreement over the entire lot, submitting therewith the deeds of
sale executed by Dafeliz and the petitioner.
Pressed by urgent financial needs, petitioner, on 17 October 1960, sold all his remaining rights over the
property in question to the private respondent for P4,000.00.
On 25 October 1960, private respondent, with his wife's consent, executed in favor of the petitioner an
Option to Repurchase the property in question within ten (10) years from said date, with a ten-year grace
period.
Private respondent submitted to the Bureau of Fisheries the definite deed of sale; he did not, however,
submit the Option to Repurchase.
Thereafter, on 2 August 1961, the Bureau of Fisheries issued to private respondent Fishpond Permit
On 11 December 1963, petitioner, contending that he has a valid twenty-year option to repurchase the
subject property, requested the Bureau of Fisheries to respondents permit insofar as the said property is
concerned. On 18 December 1964, his letter-complaint was dismissed. Petitioner then sought a
reconsideration of the dismissal; the same was denied on 29 April 1965. His appeal to the Secretary of the
DANR was likewise dismissed on 30 October 1968. Again, on 20 November 1968, petitioner sought for a
reconsideration; this time, however, he was successful.
Issue: Was there a valid Option? No
RULING: It is settled by this Court that "an agreement to repurchase becomes a promise to sell when made
after the sale, because when the sale is made without such an agreement, the purchaser acquires the thing
sold absolutely, and if he afterwards grants the vendor the right to repurchase, it is a new contract entered
into by the purchaser, as absolute owner already of the object. In that case the vendor has not reserved to
himself the right to repurchase."
Hence, the Option to Repurchase executed by private respondent in the present case, was merely
a promise to sell, which must be governed by Article 1479 of the Civil Code.

A copy of the so-called Option to Repurchase is neither attached to the records nor quoted in any of the
pleadings of the parties. This Court cannot, therefore, properly rule on whether the promise was accepted
and a consideration distinct from the price, supports the option. Undoubtedly, in the absence of either or
both acceptance and separate consideration, the promise to sell is not binding upon the promissor (private
respondent).
A unilateral promise to buy or sell is a mere offer, which is not converted into a contract except at the
moment it is accepted. Acceptance is the act that gives life to a juridical obligation, because, before the
promise is accepted, the promissor may withdraw it at any time. Upon acceptance, however, a bilateral
contract to sell and to buy is created, and the offeree ipso facto assumes the obligations of a purchaser; the
offeror, on the other hand, would be liable for damages if he fails to deliver the thing he had offered for sale.

The contract of option is a separate and distinct contract from the contract which the parties may enter into
upon the consummation of the option, and a consideration for an optional contract is just as important as the
consideration for any other kind of contract. Thus, a distinction should be drawn between the
consideration for the option to repurchase, and the consideration for the contract of repurchase
itself.
Even if the promise was accepted, private respondent was not bound thereby in the absence of a distinct
consideration.