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] Second Division, Regalado (J): 3 concur 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 Piñas, 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
praying. the petition for review on certiorari. In a contract of sale. but the eastern portion thereof which was the subject of the sale between Adelfa Properties and the brothers Jose and Dominador Jimenez. and that the annotation of the option contract on TCT 309773 be cancelled. was tantamount to a rejection of the option. Option Contract or Contract to Sell. making the suspension of payment applicable in the case. with modificatory premises. the trial court rendered judgment holding that the agreement entered into by the parties was merely an option contract. title is retained by the vendor until the full payment of the price Thus. Hence. 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. and declaring that the suspension of payment by Adelfa Properties constituted a counter-offer which.purchase. therefore. 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 latter’s kin did not involve the western portion of the land covered by the contract between the parties. whereas in a contract to sell. Adelfa Properties failed to surrender the certificate of title. 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 . RTC: the Court of appeals affirmed in toto the decision of the court a quo. ISSUE: Whether or not the contract is a Contract of Sale . rather than a contract of sale. That Article 1590 of the Civil Code on suspension of payments applies only to a contract of sale or a contract to sell. The trial court then directed the cancellation of the exclusive option to purchase. 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. SC: The Supreme Court affirmed the assailed judgment of the Court of Appeals in CA-GR CV 34767. whereas in a contract to sell. that Adelfa Properties be ordered to return the owner’s duplicate certificate of title. by agreement the ownership is reserved in the vendor and is not to pass until the full payment of the price. that the exclusive option to purchase be declared null and void. Rosario and Salud Jimenez filed Civil Case 7532 in the RTC Pasay City (Branch 113) for annulment of contract with damages. but not to an option contract which it opined was the nature of the document subject of the case at bar. Rosario and Salud then requested Adelfa Properties to return the owner’s duplicate copy of the certificate of title of Salud Jimenez. among others. nor one giving the vendor the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period.” Contract interpreted to ascertain intent of parties. RTC: On 5 September 1991. 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. 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. On appeal. Adelfa properties posits that the contract is a Contract of Sale and not an Option Contract or Contract to Sell. the vendor has lost and cannot recover ownership until and unless the contract is resolved or rescinded. 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.
Therefore. its assailed judgment in CA-G. the same likewise prayed for the recovery of therein Jimenez’ share in that parcel of land specifically covered by TCT 309773. secondarily. although the complaint prayed for the annulment only of the contract of sale executed between Adelfa Properties and the Jimenez brothers. Had the Jimenezes chosen to enforce the contract. the Jimenezes may no longer be compelled to sell and deliver the subject property to Adelfa Properties for two reasons. That written notice of rescission is deemed sufficient under the circumstances. that is. and consequently binding and enforceable. WHEREFORE. it is easily discernible that. the title of a contract does not necessarily determine its true nature. By Adelfa’s failure to comply with its obligation. the Jimenezes were claiming to be co-owners of the entire parcel of land described in TCT 309773. There is no doubt that Adelfa’s obligation to pay the purchase price is specific. Adelfa Properties justified in suspending payment of balance by reason of vindicatory action filed against it In Civil Case 89-5541. Adelfa Properties was justified in suspending payment of the balance of the purchase price by reason of the aforesaid vindicatory action filed against it. compliance with which could legally and definitely be demanded from petitioner as a consequence. and not only of a portion thereof nor did their claim pertain exclusively to the eastern half adjudicated to the Jimenez brothers. Jimenezes may no longer be compelled to sell and deliver subject property Be that as it may. judging from the subsequent acts of the parties which will hereinafter be discussed. the fact that the contract to sell had been validly rescinded by the Jimenezes. and words in context not words standing alone. In other words. as in the contract involved in the present controversy.contract. on the foregoing modificatory premises.806. . Adelfa’s failure to duly effect the consignation of the purchase price after the disturbance had ceased. In addition. the Jimenezes elected to resort to and did announce the rescission of the contract through its letter to Adelfa dated 27 July 1990. and the validity of the suspension of payment notwithstanding. 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. This is distinctly made manifest in the contract itself as an integral stipulation. they could have specifically compelled Adelfa to pay the balance of P2. . 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. CV No. it is undeniable that the intention of the parties was to enter into a contract to sell. all the words not just a particular word or two. definite and certain. Moreover. 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. 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. 34767 is hereby AFFIRMED. Hence. and. Furthermore.150.00. judicial action for rescission of a contract is not necessary where the contract provides for automatic rescission in case of breach. 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.R.
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