6) FEDERICO SERRA, petitioner, vs.

CA and RCBC, respondent

G.R. No. 103338 January 4, 1994

Facts:
 In 1975 Petitioner, the owner of a 374 SQM land in Quezo St., Masbate, Masbate, leased its land
to with the OPTION TO BUY. The pertinent portion of which reads:
1) The LESSOR leases unto the LESSEE, an the LESSEE hereby accepts in lease, the parcel of land
described in the first WHEREAS clause, to have and to hold the same for a period of twenty-
five (25) years commencing from June 1, 1975 to June 1, 2000. The LESSEE, however, shall
have the option to purchase said parcel of land within a period of ten (10) years from the
date of the signing of this Contract at a price not greater than TWO HUNDRED TEN PESOS
(P210.00) per square meter. Lessor shall, within such ten-year period, to register said parcel
of land under the TORRENS SYSTEM. If not registered in 10 years, the LESSEE shall have the
right, upon termination of the lease to be paid by the LESSOR the market value of the
building and improvements constructed on said parcel of land.
2) Monthly rental shall be P700.00
3) LESSEE is hereby authorized to construct as its sole expense a building and such other
improvements on said parcel of land, which it may need in pursuance of its business and/or
operations; provided, that if for any reason the LESSEE shall fail to exercise its option, it shall
become the property of the LESSOR without the right of reimbursement on the part of the
LESSEE.
4) Agreement was notarized
 Petitioner registered the land within 3 years alleges that as soon as he had the property
registered, he kept on pursuing the sale of the lot as per their agreement.
 In September 4, 1984, respondent decided to exercise its option petitioner replied that he is no
longer selling the property.
 Respondent filed an action for specific performance before the trail court.
 Petitioner alleges the following:
1) Contract having been prepared and drawn by RCBC, it took undue advantage on him when it
set in lopsided terms
2) Option was not supported by any consideration distinct from the price and hence not
binding upon him
3) A condition for the validity and/or efficacy of the option, it should have been exercised
within the reasonable time after the registration of the land under the Torrens System; that
its delayed action on the option have forfeited whatever its claim to the same.
4) Extraordinary inflation supervened resulting in the unusual decrease in the purchasing
power of the currency that could not reasonably be forseen or was manifestly beyond the
contemplation of the parties at the time of the establishment of the obligation, thus,
rendering the terms of the contract unenforceable, inequitable and to the undue
enrichment of RCBC
5) The rental of P700.00 has become unrealistic and unreasonable, that justice and equity will
require its adjustment
 Trial court found the contract to be valid, the court nonetheless ruled that the option to buy in
unenforceable because it lacked a consideration distinct from the price and RCBC did not
exercise its option within reasonable time. But upon motion for reconsideration by the
respondent, the court reversed its initial ruling.
 Petitioner appealed before the CA but CA affirmed the following findings of the trial court:
 1) Contract is valid and that the parties perfectly understood the contents
2) Option is supported by a distinct and separate consideration as embodied in the agreement
3) There is no basis in granting an adjustment in rental

Issue:
1) WON contract of adhesion was valid?
2) WON the price "not greater than TWO HUNDRED PESOS" is certain or definite?
3) WON Respondent court gravely abused its discretion in not granting currency adjustment on the
already eroded value of the stipulated rentals for twenty-five years
4) Won

Held:
Contract of Adhesion was valid.
The adhesion contracts are as binding as ordinary contracts. Because in reality, the party who
adheres to the contract is free to reject it entirely, although, this Court will not hesitate to rule out blind
adherence to terms where facts and circumstances will show that it is basically one-sided.
We do not find the situation in the present case to be inequitable. Petitioner is a highly
educated man, who, at the time of the trial was already a CPA-Lawyer, and when he entered into the
contract, was already a CPA, holding a respectable position with the Metropolitan Manila Commission. It
is evident that a man of his stature should have been more cautious in transactions he enters into,
particularly where it concerns valuable properties.

"Not greater than TWO HUNDRED PESOS" is certain or definite.

A price is considered certain if it is so with reference to another thing certain or when the
determination thereof is left to the judgment of a specified person or persons. 19 And generally, gross
inadequacy of price does not affect a contract of sale. Contracts are to be construed according to the
sense and meaning of the terms which the parties themselves have used. In the present dispute, there is
evidence to show that the intention of the parties is to peg the price at P210 per square meter.

There is no basis, legal or factual, in adjusting the amount of the rent. The contract is the law
between the parties and if there is indeed reason to adjust the rent, the parties could by themselves
negotiate for the amendment of the contract. Neither could we consider the decline of the purchasing
power of the Philippine peso from 1983 to the time of the commencement of the present case in 1985,
to be so great as to result in an extraordinary inflation. Extraordinary inflation exists when there in an
unimaginable increase or decrease of the purchasing power of the Philippine currency, or fluctuation
in the value of pesos manifestly beyond the contemplation of the parties at the time of the
establishment of the obligation.

Premises considered, we find that the contract of "LEASE WITH OPTION TO BUY" between
petitioner and respondent bank is valid, effective and enforceable, the price being certain and that
there was consideration distinct from the price to support the option given to the lessee.