Adelfa Properties v. Court of Appeals

Summary

Adelfa Properties entered into an 'Exclusive Option to Purchase' with the Jimenez sisters for P2.856 million. When a civil case was filed challenging the property's ownership, Adelfa suspended payment citing Article 1590 of the Civil Code. The lower courts ruled this was an option contract and the suspension constituted rejection. The Supreme Court held it was actually a contract to sell, not an option contract, distinguishing between earnest money and option money. While Adelfa was initially justified in suspending payment due to the vindicatory action, it failed to make proper tender and consignation after the civil case was dismissed. The Court affirmed the validity of the private respondents' rescission and the subsequent sale to a third party, establishing important precedents on contract classification and payment suspension rights.