University of Mindanao - College of Legal Education

SALES

Case Name Adelfa Properties, Inc. v. CA, 240 SCRA 565

Docket Number | Date G.R. No. 111238, January 25, 1995

Ponente REGALADO, J.

Petitioner ADELFA PROPERTIES, INC.

Respondents COURT OF APPEALS, ROSARIO JIMENEZ-CASTAÑEDA

and SALUD JIMENEZ

Case summary Adelfa Properties, Inc. offered to buy a parcel of lot

belonging to Rosario and Salud Jimenez (sellers). They
executed a document entitled “Exclusive Option to
Purchase” (Option contract). Title over the property was
delivered to Adelfa. A civil case then was commenced by
the nephews and nieces of the sellers concerning the
subject property. Adelfa suspended payments. The former
civil case was later dismissed, despite which, Adelfa failed
to make further payments but it caused the annotation of
said option contract in the title. Nonetheless, the seller
executed a Deed of Conditional Sale in favor of one
Emylene Chua. Adelfa signified its willingness to pay
purchase price so the Deed of Absolute Sale may be
executed; sellers ignored. The sellers then sent a notice
rescinding the contract. They also demanded for the return
of the title in Adelfa’s possession; Adelfa refused.

Thus, the sellers filed a complaint, praying among others,

for the cancellation of the option contract and its
annotation in the title of the subject property, and the
return of said title.

The RTC ruled in favor of the sellers. It held that Adelfa’s

failure to make further payments amounts to its refusal to
exercise its right to purchase the property under the option
contract. The CA affirmed. The SC reversed.

Doctrine Where the intention of the parties is to withhold transfer of

the ownership of the thing subject of a contract of sale until
full payment of the purchase price, the contract is one of
contract to sell. Delivery without intention of transferring
ownership over said property does not affect the nature of
the contract.
 RELEVANT FACTS

Private respondents were the co-owners of a parcel of land with their two brothers, Jose and
Dominador Jimenez. Jose and Dominador Jimenez sold the east portion of the lot to petitioner
Adelfa accompanied by an extrajudicial partition of the property with the west portion allotted to
private respondents. After the sale, Petitioner and private respondents entered into an
“Exclusive Option to Purchase” in favor of the former over the west portion of the land. In the
said contract, petitioner paid Php 50,000.00 as option money, but the stipulation states that it
would form part of the purchase price.

The owner’s duplicate of private respondents was lost so they initiated reconstitution
proceedings represented by petitioner’s lawyer. Pursuant to this, the reconstituted title remained
in the possession of the lawyer.

The nieces and nephews of the Jimenez’s filed an action to annul the sale of the east portion of
the land to petitioner. Pursuant to this, petitioner suspended the payment of the full purchase
price because of the vindicatory action filed by the niece and nephews which it duly informed
the private respondents.

The suit however was dismissed. After the dismissal, the petitioner sent a letter to private
respondents conveying its intention to pay the full price. However, the private respondents
ignored the offer since it already sold the said lot to another person. The private respondents
sought the recovery of the title of the land from the petitioner but the latter did not comply, the
former filed an action to recover the same.

The Petitioner alleged that they were justified to suspend the payment of the price since there
was a valid vindicatory action under Art 1590 of the Civil Code. On the other hand, private
respondents countered, saying that the contract was a mere option contract and thus Art 1590
is not applicable.

The RTC ruled in favor of private respondents. The CA affirmed in toto.

RATIO DECIDENDI

Whether or not Article Due to its failure to pay the purchase price within the agreed
1590 is applicable, period, petitioner Adelfa invokes Article 1590 of the civil Code
thereby justifying the which provides:
refusal by Adelfa to pay
the balance of the Art. 1590. Should the vendee be disturbed in the possession or
purchase price. ownership of the thing acquired, or should he have reasonable
grounds to fear such disturbance, by a vindicatory action or a
foreclosure of mortgage, he may suspend the payment of the
price until the vendor has caused the disturbance or danger to
cease, unless the latter gives security for the return of the price in
 a proper case, or it has been stipulated that, notwithstanding any
such contingency, the vendee shall be bound to make the
payment. A mere act of trespass shall not authorize the
suspension of the payment of the price.

Respondent court refused to apply the aforequoted provision of

law on the erroneous assumption that the true agreement
between the parties was a contract of option. It was not an option
contract but a perfected contract to sell. Therefore, Article 1590
would properly apply.

Both lower courts, are in accord that since the civil case filed
against the parties herein involved only the eastern half of the
land subject of the deed of sale between Adelfa and the Jimenez
brothers, it did not have any adverse effect on private
respondents’ title and ownership over the western half of the land
which is covered by the contract subject of the present case. At a
glance, it is easily discernible that, although the complaint prayed
for the annulment only of the contract of sale executed between
petitioner and the Jimenez brothers, the plaintiffs therein were
claiming to be co-owners of the entire parcel of land, and not only
of a portion thereof nor, as incorrectly interpreted by the lower
courts, not pertaining exclusively to the eastern half adjudicated
to the Jimenez brothers.

Such being the case, petitioner 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 private respondents that petitioner 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.

RULING

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 the SC find to be correct, its assailed judgment is hereby
AFFIRMED.