Victoria N. Racelis v. Spouses Germil Javier

Summary

This case involves a dispute between property administrator Racelis and Spouses Javier over a failed property purchase and lease arrangement. The Spouses leased a Marikina property with intent to buy for P3.5 million, paying P78,000 as initial payment. When they failed to complete the purchase, Racelis terminated the lease and disconnected electricity when they refused to vacate. The main issues were whether the Spouses could suspend rent under Article 1658 of the Civil Code and whether the P78,000 was earnest money or advance rent. The Supreme Court ruled that the rent suspension right did not apply since the lease had expired, making the Spouses unlawful detainers. The Court characterized the P78,000 as earnest money in a contract to sell, which should be forfeited when the sale failed without the seller's fault, representing the opportunity cost of holding the property off the market.