G.R. No.

111238 January 25, 1995

ADELFA PROPERTIES, INC., petitioner,

vs.
COURT OF APPEALS, ROSARIO JIMENEZ-CASTAÑEDA and SALUD JIMENEZ, respondents.

FACTS:
Private respondents and their brothers, Jose and Dominador Jimenez, co-owned a
parcel of land consisting of 17,710 sqm. in Las Piñas. Jose and Dominador sold
their share consisting of 1/2 of said land, specifically the eastern part, to
petitioner pursuant to "Kasulatan sa Bilihan ng Lupa." Petitioner also wants to buy
the other half from private respondents and an "Exclusive Option to Purchase" ,
dated Nov. 25, 1989, was executed between plaintiffs and respondents with the
following terms and conditions:
1.) The selling price of the 8,655 sqm western part of the property is
P2,856,150.00
2.)An option money of Php50,000 shall be credited as partial payment and the
remaining balance is payable on or before Nov.30 ,1989.
3.)The option shall be cancelled in case of default by Adelfa Properties and 50% of
the option money be forfeited and 50% will be refunded if the property will be sold
to a third party.
The certificate of title issued to Salud was lost so they hired Atty. Bernardo for
the re-issuance of a new copy. A new copy was issued and remained in the possession
of Atty. Bernardo until he turned it over to Petitioner.

Before petitioner could make payment, It received summons on Nov. 29, 1989 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 and suggested that
private respondents settle the case with their nephews and nieces. Salud attributed
the suspension as "lack of word of honor". Priv. respondents sent Francisca Jimenez
to see Atty. Bernardo to cancel the transaction. In turn, Atty. Bernardo offered to
pay the purchase price but Php500,000 will be deducted for the settlement. This was
rejected by respondents. He lowered the offer to Php300,000 but was also rejected.
Private respondents then sold the parcel of land to Emylene Chua for Php3,029,250.
Atty. Bernardo again wrote to priv. respondents that petitioner was willing to pay
the purchase price in view of the dismissal of the case filed by the nephews and
nieces of priv. respondents but it was ignored. Private respondents' counsel sent
a letter to petitioner with a Php25,000 check representing the 50% option money and
asking petitioner to return the owner's duplicate copy of the certificate of title
of Salud. Petitioner failed to surrender the certificate of title, hence private
respondents filed a case for annulment of contract and the "Exclusive Option to
Purchase" be declared null and void; that defendant, herein petitioner, be ordered
to return the owner's duplicate certificate of title.

Trial Court Ruling: The trial court held that the agreement entered into by the
parties was merely an option contract, and declaring that the suspension of payment
by herein petitioner constituted a counter-offer which, therefore, was tantamount
to a rejection of the option. The trial court then directed the cancellation of the
"Exclusive Option to Purchase" and declared the sale to Emylene Chua as valid and
binding.

CA Decision: C.A. affirmed the decision of the court and held 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.

ISSUE:
1.) Whether or 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.

2.) Whether or not the Php50,000 given by Adelfa Properties Inc., is an option
money or an earnest money.

SC Ruling: The Supreme Court affirmed the judgment of the Court of Appeals.

1.)No it is not an option contract, 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.
The distinction between an "option" and a contract of sale is that an option is an
UNACCEPTED OFFER. There is indeed a concurrence of petitioner's offer to buy and
private respondents' acceptance.Thus, acceptance may be shown by the acts, conduct,
or words of a party recognizing the existence of the contract of sale. Priv.
respondents accepted the offer of petitioner when they suggested that their
certificate of title be first reconstituted and they agreed that petitioner would
pay them either in cash or manager's check the amount of Php2.8m

2.)Earnest money, The amount of P50,000.00 was not 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 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.
earnest money is given, the buyer is bound to pay the balance, while when the
would-be buyer gives option money, he is not required to buy.

NOTE: Reason why priv. respondents may no longer be compelled to sell:

1.) petitioner's failure to duly effect the consignation of the purchase price
after the disturbance had ceased
2.) the fact that the contract to sell had been validly rescinded by private
respondents.

Provision(s) related to SALES:

Art. 1482 - Whenever 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.