G.R. No. 46570 - Villena vs. Secretary of the Interior

Private respondents Rosario and Salud Jimenez and their brothers Jose and Dominador were co-owners of a 17,710 sqm parcel covered by TCT No. 309773 in Las Piñas.
On July 28, 1988, Jose and Dominador sold the eastern half (8,855 sqm) to Adelfa Properties, Inc.; a subsequent extrajudicial partition confirmed the western half to Rosario and Salud.

On November 25, 1989, petitioner and respondents executed an “Exclusive Option to Purchase” covering the western 8,855 sqm for P 2,856,150, with P 50,000 as option (earnest) money credited against the price; balance of P 2,806,150 was due on or before November 30, 1989.
The option provided that upon default the option would be cancelled, 50% of the option money forfeited, and the rest refunded upon resale; taxes and registration costs were allocated between the parties accordingly.

Respondent Salud’s owner’s copy of the TCT was lost; petitioner’s counsel filed a petition for reconstitution and held the new certificate until delivery to petitioner.

On November 29, 1989, petitioner received summons in Civil Case No. 89-5541 filed by the nephews and nieces of respondents, seeking annulment of the sale to Household Corporation and recovery of ownership of the entire parcel covered by TCT No. 309773.
By letter dated November 29, 1989, petitioner informed respondents it would hold payment pending settlement of the case; respondents refused, citing “lack of word of honor.”

On December 7, 1989, petitioner annotated on TCT No. 309773 its option and the sale to Jose and Dominador.
On December 14–22, 1989, respondents attempted to cancel the option; petitioner proposed deducting P 500,000 (later P 300,000) from the price for case settlement—rejected by respondents.
The Makati RTC dismissed Civil Case No. 89-5541 on February 23, 1990; petitioner re-annotated its option on February 28, 1990.
Also on February 28, 1990, respondents executed a conditional sale of the same lot half to Emylene Chua for P 3,029,250, with P 1,500,000 paid.
On April 16, 1990, petitioner’s counsel offered to pay the purchase price upon execution of the deed of absolute sale—ignored by respondents.
On July 27, 1990, respondents refunded 50% of the option money (P 25,000) and demanded return of the owner’s duplicate title; petitioner failed to return it.
Respondents filed Civil Case No. 7532 for annulment of contract, return of title, cancellation of annotation, and damages; Emylene Chua intervened.

Whether the “Exclusive Option to Purchase” is an option contract or a contract to sell.
Whether petitioner validly suspended payment of the purchase price under Article 1590, Civil Code, and the legal effects of such suspension.