G.R. No. 83759 July 12, 1991
The Deed of Sale was duly
SPOUSES CIPRIANO VASQUEZ and VALERIANA
GAYANELO, petitioners,
vs.
HONORABLE COURT OF APPEALS and SPOUSES
MARTIN VALLEJERA and APOLONIA OLEA,respondents.
Dionisio C. Isidto for petitioners.
Raymundo Lozada, Jr. for private respondents.
GUTIERREZ, JR., J.:p
This petition seeks to reverse the decision of the Court
of Appeals which affirmed the earlier decision of the
Regional Trial Court, 6th Judicial Region, Branch 56,
Himamaylan, Negros Occidental in Civil Case No. 839
(for specific performance and damages) ordering the
petitioners (defendants in the civil case) to resell Lot No.
1860 of the Cadastral Survey of Himamaylan, Negros
Occidental to the respondents (plaintiffs in the civil case)
upon payment by the latter of the amount of P24,000.00
as well as the appellate court's resolution denying a
motion for reconsideration. In addition, the appellate
court ordered the petitioners to pay the amount of
P5,000.00 as necessary and useful expenses in
accordance with Article 1616 of the Civil Code.
The facts of the case are not in dispute. They are
summarized by the appellate court as follows:
On January 15, 1975, the plaintiffs-spouses
(respondents herein) filed this action against the
defendants-spouses (petitioners herein) seeking
to redeem Lot No. 1860 of the Himamaylan
Cadastre which was previously sold by plaintiffs
to defendants on September 21, 1964.
The said lot was registered in the name of
plaintiffs. On October 1959, the same was leased
by plaintiffs to the defendants up to crop year
1966-67, which was extended to crop year 1968-
69. After the execution of the lease, defendants
took possession of the lot, up to now and
devoted the same to the cultivation of sugar.
On September 21, 1964, the plaintiffs sold the lot
to the defendants under a Deed of Sale for the
amount of P9,000.00.
ratified and notarized. On the same day and
along with the execution of the Deed of Sale, a
separate instrument, denominated as Right to
Repurchase (Exh. E), was executed by the parties
granting plaintiffs the right to repurchase the lot
for P12,000.00, said Exh. E likewise duly ratified
and notarized. By virtue of the sale, defendants
secured TCT No. T-58898 in their name. On
January 2, 1969, plaintiffs sold the same lot to
Benito Derrama, Jr., after securing the
defendants' title, for the sum of P12,000.00.
Upon the protestations of defendant, assisted by
counsel, the said second sale was cancelled after
the payment of P12,000.00 by the defendants to
Derrama.
Defendants resisted this action for redemption
on the premise that Exh. E is just an option to
buy since it is not embodied in the same
document of sale but in a separate document,
and since such option is not supported by a
consideration distinct from the price, said deed
for right to repurchase is not binding upon them.
After trial, the court below rendered judgment
against the defendants, ordering them to resell
lot No. 1860 of the Himamaylan Cadastre to the
plaintiffs for the repurchase price of P24,000.00,
which amount combines the price paid for the
first sale and the price paid by defendants to
Benito Derrama, Jr.
Defendants moved for, but were denied
reconsideration. Excepting thereto, defendants-
appealed, . . . (Rollo, pp. 44-45)
The petition was given due course in a resolution dated
February 12, 1990.
The petitioners insist that they can not be compelled to
resell Lot No. 1860 of the Himamaylan Cadastre. They
contend that the nature of the sale over the said lot
between them and the private respondents was that of
an absolute deed of sale and that the right thereafter
granted by them to the private respondents (Right to
Repurchase, Exhibit "E") can only be either an option to
buy or a mere promise on their part to resell the
property. They opine that since the "RIGHT TO
REPURCHASE" was not supported by any consideration
distinct from the purchase price it is not valid and
binding on the petitioners pursuant to Article 1479 of
the Civil Code.
The document denominated as "RIGHT TO
REPURCHASE" (Exhibit E) provides:
RIGHT TO REPURCHASE
KNOW ALL MEN BY THESE PRESENTS:
I, CIPRIANO VASQUEZ, . . ., do hereby grant the
spouses Martin Vallejera and Apolonia Olea,
their heirs and assigns, the right to repurchase
said Lot No. 1860 for the sum of TWELVE
THOUSAND PESOS (P12,000.00), Philippine
Currency, within the period TEN (10) YEARS from
the agricultural year 1969-1970 when my
contract of lease over the property shall expire
and until the agricultural year 1979-1980.
IN WITNESS WHEREOF, I have hereunto signed
my name at Binalbagan, Negros Occidental, this
21st day of September, 1964.
SGD. CIPRIANO VASQUEZ
SGD. VALERIANA G. VASQUEZ SGD. FRANCISCO SANICAS
(Rollo, p. 47)
The Court of Appeals, applying the principles laid down
in the case of Sanchez v. Rigos, 45 SCRA 368 [1972]
decided in favor of the private respondents.
In the Sanchez case, plaintiff-appellee Nicolas Sanchez
and defendant-appellant Severino Rigos executed a
document entitled "Option to Purchase," whereby Mrs.
Rigos "agreed, promised and committed . . . to sell" to
Sanchez for the sum of P1,510.00, a registered parcel of
land within 2 years from execution of the document
with the condition that said option shall be deemed
"terminated and lapsed," if "Sanchez shall fail to
exercise his right to buy the property" within the
stipulated period. In the same document, Sanchez" . .
. hereby agree and conform with all the conditions set
forth in the option to purchase executed in my favor,
that I bind myself with all the terms and conditions."
(Emphasis supplied) The notarized document was signed
both by Sanchez and Rigos.
After several tenders of payment of the agreed sum of
P1,510.00 made by Sanchez within the stipulated period
were rejected by Rigos, the former deposited said
amount with the Court of First Instance of Nueva Ecija
and filed an action for specific performance and
damages against Rigos.
The lower court rendered judgment in favor of Sanchez
and ordered Rigos to accept the sum judicially consigned
and to execute in Sanchez' favor the requisite deed of
conveyance. Rigos appealed the case to the Court of
Appeals which certified to this Court on the ground that
it involves a pure question of law.
This Court after deliberating on two conflicting
principles laid down in the cases of Southwestern Sugar
and Molasses Co. v. Atlantic Gulf and Pacific Co., (97
Phil. 249 [1955]) and Atkins, Kroll & Co., Inc. v. Cua Hian
Tek, 102 Phil. 948 [1958]) arrived at the conclusion that
Article 1479 of the Civil Code which provides: ––
Art. 1479. A promise to buy and sell a
determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or to sell a
determinate thing for a price certain is binding
upon the promissory if the promise is supported
by a consideration distinct from the price.
and Article 1324 thereof which provides:
Art. 1324. When the offerer has allowed the
offerer a certain period to accept, the offer may
be withdrawn at any time before acceptance by
communicating such withdrawal, except when
the option is founded upon a consideration, as
something paid or promised.
should be reconciled and harmonized to avoid a conflict
between the two provisions. In effect, the Court
abandoned the ruling in the Southwestern Sugar and
Molasses Co. case and reiterated the ruling in the Atkins,
Kroll and Co. case, to wit:
However, this Court itself, in the case of Atkins, Kroll and
Co., Inc. v. Cua Hian Tek, (102 Phil. 948, 951-952)
decided later than Southwestern Sugar & Molasses Co.
v. Atlantic Gulf & Pacific Co., (supra) saw no distinction
between Articles 1324 and 1479 of the Civil Code and
applied the former where a unilateral promise to sell
similar to the one sued upon here was involved, treating
such promise as an option which, although not binding
as a contract in itself for lack of separate consideration,
nevertheless generated a bilateral contract of purchase
and sale upon acceptance. Speaking through Associate
Justice, later Chief Justice, Cesar Bengzon, this Court
said:
Furthermore, an option is unilateral: a
promise to sell at the price fixed
whenever the offeree should decide to
exercise his option within the specified
time. After accepting the promise and
before he exercises his option, the holder
of the option is not bound to buy. He is
free either to buy or not to buy later. In
this case however, upon accepting herein
petitioner's offer a bilateral promise to
sell and to buy ensued, and the
respondent ipso facto assumed the
obligation of a purchaser. He did not just
get the right subsequently to buy or not
to buy. It was not a mere option then; it
was bilateral contract of sale.
Lastly, even supposing that Exh. A
granted an option which is not binding for
lack of consideration, the authorities hold
that
If the option is given without a
consideration, it is a mere offer of a
contract of sale, which is not binding until
accepted. If, however, acceptance is
made before a withdrawal, it constitutes
a binding contract of sale, even though
the option was not supported by a
sufficient consideration . . . (77 Corpus
Juris Secundum p. 652. See also 27 Ruling
Case Law 339 and cases cited.)
This Court affirmed the lower court's decision although
the promise to sell was not supported by a
consideration distinct from the price. It was obvious that
Sanchez, the promisee, accepted the option to buy
before Rigos, the promisor, withdrew the same. Under
such circumstances, the option to purchase was
converted into a bilateral contract of sale which bound
both parties.
In the instant case and contrary to the appellate court's
finding, it is clear that the right to repurchase was not
supported by a consideration distinct from the price.
The rule is that the promisee has the burden of proving
such consideration. Unfortunately, the private
respondents, promisees in the right to repurchase failed
to prove such consideration. They did not even allege
the existence thereof in their complaint. (See Sanchez v.
Rigos supra)
Therefore, in order that the Sanchez case can be
applied, the evidence must show that the private
respondents accepted the right to repurchase.
The record, however, does not show that the private
respondents accepted the "Right to Repurchase" the
land in question. We disagree with the appellate court's
finding that the private respondents accepted the "right
to repurchase" under the following circumstances: . . as
evidenced by the annotation and registration of the
same on the back of the transfer of certificate of title in
the name of appellants. As vividly appearing therein, it
was signed by appellant himself and witnessed by his
wife so that for all intents and purposes the Vasquez
spouses are estopped from disregarding its obvious
purpose and intention."
The annotation and registration of the right to
repurchase at the back of the certificate of title of the
petitioners can not be considered as acceptance of the
right to repurchase. Annotation at the back of the
certificate of title of registered land is for the purpose
of binding purchasers of such registered land. Thus, we
ruled in the case of Bel Air Village Association,
Inc. v. Dionisio (174 SCRA 589 [1989]), citing Tanchoco
v. Aquino (154 SCRA 1 [1987]), and Constantino
v. Espiritu (45 SCRA 557 [1972]) that purchasers of a
registered land are bound by the annotations found at
the back of the certificate of title covering the subject
parcel of land. In effect, the annotation of the right to
repurchase found at the back of the certificate of title
over the subject parcel of land of the private
respondents only served as notice of the existence of
such unilateral promise of the petitioners to resell the
same to the private respondents. This, however, can not
be equated with acceptance of such right to repurchase
by the private respondent.
Neither can the signature of the petitioners in the
document called "right to repurchase" signify
acceptance of the right to repurchase. The respondents
did not sign the offer. Acceptance should be made by
the promisee, in this case, the private respondents and
not the promisors, the petitioners herein. It would be
absurd to require the promisor of an option to buy to
accept his own offer instead of the promisee to whom
the option to buy is given.
Furthermore, the actions of the private respondents ––
(a) filing a complaint to compel re-sale and their
demands for resale prior to filing of the complaint
cannot be considered acceptance. As stated in Vda. de
Zulueta v. Octaviano (121 SCRA 314 [1983]):
And even granting, arguendo that the sale was a pacto
de retro sale, the evidence shows that Olimpia, through
her lawyer, opted to repurchase the land only on 16
February 1962, approximately two years beyond the
stipulated period, that is not later than May, 1960.
If Olimpia could not locate Aurelio, as she contends, and
based on her allegation that the contract between her
was one of sale with right to repurchase, neither,
however, did she tender the redemption price to private
respondent Isauro, but merely wrote him letters
expressing her readiness to repurchase the property.
It is clear that the mere sending of letters by the vendor
expressing his desire to repurchase the property without
accompanying tender of the redemption price fell short
of the requirements of law. (Lee v. Court of Appeals, 68
SCRA 197 [1972])
Neither did petitioner make a judicial consignation of
the repurchase price within the agreed period.
In a contract of sale with a right of repurchase, the
redemptioner who may offer to make the repurchase on
the option date of redemption should deposit the full
amount in court . . . (Rumbaoa v. Arzaga, 84 Phil. 812
[1949])
To effectively exercise the right to repurchase the
vendor a retro must make an actual and simultaneous
tender of payment or consignation. (Catangcatang v.
Legayada, 84 SCRA 51 [1978])
The private respondents' ineffectual acceptance of the
option to buy validated the petitioner's refusal to sell
the parcel which can be considered as a withdrawal of
the option to buy.
We agree with the petitioners that the case of Vda. de
Zulueta v. Octaviano, (supra) is in point.
Stripped of non-essentials the facts of the Zulueta case
are as follows: On November 25, 1952 (Emphasis
supplied) Olimpia Fernandez Vda. de Zulueta, the
registered owner of a 5.5 hectare riceland sold the lot to
private respondent Aurelio B. Octaviano for P8,600.00
subject to certain terms and conditions. The contract
was an absolute and definite sale. On the same day,
November 25, 1952, (Emphasis supplied) the vendee,
Aurelio signed another document giving the vendor
Zulueta the "option to repurchase" the property at
anytime after May 1958 but not later than May 1960.
When however, Zulueta tried to exercise her "option to
buy" the property, Aurelio resisted the same prompting
Zulueta to commence suit for recovery of ownership and
possession of the property with the then Court of First
Instance of Iloilo.
The trial court ruled in favor of Zulueta. Upon appeal,
however, the Court of Appeals reversed the trial court's
decision.
We affirmed the appellate court's decision and ruled:
The nature of the transaction between Olimpia and
Aurelio, from the context of Exhibit "E" is not a sale with
right to repurchase. Conventional redemption takes
place "when the vendor reserves the right to repurchase
the thing sold, with the obligation to comply with the
provisions of Article 1616 and other stipulations which
may have been agreed upon. (Article 1601, Civil Code).
In this case, there was no reservation made by the
vendor, Olimpia, in the document Exhibit "E" the "option
to repurchase" was contained in a subsequent
document and was made by the vendee, Aurelio. Thus, it
was more of an option to buy or a mere promise on the
part of the vendee, Aurelio, to resell the property to the
vendor, Olimpia. (10 Manresa, p. 311 cited in Padilla's
Civil Code Annotated, Vol. V, 1974 ed., p. 467) As held in
Villarica v. Court of Appeals (26 SCRA 189 [1968]):
The right of repurchase is not a right granted the
vendor by the vendee in a subsequent
instrument, but is a right reserved by the vendor
in the same instrument of sale as one of the
stipulations of the contract. Once the instrument
of absolute sale is executed, the vendor can no
longer reserve the right to repurchase, and any
 right thereafter granted the vendor by the
vendee in a separate instrument cannot be a
right of repurchase but some other right like the
option to buy in the instant case. . . (Emphasis
supplied)
The appellate court rejected the application of the
Zulueta case by stating:
. . . [A]s found by the trial court from which we quote
with approval below, the said cases involve the lapse of
several days for the execution of separate instruments
after the execution of the deed of sale, while the instant
case involves the execution of an instrument, separate
as it is, but executed on the same day, and notarized by
the same notary public, to wit:
A close examination of Exh. "E" reveals that although it
is a separate document in itself, it is far different from
the document which was pronounced as an option by
the Supreme Court in the Villarica case. The option in
the Villarica case was executed several days after the
execution of the deed of sale. In the present case, Exh.
"E" was executed and ratified by the same notary public
and the Deed of Sale of Lot No. 1860 by the plaintiffs to
the defendants were notarized by the same notary
public and entered in the same page of the same
notarial register . . .
The latter case (Vda. de Zulueta v. Octaviano, supra),
likewise involved the execution of the separate
document after an intervention of several days and the
question of laches was decided therein, which is not
present in the instant case. That distinction is therefore
crucial and We are of the opinion that the appellee's
right to repurchase has been adequately provided for
and reserved in conformity with Article 1601 of the Civil
Code, which states:
Conventional redemption shall take place when the
vendor reserves the right to repurchase the thing sold,
with the obligation to comply with the provision of
Article 1616 and other stipulations which may have
been agreed upon. (Rollo, pp. 46-47)
Obviously, the appellate court's findings are not
reflected in the cited decision. As in the instant case, the
option to repurchase involved in the Zulueta case was
executed in a separate document but on the same
date that the deed of definite sale was executed.
While it is true that this Court in the Zulueta case found
Zulueta guilty of laches, this, however, was not the
primary reason why this Court disallowed the
redemption of the property by Zulueta. It is clear from
the decision that the ruling in the Zulueta case was
based mainly on the finding that the transaction
between Zulueta and Octaviano was not a sale with right
to repurchase and that the "option to repurchase was
but an option to buy or a mere promise on the part of
Octaviano to resell the property to Zulueta.
In the instant case, since the transaction between the
petitioners and private respondents was not a sale with
right to repurchase, the private respondents cannot
avail of Article 1601 of the Civil Code which provides for
conventional redemption.
WHEREFORE, the petition is GRANTED. The questioned
decision and resolution of the Court of Appeals are
hereby REVERSED and SET ASIDE. The complaint in Civil
Case No. 839 of the then Court of First Instance of
Negros Occidental 12th Judicial District Branch 6 is
DISMISSED. No costs.
SO ORDERED.
G.R. No. 103338 January 4, 1994
FEDERICO SERRA, petitioner,
vs.
THE HON. COURT OF APPEALS AND RIZAL
COMMERCIAL BANKING CORPORATION, respondents.
Andres R. Amante, Jr. for petitioner.
R.C. Domingo, Jr. & Associates for private respondent.
NOCON, J.:
A promise to buy and sell a determinate thing for a price
certain is reciprocally demandable. An accepted
unilateral promise to buy and sell a determinate thing
for a price certain is binding upon the promisor if the
promise is supported by a consideration distinct from
the price. (Article 1479, New Civil Code) The first is the
mutual promise and each has the right to demand from
the other the fulfillment of the obligation. While the
second is merely an offer of one to another, which if
accepted, would create an obligation to the offeror to
make good his promise, provided the acceptance is
supported by a consideration distinct from the price.
Disputed in the present case is the efficacy of a
"Contract of Lease with Option to Buy", entered into
between petitioner Federico Serra and private
respondent Rizal Commercial Banking Corporation.
(RCBC).
Petitioner is the owner of a 374 square meter parcel of
land located at Quezon St., Masbate, Masbate.
Sometime in 1975, respondent bank, in its desire to put
up a branch in Masbate, Masbate, negotiated with
petitioner for the purchase of the then unregistered
property. On May 20, 1975, a contract of LEASE WITH
OPTION TO BUY was instead forged by the parties, 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. For this purpose, the LESSOR
undertakes, within such ten-year period, to
register said parcel of land under the TORRENS
SYSTEM and all expenses appurtenant thereto
shall be for his sole account.
If, for any reason, said parcel of land is not
registered under the TORRENS SYSTEM within
the aforementioned ten-year period, 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.
The LESSEE is hereby appointed attorney-in-fact
for the LESSOR to register said parcel of land
under the TORRENS SYSTEM in case the LESSOR,
for any reason, fails to comply with his obligation
to effect said registration within reasonable time
after the signing of this Agreement, and all
expenses appurtenant to such registration shall
be charged by the LESSEE against the rentals due
to the LESSOR.
2. During the period of the lease, the LESSEE
covenants to pay the LESSOR, at the latter's
residence, a monthly rental of SEVEN HUNDRED
PESOS (P700.00), Philippine Currency, payable in
advance on or before the fifth (5th) day of every
calendar month, provided that the rentals for the
first four (4) months shall be paid by the LESSEE
in advance upon the signing of this Contract.
3. The 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 mentioned
in paragraph (1) above in case the parcel of land
is registered under the TORRENS SYSTEM within
the ten-year period mentioned therein, said
building and/or improvements, shall become the
property of the LESSOR after the expiration of
the 25-year lease period without the right of
reimbursement on the part of the LESSEE. The
authority herein granted does not, however,
extend to the making or allowing any unlawful,
improper or offensive used of the leased
premises, or any use thereof, other than banking
and office purposes. The maintenance and
upkeep of such building, structure and
improvements shall likewise be for the sole
account of the LESSEE. 1
The foregoing agreement was subscribed before Notary
Public Romeo F. Natividad.
Pursuant to said contract, a building and other
improvements were constructed on the land which
housed the branch office of RCBC in Masbate, Masbate.
Within three years from the signing of the contract,
petitioner complied with his part of the agreement by
having the property registered and
placed under the TORRENS SYSTEM, for which Original
Certificate of Title No. 0-232 was issued by the Register
of Deeds of the Province of Masbate.
Petitioner alleges that as soon as he had the property
registered, he kept on pursuing the manager of the
branch to effect the sale of the lot as per their
agreement. It was not until September 4, 1984,
however, when the respondent bank decided to
exercise its option and informed petitioner, through a
letter, 2 of its intention to buy the property at the
agreed price of not greater than P210.00 per square
meter or a total of P78,430.00. But much to the surprise
of the respondent, petitioner replied that he is no longer
selling the property. 3
Hence, on March 14, 1985, a complaint for specific
performance and damages were filed by respondent
against petitioner. In the complaint, respondent alleged
that during the negotiations it made clear to petitioner
that it intends to stay permanently on property once its
branch office is opened unless the exigencies of the
business requires otherwise. Aside from its prayer for
specific performance, it likewise asked for an award of
P50,000.00 for attorney's fees P100,000.00 as
exemplary damages and the cost of the suit. 4
A special and affirmative defenses, petitioner
contended:
1. That the contract having been prepared and drawn by
RCBC, it took undue advantage on him when it set in
lopsided terms.
2. That the option was not supported by any
consideration distinct from the price and hence not
binding upon him.
3. That as 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. That 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
and as counterclaim petitioner alleged that:
1. The rental of P700.00 has become unrealistic and
unreasonable, that justice and equity will require its
adjustment.
2. By the institution of the complaint he suffered moral
damages which may be assessed at P100,000.00 and
award of attorney's fee of P25,000.00 and exemplary
damages at P100,000.00. 6
Initially, after trial on the merits, the court dismissed the
complaint. Although it 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. The prayer for readjustment of
rental was denied, as well as that for moral and
exemplary damages. 7
Nevertheless, upon motion for reconsideration of
respondent, the court in the order of January 9, 1989,
reversed itself, the dispositive portion reads:
WHEREFORE, the Court reconsiders its decision dated
June 6, 1988, and hereby renders judgment as follows:
1. The defendant is hereby ordered to execute and
deliver the proper deed of sale in favor of plaintiff
selling, transferring and
conveying the property covered by and described in the
Original Certificate of Title 0-232 of the Registry of
Deeds of Masbate for the sum of Seventy Eight
Thousand Five Hundred Forty Pesos (P78,540,00),
Philippine Currency;
2. Defendant is ordered to pay plaintiff the sum of Five
Thousand (P5,000.00) Pesos as attorney's fees;
3. The counter claim of defendant is hereby dismissed;
and
4. Defendants shall pay the costs of suit. 8
In a decision promulgated on September 19, 1991, 9 the
Court of Appeals affirmed the findings of the trial court
that:
1. The contract is valid and that the parties perfectly
understood the contents thereof;
2. The 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.
Assailing the judgment of the appellate court, petitioner
would like us to consider mainly the following:
1. The disputed contract is a contract of adhesion.
2. There was no consideration to support the option,
distinct from the price, hence the option cannot be
exercised.
3. Respondent court gravely abused its discretion in not
granting currency adjustment on the already eroded
value of the stipulated rentals for twenty-five years.
The petition is devoid of merit.
There is no dispute that the contract is valid and existing
between the parties, as found by both the trial court
and the appellate court. Neither do we find the terms of
the contract unfairly lopsided to have it ignored.
A contract of adhesion is one wherein a party, usually a
corporation, prepares the stipulations in the contract,
while the other party merely affixes his signature or his
"adhesion" thereto. These types of 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. 10
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. He is amply equipped to drive a hard bargain
if he would be so minded to.
Petitioner contends that the doctrines laid down in the
cases of Atkins Kroll v. Cua Hian Tek, 11 Sanchez
v. Rigos, 12 and Vda. de Quirino v. Palarca 13 were
misapplied in the present case, because 1) the option
given to the respondent bank was not supported by a
consideration distinct from the price; and 2) that the
stipulated price of "not greater than P210.00 per square
meter" is not certain or definite.
Article 1324 of the Civil Code provides that when an
offeror has allowed the offeree a certain period to
accept, the offer maybe withdrawn at anytime before
acceptance by communicating such withdrawal, except
when the option is founded upon consideration, as
something paid or promised. On the other hand, Article
1479 of the Code provides that an accepted unilateral
promise to buy and sell a determinate thing for a price
certain is binding upon the promisor if the promise
is supported by a consideration distinct from the price.
In a unilateral promise to sell, where the debtor fails to
withdraw the promise before the acceptance by the
creditor, the transaction becomes a bilateral contract to
sell and to buy, because upon acceptance by the
creditor of the offer to sell by the debtor, there is
already a meeting of the minds of the parties as to the
thing which is determinate and the price which is
certain. 14 In which case, the parties may then
reciprocally demand performance.
Jurisprudence has taught us that an optional contract is
a privilege existing only in one party — the buyer. For a
separate consideration paid, he is given the right to
decide to purchase or not, a certain merchandise or
property, at any time within the agreed period, at a
fixed price. This being his prerogative, he may not be
compelled to exercise the option to buy before the time
expires. 15
On the other hand, what may be regarded as a
consideration separate from the price is discussed in the
case ofVda. de Quirino v. Palarca 16 wherein the facts
are almost on all fours with the case at bar. The said
case also involved a lease contract with option to buy
where we had occasion to say that "the consideration
for the lessor's obligation to sell the leased premises to
the lessee, should he choose to exercise his option to
purchase the same, is the obligation of the lessee to sell
to the lessor the building and/or improvements
constructed and/or made by the former, if he fails to
exercise his option to buy leased premises." 17
In the present case, the consideration is even more
onerous on the part of the lessee since it entails
transferring of the building and/or improvements on the
property to petitioner, should respondent bank fail to
exercise its option within the period stipulated. 18
The bugging question then is whether the price "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. 20
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. This was confirmed by
petitioner himself in his testimony, as follows:
Q. Will you please tell this Court what was the offer?
A. It was an offer to buy the property that I have in
Quezon City (sic).
Q. And did they give you a specific amount?
xxx xxx xxx
A. Well, there was an offer to buy the property at P210
per square meters (sic).
Q. And that was in what year?
A . 1975, sir.
Q. And did you accept the offer?
A. Yes, sir. 21
Moreover, by his subsequent acts of having the land
titled under the Torrens System, and in pursuing the
bank manager to effect the sale immediately, means
that he understood perfectly the terms of the contract.
He even had the same property mortgaged to the
respondent bank sometime in 1979, without the
slightest hint of wanting to abandon his offer to sell the
property at the agreed price of P210 per square
meter. 22
Finally, we agree with the courts a quo that 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. 23
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.
WHEREFORE, this petition is hereby DISMISSED, and the
decision of the appellate court is hereby AFFIRMED.
SO ORDERED.
G.R. No. 168325 December 8, 2010
ROBERTO D. TUAZON, Petitioner,
vs.
LOURDES Q. DEL ROSARIO-SUAREZ, CATALINA R.
SUAREZ-DE LEON, WILFREDO DE LEON, MIGUEL LUIS S.
DE LEON, ROMMEL LEE S. DE LEON, and GUILLERMA L.
SANDICO-SILVA, as attorney-in-fact of the defendants,
except Lourdes Q. Del Rosario-Suarez, Respondents.
DECISION
DEL CASTILLO, J.:
In a situation where the lessor makes an offer to sell to
the lessee a certain property at a fixed price within a
certain period, and the lessee fails to accept the offer or
to purchase on time, then the lessee loses his right to
buy the property and the owner can validly offer it to
another.
This Petition for Review on Certiorari1 assails the
Decision2 dated May 30, 2005 of the Court of Appeals
(CA) in CA-G.R. CV No. 78870, which affirmed the
Decision3 dated November 18, 2002 of the Regional Trial
Court (RTC), Branch 101, Quezon City in Civil Case No. Q-
00-42338.
Factual Antecedents
Respondent Lourdes Q. Del Rosario-Suarez (Lourdes)
was the owner of a parcel of land, containing more or
less an area of 1,211 square meters located along
Tandang Sora Street, Barangay Old Balara, Quezon City
and previously covered by Transfer Certificate of Title
(TCT) No. RT-561184 issued by the Registry of Deeds of
Quezon City.
On June 24, 1994, petitioner Roberto D. Tuazon
(Roberto) and Lourdes executed a Contract of
Lease5 over the abovementioned parcel of land for a
period of three years. The lease commenced in March
1994 and ended in February 1997. During the effectivity
of the lease, Lourdes sent a letter6 dated January 2,
1995 to Roberto where she offered to sell to the latter
subject parcel of land. She pegged the price
at P37,541,000.00 and gave him two years from January
2, 1995 to decide on the said offer.
On June 19, 1997, or more than four months after the
expiration of the Contract of Lease, Lourdes sold subject
parcel of land to her only child, Catalina Suarez-De Leon,
her son-in-law Wilfredo De Leon, and her two
grandsons, Miguel Luis S. De Leon and Rommel S. De
Leon (the De Leons), for a total consideration of
onlyP2,750,000.00 as evidenced by a Deed of Absolute
Sale7 executed by the parties. TCT No. 1779868 was then
issued by the Registry of Deeds of Quezon City in the
name of the De Leons.
The new owners through their attorney-in-fact,
Guillerma S. Silva, notified Roberto to vacate the
premises. Roberto refused hence, the De Leons filed a
complaint for Unlawful Detainer before the
Metropolitan Trial Court (MeTC) of Quezon City against
him. On August 30, 2000, the MeTC rendered a
Decision9 ordering Roberto to vacate the property for
non-payment of rentals and expiration of the contract.
Ruling of the Regional Trial Court
On November 8, 2000, while the ejectment case was on
appeal, Roberto filed with the RTC of Quezon City a
Complaint10 for Annulment of Deed of Absolute Sale,
Reconveyance, Damages and Application for Preliminary
Injunction against Lourdes and the De Leons. On
November 13, 2000, Roberto filed a Notice of Lis
Pendens11with the Registry of Deeds of Quezon City.
On January 8, 2001, respondents filed An Answer with
Counterclaim12 praying that the Complaint be dismissed
for lack of cause of action. They claimed that the filing of
such case was a mere leverage of Roberto against them
because of the favorable Decision issued by the MeTC in
the ejectment case.
On September 17, 2001, the RTC issued an
Order13 declaring Lourdes and the De Leons in default
for their failure to appear before the court for the
second time despite notice. Upon a Motion for
Reconsideration,14 the trial court in an Order15 dated
October 19, 2001 set aside its Order of default.
After trial, the court a quo rendered a Decision declaring
the Deed of Absolute Sale made by Lourdes in favor of
the De Leons as valid and binding. The offer made by
Lourdes to Roberto did not ripen into a contract to sell
because the price offered by the former was not
acceptable to the latter. The offer made by Lourdes is no
longer binding and effective at the time she decided to
sell the subject lot to the De Leons because the same
was not accepted by Roberto. Thus, in a Decision dated
November 18, 2002, the trial court dismissed the
complaint. Its dispositive portion reads:
WHEREFORE, premises considered, judgment is hereby
rendered dismissing the above-entitled Complaint for
lack of merit, and ordering the Plaintiff to pay the
Defendants, the following:
1. the amount of P30,000.00 as moral damages;
2. the amount of P30,000.00 as exemplary
damages;
3. the amount of P30,000.00 as attorney’s fees;
and
4. cost of the litigation.
SO ORDERED.16
Ruling of the Court of Appeals
On May 30, 2005, the CA issued its Decision dismissing
Roberto’s appeal and affirming the Decision of the RTC.
Hence, this Petition for Review on Certiorari filed by
Roberto advancing the following arguments:
I.
The Trial Court and the Court of Appeals had decided
that the "Right of First Refusal" exists only within the
parameters of an "Option to Buy", and did not exist
when the property was sold later to a third person,
under favorable terms and conditions which the former
buyer can meet.
II.
What is the status or sanctions of an appellee in the
Court of Appeals who has not filed or failed to file an
appellee’s brief?17
Petitioner’s Arguments
Roberto claims that Lourdes violated his right to buy
subject property under
the principle of "right of first refusal" by not giving him
"notice" and the opportunity to buy the property under
the same terms and conditions or specifically based on
the much lower price paid by the De Leons.
Roberto further contends that he is enforcing his "right
of first refusal" based on Equatorial Realty Development,
Inc. v. Mayfair Theater, Inc.18 which is the leading case
on the "right of first refusal."
Respondents’ Arguments
On the other hand, respondents posit that this case is
not covered by the principle of "right of first refusal" but
an unaccepted unilateral promise to sell or, at best, a
contract of option which was not perfected. The letter
of Lourdes to Roberto clearly embodies an option
contract as it grants the latter only two years to exercise
the option to buy the subject property at a price certain
of P37,541,000.00. As an option contract, the said letter
would have been binding upon Lourdes without need of
any consideration, had Roberto accepted the offer. But
in this case there was no acceptance made neither was
there a distinct consideration for the option contract.
Our Ruling
The petition is without merit.
This case involves an option contract and not a contract
of a right of first refusal
In Beaumont v. Prieto,19 the nature of an option contract
is explained thus:
In his Law Dictionary, edition of 1897, Bouvier defines an
option as a contract, in the following language:
‘A contract by virtue of which A, in consideration of the
payment of a certain sum to B, acquires the privilege of
buying from, or selling to, B certain securities or
properties within a limited time at a specified price.
(Story vs. Salamon, 71 N. Y., 420.)’
From Vol. 6, page 5001, of the work "Words and
Phrases," citing the case of Ide vs. Leiser (24 Pac., 695;
10 Mont., 5; 24 Am. St. Rep., 17) the following quotation
has been taken:
‘An agreement in writing to give a person the ‘option’ to
purchase lands within a given time at a named price is
neither a sale nor an agreement to sell. It is simply a
contract by which the owner of property agrees with
another person that he shall have the right to buy his
property at a fixed price within a certain time. He does
not sell his land; he does not then agree to sell it; but he
does sell something; that is, the right or privilege to buy
at the election or option of the other party. The second
party gets in praesenti, not lands, nor an agreement that
he shall have lands, but he does get something of value;
that is, the right to call for and receive lands if he elects.
The owner parts with his right to sell his lands, except to
the second party, for a limited period. The second party
receives this right, or rather, from his point of view, he
receives the right to elect to buy.
But the two definitions above cited refer to the contract
of option, or, what amounts to the same thing, to the
case where there was cause or consideration for the
obligation x x x. (Emphasis supplied.)
On the other hand, in Ang Yu Asuncion v. Court of
Appeals,20 an elucidation on the "right of first refusal"
was made thus:
In the law on sales, the so-called ‘right of first refusal’ is
an innovative juridical relation. Needless to point out, it
cannot be deemed a perfected contract of sale under
Article 1458 of the Civil Code. Neither can the right of
first refusal, understood in its normal concept, per se be
brought within the purview of an option under the
second paragraph of Article 1479, aforequoted, or
possibly of an offer under Article 1319 of the same
Code. An option or an offer would require, among other
things, a clear certainty on both the object and the cause
or consideration of the envisioned contract. In a right of
first refusal, while the object might be made
determinate, the exercise of the right, however, would
be dependent not only on the grantor's eventual
intention to enter into a binding juridical relation with
another but also on terms, including the price, that
obviously are yet to be later firmed up. Prior thereto, it
can at best be so described as merely belonging to a
class of preparatory juridical relations governed not by
contracts (since the essential elements to establish
the vinculum juris would still be indefinite and
inconclusive) but by, among other laws of general
application, the pertinent scattered provisions of the
Civil Code on human conduct.
Even on the premise that such right of first refusal has
been decreed under a final judgment, like here, its
breach cannot justify correspondingly an issuance of a
writ of execution under a judgment that merely
recognizes its existence, nor would it sanction an action
for specific performance without thereby negating the
indispensable element of consensuality in the perfection
of contracts. It is not to say, however, that the right of
first refusal would be inconsequential for, such as
already intimated above, an unjustified disregard
thereof, given, for instance, the circumstances
expressed in Article 19 of the Civil Code, can warrant a
recovery for damages. (Emphasis supplied.)
From the foregoing, it is thus clear that an option
contract is entirely different and distinct from a right of
first refusal in that in the former, the option granted to
the offeree is for a fixed period and at a determined
price. Lacking these two essential requisites, what is
involved is only a right of first refusal.
In this case, the controversy is whether the letter of
Lourdes to Roberto dated January 2, 1995 involved an
option contract or a contract of a right of first refusal. In
its entirety, the said letter-offer reads:
206 Valdes Street
Josefa Subd. Balibago
Angeles City 2009
January 2, 1995
Tuazon Const. Co.
986 Tandang Sora Quezon City
Dear Mr. Tuazon,
I received with great joy and happiness the big box of
sweet grapes and ham, fit for a king’s party. Thanks very
much.
I am getting very old (79 going 80 yrs. old) and wish to
live in the U.S.A. with my only family. I need money to
buy a house and lot and a farm with a little cash to start.
I am offering you to buy my 1211 square
meter at P37,541,000.00 you can pay me in dollars in
the name of my daughter. I never offered it to anyone.
Please shoulder the expenses for the transfer. I wish the
Lord God will help you buy my lot easily and you will be
very lucky forever in this place. You have all the time to
decide when you can, but not for 2 years or more.
I wish you long life, happiness, health, wealth and great
fortune always!
I hope the Lord God will help you be the recipient of
multi-billion projects aid from other countries.
Thank you,
Lourdes Q. del Rosario vda de Suarez
It is clear that the above letter embodies an option
contract as it grants Roberto a fixed period of only two
years to buy the subject property at a price certain
of P37,541,000.00. It being an option contract, the rules
applicable are found in Articles 1324 and 1479 of the
Civil Code which provide:
Art. 1324. When the offerer has allowed the offeree a
certain period to accept, the offer may be withdrawn at
any time before acceptance by communicating such
withdrawal, except when the option is founded upon a
consideration, as something paid or promised.
Art. 1479. A promise to buy and sell a determinate thing
for a price certain is reciprocally demandable.
An accepted unilateral promise to buy or to sell a
determinate thing for a price certain is binding upon the
promissor if the promise is supported by a consideration
distinct from the price.
It is clear from the provision of Article 1324 that there is
a great difference between the effect of an option which
is without a consideration from one which is founded
upon a consideration. If the option is without any
consideration, the offeror may withdraw his offer by
communicating such withdrawal to the offeree at
anytime before acceptance; if it is founded upon a
consideration, the offeror cannot withdraw his offer
before the lapse of the period agreed upon.
The second paragraph of Article 1479 declares that "an
accepted unilateral promise to buy or to sell a
determinate thing for a price certain is binding upon the
promissor if the promise is supported by a consideration
distinct from the price." Sanchez v. Rigos21 provided an
interpretation of the said second paragraph of Article
1479 in relation to Article 1324. Thus:
There is no question that under Article 1479 of the new
Civil Code "an option to sell," or "a promise to buy or to
sell," as used in said article, to be valid must be
"supported by a consideration distinct from the price."
This is clearly inferred from the context of said article
that a unilateral promise to buy or to sell, even if
accepted, is only binding if supported by consideration.
In other words, "an accepted unilateral promise can only
have a binding effect if supported by a consideration,
which means that the option can still be
withdrawn, even if accepted, if the same is not
supported by any consideration. Hence, it is not
disputed that the option is without consideration. It can
therefore be withdrawn notwithstanding the acceptance
made of it by appellee.
It is true that under Article 1324 of the new Civil Code,
the general rule regarding offer and acceptance is that,
when the offerer gives to the offeree a certain period to
accept, "the offer may be withdrawn at any time before
acceptance" except when the option is founded upon
consideration, but this general rule must be interpreted
asmodified by the provision of Article 1479 above
referred to, which applies to "a promise to buy and
sell"specifically. As already stated, this rule requires that
a promise to sell to be valid must be supported by a
consideration distinct from the price.
In Diamante v. Court of Appeals,22 this Court further
declared that:
A unilateral promise to buy or sell is a mere offer, which
is not converted into a contract except at the moment it
is accepted. Acceptance is the act that gives life to a
juridical obligation, because, before the promise is
accepted, the promissor may withdraw it at any time.
Upon acceptance, however, a bilateral contract to sell
and to buy is created, and the offeree ipso
facto assumes the obligations of a purchaser; the
offeror, on the other hand, would be liable for damages
if he fails to deliver the thing he had offered for sale.
xxxx
Even if the promise was accepted, private respondent
was not bound thereby in the absence of a distinct
consideration. (Emphasis ours.)
In this case, it is undisputed that Roberto did not accept
the terms stated in the letter of Lourdes as he
negotiated for a much lower price. Roberto’s act of
negotiating for a much lower price was a counter-offer
and is therefore not an acceptance of the offer of
Lourdes. Article 1319 of the Civil Code provides:
Consent is manifested by the meeting of the offer and
the acceptance upon the thing and the cause which are
to constitute the contract. The offer must be certain and
the acceptance absolute. A qualified
acceptanceconstitutes a counter-offer. (Emphasis
supplied.)
The counter-offer of Roberto for a much lower price was
not accepted by Lourdes. There is therefore no contract
that was perfected between them with regard to the
sale of subject property. Roberto, thus, does not have
any right to demand that the property be sold to him at
the price for which it was sold to the De Leons neither
does he have the right to demand that said sale to the
De Leons be annulled.
Equatorial Realty Development, Inc. v. Mayfair Theater,
Inc. is not applicable here
It is the position of Roberto that the facts of this case
and that of Equatorial are similar in nearly all aspects.
Roberto is a lessee of the property like Mayfair Theater
in Equatorial. There was an offer made to Roberto by
Lourdes during the effectivity of the contract of lease
which was also the case in Equatorial. There were
negotiations as to the price which did not bear fruit
because Lourdes sold the property to the De Leons
which was also the case in Equatorial wherein Carmelo
and Bauermann sold the property to Equatorial. The
existence of the lease of the property is known to the De
Leons as they are related to Lourdes while in Equatorial,
the lawyers of Equatorial studied the lease contract of
Mayfair over the property. The property in this case was
sold by Lourdes to the De Leons at a much lower price
which is also the case in Equatorial where Carmelo and
Bauerman sold to Equatorial at a lesser price. It is
Roberto’s conclusion that as in the case
of Equatorial, there was a violation of his right of first
refusal and hence annulment or rescission of the Deed
of Absolute Sale is the proper remedy.
Roberto’s reliance in Equatorial is misplaced. Despite his
claims, the facts in Equatorial radically differ from the
facts of this case. Roberto overlooked the fact that
in Equatorial, there was an express provision in the
Contract of Lease that –
(i)f the LESSOR should desire to sell the leased
properties, the LESSEE shall be given 30-days exclusive
option to purchase the same.
There is no such similar provision in the Contract of
Lease between Roberto and Lourdes. What is involved
here is a separate and distinct offer made by Lourdes
through a letter dated January 2, 1995 wherein she is
selling the leased property to Roberto for a definite
price and which gave the latter a definite period for
acceptance. Roberto was not given a right of first
refusal. The letter-offer of Lourdes did not form part of
the Lease Contract because it was made more than six
months after the commencement of the lease.
It is also very clear that in Equatorial, the property was
sold within the lease period. In this case, the subject
property was sold not only after the expiration of the
period provided in the letter-offer of Lourdes but also
after the effectivity of the Contract of Lease.
Moreover, even if the offer of Lourdes was accepted by
Roberto, still the former is not bound thereby because
of the absence of a consideration distinct and separate
from the price. The argument of Roberto that the
separate consideration was the liberality on the part of
Lourdes cannot stand. A perusal of the letter-offer of
Lourdes would show that what drove her to offer the
property to Roberto was her immediate need for funds
as she was already very old. Offering the property to
Roberto was not an act of liberality on the part of
Lourdes but was a simple matter of convenience and
practicality as he was the one most likely to buy the
property at that time as he was then leasing the same.
All told, the facts of the case, as found by the RTC and
the CA, do not support Roberto’s claims that the letter
of Lourdes gave him a right of first refusal which is
similar to the one given to Mayfair Theater in the case
ofEquatorial. Therefore, there is no justification to annul
the deed of sale validly entered into by Lourdes with the
De Leons.
What is the effect of the failure of Lourdes to file her
appellee’s brief at the CA?
Lastly, Roberto argues that Lourdes should be
sanctioned for her failure to file her appellee’s brief
before the CA.
Certainly, the appellee’s failure to file her brief would
not mean that the case would be automatically decided
against her. Under the circumstances, the prudent
action on the part of the CA would be to deem Lourdes
to have waived her right to file her appellee’s brief. De
Leon v. Court of Appeals,23 is instructive when this Court
decreed:
On the second issue, we hold that the Court of Appeals
did not commit grave abuse of discretion in considering
the appeal submitted for decision. The proper remedy in
case of denial of the motion to dismiss is to file the
appellee’s brief and proceed with the appeal. Instead,
petitioner opted to file a motion for reconsideration
which, unfortunately, was pro forma. All the grounds
raised therein have been discussed in the first resolution
of the respondent Court of Appeals. There is no new
ground raised that might warrant reversal of the
resolution. A cursory perusal of the motion would
readily show that it was a near verbatim repetition of
the grounds stated in the motion to dismiss; hence, the
filing of the motion for reconsideration did not suspend
the period for filing the appellee’s brief. Petitioner was
therefore properly deemed to have waived his right to
file appellee’s brief.(Emphasis supplied.)lawphi1
In the above cited case, De Leon was the plaintiff in a
Complaint for a sum of money in the RTC. He obtained a
favorable judgment and so defendant went to the CA.
The appeal of defendant-appellant was taken
cognizance of by the CA but De Leon filed a Motion to
Dismiss the Appeal with Motion to Suspend Period to
file Appellee’s Brief. The CA denied the Motion to
Dismiss. De Leon filed a Motion for Reconsideration
which actually did not suspend the period to file the
appellee’s brief. De Leon therefore failed to file his brief
within the period specified by the rules and hence he
was deemed by the CA to have waived his right to file
appellee’s brief.
The failure of the appellee to file his brief would not
result to the rendition of a decision favorable to the
appellant. The former is considered only to have waived
his right to file the Appellee’s Brief. The CA has the
jurisdiction to resolve the case based on the Appellant’s
Brief and the records of the case forwarded by the RTC.
The appeal is therefore considered submitted for
decision and the CA properly acted on it.
WHEREFORE, the instant petition for review
on certiorari is DENIED. The assailed Decision of the
Court of Appeals in CA-G.R. CV No. 78870, which
affirmed the Decision dated November 18, 2002 of the
Regional Trial Court, Branch 101, Quezon City in Civil
Case No. Q-00-42338 is AFFIRMED.
SO ORDERED.
G.R. No. L-28269 August 15, 1969
CONSUELO VDA. DE QUIRINO, petitioner,
vs.
JOSE PALARCA, respondent.
Rosendo J. Tansinsin for petitioner.
Jose Palarca in his own behalf.
CONCEPCION, C.J.:
Appeal by certiorari, taken by Consuelo Vda. de Quirino,
petitioner herein and defendant in the lower courts,
from a decision of the Court of Appeals affirming that of
the Court of First Instance of Manila, the dispositive part
of which reads:
FOR THE FOREGOING CONSIDERATIONS, the
Court hereby renders judgment ordering the
defendant within fifteen (15) days from the date
this judgment becomes final, to execute a deed
of conveyance in favor of the plaintiff Jose
Palarca, of age, Filipino, married to Querubina
Cristobal, over Lot 30, Block 84 of the Sulucan
Subdivision, covered by TCT 59442 of the Manila
Registry, with his postal address at 544 Corner
Quezon Blvd., Manila, and directing said
defendant to deliver the certificate of title, and
ordering the plaintiff to deliver to the defendant
at the time of receiving the aforesaid deed of
sale and title, the amount of P12,000 in cash.
Costs is charged against the defendant.
On October 4, 1947, said petitioner — hereinafter
referred to as the lessor — and respondent Jose Palarca
— hereinafter referred to as the lessee — entered into a
lease contract whereby the former leased to the latter a
parcel of land known as Lot 30 of block 84 of the Sulucan
Subdivision, located at Sampaloc, Manila, with an area
of about 150 square meters, and more particularly
described in TCT No. 59442 of the Office of the Register
of Deeds of Manila. In their written contract of lease it
was stipulated, inter alia, that the term thereof would
be ten (10) years, from November 1, 1947 to November
1, 1957; that the monthly rental would be P250, payable
in advance; that the lessee could demolish the lessor's
old building on the leased premises and construct
thereon any building and/or improvements suitable for
school purposes, which new building and/or
improvements shall belong to the lessee; that within
one (1) year after the expiration of the lease, the lessee
would have "the right and option to buy the leased
premises" for P12,000; that, should the lessee fail to
exercise this option, said (new) building and/or
improvements shall be evaluated by a committee
organized therefor, as set forth in the contract; that,
after such "valuation," the lessor shall "have the option
to buy" said "building and/or improvements within ...
one (1) year, after the expiration of the contract"; and
that, should neither of the parties exercise their
respective options, both "shall be free to look for a
buyer for his or her respective property."
By a letter, dated September 15, 1958, the lessee
informed the lessor that the former (lessee) was
exercising "his right to buy the leased property for the
agreed price of P12,000," and inquired "when" the latter
(lessor) would be "ready to execute the deed of sale," so
that the agreed price could be delivered to her. Soon
thereafter, before the expiration of the term of his
option, or on October 6, 1958, the lessee wrote a follow-
up letter to the lessor, advising her that the former had
in his "possession the amount of P12,000 with which to
purchase" the leased premises, and, asked her, once
more, "when" she would be ready to execute the
corresponding deed of sale, in order that he (lessee)
could pay said price. Through her counsel, the lessor
replied, however, on October 10, 1958, that she "cannot
accede" to the lessee's requests "because the ...
contract of October 4, 1947, has been novated by
another agreement, wherein the rent of P250 a month
was reduced to P100.00."
Thereupon, that same month, the lessee instituted the
present action to compel the lessor to comply with her
obligation to execute the corresponding deed of sale in
his (lessee's) favor, upon payment by him of said sum of
P12,000. The lessor filed her answer admitting some
allegations of the complaint and denying other
allegations thereof, as well as alleging, as special
defense, that the lease contract had been "modified" by
a subsequent agreement of the parties, which had been
observed and carried out by them, and that payment of
the stipulated price had not been properly tendered or
validly consigned. The lessor, likewise, set up a
counterclaim for damages, attorney's fees and expenses
of litigation. After appropriate proceedings, the Court of
First Instance rendered the decision adverted to above,
which was affirmed by the Court of Appeals. Hence, this
petition for review on certiorari, in which the lessor
maintains: (1) that the lessee's option to purchase the
leased premises was null and void for want of
consideration; (2) that the lessee should have been
sentenced to pay rentals, during the pendency of this
case; and (3) that the lessee should have been
sentenced, also, to pay damages, attorney's fees and the
costs of the suit.
The first contention is clearly without merit. To begin
with, it is based upon the premise that the option of the
lessee is devoid of consideration, which is false. Indeed,
in reciprocal contracts, like the one in question, the
obligation or promise of each party is the consideration
for that of the other. 1 In the language of Article 1350 of
our Civil Code, "(i)n onerous contracts the cause is
understood to be, for each contracting party, the
prestation or promise of a thing or service by the other
... ." As a consequence, "(t)he power to rescind
obligations is implied in reciprocal ones, in case one of
the obligors should not comply with what is incumbent
upon him." 2
In the case at bar, the consideration for the lessor's
obligation to sell the leased premises to the lessee,
should he choose to exercise his option to purchase the
same, is the obligation of the lessee to sell to the lessor
the building and/or improvements constructed and/or
made by the former, if he fails to exercise his option to
buy said premises. Then, again, the amount of the
rentals agreed upon in the contract of October 4, 1947
— which amount turned out to be so burdensome upon
the lessee, that the lessor agreed, five (5) years later, to
reduce it —1 as well as the building and/or
improvements contemplated to be constructed and/or
introduced by the lessee, were, undoubtedly, part of the
consideration for his option to purchase the leased
premises.
Then, again, the alleged lack of consideration therefor
was not set up as a defense or otherwise put in issue,
either in the trial court or in the Court of Appeals. The
appealed decisions of the Court of First Instance and the
Court of Appeals, and the records before us show that
the defenses mainly pressed in said courts were the
alleged cancellation of the lessee's option and his failure
to make a valid tender and consignation of the
stipulated price. The cancellation of the option was
sought to be deduced from a novation made in 1952,
when, upon the lessee's request, the lessor agreed to
reduce the monthly rental from P250 to P100. Neither
defense was, however, sustained by said courts, and, we
think, correctly.
Indeed, not being inconsistent with the lessee's option
to purchase the leased premises, said agreement to
reduce the rental did not necessarily cancel or
extinguish the option. Although the lessor would have
the Court believe that she consented to said reduction,
condition that the option be cancelled, this claim
had not been proven. What is more, it was refuted by
her letter to the lessee, Exhibit D, dated January 29,
1952, stating that "in view of the fact that you (lessee)
find it very difficult to pay the rental of P250, I am willing
to reduce it to P100 from January 1952, on the condition
that the remaining balance (of the rental) will be
settled." The cancellation of the option was not,
therefore, one of the conditions for the aforementioned
reduction of the rental.
Then, too, the consignation referred to in Article 1256 of
our Civil Code is inapplicable to the present case,
because said provision refers to consignation as one of
the means for the payment or discharge of a "debt,"
whereas the lessee was not indebted to the lessor for
the price of the leased premises. 3 The lessee merely
exercised a right of option and had no obligation to pay
said price until the execution of the deed of sale in his
favor, which the lessor refused to do.
Said want of consideration not having pleaded or
otherwise alleged as one of her defenses in either one of
the lower courts, the lessor may not set it up, for the
first time, in her present second appeal. 4
As regards the rentals during the pendency of this case,
suffice it to note that, had the lessor readily complied
with her obligation to execute the corresponding deed
of conveyance to the lessee, upon payment by him of
the agreed price of P12,000, which he tendered in
October, 1958, the premises in question would have
become his property on or before November 1, 1958,
and since then he would have had no obligation to pay
rentals. As a consequence, it is neither just nor fair to
impose such obligation upon him by reason of the
lessor's illegal breach of their contract. Otherwise, she
would be rewarded therefor and we would jeopardize
the sanctity of contractual obligations.
The last point raised by the lessor is a mere corollary to
those already disposed of. Hence, it needs no further
discussion.
WHEREFORE, the decision appealed from should be, as
it is hereby affirmed, with costs against the lessor,
petitioner-appellant Consuelo Vda. de Quirino.
G.R. No. 97332 October 10, 1991
SPOUSES JULIO D. VILLAMOR AND MARINA
VILLAMOR, petitioners,
vs.
THE HON. COURT OF APPEALS AND SPOUSES MACARIA
LABINGISA REYES AND ROBERTO REYES,respondents.
Tranquilino F. Meris for petitioners.
Agripino G. Morga for private respondents.
MEDIALDEA, J.:p
This is a petition for review on certiorari of the decision
of the Court of Appeals in CA-G.R. No. 24176 entitled,
"Spouses Julio Villamor and Marina Villamor, Plaintiffs-
Appellees, versus Spouses Macaria Labing-isa Reyes and
Roberto Reyes, Defendants-Appellants," which reversed
the decision of the Regional Trial Court (Branch 121) at
Caloocan City in Civil Case No. C-12942.
The facts of the case are as follows:
Macaria Labingisa Reyes was the owner of a 600-square
meter lot located at Baesa, Caloocan City, as evidenced
by Transfer Certificate of Title No. (18431) 18938, of the
Register of Deeds of Rizal.
In July 1971, Macaria sold a portion of 300 square
meters of the lot to the Spouses Julio and Marina and
Villamor for the total amount of P21,000.00. Earlier,
Macaria borrowed P2,000.00 from the spouses which
amount was deducted from the total purchase price of
the 300 square meter lot sold. The portion sold to the
Villamor spouses is now covered by TCT No. 39935 while
the remaining portion which is still in the name of
Macaria Labing-isa is covered by TCT No. 39934 (pars. 5
and 7, Complaint). On November 11, 1971, Macaria
executed a "Deed of Option" in favor of Villamor in
which the remaining 300 square meter portion (TCT No.
39934) of the lot would be sold to Villamor under the
conditions stated therein. The document reads:
DEED OF OPTION
This Deed of Option, entered into in the City of
Manila, Philippines, this 11th day of November,
1971, by and between Macaria Labing-isa, of age,
married to Roberto Reyes, likewise of age, and
both resideing on Reparo St., Baesa, Caloocan
City, on the one hand, and on the other hand the
spouses Julio Villamor and Marina V. Villamor,
also of age and residing at No. 552 Reparo St.,
corner Baesa Road, Baesa, Caloocan City.
WITNESSETH
That, I Macaria Labingisa, am the owner in fee
simple of a parcel of land with an area of 600
square meters, more or less, more particularly
described in TCT No. (18431) 18938 of the Office
of the Register of Deeds for the province of Rizal,
issued in may name, I having inherited the same
from my deceased parents, for which reason it is
my paraphernal property;
That I, with the conformity of my husband,
Roberto Reyes, have sold one-half thereof to the
aforesaid spouses Julio Villamor and Marina V.
Villamor at the price of P70.00 per sq. meter,
which was greatly higher than the actual
reasonable prevailing value of lands in that place
at the time, which portion, after segregation, is
now covered by TCT No. 39935 of the Register of
Deeds for the City of Caloocan, issued on August
17, 1971 in the name of the aforementioned
spouses vendees;
That the only reason why the Spouses-vendees
Julio Villamor and Marina V. Villamor, agreed to
buy the said one-half portion at the above-stated
price of about P70.00 per square meter, is
because I, and my husband Roberto Reyes, have
agreed to sell and convey to them the remaining
one-half portion still owned by me and now
covered by TCT No. 39935 of the Register of
Deeds for the City of Caloocan, whenever the
need of such sale arises, either on our part or on
the part of the spouses (Julio) Villamor and
Marina V. Villamor, at the same price of P70.00
per square meter, excluding whatever
improvement may be found the thereon;
That I am willing to have this contract to sell
inscribed on my aforesaid title as an
encumbrance upon the property covered
thereby, upon payment of the corresponding
fees; and
That we, Julio Villamor and Marina V. Villamor,
hereby agree to, and accept, the above
provisions of this Deed of Option.
IN WITNESS WHEREOF, this Deed of Option is
signed in the City of Manila, Philippines, by all
the persons concerned, this 11th day of
November, 1971.
JULIO VILLAMOR MACARIA LABINGISA
With My Conformity:
MARINA VILLAMOR ROBERTO REYES
Signed in the Presence Of:
MARIANO Z. SUNIGA
ROSALINDA S. EUGENIO
ACKNOWLEDGMENT
REPUBLIC OF THE PHILIPPINES)
CITY OF MANILA ) S.S.
At the City of Manila, on the 11th day of
November, 1971, personally appeared before me
Roberto Reyes, Macaria Labingisa, Julio Villamor
and Marina Ventura-Villamor, known to me as
the same persons who executed the foregoing
Deed of Option, which consists of two (2) pages
including the page whereon this
acknowledgement is written, and signed at the
left margin of the first page and at the bottom of
the instrument by the parties and their
witnesses, and sealed with my notarial seal, and
said parties acknowledged to me that the same is
their free act and deed. The Residence
Certificates of the parties were exhibited to me
as follows: Roberto Reyes, A-22494, issued at
Manila on Jan. 27, 1971, and B-502025, issued at
Makati, Rizal on Feb. 18, 1971; Macaria
Labingisa, A-3339130 and B-1266104, both
issued at Caloocan City on April 15, 1971, their
joint Tax Acct. Number being 3028-767-6; Julio
Villamor, A-804, issued at Manila on Jan. 14,
1971, and B-138, issued at Manila on March 1,
1971; and Marina Ventura-Villamor, A-803,
issued at Manila on Jan. 14, 1971, their joint Tax
Acct. Number being 608-202-6.
ARTEMIO M. MALUBAY
Notary Public
Until December 31, 1972
PTR No. 338203, Manila
January 15, 1971
Doc. No. 1526;
Page No. 24;
Book No. 38;
Series of 1971. (pp. 25-29, Rollo)
According to Macaria, when her husband, Roberto
Reyes, retired in 1984, they offered to repurchase the
lot sold by them to the Villamor spouses but Marina
Villamor refused and reminded them instead that the
Deed of Option in fact gave them the option to purchase
the remaining portion of the lot.
The Villamors, on the other hand, claimed that they had
expressed their desire to purchase the remaining 300
square meter portion of the lot but the Reyeses had
been ignoring them. Thus, on July 13, 1987, after
conciliation proceedings in the barangay level failed,
they filed a complaint for specific performance against
the Reyeses.
On July 26, 1989, judgment was rendered by the trial
court in favor of the Villamor spouses, the dispositive
portion of which states:
WHEREFORE, and (sic) in view of the foregoing,
judgment is hereby rendered in favor of the
plaintiffs and against the defendants ordering
the defendant MACARIA LABING-ISA REYES and
ROBERTO REYES, to sell unto the plaintiffs the
land covered by T.C.T No. 39934 of the Register
of Deeds of Caloocan City, to pay the plaintiffs
the sum of P3,000.00 as and for attorney's fees
and to pay the cost of suit.
The counterclaim is hereby DISMISSED, for LACK
OF MERIT.
SO ORDERED. (pp. 24-25, Rollo)
Not satisfied with the decision of the trial court, the
Reyes spouses appealed to the Court of Appeals on the
following assignment of errors:
1. HOLDING THAT THE DEED OF OPTION EXECUTED ON
NOVEMBER 11, 1971 BETWEEN THE PLAINTIFF-
APPELLEES AND DEFENDANT-APPELLANTS IS STILL VALID
AND BINDING DESPITE THE LAPSE OF MORE THAN
THIRTEEN (13) YEARS FROM THE EXECUTION OF THE
CONTRACT;
2. FAILING TO CONSIDER THAT THE DEED OF OPTION
CONTAINS OBSCURE WORDS AND STIPULATIONS WHICH
SHOULD BE RESOLVED AGAINST THE PLAINTIFF-
APPELLEES WHO UNILATERALLY DRAFTED AND
PREPARED THE SAME;
3. HOLDING THAT THE DEED OF OPTION EXPRESSED THE
TRUE INTENTION AND PURPOSE OF THE PARTIES
DESPITE ADVERSE, CONTEMPORANEOUS AND
SUBSEQUENT ACTS OF THE PLAINTIFF-APPELLEES;
4. FAILING TO PROTECT THE DEFENDANT-APPELLANTS
ON ACCOUNT OF THEIR IGNORANCE PLACING THEM AT
A DISADVANTAGE IN THE DEED OF OPTION;
5. FAILING TO CONSIDER THAT EQUITABLE
CONSIDERATION TILT IN FAVOR OF THE DEFENDANT-
APPELLANTS; and
6. HOLDING DEFENDANT-APPELLANTS LIABLE TO PAY
PLAINTIFF-APPELLEES THE AMOUNT OF P3,000.00 FOR
AND BY WAY OF ATTORNEY'S FEES. (pp. 31-32, Rollo)
On February 12, 1991, the Court of Appeals rendered a
decision reversing the decision of the trial court and
dismissing the complaint. The reversal of the trial court's
decision was premised on the finding of respondent
court that the Deed of Option is void for lack of
consideration.
The Villamor spouses brought the instant petition for
review on certiorari on the following grounds:
I. THE COURT OF APPEALS GRAVELY ERRED IN FINDING
THAT THE PHRASE WHENEVER THE NEED FOR SUCH
SALE ARISES ON OUR (PRIVATE RESPONDENT) PART OR
ON THE PART OF THE SPOUSES JULIO D. VILLAMOR AND
MARINA V. VILLAMOR' CONTAINED IN THE DEED OF
OPTION DENOTES A SUSPENSIVE CONDITION;
II. ASSUMING FOR THE SAKE OF ARGUMENT THAT THE
QUESTIONED PHRASE IS INDEED A CONDITION, THE
COURT OF APPEALS ERRED IN NOT FINDING, THAT THE
SAID CONDITION HAD ALREADY BEEN FULFILLED;
III. ASSUMING FOR THE SAKE OF ARGUMENT THAT THE
QUESTIONED PHRASE IS INDEED A CONDITION, THE
COURT OF APPEALS ERRED IN HOLDING THAT THE
IMPOSITION OF SAID CONDITION PREVENTED THE
PERFECTION OF THE CONTRACT OF SALE DESPITE THE
EXPRESS OFFER AND ACCEPTANCE CONTAINED IN THE
DEED OF OPTION;
IV. THE COURT OF APPEALS ERRED IN FINDING THAT
THE DEED OF OPTION IS VOID FOR LACK OF
CONSIDERATION;
V. THE COURT OF APPEALS ERRED IN HOLDING THAT A
DISTINCT CONSIDERATION IS NECESSARY TO SUPPORT
THE DEED OF OPTION DESPITE THE EXPRESS OFFER AND
ACCEPTANCE CONTAINED THEREIN. (p. 12, Rollo)
The pivotal issue to be resolved in this case is the
validity of the Deed of Option whereby the private
respondents agreed to sell their lot to petitioners
"whenever the need of such sale arises, either on our
part (private respondents) or on the part of Julio
Villamor and Marina Villamor (petitioners)." The court a
quo, rule that the Deed of Option was a
valid written agreement between the parties and made
the following conclusions:
xxx xxx xxx
It is interesting to state that the agreement between the
parties are evidence by a writing, hence, the
controverting oral testimonies of the herein defendants
cannot be any better than the documentary evidence,
which, in this case, is the Deed of Option (Exh. "A" and
"A-a")
The law provides that when the terms of an agreement
have been reduced to writing it is to be considered as
containing all such terms, and therefore, there can be,
between the parties and their successors in interest no
evidence of their terms of the agreement, other than
the contents of the writing. ... (Section 7 Rule 130
Revised Rules of Court) Likewise, it is a general and most
inflexible rule that wherever written instruments are
appointed either by the requirements of law, or by the
contract of the parties, to be the repositories and
memorials of truth, any other evidence is excluded from
being used, either as a substitute for such instruments,
or to contradict or alter them. This is a matter both of
principle and of policy; of principle because such
instruments are in their nature and origin entitled to a
much higher degree of credit than evidence of policy,
because it would be attended with great mischief if
those instruments upon which man's rights depended
were liable to be impeached by loose collateral
evidence. Where the terms of an agreement are reduced
to writing, the document itself, being constituted by the
parties as the expositor of their intentions, it is the only
instrument of evidence in respect of that
agreement which the law will recognize so long as it
exists for the purpose of evidence. (Starkie, EV, pp. 648,
655 cited in Kasheenath vs. Chundy, W.R. 68, cited in
Francisco's Rules of Court, Vol. VII Part I p. 153)
(Emphasis supplied, pp. 126-127, Records).
The respondent appellate court, however, ruled that the
said deed of option is void for lack of consideration. The
appellate court made the following disquisitions:
Plaintiff-appellees say they agreed to pay P70.00
per square meter for the portion purchased by
them although the prevailing price at that time
was only P25.00 in consideration of the option to
buy the remainder of the land. This does not
seem to be the case. In the first place, the deed
of sale was never produced by them to prove
their claim. Defendant-appellants testified that
no copy of the deed of sale had ever been given
to them by the plaintiff-appellees. In the second
place, if this was really the condition of the prior
sale, we see no reason why it should be
reiterated in the Deed of Option. On the
contrary, the alleged overprice paid by the
plaintiff-appellees is given in the Deed as reason
for the desire of the Villamors to acquire the land
rather than as a consideration for the option
given to them, although one might wonder why
they took nearly 13 years to invoke their right if
they really were in due need of the lot.
At all events, the consideration needed to
support a unilateral promise to sell is a dinstinct
one, not something that is as uncertain as P70.00
per square meter which is allegedly 'greatly
higher than the actual prevailing value of lands.'
A sale must be for a price certain (Art. 1458). For
how much the portion conveyed to the plaintiff-
appellees was sold so that the balance could be
considered the consideration for the promise to
sell has not been shown, beyond a mere
allegation that it was very much below P70.00
per square meter.
The fact that plaintiff-appellees might have paid
P18.00 per square meter for another land at the
time of the sale to them of a portion of
defendant-appellant's lot does not necessarily
prove that the prevailing market price at the
time of the sale was P18.00 per square meter. (In
fact they claim it was P25.00). It is improbable
that plaintiff-appellees should pay P52.00 per
square meter for the privilege of buying when
the value of the land itself was allegedly P18.00
per square meter. (pp. 34-35, Rollo)
As expressed in Gonzales v. Trinidad, 67 Phil. 682,
consideration is "the why of the contracts, the essential
reason which moves the contracting parties to enter
into the contract." The cause or the impelling reason on
the part of private respondent executing the deed of
option as appearing in the deed itself is the petitioner's
having agreed to buy the 300 square meter portion of
private respondents' land at P70.00 per square meter
"which was greatly higher than the actual reasonable
prevailing price." This cause or consideration is clear
from the deed which stated:
That the only reason why the spouses-vendees Julio
Villamor and Marina V. Villamor agreed to buy the said
one-half portion at the above stated price of about
P70.00 per square meter, is because I, and my husband
Roberto Reyes, have agreed to sell and convey to them
the remaining one-half portion still owned by me ... (p.
26, Rollo)
The respondent appellate court failed to give due
consideration to petitioners' evidence which shows that
in 1969 the Villamor spouses bough an adjacent lot from
the brother of Macaria Labing-isa for only P18.00 per
square meter which the private respondents did not
rebut. Thus, expressed in terms of money, the
consideration for the deed of option is the difference
between the purchase price of the 300 square meter
portion of the lot in 1971 (P70.00 per sq.m.) and the
prevailing reasonable price of the same lot in 1971.
Whatever it is, (P25.00 or P18.00) though not specifically
stated in the deed of option, was ascertainable.
Petitioner's allegedly paying P52.00 per square meter
for the option may, as opined by the appellate court, be
improbable but improbabilities does not invalidate a
contract freely entered into by the parties.
The "deed of option" entered into by the parties in this
case had unique features. Ordinarily, an optional
contract is a privilege existing in one person, for which
he had paid a consideration and which gives him the
right to buy, for example, certain merchandise or certain
specified property, from another person, if he chooses,
at any time within the agreed period at a fixed price
(Enriquez de la Cavada v. Diaz, 37 Phil. 982). If We look
closely at the "deed of option" signed by the parties, We
will notice that the first part covered the statement on
the sale of the 300 square meter portion of the lot to
Spouses Villamor at the price of P70.00 per square
meter "which was higher than the actual reasonable
prevailing value of the lands in that place at that time (of
sale)." The second part stated that the only reason why
the Villamor spouses agreed to buy the said lot at a
much higher price is because the vendor (Reyeses) also
agreed to sell to the Villamors the other half-portion of
300 square meters of the land. Had the deed stopped
there, there would be no dispute that the deed is really
an ordinary deed of option granting the Villamors the
option to buy the remaining 300 square meter-half
portion of the lot in consideration for their having
agreed to buy the other half of the land for a much
higher price. But, the "deed of option" went on and
stated that the sale of the other half would be made
"whenever the need of such sale arises, either on our
(Reyeses) part or on the part of the Spouses Julio
Villamor and Marina V. Villamor. It appears that while
the option to buy was granted to the Villamors, the
Reyeses were likewise granted an option to sell. In other
words, it was not only the Villamors who were granted
an option to buy for which they paid a consideration.
The Reyeses as well were granted an option to sell
should the need for such sale on their part arise.
In the instant case, the option offered by private
respondents had been accepted by the petitioner, the
promise, in the same document. The acceptance of an
offer to sell for a price certain created a bilateral
contract to sell and buy and upon acceptance, the
offer, ipso facto assumes obligations of a vendee (See
Atkins, Kroll & Co. v. Cua Mian Tek, 102 Phil. 948).
Demandabilitiy may be exercised at any time after the
execution of the deed. InSanchez v. Rigos, No. L-25494,
June 14, 1972, 45 SCRA 368, 376, We held:
In other words, since there may be no valid
contract without a cause of consideration, the
promisory is not bound by his promise and may,
accordingly withdraw it. Pending notice of its
withdrawal, his accepted promise partakes,
however, of the nature of an offer to sell which, if
accepted, results in a perfected contract of sale.
A contract of sale is, under Article 1475 of the Civil Code,
"perfected at the moment there is a meeting of minds
upon the thing which is the object of the contract and
upon the price. From that moment, the parties may
reciprocally demand perform of contracts." Since there
was, between the parties, a meeting of minds upon the
object and the price, there was already a perfected
contract of sale. What was, however, left to be done
was for either party to demand from the other their
respective undertakings under the contract. It may be
demanded at any time either by the private
respondents, who may compel the petitioners to pay for
the property or the petitioners, who may compel the
private respondents to deliver the property.
However, the Deed of Option did not provide for the
period within which the parties may demand the
performance of their respective undertakings in the
instrument. The parties could not have contemplated
that the delivery of the property and the payment
thereof could be made indefinitely and render uncertain
the status of the land. The failure of either parties to
demand performance of the obligation of the other for
an unreasonable length of time renders the contract
ineffective.
Under Article 1144 (1) of the Civil Code, actions upon
written contract must be brought within ten (10) years.
The Deed of Option was executed on November 11,
1971. The acceptance, as already mentioned, was also
accepted in the same instrument. The complaint in this
case was filed by the petitioners on July 13, 1987,
seventeen (17) years from the time of the execution of
the contract. Hence, the right of action had prescribed.
There were allegations by the petitioners that they
demanded from the private respondents as early as
1984 the enforcement of their rights under the contract.
Still, it was beyond the ten (10) years period prescribed
by the Civil Code. In the case of Santos v. Ganayo,
L-31854, September 9, 1982, 116 SCRA 431, this Court
affirming and subscribing to the observations of the
courta quo held, thus:
... Assuming that Rosa Ganayo, the oppositor
herein, had the right based on the Agreement to
Convey and Transfer as contained in Exhibits '1'
and '1-A', her failure or the abandonment of her
right to file an action against Pulmano Molintas
when he was still a co-owner of the on-half (1/2)
portion of the 10,000 square meters is now
barred by laches and/or prescribed by law
because she failed to bring such action within ten
(10) years from the date of the written
agreement in 1941, pursuant to Art. 1144 of the
New Civil Code, so that when she filed the
adverse claim through her counsel in 1959 she
had absolutely no more right whatsoever on the
same, having been barred by laches.
It is of judicial notice that the price of real estate in
Metro Manila is continuously on the rise. To allow the
petitioner to demand the delivery of the property
subject of this case thirteen (13) years or seventeen (17)
years after the execution of the deed at the price of only
P70.00 per square meter is inequitous. For reasons also
of equity and in consideration of the fact that the
private respondents have no other decent place to live,
this Court, in the exercise of its equity jurisdiction is not
inclined to grant petitioners' prayer.
ACCORDINGLY, the petition is DENIED. The decision of
respondent appellate court is AFFIRMED for reasons
cited in this decision. Judgement is rendered dismissing
the complaint in Civil Case No. C-12942 on the ground of
prescription and laches.
SO ORDERED.
G.R. No. 113665 October 7, 2004
SPOUSES REMEDIOS DIJAMCO and TEODORO
DIJAMCO, petitioners,
vs.
COURT OF APPEALS and PREMIERE DEVELOPMENT
BANK, respondents.
DECISION
CORONA, J.:
This is a petition for review1 of the January 7, 1994
resolution and March 30, 1993 decision2 of the Court of
Appeals in CA G.R. CV No. 34125, affirming the February
27, 1991 decision3 of the Regional Trial Court, Branch
109, Pasay City in Civil Case No. 5795, which dismissed
petitioners’ complaint against private respondent
Premiere Development Bank for recovery of real
property and damages.
This dispute arose from the following facts, as
summarized by the RTC and the CA:
It appears on record that plaintiffs were granted
four separate loans by defendant bank, as
follows: Industrial Loan No. 1833 in the amount
of P75,000.00 granted on April, 1976; Industrial
loan No. 2985 in the amount of P80,000.00
granted on March, 1980; Real Estate Loan No.
2084 in the amount ofP80,000.00 granted on
February, 1986 and Real Estate Loan No. 64 in
the amount of P210,000.00 granted on October,
1981. The subject of this complaint pertains to
the fourth loan or the Real Estate Loan No. 2084.
To secure the payment of the fourth loan,
plaintiffs executed a real estate mortgage over a
parcel of land located in Pasay City covered by
TCT No. 34450 which according to plaintiffs has
an improvement thereon a five-door apartment.
Due to severe economic reverses, plaintiffs failed
to remit monthly amortizations regularly on the
fourth loan. It appears that plaintiffs were not
only in arrears on the fourth loan but also on the
second and third loans, as well. At the time that
the plaintiffs were negotiating for the settlement
of the second and third loans, the fourth loan
was about ten (10) months in arrears. Because of
this predicament, plaintiffs approached Atty.
Araos, Vice President of defendant bank and a
family friend of the Dijamcos. According to the
plaintiffs, Atty. Araos "advised them to first settle
all the two smaller loans (the second and third
loans) and not to worry about the P210,000.00
loan" (par. 6, page 2, Amended Complaint). On
the other hand, defendant bank alleges that it
was plaintiff’s (sic) scheme to pay off the second
and third loans first so that they (plaintiffs)
would then use the collateral of these loans in
securing a loan from another which proceeds
they would then use to pay off the fourth loan,
but this plaintiffs failed to do despite the
cooperation of defendant bank.
xxx xxx xxx
On March 6, 1983, defendant bank sought the
assistance of the City Sheriff of Pasay City
regarding defendant bank’s Petition for
Extrajudicial Foreclosure of Mortgage under Act
3135 against spouses Remedios R. Dijamco and
Teodoro S. Dijamco (See Exh. 4), stating therein
among other things that the mortgagors, herein
plaintiffs, have violated the provisions of the
mortgage contract executed in favor of the
defendant bank and that the mortgagee bank is
now entitled to foreclose the same. On
September 6, 1983, Deputy Sheriff Umberto
Ramos for and in behalf of the Ex-Officio Sheriff
of Pasay City issued a Notice of Sheriffs’ sale
(Exh. 5) stating therein that a sheriff’s sale shall
be conducted on October 6, 1983 by virtue of the
power of attorney inserted in the Deed of Real
Estate Mortgage and upon the verified petition
of the mortgagee in accordance with the
provisions of Act 4118. However, the sheriff’s
sale was not held as previously scheduled due to
the request for postponement filed by herein
plaintiffs dated October 4, 1983 (Exh. 6).
Plaintiffs requested for five successive
postponements in separate requests, to wit Nov.
4, 1983 (Exh. 7); Dec. 7, 1983 (Exh. 8); Jan.
5,1984 (Exh. 9); and Feb. 4, 1984 (Exh.
10).1avvphi1.net
On March 7, 1984, the Office of the Ex-
Officio Sheriff of Pasay City issued a Certificate of
Sale of even date (Exh. 11), stating therein that
the mortgaged property covered by TCT 34450
was sold in public auction on said date, with
defendant bank as the highest bidder for the
price of P359,881.80.
xxx xxx xxx
...plaintiffs failed to redeem the property within
the redemption period.
In a letter dated June 11, 1986 (Exh. 14)
addressed to Dr. Procopio C. Reyes, President of
defendant bank, plaintiff Remedios Dijamco
offered to repurchase the subject property, the
pertinent and most important contents of which
is hereinbelow reproduced and underlined, as
follows:
" x x x.
We have sought ways and means to repurchase the
subject property from you up to this time we are unable
to do so. However, we could pay interest monthly, just
so the principal of P622,095.00 as of May 30, 1986 will
no longer be increased. In connection therewith we
wish to repurchase our foreclosed properties within a
year’s time and are submitting the following plan of
payment for your approval:
Repurchase price as of May 30, 1986 -
P622,095.00
Interest of 26% PA to be paid monthly –
P13,478.00
Grace period requested to repurchase the subject
properties is one (1) year from May 30, 1986 or until
May 30, 1987.
CONDITIONS:
1. Interest of P13,478.73 shall be paid on a
monthly basis starting June 30, 1986 and every
30th day of every month until May 30, 1987.
2. Failure to remit interest payment when the
same is due will render this proposal
automatically revoked without need of formal
 demand, and you may immediately enforce
your Writ of Possession.
3. That in case of failure to repurchase the
subject property within the period above
mentioned, all interest and other payment
made by us shall be treated as rentals for the
use of the property.
We shall appreciate your favorable action on the matter.
Very truly yours,
Signed
REMEDIOS R. DIJAMCO
CONFORME:
Premiere Development Bank
By:
Signed Procopio C. Reyes
Authorized Signatory"
xxx xxx xxx
In compliance with the letter-agreement dated June 11,
1986 (Exh. 14), plaintiffs paid defendant bank six (6)
monthly remittances in the amount of P13,478.73 or a
total of P80,872.38. According to the plaintiffs, the
payment was discontinued by the plaintiffs when Atty.
Araos informed plaintiffs that "none of the amount will
be deducted from the purchase price x x x" (Par. 17,
Amended Complaint). ([RTC] Decision, pp. 1-7; Records,
pp. 446-452) (Emphasis and underscoring supplied).4
In accordance with the June 11, 1986 agreement,
petitioners remitted monthly interest for six months,
until January 1987, after which petitioners stopped
paying and sued respondent Premiere Development
Bank on May 13, 1988. They claimed that the latter
employed fraud and undue advantage in depriving them
of their property and prayed for recovery of said
property for P350,000 and damages. The RTC dismissed
the complaint for utter lack of merit and the CA affirmed
such dismissal.1avvphi1.net
Hence, this appeal.
We hold that the RTC and the CA were correct in
dismissing petitioners’ complaint. Thus, we deny this
petition.
Petitioners themselves admit the uniform factual
findings of the RTC and the CA that respondent bank
validly acquired the subject property at the auction sale,
and that it was only after the title was consolidated and
transferred to the bank that petitioner Remedios
Dijamco signed the June 11, 1986 agreement to
purchase the same property (not to repurchase it, as
their right of redemption had long expired).5 Remedios
voluntarily entered into the June 11, 1986 agreement
without fraud or undue advantage from respondent
bank. As such, the agreement was binding, valid and
enforceable between the parties, pursuant to Articles
13156 11597 and 13708of the Civil Code of the
Philippines.
Contrary to petitioners’ assertion that the June 11, 1986
agreement was a contract of sale, we hold that it was a
contract of option to purchase and a contract to sell.
We distinguish between a contract of sale in which title
passes to the buyer upon delivery of the thing sold and a
contract to sell where, by agreement, the ownership is
reserved by the seller till full payment of the purchase
price. Thus:
a. In a contract of sale, non-payment of the price
is a negative resolutory condition.
In a contract to sell, full payment is a positive
suspensive condition.
b. In a contract of sale, the vendor has lost and
cannot recover the ownership of the thing sold
until and unless the contract of sale is itself
resolved and set aside.
In a contract to sell, the title remains in the vendor if the
vendee does not comply with the condition precedent
of making payment at the time specified in the contract.
If the vendor, because of non-compliance with the
suspensive condition stipulated, seeks to eject the buyer
form the land object of the agreement, said vendor is
enforcing the contract and is not resolving the same.9
Indeed, the CA was correct in finding that the June 11,
1986 agreement was a contract to sell because:
 1. By its own terms, it [was] a contract whereby
the appellants [were] granted the right to
repurchase the property involved at the fixed
price of P622,095.00 within a year provided they
[paid] monthly interest payments of P13,478.73;
2. No transfer or conveyance of ownership was
effected by its terms;
3. The interest payments [were] not even part of
the repurchase price because in case of failure to
exercise the right to repurchase they would be
considered as rentals for the use of the property.
They [were] not to be returned (Condition No. 3);
4. The interest payments were in a way a
consideration to preserve the right to
repurchase. In default of the interest payments,
the right to repurchase terminate[d] (Condition
No. 2)10
The stipulation on interest payments was actually a
consideration for the contract of option to purchase in
compliance with the second paragraph of Article 1479 of
the Civil Code, that is, "An accepted unilateral promise
to buy (in this case, by petitioners) or to sell a
determinate thing (in this case, the subject real property
of respondent bank) for a price certain (in this
case, P622,095) is binding upon the promissor if the
promise is supported by a consideration distinct from the
price" (in this case, a monthly interest payment
of P13,478.73).
The contract of option to purchase was separate from
the contract to sell and both contracts needed separate
and distinct considerations for validity.
The monthly interest payment of P13,478.73 as
consideration for petitioners’ option to purchase the lot
formerly owned by them and which they continued to
occupy even after the filing of their complaint in 1988
until mid of 1989,11 was valid, fair and reasonable. First,
it was the petitioners themselves who proposed such
consideration which was duly accepted by private
respondent bank in writing. Hence, it was a valid,
binding and enforceable contract between them.
Second, the consideration was fair and reasonable
because it preserved not only petitioners’ preferred
right to purchase subject property at a fixed price for
one year but also their continued possession and
enjoyment of it. Third, petitioners could not feign
mistake or ignorance of the terms of the agreement
because, as observed by the CA, "plaintiff-appellant
Dijamco testified that she had come to realize the
alleged unfairness of having to pay P13,478.73 all for
interest only after she paid the monthly
installment12 and everytime she paid she told them (the
bank people) ‘it is unfair’.13 Yet inexplicably, she kept on
paying for six months even after she had come to know
about such unfairness."14
Although petitioners paid six months’ interest until
January 1987, they did not exercise their right to
purchase the property during that period. Neither did
they keep on paying the monthly interest as
consideration for the continuation of their option right
for the next six months. Hence, the automatic
revocation clause of the agreement took effect,
resulting in the rescission of the contract of option to
purchase and the contract to sell by respondent bank. A
judicial action for the rescission of a contract is not
necessary where the contract provides that it may be
revoked and cancelled for violation of any of its terms
and conditions.15 Furtheremore, inasmuch as the six
months’ interest was the consideration for petitioners’
option to purchase the property during that period, the
payments therefor could not possibly be credited as part
of the purchase price of the contract to sell.
All told, petitioners have no right to demand
reconveyance of the subject property for P350,000 and
claim damages.
WHEREFORE, the petition is hereby DENIED for lack of
merit.
Costs against petitioners.
SO ORDERED.
G.R. No. 113665 October 7, 2004
SPOUSES REMEDIOS DIJAMCO and TEODORO
DIJAMCO, petitioners,
vs.
COURT OF APPEALS and PREMIERE DEVELOPMENT
BANK, respondents.
DECISION
CORONA, J.:
This is a petition for review1 of the January 7, 1994
resolution and March 30, 1993 decision2 of the Court of
Appeals in CA G.R. CV No. 34125, affirming the February
27, 1991 decision3 of the Regional Trial Court, Branch 109,
Pasay City in Civil Case No. 5795, which dismissed
petitioners’ complaint against private respondent Premiere
Development Bank for recovery of real property and
damages.
This dispute arose from the following facts, as summarized
by the RTC and the CA:
It appears on record that plaintiffs were granted four
separate loans by defendant bank, as follows:
Industrial Loan No. 1833 in the amount
of P75,000.00 granted on April, 1976; Industrial
loan No. 2985 in the amount of P80,000.00 granted
on March, 1980; Real Estate Loan No. 2084 in the
amount ofP80,000.00 granted on February, 1986
and Real Estate Loan No. 64 in the amount
of P210,000.00 granted on October, 1981. The
subject of this complaint pertains to the fourth loan
or the Real Estate Loan No. 2084. To secure the
payment of the fourth loan, plaintiffs executed a real
estate mortgage over a parcel of land located in
Pasay City covered by TCT No. 34450 which
according to plaintiffs has an improvement thereon
a five-door apartment.
Due to severe economic reverses, plaintiffs failed to
remit monthly amortizations regularly on the fourth
loan. It appears that plaintiffs were not only in
arrears on the fourth loan but also on the second
and third loans, as well. At the time that the
plaintiffs were negotiating for the settlement of the
second and third loans, the fourth loan was about
ten (10) months in arrears. Because of this
predicament, plaintiffs approached Atty. Araos, Vice
President of defendant bank and a family friend of
the Dijamcos. According to the plaintiffs, Atty.
Araos "advised them to first settle all the two
smaller loans (the second and third loans) and not
to worry about the P210,000.00 loan" (par. 6, page
2, Amended Complaint). On the other hand,
defendant bank alleges that it was plaintiff’s
(sic) scheme to pay off the second and third loans
first so that they (plaintiffs) would then use the
collateral of these loans in securing a loan from
another which proceeds they would then use to pay
off the fourth loan, but this plaintiffs failed to do
despite the cooperation of defendant bank.
xxx xxx xxx
On March 6, 1983, defendant bank sought the
assistance of the City Sheriff of Pasay City
regarding defendant bank’s Petition for Extrajudicial
Foreclosure of Mortgage under Act 3135 against
spouses Remedios R. Dijamco and Teodoro S.
Dijamco (See Exh. 4), stating therein among other
things that the mortgagors, herein plaintiffs, have
violated the provisions of the mortgage contract
executed in favor of the defendant bank and that
the mortgagee bank is now entitled to foreclose the
same. On September 6, 1983, Deputy Sheriff
Umberto Ramos for and in behalf of the Ex-
Officio Sheriff of Pasay City issued a Notice of
Sheriffs’ sale (Exh. 5) stating therein that a sheriff’s
sale shall be conducted on October 6, 1983 by
virtue of the power of attorney inserted in the Deed
of Real Estate Mortgage and upon the verified
petition of the mortgagee in accordance with the
provisions of Act 4118. However, the sheriff’s sale
was not held as previously scheduled due to the
request for postponement filed by herein plaintiffs
dated October 4, 1983 (Exh. 6). Plaintiffs requested
for five successive postponements in separate
requests, to wit Nov. 4, 1983 (Exh. 7); Dec. 7, 1983
(Exh. 8); Jan. 5,1984 (Exh. 9); and Feb. 4, 1984
(Exh. 10). 1avv phi 1.net
On March 7, 1984, the Office of the Ex-
Officio Sheriff of Pasay City issued a Certificate of
Sale of even date (Exh. 11), stating therein that the
mortgaged property covered by TCT 34450 was
sold in public auction on said date, with defendant
bank as the highest bidder for the price
of P359,881.80.
xxx xxx xxx
...plaintiffs failed to redeem the property within the
redemption period.
In a letter dated June 11, 1986 (Exh. 14) addressed
to Dr. Procopio C. Reyes, President of defendant
bank, plaintiff Remedios Dijamco offered to
repurchase the subject property, the pertinent and
most important contents of which is hereinbelow
reproduced and underlined, as follows:
" x x x.
We have sought ways and means to repurchase
the subject property from you up to this time we are
unable to do so. However, we could pay interest
monthly, just so the principal of P622,095.00 as
of May 30, 1986 will no longer be increased. In
connection therewith we wish to repurchase our
foreclosed properties within a year’s time and
are submitting the following plan of payment for
your approval:
Repurchase price as of May 30, 1986 -
P622,095.00
Interest of 26% PA to be paid monthly –
P13,478.00
Grace period requested to repurchase the subject
properties is one (1) year from May 30, 1986 or
until May 30, 1987.
 CONDITIONS:
1. Interest of P13,478.73 shall be paid on a monthly
basis starting June 30, 1986 and every 30th day of
every month until May 30, 1987.
2. Failure to remit interest payment when the
same is due will render this proposal
automatically revoked without need of formal
demand, and you may immediately enforce your
Writ of Possession.
3. That in case of failure to repurchase the subject
property within the period above mentioned, all
interest and other payment made by us shall be
treated as rentals for the use of the property.
We shall appreciate your favorable action on the
matter.
Very truly yours,
Signed
REMEDIOS R. DIJAMCO
CONFORME:
Premiere Development Bank
By:
Signed Procopio C. Reyes
Authorized Signatory"
xxx xxx xxx
In compliance with the letter-agreement dated June
11, 1986 (Exh. 14), plaintiffs paid defendant bank
six (6) monthly remittances in the amount
of P13,478.73 or a total of P80,872.38. According
to the plaintiffs, the payment was discontinued by
the plaintiffs when Atty. Araos informed plaintiffs
that "none of the amount will be deducted from the
purchase price x x x" (Par. 17, Amended
Complaint). ([RTC] Decision, pp. 1-7; Records, pp.
446-452) (Emphasis and underscoring supplied).4
In accordance with the June 11, 1986 agreement,
petitioners remitted monthly interest for six months, until
January 1987, after which petitioners stopped paying and
sued respondent Premiere Development Bank on May 13,
1988. They claimed that the latter employed fraud and
undue advantage in depriving them of their property and
prayed for recovery of said property for P350,000 and
damages. The RTC dismissed the complaint for utter lack
of merit and the CA affirmed such dismissal.
1avvphi1.net
Hence, this appeal.
We hold that the RTC and the CA were correct in
dismissing petitioners’ complaint. Thus, we deny this
petition.
Petitioners themselves admit the uniform factual findings of
the RTC and the CA that respondent bank validly acquired
the subject property at the auction sale, and that it was only
after the title was consolidated and transferred to the bank
that petitioner Remedios Dijamco signed the June 11, 1986
agreement to purchase the same property (not to
repurchase it, as their right of redemption had long
expired).5 Remedios voluntarily entered into the June 11,
1986 agreement without fraud or undue advantage from
respondent bank. As such, the agreement was binding,
valid and enforceable between the parties, pursuant to
Articles 13156 11597 and 13708of the Civil Code of the
Philippines.
Contrary to petitioners’ assertion that the June 11, 1986
agreement was a contract of sale, we hold that it was a
contract of option to purchase and a contract to sell.
We distinguish between a contract of sale in which title
passes to the buyer upon delivery of the thing sold and a
contract to sell where, by agreement, the ownership is
reserved by the seller till full payment of the purchase price.
Thus:
a. In a contract of sale, non-payment of the price is
a negative resolutory condition.
In a contract to sell, full payment is a positive
suspensive condition.
b. In a contract of sale, the vendor has lost and
cannot recover the ownership of the thing sold until
and unless the contract of sale is itself resolved and
set aside.
In a contract to sell, the title remains in the vendor if the
vendee does not comply with the condition precedent of
making payment at the time specified in the contract. If the
vendor, because of non-compliance with the suspensive
condition stipulated, seeks to eject the buyer form the land
object of the agreement, said vendor is enforcing the
contract and is not resolving the same.9
Indeed, the CA was correct in finding that the June 11,
1986 agreement was a contract to sell because:
1. By its own terms, it [was] a contract whereby the
appellants [were] granted the right to repurchase
the property involved at the fixed price
of P622,095.00 within a year provided they [paid]
monthly interest payments of P13,478.73;
2. No transfer or conveyance of ownership was
effected by its terms;
 3. The interest payments [were] not even part of the purchase the property during that period, the payments
repurchase price because in case of failure to therefor could not possibly be credited as part of the
exercise the right to repurchase they would be purchase price of the contract to sell.
considered as rentals for the use of the property.
They [were] not to be returned (Condition No. 3); All told, petitioners have no right to demand reconveyance
of the subject property for P350,000 and claim damages.
4. The interest payments were in a way a
consideration to preserve the right to repurchase. In WHEREFORE, the petition is hereby DENIED for lack of
default of the interest payments, the right to merit.
repurchase terminate[d] (Condition No. 2)10
Costs against petitioners.
The stipulation on interest payments was actually a
consideration for the contract of option to purchase in SO ORDERED
compliance with the second paragraph of Article 1479 of
the Civil Code, that is, "An accepted unilateral promise to
buy (in this case, by petitioners) or to sell a determinate
thing (in this case, the subject real property of respondent
bank) for a price certain (in this case, P622,095) is binding
upon the promissor if the promise is supported by a
consideration distinct from the price" (in this case, a
monthly interest payment of P13,478.73).

The contract of option to purchase was separate from the

contract to sell and both contracts needed separate and
distinct considerations for validity.

The monthly interest payment of P13,478.73 as

consideration for petitioners’ option to purchase the lot
formerly owned by them and which they continued to
occupy even after the filing of their complaint in 1988 until
mid of 1989,11 was valid, fair and reasonable. First, it was
the petitioners themselves who proposed such
consideration which was duly accepted by private
respondent bank in writing. Hence, it was a valid, binding
and enforceable contract between them. Second, the
consideration was fair and reasonable because it
preserved not only petitioners’ preferred right to purchase
subject property at a fixed price for one year but also their
continued possession and enjoyment of it. Third, petitioners
could not feign mistake or ignorance of the terms of the
agreement because, as observed by the CA, "plaintiff-
appellant Dijamco testified that she had come to realize the
alleged unfairness of having to pay P13,478.73 all for
interest only after she paid the monthly installment12 and
everytime she paid she told them (the bank people) ‘it is
unfair’.13 Yet inexplicably, she kept on paying for six months
even after she had come to know about such unfairness."14

Although petitioners paid six months’ interest until January

1987, they did not exercise their right to purchase the
property during that period. Neither did they keep on paying
the monthly interest as consideration for the continuation of
their option right for the next six months. Hence, the
automatic revocation clause of the agreement took effect,
resulting in the rescission of the contract of option to
purchase and the contract to sell by respondent bank. A
judicial action for the rescission of a contract is not
necessary where the contract provides that it may be
revoked and cancelled for violation of any of its terms and
conditions.15 Furtheremore, inasmuch as the six months’
interest was the consideration for petitioners’ option to