POLICITACION

POLICITACION G.R. No.
166862 December 20, 2006
MANILA METAL CONTAINER CORPORATION, petitioner, REYNALDO C. TOLENTINO, intervenor, vs. PHILIPPINE NATIONAL BANK, respondent, DMCI PRO!ECT DE"ELOPER#, INC., intervenor.
DECISION
CALLE!O, #R., J.$ Before us is a petition for review on certiorari of the Decision of the Court of Appea!s "CA# in CA$ %.&. No. '( )* which affir+ed the decision , of the &e-iona! Tria! Court "&TC#, Branch . , PasiCit/, in Civi! Case No. )0)) , and its &eso!ution * den/in- the +otion for reconsideration fi!ed 1/ petitioner 2ani!a 2eta! Container Corporation "22CC#. T%e A&'ece(e&') Petitioner was the owner of a 0,3 ) s4uare +eter parce! of !and !ocated in 2anda!u/on- "now a Cit/#, 2etro 2ani!a. The propert/ was covered 1/ Transfer Certificate of Tit!e "TCT# No. **,350 of the &e-istr/ of Deeds of &i6a!. To secure a P533,333.33 !oan it had o1tained fro+ respondent Phi!ippine Nationa! Ban7 "PNB#, petitioner e8ecuted a rea! estate +ort-a-e over the !ot. &espondent PNB !ater -ranted petitioner a new credit acco++odation of P ,333,333.339 and, on Nove+1er (, 5.*, petitioner e8ecuted an A+end+ent ' of &ea! Estate 2ort-a-e over its propert/. On 2arch * , 50 , petitioner secured another !oan of P()*,333.33 fro+ respondent PNB, pa/a1!e in 4uarter!/ insta!!+ents of P*,,()3.33, p!us interests and other char-es. ) On Au-ust ), 50,, respondent PNB fi!ed a petition for e8tra:udicia! forec!osure of the rea! estate +ort-a-e and sou-ht to have the propert/ so!d at pu1!ic auction for P5 ,)*,., , petitioner;s outstandin- o1!i-ation to respondent PNB as of <une *3, 50,, ( p!us interests and attorne/;s fees. After due notice and pu1!ication, the propert/ was so!d at pu1!ic auction on Septe+1er ,0, 50, where respondent PNB was dec!ared the winnin- 1idder for P ,333,333.33. The Certificate of Sa!e. issued in its favor was re-istered with the Office of the &e-ister of Deeds of &i6a!, and was annotated at the dorsa! portion of the tit!e on =e1ruar/ ., 50*. Thus, the period to redee+ the propert/ was to e8pire on =e1ruar/ ., 50'. Petitioner sent a !etter dated Au-ust ,), 50* to respondent PNB, re4uestin- that it 1e -ranted an e8tension of ti+e to redee+>repurchase the propert/. 0 In its rep!/ dated Au-ust *3, 50*, respondent PNB infor+ed petitioner that the re4uest had 1een referred to its Pasa/ Cit/ Branch for appropriate action and reco++endation. 5 In a !etter 3 dated =e1ruar/ 3, 50', petitioner reiterated its re4uest for a one /ear e8tension fro+ =e1ruar/ ., 50' within which to redee+>repurchase the propert/ on insta!!+ent 1asis. It
reiterated its re4uest to repurchase the propert/ on insta!!+ent. 2eanwhi!e, so+e PNB Pasa/ Cit/ Branch personne! infor+ed petitioner that as a +atter of po!ic/, the 1an7 does not accept ?partia! rede+ption.? , Since petitioner fai!ed to redee+ the propert/, the &e-ister of Deeds cance!!ed TCT No. *,350 on <une , 50', and issued a new tit!e in favor of respondent PNB. * Petitioner;s offers had not /et 1een acted upon 1/ respondent PNB. 2eanwhi!e, the Specia! Assets 2ana-e+ent Depart+ent "SA2D# had prepared a state+ent of account, and as of <une ,), 50' petitioner;s o1!i-ation a+ounted to P ,).',)(3.'.. This inc!uded the 1id price of P ,3)(,5,'.)3, interest, advances of insurance pre+iu+s, advances on rea!t/ ta8es, re-istration e8penses, +isce!!aneous e8penses and pu1!ication cost. ' @hen apprised of the state+ent of account, petitioner re+itted P.,),333.33 to respondent PNB as ?deposit to repurchase,? and Officia! &eceipt No. 5.0 5 was issued to it. ) In the +eanti+e, the SA2D reco++ended to the +ana-e+ent of respondent PNB that petitioner 1e a!!owed to repurchase the propert/ for P ,).',)(3.33. In a !etter dated Nove+1er ', 50', the PNB +ana-e+ent infor+ed petitioner that it was re:ectin- the offer and the reco++endation of the SA2D. It was su--ested that petitioner purchase the propert/ for P,,((3,333.33, its +ini+u+ +ar7et va!ue. &espondent PNB -ave petitioner unti! Dece+1er ), 50' to act on the proposa!9 otherwise, its P.,),333.33 deposit wou!d 1e returned and the propert/ wou!d 1e so!d to other interested 1u/ers. ( Petitioner, however, did not a-ree to respondent PNB;s proposa!. Instead, it wrote another !etter dated Dece+1er ,, 50' re4uestin- for a reconsideration. &espondent PNB rep!ied in a !etter dated Dece+1er ,0, 50', wherein it reiterated its proposa! that petitioner purchase the propert/ for P,,((3,333.33. PNB a-ain infor+ed petitioner that it wou!d return the deposit shou!d petitioner desire to withdraw its offer to purchase the propert/. . On =e1ruar/ ,), 50), petitioner, throu-h counse!, re4uested that PNB reconsider its !etter dated Dece+1er ,0, 50'. Petitioner dec!ared that it had a!read/ a-reed to the SA2D;s offer to purchase the propert/ forP ,).',)(3.'., and that was wh/ it had paid P.,),333.33. Petitioner warned respondent PNB that it wou!d see7 :udicia! recourse shou!d PNB insist on the position. 0 On <une ', 50), respondent PNB infor+ed petitioner that the PNB Board of Directors had accepted petitioner;s offer to purchase the propert/, 1ut for P ,5* ,*05.)* in cash !ess the P.,),333.33 a!read/ deposited with it. 5 On pa-e two of the !etter was a space a1ove the t/pewritten na+e of petitioner;s President, Pa1!o %a1rie!, where he was to affi8 his si-nature. Aowever, Pa1!o %a1rie! did not confor+ to the !etter 1ut +ere!/ indicated therein that he had received it.,3 Petitioner did not respond, so PNB re4uested petitioner in a !etter dated <une *3, 500 to su1+it an a+ended offer to repurchase. Petitioner re:ected respondent;s proposa! in a !etter dated <u!/ ', 500. It +aintained that respondent PNB had a-reed to se!! the propert/ for P ,).',)(3.'., and that since its P.,),333.33 downpa/+ent had 1een accepted, respondent PNB was proscri1ed fro+ increasin- the purchase price of the propert/. , Petitioner averred that it had a net 1a!ance pa/a1!e in the a+ount of P('*,'),.*'. &espondent PNB, however, re:ected petitioner;s offer to pa/ the 1a!ance of P('*,'),.*' in a !etter dated Au-ust , 505. ,, On Au-ust ,0, 505, petitioner fi!ed a co+p!aint a-ainst respondent PNB for ?Annu!+ent of 2ort-a-e and 2ort-a-e =orec!osure, De!iver/ of Tit!e, or Specific Perfor+ance with Da+a-es.? To support its cause of action for specific perfor+ance, it a!!e-ed the fo!!owin-B
*'. As ear!/ as <une ,), 50', PNB had accepted the down pa/+ent fro+ 2ani!a 2eta! in the su1stantia! a+ount of P.,),333.33 for the rede+ption>repurchase price of P ,).',)(3.'. as approved 1/ its S2AD and considerin- the re!iance +ade 1/ 2ani!a 2eta! and the !on- ti+e that has e!apsed, the approva! of the hi-her +ana-e+ent of the Ban7 to confir+ the a-ree+ent of its S2AD is c!ear!/ a potestative condition which cannot !e-a!!/ pre:udice 2ani!a 2eta! which has acted and re!ied on the approva! of S2AD. The Ban7 cannot ta7e advanta-e of a condition which is entire!/ dependent upon its own wi!! after acceptin- and 1enefitin- fro+ the su1stantia! pa/+ent +ade 1/ 2ani!a 2eta!. *). PNB approved the repurchase price of P ,).',)(3.'. for which it accepted P.,),333.33 fro+ 2ani!a 2eta!. PNB cannot ta7e advanta-e of its own de!a/ and !on- inaction in de+andin- a hi-her a+ount 1ased on uni!atera! co+putation of interest rate without the consent of 2ani!a 2eta!. Petitioner !ater fi!ed an a+ended co+p!aint and supported its c!ai+ for da+a-es with the fo!!owin- ar-u+entsB *(. That in order to protect itse!f a-ainst the wron-fu! and +a!icious acts of the defendant Ban7, p!aintiff is constrained to en-a-e the services of counse! at an a-reed fee of P)3,333.33 and to incur !iti-ation e8penses of at !east P*3,333.33, which the defendant PNB shou!d 1e conde+ned to pa/ the p!aintiff 2ani!a 2eta!. *.. That 1/ reason of the wron-fu! and +a!icious actuations of defendant PNB, p!aintiff 2ani!a 2eta! suffered 1es+irched reputation for which defendant PNB is !ia1!e for +ora! da+a-es of at !east P)3,333.33. *0. That for the wron-fu! and +a!icious act of defendant PNB which are hi-h!/ reprehensi1!e, e8e+p!ar/ da+a-es shou!d 1e awarded in favor of the p!aintiff 1/ wa/ of e8a+p!e or correction for the pu1!ic -ood of at !east P*3,333.33.,* Petitioner pra/ed that, after due proceedin-s, :ud-+ent 1e rendered in its favor, thusB a# Dec!arin- the A+ended &ea! Estate 2ort-a-e "Anne8 ?A?# nu!! and void and without an/ !e-a! force and effect. 1# Dec!arin- defendant;s acts of e8tra$:udicia!!/ forec!osin- the +ort-a-e over p!aintiff;s propert/ and settin- it for auction sa!e nu!! and void. c# Orderin- the defendant &e-ister of Deeds to cance! the new tit!e issued in the na+e of PNB "TCT NO. '*.5,# coverin- the propert/ descri1ed in para-raph ' of the Co+p!aint, to reinstate TCT No. *.3,) in the na+e of 2ani!a 2eta! and to cance! the annotation of the +ort-a-e in 4uestion at the 1ac7 of the TCT No.*.3,) descri1ed in para-raph ' of this Co+p!aint. d# Orderin- the defendant PNB to return and>or de!iver ph/sica! possession of the TCT No. *.3,)descri1ed in para-raph ' of this Co+p!aint to the p!aintiff 2ani!a 2eta!. e# Orderin- the defendant PNB to pa/ the p!aintiff 2ani!a 2eta!;s actua! da+a-es, +ora! and e8e+p!ar/ da+a-es in the a--re-ate a+ount of not !ess than P03,333.33 as +a/ 1e warranted 1/ the evidence and fi8ed 1/ this Aonora1!e Court in the e8ercise of its sound discretion, and attorne/;s fees of P)3,333.33 and !iti-ation e8penses of at !east P*3,333.33 as +a/ 1e proved durin- the tria!, and costs of suit.
P!aintiff !i7ewise pra/s for such further re!iefs which +a/ 1e dee+ed :ust and e4uita1!e in the pre+ises.,' In its Answer to the co+p!aint, respondent PNB averred, as a specia! and affir+ative defense, that it had ac4uired ownership over the propert/ after the period to redee+ had e!apsed. It c!ai+ed that no contract of sa!e was perfected 1etween it and petitioner after the period to redee+ the propert/ had e8pired. Durin- pre$tria!, the parties a-reed to su1+it the case for decision, 1ased on their stipu!ation of facts.,) The parties a-reed to !i+it the issues to the fo!!owin-B . @hether or not the <une ', 50) !etter of the defendant approvin->acceptin- p!aintiff;s offer to purchase the propert/ is sti!! va!id and !e-a!!/ enforcea1!e. ,. @hether or not the p!aintiff has waived its ri-ht to purchase the propert/ when it fai!ed to confor+ with the conditions set forth 1/ the defendant in its !etter dated <une ', 50). *. @hether or not there is a perfected contract of sa!e 1etween the parties. ,( @hi!e the case was pendin-, respondent PNB de+anded, on Septe+1er ,3, 505, that petitioner vacate the propert/ within ) da/s fro+ notice, ,. 1ut petitioners refused to do so. On 2arch 0, 55*, petitioner offered to repurchase the propert/ for P*,)33,333.33.,0 The offer was however re:ected 1/ respondent PNB, in a !etter dated Apri! *, 55*. Accordin- to it, the prevai!in- +ar7et va!ue of the propert/ was appro8i+ate!/ P*3,333,333.33, and as a +atter of po!ic/, it cou!d not se!! the propert/ for !ess than its +ar7et va!ue. ,5 On <une , , 55*, petitioner offered to purchase the propert/ for P',,)3,333.33 in cash.*3The offer was a-ain re:ected 1/ respondent PNB on Septe+1er *, 55*.* On 2a/ * , 55', the tria! court rendered :ud-+ent dis+issin- the a+ended co+p!aint and respondent PNB;s counterc!ai+. It ordered respondent PNB to refund the P.,),333.33 deposit petitioner had +ade.*, The tria! court ru!ed that there was no perfected contract of sa!e 1etween the parties9 hence, petitioner had no cause of action for specific perfor+ance a-ainst respondent. The tria! court dec!ared that respondent had re:ected petitioner;s offer to repurchase the propert/. Petitioner, in turn, re:ected the ter+s and conditions contained in the <une ', 50) !etter of the SA2D. @hi!e petitioner had offered to repurchase the propert/ per its !etter of <u!/ ', 500, the a+ount of P('*,',,.*' was wa/ 1e!ow the P ,,3(,*05.)* which respondent PNB had de+anded. It further dec!ared that the P.,),333.33 re+itted 1/ petitioner to respondent PNB on <une ', 50) was a ?deposit,? and not a downpa/+ent or earnest +one/. On appea! to the CA, petitioner +ade the fo!!owin- a!!e-ationsB I TAE LO@E& COC&T E&&ED IN &CLIN% TAAT DE=ENDANT$APPELLEE;S LETTE& DATED ' <CNE 50) APP&ODIN%>ACCEPTIN% PLAINTI==$APPELLANT;S O==E& TO PC&CAASE TAE SCB<ECT P&OPE&TE IS NOT DALID AND EN=O&CEABLE. II TAE LO@E& COC&T E&&ED IN &CLIN% TAAT TAE&E @AS NO PE&=ECTED CONT&ACT O= SALE BET@EEN PLAINTI==$APPELLANT AND DE=ENDANT$APPELLEE.
III TAE LO@E& COC&T E&&ED IN &CLIN% TAAT PLAINTI==$APPELLLANT @AIDED ITS &I%AT TO PC&CAASE TAE SCB<ECT P&OPE&TE @AEN IT =AILED TO CON=O&2 @ITA CONDITIONS SET =O&TA BE DE=ENDANT$APPELLEE IN ITS LETTE& DATED ' <CNE 50). ID TAE LO@E& COC&T E&&ED IN DIS&E%A&DIN% TAE =ACT TAAT IT @AS TAE DE=ENDANT$APPELLEE @AICA &ENDE&ED IT DI==ICCLT I= NOT I2POSSIBLE =O& PLAINTI==$APPELLANT TO CO2PLETE TAE BALANCE O= TAEI& PC&CAASE P&ICE. D TAE LO@E& COC&T E&&ED IN DIS&E%A&DIN% TAE =ACT TAAT TAE&E @AS NO DALID &ESCISSION O& CANCELLATION O= SCB<ECT CONT&ACT O= &EPC&CAASE. DI TAE LO@E& COC&T E&&ED IN DECLA&IN% TAAT PLAINTI== =AILED AND &E=CSED TO SCB2IT TAE A2ENDED &EPC&CAASE O==E&. DII TAE LO@E& COC&T E&&ED IN DIS2ISSIN% TAE A2ENDED CO2PLAINT O= PLAINTI==$APPELLANT. DIII TAE LO@E& COC&T E&&ED IN NOT A@A&DIN% PLAINTI==$APPELLANT ACTCAL, 2O&AL AND EFE2PLA&E DA2A%ES, ATTOT&NEE;S =EES AND LITI%ATION EFPENSES. ** 2eanwhi!e, on <une ., 55*, petitioner;s Board of Directors approved &eso!ution No. *$33', where it waived, assi-ned and transferred its ri-hts over the propert/ covered 1/ TCT No. **355 and TCT No. *.3,) in favor of Ba/ani %a1rie!, one of its Directors. *' Thereafter, Ba/ani %a1rie! e8ecuted a Deed of Assi-n+ent over ) G of the ownership and +ana-e+ent of the propert/ in favor of &e/na!do To!entino, who !ater +oved for !eave to intervene as p!aintiff$appe!!ant. On <u!/ ', 55*, the CA issued a reso!ution -rantin- the +otion, *) and !i7ewise -ranted the +otion of &e/na!do To!entino su1stitutin- petitioner 22CC, as p!aintiff$appe!!ant, and his +otion to withdraw as intervenor.*( The CA rendered :ud-+ent on 2a/ , ,333 affir+in- the decision of the &TC. *. It dec!ared that petitioner o1vious!/ never a-reed to the se!!inprice proposed 1/ respondent PNB "P ,5* ,*05.)*# since petitioner had 7ept on insistin- that the se!!inprice shou!d 1e !owered to P ,).',)(3.'.. C!ear!/ therefore, there was no +eetinof the +inds 1etween the parties as to the price or consideration of the sa!e. The CA ratiocinated that petitioner;s ori-ina! offer to purchase the su1:ect propert/ had not 1een accepted 1/ respondent PNB. In fact, it +ade a counter$offer throu-h its <une ', 50) !etter specifica!!/ on the se!!in- price9 petitioner did not a-ree to the counter$offer9 and the ne-otiations did not prosper. 2oreover, petitioner did not pa/ the 1a!ance of the purchase price within the si8t/$da/ period set in the <une ', 50) !etter of respondent PNB. Conse4uent!/, there was no perfected contract of sa!e, and as such, there was no contract to rescind.
Accordin- to the appe!!ate court, the c!ai+ for da+a-es and the counterc!ai+ were correct!/ dis+issed 1/ the court a 4uo for no evidence was presented to support it. &espondent PNB;s !etter dated <une *3, 500 cannot revive the fai!ed ne-otiations 1etween the parties. &espondent PNB +ere!/ as7ed petitioner to su1+it an a+ended offer to repurchase. @hi!e petitioner reiterated its re4uest for a !ower se!!inprice and that the 1a!ance of the repurchase 1e reduced, however, respondent re:ected the proposa! in a !etter dated Au-ust , 505. Petitioner fi!ed a +otion for reconsideration, which the CA !i7ewise denied. Thus, petitioner fi!ed the instant petition for review on certiorari, a!!e-in- thatB I. TAE COC&T O= APPEALS E&&ED ON A HCESTION O= LA@ @AEN IT &CLED TAAT TAE&E IS NO PE&=ECTED CONT&ACT O= SALE BET@EEN TAE PETITIONE& AND &ESPONDENT. II. TAE COC&T O= APPEALS E&&ED ON A HCESTION O= LA@ @AEN IT &CLED TAAT TAE A2OCNT O= PAP.,),333.33 PAID BE TAE PETITIONE& IS NOT AN EA&NEST 2ONEE. III. TAE COC&T O= APPEALS E&&ED ON A HCESTION O= LA@ @AEN IT &CLED TAAT TAE =AILC&E O= TAE PETITIONE&$APPELLANT TO SI%NI=E ITS CON=O&2ITE TO TAE TE&2S CONTAINED IN PNB;S <CNE ', 50) LETTE& 2EANS TAAT TAE&E @AS NO DALID AND LE%ALLE EN=O&CEABLE CONT&ACT O= SALE BET@EEN TAE PA&TIES. ID. TAE COC&T O= APPEALS E&&ED ON A HCESTION O= LA@ TAAT NON$PAE2ENT O= TAE PETITIONE&$APPELLANT O= TAE BALANCE O= TAE O==E&ED P&ICE IN TAE LETTE& O= PNB DATED <CNE ', 50), @ITAIN SIFTE "(3# DAES =&O2 NOTICE O= APP&ODAL CONSTITCTES NO DALID AND LE%ALLE EN=O&CEABLE CONT&ACT O= SALE BET@EEN TAE PA&TIES. D. TAE COC&T O= APPEALS SE&IOCSLE E&&ED @AEN IT AELD TAAT TAE LETTE&S O= PETITIONE&$APPELLANT DATED 2A&CA 0, 55* AND <CNE , , 55*, O==E&IN% TO BCE TAE SCB<ECT P&OPE&TE AT DI==E&ENT A2OCNT @E&E P&OO= TAAT TAE&E IS NO PE&=ECTED CONT&ACT O= SALE.*0 The thresho!d issue is whether or not petitioner and respondent PNB had entered into a perfected contract for petitioner to repurchase the propert/ fro+ respondent. Petitioner +aintains that it had accepted respondent;s offer +ade throu-h the SA2D, to se!! the propert/ forP ,).',)(3.33. @hen the acceptance was +ade in its !etter dated <une ,), 50'9 it then deposited P.,),333.33 with the SA2D as partia! pa/+ent, evidenced 1/ &eceipt No. 5.0 5' which respondent had issued. Petitioner avers that the SA2D;s acceptance of the deposit a+ounted to an acceptance of its offer to repurchase. 2oreover, as -!eaned fro+ the !etter of SA2D dated <une ', 50), the PNB Board of Directors had approved petitioner;s offer to purchase the propert/. It c!ai+s that this was the suspensive condition, the fu!fi!!+ent of which -ave rise to the contract. &espondent cou!d no !on-er uni!atera!!/ withdraw its offer to se!! the propert/ for P ,).',)(3.'., since the acceptance of the offer resu!ted in a perfected contract of sa!e9 it was o1!i-ed to re+it to respondent the 1a!ance of the ori-ina! purchase price of P ,).',)(3.'., whi!e respondent was o1!i-ed to transfer ownership and de!iver the propert/ to petitioner, confor+a1!/ with Artic!e )5 of the New Civi! Code. Petitioner posits that respondent was proscri1ed fro+ increasin- the interest rate after it had accepted respondent;s offer to se!! the propert/ for P ,).',)(3.33. Conse4uent!/, respondent cou!d no !on-er va!id!/ +a7e a counter$offer of P ,5* ,.05.00 for the purchase of the propert/. It !i7ewise +aintains that, a!thou-h theP.,),333.33 was considered as ?deposit for the repurchase
of the propert/? in the receipt issued 1/ the SA2D, the a+ount constitutes earnest +one/ as conte+p!ated in Artic!e '0, of the New Civi! Code. Petitioner cites the ru!in-s of this Court in Villonco v. Bormaheco*5 and Topacio v. Court of Appeals.'3 Petitioner avers that its fai!ure to append its confor+it/ to the <une ', 50' !etter of respondent and its fai!ure to pa/ the 1a!ance of the price as fi8ed 1/ respondent within the (3$da/ period fro+ notice was to protest respondent;s 1reach of its o1!i-ation to petitioner. It did not a+ount to a re:ection of respondent;s offer to se!! the propert/ since respondent was +ere!/ see7in- to enforce its ri-ht to pa/ the 1a!ance of P ,).3,)('.'.. In an/ event, respondent had the option either to accept the 1a!ance of the offered price or to cause the rescission of the contract. Petitioner;s !etters dated 2arch 0, 55* and <une , , 55* to respondent durin- the pendenc/ of the case in the &TC were +ere!/ to co+pro+ise the pendin- !awsuit, the/ did not constitute separate offers to repurchase the propert/. Such offer to co+pro+ise shou!d not 1e ta7en a-ainst it, in accordance with Section ,., &u!e *3 of the &evised &u!es of Court. =or its part, respondent contends that the parties never -raduated fro+ the ?ne-otiation sta-e? as the/ cou!d not a-ree on the a+ount of the repurchase price of the propert/. A!! that transpired was an e8chan-e of proposa!s and counter$proposa!s, nothin- +ore. It insists that a definite a-ree+ent on the a+ount and +anner of pa/+ent of the price are essentia! e!e+ents in the for+ation of a 1indin- and enforcea1!e contract of sa!e. There was no such a-ree+ent in this case. Pri+ari!/, the concept of ?suspensive condition? si-nifies a future and uncertain event upon the fu!fi!!+ent of which the o1!i-ation 1eco+es effective. It c!ear!/ presupposes the e8istence of a va!id and 1indin- a-ree+ent, the effectivit/ of which is su1ordinated to its fu!fi!!+ent. Since there is no perfected contract in the first p!ace, there is no 1asis for the app!ication of the princip!es -overnin- ?suspensive conditions.? Accordin- to respondent, the State+ent of Account prepared 1/ SA2D as of <une ,), 50' cannot 1e c!assified as a counter$offer9 it is si+p!/ a recita! of its tota! +onetar/ c!ai+s a-ainst petitioner. 2oreover, the a+ount stated therein cou!d not !i7ewise 1e considered as the counter$ offer since as ad+itted 1/ petitioner, it was on!/ reco++endation which was su1:ect to approva! of the PNB Board of Directors. Neither can the receipt 1/ the SA2D of P.,),333.33 1e re-arded as evidence of a perfected sa!e contract. As -!eaned fro+ the parties; Stipulation of Facts durin- the proceedin-s in the court a quo, the a+ount is +ere!/ an ac7now!ed-+ent of the receipt of P.,),333.33 as deposit to repurchase the propert/. The deposit of P.,),333.33 was accepted 1/ respondent on the condition that the purchase price wou!d sti!! 1e approved 1/ its Board of Directors. &espondent +aintains that its acceptance of the a+ount was 4ua!ified 1/ that condition, thus not a1so!ute. Pendin- such approva!, it cannot 1e !e-a!!/ c!ai+ed that respondent is a!read/ 1ound 1/ an/ contract of sa!e with petitioner. Accordin- to respondent, petitioner 7new that the SA2D has no capacit/ to 1ind respondent and that its authorit/ is !i+ited to ad+inisterin-, +ana-in- and preservin- the properties and other specia! assets of PNB. The SA2D does not have the power to se!!, encu+1er, dispose of, or otherwise a!ienate the assets, since the power to do so +ust e+anate fro+ its Board of Directors. The SA2D was not authori6ed 1/ respondent;s Board to enter into contracts of sa!e with third persons invo!vin- corporate assets. There is a1so!ute!/ nothinon record that respondent authori6ed the SA2D, or +ade it appear to petitioner that it represented itse!f as havin- such authorit/.
&espondent reiterates that SA2D had infor+ed petitioner that its offer to repurchase had 1een approved 1/ the Board su1:ect to the condition, a+onothers, ?that the se!!inprice sha!! 1e the tota! 1an7;s c!ai+ as of docu+entation date 8 8 8 pa/a1!e in cash "P.,),333.33 a!read/ deposited# within (3 da/s fro+ notice of approva!.? A new State+ent of Account was attached therein indicatin- the tota! 1an7;s c!ai+ to 1e P ,5* ,*05.)* !ess deposit of P.,),333.33, or P ,,3(,*05.33. =urther+ore, whi!e respondent;s Board of Directors accepted petitioner;s offer to repurchase the propert/, the acceptance was 4ua!ified, in that it re4uired a hi-her sa!e price and su1:ect to specified ter+s and conditions enu+erated therein. This 4ua!ified acceptance was in effect a counter$offer, necessitatin- petitioner;s acceptance in return. T%e R*+,&- o. '%e Co*r' The ru!inof the appe!!ate court that there was no perfected contract of sa!e 1etween the parties on <une ', 50) is correct. A contract is a +eetinof +inds 1etween two persons where1/ one 1inds hi+se!f, with respect to the other, to -ive so+ethin- or to render so+e service. ' Cnder Artic!e * 0 of the New Civi! Code, there is no contract un!ess the fo!!owin- re4uisites concurB " # Consent of the contractin- parties9 ",# O1:ect certain which is the su1:ect +atter of the contract9 "*# Cause of the o1!i-ation which is esta1!ished. Contracts are perfected 1/ +ere consent which is +anifested 1/ the +eetinof the offer and the acceptance upon the thin- and the cause which are to constitute the contract. ', Once perfected, the/ 1ind other contractinparties and the o1!i-ations arisin- therefro+ have the for+ of !aw 1etween the parties and shou!d 1e co+p!ied with in -ood faith. The parties are 1ound not on!/ to the fu!fi!!+ent of what has 1een e8press!/ stipu!ated 1ut a!so to the conse4uences which, accordin- to their nature, +a/ 1e in 7eepin- with -ood faith, usa-e and !aw. '* B/ the contract of sa!e, one of the contractinparties o1!i-ates hi+se!f to transfer the ownership of and de!iver a deter+inate thin-, and the other to pa/ therefor a price certain in +one/ or its e4uiva!ent.'' The a1sence of an/ of the essentia! e!e+ents wi!! ne-ate the e8istence of a perfected contract of sa!e. As the Court ru!ed in Boston Bank of the Philippines v. Manalo B') A definite a-ree+ent as to the price is an essentia! e!e+ent of a 1indin- a-ree+ent to se!! persona! or rea! propert/ 1ecause it serious!/ affects the ri-hts and o1!i-ations of the parties. Price is an essentia! e!e+ent in the for+ation of a 1indin- and enforcea1!e contract of sa!e. The fi8in- of the price can never 1e !eft to the decision of one of the contractinparties. But a price fi8ed 1/ one of the contractinparties, if accepted 1/ the other, -ives rise to a perfected sa!e. '( A contract of sa!e is consensua! in nature and is perfected upon +ere +eetinof the +inds. @hen there is +ere!/ an offer 1/ one part/ without acceptance of the other, there is no contract.'. @hen the contract of sa!e is not perfected, it cannot, as an independent source of o1!i-ation, serve as a 1indin- :uridica! re!ation 1etween the parties. '0 In San Miguel Properties Philippines, nc. v. !uang ,'5 the Court ru!ed that the sta-es of a contract of sa!e are as fo!!owsB " # ne-otiation, coverin- the period fro+ the ti+e the prospective
contractinparties indicate interest in the contract to the ti+e the contract is perfected9 ",# perfection, which ta7es p!ace upon the concurrence of the essentia! e!e+ents of the sa!e which are the +eetinof the +inds of the parties as to the o1:ect of the contract and upon the price9 and "*# consummation, which 1e-ins when the parties perfor+ their respective underta7in-s under the contract of sa!e, cu!+inatin- in the e8tin-uish+ent thereof. A ne-otiation is for+a!!/ initiated 1/ an offer, which, however, +ust 1e certain. )3 At an/ ti+e prior to the perfection of the contract, either ne-otiatin- part/ +a/ stop the ne-otiation. At this sta-e, the offer +a/ 1e withdrawn9 the withdrawa! is effective i++ediate!/ after its +anifestation. To convert the offer into a contract, the acceptance +ust 1e a1so!ute and +ust not 4ua!if/ the ter+s of the offer9 it +ust 1e p!ain, une4uivoca!, unconditiona! and without variance of an/ sort fro+ the proposa!. In A"elfa Properties, nc. v. Court of Appeals ,) the Court ru!ed thatB 8 8 8 The ru!e is that e8cept where a for+a! acceptance is so re4uired, a!thou-h the acceptance +ust 1e affir+ative!/ and c!ear!/ +ade and +ust 1e evidenced 1/ so+e acts or conduct co++unicated to the offeror, it +a/ 1e shown 1/ acts, conduct, or words of the acceptin- part/ that c!ear!/ +anifest a present intention or deter+ination to accept the offer to 1u/ or se!!. Thus, acceptance +a/ 1e shown 1/ the acts, conduct, or words of a part/ reco-ni6in- the e8istence of the contract of sa!e.), A 4ua!ified acceptance or one that invo!ves a new proposa! constitutes a counter$offer and a re:ection of the ori-ina! offer. A counter$offer is considered in !aw, a re:ection of the ori-ina! offer and an atte+pt to end the ne-otiation 1etween the parties on a different 1asis. )* Conse4uent!/, when so+ethin- is desired which is not e8act!/ what is proposed in the offer, such acceptance is not sufficient to -uarantee consent 1ecause an/ +odification or variation fro+ the ter+s of the offer annu!s the offer.)' The acceptance +ust 1e identica! in a!! respects with that of the offer so as to produce consent or +eetinof the +inds. In this case, petitioner had unti! =e1ruar/ ., 50' within which to redee+ the propert/. Aowever, since it !ac7ed the resources, it re4uested for +ore ti+e to redee+>repurchase the propert/ under such ter+s and conditions a-reed upon 1/ the parties. )) The re4uest, which was +ade throu-h a !etter dated Au-ust ,), 50*, was referred to the respondent;s +ain 1ranch for appropriate action.)( Before respondent cou!d act on the re4uest, petitioner a-ain wrote respondent as fo!!owsB . Cpon approva! of our re4uest, we wi!! pa/ /our -oodse!ves ONE ACND&ED I =I=TE TAOCSAND PESOS "P )3,333.33#9 ,. @ithin si8 +onths fro+ date of approva! of our re4uest, we wi!! pa/ another =OC& ACND&ED =I=TE TAOCSAND PESOS "P')3,333.33#9 and *. The re+ainin- 1a!ance to-ether with the interest and other e8penses that wi!! 1e incurred wi!! 1e paid within the !ast si8 +onths of the one /ear -rave period re4uested for. ). @hen the petitioner was to!d that respondent did not a!!ow ? /0r',0+ re(em/',o&,?)0 it sent a !etter to respondent;s President reiteratin- its offer to purchase the propert/. )5 There was no response to petitioner;s !etters dated =e1ruar/ 3 and ), 50'. The state+ent of account prepared 1/ the SA2D statin- that the net c!ai+ of respondent as of <une ,), 50' wasP ,).',)(3.'. cannot 1e considered an un4ua!ified acceptance to petitioner;s
offer to purchase the propert/. The state+ent is 1ut a co+putation of the a+ount which petitioner was o1!i-ed to pa/ in case respondent wou!d !ater a-ree to se!! the propert/, inc!udininterests, advances on insurance pre+iu+, advances on rea!t/ ta8es, pu1!ication cost, re-istration e8penses and +isce!!aneous e8penses. There is no evidence that the SA2D was authori6ed 1/ respondent;s Board of Directors to accept petitioner;s offer and se!! the propert/ for P ,).',)(3.'.. An/ acceptance 1/ the SA2D of petitioner;s offer wou!d not 1ind respondent. As this Court ru!ed in AF #ealt$ %evelopment, nc. vs. %iesehuan Freight Services, nc.B(3 Section ,* of the Corporation Code e8press!/ provides that the corporate powers of a!! corporations sha!! 1e e8ercised 1/ the 1oard of directors. <ust as a natura! person +a/ authori6e another to do certain acts in his 1eha!f, so +a/ the 1oard of directors of a corporation va!id!/ de!e-ate so+e of its functions to individua! officers or a-ents appointed 1/ it. Thus, contracts or acts of a corporation +ust 1e +ade either 1/ the 1oard of directors or 1/ a corporate a-ent du!/ authori6ed 1/ the 1oard. A1sent such va!id de!e-ation>authori6ation, the ru!e is that the dec!arations of an individua! director re!atin- to the affairs of the corporation, 1ut not in the course of, or connected with the perfor+ance of authori6ed duties of such director, are he!d not 1indin- on the corporation. Thus, a corporation can on!/ e8ecute its powers and transact its 1usiness throu-h its Board of Directors and throu-h its officers and a-ents when authori6ed 1/ a 1oard reso!ution or its 1/$ !aws.( It appears that the SA2D had prepared a reco++endation for respondent to accept petitioner;s offer to repurchase the propert/ even 1e/ond the one$/ear period9 it reco++ended that petitioner 1e a!!owed to redee+ the propert/ and pa/ P ,).',)(3.33 as the purchase price. &espondent !ater approved the reco++endation that the propert/ 1e so!d to petitioner. But instead of the P ,).',)(3.'. reco++ended 1/ the SA2D and to which petitioner had previous!/ confor+ed, respondent set the purchase price at P,,((3,333.33. In fine, respondent;s acceptance of petitioner;s offer was 4ua!ified, hence can 1e at +ost considered as a counter$ offer. If petitioner had accepted this counter$offer, a perfected contract of sa!e wou!d have arisen9 as it turns out, however, petitioner +ere!/ sou-ht to have the counter$offer reconsidered. This re4uest for reconsideration wou!d !ater 1e re:ected 1/ respondent. @e do not a-ree with petitioner;s contention that the P.,),333.33 it had re+itted to respondent was ?earnest +one/? which cou!d 1e considered as proof of the perfection of a contract of sa!e under Artic!e '0, of the New Civi! Code. The provision readsB A&T. '0,. @henever earnest +one/ is -iven in a contract of sa!e, it sha!! 1e considered as part of the price and as proof of the perfection of the contract. This contention is !i7ewise ne-ated 1/ the stipu!ation of facts which the parties entered into in the tria! courtB 0. On <une 0, 50', the Specia! Assets 2ana-e+ent Depart+ent "SA2D# of PNB prepared an updated State+ent of Account showin- 22CC;s tota! !ia1i!it/ to PNB as of <une ,), 50' to 1e P ,).',)(3.'. and reco++ended this a+ount as the repurchase price of the su1:ect propert/.
5. On <une ,), 50', 22CC paid P.,),333.33 to PNB as deposit to repurchase the propert/. The deposit of P725,000 was accepted by PNB on the condition that the purchase price is still subject to the approval of the PNB Board .(, Thus, the P.,),333.33 was +ere!/ a deposit to 1e app!ied as part of the purchase price of the propert/, in the event that respondent wou!d approve the reco++endation of SA2D for respondent to accept petitioner;s offer to purchase the propert/ for P ,).',)(3.'.. Cn!ess and unti! the respondent accepted the offer on these ter+s, no perfected contract of sa!e wou!d arise. A1sent proof of the concurrence of a!! the essentia! e!e+ents of a contract of sa!e, the -ivin- of earnest +one/ cannot esta1!ish the e8istence of a perfected contract of sa!e. (* It appears that, per its !etter to petitioner dated <une ', 50), the respondent had decided to accept the offer to purchase the propert/ for P ,5* ,*05.)*. Aowever, this a+ounted to an a+end+ent of respondent;s 4ua!ified acceptance, or an a+ended counter$offer, 1ecause whi!e the respondent !owered the purchase price, it sti!! dec!ared that its acceptance was su1:ect to the fo!!owin- ter+s and conditionsB . That the se!!inprice sha!! 1e the tota! Ban7;s c!ai+ as of docu+entation date "p!s. see attached state+ent of account as of )$* $0)#, pa/a1!e in cash "P.,),333.33 a!read/ deposited# within si8t/ "(3# da/s fro+ notice of approva!9 ,. The Ban7 se!!s on!/ whatever ri-hts, interests and participation it +a/ have in the propert/ and /ou are char-ed with fu!! 7now!ed-e of the nature and e8tent of said ri-hts, interests and participation and waive /our ri-ht to warrant/ a-ainst eviction. *. A!! ta8es and other -overn+ent i+posts due or to 1eco+e due on the propert/, as we!! as e8penses inc!udin- costs of docu+ents and science sta+ps, transfer fees, etc., to 1e incurred in connection with the e8ecution and re-istration of a!! coverin- docu+ents sha!! 1e 1orne 1/ /ou9 '. That /ou sha!! underta7e at /our own e8pense and account the e:ect+ent of the occupants of the propert/ su1:ect of the sa!e, if there are an/9 ). That upon /our fai!ure to pa/ the 1a!ance of the purchase price within si8t/ "(3# da/s fro+ receipt of advice acceptin- /our offer, /our deposit sha!! 1e forfeited and the Ban7 is thenceforth authori6ed to se!! the propert/ to other interested parties. (. That the sa!e sha!! 1e su1:ect to such other ter+s and conditions that the Le-a! Depart+ent +a/ i+pose to protect the interest of the Ban7. (' It appears that a!thou-h respondent re4uested petitioner to confor+ to its a+ended counter$ offer, petitioner refused and instead re4uested respondent to reconsider its a+ended counter$ offer. Petitioner;s re4uest was u!ti+ate!/ re:ected and respondent offered to refund its P.,),333.33 deposit. In su+, then, there was no perfected contract of sa!e 1etween petitioner and respondent over the su1:ect propert/. IN LIGHT O1 ALL THE 1OREGOING, the petition is DENIED. The assai!ed decision is A11IRMED. Costs a-ainst petitioner 2ani!a 2eta! Container Corporation. #O ORDERED.
&nares'Santiago, (., )orking Chairperson, Austria'Martine*, an" Chico'+a*ario, ((., concur. Pangani,an, C.(., retired as of Dece+1er ., ,33(. . OPTION CONT&ACT %.&. No. *'5. 2arch ,), ,33'
AE&2INIO TAEA%, petitioner, vs. A2ANCIA LACSON, &OSENDO LACSON, ANTONIO LACSON, <CAN LACSON, TEODISIA LACSON$ESPINOSA and TAE COC&T O= APPEALS, respondents.
DECISION
CALLE<O, S&., <.B
Before us is a petition for review on certiorari of the Decision and the &eso!ution, of respondent Court of Appea!s in CA$%.&. SP No. ''00*.
The Case for the Petitioner
&espondents An-e!ica Tiotu/co Dda. de Lacson,* and her chi!dren A+ancia, Antonio, <uan, and Teodosia, a!! surna+ed Lacson, were the re-istered owners of three parce!s of !and !ocated in 2a1a!acat, Pa+pan-a, covered 1/ Transfer Certificates of Tit!e "TCT# Nos. *)5,,$&, *)5,*$&, and *)5,)$&, re-istered in the &e-ister of Deeds of San =ernando, Pa+pan-a. The properties, which were tenanted a-ricu!tura! !ands,' were ad+inistered 1/ &enato Espinosa for the owner.
On 2arch ., 55(, a -roup of ori-ina! far+ers>ti!!ers, na+e!/, <u!io Tia+son, &enato %o6un, &osita Aernande6, Bienvenido Ton-o!, A!fonso =!ores, Nor+a Huia+1ao, &osita To!entino, <ose Sosa, =rancisco To!entino, Sr., E+i!iano La8a+ana, &u1en Torres, 2e!iton A!!ani-ue, Do+in-a La8a+ana, =e!icencia de Leon, E+i!iano &a+os, and another -roup, na+e!/, =e!ino %. To!entino, &ica %o6un, Per!a %o6un, Beni-no To!entino, &odo!fo Huia+1ao, &o+an La8a+ana, Eddie San Luis, &icardo Aernande6, Nicenciana 2iranda, <ose %o6un, A!fredo Sosa, <ose Tia+son, Au-usto To!entino, Si8to Aernande6, A!e8 Huia+1ao, Isidro To!entino, Ceferino de Leon, A!1erto Aernande6, Or!ando =!ores, and Aure!io =!ores,) individua!!/ e8ecuted in favor of the petitioner separate Deeds of Assi-n+ent( in which the assi-nees assi-ned to the petitioner their respective ri-hts as
tenants>ti!!ers of the !andho!din-s possessed and ti!!ed 1/ the+ for and in consideration of P)3.33 per s4uare +eter. The said a+ount was +ade pa/a1!e ?when the !e-a! i+pedi+ents to the sa!e of the propert/ to the petitioner no !on-er e8isted.? The petitioner was a!so -ranted the e8c!usive ri-ht to 1u/ the propert/ if and when the respondents, with the concurrence of the defendants$tenants, a-reed to se!! the propert/. In the interi+, the petitioner -ave varied su+s of +one/ to the tenants as partia! pa/+ents, and the !atter issued receipts for the said a+ounts.
On <u!/ ,', 55(, the petitioner ca!!ed a +eetinof the defendants$tenants to wor7 out the i+p!e+entation of the ter+s of their separate a-ree+ents.. Aowever, on Au-ust 0, 55(, the defendants$tenants, throu-h <oven 2ariano, wrote the petitioner statin- that the/ were not attendin- the +eetin- and instead -ave notice of their co!!ective decision to se!! a!! their ri-hts and interests, as tenants>!essees, over the !andho!din- to the respondents.0 E8p!ainin- their reasons for their co!!ective decision, the/ wrote as fo!!owsB
Ja+i a/ na-tiwa!a sa in/o, na-in- tapat at nanindi-an sa !ahat n- atin- napa-7asunduan, hindi tu+an--ap n- i1an- 1u/er o ahente, pero sinira nin/o an- a+in- pa-titiwa!a sa pa+a+a-itan n- de+anda nin/o at pa-1i1i-a/ n- pro1!e+a sa a+in na hindi na+an na-1enta n- !upa.
Ja/a 7a+i a/ na-pu!on- at na-pas/a na i1enta na !an- an- a+in- 7arapatan o an- a+in!upan- sinasa7a sa !andowner o sa +-a pa+i!/an- Lacson, dahi! a/aw na+in- +a-7aroon n- pro1!e+a.
Ja/a 7un- an- sasa1ihin nin/on- itoK/ 7atan-ahan, !a!o si-uron- +a-i-in- 7atan-ahan 7un- i1e1enta pa na+in sa in/o an- a+in- !upan- sinasa7a, 7a/a pasens/a na !an- 2ister Ta/a-. Dahi! sinira nin/o an- a+in- pa-titiwa!a at 7atapatan.5
On Au-ust 5, 55(, the petitioner fi!ed a co+p!aint with the &e-iona! Tria! Court of San =ernando, Pa+pan-a, Branch '', a-ainst the defendants$tenants, as we!! as the respondents, for the court to fi8 a period within which to pa/ the a-reed purchase price of P)3.33 per s4uare +eter to the defendants, as provided for in the Deeds of Assi-n+ent. The petitioner a!so pra/ed for a writ of pre!i+inar/ in:unction a-ainst the defendants and the respondents therein. 3 The case was doc7eted as Civi! Case No. 35 3.
In his co+p!aint, the petitioner a!!e-ed, inter a!ia, the fo!!owin-B
'. That defendants <u!io Tia+son, &enato %o6un, &osita Aernande6, Bienvenido Ton-o!, A!fonso =!ores, Nor+a Huia+1ao, &osita To!entino, <ose Sosa, =rancisco To!entino, Sr., E+i!iano La8a+ana, &u1en Torres, 2e!iton A!!ani-ue, Do+in-a La8a+ana, =e!icencia de Leon, E+i!iano &a+os are ori-ina! far+ers or direct ti!!ers of !andho!din-s over parce!s of !ands covered 1/ Transfer Certificate of Tit!e Nos. *)5,,$&, *)5,*$& and *)5,)$& which are re-istered in the na+es of defendants LACSONS9 whi!e defendants =e!ino %. To!entino, &ica %o6un, Per!a %o6un, Beni-no To!entino, &odo!fo Huia+1ao, &o+an La8a+ana, Eddie San Luis, A!fredo %o6un, <ose Tia+son, Au-usto To!entino, Si8to Aernande6, A!e8 Huia+1ao, Isidro To!entino, Ceferino de Leon, A!1erto Aernande6, and Aure!io =!ores are su1$tenants over the sa+e parce! of !and.
). That on 2arch ., 55( the defendants TIA2SON, et a!., entered into Deeds of Assi-n+ent with the p!aintiff 1/ which the defendants assi-ned a!! their ri-hts and interests on their !andho!din-s to the p!aintiff and that on the sa+e date "2arch ., 55(#, the defendants received fro+ the p!aintiff partia! pa/+ents in the a+ounts correspondinto their na+es. Su1se4uent pa/+ents were a!so receivedB
st PAE2ENT
,nd PAE2ENT P ,3,333
CAECJ NO. TOTAL P 3,(, .)' ,* ,0 P *3,(, .)'
.<u!io Tia+son $ $ $ $ $ $ ,. &enato %o6un $ $ $ $ $ $
Lson of =e!i8 %o6un "deceased#M P 3,333 *. &osita Aernande6 $ $ $ $ P ),333 '. Bienvenido Ton-o! $ $ $ LSon of A1undio Ton-o! "deceased#M ). A!fonso =!ores $ $ $ $ $ $ P *3,333 (. Nor+a Huia+1ao $ $ $ $ P 3,333 .. &osita To!entino $ $ $ $ $ P 3,333 0. <ose Sosa $ $ $ $ $ $ $ $ $ P 3,333 5. =rancisco To!entino, Sr. P 3,333 3. E+i!iano La8a+ana $ $ . &u1en Torres $ $ $ $ $ $ LSon of 2ariano Torres "deceased#M ,. 2e!iton A!!ani-ue P 3,333
5(,333 ,* ,.'
3(,333.33 P 5,*.'.,'
',*.'.,'
P 3,333 ,(,('0.'3 ' ,)3 . 3 ,,, ,(.30 ',0( .* ,',,*..(, $$$$$$
','().53 ,* ,. ,* ,.5 ,* ,0' ,* ,5 ,* ,0* $$$$$$ $$$$$$
,* ,0) )(,('0.'3 ) ,)3 . 3 *,, ,(.30 ,',0( .* *',,*..(,
,','().53
P 3,333
P 3,333 ,,5''...
P **,)0..* ,* ,(5
$$$$$$
P '*,)0..*
P ,,,5''...
*. Do+in-a La8a+ana '. =e!icencia de Leon ). E+i!iano &a+os (. =e!ino %. To!entino .. &ica %o6un 0. Per!a %o6un
P ),333 3,333 ),333 3,333 $$$$$$ $$$$$$ 3,333 3,333 3,333 $$$$$$ 3,333 3,333 $$$$$$ $$$$$$ $$$$$$
,,,,(5.3, $$$$$$ 0,0(5.(3 $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$ $$$$$$
,* ,.) $$$$$$
,.,,(5.3,
,* ,03 $$$$$$ $$$$$$
,*,0(5.(3
),333 $$$$$$ 3,333
5. Beni-no To!entino ,3. &odo!fo Huia+1ao , . &o+an La8a+ana ,,. Eddie San Luis 3,333
$$$$$$ $$$$$$ $$$$$$
,*. &icardo Aernande6 ,'. Nicenciana 2iranda ,). <ose %o6un ,(. A!fredo Sosa ,.. <ose Tia+son 3,333
$$$$$$ $$$$$$
),333 $$$$$$ 3,333
,0. Au-usto To!entino ,5. Si8to Aernande6
),333 $$$$$$ 3,333 $$$$$$ $$$$$$
$$$$$$
*3. A!e8 Huia+1ao 3,333 * . Isidro To!entino 3,333 *,. Ceferino de Leon **. A!1erto Aernande6 *'. Or!ando =!ore6 *). Aure!io =!ores 3,333 3,333 $$$$$$
,*.0..3 $$$$$$ $$$$$$ $$$$$$
,* ,.3 $$$$$$ $$$$$$ $$$$$$ $$$$$$
$$$$$$
3,333 $$$$$$ $$$$$$
(. That on <u!/ ,', 55(, the p!aintiff wrote the defendants TIA2SON, et a!., invitin- the+ for a +eetin- re-ardin- the ne-otiations>i+p!e+entations of the ter+s of their Deeds of Assi-n+ent9
.. That on Au-ust 0, 55(, the defendants TIA2SON, et a!., throu-h <oven 2ariano, rep!ied that the/ are no !on-er wi!!in- to pursue with the ne-otiations, and instead the/ -ave notice to the p!aintiff that the/ wi!! se!! a!! their ri-hts and interests to the re-istered owners "defendants LACSONS#.
A cop/ of the !etter is hereto attached as Anne8 ?A? etc.9
0. That the defendants TIA2SON, et. a!., have no ri-ht to dea! with the defendants LACSON or with an/ third persons whi!e their contracts with the p!aintiff are su1sistin-9 defendants LACSONS are inducin- or have induced the defendants TIA2SON, et. a!., to vio!ate their contracts with the p!aintiff9
5. That 1/ reason of the +a!icious acts of a!! the defendants, p!aintiff suffered +ora! da+a-es in the for+s of +enta! an-uish, +enta! torture and serious an8iet/ which in the su+ of P)33,333.33 for which defendants shou!d 1e he!d !ia1!e :oint!/ and severa!!/.
In support of his p!ea for in:unctive re!ief, the petitioner, as p!aintiff, a!so a!!e-ed the fo!!owin- in his co+p!aintB
. That to +aintain the status 4uo, the defendants TIA2SON, et a!., shou!d 1e restrained fro+ rescindin- their contracts with the p!aintiff, and the defendants LACSONS shou!d a!so 1e restrained fro+ acceptin- an/ offer of sa!e or a!ienation with the defendants TIA2SON, et a!., in whatever for+, the !atterKs ri-hts and interests in the properties +entioned in para-raph ' hereof9 further, the LACSONS shou!d 1e restrained fro+ encu+1erin->a!ienatin- the su1:ect properties covered 1/ TCT No. *)5,,$&, *)5,*$& and TCT No. *)5,)$&, &e-istr/ of Deeds of San =ernando, Pa+pan-a9
,. That the defendants TIA2SON, et a!., threaten to rescind their contracts with the p!aintiff and are a!so 1ent on se!!in->a!ienatin- their ri-hts and interests over the su1:ect properties to their co$defendants "LACSONS# or an/ other persons to the da+a-e and pre:udice of the p!aintiff who a!read/ invested +uch +one/, efforts and ti+e in the said transactions9
*. That the p!aintiff is entit!ed to the re!iefs 1ein- de+anded in the co+p!aint9
'. That to prevent irrepara1!e da+a-es and pre:udice to the p!aintiff, as the !atter has no speed/ and ade4uate re+ed/ under the ordinar/ course of !aw, it is essentia! that a @rit of Pre!i+inar/ In:unction 1e issued en:oinin- and restrainin- the defendants TIA2SON, et a!., fro+ rescindin- their contracts with the p!aintiff and fro+ se!!in->a!ienatin- their properties to the LACSONS or other persons9
). That the p!aintiff is wi!!in- and a1!e to put up a reasona1!e 1ond to answer for the da+a-es which the defendants wou!d suffer shou!d the in:unction pra/ed for and -ranted 1e found without 1asis. ,
The petitioner pra/ed, that after the proceedin-s, :ud-+ent 1e rendered as fo!!owsB
. Pendin- the hearin-, a @rit of Pre!i+inar/ In:unction 1e issued prohi1itin-, en:oininand restrainin- defendants <u!io Tia+son, &enato %o6un, &osita Aernande6, Bienvenido Ton-o!, A!fonso =!ores, Nor+a Huia+1ao, &osita To!entino, <ose Sosa, =rancisco To!entino Sr., E+i!iano La8a+ana, &u1en Torres, 2e!iton A!!ani-ue, Do+in-a La8a+ana, =e!icencia de Leon, E+i!iano &a+os, =e!ino %. To!entino, &ica %o6un, Per!a %o6un, Beni-no To!entino, &odo!fo Huia+1ao, &o+an La8a+ana, Eddie San Luis, &icardo Aernande6, Nicenciana 2iranda, <ose %o6un, A!fredo Sosa, <ose Tia+son, Au-usto To!entino, Ceferino de Leon, A!1erto Aernande6, Or!ando =!ores, and Aure!io =!ores fro+ rescindin- their contracts with the p!aintiff and fro+ a!ienatin- their ri-hts and interest over the afore+entioned properties in favor of defendants LACSONS or an/ other third persons9 and prohi1itin- the defendants LACSONS fro+ encu+1erin->a!ienatin- TCT Nos. *)5,,$&, *)5,*$& and *)5,)$& of the &e-istr/ of Deeds of San =ernando, Pa+pan-a.
,. And pendin- the hearin- of the Pra/er for a @rit of Pre!i+inar/ In:unction, it is pra/ed that a restrainin- order 1e issued restrainin- the afore+entioned defendants "TIA2SON, et a!.# fro+ rescindin- their contracts with the p!aintiff and fro+ a!ienatin- the su1:ect properties to the defendants LACSONS or an/ third persons9 further, restrainin- and en:oinin- the defendants LACSONS fro+ encu+1erin->se!!in- the properties covered 1/ TCT Nos. *)5,,$&, *)5,*$&, and *)5,)$& of the &e-istr/ of Deeds of San =ernando, Pa+pan-a.
*. =i8in- the period within which p!aintiff sha!! pa/ the 1a!ance of the purchase price to the defendants TIA2SON, et a!., after the !apse of !e-a! i+pedi+ent, if an/.
'. 2a7in- the @rit of Pre!i+inar/ In:unction per+anent9
). Orderin- the defendants to pa/ the p!aintiff the su+ of P)33,333.33 as +ora! da+a-es9
(. Orderin- the defendants to pa/ the p!aintiff attorne/Ks fees in the su+ of P 33,333.33 p!us !iti-ation e8penses of P)3,333.339
P!aintiff pra/s for such other re!ief as +a/ 1e :ust and e4uita1!e under the pre+ises. *
In their answer to the co+p!aint, the respondents as defendants asserted that "a# the defendant An-e!ica Dda. de Lacson had died on Apri! ,', 55*9 "1# twe!ve of the defendants were tenants>!essees of respondents, 1ut the tenanc/ status of the rest of the defendants was uncertain9 "c# the/ never induced the defendants Tia+son to vio!ate their contracts with the petitioner9 and, "d# 1ein- +ere!/ tenants$ti!!ers, the defendants$tenants had no ri-ht to enter into an/ transactions invo!vin- their properties without their 7now!ed-e and consent. The/ a!so averred that the transfers or assi-n+ents of !easeho!d ri-hts +ade 1/ the defendants$tenants to the petitioner is contrar/ to Presidentia! Decree "P.D.# No. ,. and &epu1!ic Act No. (()., the Co+prehensive A-rarian &efor+ Pro-ra+ "CA&P#. ' The respondents interposed counterc!ai+s for da+a-es a-ainst the petitioner as p!aintiff.
The defendants$tenants Tia+son, et a!., a!!e-ed in their answer with counterc!ai+ for da+a-es, that the +one/ each of the+ received fro+ the petitioner were in the for+ of !oans, and that the/ were deceived into si-nin- the deeds of assi-n+entB
a# That a!! the fore-oin- a!!e-ations in the Answer are here1/ rep!eaded and incorporated in so far as the/ are +ateria! and re!evant herein9
1# That the defendants Tia+son, et a!., in so far as the Deeds of Assi-n+ent are concernLedM never 7new that what the/ did si-n is a Deed of Assi-n+ent. @hat the/ 7new was that the/ were +ade to si-n a docu+ent that wi!! serve as a receipt for the !oan -ranted LtoM the+ 1/ the p!aintiff9
c# That the Deeds of Assi-n+ent were si-ned throu-h the e+p!o/+ent of fraud, deceit and fa!se pretenses of p!aintiff and +ade the defendants 1e!ieve that what the/ si-nLedM was a +ere receipt for a+ounts received 1/ wa/ of !oans9
d# That the docu+ents si-ned in 1!an7 were fi!!ed up and co+p!eted after the defendants Tia+son, et a!., si-ned the docu+ents and their co+p!etion and acco+p!ish+ent was done in the a1sence of said defendants and, worst of a!!, defendants were not provided a cop/ thereof9
e# That as co+p!eted, the Deeds of Assi-n+ent ref!ected that the defendants Tia+son, et a!., did assi-n a!! their ri-hts and interests in the properties or !andho!din-s the/ were ti!!inin favor of the p!aintiff. That if this is so, assu+inar-uendo that the docu+ents were vo!untari!/ e8ecuted, the defendants Tia+son, et a!., do not have an/ ri-ht to transfer their interest in the !andho!din-s the/ are ti!!inas the/ have no ri-ht whatsoever
in the !andho!din-s, the !andho!din-s 1e!on- to their co$defendants, Lacson, et a!., and therefore, the contract is nu!! and void9
f# That whi!e it is ad+itted that the defendants Tia+son, et a!., received su+s of +one/ fro+ p!aintiffs, the sa+e were received as approved !oans -ranted 1/ p!aintiff to the defendants Tia+son, et a!., and not as part consideration of the a!!e-ed Deeds of Assi-n+ent9 and 1/ wa/ ofBN )
At the hearin- of the petitionerKs p!ea for a writ of pre!i+inar/ in:unction, the respondentsK counse! fai!ed to appear. In support of his p!ea for a writ of pre!i+inar/ in:unction, the petitioner adduced in evidence the Deeds of Assi-n+ent, ( the receipts . issued 1/ the defendants$tenants for the a+ounts the/ received fro+ hi+9 and the !etter 0 the petitioner received fro+ the defendants$tenants. The petitioner then rested his case.
The respondents, thereafter, fi!ed a Co++ent>2otion to dis+iss>den/ the petitionerKs p!ea for in:unctive re!ief on the fo!!owin- -roundsB "a# the Deeds of Assi-n+ent e8ecuted 1/ the defendants$tenants were contrar/ to pu1!ic po!ic/ and P.D. No. ,. and &ep. Act No. (().9 "1# the petitioner fai!ed to prove that the respondents induced the defendants$tenants to rene-e on their o1!i-ations under the ?Deeds of Assi-n+ent9? "c# not 1ein- priv/ to the said deeds, the respondents are not 1ound 1/ the said deeds9 and, "d# the respondents had the a1so!ute ri-ht to se!! and dispose of their propert/ and to encu+1er the sa+e and cannot 1e en:oined fro+ doin- so 1/ the tria! court.
The petitioner opposed the +otion, contendinthat it was pre+ature for the tria! court to reso!ve his p!ea for in:unctive re!ief, 1efore the respondents and the defendants$tenants adduced evidence in opposition thereto, to afford the petitioner a chance to adduce re1utta! evidence and prove his entit!e+ent to a writ of pre!i+inar/ in:unction. The respondents rep!ied that it was the 1urden of the petitioner to esta1!ish the re4uisites of a writ of pre!i+inar/ in:unction without an/ evidence on their part, and that the/ were not 1ound to adduce an/ evidence in opposition to the petitionerKs p!ea for a writ of pre!i+inar/ in:unction.
On =e1ruar/ *, 55., the court issued an Order 5 den/in- the +otion of the respondents for 1ein- pre+ature. It directed the hearin- to proceed for the respondents to adduce their evidence. The court ru!ed that the petitioner, on the 1asis of the +ateria! a!!e-ations of the co+p!aint, was entit!ed to in:unctive re!ief. It a!so he!d that 1efore the court cou!d reso!ve the petitionerKs p!ea for in:unctive re!ief, there was need for a hearin- to ena1!e the respondents and the defendants$tenants to adduce evidence to controvert that of the petitioner. The respondents fi!ed a +otion for reconsideration, which the court denied in its Order dated Apri! (, 55.. The tria! court ru!ed that on the face of the aver+ents of the co+p!aint, the p!eadin-s of the parties and the evidence adduced 1/ the petitioner,
the !atter was entit!ed to in:unctive re!ief un!ess the respondents and the defendants$ tenants adduced controvertin- evidence.
The respondents, the petitioners therein, fi!ed a petition for certiorari in the Court of Appea!s for the nu!!ification of the =e1ruar/ *, 55. and Apri! (, 55. Orders of the tria! court. The case was doc7eted as CA$%.&. SP No. ''00*. The petitioners therein pra/ed in their petition thatB
. An order 1e issued dec!arin- the orders of respondent court dated =e1ruar/ *, 55. and Apri! (, 55. as nu!! and void9
,. An order 1e issued directin- the respondent court to issue an order den/in- the app!ication of respondent Aer+inio Ta/a- for the issuance of a @rit of Pre!i+inar/ In:unction and>or restrainin- order.
*. In the +eanti+e, a @rit of Pre!i+inar/ In:unction 1e issued a-ainst the respondent court, prohi1itin- it fro+ issuin- its own writ of in:unction a-ainst Petitioners, and thereafter +a7in- said in:unction to 1e issued 1/ this Court per+anent.
Such other orders as +a/ 1e dee+ed :ust I e4uita1!e under the pre+ises a!so pra/ed for.,3
The respondents asserted that the Deeds of Assi-n+ent e8ecuted 1/ the assi-nees in favor of the petitioner were contrar/ to para-raph * of P.D. No. ,. and the second para-raph of Section .3 of &ep. Act No. (()., and, as such, cou!d not 1e enforced 1/ the petitioner for 1ein- nu!! and void. The respondents a!so c!ai+ed that the enforce+ent of the deeds of assi-n+ent was su1:ect to a supervenin- conditionB
*. That this e8c!usive and a1so!ute ri-ht -iven to the assi-nee sha!! 1e e8ercised on!/ when no !e-a! i+pedi+ents e8ist to the !ot to effect the s+ooth transfer of !awfu! ownership of the !ot>propert/ in the na+e of the ASSI%NEE.,
The respondents ar-ued that unti! such condition too7 p!ace, the petitioner wou!d not ac4uire an/ ri-ht to enforce the deeds 1/ in:unctive re!ief. =urther+ore, the petitionerKs p!ea in his co+p!aint 1efore the tria! court, to fi8 a period within which to pa/ the 1a!ance of the a+ounts due to the tenants under said deeds after the ?!apse? of an/ !e-a! i+pedi+ent, assu+ed that the deeds were va!id, when, in fact and in !aw, the/ were not. Accordin- to the respondents, the/ were not parties to the deeds of assi-n+ent9 hence,
the/ were not 1ound 1/ the said deeds. The issuance of a writ of pre!i+inar/ in:unction wou!d restrict and i+pede the e8ercise of their ri-ht to dispose of their propert/, as provided for in Artic!e ',0 of the New Civi! Code. The/ asserted that the petitioner had no cause of action a-ainst the+ and the defendants$tenants.
On Apri! ., 550, the Court of Appea!s rendered its decision a-ainst the petitioner, annu!!in- and settinaside the assai!ed orders of the tria! court9 and per+anent!/ en:oinin- the said tria! court fro+ proceedin- with Civi! Case No. 353 . The decreta! portion of the decision reads as fo!!owsB
Aowever, even if private respondent is denied of the in:unctive re!ief he de+ands in the !ower court sti!! he cou!d avai! of other course of action in order to protect his interest such as the institution of a si+p!e civi! case of co!!ection of +one/ a-ainst TIA2SON, et a!.
=or a!! the fore-oin- considerations, the orders dated * =e1ruar/ 55. and ( Apri! 55. are here1/ NCLLI=IED and ordered SET ASIDE for havin- 1een issued with -rave a1use of discretion a+ountin- to !ac7 or e8cess of :urisdiction. Accordin-!/, pu1!ic respondent is per+anent!/ en:oined fro+ proceedin- with the case desi-nated as Civi! Case No. 353 .,,
The CA ru!ed that the respondents cou!d not 1e en:oined fro+ a!ienatin- or even encu+1erin- their propert/, especia!!/ so since the/ were not privies to the deeds of assi-n+ent e8ecuted 1/ the defendants$tenants. The defendants$tenants were not /et owners of the portions of the !andho!din-s respective!/ ti!!ed 1/ the+9 as such, the/ had nothin- to assi-n to the petitioner. =ina!!/, the CA ru!ed that the deeds of assi-n+ent e8ecuted 1/ the defendants$tenants were contrar/ to P.D. No. ,. and &ep. Act No. (()..
On Au-ust ', 550, the CA issued a &eso!ution den/in- the petitionerKs +otion for reconsideration.,*
Aence, the petitioner fi!ed his petition for review on certiorari 1efore this Court, contendin- as fo!!owsB
A 2E&E ALLE%ATION IN TAE ANS@E& O= TAE TENANTS COCLD NOT BE CSED AS EDIDENCE O& BASIS =O& ANE CONCLCSION, AS TAIS ALLE%ATION, IS STILL TAE SCB<ECT O= T&IAL IN TAE LO@E& COC&T "&TC#.,'
II
TAE COC&T O= APPEALS CANNOT EN<OIN TAE AEA&IN% O= A PETITION =O& P&ELI2INA&E IN<CNCTION AT A TI2E @AEN TAE LO@E& COC&T "&TC# IS STILL &ECEIDIN% EDIDENCE P&ECISELE TO DETE&2INE @AETAE& O& NOT TAE @&IT O= P&ELI2INA&E IN<CNCTION BEIN% P&AEED =O& BE TAEA% SAOCLD BE %&ANTED O& NOT.,)
III
TAE COC&T O= APPEALS CANNOT CSE ?=ACTS? NOT IN EDIDENCE, TO SCPPO&T ITS CONCLCSION TAAT TAE TENANTS A&E NOT EET ?A@A&DEES O= TAE LAND &E=O&2.,(
ID
TAE COC&T O= APPEALS CANNOT CACSE TAE PE&2ANENT STOPPA%E O= TAE ENTI&E P&OCEEDIN%S BELO@ INCLCDIN% TAE T&IAL ON TAE 2E&ITS O= TAE CASE CONSIDE&IN% TAAT TAE ISSCE INDOLDED ONLE TAE P&OP&IETE O= 2AINTAININ% TAE STATCS HCO.,.
TAE COC&T O= APPEALS CANNOT INCLCDE IN ITS DECISION TAE CASE O= TAE OTAE& *) TENANTS @AO DO NOT HCESTION TAE <C&ISDICTION O= TAE LO@E& COC&T "&TC# ODE& TAE CASE AND @AO A&E IN =ACT STILL P&ESENTIN% TAEI& EDIDENCE TO OPPOSE TAE IN<CNCTION P&AEED =O&, AND TO P&ODE AT TAE SA2E TI2E TAE COCNTE&$CLAI2S TAEE =ILED A%AINST TAE PETITIONE&.,0
DI
TAE LO@E& COC&T "&TC# AAS <C&ISDICTION ODE& TAE CASE =ILED BE TAEA% =O& ?=IFIN% O= PE&IOD? CNDE& A&T. 5. O= TAE NE@ CIDIL CODE AND =O& ?DA2A%ES? A%AINST TAE LACSONS CNDE& A&T. * ' O= TAE SA2E CODE. TAIS CASE CANNOT BE SCPP&ESSED O& &ENDE&ED NC%ATO&E CNCE&E2ONIOCSLE.,5
The petitioner fau!ts the Court of Appea!s for per+anent!/ en:oinin- the tria! court fro+ proceedin- with Civi! Case No. 35 3. Ae opines that the sa+e was too drastic, tanta+ount to a dis+issa! of the case. Ae ar-ues that at that sta-e, it was pre+ature for the appe!!ate court to deter+ine the +erits of the case since no evidentiar/ hearinthereon was conducted 1/ the tria! court. This, the Court of Appea!s cannot do, since neither part/ +oved for the dis+issa! of Civi! Case No. 35 3. The petitioner points out that the Court of Appea!s, in +a7in- its findin-s, went 1e/ond the issue raised 1/ the private respondents, na+e!/, whether or not the tria! court co++itted a -rave a1use of discretion a+ountin- to e8cess or !ac7 of :urisdiction when it denied the respondentKs +otion for the denia!>dis+issa! of the petitionerKs p!ea for a writ of pre!i+inar/ in:unction. Ae, !i7ewise, points out that the appe!!ate court erroneous!/ presu+ed that the !easeho!ders were not DA& awardees and that the deeds of assi-n+ent were contrar/ to !aw. Ae contends that !easeho!d tenants are not prohi1ited fro+ conve/in- or waivintheir !easeho!d ri-hts in his favor. Ae insists that there is nothin- i!!e-a! with his contracts with the !easeho!ders, since the sa+e sha!! 1e effected on!/ when there are no +ore ?!e-a! i+pedi+ents.?
At 1otto+, the petitioner contends that, at that sta-e, it was pre+ature for the appe!!ate court to deter+ine the +erits of his case since no evidentiar/ hearin- on the +erits of his co+p!aint had /et 1een conducted 1/ the tria! court.
The Co++ent>2otion of the &espondents to Dis+iss>Den/ PetitionerKs P!ea for a @rit of Pre!i+inar/ In:unction @as Not Pre+ature.
Contrar/ to the ru!inof the tria! court, the +otion of the respondents to dis+iss>den/ the petitionerKs p!ea for a writ of pre!i+inar/ in:unction after the petitioner had adduced his evidence, testi+onia! and docu+entar/, and had rested his case on the incident, was proper and ti+e!/. It 1ears stressin- that the petitioner had the 1urden to prove his ri-ht to a writ of pre!i+inar/ in:unction. Ae +a/ re!/ so!e!/ on the +ateria! a!!e-ations of his co+p!aint or adduce evidence in support thereof. The petitioner adduced his evidence to support his p!ea for a writ of pre!i+inar/ in:unction a-ainst the respondents and the defendants$tenants and rested his case on the said incident. The respondents then had three optionsB "a# fi!e a +otion to den/>dis+iss the +otion on the -round that the petitioner fai!ed to dischar-e his 1urden to prove the factua! and !e-a! 1asis for his p!ea for a writ of pre!i+inar/ in:unction and, if the tria! court denies his +otion, for the+ to adduce evidence in opposition to the petitionerKs p!ea9 "1# for-o their +otion and adduce testi+onia! and>or docu+entar/ evidence in opposition to the petitionerKs p!ea for a writ of pre!i+inar/ in:unction9 or, "c# waive their ri-ht to adduce evidence and su1+it the incident for consideration on the 1asis of the p!eadin-s of the parties and the evidence of the
petitioner. The respondents opted not to adduce an/ evidence, and instead fi!ed a +otion to den/ or dis+iss the petitionerKs p!ea for a writ of pre!i+inar/ in:unction a-ainst the+, on their c!ai+ that the petitioner fai!ed to prove his entit!e+ent thereto. The tria! court cannot co+pe! the respondents to adduce evidence in opposition to the petitionerKs p!ea if the respondents opt to waive their ri-ht to adduce such evidence. Thus, the tria! court shou!d have reso!ved the respondentsK +otion even without the !atterKs opposition and the presentation of evidence thereon.
The &TC Co++itted a %rave A1use of Discretion A+ountinto E8cess or Lac7 of <urisdiction in Issuin- its =e1ruar/ *, 55. and Apri! (, 55. Orders
In its =e1ruar/ *, 55. Order, the tria! court ru!ed that the petitioner was entit!ed to a writ of pre!i+inar/ in:unction a-ainst the respondents on the 1asis of the +ateria! aver+ents of the co+p!aint. In its Apri! (, 55. Order, the tria! court denied the respondentsK +otion for reconsideration of the previous order, on its findinthat the petitioner was entit!ed to a writ of pre!i+inar/ in:unction 1ased on the +ateria! a!!e-ations of his co+p!aint, the evidence on record, the p!eadin-s of the parties, as we!! as the app!ica1!e !awsB
N =or the record, the Court denied the LACSONSK CO22ENT>2OTION on the 1asis of the facts cu!!ed fro+ the evidence presented, the p!eadin-s and the !aw app!ica1!e unswa/ed 1/ the partisan or persona! interests, pu1!ic opinion or fear of criticis+ "Canon *, &u!e *.3,, Code of <udicia! Ethics#.*3
Section *, &u!e )0 of the &u!es of Court, as a+ended, enu+erates the -rounds for the issuance of a writ of pre!i+inar/ in:unction, thusB
"a# That the app!icant is entit!ed to the re!ief de+anded, and the who!e or part of such re!ief consists in restrainin- the co++ission or continuance of the act or acts co+p!ained of, or in re4uirin- the perfor+ance of an act or acts, either for a !i+ited period or perpetua!!/9
"1# That the co++ission, continuance or non$perfor+ance of the act or acts co+p!ained of durin- the !iti-ation wou!d pro1a1!/ wor7 in:ustice to the app!icant9 or
"c# That a part/, court, a-enc/ or a person is doin-, threatenin-, or is atte+ptin- to do, or is procurin- or sufferin- to 1e done, so+e act or acts pro1a1!/ in vio!ation of the ri-hts of the app!icant respectin- the su1:ect of the action or proceedin-, and tendin- to render the :ud-+ent ineffectua!.
A pre!i+inar/ in:unction is an e8traordinar/ event ca!cu!ated to preserve or +aintain the status 4uo of thin-s ante !ite+ and is -enera!!/ avai!ed of to prevent actua! or threatened acts, unti! the +erits of the case can 1e heard. In:unction is accepted as the stron- ar+ of e4uit/ or a transcendent re+ed/.* @hi!e -enera!!/ the -rant of a writ of pre!i+inar/ in:unction rests on the sound discretion of the tria! court ta7in- co-ni6ance of the case, e8tre+e caution +ust 1e o1served in the e8ercise of such discretion.*, Indeed, in O!a!ia v. Ai6on,** we he!dB
It has 1een consistent!/ he!d that there is no power the e8ercise of which is +ore de!icate, which re4uires -reater caution, de!i1eration and sound discretion, or +ore dan-erous in a dou1tfu! case, than the issuance of an in:unction. It is the stron- ar+ of e4uit/ that shou!d never 1e e8tended un!ess to cases of -reat in:ur/, where courts of !aw cannot afford an ade4uate or co++ensurate re+ed/ in da+a-es.
Ever/ court shou!d re+e+1er that an in:unction is a !i+itation upon the freedo+ of action of the defendant and shou!d not 1e -ranted !i-ht!/ or precipitate!/. It shou!d 1e -ranted on!/ when the court is fu!!/ satisfied that the !aw per+its it and the e+er-enc/ de+ands it.*'
The ver/ foundation of the :urisdiction to issue writ of in:unction rests in the e8istence of a cause of action and in the pro1a1i!it/ of irrepara1!e in:ur/, inade4uac/ of pecuniar/ co+pensation and the prevention of the +u!tip!icit/ of suits. @here facts are not shown to 1rin- the case within these conditions, the re!ief of in:unction shou!d 1e refused.*)
=or the court to issue a writ of pre!i+inar/ in:unction, the petitioner was 1urdened to esta1!ish the fo!!owin-B " # a ri-ht in esse or a c!ear and un+ista7a1!e ri-ht to 1e protected9 ",# a vio!ation of that ri-ht9 "*# that there is an ur-ent and per+anent act and ur-ent necessit/ for the writ to prevent serious da+a-e.*( Thus, in the a1sence of a c!ear !e-a! ri-ht, the issuance of the in:unctive writ constitutes a -rave a1use of discretion. @here the co+p!ainantKs ri-ht is dou1tfu! or disputed, in:unction is not proper. In:unction is a preservative re+ed/ ai+ed at protectin- su1stantia! ri-hts and interests. It is not desi-ned to protect contin-ent or future ri-hts. The possi1i!it/ of irrepara1!e da+a-e without proof of ade4uate e8istin- ri-hts is not a -round for in:unction.*.
@e have reviewed the p!eadin-s of the parties and found that, as contended 1/ the respondents, the petitioner fai!ed to esta1!ish the essentia! re4uisites for the issuance of a writ of pre!i+inar/ in:unction. Aence, the tria! court co++itted a -rave a1use of its discretion a+ountin- to e8cess or !ac7 of :urisdiction in den/in- the respondentsK co++ent>+otion as we!! as their +otion for reconsideration.
=irst. The tria! court cannot en:oin the respondents, at the instance of the petitioner, fro+ se!!in-, disposin- of and encu+1erin- their propert/. As the re-istered owners of the propert/, the respondents have the ri-ht to en:o/ and dispose of their propert/ without an/ other !i+itations than those esta1!ished 1/ !aw, in accordance with Artic!e ',0 of the Civi! Code. The ri-ht to dispose of the propert/ is the power of the owner to se!!, encu+1er, transfer, and even destro/ the propert/. Ownership a!so inc!udes the ri-ht to recover the possession of the propert/ fro+ an/ other person to who+ the owner has not trans+itted such propert/, 1/ the appropriate action for restitution, with the fruits, and for inde+nification for da+a-es.*0 The ri-ht of ownership of the respondents is not, of course, a1so!ute. It is !i+ited 1/ those set forth 1/ !aw, such as the a-rarian refor+ !aws. Cnder Artic!e *3( of the New Civi! Code, the respondents +a/ enter into contracts coverin- their propert/ with another under such ter+s and conditions as the/ +a/ dee+ 1eneficia! provided the/ are not contrar/ to !aw, +ora!s, -ood conduct, pu1!ic order or pu1!ic po!ic/.
The respondents cannot 1e en:oined fro+ se!!in- or encu+1erin- their propert/ si+p!/ and +ere!/ 1ecause the/ had e8ecuted Deeds of Assi-n+ent in favor of the petitioner, o1!i-in- the+se!ves to assi-n and transfer their ri-hts or interests as a-ricu!tura! far+ers>!a1orers>su1$tenants over the !andho!din-, and -rantin- the petitioner the e8c!usive ri-ht to 1u/ the propert/ su1:ect to the occurrence of certain conditions. The respondents were not parties to the said deeds. There is no evidence that the respondents a-reed, e8press!/ or i+p!ied!/, to the said deeds or to the ter+s and conditions set forth therein. Indeed, the/ assai!ed the va!idit/ of the said deeds on their c!ai+ that the sa+e were contrar/ to the !etter and spirit of P.D. No. ,. and &ep. Act No. (().. The petitioner even ad+itted when he testified that he did not 7now an/ of the respondents, and that he had not +et an/ of the+ 1efore he fi!ed his co+p!aint in the &TC. Ae did not even 7now that one of those who+ he had i+p!eaded as defendant, An-e!ica Dda. de Lacson, was a!read/ dead.
HB But /ou have not +et an/ of these LacsonsO
AB Not /et, sir.
HB Do /ou 7now that two ",# of the defendants are residents of the Cnited StatesO
AB I do not 7now, sir.
HB Eou do not 7now a!so that An-e!a Tiotuvie "sic# Dda. de Lacson had a!read/ 1een deadO
AB I a+ aware of that, sir.*5
@e are one with the Court of Appea!s in its ru!in- thatB
@e cannot see our wa/ c!ear on how or wh/ in:unction shou!d !ie a-ainst petitioners. As owners of the !ands 1ein- ti!!ed 1/ TIA2SON, et a!., petitioners, under the !aw, have the ri-ht to en:o/ and dispose of the sa+e. Thus, the/ have the ri-ht to possess the !ands, as we!! as the ri-ht to encu+1er or a!ienate the+. This princip!e of !aw notwithstandin-, private respondent in the !ower court sou-ht to restrain the petitioners fro+ encu+1erinand>or a!ienatin- the properties covered 1/ TCT No. *)5,,$&, *)5,*$& and TCT No. *)5,)$ & of the &e-istr/ of Deeds of San =ernando, Pa+pan-a. This cannot 1e a!!owed to prosper since it wou!d constitute a !i+itation or restriction, not otherwise esta1!ished 1/ !aw on their ri-ht of ownership, +ore so considerin- that petitioners were not even priv/ to the a!!e-ed transaction 1etween private respondent and TIA2SON, et a!.'3
Second. A readin- the aver+ents of the co+p!aint wi!! show that the petitioner c!ear!/ has no cause of action a-ainst the respondents for the principa! re!ief pra/ed for therein, for the tria! court to fi8 a period within which to pa/ to each of the defendants$tenants the 1a!ance of the P)3.33 per s4uare +eter, the consideration under the Deeds of Assi-n+ent e8ecuted 1/ the defendants$tenants. The respondents are not parties or privies to the deeds of assi-n+ent. The +atter of the period for the petitioner to pa/ the 1a!ance of the said a+ount to each of the defendants$tenants is an issue 1etween the+, the parties to the deed.
Third. On the face of the co+p!aint, the action of the petitioner a-ainst the respondents and the defendants$tenants has no !e-a! 1asis. Cnder the Deeds of Assi-n+ent, the o1!i-ation of the petitioner to pa/ to each of the defendants$tenants the 1a!ance of the purchase price was conditioned on the occurrence of the fo!!owin- eventsB "a# the respondents a-ree to se!! their propert/ to the petitioner9 "1# the !e-a! i+pedi+ents to the sa!e of the !andho!din- to the petitioner no !on-er e8ist9 and, "c# the petitioner decides to 1u/ the propert/. @hen he testified, the petitioner ad+itted that the !e-a! i+pedi+ents referred to in the deeds were "a# the respondentsK refusa! to se!! their propert/9 and, "1# the !ac7 of approva! of the Depart+ent of A-rarian &efor+B
H B There is no specific a-ree+ent prior to the e8ecution of those docu+ents as when the/ wi!! pa/O
A B @e a-reed to that, that I wi!! pa/ the+ when there are no !e-a! i+pedi+ent, sir.
H B 2an/ of the docu+ents are un!attered "sic# and /ou want to conve/ to this Aonora1!e Court that prior to the e8ecution of these docu+ents /ou have those tentative a-ree+ent for instance that the a+ount or the cost of the price is to 1e paid when there are no !e-a! i+pedi+ent, /ou are usin- the word ?!e-a! i+pedi+ent,? do /ou 7now the +eanin- of thatO
A B @hen there are "sic# no +ore !e-a! i+pedi+ent e8ist, sir.
H B Did /ou +a7e how "sic# to the effect that the +eanin- of that phrase that /ou used the un!ettered defendantsO
A B @e have a-reed to that, sir.
ATTE. OCA2POB
2a/ I as7, Eour Aonor, that the witness p!ease answer +/ 4uestion not to answer in the wa/ he wanted it.
COC&TB
<ust answer the 4uestion, 2r. Ta/a-.
@ITNESSB
Ees, Eour Aonor.
ATTE. OCA2POB
H B Did /ou e8p!ain to the+O
A B Ees, sir.
H B @hat did /ou te!! the+O
A B I e8p!ainLedM to the+, sir, that the !e-a! i+pedi+ent then especia!!/ if the Lacsons wi!! not a-ree to se!! their shares to +e or to us it wou!d 1e hard to "sic# +e to pa/ the+ in fu!!. And those covered 1/ DA&. I e8p!ainLedM to the+ and it was c!ear!/ stated in the tit!e that there is LaM prohi1ited period of ti+e 1efore /ou can se!! the propert/. I e8p!ained ever/ detai! to the+.'
It is on!/ upon the occurrence of the fore-oin- conditions that the petitioner wou!d 1e o1!i-ed to pa/ to the defendants$tenants the 1a!ance of the P)3.33 per s4uare +eter under the deeds of assi-n+ent. ThusB
,. That in case the ASSI%NO& and LANDO@NE& wi!! +utua!!/ a-ree to se!! the said !ot to the ASSI%NEE, who is -iven an e8c!usive and a1so!ute ri-ht to 1u/ the !ot, the ASSI%NO& sha!! receive the su+ of =I=TE PESOS "P)3.33# per s4uare +eter as consideration of the tota! area actua!!/ ti!!ed and possessed 1/ the ASSI%NO&, !ess whatever a+ount received 1/ the ASSI%NO& inc!udin- co++issions, ta8es and a!! a!!owa1!e deductions re!ative to the sa!e of the su1:ect properties.
*. That this e8c!usive and a1so!ute ri-ht -iven to the ASSI%NEE sha!! 1e e8ercised on!/ when no !e-a! i+pedi+ents e8ist to the !ot to effect the s+ooth transfer of !awfu! ownership of the !ot>propert/ in the na+e of the ASSI%NEE9
'. That the ASSI%NO& wi!! re+ain in peacefu! possession over the said propert/ and sha!! en:o/ the fruits>earnin-s and>or harvest of the said !ot unti! such ti+e that fu!! pa/+ent of the a-reed purchase price had 1een +ade 1/ the ASSI%NEE.',
There is no showin- in the petitionerKs co+p!aint that the respondents had a-reed to se!! their propert/, and that the !e-a! i+pedi+ents to the a-ree+ent no !on-er e8isted. The petitioner and the defendants$tenants had /et to su1+it the Deeds of Assi-n+ent to the Depart+ent of A-rarian &efor+ which, in turn, had to act on and approve or disapprove the sa+e. In fact, as a!!e-ed 1/ the petitioner in his co+p!aint, he was /et to +eet with
the defendants$tenants to discuss the i+p!e+entation of the deeds of assi-n+ent. Cn!ess and unti! the Depart+ent of A-rarian &efor+ approved the said deeds, if at a!!, the petitioner had no ri-ht to enforce the sa+e in a court of !aw 1/ as7in- the tria! court to fi8 a period within which to pa/ the 1a!ance of the purchase price and pra/infor in:unctive re!ief.
@e do not a-ree with the contention of the petitioner that the deeds of assi-n+ent e8ecuted 1/ the defendants$tenants are perfected option contracts.'* An option is a contract 1/ which the owner of the propert/ a-rees with another person that he sha!! have the ri-ht to 1u/ his propert/ at a fi8ed price within a certain ti+e. It is a condition offered or contract 1/ which the owner stipu!ates with another that the !atter sha!! have the ri-ht to 1u/ the propert/ at a fi8ed price within a certain ti+e, or under, or in co+p!iance with certain ter+s and conditions, or which -ives to the owner of the propert/ the ri-ht to se!! or de+and a sa!e. It i+poses no 1indin- o1!i-ation on the person ho!din- the option, aside fro+ the consideration for the offer. Cnti! accepted, it is not, proper!/ spea7in-, treated as a contract.'' The second part/ -ets in praesenti, not !ands, not an a-ree+ent that he sha!! have the !ands, 1ut the ri-ht to ca!! for and receive !ands if he e!ects.') An option contract is a separate and distinct contract fro+ which the parties +a/ enter into upon the con:unction of the option.'(
In this case, the defendants$tenants$su1tenants, under the deeds of assi-n+ent, -ranted to the petitioner not on!/ an option 1ut the e8c!usive ri-ht to 1u/ the !andho!din-. But the -rantors were +ere!/ the defendants$tenants, and not the respondents, the re-istered owners of the propert/. Not 1ein- the re-istered owners of the propert/, the defendants$ tenants cou!d not !e-a!!/ -rant to the petitioner the option, +uch !ess the ?e8c!usive ri-ht? to 1u/ the propert/. As the Latin sa/in- -oes, ?NE2O DAT HCOD NON AABET.?
=ourth. The petitioner i+p!eaded the respondents as parties$defendants so!e!/ on his a!!e-ation that the !atter induced or are inducin- the defendants$tenants to vio!ate the deeds of assi-n+ent, contrar/ to the provisions of Artic!e * ' of the New Civi! Code which readsB
Art. * '. An/ third person who induces another to vio!ate his contract sha!! 1e !ia1!e for da+a-es to the other contractin- part/.
In So Pin- Bun v. Court of Appea!s,'. we he!d that for the said !aw to app!/, the p!eader is 1urdened to prove the fo!!owin-B " # the e8istence of a va!id contract9 ",# 7now!ed-e 1/ the third person of the e8istence of the contract9 and "*# interference 1/ the third person in the contractua! re!ation without !e-a! :ustification.
@here there was no +a!ice in the interference of a contract, and the i+pu!se 1ehind oneKs conduct !ies in a proper 1usiness interest rather than in wron-fu! +otives, a part/ cannot 1e a +a!icious interferer. @here the a!!e-ed interferer is financia!!/ interested, and such interest +otivates his conduct, it cannot 1e said that he is an officious or +a!icious inter+edd!er.'0
In fine, one who is not a part/ to a contract and who interferes thereon is not necessari!/ an officious or +a!icious inter+edd!er. The on!/ evidence adduced 1/ the petitioner to prove his c!ai+ is the !etter fro+ the defendants$tenants infor+in- hi+ that the/ had decided to se!! their ri-hts and interests over the !andho!din- to the respondents, instead of honorin- their o1!i-ation under the deeds of assi-n+ent 1ecause, accordin- to the+, the petitioner harassed those tenants who did not want to e8ecute deeds of assi-n+ent in his favor, and 1ecause the said defendants$tenants did not want to have an/ pro1!e+ with the respondents who cou!d cause their eviction for e8ecutin- with the petitioner the deeds of assi-n+ent as the said deeds are in vio!ation of P.D. No. ,. and &ep. Act No. (()..'5 The defendants$tenants did not a!!e-e therein that the respondents induced the+ to 1reach their contracts with the petitioner. The petitioner hi+se!f ad+itted when he testified that his c!ai+ that the respondents induced the defendants$assi-nees to vio!ate contracts with hi+ was 1ased +ere!/ on what ?he heard,? thusB
HB %oin- to /our !ast state+ent that the Lacsons induces "sic# the defendants, did /ou see that the Lacsons were inducin- the defendantsO
AB I heard and so+eti+e in LtheM first wee7 of Au-ust, sir, the/ went in the 1arrio "sic#. As a +atter of fact, that is the reason wh/ the/ sent +e !etter that the/ wi!! se!! it to the Lacsons.
HB Incidenta!!/, do /ou 7new "sic# these Lacsons individua!!/O
AB No, sir, it was on!/ 2r. Espinosa who I 7new "sic# persona!!/, the a!!e-ed ne-otiator and has the authorit/ to se!! the propert/.)3
Even if the respondents received an offer fro+ the defendants$tenants to assi-n and transfer their ri-hts and interests on the !andho!din-, the respondents cannot 1e en:oined fro+ entertainin- the said offer, or even ne-otiatin- with the defendants$tenants. The respondents cou!d not even 1e e8pected to warn the defendants$tenants for e8ecutin- the said deeds in vio!ation of P.D. No. ,. and &ep. Act No. (().. Cnder Section ,, of the !atter !aw, 1eneficiaries under P.D. No. ,. who have cu!pa1!/ so!d, disposed of, or a1andoned their !and, are dis4ua!ified fro+ 1eco+in- 1eneficiaries.
=ro+ the p!eadin-s of the petitioner, it is 4uite evident that his purpose in havin- the defendants$tenants e8ecute the Deeds of Assi-n+ent in his favor was to ac4uire the !andho!din- without an/ tenants thereon, in the event that the respondents a-reed to se!! the propert/ to hi+. The petitioner 7new that under Section of &ep. Act No. *0'', if the respondents a-reed to se!! the propert/, the defendants$tenants sha!! have preferentia! ri-ht to 1u/ the sa+e under reasona1!e ter+s and conditionsB
SECTION . LesseeKs &i-ht of Pre$e+ption. P In case the a-ricu!tura! !essor desires to se!! the !andho!din-, the a-ricu!tura! !essee sha!! have the preferentia! ri-ht to 1u/ the sa+e under reasona1!e ter+s and conditionsB Provided, That the entire !andho!din- offered for sa!e +ust 1e pre$e+pted 1/ the Land Authorit/ if the !andowner so desires, un!ess the +a:orit/ of the !essees o1:ect to such ac4uisitionB Provided, further, That where there are two or +ore a-ricu!tura! !essees, each sha!! 1e entit!ed to said preferentia! ri-ht on!/ to the e8tent of the area actua!!/ cu!tivated 1/ hi+. N)
Cnder Section , of the !aw, if the propert/ was so!d to a third person without the 7now!ed-e of the tenants thereon, the !atter sha!! have the ri-ht to redee+ the sa+e at a reasona1!e price and consideration. B/ assi-nin- their ri-hts and interests on the !andho!din- under the deeds of assi-n+ent in favor of the petitioner, the defendants$ tenants there1/ waived, in favor of the petitioner, who is not a 1eneficiar/ under Section ,, of &ep. Act No. (()., their ri-hts of pree+ption or rede+ption under &ep. Act No. *0''. The defendants$tenants wou!d then have to vacate the propert/ in favor of the petitioner upon fu!! pa/+ent of the purchase price. Instead of ac4uirin- ownership of the portions of the !andho!din- respective!/ ti!!ed 1/ the+, the defendants$tenants wou!d a-ain 1eco+e !and!ess for a +eas!/ su+ of P)3.33 per s4uare +eter. The petitionerKs sche+e is su1versive, not on!/ of pu1!ic po!ic/, 1ut a!so of the !etter and spirit of the a-rarian !aws. That the sche+e of the petitioner had /et to ta7e effect in the future or ten /ears hence is not a :ustification. The respondents +a/ we!! ar-ue that the a-rarian !aws had 1een vio!ated 1/ the defendants$tenants and the petitioner 1/ the +ere e8ecution of the deeds of assi-n+ent. In fact, the petitioner has i+p!e+ented the deeds 1/ pa/in- the defendants$tenants a+ounts of +one/ and even sou-ht their i++ediate i+p!e+entation 1/ settin- a +eetin- with the defendants$tenants. In fine, the petitioner wou!d not wait for ten /ears to evict the defendants$tenants. =or hi+, ti+e is of the essence.
The Appe!!ate Court Erred In Per+anent!/ En:oininThe &e-iona! Tria! Court =ro+ Continuin- with the Proceedin-s in Civi! Case No. 35 3.
@e a-ree with the petitionerKs contention that the appe!!ate court erred when it per+anent!/ en:oined the &TC fro+ continuin- with the proceedin-s in Civi! Case No. 35 3. The on!/ issue 1efore the appe!!ate court was whether or not the tria! court co++itted a -rave a1use of discretion a+ountin- to e8cess or !ac7 of :urisdiction in den/in- the respondentsK +otion to den/ or dis+iss the petitionerKs p!ea for a writ of pre!i+inar/ in:unction. Not one of the parties pra/ed to per+anent!/ en:oin the tria! court fro+ further proceedin- with Civi! Case No. 35 3 or to dis+iss the co+p!aint. It 1ears stressin- that the petitioner +a/ sti!! a+end his co+p!aint, and the respondents and the defendants$tenants +a/ fi!e +otions to dis+iss the co+p!aint. B/ per+anent!/ en:oininthe tria! court fro+ proceedin- with Civi! Case No. 35 3, the appe!!ate court acted ar1itrari!/ and effective!/ dis+issed the co+p!aint +otu proprio, inc!udin- the counterc!ai+s of the respondents and that of the defendants$tenants. The defendants$ tenants were even deprived of their ri-ht to prove their specia! and affir+ative defenses.
IN LI%AT O= ALL TAE =O&E%OIN%, the petition is PA&TIALLE %&ANTED. The Decision of the Court of Appea!s nu!!if/in- the =e1ruar/ *, 55( and Apri! (, 55. Orders of the &TC is A==I&2ED. The writ of in:unction issued 1/ the Court of Appea!s per+anent!/ en:oinin- the &TC fro+ further proceedin- with Civi! Case No. 35 3 is here1/ LI=TED and SET ASIDE. The &e-iona! Tria! Court of 2a1a!acat, Pa+pan-a, Branch '', is O&DE&ED to continue with the proceedin-s in Civi! Case No. 35 3 as provided for 1/ the &u!es of Court, as a+ended.
SO O&DE&ED.
Puno, "Chair+an#, Huisu+1in-, Austria$2artine6, and Tin-a, <<., concur. 1IR#T DI"I#ION
POLYTECHNIC 2NI"ER#ITY O1 THE PHILIPPINE#, Petitioner,
G.R. No. 184612
$ versus $
GOLDEN HORI3ON REALTY CORPORATION,
&espondent.
5 5 G.R. No. 186260 NATIONAL DE"ELOPMENT COMPANY, Petitioner, PCNO, C.(., Chairperson, $ versus $ CA&PIO 2O&ALES, LEONA&DO$DE CAST&O, GOLDEN HORI3ON REALTY CORPORATION, &espondent. Pro+u!-atedB BE&SA2IN, and DILLA&A2A, <&., ((. PresentB
2arch ), ,3 3 5 5
DECI#ION
"ILLARAMA, !R., J.$
The a1ove$tit!ed conso!idated petitions fi!ed under &u!e ') of the 55. &u!es of Civi! Procedure, as a+ended, see7 to reverse the Decision 718 dated <une ,), ,330 and &eso!ution dated Au-ust ,,, ,330 of the Court of Appea!s "CA# in CA$%.&. CD No. 0'*55 which affir+ed the Decision728 dated Nove+1er ,), ,33' of the &e-iona! Tria! Court "&TC# of 2a7ati Cit/, Branch '' in Civi! Case No. 00$,,*0. The undisputed facts are as fo!!owsB
Petitioner Nationa! Deve!op+ent Co+pan/ "NDC# is a -overn+ent$ owned and contro!!ed corporation, created under Co++onwea!th Act No. 0,, as a+ended 1/ Co+. Act No. * and Presidentia! Decree "P.D.# No. ((0. Petitioner Po!/technic Cniversit/ of the Phi!ippines "PCP# is a pu1!ic, non$sectarian, non$profit educationa! institution created in 5.0 1/ virtue of P.D. No. *' . In the ear!/ si8ties, NDC had in its disposa! a ten " 3#$hectare propert/ !ocated a!on- Pure6a St., Sta. 2esa, 2ani!a. The estate was popu!ar!/ 7nown as the NDC Co+pound and covered 1/ Transfer Certificate of Tit!e Nos. 5,00), 3*3 and ')'.3. On Septe+1er ., 5.., NDC entered into a Contract of Lease "C$**$..# with %o!den Aori6on &ea!t/ Corporation "%A&C# over a portion of the propert/, with an area of ,,'3. s4uare +eters for a period of ten " 3# /ears, renewa1!e for another ten " 3# /ears with +utua! consent of the parties.748 On 2a/ ', 5.0, a second Contract of Lease "C$ ,$.0# was e8ecuted 1etween NDC and %A&C coverin- *,,,,.03 s4uare +eters, a!so renewa1!e upon +utua! consent after the e8piration of the ten " 3#$/ear !ease period. In addition, %A&C as !essee was -ranted the Qoption to purchase the area !eased, the price to 1e ne-otiated and deter+ined at the ti+e the option to purchase is e8ercised.R768 Cnder the !ease a-ree+ents, %A&C was o1!i-ed to construct at its own e8pense 1ui!din-s of stron- +ateria! at no !ess than the stipu!ated cost, and other i+prove+ents which sha!! auto+atica!!/ 1e!on- to the NDC as !essor upon the e8piration of the !ease period. Accordin-!/, %A&C introduced per+anent i+prove+ents and structures as re4uired 1/ the ter+s of the contract. After the co+p!etion of the industria! co+p!e8 pro:ect, for which %A&C spent P) +i!!ion, it was !eased to various +anufacturers, industria!ists and other 1usiness+en there1/ -eneratin- hundreds of :o1s. 798 On <une *, 500, 1efore the e8piration of the ten " 3#$/ear period under the second !ease contract, %A&C wrote a !etter to NDC indicatin- its e8ercise of the option to renew the !ease for another ten " 3# /ears. As no response was received fro+ NDC, %A&C sent another !etter on Au-ust ,, 500, reiteratin- its desire to renew the contract and a!so re4uestin- for priorit/ to ne-otiate for its purchase shou!d NDC opt to se!! the !eased pre+ises.768 NDC sti!! did not rep!/ 1ut continued to accept renta! pa/+ents fro+ %A&C and a!!owed the !atter to re+ain in possession of the propert/. So+eti+e after Septe+1er 500, %A&C discovered that NDC had decided to secret!/ dispose the propert/ to a third part/. On Octo1er , , 500, %A&C fi!ed in the &TC a co+p!aint for specific perfor+ance, da+a-es with pre!i+inar/ in:unction and te+porar/ restrainin- order.7:8 In the +eanti+e, then President Cora6on C. A4uino issued 2e+orandu+ Order No. , ' dated <anuar/ (, 505, orderin- the transfer of the who!e NDC Co+pound to the Nationa! %overn+ent, which in turn wou!d conve/ the said propert/ in favor of PCP at ac4uisition cost. The +e+orandu+ order cited the serious need of PCP, considered the QPoor 2anKs Cniversit/,R to e8pand its ca+pus, which ad:oins the NDC Co+pound, to acco++odate its -rowin- student popu!ation, and the wi!!in-ness of PCP to 1u/ and of NDC to se!! its propert/. The order of conve/ance of the 3.* $hectare propert/ wou!d auto+atica!!/ resu!t in the cance!!ation of NDCKs tota! o1!i-ation in favor of the Nationa! %overn+ent in the a+ount of P)., 5*,,3 .('.788
On =e1ruar/ ,3, 505, the &TC issued a writ of pre!i+inar/ in:unction en:oinin- NDC and its attorne/s, representatives, a-ents and an/ other persons assistin- it fro+ proceedin- with the sa!e and disposition of the !eased pre+ises. 7;8 On =e1ruar/ ,*, 505, PCP fi!ed a +otion to intervene as part/ defendant, c!ai+inthat as a purchaser pen"ente lite of a propert/ su1:ect of !iti-ation it is entit!ed to intervene in the proceedin-s. The &TC -ranted the said +otion and directed PCP to fi!e its Answer$in$Intervention.7108 PCP a!so de+anded that %A&C vacate the pre+ises, insistin- that the !atterKs !ease contract had a!read/ e8pired. Its de+and !etter unheeded 1/ %A&C, PCP fi!ed an e:ect+ent case "Civi! Case No. *'' (# 1efore the 2etropo!itan Tria! Court "2eTC# of 2ani!a on <anuar/ ', 55 .7118 Due to this deve!op+ent, %A&C fi!ed an A+ended and>or Supp!e+enta! Co+p!aint to inc!ude as additiona! defendants PCP, Aonora1!e E8ecutive Secretar/ Oscar Or1os and <ud-e Ernesto A. &e/es of the 2ani!a 2eTC, and to en:oin the afore$+entioned defendants fro+ prosecutin- Civi! Case No. *'' ( for e:ect+ent. A te+porar/ restrainin- order was su1se4uent!/ issued 1/ the &TC en:oinin- PCP fro+ prosecutin- and <ud-e =rancisco Bri!!antes, <r. fro+ proceedin- with the e:ect+ent case.7128 In its Second A+ended and>or Supp!e+enta! Co+p!aint, %A&C ar-ued that 2e+orandu+ Order No. , ' is a nu!!it/, for 1ein- vio!ative of the writ of in:unction issued 1/ the tria! court, apart fro+ 1ein- an infrin-e+ent of the Constitutiona! prohi1ition a-ainst i+pair+ent of o1!i-ation of contracts, an encroach+ent on !e-is!ative functions and a 1i!! of attainder. In the a!ternative, shou!d the tria! court ad:ud-e the +e+orandu+ order as va!id, %A&C contended that its e8istin- ri-ht +ust sti!! 1e respected 1/ a!!owin- it to purchase the !eased pre+ises.7148 Pre$tria! was set 1ut was suspended upon a-ree+ent of the parties to await the fina! reso!ution of a si+i!ar case invo!vin- NDC, PCP and another !essee of NDC, =irestone Cera+ics, Inc. "=irestone#, then pendin- 1efore the &TC of Pasa/ Cit/. 7168 On Nove+1er ', ,33 , this Court rendered a decision in %.&. Nos. '*) * "Pol$technic -niversit$ of the Philippines v. Court of Appeals # and '*)53 "+ational %evelopment Corporation v. Firestone Ceramics, nc. #,7198 which dec!ared that the sa!e to PCP 1/ NDC of the portion !eased 1/ =irestone pursuant to 2e+orandu+ Order No. , ' vio!ated the ri-ht of first refusa! -ranted to =irestone under its third !ease contract with NDC. @e thus decreedB @AE&E=O&E, the petitions in %.&. No. '*) * and %.&. No. '*)53 are DENIED. Inas+uch as the first contract of !ease fi8ed the area of the !eased pre+ises at ,.53 0 hectares whi!e the second contract p!aced it at ,.(3 hectares, !et a -round surve/ of the !eased pre+ises 1e i++ediate!/ conducted 1/ a du!/ !icensed, re-istered surve/or at the e8pense of private respondent =I&ESTONE CE&A2ICS, INC., within two ",# +onths fro+ the fina!it/ of the :ud-+ent in this case. Thereafter, private respondent =I&ESTONE CE&A2ICS, INC., sha!! have si8 "(# +onths fro+ receipt of the approved surve/ within which to e8ercise its ri-ht to purchase the !eased propert/ at P ,)33.33 per s4uare +eter, and petitioner Po!/technic Cniversit/ of the Phi!ippines is ordered to reconve/ the propert/ to =I&ESTONE CE&A2ICS, INC., in the e8ercise of its ri-ht of first refusa! upon pa/+ent of the purchase price thereof.
SO O&DE&ED.7168
The &TC resu+ed the proceedin-s and when +ediation and pre$tria! fai!ed to sett!e the case a+ica1!/, tria! on the +erits ensued. 71:8 On Nove+1er ,), ,33', the &TC rendered its decision upho!din- the ri-ht of first refusa! -ranted to %A&C under its !ease contract with NDC and orderin- PCP to reconve/ the said portion of the propert/ in favor of %A&C. The dispositive portion readsB @AE&E=O&E, pre+ises considered, :ud-+ent is here1/ rendered in favor of the p!aintiff and a-ainst the defendants orderin- the p!aintiff to cause i++ediate -round surve/ of the pre+ises su1:ect of the !eased contract under Lease Contract No. C$**$.. and C$ ,$.0 +easurin- ,,'3. and *,,,,.0 s4uare +eters respective!/, 1/ a du!/ !icensed and re-istered surve/or at the e8pense of the p!aintiff within two +onths fro+ receipt of this Decision and thereafter, the p!aintiff sha!! have si8 "(# +onths fro+ receipt of the approved surve/ within which to e8ercise its ri-ht to purchase the !eased propert/ at P))'..' per s4uare +eter. And fina!!/, the defendant PCP, in whose na+e the propert/ is tit!ed, is here1/ ordered to reconve/ the aforesaid propert/ to the p!aintiff in the e8ercise of its ri-ht of its option to 1u/ or first refusa! upon pa/+ent of the purchase price thereof.
The defendant NDC is here1/ further ordered to pa/ the p!aintiff attorne/Ks fees in the a+ount of P 33,333.33.
The case a-ainst defendant E8ecutive Secretar/ is dis+issed and this decision sha!! 1ind defendant 2etropo!itan Tria! Court, Branch ,3 of 2ani!a.
@ith costs a-ainst defendants NDC and PCP.
SO O&DE&ED.7188
NDC and PCP separate!/ appea!ed the decision to the CA. 71;8 B/ Decision of <une ,), ,330, the CA affir+ed in toto the decision of the &TC.7208 Both the &TC and the CA app!ied this CourtKs ru!inin Pol$technic -niversit$ of the Philippines v. Court of Appeals .supra/ , considerin- that %A&C is si+i!ar!/ situated as a !essee of NDC whose ri-ht of first refusa! under the !ease contract was vio!ated 1/ the sa!e of the propert/ to PCP without NDC havin- first offered to se!! the sa+e to %A&C despite the !atterKs re4uest for the renewa! of the !ease and>or to purchase the !eased pre+ises prior to the e8piration of the second !ease contract. The CA further a-reed with the &TCKs
findinthat there was an i+p!ied renewa! of the !ease upon the fai!ure of NDC to act on %A&CKs repeated re4uests for renewa! of the !ease contract, 1oth ver1a! and written, and continuin- to accept +onth!/ renta! pa/+ents fro+ %A&C which was a!!owed to continue in possession of the !eased pre+ises. The CA a!so re:ected the ar-u+ent of NDC and PCP that even assu+inthat %A&C had the ri-ht of first refusa!, said ri-ht pertained on!/ to the second !ease contract, C$ ,$ .0 coverin- *,,,,.03 s4uare +eters, and not to the first !ease contract, C$**$.. coverin,,'3. s4uare +eters, which had a!read/ e8pired. It sustained the &TCKs findinthat the two ",# !ease contracts were interre!ated 1ecause each for+ed part of %A&CKs industria! co+p!e8, such that 1usiness operations wou!d 1e rendered use!ess and inoperative if the first contract were to 1e detached fro+ the other, as si+i!ar!/ he!d in the afore$+entioned case of Pol$technic -niversit$ of the Philippines v. Court of Appeals. Petitioner PCP ar-ues that respondentKs ri-ht to e8ercise the option to purchase had e8pired with the ter+ination of the ori-ina! contract of !ease and was not carried over to the su1se4uent i+p!ied new !ease 1etween respondent and petitioner NDC. As testified to 1/ their witnesses Leticia Ca1anto- and Att/. &hoe! 2a1a66a, there was no a-ree+ent or docu+ent to the effect that respondentKs re4uest for e8tension or renewa! of the su1:ect contracts of !ease for another ten " 3# /ears was approved 1/ NDC. Aence, respondent can no !on-er e8ercise the option to purchase the !eased pre+ises when the sa+e were conve/ed to PCP pursuant to 2e+orandu+ Order No. , ' dated <anuar/ (, 505, !onafter the e8piration of C$**$.. and C$ ,$.0 in Septe+1er 500. 7218 Petitioner PCP further contends that whi!e it is conceded that there was an i+p!ied new !ease 1etween respondent and petitioner NDC after the e8piration of the !ease contracts, the sa+e did not inc!ude the ri-ht of first refusa! ori-ina!!/ -ranted to respondent. The CA shou!d have app!ied the ru!inin %i*on v. Magsa$sa$7228 that the !essee cannot an/ +ore e8ercise its option to purchase after the !apse of the one " #$/ear period of the !ease contract. @ith the i+p!icit renewa! of the !ease on a +onth!/ 1asis, the other ter+s of the ori-ina! contract of !ease which are revived in the i+p!ied new !ease under Artic!e (.3 of the Civi! Code are on!/ those ter+s which are -er+ane to the !esseeKs ri-ht of continued en:o/+ent of the propert/ !eased. The provision entit!in- the !essee the option to purchase the !eased pre+ises is not dee+ed incorporated in the i+p!ied!/ renewed contract 1ecause it is a!ien to the possession of the !essee. Conse4uent!/, as in this case, respondentKs ri-ht of option to purchase the !eased pre+ises was not vio!ated despite the i+p!ied!/ renewed contract of !ease with NDC. &espondent cannot favora1!/ invo7e the decision in %.&. Nos. '*) * and '*)53 "Pol$technic -niversit$ of the Philippines v. Court of Appeals/ for the si+p!e reason, a+onothers, that un!i7e in said cases, the contracts of !ease of respondent with NDC were not +utua!!/ e8tended or renewed for another ten " 3# /ears. Thus, when the !eased pre+ises were conve/ed to PCP, respondent did not an/ +ore have an/ ri-ht of first refusa!, which incidenta!!/ appears on!/ in the second !ease contract and not in the first !ease contract.7248 On its part, petitioner NDC assai!s the CA in ho!dinthat the contracts of !ease were i+p!ied!/ renewed for another ten " 3#$/ear period. The provisions of C$**$.. and C$ ,$.0 c!ear!/ state that the !essee is -ranted the option Qto renew for another ten " 3# /ears with the +utua! consent of 1oth parties.R As re-ards the continued receipt of renta!s 1/ NDC and possession 1/ the respondent of the !eased pre+ises, the i+p!ied!/ renewed !ease
was on!/ +onth$to$+onth and not ten " 3# /ears since the renta!s are 1ein- paid on a +onth!/ 1asis, as he!d in %i*on v. Magsa$sa$.7268 Petitioner NDC further fau!ts the CA in sustainin- the &TCKs decision which erroneous!/ -ranted respondent the option to purchase the !eased pre+ises at the rate of P))'..' per s4uare +eter, the sa+e rate for which NDC so!d the propert/ to petitioner PCP and>or the Nationa! %overn+ent, which is the +ere ac4uisition cost thereof. It +ust 1e noted that such consideration or rate was i+posed 1/ 2e+orandu+ Order No. , ' under the pre+ise that it sha!!, in effect, 1e a sa!e and>or purchase fro+ one " # -overn+ent a-enc/ to another. It was intended +ere!/ as a transfer of one " # user of the Nationa! %overn+ent to another, with the 1eneficiar/, PCP in this case, +ere!/ returninto the petitioner>transferor the cost of ac4uisition thereof, as appearin- on its accountin1oo7s. It does not in an/ wa/ ref!ect the true and fair +ar7et va!ue of the propert/, nor was it a price a Qwi!!in- se!!erR wou!d de+and and accept for partin- with his rea! propert/. Such 1enefit, therefore, cannot 1e e8tended to respondent as a private entit/, as the !atter does not share the sa+e poc7et, so to spea7, with the Nationa! %overn+ent.
7298
The issue to 1e reso!ved is whether or not our ru!inin Pol$technic -niversit$ of the Philippines v. Court of Appeals app!ies in this case invo!vin- another !essee of NDC who c!ai+ed that the option to purchase the portion !eased to it was si+i!ar!/ vio!ated 1/ the sa!e of the NDC Co+pound in favor of PCP pursuant to 2e+orandu+ Order No. , '. @e ru!e in the affir+ative. The second !ease contract contained the fo!!owin- provisionB
III. It is +utua!!/ a-reed 1/ the parties that this Contract of Lease sha!! 1e in fu!! force and effect for a period of ten " 3# /ears counted fro+ the effectivit/ of the pa/+ent of renta! as provided under su1$para-raph "1# of Artic!e I, with option to renew for another ten " 3# /ears with the +utua! consent of 1oth parties. In no case shou!d the renta!s 1e increased 1/ +ore than 33G of the ori-ina! a+ount fi8ed.
Le))ee )%0++ 0+)o %0<e '%e o/',o& 'o /*rc%0)e '%e 0re0 +e0)e(, '%e /r,ce 'o be &e-o',0'e( 0&( (e'erm,&e( 0' '%e ',me '%e o/',o& 'o /*rc%0)e ,) e5erc,)e(. LE2PAASIS SCPPLIEDM
An option is a contract 1/ which the owner of the propert/ a-rees with another person that the !atter sha!! have the ri-ht to 1u/ the for+erKs propert/ at a fi8ed price within a certain ti+e. It is a condition offered or contract 1/ which the owner stipu!ates with another that the !atter sha!! have the ri-ht to 1u/ the propert/ at a fi8ed price within a certain ti+e, or under, or in co+p!iance with certain ter+s and conditions9 or which -ives to the owner of the propert/ the ri-ht to se!! or de+and a sa!e. 7268 It 1inds the part/, who has -iven the option, not to enter into the principa! contract with an/ other person durin- the period desi-nated, and, within that period, to enter into such contract
with the one to who+ the option was -ranted, if the !atter shou!d decide to use the option.
72:8
Cpon the other hand, a ri-ht of first refusa! is a contractua! -rant, not of the sa!e of a propert/, 1ut of the first priorit/ to 1u/ the propert/ in the event the owner se!!s the sa+e.7288 As distin-uished fro+ an option contract, in a ri-ht of first refusa!, whi!e the o1:ect +i-ht 1e +ade deter+inate, the e8ercise of the ri-ht of first refusa! wou!d 1e dependent not on!/ on the ownerKs eventua! intention to enter into a 1indin- :uridica! re!ation with another 1ut a!so on ter+s, inc!udin- the price, that are /et to 1e fir+ed up.
72;8
As the option to purchase c!ause in the second !ease contract has no definite period within which the !eased pre+ises wi!! 1e offered for sa!e to respondent !essee and the price is +ade su1:ect to ne-otiation and deter+ined on!/ at the ti+e the option to 1u/ is e8ercised, it is o1vious!/ a +ere ri-ht of refusa!, usua!!/ inserted in !ease contracts to -ive the !essee the first crac7 to 1u/ the propert/ in case the !essor decides to se!! the sa+e. That respondent was -ranted a ri-ht of first refusa! under the second !ease contract appears not to have 1een disputed 1/ petitioners. @hat petitioners assai! is the CAKs erroneous conc!usion that such ri-ht of refusa! su1sisted even after the e8piration of the ori-ina! !ease period, when respondent was a!!owed to continue sta/inin the !eased pre+ises under an i+p!ied renewa! of the !ease and without the ri-ht of refusa! carried over to such +onth$to$+onth !ease. Petitioners thus +aintain that no ri-ht of refusa! was vio!ated 1/ the sa!e of the propert/ in favor of PCP pursuant to 2e+orandu+ Order No. , '. PetitionersK position is untena1!e. @hen a !ease contract contains a ri-ht of first refusa!, the !essor has the !e-a! dut/ to the !essee not to se!! the !eased propert/ to an/one at an/ price unti! after the !essor has +ade an offer to se!! the propert/ to the !essee and the !essee has fai!ed to accept it. On!/ after the !essee has fai!ed to e8ercise his ri-ht of first priorit/ cou!d the !essor se!! the propert/ to other 1u/ers under the sa+e ter+s and conditions offered to the !essee, or under ter+s and conditions +ore favora1!e to the !essor.7408 &ecords showed that durin- the hearin- on the app!ication for a writ of pre!i+inar/ in:unction, respondent adduced in evidence a !etter of Antonio A. Aenson dated 01 (ul$ 0233 addressed to 2r. <a7e C. La-onera, Director and Specia! Assistant to E8ecutive Secretar/ Cata!ino 2acarae-, reviewin- a proposed +e+orandu+ order su1+itted to President Cora6on C. A4uino transferrin- the who!e NDC Co+pound, inc!udin- the pre+ises !eased 1/ respondent, in favor of petitioner PCP. This !etter was offered in evidence 1/ respondent to prove the e8istence of docu+ents as of that date and even prior to the e8piration of the second !ease contract or the !apse of the ten " 3#$/ear period counted fro+ the effectivit/ of the renta! pa/+ent $$ that is, one hundred and fift/ " )3# da/s fro+ the si-ninof the contract "2a/ ', 5.0#, as provided in Art. I, para-raph "1# of C$ ,$.0, or on 4cto,er 0, 0233. &espondent thus ti+e!/ e8ercised its option to purchase on Au-ust ,, 500. Aowever, considerin- that NDC had 1een ne-otiatin- throu-h the Nationa! %overn+ent for the sa!e of the propert/ in favor of PCP as ear!/ as <u!/ ), 500 without first offerin- to se!! it to respondent and even when respondent co++unicated its desire to e8ercise the option to purchase -ranted to it under the !ease contract, it is c!ear that
NDC vio!ated respondentKs ri-ht of first refusa!. Cnder the pre+ises, the +atter of the ri-ht of refusa! not havin- 1een carried over to the i+p!ied!/ renewed +onth$to$+onth !ease after the e8piration of the second !ease contract on Octo1er , , 500 1eco+es irre!evant since at the ti+e of the ne-otiations of the sa!e to a third part/, petitioner PCP, respondentKs ri-ht of first refusa! was sti!! su1sistin-. Petitioner NDC in its +e+orandu+ contended that the CA erred in app!/in- the ru!inin Pol$technic -niversit$ of the Philippines v. Court of Appeals pointin- out that the case of !essee =irestone Cera+ics, Inc. is different 1ecause the !ease contract therein had not /et e8pired whi!e in this case respondentKs !ease contracts have a!read/ e8pired and never renewed. The date of the e8piration of the !ease contract in said case is Dece+1er * , 505 which is prior to the issuance of 2e+orandu+ Order No. , ' on <anuar/ (, 505. In contrast, respondentKs !ease contracts had a!read/ e8pired "Septe+1er 500# at the ti+e said +e+orandu+ order was issued.7418 Such contention does not ho!d water. As a!read/ +entioned, the rec7onin- point of the offer of sa!e to a third part/ was not the issuance of 2e+orandu+ Order No. , ' on <anuar/ (, 505 1ut the co++ence+ent of such ne-otiations as ear!/ as <u!/ 500 when respondentKs ri-ht of first refusa! was sti!! su1sistin- and the !ease contracts sti!! in force. Petitioner NDC did not 1other to respond to respondentKs !etter of <une *, 500 infor+init of respondentKs e8ercise of the option to renew and re4uestin- to discuss further the +atter with NDC, nor to the su1se4uent !etter of Au-ust ,, 500 reiteratinthe re4uest for renewin- the !ease for another ten " 3# /ears and a!so the e8ercise of the option to purchase under the !ease contract. Petitioner NDC had dis+issed these !etters as Q+ere infor+ative in nature, and a re4uest at its 1est.R 7428 Perusa! of the !etter dated Au-ust ,, 500, however, 1e!ies such c!ai+ of petitioner NDC that it was +ere!/ infor+ative, thusB
Au-ust ,, 500
AON. ANTONIO AENSON %enera! 2ana-er NATIONAL DEDELOP2ENT CO2PANE *.. Se"n#. %i! <. Pu/at Avenue 2a7ati, 2etro 2ani!a
&E=B
Contract of Lease Nos. C$**$.. I C$ ,$.0
Dear SirB
T%,) ,) .*r'%er 'o o*r e0r+,er +e''er (0'e( !*&e 14, 1;88 .orm0++= 0(<,),&=o*r -oo()e+<e) o. o*r ,&'e&',o& 'o e5erc,)e o*r o/',o& .or 0&o'%er 'e& >10? =e0r). #%o*+( '%e N0',o&0+ De<e+o/me&' Com/0&= o/' 'o )e++ '%e /ro/er'= co<ere( b= )0,( +e0)e), @e 0+)o reA*e)' .or /r,or,'= 'o &e-o',0'e .or ,') /*rc%0)e 0' 'erm) 0&(Bor co&(,',o&) m*'*0++= 0cce/'0b+e.
As a 1ac7-rounder, we wish to infor+ /ou that since the start of our !ease, we have i+proved on the propert/ 1/ constructin- 1ode-a$t/pe 1ui!din-s which present!/ house a!! !e-iti+ate tradin- and +anufacturin- concerns. These 1usiness are su1stantia! ta8pa/ers, e+p!o/ not !ess than *33 e+p!o/ees and contri1ute even forei-n earnin-s.
It is in this conte8t that @e 0re reA*e)',&- .or '%e e5'e&),o& o. '%e +e0)e co&'r0c' 'o /re<e&' )er,o*) eco&om,c (,)r*/',o& 0&( (,)+oc0',o& o. '%e b*),&e)) co&cer&), 0) @e++ 0) /ro<,(e o*r)e+<e), '%e +e))ee, 0& o//or'*&,'= 'o reco*/ o*r ,&<e)'me&') 0&( ob'0,& 0 .0,r re'*r& '%ereo..
Eour favora1!e consideration on our re4uest wi!! 1e ver/ +uch appreciated.
ver/ tru!/ /ours,
TIC AAN TEN% President7448
As to petitionersK ar-u+ent that respondentKs ri-ht of first refusa! can 1e invo7ed on!/ with respect to the second !ease contract which e8press!/ provided for the option to purchase 1/ the !essee, and not in the first !ease contract which contained no such c!ause, we sustain the &TC and CA in findinthat the second contract, coverin- an area of *,,,,.03 s4uare +eters, is interre!ated to and insepara1!e fro+ the first contract over ,,'3. s4uare +eters. The structures 1ui!t on the !eased pre+ises, which are ad:acent to each other, for+ part of an inte-rated s/ste+ of a co++ercia! co+p!e8 !eased out to +anufacturers, fa1ricators and other 1usinesses. Petitioners su1+itted a s7etch p!an and pictures ta7en of the drivewa/s, in an effort to show that the !eased pre+ises can 1e used separate!/ 1/ respondent, and that the two ",# !ease contracts are distinct fro+ each other.7468 Such was a desperate atte+pt to downp!a/ the co++ercia! purpose of respondentKs su1stantia! i+prove+ents which -reat!/ contri1uted to the increased va!ue of the !eased pre+ises. To prove that petitioner NDC had considered the !eased pre+ises as a sin-!e unit, respondent su1+itted evidence showin- that NDC issued on!/ one " # receipt for the renta! pa/+ents for the two portions. 7498 &espondent further presented the
1!ueprint p!an prepared 1/ its witness, En-r. A!e:andro E.Tinio, who supervised the construction of the structures on the !eased pre+ises, to show the 1ui!din- concept as a one$stop industria! site and inte-rated co++ercia! co+p!e8. 7468 In fine, the CA was correct in dec!arin- that there e8ists no :ustifia1!e reason not to app!/ the sa+e rationa!e in Pol$technic -niversit$ of the Philippines v. Court of Appeals in the case of respondent who was si+i!ar!/ pre:udiced 1/ petitioner NDCKs sa!e of the propert/ to PCP, as to entit!e the respondent to e8ercise its option to purchase unti! Octo1er 500 inas+uch as the 2a/ ', 5.0 contract e+1odied the option to renew the !ease for another ten " 3# /ears upon +utua! consent and -ivin- respondent the option to purchase the !eased pre+ises for a price to 1e ne-otiated and deter+ined at the ti+e such option was e8ercised 1/ respondent. It is to 1e noted that 2e+orandu+ Order No. , ' itse!f dec!ared that the transfer is Qsu1:ect to such !iens>!eases e8istin- Lon the su1:ect propert/M.R ThusB ...we now proceed to deter+ine whether =I&ESTONE shou!d 1e a!!owed to e8ercise ,') r,-%' o. .,r)' re.*)0+ o<er '%e /ro/er'=. Such ri-ht was e5/re))+= )'0'e( b= NDC 0&( 1IRE#TONE ,& /0r. C" o. '%e,r '%,r( co&'r0c' (e&om,&0'e( 0) A 10 :8 e5ec*'e( o& 22 December 1;:8 which, as found 1/ the courts a quo, @0) ,&'erre+0'e( 'o 0&( ,&)e/0r0b+e .rom '%e,r .,r)' co&'r0c' (e&om,&0'e( 0) C 40 69 e5ec*'e( o& 26 A*-*)' 1;69 0&( '%e,r )eco&( co&'r0c' (e&om,&0'e( 0) C 26 68 e5ec*'e( o& 8 !0&*0r= 1;6;. Thus $ Shou!d the LESSO& desire to se!! the !eased pre+ises durin- the ter+ of this A-ree+ent, or an/ e8tension thereof, the LESSO& sha!! first -ive to the LESSEE, which sha!! have the right of first option to purchase the !eased pre+ises su1:ect to +utua! a-ree+ent of 1oth parties.
In the instant case, the ri-ht of first refusa! is an inte-ra! and indivisi1!e part of the contract of !ease and is insepara1!e fro+ the who!e contract. The consideration for the ri-ht is 1ui!t into the reciproca! o1!i-ations of the parties. Thus, it is not correct for petitioners to insist that there was no consideration paid 1/ =I&ESTONE to entit!e it to the e8ercise of the ri-ht, inas+uch as the stipu!ation is part and parce! of the contract of !ease +a7in- the consideration for the !ease the sa+e as that for the option.
It is a sett!ed princip!e in civi! !aw that when a !ease contract contains a ri-ht of first refusa!, the !essor is under a !e-a! dut/ to the !essee not to se!! to an/1od/ at an/ price unti! after he has +ade an offer to se!! to the !atter at a certain price and the !essee has fai!ed to accept it. The !essee has a ri-ht that the !essorKs first offer sha!! 1e in his favor. T%e o/',o& ,& '%,) c0)e @0) ,&cor/or0'e( ,& '%e co&'r0c') o. +e0)e b= NDC .or '%e be&e.,' o. 1IRE#TONE @%,c%, ,& <,e@ o. '%e 'o'0+ 0mo*&' o. ,') ,&<e)'me&') ,& '%e /ro/er'=, @0&'e( 'o be 0))*re( '%0' ,' @o*+( be -,<e& '%e .,r)' o//or'*&,'= 'o b*= '%e /ro/er'= 0' 0 /r,ce .or @%,c% ,' @o*+( be o..ere(. Co&),)'e&' @,'% '%e,r 0-reeme&', ,' @0) '%e& ,m/+,c,' .or NDC 'o %0<e .,r)' o..ere( '%e +e0)e( /rem,)e) o. 2.60 %ec'0re) 'o 1IRE#TONE /r,or 'o '%e )0+e ,& .0<or o. P2P. O&+= ,.
1IRE#TONE .0,+e( 'o e5erc,)e ,') r,-%' o. .,r)' /r,or,'= co*+( NDC +0@.*++= )e++ '%e /ro/er'= 'o /e',',o&er P2P.74:8 LE2PAASIS SCPPLIEDM
As we further ru!ed in the afore$cited case, the contractua! -rant of a ri-ht of first refusa! is enforcea1!e, and fo!!owin- an ear!ier ru!inin 5quatorial #ealt$ %evelopment, nc. v. Ma$fair Theater, nc.,7488 the e8ecution of such ri-ht consists in directin- the -rantor to co+p!/ with his o1!i-ation accordin- to the ter+s at which he shou!d have offered the propert/ in favor of the -rantee and at that price when the offer shou!d have 1een +ade. @e then deter+ined the proper rate at which the !eased portion shou!d 1e reconve/ed to respondent 1/ PCP, to who+ the !essorNDC so!d it in vio!ation of respondent !esseeKs ri-ht of first refusa!, as fo!!owsB
It now 1eco+es apropos to as7 whether the courts a quo were correct in fi8in- the proper consideration of the sa!e at P ,)33.33 per s4uare +eter. In contracts of sa!e, the 1asis of the ri-ht of first refusa! +ust 1e the current offer of the se!!er to se!! or the offer to purchase of the prospective 1u/er. On!/ after the !essee$-rantee fai!s to e8ercise its ri-ht under the sa+e ter+s and within the period conte+p!ated can the owner va!id!/ offer to se!! the propert/ to a third person, a-ain, un"er the same terms as offere" to the grantee . It appearin- that the who!e NDC co+pound was so!d to PCP for P))'..' per s4uare +eter, it wou!d have 1een +ore proper for the courts 1e!ow to have ordered the sa!e of the propert/ a!so at the sa+e price. Aowever, ),&ce 1IRE#TONE &e<er r0,)e( '%,) 0) 0& ,))*e, @%,+e o& '%e o'%er %0&( ,' 0(m,''e( '%0' '%e <0+*e o. '%e /ro/er'= )'oo( 0' P1,900.00 /er )A*0re me'er, '%e& @e )ee &o com/e++,&- re0)o& 'o mo(,.= '%e %o+(,&-) o. '%e co*r') a uo '%0' '%e +e0)e( /rem,)e) be )o+( 0' '%0' /r,ce. 74;8 LE2PAASIS SCPPLIEDM
In the !i-ht of the fore-oin-, we ho!d that respondent, which did not offer an/ a+ount to petitioner NDC, and neither "ispute" the P0,166.66 per square meter actual value of +%C7s propert$ at that ti+e it was so!d to PCP at P))'..' per s4uare +eter, as du!/ considered 1/ this Court in the Firestone case, shou!d 1e 1ound 1/ such deter+ination. Accordin-!/, the price at which the !eased pre+ises shou!d 1e so!d to respondent in the e8ercise of its ri-ht of first refusa! under the !ease contract with petitioner NDC, which was pe--ed 1/ the &TC at P))'..' per s4uare +eter, shou!d 1e ad:usted to P ,)33.33 per s4uare +eter, which +ore accurate!/ ref!ects its true va!ue at that ti+e of the sa!e in favor of petitioner PCP. Indeed, 1asic is the ru!e that a part/ to a contract cannot uni!atera!!/ withdraw a ri-ht of first refusa! that stands upon va!ua1!e consideration. 7608 @e have cate-orica!!/ ru!ed that it is not correct to sa/ that there is no consideration for the -rant of the ri-ht of first refusa! if such -rant is e+1odied in the sa+e contract of !ease. Since the stipu!ation for+s part of the entire !ease contract, the consideration for the !ease inc!udes the
consideration for the -rant of the ri-ht of first refusa!. In enterin- into the contract, the !essee is in effect statin- that it consents to !ease the pre+ises and to pa/ the price a-reed upon provided the !essor a!so consents that, shou!d it se!! the !eased propert/, then, the !essee sha!! 1e -iven the ri-ht to +atch the offered purchase price and to 1u/ the propert/ at that price.7618 @e have further stressed that not even the avowed pu1!ic we!fare or the constitutiona! priorit/ accorded to education, invo7ed 1/ petitioner PCP in the Firestone case, wou!d serve as !icense for us, and an/ part/ for that +atter, to destro/ the sanctit/ of 1indin- o1!i-ations. @hi!e education +a/ 1e prioriti6ed for !e-is!ative and 1ud-etar/ purposes, it is dou1tfu! if such i+portance can 1e used to confiscate private propert/ such as the ri-ht of first refusa! -ranted to a !essee of petitioner NDC. 7628 C!ear!/, no reversi1!e error was co++itted 1/ the CA in sustainin- respondentKs contractua! ri-ht of first refusa! and orderin- the reconve/ance of the !eased portion of petitioner NDCKs propert/ in its favor. DHERE1ORE, the petitions are DENIED. The Decision dated Nove+1er ,), ,33' of the &e-iona! Tria! Court of 2a7ati Cit/, Branch '' in Civi! Case No. 00$,,*0, as affir+ed 1/ the Court of Appea!s in its Decision dated <une ,), ,330 in CA$%.&. CD No. 0'*55, is here1/ A11IRMED with MODI1ICATION in that the price to 1e paid 1/ respondent %o!den Aori6on &ea!t/ Corporation for the !eased portion of the NDC Co+pound under Lease Contract Nos. C$**$.. and C$ ,$.0 is here1/ increased to P ,)33.33 per s4uare +eter. No pronounce+ent as to costs. #O ORDERED. G.R. No. 111248 !0&*0r= 29, 1;;9 ADEL1A PROPERTIE#, INC., petitioner, vs. CO2RT O1 APPEAL#, RO#ARIO !IMENE3 CA#TAEEDA 0&( #AL2D !IMENE3, respondents.
REGALADO, J!" The +ain issues presented for reso!ution in this petition for review on certiorari of the :ud-+ent of respondent Court of appea!s, dated Apri! (, 55*, in CA$%.&. CD No. *'.(. 1 are " # whether of not the ?E8c!usive Option to Purchase? e8ecuted 1etween petitioner Ade!fa Properties, Inc. and private respondents &osario <i+ene6$CastaSeda and Sa!ud <i+ene6 is an option contract9 and ",# whether or not there was a va!id suspension of pa/+ent of the purchase price 1/ said petitioner, and the !e-a! effects thereof on the contractua! re!ations of the parties. The records disc!ose the fo!!owin- antecedent facts which cu!+inated in the present appe!!ate review, to witB . Aerein private respondents and their 1rothers, <ose and Do+inador <i+ene6, were the re-istered co$owners of a parce! of !and consistin- of .,. 3 s4uare +eters, covered 1/
Transfer Certificate of Tit!e "TCT# No. *35..*, 2situated in Barrio Cu!asi, Las PiSas, 2etro 2ani!a. ,. On <u!/ ,0, 500, <ose and Do+inador <i+ene6 so!d their share consistin- of one$ha!f of said parce! of !and, specifica!!/ the eastern portion thereof, to herein petitioner pursuant to a ?8asulatan sa Bilihan ng 9upa.? 4Su1se4uent!/, a ?Confir+ator/ E8tra:udicia! Partition A-ree+ent? 6 was e8ecuted 1/ the <i+ene6es, wherein the eastern portion of the su1:ect !ot, with an area of 0,0)) s4uare +eters was ad:udicated to <ose and Do+inador <i+ene6, whi!e the western portion was a!!ocated to herein private respondents. *. Thereafter, herein petitioner e8pressed interest in 1u/in- the western portion of the propert/ fro+ private respondents. Accordin-!/, on Nove+1er ,), 505, an ?E8c!usive Option to Purchase? 9 was e8ecuted 1etween petitioner and private respondents, under the fo!!owin- ter+s and conditionsB . The se!!inprice of said 0,()) s4uare +eters of the su1:ect propert/ is T@O 2ILLION EI%AT ACND&ED =I=TE SIF TAOCSAND ONE ACND&ED =I=TE PESOS ONLE "P,,0)(, )3.33# ,. The su+ of P)3,333.33 which we received fro+ ADEL=A P&OPE&TIES, INC. as an option +one/ sha!! 1e credited as partia! pa/+ent upon the consu++ation of the sa!e and the 1a!ance in the su+ of T@O 2ILLION EI%AT ACND&ED SIF TAOCSAND ONE ACND&ED =I=TE PESOS "P,,03(, )3.33# to 1e paid on or 1efore Nove+1er *3, 5059 *. In case of defau!t on the part of ADEL=A P&OPE&TIES, INC. to pa/ said 1a!ance in accordance with para-raph , hereof, this option sha!! 1e cance!!ed and )3G of the option +one/ to 1e forfeited in our favor and we wi!! refund the re+ainin- )3G of said +one/ upon the sa!e of said propert/ to a third part/9 '. A!! e8penses inc!udin- the correspondincapita! -ains ta8, cost of docu+entar/ sta+ps are for the account of the DENDO&S, and e8penses for the re-istration of the deed of sa!e in the &e-istr/ of Deeds are for the account of ADEL=A P&OPE&TIES, INC. Considerin-, however, that the owner;s cop/ of the certificate of tit!e issued to respondent Sa!ud <i+ene6 had 1een !ost, a petition for the re$issuance of a new owner;s cop/ of said certificate of tit!e was fi!ed in court throu-h Att/. Ba/ani L. Bernardo, who acted as private respondents; counse!. Eventua!!/, a new owner;s cop/ of the certificate of tit!e was issued 1ut it re+ained in the possession of Att/. Bernardo unti! he turned it over to petitioner Ade!fa Properties, Inc. '. Before petitioner cou!d +a7e pa/+ent, it received su++ons 6 on Nove+1er ,5, 505, to-ether with a cop/ of a co+p!aint fi!ed 1/ the nephews and nieces of private respondents a-ainst the !atter, <ose and Do+inador <i+ene6, and herein petitioner in the &e-iona! Tria! Court of 2a7ati, doc7eted as Civi! Case No. 05$))' , for annu!+ent of the deed of sa!e in favor of Aouseho!d Corporation and recover/ of ownership of the propert/ covered 1/ TCT No. *35..*. : ). As a conse4uence, in a !etter dated Nove+1er ,5, 505, petitioner infor+ed private respondents that it wou!d ho!d pa/+ent of the fu!! purchase price and su--ested that private respondents sett!e the case with their nephews and nieces, addin- that ?. . . if possi1!e, a!thou-h Nove+1er *3, 505 is a ho!ida/, we wi!! 1e waitin- for /ou and said p!aintiffs at our office up to .B33 p.+.? 8 Another !etter of the sa+e tenor and of even date
was sent 1/ petitioner to <ose and Do+inador <i+ene6. ; &espondent Sa!ud <i+ene6 refused to heed the su--estion of petitioner and attri1uted the suspension of pa/+ent of the purchase price to ?!ac7 of word of honor.? (. On Dece+1er ., 505, petitioner caused to 1e annotated on the tit!e of the !ot its option contract with private respondents, and its contract of sa!e with <ose and Do+inador <i+ene6, as Entr/ No. '*.$' and entr/ No. '*0$', respective!/. .. On Dece+1er ', 505, private respondents sent =rancisca <i+ene6 to see Att/. Bernardo, in his capacit/ as petitioner;s counse!, and to infor+ the !atter that the/ were cance!!in- the transaction. In turn, Att/. Bernardo offered to pa/ the purchase price provided that P)33,333.33 1e deducted therefro+ for the sett!e+ent of the civi! case. This was re:ected 1/ private respondents. On Dece+1er ,,, 505, Att/. Bernardo wrote private respondents on the sa+e +atter 1ut this ti+e reducin- the a+ount fro+ P)33,333.33 to P*33,333.33, and this was a!so re:ected 1/ the !atter. 0. On =e1ruar/ ,*, 553, the &e-iona! Tria! Court of 2a7ati dis+issed Civi! Case No. 05$ ))' . Thus, on =e1ruar/ ,0, 553, petitioner caused to 1e annotated anew on TCT No. *35..* the e8c!usive option to purchase as Entr/ No. ''',$'. 5. On the sa+e da/, =e1ruar/ ,0, 553, private respondents e8ecuted a Deed of Conditiona! Sa!e 10 in favor of E+/!ene Chua over the sa+e parce! of !and for P*,3,5,,)3, of which P ,)33,333.33 was paid to private respondents on said date, with the 1a!ance to 1e paid upon the transfer of tit!e to the specified one$ha!f portion. 3. On Apri! (, 553, Att/. Bernardo wrote private respondents infor+in- the !atter that in view of the dis+issa! of the case a-ainst the+, petitioner was wi!!in- to pa/ the purchase price, and he re4uested that the correspondin- deed of a1so!ute sa!e 1e e8ecuted. 11 This was i-nored 1/ private respondents. . On <u!/ ,., 553, private respondents; counse! sent a !etter to petitioner enc!osintherein a chec7 for P,),333.33 representin- the refund of fift/ percent of the option +one/ paid under the e8c!usive option to purchase. Private respondents then re4uested petitioner to return the owner;s dup!icate cop/ of the certificate of tit!e of respondent Sa!ud <i+ene6. 12 Petitioner fai!ed to surrender the certificate of tit!e, hence private respondents fi!ed Civi! Case No. .)*, in the &e-iona! Tria! Court of Pasa/ Cit/, Branch *, for annu!+ent of contract with da+a-es, pra/in-, a+onothers, that the e8c!usive option to purchase 1e dec!ared nu!! and void9 that defendant, herein petitioner, 1e ordered to return the owner;s dup!icate certificate of tit!e9 and that the annotation of the option contract on TCT No. *35..* 1e cance!!ed. E+/!ene Chua, the su1se4uent purchaser of the !ot, fi!ed a co+p!aint in intervention. ,. The tria! court rendered :ud-+ent 14 therein on Septe+1er ), 55 ho!dinthat the a-ree+ent entered into 1/ the parties was +ere!/ an option contract, and dec!arin- that the suspension of pa/+ent 1/ herein petitioner constituted a counter$offer which, therefore, was tanta+ount to a re:ection of the option. It !i7ewise ru!ed that herein petitioner cou!d not va!id!/ suspend pa/+ent in favor of private respondents on the -round that the vindicator/ action fi!ed 1/ the !atter;s 7in did not invo!ve the western portion of the !and covered 1/ the contract 1etween petitioner and private respondents, 1ut the eastern portion thereof which was the su1:ect of the sa!e 1etween petitioner and the 1rothers <ose and Do+inador <i+ene6. The tria! court then directed the cance!!ation of
the e8c!usive option to purchase, dec!ared the sa!e to intervenor E+/!ene Chua as va!id and 1indin-, and ordered petitioner to pa/ da+a-es and attorne/;s fees to private respondents, with costs. *. On appea!, respondent Court of appea!s affir+ed in toto the decision of the court a quo and he!d that the fai!ure of petitioner to pa/ the purchase price within the period a-reed upon was tanta+ount to an e!ection 1/ petitioner not to 1u/ the propert/9 that the suspension of pa/+ent constituted an i+position of a condition which was actua!!/ a counter$offer a+ountin- to a re:ection of the option9 and that Artic!e )53 of the Civi! Code on suspension of pa/+ents app!ies on!/ to a contract of sa!e or a contract to se!!, 1ut not to an option contract which it opined was the nature of the docu+ent su1:ect of the case at 1ar. Said appe!!ate court si+i!ar!/ uphe!d the va!idit/ of the deed of conditiona! sa!e e8ecuted 1/ private respondents in favor of intervenor E+/!ene Chua. In the present petition, the fo!!owin- assi-n+ent of errors are raisedB . &espondent court of appea!s acted with -rave a1use of discretion in +a7in- its findinthat the a-ree+ent entered into 1/ petitioner and private respondents was strict!/ an option contract9 ,. %rantin- arguen"o that the a-ree+ent was an option contract, respondent court of Appea!s acted with -rave a1use of discretion in -rievous!/ fai!in- to consider that whi!e the option period had not !apsed, private respondents cou!d not uni!atera!!/ and pre+ature!/ ter+inate the option period9 *. &espondent Court of Appea!s acted with -rave a1use of discretion in fai!in- to appreciate fu!!/ the attendant facts and circu+stances when it +ade the conc!usion of !aw that Artic!e )53 does not app!/9 and '. &espondent Court of Appea!s acted with -rave a1use of discretion in confor+in- with the sa!e in favor of appe!!ee 2a. E+/!ene Chua and the award of da+a-es and attorne/;s fees which are not on!/ e8cessive, 1ut a!so without in fact and in !aw. 16 An ana!/sis of the facts o1tainin- in this case, as we!! as the evidence presented 1/ the parties, irresisti1!/ !eads to the conc!usion that the a-ree+ent 1etween the parties is a contract to se!!, and not an option contract or a contract of sa!e. I . In view of the e8tended dis4uisition thereon 1/ respondent court, it wou!d 1e worthwhi!e at this :uncture to 1rief!/ discourse on the rationa!e 1ehind our treat+ent of the a!!e-ed option contract as a contract to se!!, rather than a contract of sa!e. The distinction 1etween the two is i+portant for in contract of sa!e, the tit!e passes to the vendee upon the de!iver/ of the thin- so!d9 whereas in a contract to se!!, 1/ a-ree+ent the ownership is reserved in the vendor and is not to pass unti! the fu!! pa/+ent of the price. In a contract of sa!e, the vendor has !ost and cannot recover ownership unti! and un!ess the contract is reso!ved or rescinded9 whereas in a contract to se!!, tit!e is retained 1/ the vendor unti! the fu!! pa/+ent of the price, such pa/+ent 1ein- a positive suspensive condition and fai!ure of which is not a 1reach 1ut an event that prevents the o1!i-ation of the vendor to conve/ tit!e fro+ 1eco+ineffective. Thus, a deed of sa!e is considered a1so!ute in nature where there is neither a stipu!ation in the deed that tit!e to
the propert/ so!d is reserved in the se!!er unti! the fu!! pa/+ent of the price, nor one -ivinthe vendor the ri-ht to uni!atera!!/ reso!ve the contract the +o+ent the 1u/er fai!s to pa/ within a fi8ed period. 19 There are two features which convince us that the parties never intended to transfer ownership to petitioner e8cept upon the fu!! pa/+ent of the purchase price. =irst!/, the e8c!usive option to purchase, a!thou-h it provided for auto+atic rescission of the contract and partia! forfeiture of the a+ount a!read/ paid in case of defau!t, does not +ention that petitioner is o1!i-ed to return possession or ownership of the propert/ as a conse4uence of non$pa/+ent. There is no stipu!ation anent reversion or reconve/ance of the propert/ to herein private respondents in the event that petitioner does not co+p!/ with its o1!i-ation. @ith the a1sence of such a stipu!ation, a!thou-h there is a provision on the re+edies avai!a1!e to the parties in case of 1reach, it +a/ !e-a!!/ 1e inferred that the parties never intended to transfer ownership to the petitioner to co+p!etion of pa/+ent of the purchase price. In effect, there was an i+p!ied a-ree+ent that ownership sha!! not pass to the purchaser unti! he had fu!!/ paid the price. Artic!e '.0 of the civi! code does not re4uire that such a stipu!ation 1e e8press!/ +ade. Conse4uent!/, an i+p!ied stipu!ation to that effect is considered va!id and, therefore, 1indin- and enforcea1!e 1etween the parties. It shou!d 1e noted that under the !aw and :urisprudence, a contract :hich contains this kin" of stipulation is consi"ere" a contract to sell . 2oreover, that the parties rea!!/ intended to e8ecute a contract to se!!, and not a contract of sa!e, is 1o!stered 1/ the fact that the deed of a1so!ute sa!e wou!d have 1een issued on!/ upon the pa/+ent of the 1a!ance of the purchase price, as +a/ 1e -!eaned fro+ petitioner;s !etter dated Apri! (, 553 16 wherein it infor+ed private respondents that it ?is now read/ and wi!!in- to pa/ /ou si+u!taneous!/ with the e8ecution of the correspondin- deed of a1so!ute sa!e.? Second!/, it has not 1een shown there was de!iver/ of the propert/, actua! or constructive, +ade to herein petitioner. The e8c!usive option to purchase is not contained in a pu1!ic instru+ent the e8ecution of which wou!d have 1een considered e4uiva!ent to de!iver/. 1: Neither did petitioner ta7e actua!, ph/sica! possession of the propert/ at an/ -iven ti+e. It is true that after the reconstitution of private respondents; certificate of tit!e, it re+ained in the possession of petitioner;s counse!, Att/. Ba/ani L. Bernardo, who thereafter de!ivered the sa+e to herein petitioner. Nor+a!!/, under the !aw, such possession 1/ the vendee is to 1e understood as a de!iver/. 18Aowever, private respondents e8p!ained that there was rea!!/ no intention on their part to de!iver the tit!e to herein petitioner with the purpose of transferrin- ownership to it. The/ c!ai+ that Att/. Bernardo had possession of the tit!e on!/ 1ecause he was their counse! in the petition for reconstitution. @e have no reason not to 1e!ieve this e8p!anation of private respondents, aside fro+ the fact that such contention was never refuted or contradicted 1/ petitioner. ,. Irrefra-a1!/, the controverted docu+ent shou!d !e-a!!/ 1e considered as a perfected contract to se!!. On this particu!ar point, therefore, we re:ect the position and ratiocination of respondent Court of Appea!s which, whi!e awardin- the correct re!ief to private respondents, cate-ori6ed the instru+ent as ?strict!/ an option contract.? The i+portant tas7 in contract interpretation is a!wa/s the ascertain+ent of the intention of the contractinparties and that tas7 is, of course, to 1e dischar-ed 1/ !oo7in- to the
words the/ used to pro:ect that intention in their contract, a!! the words not :ust a particu!ar word or two, and words in conte8t not words standin- a!one. 1;2oreover, :ud-infro+ the su1se4uent acts of the parties which wi!! hereinafter 1e discussed, it is undenia1!e that the intention of the parties was to enter into a contract to se!!. 20 In addition, the tit!e of a contract does not necessari!/ deter+ine its true nature. 21 Aence, the fact that the docu+ent under discussion is entit!ed ?E8c!usive Option to Purchase? is not contro!!in- where the te8t thereof shows that it is a contract to se!!. An option, as used in the !aw on sa!es, is a continuin- offer or contract 1/ which the owner stipu!ates with another that the !atter sha!! have the ri-ht to 1u/ the propert/ at a fi8ed price within a certain ti+e, or under, or in co+p!iance with, certain ter+s and conditions, or which -ives to the owner of the propert/ the ri-ht to se!! or de+and a sa!e. It is a!so so+eti+es ca!!ed an ?unaccepted offer.? An option is not of itse!f a purchase, 1ut +ere!/ secures the privi!e-e to 1u/. 22 It is not a sa!e of propert/ 1ut a sa!e of propert/ 1ut a sa!e of the ri-ht to purchase.24 It is si+p!/ a contract 1/ which the owner of propert/ a-rees with another person that he sha!! have the ri-ht to 1u/ his propert/ at a fi8ed price within a certain ti+e. Ae does not se!! his !and9 he does not then a-ree to se!! it9 1ut he does se!! so+ethin-, that it is, the ri-ht or privi!e-e to 1u/ at the e!ection or option of the other part/. 26 Its distin-uishin- characteristic is that it i+poses no 1indin- o1!i-ation on the person ho!din- the option, aside fro+ the consideration for the offer. Cnti! acceptance, it is not, proper!/ spea7in-, a contract, and does not vest, transfer, or a-ree to transfer, an/ tit!e to, or an/ interest or ri-ht in the su1:ect +atter, 1ut is +ere!/ a contract 1/ which the owner of propert/ -ives the optionee the ri-ht or privi!e-e of acceptin- the offer and 1u/in- the propert/ on certain ter+s. 29 On the other hand, a contract, !i7e a contract to se!!, invo!ves a +eetinof +inds two persons where1/ one 1inds hi+se!f, with respect to the other, to -ive so+ethin- or to render so+e service. 26 Contracts, in -enera!, are perfected 1/ +ere consent, 2: which is +anifested 1/ the +eetinof the offer and the acceptance upon the thin- and the cause which are to constitute the contract. The offer +ust 1e certain and the acceptance a1so!ute. 28 The distinction 1etween an ?option? and a contract of sa!e is that an option is an unaccepted offer. It states the ter+s and conditions on which the owner is wi!!in- to se!! the !and, if the ho!der e!ects to accept the+ within the ti+e !i+ited. If the ho!der does so e!ect, he +ust -ive notice to the other part/, and the accepted offer thereupon 1eco+es a va!id and 1indin- contract. If an acceptance is not +ade within the ti+e fi8ed, the owner is no !on-er 1ound 1/ his offer, and the option is at an end. A contract of sa!e, on the other hand, fi8es definite!/ the re!ative ri-hts and o1!i-ations of 1oth parties at the ti+e of its e8ecution. The offer and the acceptance are concurrent, since the +inds of the contractinparties +eet in the ter+s of the a-ree+ent. 2; A perusa! of the contract in this case, as we!! as the ora! and docu+entar/ evidence presented 1/ the parties, readi!/ shows that there is indeed a concurrence of petitioner;s offer to 1u/ and private respondents; acceptance thereof. The ru!e is that e8cept where a for+a! acceptance is so re4uired, a!thou-h the acceptance +ust 1e affir+ative!/ and c!ear!/ +ade and +ust 1e evidenced 1/ so+e acts or conduct co++unicated to the offeror, it +a/ 1e +ade either in a for+a! or an infor+a! +anner, and +a/ 1e shown 1/ acts, conduct, or words of the acceptin- part/ that c!ear!/ +anifest a present intention or
deter+ination to accept the offer to 1u/ or se!!. Thus, acceptance +a/ 1e shown 1/ the acts, conduct, or words of a part/ reco-ni6in- the e8istence of the contract of sa!e. 40 The records a!so show that private respondents accepted the offer of petitioner to 1u/ their propert/ under the ter+s of their contract. At the ti+e petitioner +ade its offer, private respondents su--ested that their transfer certificate of tit!e 1e first reconstituted, to which petitioner a-reed. As a +atter of fact, it was petitioner;s counse!, Att/. Ba/ani L. Bernardo, who assisted private respondents in fi!in- a petition for reconstitution. After the tit!e was reconstituted, the parties a-reed that petitioner wou!d pa/ either in cash or +ana-er;s chec7 the a+ount of P,,0)(, )3.33 for the !ot. Petitioner was supposed to pa/ the sa+e on Nove+1er ,), 505, 1ut it !ater offered to +a7e a down pa/+ent of P)3,333.33, with the 1a!ance of P,,03(, )3.33 to 1e paid on or 1efore Nove+1er *3, 505. Private respondents a-reed to the counter$offer +ade 1/ petitioner. 41 As a resu!t, the so$ca!!ed e8c!usive option to purchase was prepared 1/ petitioner and was su1se4uent!/ si-ned 1/ private respondents, there1/ creatin- a perfected contract to se!! 1etween the+. It cannot 1e -ainsaid that the offer to 1u/ a specific piece of !and was definite and certain, whi!e the acceptance thereof was a1so!ute and without an/ condition or 4ua!ification. The a-ree+ent as to the o1:ect, the price of the propert/, and the ter+s of pa/+ent was c!ear and we!!$defined. No other si-nificance cou!d 1e -iven to such acts that than the/ were +eant to fina!i6e and perfect the transaction. The parties even went 1e/ond the 1asic re4uire+ents of the !aw 1/ stipu!atin- that ?a!! e8penses inc!udin- the correspondincapita! -ains ta8, cost of docu+entar/ sta+ps are for the account of the vendors, and e8penses for the re-istration of the deed of sa!e in the &e-istr/ of Deeds are for the account of Ade!fa properties, Inc.? Aence, there was nothin- !eft to 1e done e8cept the perfor+ance of the respective o1!i-ations of the parties. @e do not su1scri1e to private respondents; su1+ission, which was uphe!d 1/ 1oth the tria! court and respondent court of appea!s, that the offer of petitioner to deduct P)33,333.33, "!ater reduced to P*33,333.33# fro+ the purchase price for the sett!e+ent of the civi! case was tanta+ount to a counter$offer. It +ust 1e stressed that there a!read/ e8isted a perfected contract 1etween the parties at the ti+e the a!!e-ed counter$offer was +ade. Thus, an/ new offer 1/ a part/ 1eco+es 1indin- on!/ when it is accepted 1/ the other. In the case of private respondents, the/ actua!!/ refused to concur in said offer of petitioner, 1/ reason of which the ori-ina! ter+s of the contract continued to 1e enforcea1!e. At an/ rate, the sa+e cannot 1e considered a counter$offer for the si+p!e reason that petitioner;s so!e purpose was to sett!e the civi! case in order that it cou!d a!read/ co+p!/ with its o1!i-ation. In fact, it was even indicative of a desire 1/ petitioner to i++ediate!/ co+p!/ therewith, e8cept that it was 1ein- prevented fro+ doin- so 1ecause of the fi!inof the civi! case which, it 1e!ieved in -ood faith, rendered co+p!iance i+pro1a1!e at that ti+e. In addition, no inference can 1e drawn fro+ that su--estion -iven 1/ petitioner that it was tota!!/ a1andonin- the ori-ina! contract. 2ore i+portant!/, it wi!! 1e noted that the fai!ure of petitioner to pa/ the 1a!ance of the purchase price within the a-reed period was attri1uted 1/ private respondents to ?!ac7 of word of honor? on the part of the for+er. The reason of ?!ac7 of word of honor? is to us a c!ear indication that private respondents considered petitioner a!read/ 1ound 1/ its
o1!i-ation to pa/ the 1a!ance of the consideration. In effect, private respondents were de+andin- or e8actin- fu!fi!!+ent of the o1!i-ation fro+ herein petitioner. with the arriva! of the period a-reed upon 1/ the parties, petitioner was supposed to co+p!/ with the o1!i-ation incu+1ent upon it to perfor+, not +ere!/ to e8ercise an option or a ri-ht to 1u/ the propert/. The o1!i-ation of petitioner on Nove+1er *3, 55* consisted of an o1!i-ation to -ive so+ethin-, that is, the pa/+ent of the purchase price. The contract did not si+p!/ -ive petitioner the discretion to pa/ for the propert/. 42It wi!! 1e noted that there is nothin- in the said contract to show that petitioner was +ere!/ -iven a certain period within which to e8ercise its privi!e-e to 1u/. The a-reed period was intended to -ive ti+e to herein petitioner within which to fu!fi!! and co+p!/ with its o1!i-ation, that is, to pa/ the 1a!ance of the purchase price. No evidence was presented 1/ private respondents to prove otherwise. The test in deter+inin- whether a contract is a ?contract of sa!e or purchase? or a +ere ?option? is whether or not the a-ree+ent cou!d 1e specifica!!/ enforced. 44 There is no dou1t that the o1!i-ation of petitioner to pa/ the purchase price is specific, definite and certain, and conse4uent!/ 1indin- and enforcea1!e. Aad private respondents chosen to enforce the contract, the/ cou!d have specifica!!/ co+pe!!ed petitioner to pa/ the 1a!ance of P,,03(, )3.33. This is distinct!/ +ade +anifest in the contract itse!f as an inte-ra! stipu!ation, co+p!iance with which cou!d !e-a!!/ and definite!/ 1e de+anded fro+ petitioner as a conse4uence. This is not a case where no ri-ht is as /et created nor an o1!i-ation dec!ared, as where so+ethin- further re+ains to 1e done 1efore the 1u/er and se!!er o1!i-ate the+se!ves. 46 An a-ree+ent is on!/ an ?option? when no o1!i-ation rests on the part/ to +a7e an/ pa/+ent e8cept such as +a/ 1e a-reed on 1etween the parties as consideration to support the option unti! he has +ade up his +ind within the ti+e specified. 49 An option, and not a contract to purchase, is effected 1/ an a-ree+ent to se!! rea! estate for pa/+ents to 1e +ade within specified ti+e and providin- forfeiture of +one/ paid upon fai!ure to +a7e pa/+ent, where the purchaser does not a-ree to purchase, to +a7e pa/+ent, or to 1ind hi+se!f in an/ wa/ other than the forfeiture of the pa/+ents +ade. 46 As herein1efore discussed, this is not the situation o1tainin- in the case at 1ar. @hi!e there is :urisprudence to the effect that a contract which provides that the initia! pa/+ent sha!! 1e tota!!/ forfeited in case of defau!t in pa/+ent is to 1e considered as an option contract, 4: sti!! we are not inc!ined to confor+ with the findin-s of respondent court and the court a quo that the contract e8ecuted 1etween the parties is an option contract, for the reason that the parties were a!read/ conte+p!atin- the pa$ment of the ,alance of the purchase price, and were not +ere!/ 4uotin- an a-reed va!ue for the propert/. The ter+ ?1a!ance,? connotes a re+ainder or so+ethin- re+ainin- fro+ the ori-ina! tota! su+ a!read/ a-reed upon. In other words, the a!!e-ed option +one/ of P)3,333.33 was actua!!/ earnest +one/ which was intended to for+ part of the purchase price. The a+ount of P)3,333.33 was not distinct fro+ the cause or consideration for the sa!e of the propert/, 1ut was itse!f a part thereof. It is a statutor/ ru!e that whenever earnest +one/ is -iven in a contract of sa!e, it sha!! 1e considered as part of the price and as proof of the perfection of the contract. 48 It
constitutes an advance pa/+ent and +ust, therefore, 1e deducted fro+ the tota! price. A!so, earnest +one/ is -iven 1/ the 1u/er to the se!!er to 1ind the 1ar-ain. There are c!ear distinctions 1etween earnest +one/ and option +one/, vi*.B "a# earnest +one/ is part of the purchase price, whi!e option +one/ ids the +one/ -iven as a distinct consideration for an option contract9 "1# earnest +one/ is -iven on!/ where there is a!read/ a sa!e, whi!e option +one/ app!ies to a sa!e not /et perfected9 and "c# when earnest +one/ is -iven, the 1u/er is 1ound to pa/ the 1a!ance, whi!e when the wou!d$1e 1u/er -ives option +one/, he is not re4uired to 1u/. 4; The afore4uoted characteristics of earnest +one/ are apparent in the so$ca!!ed option contract under review, even thou-h it was ca!!ed ?option +one/? 1/ the parties. In addition, private respondents fai!ed to show that the pa/+ent of the 1a!ance of the purchase price was on!/ a condition precedent to the acceptance of the offer or to the e8ercise of the ri-ht to 1u/. On the contrar/, it has 1een sufficient!/ esta1!ished that such pa/+ent was 1ut an e!e+ent of the perfor+ance of petitioner;s o1!i-ation under the contract to se!!. 60 II . This 1rin-s us to the second issue as to whether or not there was va!id suspension of pa/+ent of the purchase price 1/ petitioner and the !e-a! conse4uences thereof. To :ustif/ its fai!ure to pa/ the purchase price within the a-reed period, petitioner invo7es Artic!e )53 of the civi! Code which providesB Art. )53. Shou!d the vendee 1e distur1ed in the possession or ownership of the thinac4uired, or shou!d he have reasona1!e -rounds to fear such distur1ance, 1/ a vindicator/ action or a forec!osure of +ort-a-e, he +a/ suspend the pa/+ent of the price unti! the vendor has caused the distur1ance or dan-er to cease, un!ess the !atter -ives securit/ for the return of the price in a proper case, or it has 1een stipu!ated that, notwithstandin- an/ such contin-enc/, the vendee sha!! 1e 1ound to +a7e the pa/+ent. A +ere act of trespass sha!! not authori6e the suspension of the pa/+ent of the price. &espondent court refused to app!/ the afore4uoted provision of !aw on the erroneous assu+ption that the true a-ree+ent 1etween the parties was a contract of option. As we have herein1efore discussed, it was not an option contract 1ut a perfected contract to se!!. Deri!/, therefore, Artic!e )53 wou!d proper!/ app!/. Both !ower courts, however, are in accord that since Civi! Case No. 05$))' fi!ed a-ainst the parties herein invo!ved on!/ the eastern ha!f of the !and su1:ect of the deed of sa!e 1etween petitioner and the <i+ene6 1rothers, it did not, therefore, have an/ adverse effect on private respondents; tit!e and ownership over the western ha!f of the !and which is covered 1/ the contract su1:ect of the present case. @e have -one over the co+p!aint for recover/ of ownership fi!ed in said case 61 and we are not persuaded 1/ the factua! findin-s +ade 1/ said courts. At a -!ance, it is easi!/ discerni1!e that, a!thou-h the co+p!aint pra/ed for the annu!+ent on!/ of the contract of sa!e e8ecuted 1etween petitioner and the <i+ene6 1rothers, the sa+e !i7ewise pra/ed for the recover/ of therein p!aintiffs; share in that parce! of !and specifica!!/ covered 1/ TCT No. *35..*. In other words, the p!aintiffs therein were c!ai+in- to 1e co$owners of the entire parce! of !and descri1ed in TCT No. *35..*, and not on!/ of a portion thereof nor, as incorrect!/
interpreted 1/ the !ower courts, did their c!ai+ pertain e8c!usive!/ to the eastern ha!f ad:udicated to the <i+ene6 1rothers. Such 1ein- the case, petitioner was :ustified in suspendin- pa/+ent of the 1a!ance of the purchase price 1/ reason of the aforesaid vindicator/ action fi!ed a-ainst it. The assurance +ade 1/ private respondents that petitioner did not have to worr/ a1out the case 1ecause it was pure and si+p!e harass+ent 62 is not the 7ind of -uarant/ conte+p!ated under the e8ceptive c!ause in Artic!e )53 wherein the vendor is 1ound to +a7e pa/+ent even with the e8istence of a vindicator/ action if the vendee shou!d -ive a securit/ for the return of the price. ,. Be that as it +a/, and the va!idit/ of the suspension of pa/+ent notwithstandin-, we find and ho!d that private respondents +a/ no !on-er 1e co+pe!!ed to se!! and de!iver the su1:ect propert/ to petitioner for two reasons, that is, petitioner;s fai!ure to du!/ effect the consi-nation of the purchase price after the distur1ance had ceased9 and, secondari!/, the fact that the contract to se!! had 1een va!id!/ rescinded 1/ private respondents. The records of this case revea! that as ear!/ as =e1ruar/ ,0, 553 when petitioner caused its e8c!usive option to 1e annotated anew on the certificate of tit!e, it a!read/ 7new of the dis+issa! of civi! Case No. 05$))' . Aowever, it was on!/ on Apri! (, 553 that petitioner, throu-h its counse!, wrote private respondents e8pressin- its wi!!in-ness to pa/ the 1a!ance of the purchase price upon the e8ecution of the correspondin- deed of a1so!ute sa!e. At +ost, that was +ere!/ a notice to pa/. There was no proper tender of pa/+ent nor consi-nation in this case as re4uired 1/ !aw. The +ere sendin- of a !etter 1/ the vendee e8pressin- the intention to pa/, without the acco+pan/in- pa/+ent, is not considered a va!id tender of pa/+ent. 64 Besides, a +ere tender of pa/+ent is not sufficient to co+pe! private respondents to de!iver the propert/ and e8ecute the deed of a1so!ute sa!e. It is consi-nation which is essentia! in order to e8tin-uish petitioner;s o1!i-ation to pa/ the 1a!ance of the purchase price. 66 The ru!e is different in case of an option contract 69 or in !e-a! rede+ption or in a sa!e with ri-ht to repurchase, 66 wherein consi-nation is not necessar/ 1ecause these cases invo!ve an e8ercise of a ri-ht or privi!e-e "to 1u/, redee+ or repurchase# rather than the dischar-e of an o1!i-ation, hence tender of pa/+ent wou!d 1e sufficient to preserve the ri-ht or privi!e-e. This is 1ecause the provisions on consi-nation are not app!ica1!e when there is no o1!i-ation to pa/. 6: A contract to se!!, as in the case 1efore us, invo!ves the perfor+ance of an o1!i-ation, not +ere!/ the e8ercise of a privi!e-e of a ri-ht. conse4uent!/, perfor+ance or pa/+ent +a/ 1e effected not 1/ tender of pa/+ent a!one 1ut 1/ 1oth tender and consi-nation. =urther+ore, petitioner no !on-er had the ri-ht to suspend pa/+ent after the distur1ance ceased with the dis+issa! of the civi! case fi!ed a-ainst it. Necessari!/, therefore, its o1!i-ation to pa/ the 1a!ance a-ain arose and resu+ed after it received notice of such dis+issa!. Cnfortunate!/, petitioner fai!ed to seasona1!/ +a7e pa/+ent, as in fact it has deposit the +one/ with the tria! court when this case was ori-ina!!/ fi!ed therein. B/ reason of petitioner;s fai!ure to co+p!/ with its o1!i-ation, private respondents e!ected to resort to and did announce the rescission of the contract throu-h its !etter to petitioner dated <u!/ ,., 553. That written notice of rescission is dee+ed sufficient under the circu+stances. Artic!e )5, of the Civi! Code which re4uires rescission either 1/ :udicia! action or notaria! act is not app!ica1!e to a contract to se!!. 68 =urther+ore, :udicia! action
for rescission of a contract is not necessar/ where the contract provides for auto+atic rescission in case of 1reach, 6;as in the contract invo!ved in the present controvers/. @e are not unaware of the ru!inin -niversit$ of the Philippines vs. %e los Angeles, etc. 90 that the ri-ht to rescind is not a1so!ute, 1ein- ever su1:ect to scrutin/ and review 1/ the proper court. It is our considered view, however, that this ru!e app!ies to a situation where the e8tra:udicia! rescission is contested 1/ the defau!tin- part/. In other words, reso!ution of reciproca! contracts +a/ 1e +ade e8tra:udicia!!/ un!ess successfu!!/ i+pu-ned in court. If the de1tor i+pu-ns the dec!aration, it sha!! 1e su1:ect to :udicia! deter+ination 91 otherwise, if said part/ does not oppose it, the e8tra:udicia! rescission sha!! have !e-a! effect. 92 In the case at 1ar, it has 1een shown that a!thou-h petitioner was du!/ furnished and did receive a written notice of rescission which specified the -rounds therefore, it fai!ed to rep!/ thereto or protest a-ainst it. Its si!ence thereon su--ests an ad+ission of the veracit/ and va!idit/ of private respondents; c!ai+. 94 =urther+ore, the initiative of institutin- suit was transferred fro+ the rescinder to the defau!ter 1/ virtue of the auto+atic rescission c!ause in the contract. 96 But then, the records 1ear out the fact that aside fro+ the !ac7adaisica! +anner with which petitioner treated private respondents; !atter of cance!!ation, it utter!/ fai!ed to serious!/ see7 redress fro+ the court for the enforce+ent of its a!!e-ed ri-hts under the contract. If private respondents had not ta7en the initiative of fi!in- Civi! Case No. .)*,, evident!/ petitioner had no intention to ta7e an/ !e-a! action to co+pe! specific perfor+ance fro+ the for+er. B/ such cava!ier disre-ard, it has 1een effective!/ estopped fro+ see7in- the affir+ative re!ief it now desires 1ut which it had theretofore disdained. @AE&E=O&E, on the fore-oin- +odificator/ pre+ises, and considerin- that the sa+e resu!t has 1een reached 1/ respondent Court of Appea!s with respect to the re!ief awarded to private respondents 1/ the court a quo which we find to 1e correct, its assai!ed :ud-+ent in CA$%.&. CD No. *'.(. is here1/ A==I&2ED. SO O&DE&ED. +arvasa, C.(., Puno an" Men"o*a, ((., concur .
I.
2EANIN% O= SEPA&ATE CONSIDE&ATION %.&. No. 5.**, Octo1er 3, 55
SPOCSES <CLIO D. DILLA2O& AND 2A&INA DILLA2O&, petitioners, vs. TAE AON. COC&T O= APPEALS AND SPOCSES 2ACA&IA LABIN%ISA &EEES AND &OBE&TO &EEES, respondents.
Tran4ui!ino =. 2eris for petitioners.
A-ripino %. 2or-a for private respondents.
2EDIALDEA, <.Bp
This is a petition for review on certiorari of the decision of the Court of Appea!s in CA$%.&. No. ,' .( entit!ed, ?Spouses <u!io Di!!a+or and 2arina Di!!a+or, P!aintiffs$ Appe!!ees, versus Spouses 2acaria La1in-$isa &e/es and &o1erto &e/es, Defendants$Appe!!ants,? which reversed the decision of the &e-iona! Tria! Court "Branch , # at Ca!oocan Cit/ in Civi! Case No. C$ ,5',.
The facts of the case are as fo!!owsB
2acaria La1in-isa &e/es was the owner of a (33$s4uare +eter !ot !ocated at Baesa, Ca!oocan Cit/, as evidenced 1/ Transfer Certificate of Tit!e No. " 0'* # 05*0, of the &e-ister of Deeds of &i6a!.
In <u!/ 5. , 2acaria so!d a portion of *33 s4uare +eters of the !ot to the Spouses <u!io and 2arina and Di!!a+or for the tota! a+ount of P, ,333.33. Ear!ier, 2acaria 1orrowed P,,333.33 fro+ the spouses which a+ount was deducted fro+ the tota! purchase price of the *33 s4uare +eter !ot so!d. The portion so!d to the Di!!a+or spouses is now covered 1/ TCT No. *55*) whi!e the re+ainin- portion which is sti!! in the na+e of 2acaria La1in-$isa is covered 1/ TCT No. *55*' "pars. ) and ., Co+p!aint#. On Nove+1er , 5. , 2acaria e8ecuted a ?Deed of Option? in favor of Di!!a+or in which the re+ainin- *33 s4uare +eter portion "TCT No. *55*'# of the !ot wou!d 1e so!d to Di!!a+or under the conditions stated therein. The docu+ent readsB
DEED O= OPTION
This Deed of Option, entered into in the Cit/ of 2ani!a, Phi!ippines, this th da/ of Nove+1er, 5. , 1/ and 1etween 2acaria La1in-$isa, of a-e, +arried to &o1erto &e/es, !i7ewise of a-e, and 1oth residein- on &eparo St., Baesa, Ca!oocan Cit/, on the one hand, and on the other hand the spouses <u!io Di!!a+or and 2arina D.
Di!!a+or, a!so of a-e and residin- at No. )), &eparo St., corner Baesa &oad, Baesa, Ca!oocan Cit/.
@ITNESSETA
That, I 2acaria La1in-isa, a+ the owner in fee si+p!e of a parce! of !and with an area of (33 s4uare +eters, +ore or !ess, +ore particu!ar!/ descri1ed in TCT No. " 0'* # 05*0 of the Office of the &e-ister of Deeds for the province of &i6a!, issued in +a/ na+e, I havin- inherited the sa+e fro+ +/ deceased parents, for which reason it is +/ parapherna! propert/9
That I, with the confor+it/ of +/ hus1and, &o1erto &e/es, have so!d one$ha!f thereof to the aforesaid spouses <u!io Di!!a+or and 2arina D. Di!!a+or at the price of P.3.33 per s4. +eter, which was -reat!/ hi-her than the actua! reasona1!e prevai!inva!ue of !ands in that p!ace at the ti+e, which portion, after se-re-ation, is now covered 1/ TCT No. *55*) of the &e-ister of Deeds for the Cit/ of Ca!oocan, issued on Au-ust ., 5. in the na+e of the afore+entioned spouses vendees9
That the on!/ reason wh/ the Spouses$vendees <u!io Di!!a+or and 2arina D. Di!!a+or, a-reed to 1u/ the said one$ha!f portion at the a1ove$stated price of a1out P.3.33 per s4uare +eter, is 1ecause I, and +/ hus1and &o1erto &e/es, have a-reed to se!! and conve/ to the+ the re+ainin- one$ha!f portion sti!! owned 1/ +e and now covered 1/ TCT No. *55*) of the &e-ister of Deeds for the Cit/ of Ca!oocan, whenever the need of such sa!e arises, either on our part or on the part of the spouses "<u!io# Di!!a+or and 2arina D. Di!!a+or, at the sa+e price of P.3.33 per s4uare +eter, e8c!udin- whatever i+prove+ent +a/ 1e found the thereon9
That I a+ wi!!in- to have this contract to se!! inscri1ed on +/ aforesaid tit!e as an encu+1rance upon the propert/ covered there1/, upon pa/+ent of the correspondin- fees9 and
That we, <u!io Di!!a+or and 2arina D. Di!!a+or, here1/ a-ree to, and accept, the a1ove provisions of this Deed of Option.
IN @ITNESS @AE&EO=, this Deed of Option is si-ned in the Cit/ of 2ani!a, Phi!ippines, 1/ a!! the persons concerned, this th da/ of Nove+1er, 5. .
<CLIO DILLA2O&
2ACA&IA LABIN%ISA
@ith 2/ Confor+it/B
2A&INA DILLA2O& &OBE&TO &EEES
Si-ned in the Presence OfB
2A&IANO T. SCNI%A &OSALINDA S. EC%ENIO
ACJNO@LED%2ENT
&EPCBLIC O= TAE PAILIPPINES# CITE O= 2ANILA # S.S.
At the Cit/ of 2ani!a, on the th da/ of Nove+1er, 5. , persona!!/ appeared 1efore +e &o1erto &e/es, 2acaria La1in-isa, <u!io Di!!a+or and 2arina Dentura$ Di!!a+or, 7nown to +e as the sa+e persons who e8ecuted the fore-oin- Deed of Option, which consists of two ",# pa-es inc!udin- the pa-e whereon this ac7now!ed-e+ent is written, and si-ned at the !eft +ar-in of the first pa-e and at the 1otto+ of the instru+ent 1/ the parties and their witnesses, and sea!ed with +/ notaria! sea!, and said parties ac7now!ed-ed to +e that the sa+e is their free act and deed. The &esidence Certificates of the parties were e8hi1ited to +e as fo!!owsB &o1erto &e/es, A$,,'5', issued at 2ani!a on <an. ,., 5. , and B$)3,3,), issued at 2a7ati, &i6a! on =e1. 0, 5. 9 2acaria La1in-isa, A$***5 *3 and B$ ,(( 3', 1oth issued at Ca!oocan Cit/ on Apri! ), 5. , their :oint Ta8 Acct. Nu+1er 1ein- *3,0$ .(.$(9 <u!io Di!!a+or, A$03', issued at 2ani!a on <an. ', 5. , and B$ *0, issued at 2ani!a on 2arch , 5. 9 and 2arina Dentura$Di!!a+or, A$03*, issued at 2ani!a on <an. ', 5. , their :oint Ta8 Acct. Nu+1er 1ein- (30$,3,$(.
A&TE2IO 2. 2ALCBAE Notar/ Pu1!ic Cnti! Dece+1er * , 5., PT& No. **0,3*, 2ani!a
<anuar/ ), 5.
Doc. No. ),(9 Pa-e No. ,'9 Boo7 No. *09 Series of 5. . "pp. ,)$,5, &o!!o#
Accordin- to 2acaria, when her hus1and, &o1erto &e/es, retired in 50', the/ offered to repurchase the !ot so!d 1/ the+ to the Di!!a+or spouses 1ut 2arina Di!!a+or refused and re+inded the+ instead that the Deed of Option in fact -ave the+ the option to purchase the re+ainin- portion of the !ot.
The Di!!a+ors, on the other hand, c!ai+ed that the/ had e8pressed their desire to purchase the re+ainin- *33 s4uare +eter portion of the !ot 1ut the &e/eses had 1een i-norin- the+. Thus, on <u!/ *, 50., after conci!iation proceedin-s in the 1aran-a/ !eve! fai!ed, the/ fi!ed a co+p!aint for specific perfor+ance a-ainst the &e/eses.
On <u!/ ,(, 505, :ud-+ent was rendered 1/ the tria! court in favor of the Di!!a+or spouses, the dispositive portion of which statesB
@AE&E=O&E, and "sic# in view of the fore-oin-, :ud-+ent is here1/ rendered in favor of the p!aintiffs and a-ainst the defendants orderin- the defendant 2ACA&IA LABIN%$ISA &EEES and &OBE&TO &EEES, to se!! unto the p!aintiffs the !and covered 1/ T.C.T No. *55*' of the &e-ister of Deeds of Ca!oocan Cit/, to pa/ the p!aintiffs the su+ of P*,333.33 as and for attorne/;s fees and to pa/ the cost of suit.
The counterc!ai+ is here1/ DIS2ISSED, for LACJ O= 2E&IT.
SO O&DE&ED. "pp. ,'$,), &o!!o#
Not satisfied with the decision of the tria! court, the &e/es spouses appea!ed to the Court of Appea!s on the fo!!owin- assi-n+ent of errorsB
. AOLDIN% TAAT TAE DEED O= OPTION EFECCTED ON NODE2BE& , 5. BET@EEN TAE PLAINTI==$APPELLEES AND DE=ENDANT$APPELLANTS IS STILL DALID AND BINDIN% DESPITE TAE LAPSE O= 2O&E TAAN TAI&TEEN " *# EEA&S =&O2 TAE EFECCTION O= TAE CONT&ACT9
,. =AILIN% TO CONSIDE& TAAT TAE DEED O= OPTION CONTAINS OBSCC&E @O&DS AND STIPCLATIONS @AICA SAOCLD BE &ESOLDED A%AINST TAE PLAINTI==$ APPELLEES @AO CNILATE&ALLE D&A=TED AND P&EPA&ED TAE SA2E9
*. AOLDIN% TAAT TAE DEED O= OPTION EFP&ESSED TAE T&CE INTENTION AND PC&POSE O= TAE PA&TIES DESPITE ADDE&SE, CONTE2PO&ANEOCS AND SCBSEHCENT ACTS O= TAE PLAINTI==$APPELLEES9
'. =AILIN% TO P&OTECT TAE DE=ENDANT$APPELLANTS ON ACCOCNT O= TAEI& I%NO&ANCE PLACIN% TAE2 AT A DISADDANTA%E IN TAE DEED O= OPTION9
). =AILIN% TO CONSIDE& TAAT EHCITABLE CONSIDE&ATION TILT IN =ADO& O= TAE DE=ENDANT$APPELLANTS9 and
(. AOLDIN% DE=ENDANT$APPELLANTS LIABLE TO PAE PLAINTI==$APPELLEES TAE A2OCNT O= P*,333.33 =O& AND BE @AE O= ATTO&NEE;S =EES. "pp. * $*,, &o!!o#
On =e1ruar/ ,, 55 , the Court of Appea!s rendered a decision reversin- the decision of the tria! court and dis+issin- the co+p!aint. The reversa! of the tria! court;s decision was pre+ised on the findin- of respondent court that the Deed of Option is void for !ac7 of consideration.
The Di!!a+or spouses 1rou-ht the instant petition for review on certiorari on the fo!!owin- -roundsB
I. TAE COC&T O= APPEALS %&ADELE E&&ED IN =INDIN% TAAT TAE PA&ASE @AENEDE& TAE NEED =O& SCCA SALE A&ISES ON OC& "P&IDATE &ESPONDENT# PA&T O& ON TAE PA&T O= TAE SPOCSES <CLIO D. DILLA2O& AND 2A&INA D. DILLA2O&; CONTAINED IN TAE DEED O= OPTION DENOTES A SCSPENSIDE CONDITION9
II. ASSC2IN% =O& TAE SAJE O= A&%C2ENT TAAT TAE HCESTIONED PA&ASE IS INDEED A CONDITION, TAE COC&T O= APPEALS E&&ED IN NOT =INDIN%, TAAT TAE SAID CONDITION AAD AL&EADE BEEN =CL=ILLED9
III. ASSC2IN% =O& TAE SAJE O= A&%C2ENT TAAT TAE HCESTIONED PA&ASE IS INDEED A CONDITION, TAE COC&T O= APPEALS E&&ED IN AOLDIN% TAAT TAE I2POSITION O= SAID CONDITION P&EDENTED TAE PE&=ECTION O= TAE CONT&ACT O= SALE DESPITE TAE EFP&ESS O==E& AND ACCEPTANCE CONTAINED IN TAE DEED O= OPTION9
ID. TAE COC&T O= APPEALS E&&ED IN =INDIN% TAAT TAE DEED O= OPTION IS DOID =O& LACJ O= CONSIDE&ATION9
D. TAE COC&T O= APPEALS E&&ED IN AOLDIN% TAAT A DISTINCT CONSIDE&ATION IS NECESSA&E TO SCPPO&T TAE DEED O= OPTION DESPITE TAE EFP&ESS O==E& AND ACCEPTANCE CONTAINED TAE&EIN. "p. ,, &o!!o#
The pivota! issue to 1e reso!ved in this case is the va!idit/ of the Deed of Option where1/ the private respondents a-reed to se!! their !ot to petitioners ?whenever the need of such sa!e arises, either on our part "private respondents# or on the part of <u!io Di!!a+or and 2arina Di!!a+or "petitioners#.? The court a 4uo, ru!e that the Deed of Option was a va!id written a-ree+ent 1etween the parties and +ade the fo!!owin- conc!usionsB
888
888
888
It is interestin- to state that the a-ree+ent 1etween the parties are evidence 1/ a writin-, hence, the controvertin- ora! testi+onies of the herein defendants cannot 1e an/ 1etter than the docu+entar/ evidence, which, in this case, is the Deed of Option "E8h. ?A? and ?A$a?#
The !aw provides that when the ter+s of an a-ree+ent have 1een reduced to writin- it is to 1e considered as containin- a!! such ter+s, and therefore, there can 1e, 1etween the parties and their successors in interest no evidence of their ter+s of the a-ree+ent, other than the contents of the writin-. ... "Section . &u!e *3 &evised &u!es of Court# Li7ewise, it is a -enera! and +ost inf!e8i1!e ru!e that wherever written instru+ents are appointed either 1/ the re4uire+ents of !aw, or 1/ the contract of the parties, to 1e the repositories and +e+oria!s of truth, an/ other evidence is e8c!uded fro+ 1ein- used, either as a su1stitute for such
instru+ents, or to contradict or a!ter the+. This is a +atter 1oth of princip!e and of po!ic/9 of princip!e 1ecause such instru+ents are in their nature and ori-in entit!ed to a +uch hi-her de-ree of credit than evidence of po!ic/, 1ecause it wou!d 1e attended with -reat +ischief if those instru+ents upon which +an;s ri-hts depended were !ia1!e to 1e i+peached 1/ !oose co!!atera! evidence. @here the ter+s of an a-ree+ent are reduced to writin-, the docu+ent itse!f, 1einconstituted 1/ the parties as the e8positor of their intentions, it is the on!/ instru+ent of evidence in respect of that a-ree+ent which the !aw wi!! reco-ni6e so !on- as it e8ists for the purpose of evidence. "Star7ie, ED, pp. ('0, ()) cited in Jasheenath vs. Chund/, @.&. (0, cited in =rancisco;s &u!es of Court, Do!. DII Part I p. )*# "E+phasis supp!ied, pp. ,($ ,., &ecords#.
The respondent appe!!ate court, however, ru!ed that the said deed of option is void for !ac7 of consideration. The appe!!ate court +ade the fo!!owin- dis4uisitionsB
P!aintiff$appe!!ees sa/ the/ a-reed to pa/ P.3.33 per s4uare +eter for the portion purchased 1/ the+ a!thou-h the prevai!inprice at that ti+e was on!/ P,).33 in consideration of the option to 1u/ the re+ainder of the !and. This does not see+ to 1e the case. In the first p!ace, the deed of sa!e was never produced 1/ the+ to prove their c!ai+. Defendant$appe!!ants testified that no cop/ of the deed of sa!e had ever 1een -iven to the+ 1/ the p!aintiff$appe!!ees. In the second p!ace, if this was rea!!/ the condition of the prior sa!e, we see no reason wh/ it shou!d 1e reiterated in the Deed of Option. On the contrar/, the a!!e-ed overprice paid 1/ the p!aintiff$appe!!ees is -iven in the Deed as reason for the desire of the Di!!a+ors to ac4uire the !and rather than as a consideration for the option -iven to the+, a!thou-h one +i-ht wonder wh/ the/ too7 near!/ * /ears to invo7e their ri-ht if the/ rea!!/ were in due need of the !ot.
At a!! events, the consideration needed to support a uni!atera! pro+ise to se!! is a dinstinct one, not so+ethin- that is as uncertain as P.3.33 per s4uare +eter which is a!!e-ed!/ ;-reat!/ hi-her than the actua! prevai!inva!ue of !ands.; A sa!e +ust 1e for a price certain "Art. ')0#. =or how +uch the portion conve/ed to the p!aintiff$ appe!!ees was so!d so that the 1a!ance cou!d 1e considered the consideration for the pro+ise to se!! has not 1een shown, 1e/ond a +ere a!!e-ation that it was ver/ +uch 1e!ow P.3.33 per s4uare +eter.
The fact that p!aintiff$appe!!ees +i-ht have paid P 0.33 per s4uare +eter for another !and at the ti+e of the sa!e to the+ of a portion of defendant$appe!!ant;s !ot does not necessari!/ prove that the prevai!in- +ar7et price at the ti+e of the sa!e was P 0.33 per s4uare +eter. "In fact the/ c!ai+ it was P,).33#. It is i+pro1a1!e that p!aintiff$appe!!ees shou!d pa/ P),.33 per s4uare +eter for the privi!e-e of 1u/in- when the va!ue of the !and itse!f was a!!e-ed!/ P 0.33 per s4uare +eter. "pp. *'$*), &o!!o#
As e8pressed in %on6a!es v. Trinidad, (. Phi!. (0,, consideration is ?the wh/ of the contracts, the essentia! reason which +oves the contractinparties to enter into the contract.? The cause or the i+pe!!in- reason on the part of private respondent e8ecutin- the deed of option as appearin- in the deed itse!f is the petitioner;s havin- a-reed to 1u/ the *33 s4uare +eter portion of private respondents; !and at P.3.33 per s4uare +eter ?which was -reat!/ hi-her than the actua! reasona1!e prevai!inprice.? This cause or consideration is c!ear fro+ the deed which statedB
That the on!/ reason wh/ the spouses$vendees <u!io Di!!a+or and 2arina D. Di!!a+or a-reed to 1u/ the said one$ha!f portion at the a1ove stated price of a1out P.3.33 per s4uare +eter, is 1ecause I, and +/ hus1and &o1erto &e/es, have a-reed to se!! and conve/ to the+ the re+ainin- one$ha!f portion sti!! owned 1/ +e ... "p. ,(, &o!!o#
The respondent appe!!ate court fai!ed to -ive due consideration to petitioners; evidence which shows that in 5(5 the Di!!a+or spouses 1ou-h an ad:acent !ot fro+ the 1rother of 2acaria La1in-$isa for on!/ P 0.33 per s4uare +eter which the private respondents did not re1ut. Thus, e8pressed in ter+s of +one/, the consideration for the deed of option is the difference 1etween the purchase price of the *33 s4uare +eter portion of the !ot in 5. "P.3.33 per s4.+.# and the prevai!in- reasona1!e price of the sa+e !ot in 5. . @hatever it is, "P,).33 or P 0.33# thou-h not specifica!!/ stated in the deed of option, was ascertaina1!e. Petitioner;s a!!e-ed!/ pa/in- P),.33 per s4uare +eter for the option +a/, as opined 1/ the appe!!ate court, 1e i+pro1a1!e 1ut i+pro1a1i!ities does not inva!idate a contract free!/ entered into 1/ the parties.
The ?deed of option? entered into 1/ the parties in this case had uni4ue features. Ordinari!/, an optiona! contract is a privi!e-e e8istin- in one person, for which he had paid a consideration and which -ives hi+ the ri-ht to 1u/, for e8a+p!e, certain +erchandise or certain specified propert/, fro+ another person, if he chooses, at an/ ti+e within the a-reed period at a fi8ed price "Enri4ue6 de !a Cavada v. Dia6, *. Phi!. 50,#. If @e !oo7 c!ose!/ at the ?deed of option? si-ned 1/ the parties, @e wi!! notice that the first part covered the state+ent on the sa!e of the *33 s4uare +eter portion of the !ot to Spouses Di!!a+or at the price of P.3.33 per s4uare +eter ?which was hi-her than the actua! reasona1!e prevai!inva!ue of the !ands in that p!ace at that ti+e "of sa!e#.? The second part stated that the on!/ reason wh/ the Di!!a+or spouses a-reed to 1u/ the said !ot at a +uch hi-her price is 1ecause the vendor "&e/eses# a!so a-reed to se!! to the Di!!a+ors the other ha!f$portion of *33 s4uare +eters of the !and. Aad the deed stopped there, there wou!d 1e no dispute that the deed is rea!!/ an ordinar/ deed of option -rantin- the Di!!a+ors the option to 1u/ the re+ainin- *33 s4uare +eter$ha!f portion of the !ot in consideration for their havin- a-reed to 1u/ the other ha!f of the !and for a +uch hi-her price. But, the ?deed of option? went on and stated that the sa!e of the other ha!f wou!d 1e
+ade ?whenever the need of such sa!e arises, either on our "&e/eses# part or on the part of the Spouses <u!io Di!!a+or and 2arina D. Di!!a+or. It appears that whi!e the option to 1u/ was -ranted to the Di!!a+ors, the &e/eses were !i7ewise -ranted an option to se!!. In other words, it was not on!/ the Di!!a+ors who were -ranted an option to 1u/ for which the/ paid a consideration. The &e/eses as we!! were -ranted an option to se!! shou!d the need for such sa!e on their part arise.
In the instant case, the option offered 1/ private respondents had 1een accepted 1/ the petitioner, the pro+ise, in the sa+e docu+ent. The acceptance of an offer to se!! for a price certain created a 1i!atera! contract to se!! and 1u/ and upon acceptance, the offer, ipso facto assu+es o1!i-ations of a vendee "See At7ins, Jro!! I Co. v. Cua 2ian Te7, 3, Phi!. 5'0#. De+anda1i!iti/ +a/ 1e e8ercised at an/ ti+e after the e8ecution of the deed. In Sanche6 v. &i-os, No. L$,)'5', <une ', 5.,, ') SC&A *(0, *.(, @e he!dB
In other words, since there +a/ 1e no va!id contract without a cause of consideration, the pro+isor/ is not 1ound 1/ his pro+ise and +a/, accordin-!/ withdraw it. Pendin- notice of its withdrawa!, his accepted pro+ise parta7es, however, of the nature of an offer to se!! which, if accepted, resu!ts in a perfected contract of sa!e.
A contract of sa!e is, under Artic!e '.) of the Civi! Code, ?perfected at the +o+ent there is a +eetinof +inds upon the thin- which is the o1:ect of the contract and upon the price. =ro+ that +o+ent, the parties +a/ reciproca!!/ de+and perfor+ of contracts.? Since there was, 1etween the parties, a +eetinof +inds upon the o1:ect and the price, there was a!read/ a perfected contract of sa!e. @hat was, however, !eft to 1e done was for either part/ to de+and fro+ the other their respective underta7in-s under the contract. It +a/ 1e de+anded at an/ ti+e either 1/ the private respondents, who +a/ co+pe! the petitioners to pa/ for the propert/ or the petitioners, who +a/ co+pe! the private respondents to de!iver the propert/.
Aowever, the Deed of Option did not provide for the period within which the parties +a/ de+and the perfor+ance of their respective underta7in-s in the instru+ent. The parties cou!d not have conte+p!ated that the de!iver/ of the propert/ and the pa/+ent thereof cou!d 1e +ade indefinite!/ and render uncertain the status of the !and. The fai!ure of either parties to de+and perfor+ance of the o1!i-ation of the other for an unreasona1!e !en-th of ti+e renders the contract ineffective.
Cnder Artic!e '' " # of the Civi! Code, actions upon written contract +ust 1e 1rou-ht within ten " 3# /ears. The Deed of Option was e8ecuted on Nove+1er , 5. . The acceptance, as a!read/ +entioned, was a!so accepted in the sa+e instru+ent. The co+p!aint in this case was fi!ed 1/ the petitioners on <u!/ *, 50.,
seventeen " .# /ears fro+ the ti+e of the e8ecution of the contract. Aence, the ri-ht of action had prescri1ed. There were a!!e-ations 1/ the petitioners that the/ de+anded fro+ the private respondents as ear!/ as 50' the enforce+ent of their ri-hts under the contract. Sti!!, it was 1e/ond the ten " 3# /ears period prescri1ed 1/ the Civi! Code. In the case of Santos v. %ana/o, L$* 0)', Septe+1er 5, 50,, ( SC&A '* , this Court affir+in- and su1scri1in- to the o1servations of the court a 4uo he!d, thusB
... Assu+inthat &osa %ana/o, the oppositor herein, had the ri-ht 1ased on the A-ree+ent to Conve/ and Transfer as contained in E8hi1its ; ; and ; $A;, her fai!ure or the a1andon+ent of her ri-ht to fi!e an action a-ainst Pu!+ano 2o!intas when he was sti!! a co$owner of the on$ha!f " >,# portion of the 3,333 s4uare +eters is now 1arred 1/ !aches and>or prescri1ed 1/ !aw 1ecause she fai!ed to 1rin- such action within ten " 3# /ears fro+ the date of the written a-ree+ent in 5' , pursuant to Art. '' of the New Civi! Code, so that when she fi!ed the adverse c!ai+ throu-h her counse! in 5)5 she had a1so!ute!/ no +ore ri-ht whatsoever on the sa+e, havin- 1een 1arred 1/ !aches.
It is of :udicia! notice that the price of rea! estate in 2etro 2ani!a is continuous!/ on the rise. To a!!ow the petitioner to de+and the de!iver/ of the propert/ su1:ect of this case thirteen " *# /ears or seventeen " .# /ears after the e8ecution of the deed at the price of on!/ P.3.33 per s4uare +eter is ine4uitous. =or reasons a!so of e4uit/ and in consideration of the fact that the private respondents have no other decent p!ace to !ive, this Court, in the e8ercise of its e4uit/ :urisdiction is not inc!ined to -rant petitioners; pra/er.
ACCO&DIN%LE, the petition is DENIED. The decision of respondent appe!!ate court is A==I&2ED for reasons cited in this decision. <ud-e+ent is rendered dis+issin- the co+p!aint in Civi! Case No. C$ ,5', on the -round of prescription and !aches.
SO O&DE&ED.
Narvasa "Chair+an# and Cru6, <<., concur.
%riSo$A4uino, <., too7 no part.
II.
NO SEPA&ATE CONSIDE&ATION %.&. No. L$,)'5' <une ', 5.,
NICOLAS SANCAET, p!aintiff$appe!!ee, vs. SEDE&INA &I%OS, defendant$appe!!ant.
Santia-o =. Bautista for p!aintiff$appe!!ee.
<esus %. Di!!a+ar for defendant$appe!!ant.
CONCEPCION, C.<.Bp
Appea! fro+ a decision of the Court of =irst Instance of Nueva Eci:a to the Court of Appea!s, which certified the case to Cs, upon the -round that it invo!ves a 4uestion pure!/ of !aw.
The record shows that, on Apri! *, 5( , p!aintiff Nico!as Sanche6 and defendant Severina &i-os e8ecuted an instru+ent entit!ed ?Option to Purchase,? where1/ 2rs. &i-os ?a-reed, pro+ised and co++itted ... to se!!? to Sanche6 the su+ of P ,) 3.33, a parce! of !and situated in the 1arrios of A1ar and Si1ot, +unicipa!it/ of San <ose, province of Nueva Eci:a, and +ore particu!ar!/ descri1ed in Transfer Certificate of Tit!e No. NT$ ,),0 of said province, within two ",# /ears fro+ said date with the understandin- that said option sha!! 1e dee+ed ?ter+inated and e!apsed,? if ?Sanche6 sha!! fai! to e8ercise his ri-ht to 1u/ the propert/? within the stipu!ated period. Inas+uch as severa! tenders of pa/+ent of the su+ of P!,) 3.33, +ade 1/ Sanche6 within said period, were re:ected 1/ 2rs. &i-os, on 2arch ,, 5(*, the for+er deposited said a+ount with the Court of =irst Instance of Nueva Eci:a and co++enced a-ainst the !atter the present action, for specific perfor+ance and da+a-es.
After the fi!inof defendant;s answer U ad+ittin- so+e a!!e-ations of the co+p!aint, den/in- other a!!e-ations thereof, and a!!e-in-, as specia! defense, that the contract 1etween the parties ?is a uni!atera! pro+ise to se!!, and the sa+e 1einunsupported 1/ an/ va!ua1!e consideration, 1/ force of the New Civi! Code, is nu!! and void? U on =e1ruar/ , 5(', 1oth parties, assisted 1/ their respective counse!, :oint!/ +oved for a :ud-+ent on the p!eadin-s. Accordin-!/, on =e1ruar/
,0, 5(', the !ower court rendered :ud-+ent for Sanche6, orderin- 2rs. &i-os to accept the su+ :udicia!!/ consi-ned 1/ hi+ and to e8ecute, in his favor, the re4uisite deed of conve/ance. 2rs. &i-os was, !i7ewise, sentenced to pa/ P,33.33, as attorne/;s fees, and other costs. Aence, this appea! 1/ 2rs. &i-os.
This case ad+itted!/ hin-es on the proper app!ication of Artic!e '.5 of our Civi! Code, which providesB
A&T. '.5. A pro+ise to 1u/ and se!! a deter+inate thin- for a price certain is reciproca!!/ de+anda1!e.
An accepted uni!atera! pro+ise to 1u/ or to se!! a deter+inate thin- for a price certain is 1indin- upon the pro+issor if the pro+ise is supported 1/ a consideration distinct fro+ the price.
In his co+p!aint, p!aintiff a!!e-es that, 1/ virtue of the option under consideration, ?defendant a-reed and co++itted to se!!? and ?the p!aintiff a-reed and co++itted to 1u/? the !and descri1ed in the option, cop/ of which was anne8ed to said p!eadin- as Anne8 A thereof and is 4uoted on the +ar-in. Aence, p!aintiff +aintains that the pro+ise contained in the contract is ?reciproca!!/ de+anda1!e,? pursuant to the first para-raph of said Artic!e '.5. A!thou-h defendant had rea!!/ ?a-reed, pro+ised and co++itted? herse!f to se!! the !and to the p!aintiff, it is not true that the !atter had, in turn, ?a-reed and co++itted hi+se!f ? to 1u/ said propert/. Said Anne8 A does not 1ear out p!aintiff;s a!!e-ation to this effect. @hat is +ore, since Anne8 A has 1een +ade ?an inte-ra! part? of his co+p!aint, the provisions of said instru+ent for+ part ?and parce!? , of said p!eadin-.
The option did not i+pose upon p!aintiff the o1!i-ation to purchase defendant;s propert/. Anne8 A is not a ?contract to 1u/ and se!!.? It +ere!/ -ranted p!aintiff an ?option? to 1u/. And 1oth parties so understood it, as indicated 1/ the caption, ?Option to Purchase,? -iven 1/ the+ to said instru+ent. Cnder the provisions thereof, the defendant ?a-reed, pro+ised and co++itted? herse!f to se!! the !and therein descri1ed to the p!aintiff for P ,) 3.33, 1ut there is nothin- in the contract to indicate that her afore+entioned a-ree+ent, pro+ise and underta7in- is supported 1/ a consideration ?distinct fro+ the price? stipu!ated for the sa!e of the !and.
&e!/in- upon Artic!e *)' of our Civi! Code, the !ower court presu+ed the e8istence of said consideration, and this wou!d see+ to 1e the +ain factor that inf!uenced its decision in p!aintiff;s favor. It shou!d 1e noted, however, thatB
" # Artic!e *)' app!ies to contracts in -enera!, whereas the second para-raph of Artic!e '.5 refers to ?sa!es? in particu!ar, and, +ore specifica!!/, to ?an accepted uni!atera! pro+ise to 1u/ or to se!!.? In other words, Artic!e '.5 is contro!!inin the case at 1ar.
",# In order that said uni!atera! pro+ise +a/ 1e ?1indin- upon the pro+isor, Artic!e '.5 re4uires the concurrence of a condition, na+e!/, that the pro+ise 1e ?supported 1/ a consideration distinct fro+ the price.? Accordin-!/, the pro+isee can not co+pe! the pro+isor to co+p!/ with the pro+ise, un!ess the for+er esta1!ishes the e8istence of said distinct consideration. In other words, the pro+isee has the 1urden of provin- such consideration. P!aintiff herein has not even a!!e-ed the e8istence thereof in his co+p!aint.
"*# Cpon the other hand, defendant e8p!icit!/ averred in her answer, and p!eaded as a specia! defense, the a1sence of said consideration for her pro+ise to se!! and, 1/ :oinin- in the petition for a :ud-+ent on the p!eadin-s, p!aintiff has i+p!ied!/ ad+itted the truth of said aver+ent in defendant;s answer. Indeed as ear!/ as 2arch ', 530, it had 1een he!d, in Bauer+ann v. Casas, * thatB
One who pra/s for :ud-+ent on the p!eadin-s without offerin- proof as to the truth of his own a!!e-ations, and without -ivin- the opposin- part/ an opportunit/ to introduce evidence, +ust 1e understood to ad+it the truth of a!! the +ateria! and re!evant a!!e-ations of the opposin- part/, and to rest his +otion for :ud-+ent on those a!!e-ations ta7en to-ether with such of his own as are ad+itted in the p!eadin-s. "La Ee1ana Co+pan/ vs. Sevi!!a, 5 Phi!. , 3#. "E+phasis supp!ied.#
This view was reiterated in Evan-e!ista v. De !a &osa ' and 2erc/;s Incorporated v. Aer+inia Derde. )
S4uare!/ in point is Southwestern Su-ar I 2o!asses Co. v. At!antic %u!f I Pacific Co., ( fro+ which @e 4uoteB
The +ain contention of appe!!ant is that the option -ranted to appe!!ee to se!! to it 1ar-e No. 3 for the su+ of P*3,333 under the ter+s stated a1ove has no !e-a! effect 1ecause it is not supported 1/ an/ consideration and in support thereof it invo7es artic!e '.5 of the new Civi! Code. The artic!e providesB
?A&T. '.5. A pro+ise to 1u/ and se!! a deter+inate thin- for a price certain is reciproca!!/ de+anda1!e.
An accepted uni!atera! pro+ise to 1u/ or se!! a deter+inate thin- for a price certain is 1indin- upon the pro+isor if the pro+ise is supported 1/ a consideration distinct fro+ the price.?
On the other hand, Appe!!ee contends that, even -rantin- that the ?offer of option? is not supported 1/ an/ consideration, that option 1eca+e 1indin- on appe!!ant when the appe!!ee -ave notice to it of its acceptance, and that havin- accepted it within the period of option, the offer can no !on-er 1e withdrawn and in an/ event such withdrawa! is ineffective. In support this contention, appe!!ee invo7es artic!e *,' of the Civi! Code which providesB
?A&T. *,'. @hen the offerer has a!!owed the offeree a certain period to accept, the offer +a/ 1e withdrawn an/ ti+e 1efore acceptance 1/ co++unicatin- such withdrawa!, e8cept when the option is founded upon consideration as so+ethinpaid or pro+ised.?
There is no 4uestion that under artic!e '.5 of the new Civi! Code ?an option to se!!,? or ?a pro+ise to 1u/ or to se!!,? as used in said artic!e, to 1e va!id +ust 1e ?supported 1/ a consideration distinct fro+ the price.? This is c!ear!/ inferred fro+ the conte8t of said artic!e that a uni!atera! pro+ise to 1u/ or to se!!, even if accepted, is on!/ 1indin- if supported 1/ consideration. In other words, ?an accepted uni!atera! pro+ise can on!/ have a 1indin- effect if supported 1/ a consideration which +eans that the option can sti!! 1e withdrawn, even if accepted, if the sa+e is not supported 1/ an/ consideration. It is not disputed that the option is without consideration. It can therefore 1e withdrawn notwithstandin- the acceptance of it 1/ appe!!ee.
It is true that under artic!e *,' of the new Civi! Code, the -enera! ru!e re-ardinoffer and acceptance is that, when the offerer -ives to the offeree a certain period to accept, ?the offer +a/ 1e withdrawn at an/ ti+e 1efore acceptance? e8cept when the option is founded upon consideration, 1ut this -enera! ru!e +ust 1e interpreted as +odified 1/ the provision of artic!e '.5 a1ove referred to, which app!ies to ?a pro+ise to 1u/ and se!!? specifica!!/. As a!read/ stated, this ru!e re4uires that a pro+ise to se!! to 1e va!id +ust 1e supported 1/ a consideration distinct fro+ the price.
@e are not o1!ivious of the e8istence of A+erican authorities which ho!d that an offer, once accepted, cannot 1e withdrawn, re-ard!ess of whether it is supported or not 1/ a consideration " , A+. <ur. ),0#. These authorities, we note, upho!d the -enera! ru!e app!ica1!e to offer and acceptance as contained in our new Civi! Code. But we are prevented fro+ app!/in- the+ in view of the specific provision e+1odied in artic!e '.5. @hi!e under the ?offer of option? in 4uestion appe!!ant has assu+ed a c!ear o1!i-ation to se!! its 1ar-e to appe!!ee and the option has 1een e8ercised in accordance with its ter+s, and there appears to 1e no va!id or :ustifia1!e reason for appe!!ant to withdraw its offer, this Court cannot adopt a different attitude 1ecause the !aw on the +atter is c!ear. Our i+perative dut/ is to app!/ it un!ess +odified 1/ Con-ress.
Aowever, this Court itse!f, in the case of At7ins, Jro!! and Co., Inc. v. Cua Aian Te7, 0 decided !ater that Southwestern Su-ar I 2o!asses Co. v. At!antic %u!f I Pacific Co., 5 saw no distinction 1etween Artic!es *,' and '.5 of the Civi! Code and app!ied the for+er where a uni!atera! pro+ise to se!! si+i!ar to the one sued upon here was invo!ved, treatin- such pro+ise as an option which, a!thou-h not 1indin- as a contract in itse!f for !ac7 of a separate consideration, neverthe!ess -enerated a 1i!atera! contract of purchase and sa!e upon acceptance. Spea7in- throu-h Associate <ustice, !ater Chief <ustice, Cesar Ben-6on, this Court saidB
=urther+ore, an option is uni!atera!B a pro+ise to se!! at the price fi8ed whenever the offeree shou!d decide to e8ercise his option within the specified ti+e. After acceptin- the pro+ise and 1efore he e8ercises his option, the ho!der of the option is not 1ound to 1u/. Ae is free either to 1u/ or not to 1u/ !ater. In this case, however, upon acceptin- herein petitioner;s offer a 1i!atera! pro+ise to se!! and to 1u/ ensued, and the respondent ipso facto assu+ed the o1!i-ation of a purchaser. Ae did not :ust -et the ri-ht su1se4uent!/ to 1u/ or not to 1u/. It was not a +ere option then9 it was a 1i!atera! contract of sa!e.
Last!/, even supposin- that E8h. A -ranted an option which is not 1indin- for !ac7 of consideration, the authorities ho!d thatB
?If the option is -iven without a consideration, it is a +ere offer of a contract of sa!e, which is not 1indin- unti! accepted. If, however, acceptance is +ade 1efore a withdrawa!, it constitutes a 1indin- contract of sa!e, even thou-h the option was not supported 1/ a sufficient consideration. ... . ".. Corpus <uris Secundu+, p. (),. See a!so ,. &u!in- Case Law **5 and cases cited.#
?It can 1e ta7en for -ranted, as contended 1/ the defendant, that the option contract was not va!id for !ac7 of consideration. But it was, at !east, an offer to se!!, which was accepted 1/ !etter, and of the acceptance the offerer had 7now!ed-e
1efore said offer was withdrawn. The concurrence of 1oth acts U the offer and the acceptance U cou!d at a!! events have -enerated a contract, if none there was 1efore "arts. ,)' and ,(, of the Civi! Code#.? "Ta/co vs. Serra, '' Phi!. ** .#
In other words, since there +a/ 1e no va!id contract without a cause or consideration, the pro+isor is not 1ound 1/ his pro+ise and +a/, accordin-!/, withdraw it. Pendin- notice of its withdrawa!, his accepted pro+ise parta7es, however, of the nature of an offer to se!! which, if accepted, resu!ts in a perfected contract of sa!e.
This view has the advanta-e of avoidin- a conf!ict 1etween Artic!es *,' U on the -enera! princip!es on contracts U and '.5 U on sa!es U of the Civi! Code, in !ine with the cardina! ru!e of statutor/ construction that, in construin- different provisions of one and the sa+e !aw or code, such interpretation shou!d 1e favored as wi!! reconci!e or har+oni6e said provisions and avoid a conf!ict 1etween the sa+e. Indeed, the presu+ption is that, in the process of draftin- the Code, its author has +aintained a consistent phi!osoph/ or position. 2oreover, the decision in Southwestern Su-ar I 2o!asses Co. v. At!antic %u!f I Pacific Co., 3 ho!dinthat Art. *,' is +odified 1/ Art. '.5 of the Civi! Code, in effect, considers the !atter as an e8ception to the for+er, and e8ceptions are not favored, un!ess the intention to the contrar/ is c!ear, and it is not so, insofar as said two ",# artic!es are concerned. @hat is +ore, the reference, in 1oth the second para-raph of Art. '.5 and Art. *,', to an option or pro+ise supported 1/ or founded upon a consideration, stron-!/ su--ests that the two ",# provisions intended to enforce or i+p!e+ent the sa+e princip!e.
Cpon +ature de!i1eration, the Court is of the considered opinion that it shou!d, as it here1/ reiterates the doctrine !aid down in the At7ins, Jro!! I Co. case, and that, insofar as inconsistent therewith, the view adhered to in the Southwestern Su-ar I 2o!asses Co. case shou!d 1e dee+ed a1andoned or +odified.
@AE&E=O&E, the decision appea!ed fro+ is here1/ affir+ed, with costs a-ainst defendant$appe!!ant Severina &i-os. It is so ordered.
&e/es, <.B.L., 2a7a!inta!, Ta!divar, Teehan7ee, Barredo and 2a7asiar, <<., concur.
Castro, <., too7 no part.
Separate Opinions
ANTONIO, <., concurrin-B
I concur in the opinion of the Chief <ustice.
I fu!!/ a-ree with the a1andon+ent of the view previous!/ adhered to in Southwestern Su-ar I 2o!asses Co. vs. At!antic %u!f and Pacific Co., which ho!ds that an option to se!! can sti!! 1e withdrawn, even if accepted, if the sa+e is not supported 1/ an/ consideration, and the reaffir+ance of the doctrine in At7ins, Jro!! I Co., Inc. vs. Cua Aian Te7, , ho!dinthat ?an option i+p!ies ... the !e-a! o1!i-ation to 7eep the offer "to se!!# open for the ti+e specified9? that it cou!d 1e withdrawn 1efore acceptance, if there was no consideration for the option, 1ut once the ?offer to se!!? is accepted, a 1i!atera! pro+ise to se!! and to 1u/ ensues, and the offeree ipso facto assu+es the o1!i-ations of a purchaser. In other words, if the option is -iven without a consideration, it is a +ere offer to se!!, which is not 1indin- unti! accepted. If, however, acceptance is +ade 1efore a withdrawa!, it constitutes a 1indin- contract of sa!e. The concurrence of 1oth acts U the offer and the acceptance U cou!d in such event -enerate a contract.
@hi!e the !aw per+its the offeror to withdraw the offer at an/ ti+e 1efore acceptance even 1efore the period has e8pired, so+e writers ho!d the view, that the offeror can not e8ercise this ri-ht in an ar1itrar/ or capricious +anner. This is upon the princip!e that an offer i+p!ies an o1!i-ation on the part of the offeror to +aintain in such !en-th of ti+e as to per+it the offeree to decide whether to accept or not, and therefore cannot ar1itrari!/ revo7e the offer without 1ein- !ia1!e for da+a-es which the offeree +a/ suffer. A contrar/ view wou!d re+ove the sta1i!it/ and securit/ of 1usiness transactions. *
In the present case the tria! court found that the ?P!aintiff "Nico!as Sanche6# had offered the su+ of P!,) 3.33 1efore an/ withdrawa! fro+ the contract has 1een +ade 1/ the Defendant "Severina &i-os#.? Since &i-os; offer se!! was accepted 1/
Sanche6, 1efore she cou!d withdraw her offer, a 1i!atera! reciproca! contract U to se!! and to 1u/ U was -enerated.
Separate Opinions
ANTONIO, <., concurrin-B
I concur in the opinion of the Chief <ustice.
I fu!!/ a-ree with the a1andon+ent of the view previous!/ adhered to in Southwestern Su-ar I 2o!asses Co. vs. At!antic %u!f and Pacific Co., which ho!ds that an option to se!! can sti!! 1e withdrawn, even if accepted, if the sa+e is not supported 1/ an/ consideration, and the reaffir+ance of the doctrine in At7ins, Jro!! I Co., Inc. vs. Cua Aian Te7, , ho!dinthat ?an option i+p!ies ... the !e-a! o1!i-ation to 7eep the offer "to se!!# open for the ti+e specified9? that it cou!d 1e withdrawn 1efore acceptance, if there was no consideration for the option, 1ut once the ?offer to se!!? is accepted, a 1i!atera! pro+ise to se!! and to 1u/ ensues, and the offeree ipso facto assu+es the o1!i-ations of a purchaser. In other words, if the option is -iven without a consideration, it is a +ere offer to se!!, which is not 1indin- unti! accepted. If, however, acceptance is +ade 1efore a withdrawa!, it constitutes a 1indin- contract of sa!e. The concurrence of 1oth acts U the offer and the acceptance U cou!d in such event -enerate a contract.
@hi!e the !aw per+its the offeror to withdraw the offer at an/ ti+e 1efore acceptance even 1efore the period has e8pired, so+e writers ho!d the view, that the offeror can not e8ercise this ri-ht in an ar1itrar/ or capricious +anner. This is upon the princip!e that an offer i+p!ies an o1!i-ation on the part of the offeror to +aintain in such !en-th of ti+e as to per+it the offeree to decide whether to accept or not, and therefore cannot ar1itrari!/ revo7e the offer without 1ein- !ia1!e for da+a-es which the offeree +a/ suffer. A contrar/ view wou!d re+ove the sta1i!it/ and securit/ of 1usiness transactions. *
In the present case the tria! court found that the ?P!aintiff "Nico!as Sanche6# had offered the su+ of P!,) 3.33 1efore an/ withdrawa! fro+ the contract has 1een
+ade 1/ the Defendant "Severina &i-os#.? Since &i-os; offer se!! was accepted 1/ Sanche6, 1efore she cou!d withdraw her offer, a 1i!atera! reciproca! contract U to se!! and to 1u/ U was -enerated.
G.R. No. L 91826 1ebr*0r= :, 1;;2 PERCELINO DIAMANTE, petitioner, vs. HON. CO2RT O1 APPEAL# 0&( GERARDO DEYPAL2B2#, respondents. !ernan"e*, Velicaria, Vi,ar ; Santiago for petitioner. Amancio B. Sorongon for private respon"ent.
DA"IDE, !R., J!" Assai!ed in this petition for review is the &eso!ution of the respondent Court of Appea!s dated , 2arch 5.5 in C.A.$%.&. No. SP$3'0(( settinaside its ear!ier decision therein, pro+u!-ated on ( Dece+1er 5.0, which reversed the decision of the then Court of =irst Instance "now &e-iona! Tria! Court# of I!oi!o Cit/. The !atter nu!!ified the Orders of the Secretar/ of the Depart+ent of A-ricu!ture and Natura! &esources "DAN&# dated ,5 Au-ust 5(5, ,3 Nove+1er 5(5 and , Apri! 5.3, dec!ared 1indin- the =ishpond Lease A-ree+ent "=LA# issued to private respondent and disa!!owed petitioner fro+ repurchasin- fro+ private respondent a portion of the fisher/ !ot !ocated at Du+an-as, I!oi!o, covered 1/ the =LA. The p!eadin-s of the parties and the decision of the respondent Court disc!ose the factua! antecedents of this case. A fisher/ !ot, enco+passin- an area of 5.' hectares and desi-nated as Lot No. ) 0$ A of the Cadastra! Surve/ of Du+an-as, I!oi!o, was previous!/ covered 1/ =ishpond Per+it No. =$,3, issued in the na+e of Anecita Dionio. Cpon Anecita;s death, her heirs, petitioner Dia+ante and Pri+itivo Dafe!i6, inherited the propert/ which the/ !ater divided 1etween the+se!ves9 petitioner -ot '.'. hectares whi!e Dafe!i6 -ot ) hectares. It is the petitioner;s share that is the su1:ect of the present controvers/. Pri+itivo Dafe!i6 !ater so!d his share to private respondent. On , 2a/ 5)5, petitioner so!d to private respondent his !easeho!d ri-hts over the propert/ in 4uestion for P0,333.33 with the ri-ht to repurchase the sa+e within three "*# /ears fro+ said date. On ( Au-ust 5(3, private respondent fi!ed an app!ication with the Bureau of =isheries, dated , <u!/ 5(3, for a fishpond per+it and a fishpond !ease a-ree+ent over the entire !ot, su1+ittin- therewith the deeds of sa!e e8ecuted 1/ Dafe!i6 and the petitioner. Pressed 1/ ur-ent financia! needs, petitioner, on . Octo1er 5(3, so!d a!! his re+ainin- ri-hts over the propert/ in 4uestion to the private respondent for P',333.33.
On ,) Octo1er 5(3, private respondent, with his wife;s consent, e8ecuted in favor of the petitioner an Option to &epurchase the propert/ in 4uestion within ten " 3# /ears fro+ said date, with a ten$/ear -race period. Private respondent su1+itted to the Bureau of =isheries the definite deed of sa!e9 he did not, however, su1+it the Option to &epurchase. Thereafter, on , Au-ust 5( , the Bureau of =isheries issued to private respondent =ishpond Per+it No. '5)*$H9 on . Dece+1er 5(,, it approved =LA No. *., in the !atter;s favor. On Dece+1er 5(*, petitioner, contendinthat he has a va!id twent/$/ear option to repurchase the su1:ect propert/, re4uested the Bureau of =isheries to nu!!if/ =LA No. *., insofar as the said propert/ is concerned. On 0 Dece+1er 5(', his !etter$co+p!aint was dis+issed. Petitioner then sou-ht a reconsideration of the dis+issa!9 the sa+e was denied on ,5 Apri! 5(). Ais appea! to the Secretar/ of the DAN& was !i7ewise dis+issed on *3 Octo1er 5(0. A-ain, on ,3 Nove+1er 5(0, petitioner sou-ht for a reconsideration9 this ti+e, however, he was successfu!. On ,5 Au-ust 5(5, the DAN& Secretar/ -ranted his +otion in an Order cance!!in=LA No. *., and statin-, inter alia, thatB Evident!/, the app!ication as ori-ina!!/ fi!ed, cou!d not 1e favora1!/ acted upon 1/ reason of the e8istin- ri-ht of a third part/ over a portion thereof. It was on!/ the su1+ission of the deed of a1so!ute sa!e which cou!d e!i+inate the stu+1!in- 1!oc7 to the approva! of the transfer and the issuance of a per+it or !ease a-ree+ent. It was on the 1asis of this deed of sa!e, in fact, the one entit!ed ?option to repurchase? e8ecuted 1are!/ a wee7 fro+ the e8ecution of the deed of a1so!ute sa!e, "which# reverted, in effect, the status of the !and in 4uestion to what it was after the e8ecution of the deed of sa!e with ri-ht to repurchase9 that is, the !and was a-ain p!aced under an encu+1rance in favor of a third part/. Circu+stantia!!/, there is a -round "sic# to 1e!ieve that the deed of a1so!ute sa!e was e8ecuted +ere!/ with the end in view of circu+ventin- the re4uire+ents for the approva! of the transfer of !easeho!d ri-hts of Dia+ante in favor of De/pa!u1os9 and the su1se4uent e8ecution of the ?Option to &epurchase? was +ade to assure the +aintenance of a vendor a retro;s ri-hts in favor of Dia+ante. There was, therefore, a +isrepresentation of an essentia! or +ateria! fact co++itted 1/ the !essee$appe!!ee "De/pa!u1os# in his app!ication for the per+it and the !ease a-ree+ent, without which the sa+e cou!d not have 1een issued. 1 The Secretar/ 1ased his action on Section ,3 of =isheries Ad+inistrative Order No. (3, the second para-raph of which readsB An/ and a!! of the state+ents +ade in the correspondin- app!ication sha!! 1e considered as essentia! conditions and parts of the per+it or !ease -ranted. An/ fa!se state+ents in the app!ication of facts or an/ a!teration, chan-e or +odification of an/ or a!! ter+s and conditions +ade therein sha!! ipso factocause the cance!!ation of the per+it or !ease. Private respondent +oved for a reconsideration of this !ast Order ar-uin- that the DAN& Secretar/;s previous Order of *3 Octo1er 5(0 dis+issin- petitioner;s !etter$ co+p!aint had a!read/ 1eco+e fina! on the -round that he "private respondent# was not served a cop/ of petitioner;s ,3 Nove+1er 5(0 +otion for reconsideration. On
,3 Nove+1er 5(5, private respondent;s +otion for reconsideration was denied9 a second +otion for reconsideration was !i7ewise denied on ,3 Apri! 5.3. On ) 2a/ 5.3, private respondent fi!ed with the Court of =irst Instance of I!oi!o Cit/ a specia! civi! action forcertiorari with pre!i+inar/ in:unction "doc7eted as Civi! Case No. 0,35#, see7in- to annu! the Secretar/;s Orders of ,3 Apri! 5.3, ,3 Nove+1er 5(5 and ,5 Au-ust 5(5 on the -round that the Secretar/B " # -rave!/ a1used his discretion in not -ivin- hi+ the opportunit/ to 1e heard on the 4uestion of whether or not the Option to &epurchase was for-ed9 and ",# has no :urisdiction to set aside =LA No. *., as the Order of the Bureau of =isheries dis+issin- petitioner;s Dece+1er 5(* !etter$co+p!aint had a!read/ 1eco+e fina!. After issuin- a te+porar/ restrainin- order and a writ of pre!i+inar/ in:unction, the !ower court tried the case :oint!/ with Cri+ina! Case No. ),3 wherein 1oth the petitioner and a certain Att/. A-ustin Dio4uino, the Notar/ Pu1!ic who notari6ed the ,) Octo1er 5(3 Option to &epurchase, were char-ed with fa!sification of a pu1!ic docu+ent. After due tria!, the !ower court ac4uitted the accused in the cri+ina! case and decided in favor of the private respondent in Civi! Case No. 0,359 the court ru!ed thatB " # the DAN& Secretar/ a1used his discretion in issuin- the 4uestioned Orders, ",# petitioner cannot repurchase the propert/ in 4uestion as the Option to &epurchase is of dou1tfu! va!idit/, and "*# =LA No. *., in the na+e of private respondent is va!id and 1indin-. Petitioner appea!ed to the respondent Court which, on ( Dece+1er 5.0, reversed the decision of the tria! court 2on the -round that no -rave a1use of discretion was co++itted 1/ respondent Secretar/ inas+uch as private respondent was -iven the opportunit/ to 1e heard on his c!ai+ that the Option to &epurchase is spurious, and that the tria! court +ere!/ indu!-ed in con:ectures in not upho!din- its va!idit/. Said the respondent CourtB @ith a!! the fore-oin- ar-u+ents appe!!ee had e8haustive!/ adduced to show the spuriousness of the deed of ?Option to &epurchase?, appe!!ee can hard!/ co+p!ain of not havin- 1een -iven an opportunit/ to 1e heard, which is a!! that is necessar/ in re!ation to the re4uire+ent of notice and hearin- in ad+inistrative proceedin-s. 2oreover, appe!!ee never as7ed for a for+a! hearin- at the first opportunit/ that he had to do so, as when he fi!ed his first +otion for reconsideration. Ae as7ed for a for+a! hearin- on!/ in his second +otion for reconsideration evident!/ as a +ere afterthou-ht, upon rea!i6in- that his ar-u+ents were futi!e without proofs to support the+. The on!/ re+ainin- 4uestion, therefore, is whether the Secretar/ acted with -rave a1use of discretion in -ivin- wei-ht to the a!!e-ed e8ecution 1/ appe!!ee of the deed of Option to &epurchase, on the 1asis of the 8ero8 cop/ of said deed as certified 1/ the Notar/ Pu1!ic, A-ustin Dio4uino. @ith such docu+entar/ evidence du!/ certified 1/ the Notar/ Pu1!ic, which is in effect an affir+ation of the e8istence of the deed of ?Option of &epurchase? " sic# and its due e8ecution, the Secretar/ +a/ not 1e said to have -rave!/ a1used his discretion in -ivinthe docu+ent enou-h evidentiar/ wei-ht to :ustif/ his action in app!/in- the afore4uoted provisions of =isheries Ad+. Order No. (3. This piece of evidence +a/ 1e considered
su1stantia! enou-h to support the conc!usion reached 1/ the respondent Secretar/, which is a!! that is necessar/ to sustain an ad+inistrative findin- of fact "Ortua vs. Encarnacion, )5 Phi!. (*)9 An- Ti1a/ vs. CI&, (5 Phi!. (*)9 &a+os vs. The Sec. of A-ricu!ture and Natura! &esources, et a!. L$,535., <an. ,0, 5.', )) SC&A **3#. &eviewin- courts do not re$ e8a+ine the sufficienc/ of the evidence in an ad+inistrative case, if ori-ina!!/ instituted as such, nor are the/ authori6ed to receive additiona! evidence that was not su1+itted to the ad+inistrative a-enc/ concerned. =or co++on sense dictates that the 4uestion of whether the ad+inistrative a-enc/ a1used its discretion in wei-hin- evidence shou!d 1e reso!ved so!e!/ on the 1asis of the proof that the ad+inistrative authorities had 1efore the+ and no other "Ti+1anca/a vs. Dicente, L$ 5 33, Dec. ,., 5(*, 5 SC&A 0),#. In the instant case the evidence presented for the first ti+e 1efore the court a quo cou!d 1e considered on!/ for the cri+ina! case heard :oint!/ with this case. The !ower court;s action of ac4uittin- the notar/ pu1!ic, A-ustin Dio4uino, and appe!!ant Dia+ante in Cri+ina! Case No. ),3 for fa!sification of pu1!ic docu+ent is in itse!f a findinthat the a!!e-ed for-er/ has not 1een conc!usive!/ esta1!ished. This findin- is 4uite correct considerin- the ad+ission of the NBI handwritin- e8pert that ad+ission of the NBI handwritin- e8pert that he cannot +a7e an/ findin- on the 4uestion of whether appe!!ee;s si-nature on the deed of ?Option to &epurchase? is for-ed or not, 1ecause of the !ac7 of "sic# speci+en si-nature of appe!!ee for co+parative e8a+ination. The Secretar/ +a/ have such si-nature in the app!ication papers of appe!!ee on fi!e with the for+er;s office upon which to satisf/ hi+se!f of "sic# the -enuineness of appe!!ee;s si-nature. It wou!d 1e stran-e, indeed, that appe!!ee had not provided the NBI e8pert with a speci+en of his si-nature when his purpose was to have an e8pert opinion that his si-nature on the 4uestioned docu+ent is for-ed. On the other hand, as to the si-nature of his wife, the !atter herse!f ad+itted the sa+e to 1e her own. Thus U H There is a si-nature 1e!ow the t/pewritten words ?with +/ +arita! consent? and a1ove the na+e Ede!ina Du/o, whose si-nature is thisO A That is +/ si-nature. "T.s.n., Cri+. Case No. ),3, Apri! ), 5. , p. '#. In not findin- in favor of the perfect va!idit/ of the ?Option to &epurchase,? the court a quo +ere!/ indu!-ed in con:ectures. Thus, 1e!ievin- the testi+on/ of appe!!ee that the !ater "sic# cou!d not have e8ecuted the deed of option to repurchase after spendina!!e-ed!/ P ,,333.33, and that if there was rea!!/ a ver1a! a-ree+ent upon the e8ecution of the deed of a1so!ute sa!e, as a!!e-ed 1/ appe!!ant, that appe!!ant;s ri-ht to repurchase, as was stipu!ated in the ear!ier deed of sa!e, sha!! 1e preserved, such a-ree+ent shou!d have 1een e+1odied in the deed of sa!e of Octo1er ., 5(3 "E8h. D#, the court dou1ted the -enuineness of the deed of Option to &epurchase " sic#. It is hi-h!/ dou1tfu! if appe!!ee had spent P ,,333.33 durin- the period fro+ Octo1er ., 5(3 to Octo1er ,), 5(3 when the deed of option was e8ecuted. Li7ewise, the ri-ht to repurchase cou!d not have 1een e+1odied in the deed of a1so!ute sa!e since, as the Secretar/ of DAN& found, the purpose of the deed of a1so!ute sa!e is to circu+vent the !aw and insure the approva! of appe!!ee;s app!ication, as with his ri-ht to '.' hectares appearin- to 1e su1:ect to an encu+1rance, his app!ication wou!d not have 1een -iven favora1!e action.
A1ove a!!, the specu!ation and con:ectures as indu!-ed in 1/ the court a quo cannot outwei-h the pro1ative effect of the docu+ent itse!f, a certified 8ero8 cop/ thereof as issued 1/ the Notar/ Pu1!ic, the non$presentation of the ori-ina! havin- 1een e8p!ained 1/ its !oss, as was the testi+on/ of the sa+e Notar/ Pu1!ic, who :ust!/ won ac4uitta! when char-ed with fa!sification of pu1!ic docu+ent at the instance of appe!!ee. The fact that the spaces for the docu+ent nu+1er, pa-e and 1oo7 nu+1ers were not fi!!ed up in the photostatic cop/ presented 1/ the representative of the Bureau of &ecords 2ana-e+ent does not +i!itate a-ainst the -enuineness of the docu+ent. It si+p!/ +eans that the cop/ sent to the said Bureau happens to have those spaces unfi!!ed up " sic#. But the sendin- of a cop/ of the docu+ent to the Bureau of &ecords 2ana-e+ent attests stron-!/ to the e8istence of such docu+ent, the ori-ina! of which was du!/ e8ecuted, co+p!ete with the aforesaid data du!/ indicated thereon, as shown 1/ the 8ero8 cop/ certified true 1/ the Notar/ Pu1!ic. Indeed, in the a1sence of positive and convincin- proof of for-er/, a pu1!ic instru+ent e8ecuted with the intervention of a Notar/ Pu1!ic +ust 1e he!d in hi-h respect and accorded fu!! inte-rit/, if on!/ upon the presu+ption of the re-u!arit/ of officia! functions as in the nature of those upon the presu+ption of the re-u!arit/ of officia! functions as in the nature of those of a notar/ pu1!ic "Bautista vs. D/ Bun Chin, '5 O% .59 E! Ao-ar =i!ipino vs. O!vi-a, (3 Phi!. .#. Su1se4uent!/, the respondent Court, actin- on private respondent;s +otion for reconsideration, pro+u!-ated on , 2arch 5.5 the cha!!en-ed &eso!ution 4 settinaside the ear!ier decision and affir+ed, in toto, the ru!inof the tria! court, thusB . . . the respondent "DAN&# Secretar/ had -one 1e/ond his statutor/ authorit/ and had c!ear!/ acted in a1use of discretion in -ivin- due wei-ht to the a!!e-ed option to repurchase whose "sic# -enuiness "sic# and due e8ecution had 1een i+pu-ned and denied 1/ petitioner$appe!!ee "De/pa!u1os#. @hi!e the certified true cop/ of the option to repurchase +a/ have 1een the 1asis of the respondent Secretar/ in reso!vin- the +otion for reconsideration, the Court 1e!ieves that he shou!d have first ordered the presentation of evidence to reso!ve this factua! issue considerin- the conf!ictin- c!ai+s of the parties. As ear!ier pointed out, a!! that was su1+itted to the Bureau of =isheries and conse4uent!/ to the respondent Secretar/, was a 8ero8 cop/ of the 4uestioned docu+ent which was certified to 1/ a notar/ pu1!ic to 1e a cop/ of a deed found in his notaria! fi!e which did not 1ear an/ speci+en of the si-natures of the contractinparties. And assu+inthat a certification +ade 1/ a notar/ pu1!ic as to the e8istence of a docu+ent shou!d 1e dee+ed an affir+ation that such docu+ent actua!!/ e8ists. Neverthe!ess, " sic# when such c!ai+ is i+pu-ned, the one who assai!s the e8istence of a docu+ent shou!d 1e afforded the opportunit/ to prove such c!ai+, 1ecause, at +ost, the presu+ption of re-u!arit/ in the perfor+ance of officia! duties is +ere!/ disputa1!e and can 1e re1utted 1/ convincin- and positive evidence to the contrar/. Ais +otion for reconsideration havin- 1een denied, the petitioner fi!ed the instant petition for review. Petitioner contends that the &u!es of Court shou!d not 1e strict!/ app!ied to ad+inistrative proceedin-s and that the findin-s of fact of ad+inistrative 1odies, a1sent a showin- of ar1itrariness, shou!d 1e accorded respect.
@hi!e the petition has +erit, petitioner;s victor/ is ho!!ow and i!!usor/ for, as sha!! hereafter 1e shown, even as @e reverse the assai!ed reso!ution of the respondent Court of Appea!s, the 4uestioned decision of the Secretar/ +ust, neverthe!ess, 1e set aside on the 1asis of an erroneous conc!usion of !aw with respect to the Option to &epurchase. The respondent Court correct!/ he!d in its decision of ( Dece+1er 5.0 that the respondent Secretar/ provided the private respondent sufficient opportunit/ to 4uestion the authenticit/ of the Option to &epurchase and co++itted no -rave a1use of discretion in ho!dinthat the sa+e was in fact e8ecuted 1/ private respondent. @e thus find no sufficient !e-a! and factua! +oorin-s for respondent Court;s sudden turna1out in its reso!ution of , 2arch 5.5. That private respondent and his wife e8ecuted the Option to &epurchase in favor of petitioner on ,) Octo1er 5(3 is 1e/ond dispute. As deter+ined 1/ the respondent Court in its decision of ( Dece+1er 5.0, private respondent;s wife, Ede!ina Du/o, ad+itted havin- affi8ed her si-nature to the said docu+ent. Besides, the tria! court itse!f in Cri+ina! Case No. ),3 which was :oint!/ tried with the civi! case, ac4uitted 1oth the petitioners and the notar/ pu1!ic, 1efore who+ the Option to &epurchase was ac7now!ed-ed, of the cri+e of fa!sification of said docu+ent. @e ho!d, however, that the respondent Secretar/ -rave!/ erred in ho!dinthat private respondent;s non$disc!osure and suppression of the fact that '.' hectares of the area su1:ect of the app!ication is 1urdened with or encu+1ered 1/ the Option to &epurchase constituted a fa!sehood or a +isrepresentation of an essentia! or +ateria! fact which, under the second para-raph of Section ,5 of =isheries Ad+inistrative Order No. (3 ear!ier 4uoted, ?sha!! ipso facto cause the cance!!ation of the per+it or !ease.? In short, the Secretar/ was of the opinion that the Option to &epurchase was an encu+1rance on the propert/ which affected the a1so!ute and e8c!usive character of private respondent;s ownership over the '.' hectares so!d to hi+ 1/ petitioner. This is a c!ear case of a +isapp!ication of the !aw on conventiona! rede+ption and a +isunderstandin- of the effects of a ri-ht to repurchase -ranted su1se4uent!/ in an instru+ent different fro+ the ori-ina! docu+ent of sa!e. Artic!e (3 of the Civi! Code providesB Conventiona! rede+ption sha!! ta7e p!ace when the vendor reserves the ri-ht to repurchase the thin- so!d, with the o1!i-ation to co+p!/ with the provisions of artic!e ( ( and other stipu!ations which +a/ have 1een a-reed upon. In Villarica, et al. vs. Court of Appeals, et al ., 6 decided on ,5 Nove+1er 5(0, or 1are!/ seven ".# da/s 1efore the respondent Court pro+u!-ated its decision in this case, this Court, interpretin- the a1ove Artic!e, he!dB The ri-ht of repurchase is not a ri-ht -ranted the vendor 1/ the vendee in a su1se4uent instru+ent, 1ut is a ri-ht reserved 1/ the vendor in the sa+e instru+ent of sa!e as one of the stipu!ations of the contract. Once the instru+ent of a1so!ute sa!e is e8ecuted, the vendor can no !on-er reserve the ri-ht to repurchase, and an/ ri-ht thereafter -ranted the vendor 1/ the vendee in a separate instru+ent cannot 1e a ri-ht of repurchase 1ut so+e other ri-ht !i7e the option to 1u/ in the instant case. . . .
In the ear!ier case of #amos, et al. vs. casiano, et al., 9 decided in 5,., this Court had a!read/ ru!ed that ?an a-ree+ent to repurchase 1eco+es a pro+ise to se!! when +ade after the sa!e, 1ecause when the sa!e is +ade without such an a-ree+ent, the purchaser ac4uires the thin- so!d a1so!ute!/, and if he afterwards -rants the vendor the ri-ht to repurchase, it is a new contract entered into 1/ the purchaser, as a1so!ute owner a!read/ of the o1:ect. In that case the vendor has not reserved to hi+se!f the ri-ht to repurchase.? In V"a. "e Cru*o, et al. vs. Carriaga, et al., app!/ the fore-oin- princip!e.
6
this Court found another occasion to
Aence, the Option to &epurchase e8ecuted 1/ private respondent in the present case, was +ere!/ a promise to sell, which +ust 1e -overned 1/ Artic!e '.5 of the Civi! Code which reads as fo!!owsB Art. '.5. U A pro+ise to 1u/ and se!! a deter+inate thin- for a price certain is reciproca!!/ de+anda1!e. An accepted uni!atera! pro+ise to 1u/ or to se!! a deter+inate thin- for a price certain is 1indin- upon the pro+issor if the pro+ise is supported 1/ a consideration distinct fro+ the price. A cop/ of the so$ca!!ed Option to &epurchase is neither attached to the records nor 4uoted in an/ of the p!eadin-s of the parties. This Court cannot, therefore, proper!/ ru!e on whether the pro+ise was accepted and a consideration distinct fro+ the price, supports the option. Cndou1ted!/, in the a1sence of either or 1oth acceptance and separate consideration, the pro+ise to se!! is not 1indin- upon the pro+issor "private respondent#. A uni!atera! pro+ise to 1u/ or se!! is a +ere offer, which is not converted into a contract e8cept at the +o+ent it is accepted. Acceptance is the act that -ives !ife to a :uridica! o1!i-ation, 1ecause, 1efore the pro+ise is accepted, the pro+issor +a/ withdraw it at an/ ti+e. Cpon acceptance, however, a 1i!atera! contract to se!! and to 1u/ is created, and the offeree ipso facto assu+es the o1!i-ations of a purchaser9 the offeror, on the other hand, wou!d 1e !ia1!e for da+a-es if he fai!s to de!iver the thin- he had offered for sa!e. 888 888 888 . . . The contract of option is a separate and distinct contract fro+ the contract which the parties +a/ enter into upon the consu++ation of the option, and a consideration for an optiona! contract is :ust as i+portant as the consideration for an/ other 7ind of contract. Thus, a distinction shou!d 1e drawn 1etween the consideration for the option to repurchase, and the consideration for the contract of repurchase itse!f. : Even if the pro+ise was accepted, private respondent was not 1ound there1/ in the a1sence of a distinct consideration. 8 It +a/ 1e true that the fore-oin- issues were not s4uare!/ raised 1/ the parties. Bein-, however, intertwined with the issue of the correctness of the decision of the respondent Secretar/ and, considerin- further that the deter+ination of said issues is essentia! and indispensa1!e for the rendition of a :ust decision in this case, this Court does not hesitate to ru!e on the+.
In !ernan"e* vs. An"al,
this Court he!dB
If the appe!!ants; assi-n+ent of error 1e not considered a direct cha!!en-e to the decision of the court 1e!ow, we sti!! 1e!ieve that the o1:ection ta7es a narrow view of practice and procedure contrar/ to the !i1era! spirit which pervades the &u!es of Court. The first in:unction of the new &u!es "&u!e , section ,# is that the/ ?sha!! 1e !i1era!!/ construed in order to pro+ote their o1:ect and to assist the parties in o1tainin- :ust, speed/, and ine8pensive deter+ination of ever/ action and proceedin-.? In !ine with the +odern trends of procedure, we are to!d that, ?whi!e an assi-n+ent of error which is re4uired 1/ !aw or ru!e of court has 1een he!d essentia! to appe!!ate review, and on!/ those assi-ned wi!! 1e considered, there are a nu+1er of cases which appear to accord to the appe!!ate court a 1road discretionar/ power to waive the !ac7 of proper assi-n+ent of errors and consider errors not assi-ned. And an unassi-ned error c!ose!/ re!ated to an error proper!/ assi-ned, or upon which the deter+ination of the 4uestion raised 1/ the error proper!/ assi-ned is dependent, wi!! 1e considered 1/ the appe!!ate court notwithstandin- the fai!ure to assi-n it as error.? "' C.<.S., .*'9 * C.<., *' , footnote ..#. At the !east, the assi-n+ent of error, viewed in this !i-ht, authori6es us to e8a+ine and pass upon the decision of the court 1e!ow. In nsular 9ife Assurance Co., 9t". 5mplo$ees Association'+AT- vs. nsular 9ife Assurance Co., 9t"., 10 this Court ru!edB . . . "t#he Supre+e Court has a+p!e authorit/ to review and reso!ve +atter not assi-ned and specified as errors 1/ either of the parties in the appea! if it finds the consideration and deter+ination of the sa+e essentia! and indispensa1!e in order to arrive at a :ust decision in the case. 11 This Court, thus, has the authorit/ to waive the !ac7 of proper assi-n+ent of errors if the unassi-ned errors c!ose!/ re!ate to errors proper!/ pinpointed out or if the unassi-ned errors refer to +atters upon which the deter+ination of the 4uestions raised 1/ the errors proper!/ assi-ned depend. 12 The sa+e a!so app!ies to issues not specifica!!/ raised 1/ the parties. The Supre+e Court, !i7ewise, has 1road discretionar/ power, in the reso!ution of a controvers/, to ta7e into consideration +atters on record which the parties fai! to su1+it to the Court as specific 4uestions for deter+ination. 14 @here the issues a!read/ raised a!so rest on other issues not specifica!!/ presented, as !on- as the !atter issues 1ear re!evance and c!ose re!ation to the for+er and as !on- as the/ arise fro+ +atters on record, the Court has the authorit/ to inc!ude the+ in its discussion of the controvers/ as we!! as to pass upon the+. In 1rief, in those cases wherein 4uestions not particu!ar!/ raised 1/ the parties surface as necessar/ for the co+p!ete ad:udication of the ri-hts and o1!i-ations of the parties and such 4uestions fa!! within the issues a!read/ fra+ed 1/ the parties, the interests of :ustice dictate that the Court consider and reso!ve the+.
@AE&E=O&E, the instant petition is %&ANTED. The &eso!ution of respondent Court of Appea!s of , 2arch 5.5 in C.A.$%.&. No. SP$3'0(( and the Decision of the tria! court in Civi! Case No. 0,35, insofar as the/ dec!are, for the reasons therein -iven, =ishpond Lease A-ree+ent No. *.,, va!id and 1indin-, are here1/ &EDE&SED and SET ASIDE. The cha!!en-ed Orders of the respondent Secretar/ of A-ricu!ture and Natura! &esources of ,5 Au-ust 5(5, ,3 Nove+1er 5(5 and , Apri! 5.3 are !i7ewise &EDE&SED and SET ASIDE and =ishpond Lease A-ree+ent No. *., is ordered &EINSTATED.
No pronounce+ent as to costs. IT IS SO O&DE&ED.
III.
TAE&E 2CST BE ACCEPTANCE O= OPTION O==E& %.&. No. 0*.)5 <u!/ ,, 55
SPOCSES CIP&IANO DASHCET and DALE&IANA %AEANELO, petitioners, vs. AONO&ABLE COC&T O= APPEALS and SPOCSES 2A&TIN DALLE<E&A and APOLONIA OLEA, respondents.
Dionisio C. Isidto for petitioners.
&a/+undo Lo6ada, <r. for private respondents.
%CTIE&&ET, <&., <.Bp
This petition see7s to reverse the decision of the Court of Appea!s which affir+ed the ear!ier decision of the &e-iona! Tria! Court, (th <udicia! &e-ion, Branch )(, Ai+a+a/!an, Ne-ros Occidenta! in Civi! Case No. 0*5 "for specific perfor+ance and da+a-es# orderin- the petitioners "defendants in the civi! case# to rese!! Lot No. 0(3 of the Cadastra! Surve/ of Ai+a+a/!an, Ne-ros Occidenta! to the respondents "p!aintiffs in the civi! case# upon pa/+ent 1/ the !atter of the a+ount of P,',333.33 as we!! as the appe!!ate court;s reso!ution den/in- a +otion for reconsideration. In addition, the appe!!ate court ordered the petitioners to pa/ the a+ount of P),333.33 as necessar/ and usefu! e8penses in accordance with Artic!e ( ( of the Civi! Code.
The facts of the case are not in dispute. The/ are su++ari6ed 1/ the appe!!ate court as fo!!owsB
On <anuar/ ), 5.), the p!aintiffs$spouses "respondents herein# fi!ed this action a-ainst the defendants$spouses "petitioners herein# see7in- to redee+ Lot No. 0(3
of the Ai+a+a/!an Cadastre which was previous!/ so!d 1/ p!aintiffs to defendants on Septe+1er , , 5('.
The said !ot was re-istered in the na+e of p!aintiffs. On Octo1er 5)5, the sa+e was !eased 1/ p!aintiffs to the defendants up to crop /ear 5(($(., which was e8tended to crop /ear 5(0$(5. After the e8ecution of the !ease, defendants too7 possession of the !ot, up to now and devoted the sa+e to the cu!tivation of su-ar.
On Septe+1er , , 5(', the p!aintiffs so!d the !ot to the defendants under a Deed of Sa!e for the a+ount of P5,333.33. The Deed of Sa!e was du!/ ratified and notari6ed. On the sa+e da/ and a!on- with the e8ecution of the Deed of Sa!e, a separate instru+ent, deno+inated as &i-ht to &epurchase "E8h. E#, was e8ecuted 1/ the parties -rantin- p!aintiffs the ri-ht to repurchase the !ot for P ,,333.33, said E8h. E !i7ewise du!/ ratified and notari6ed. B/ virtue of the sa!e, defendants secured TCT No. T$)0050 in their na+e. On <anuar/ ,, 5(5, p!aintiffs so!d the sa+e !ot to Benito Derra+a, <r., after securin- the defendants; tit!e, for the su+ of P ,,333.33. Cpon the protestations of defendant, assisted 1/ counse!, the said second sa!e was cance!!ed after the pa/+ent of P ,,333.33 1/ the defendants to Derra+a.
Defendants resisted this action for rede+ption on the pre+ise that E8h. E is :ust an option to 1u/ since it is not e+1odied in the sa+e docu+ent of sa!e 1ut in a separate docu+ent, and since such option is not supported 1/ a consideration distinct fro+ the price, said deed for ri-ht to repurchase is not 1indin- upon the+.
After tria!, the court 1e!ow rendered :ud-+ent a-ainst the defendants, orderinthe+ to rese!! !ot No. 0(3 of the Ai+a+a/!an Cadastre to the p!aintiffs for the repurchase price of P,',333.33, which a+ount co+1ines the price paid for the first sa!e and the price paid 1/ defendants to Benito Derra+a, <r.
Defendants +oved for, 1ut were denied reconsideration. E8ceptin- thereto, defendants$appea!ed, . . . "&o!!o, pp. ''$')#
The petition was -iven due course in a reso!ution dated =e1ruar/ ,, 553.
The petitioners insist that the/ can not 1e co+pe!!ed to rese!! Lot No. 0(3 of the Ai+a+a/!an Cadastre. The/ contend that the nature of the sa!e over the said !ot 1etween the+ and the private respondents was that of an a1so!ute deed of sa!e and that the ri-ht thereafter -ranted 1/ the+ to the private respondents "&i-ht to &epurchase, E8hi1it ?E?# can on!/ 1e either an option to 1u/ or a +ere pro+ise on
their part to rese!! the propert/. The/ opine that since the ?&I%AT TO &EPC&CAASE? was not supported 1/ an/ consideration distinct fro+ the purchase price it is not va!id and 1indin- on the petitioners pursuant to Artic!e '.5 of the Civi! Code.
The docu+ent deno+inated as ?&I%AT TO &EPC&CAASE? "E8hi1it E# providesB
&I%AT TO &EPC&CAASE
JNO@ ALL 2EN BE TAESE P&ESENTSB
I, CIP&IANO DASHCET, . . ., do here1/ -rant the spouses 2artin Da!!e:era and Apo!onia O!ea, their heirs and assi-ns, the ri-ht to repurchase said Lot No. 0(3 for the su+ of T@ELDE TAOCSAND PESOS "P ,,333.33#, Phi!ippine Currenc/, within the period TEN " 3# EEA&S fro+ the a-ricu!tura! /ear 5(5$ 5.3 when +/ contract of !ease over the propert/ sha!! e8pire and unti! the a-ricu!tura! /ear 5.5$ 503.
IN @ITNESS @AE&EO=, I have hereunto si-ned +/ na+e at Bina!1a-an, Ne-ros Occidenta!, this , st da/ of Septe+1er, 5('.
S%D. CIP&IANO DASHCET
S%D. DALE&IANA %. DASHCET
S%D. =&ANCISCO SANICAS
"&o!!o, p. '.#
The Court of Appea!s, app!/in- the princip!es !aid down in the case of Sanche6 v. &i-os, ') SC&A *(0 L 5.,M decided in favor of the private respondents.
In the Sanche6 case, p!aintiff$appe!!ee Nico!as Sanche6 and defendant$appe!!ant Severino &i-os e8ecuted a docu+ent entit!ed ?Option to Purchase,? where1/ 2rs. &i-os ?a-reed, pro+ised and co++itted . . . to se!!? to Sanche6 for the su+ of P ,) 3.33, a re-istered parce! of !and within , /ears fro+ e8ecution of the docu+ent with the condition that said option sha!! 1e dee+ed ?ter+inated and !apsed,? if ?Sanche6 sha!! fai! to e8ercise his ri-ht to 1u/ the propert/? within the stipu!ated period. In the sa+e docu+ent, Sanche6? . . . here1/ a-ree and confor+
with a!! the conditions set forth in the option to purchase e8ecuted in +/ favor, that I 1ind +/se!f with a!! the ter+s and conditions.? "E+phasis supp!ied# The notari6ed docu+ent was si-ned 1oth 1/ Sanche6 and &i-os.
After severa! tenders of pa/+ent of the a-reed su+ of P ,) 3.33 +ade 1/ Sanche6 within the stipu!ated period were re:ected 1/ &i-os, the for+er deposited said a+ount with the Court of =irst Instance of Nueva Eci:a and fi!ed an action for specific perfor+ance and da+a-es a-ainst &i-os.
The !ower court rendered :ud-+ent in favor of Sanche6 and ordered &i-os to accept the su+ :udicia!!/ consi-ned and to e8ecute in Sanche6; favor the re4uisite deed of conve/ance. &i-os appea!ed the case to the Court of Appea!s which certified to this Court on the -round that it invo!ves a pure 4uestion of !aw.
This Court after de!i1eratin- on two conf!ictin- princip!es !aid down in the cases of Southwestern Su-ar and 2o!asses Co. v. At!antic %u!f and Pacific Co., "5. Phi!. ,'5 L 5))M# and At7ins, Jro!! I Co., Inc. v. Cua Aian Te7, 3, Phi!. 5'0 L 5)0M# arrived at the conc!usion that Artic!e '.5 of the Civi! Code which providesB PP
Art. '.5. A pro+ise to 1u/ and se!! a deter+inate thin- for a price certain is reciproca!!/ de+anda1!e.
An accepted uni!atera! pro+ise to 1u/ or to se!! a deter+inate thin- for a price certain is 1indin- upon the pro+issor/ if the pro+ise is supported 1/ a consideration distinct fro+ the price.
and Artic!e *,' thereof which providesB
Art. *,'. @hen the offerer has a!!owed the offerer a certain period to accept, the offer +a/ 1e withdrawn at an/ ti+e 1efore acceptance 1/ co++unicatin- such withdrawa!, e8cept when the option is founded upon a consideration, as so+ethinpaid or pro+ised.
shou!d 1e reconci!ed and har+oni6ed to avoid a conf!ict 1etween the two provisions. In effect, the Court a1andoned the ru!inin the Southwestern Su-ar and 2o!asses Co. case and reiterated the ru!inin the At7ins, Jro!! and Co. case, to witB
Aowever, this Court itse!f, in the case of At7ins, Jro!! and Co., Inc. v. Cua Aian Te7, " 3, Phi!. 5'0, 5) $5),# decided !ater than Southwestern Su-ar I 2o!asses Co. v. At!antic %u!f I Pacific Co., "supra# saw no distinction 1etween Artic!es *,' and '.5 of the Civi! Code and app!ied the for+er where a uni!atera! pro+ise to se!! si+i!ar to the one sued upon here was invo!ved, treatin- such pro+ise as an option which, a!thou-h not 1indin- as a contract in itse!f for !ac7 of separate consideration, neverthe!ess -enerated a 1i!atera! contract of purchase and sa!e upon acceptance. Spea7in- throu-h Associate <ustice, !ater Chief <ustice, Cesar Ben-6on, this Court saidB
=urther+ore, an option is uni!atera!B a pro+ise to se!! at the price fi8ed whenever the offeree shou!d decide to e8ercise his option within the specified ti+e. After acceptin- the pro+ise and 1efore he e8ercises his option, the ho!der of the option is not 1ound to 1u/. Ae is free either to 1u/ or not to 1u/ !ater. In this case however, upon acceptin- herein petitioner;s offer a 1i!atera! pro+ise to se!! and to 1u/ ensued, and the respondent ipso facto assu+ed the o1!i-ation of a purchaser. Ae did not :ust -et the ri-ht su1se4uent!/ to 1u/ or not to 1u/. It was not a +ere option then9 it was 1i!atera! contract of sa!e.
Last!/, even supposin- that E8h. A -ranted an option which is not 1indin- for !ac7 of consideration, the authorities ho!d that
If the option is -iven without a consideration, it is a +ere offer of a contract of sa!e, which is not 1indin- unti! accepted. If, however, acceptance is +ade 1efore a withdrawa!, it constitutes a 1indin- contract of sa!e, even thou-h the option was not supported 1/ a sufficient consideration . . . ".. Corpus <uris Secundu+ p. (),. See a!so ,. &u!in- Case Law **5 and cases cited.#
This Court affir+ed the !ower court;s decision a!thou-h the pro+ise to se!! was not supported 1/ a consideration distinct fro+ the price. It was o1vious that Sanche6, the pro+isee, accepted the option to 1u/ 1efore &i-os, the pro+isor, withdrew the sa+e. Cnder such circu+stances, the option to purchase was converted into a 1i!atera! contract of sa!e which 1ound 1oth parties.
In the instant case and contrar/ to the appe!!ate court;s findin-, it is c!ear that the ri-ht to repurchase was not supported 1/ a consideration distinct fro+ the price. The ru!e is that the pro+isee has the 1urden of provin- such consideration. Cnfortunate!/, the private respondents, pro+isees in the ri-ht to repurchase fai!ed to prove such consideration. The/ did not even a!!e-e the e8istence thereof in their co+p!aint. "See Sanche6 v. &i-os supra#
Therefore, in order that the Sanche6 case can 1e app!ied, the evidence +ust show that the private respondents accepted the ri-ht to repurchase.
The record, however, does not show that the private respondents accepted the ?&i-ht to &epurchase? the !and in 4uestion. @e disa-ree with the appe!!ate court;s findinthat the private respondents accepted the ?ri-ht to repurchase? under the fo!!owin- circu+stancesB . . as evidenced 1/ the annotation and re-istration of the sa+e on the 1ac7 of the transfer of certificate of tit!e in the na+e of appe!!ants. As vivid!/ appearin- therein, it was si-ned 1/ appe!!ant hi+se!f and witnessed 1/ his wife so that for a!! intents and purposes the Das4ue6 spouses are estopped fro+ disre-ardin- its o1vious purpose and intention.?
The annotation and re-istration of the ri-ht to repurchase at the 1ac7 of the certificate of tit!e of the petitioners can not 1e considered as acceptance of the ri-ht to repurchase. Annotation at the 1ac7 of the certificate of tit!e of re-istered !and is for the purpose of 1indin- purchasers of such re-istered !and. Thus, we ru!ed in the case of Be! Air Di!!a-e Association, Inc. v. Dionisio " .' SC&A )05 L 505M#, citinTanchoco v. A4uino " )' SC&A L 50.M#, and Constantino v. Espiritu "') SC&A )). L 5.,M# that purchasers of a re-istered !and are 1ound 1/ the annotations found at the 1ac7 of the certificate of tit!e coverin- the su1:ect parce! of !and. In effect, the annotation of the ri-ht to repurchase found at the 1ac7 of the certificate of tit!e over the su1:ect parce! of !and of the private respondents on!/ served as notice of the e8istence of such uni!atera! pro+ise of the petitioners to rese!! the sa+e to the private respondents. This, however, can not 1e e4uated with acceptance of such ri-ht to repurchase 1/ the private respondent.
Neither can the si-nature of the petitioners in the docu+ent ca!!ed ?ri-ht to repurchase? si-nif/ acceptance of the ri-ht to repurchase. The respondents did not si-n the offer. Acceptance shou!d 1e +ade 1/ the pro+isee, in this case, the private respondents and not the pro+isors, the petitioners herein. It wou!d 1e a1surd to re4uire the pro+isor of an option to 1u/ to accept his own offer instead of the pro+isee to who+ the option to 1u/ is -iven.
=urther+ore, the actions of the private respondents PP "a# fi!in- a co+p!aint to co+pe! re$sa!e and their de+ands for resa!e prior to fi!inof the co+p!aint cannot 1e considered acceptance. As stated in Dda. de Tu!ueta v. Octaviano " , SC&A * ' L 50*M#B
And even -rantin-, ar-uendo that the sa!e was a pacto de retro sa!e, the evidence shows that O!i+pia, throu-h her !aw/er, opted to repurchase the !and on!/ on (
=e1ruar/ 5(,, appro8i+ate!/ two /ears 1e/ond the stipu!ated period, that is not !ater than 2a/, 5(3.
If O!i+pia cou!d not !ocate Aure!io, as she contends, and 1ased on her a!!e-ation that the contract 1etween her was one of sa!e with ri-ht to repurchase, neither, however, did she tender the rede+ption price to private respondent Isauro, 1ut +ere!/ wrote hi+ !etters e8pressin- her readiness to repurchase the propert/.
It is c!ear that the +ere sendin- of !etters 1/ the vendor e8pressin- his desire to repurchase the propert/ without acco+pan/in- tender of the rede+ption price fe!! short of the re4uire+ents of !aw. "Lee v. Court of Appea!s, (0 SC&A 5. L 5.,M#
Neither did petitioner +a7e a :udicia! consi-nation of the repurchase price within the a-reed period.
In a contract of sa!e with a ri-ht of repurchase, the rede+ptioner who +a/ offer to +a7e the repurchase on the option date of rede+ption shou!d deposit the fu!! a+ount in court . . . "&u+1aoa v. Ar6a-a, 0' Phi!. 0 , L 5'5M#
To effective!/ e8ercise the ri-ht to repurchase the vendor a retro +ust +a7e an actua! and si+u!taneous tender of pa/+ent or consi-nation. "Catan-catan- v. Le-a/ada, 0' SC&A ) L 5.0M#
The private respondents; ineffectua! acceptance of the option to 1u/ va!idated the petitioner;s refusa! to se!! the parce! which can 1e considered as a withdrawa! of the option to 1u/.
@e a-ree with the petitioners that the case of Dda. de Tu!ueta v. Octaviano, "supra# is in point.
Stripped of non$essentia!s the facts of the Tu!ueta case are as fo!!owsB On Nove+1er ,), 5), "E+phasis supp!ied# O!i+pia =ernande6 Dda. de Tu!ueta, the re-istered owner of a ).) hectare rice!and so!d the !ot to private respondent Aure!io B. Octaviano for P0,(33.33 su1:ect to certain ter+s and conditions. The contract was an a1so!ute and definite sa!e. On the sa+e da/, Nove+1er ,), 5),, "E+phasis supp!ied# the vendee, Aure!io si-ned another docu+ent -ivin- the vendor Tu!ueta the ?option to repurchase? the propert/ at an/ti+e after 2a/ 5)0 1ut not !ater than 2a/ 5(3. @hen however, Tu!ueta tried to e8ercise her ?option to 1u/? the
propert/, Aure!io resisted the sa+e pro+ptin- Tu!ueta to co++ence suit for recover/ of ownership and possession of the propert/ with the then Court of =irst Instance of I!oi!o.
The tria! court ru!ed in favor of Tu!ueta. Cpon appea!, however, the Court of Appea!s reversed the tria! court;s decision.
@e affir+ed the appe!!ate court;s decision and ru!edB
The nature of the transaction 1etween O!i+pia and Aure!io, fro+ the conte8t of E8hi1it ?E? is not a sa!e with ri-ht to repurchase. Conventiona! rede+ption ta7es p!ace ?when the vendor reserves the ri-ht to repurchase the thin- so!d, with the o1!i-ation to co+p!/ with the provisions of Artic!e ( ( and other stipu!ations which +a/ have 1een a-reed upon. "Artic!e (3 , Civi! Code#.
In this case, there was no reservation +ade 1/ the vendor, O!i+pia, in the docu+ent E8hi1it ?E? the ?option to repurchase? was contained in a su1se4uent docu+ent and was +ade 1/ the vendee, Aure!io. Thus, it was +ore of an option to 1u/ or a +ere pro+ise on the part of the vendee, Aure!io, to rese!! the propert/ to the vendor, O!i+pia. " 3 2anresa, p. * cited in Padi!!a;s Civi! Code Annotated, Do!. D, 5.' ed., p. '(.# As he!d in Di!!arica v. Court of Appea!s ",( SC&A 05 L 5(0M#B
The ri-ht of repurchase is not a ri-ht -ranted the vendor 1/ the vendee in a su1se4uent instru+ent, 1ut is a ri-ht reserved 1/ the vendor in the sa+e instru+ent of sa!e as one of the stipu!ations of the contract. Once the instru+ent of a1so!ute sa!e is e8ecuted, the vendor can no !on-er reserve the ri-ht to repurchase, and an/ ri-ht thereafter -ranted the vendor 1/ the vendee in a separate instru+ent cannot 1e a ri-ht of repurchase 1ut so+e other ri-ht !i7e the option to 1u/ in the instant case. . . "E+phasis supp!ied#
The appe!!ate court re:ected the app!ication of the Tu!ueta case 1/ statin-B
. . . LAMs found 1/ the tria! court fro+ which we 4uote with approva! 1e!ow, the said cases invo!ve the !apse of severa! da/s for the e8ecution of separate instru+ents after the e8ecution of the deed of sa!e, whi!e the instant case invo!ves the e8ecution of an instru+ent, separate as it is, 1ut e8ecuted on the sa+e da/, and notari6ed 1/ the sa+e notar/ pu1!ic, to witB
A c!ose e8a+ination of E8h. ?E? revea!s that a!thou-h it is a separate docu+ent in itse!f, it is far different fro+ the docu+ent which was pronounced as an option 1/ the Supre+e Court in the Di!!arica case. The option in the Di!!arica case was e8ecuted severa! da/s after the e8ecution of the deed of sa!e. In the present case, E8h. ?E? was e8ecuted and ratified 1/ the sa+e notar/ pu1!ic and the Deed of Sa!e of Lot No. 0(3 1/ the p!aintiffs to the defendants were notari6ed 1/ the sa+e notar/ pu1!ic and entered in the sa+e pa-e of the sa+e notaria! re-ister . . .
The !atter case "Dda. de Tu!ueta v. Octaviano, supra#, !i7ewise invo!ved the e8ecution of the separate docu+ent after an intervention of severa! da/s and the 4uestion of !aches was decided therein, which is not present in the instant case. That distinction is therefore crucia! and @e are of the opinion that the appe!!ee;s ri-ht to repurchase has 1een ade4uate!/ provided for and reserved in confor+it/ with Artic!e (3 of the Civi! Code, which statesB
Conventiona! rede+ption sha!! ta7e p!ace when the vendor reserves the ri-ht to repurchase the thin- so!d, with the o1!i-ation to co+p!/ with the provision of Artic!e ( ( and other stipu!ations which +a/ have 1een a-reed upon. "&o!!o, pp. '($'.#
O1vious!/, the appe!!ate court;s findin-s are not ref!ected in the cited decision. As in the instant case, the option to repurchase invo!ved in the Tu!ueta case was e8ecuted in a separate docu+ent 1ut on the sa+e date that the deed of definite sa!e was e8ecuted.
@hi!e it is true that this Court in the Tu!ueta case found Tu!ueta -ui!t/ of !aches, this, however, was not the pri+ar/ reason wh/ this Court disa!!owed the rede+ption of the propert/ 1/ Tu!ueta. It is c!ear fro+ the decision that the ru!inin the Tu!ueta case was 1ased +ain!/ on the findinthat the transaction 1etween Tu!ueta and Octaviano was not a sa!e with ri-ht to repurchase and that the ?option to repurchase was 1ut an option to 1u/ or a +ere pro+ise on the part of Octaviano to rese!! the propert/ to Tu!ueta.
In the instant case, since the transaction 1etween the petitioners and private respondents was not a sa!e with ri-ht to repurchase, the private respondents cannot avai! of Artic!e (3 of the Civi! Code which provides for conventiona! rede+ption.
@AE&E=O&E, the petition is %&ANTED. The 4uestioned decision and reso!ution of the Court of Appea!s are here1/ &EDE&SED and SET ASIDE. The co+p!aint in Civi!
Case No. 0*5 of the then Court of =irst Instance of Ne-ros Occidenta! ,th <udicia! District Branch ( is DIS2ISSED. No costs.
SO O&DE&ED.
=ernan, C.<., =e!iciano, Bidin and Davide, <r., <<., concur.
,. &I%AT O= =I&ST &E=CSAL %.&. No. 35 ,) Dece+1er ,, 55'
AN% EC ASCNCION, A&TAC& %O AND JEA TION%, petitioners, vs. TAE AON. COC&T O= APPEALS and BCEN &EALTE DEDELOP2ENT CO&PO&ATION, respondents.
Antonio 2. A!1ano for petitioners.
C+a!i, Soriano I Associates for private respondent.
DITC%, <.B
Assai!ed, in this petition for review, is the decision of the Court of Appea!s, dated 3' Dece+1er 55 , in CA$%.&. SP No. ,(*') settinaside and dec!arin- without force and effect the orders of e8ecution of the tria! court, dated *3 Au-ust 55 and ,. Septe+1er 55 , in Civi! Case No. 0.$' 3)0.
The antecedents are recited in -ood detai! 1/ the appe!!ate court thus!/B
On <u!/ ,5, 50. a Second A+ended Co+p!aint for Specific Perfor+ance was fi!ed 1/ AnEu Asuncion and Jeh Tion-, et a!., a-ainst Bo11/ Cu Cn:ien-, &ose Cu Cn:ien- and <ose
Tan 1efore the &e-iona! Tria! Court, Branch * , 2ani!a in Civi! Case No. 0.$' 3)0, a!!e-in-, a+onothers, that p!aintiffs are tenants or !essees of residentia! and co++ercia! spaces owned 1/ defendants descri1ed as Nos. (*3$(*0 On-pin Street, Binondo, 2ani!a9 that the/ have occupied said spaces since 5*) and have 1een re!i-ious!/ pa/in- the renta! and co+p!/in- with a!! the conditions of the !ease contract9 that on severa! occasions 1efore Octo1er 5, 50(, defendants infor+ed p!aintiffs that the/ are offerin- to se!! the pre+ises and are -ivin- the+ priorit/ to ac4uire the sa+e9 that durin- the ne-otiations, Bo11/ Cu Cn:ien- offered a price of P($+i!!ion whi!e p!aintiffs +ade a counter offer of P)$+i!!ion9 that p!aintiffs thereafter as7ed the defendants to put their offer in writin- to which re4uest defendants acceded9 that in rep!/ to defendant;s !etter, p!aintiffs wrote the+ on Octo1er ,', 50( as7in- that the/ specif/ the ter+s and conditions of the offer to se!!9 that when p!aintiffs did not receive an/ rep!/, the/ sent another !etter dated <anuar/ ,0, 50. with the sa+e re4uest9 that since defendants fai!ed to specif/ the ter+s and conditions of the offer to se!! and 1ecause of infor+ation received that defendants were a1out to se!! the propert/, p!aintiffs were co+pe!!ed to fi!e the co+p!aint to co+pe! defendants to se!! the propert/ to the+.
Defendants fi!ed their answer den/in- the +ateria! a!!e-ations of the co+p!aint and interposin- a specia! defense of !ac7 of cause of action.
After the issues were :oined, defendants fi!ed a +otion for su++ar/ :ud-+ent which was -ranted 1/ the !ower court. The tria! court found that defendants; offer to se!! was never accepted 1/ the p!aintiffs for the reason that the parties did not a-ree upon the ter+s and conditions of the proposed sa!e, hence, there was no contract of sa!e at a!!. Nonethe!ess, the !ower court ru!ed that shou!d the defendants su1se4uent!/ offer their propert/ for sa!e at a price of P $+i!!ion or 1e!ow, p!aintiffs wi!! have the ri-ht of first refusa!. Thus the dispositive portion of the decision statesB
@AE&E=O&E, :ud-+ent is here1/ rendered in favor of the defendants and a-ainst the p!aintiffs su++ari!/ dis+issin- the co+p!aint su1:ect to the afore+entioned condition that if the defendants su1se4uent!/ decide to offer their propert/ for sa!e for a purchase price of E!even 2i!!ion Pesos or !ower, then the p!aintiffs has the option to purchase the propert/ or of first refusa!, otherwise, defendants need not offer the propert/ to the p!aintiffs if the purchase price is hi-her than E!even 2i!!ion Pesos.
SO O&DE&ED.
A--rieved 1/ the decision, p!aintiffs appea!ed to this Court in CA$%.&. CD No. , ,*. In a decision pro+u!-ated on Septe+1er , , 553 "penned 1/ <ustice Se-undino %. Chua and concurred in 1/ <ustices Dicente D. 2endo6a and =ernando A. Santia-o#, this Court affir+ed with +odification the !ower court;s :ud-+ent, ho!din-B
In resu+e, there was no +eetinof the +inds 1etween the parties concernin- the sa!e of the propert/. A1sent such re4uire+ent, the c!ai+ for specific perfor+ance wi!! not !ie. Appe!!ants; de+and for actua!, +ora! and e8e+p!ar/ da+a-es wi!! !i7ewise fai! as there e8ists no :ustifia1!e -round for its award. Su++ar/ :ud-+ent for defendants was proper!/ -ranted. Courts +a/ render su++ar/ :ud-+ent when there is no -enuine issue as to an/ +ateria! fact and the +ovin- part/ is entit!ed to a :ud-+ent as a +atter of !aw "%arcia vs. Court of Appea!s, .( SC&A 0 )#. A!! re4uisites o1tainin-, the decision of the court a 4uo is !e-a!!/ :ustifia1!e.
@AE&E=O&E, findin- the appea! un+eritorious, the :ud-+ent appea!ed fro+ is here1/ A==I&2ED, 1ut su1:ect to the fo!!owin- +odificationB The court a 4uo in the aforestated decision -ave the p!aintiffs$appe!!ants the ri-ht of first refusa! on!/ if the propert/ is so!d for a purchase price of E!even 2i!!ion pesos or !ower9 however, considerin- the +ercuria! and uncertain forces in our +ar7et econo+/ toda/. @e find no reason not to -rant the sa+e ri-ht of first refusa! to herein appe!!ants in the event that the su1:ect propert/ is so!d for a price in e8cess of E!even 2i!!ion pesos. No pronounce+ent as to costs.
SO O&DE&ED.
The decision of this Court was 1rou-ht to the Supre+e Court 1/ petition for review on certiorari. The Supre+e Court denied the appea! on 2a/ (, 55 ?for insufficienc/ in for+ and su1stances? "Anne8 A, Petition#.
On Nove+1er ), 553, whi!e CA$%.&. CD No. , ,* was pendin- consideration 1/ this Court, the Cu Cn:ienspouses e8ecuted a Deed of Sa!e "Anne8 D, Petition# transferrin- the propert/ in 4uestion to herein petitioner Buen &ea!t/ and Deve!op+ent Corporation, su1:ect to the fo!!owin- ter+s and conditionsB
. That for and in consideration of the su+ of =I=TEEN 2ILLION PESOS "P ),333,333.33#, receipt of which in fu!! is here1/ ac7now!ed-ed, the DENDO&S here1/ se!!s, transfers and conve/s for and in favor of the DENDEE, his heirs, e8ecutors, ad+inistrators or assi-ns, the a1ove$descri1ed propert/ with a!! the i+prove+ents found therein inc!udin- a!! the ri-hts and interest in the said propert/ free fro+ a!! !iens and encu+1rances of whatever nature, e8cept the pendin- e:ect+ent proceedin-9
,. That the DENDEE sha!! pa/ the Docu+entar/ Sta+p Ta8, re-istration fees for the transfer of tit!e in his favor and other e8penses incidenta! to the sa!e of a1ove$descri1ed propert/ inc!udin- capita! -ains ta8 and accrued rea! estate ta8es.
As a conse4uence of the sa!e, TCT No. 3),)'>T$00 in the na+e of the Cu Cn:ienspouses was cance!!ed and, in !ieu thereof, TCT No. 5)0 ( was issued in the na+e of petitioner on Dece+1er *, 553.
On <u!/ , 55 , petitioner as the new owner of the su1:ect propert/ wrote a !etter to the !essees de+andinthat the !atter vacate the pre+ises.
On <u!/ (, 55 , the !essees wrote a rep!/ to petitioner statin- that petitioner 1rou-ht the propert/ su1:ect to the notice of !is pendens re-ardin- Civi! Case No. 0.$' 3)0 annotated on TCT No. 3),)'>T$00 in the na+e of the Cu Cn:ien-s.
The !essees fi!ed a 2otion for E8ecution dated Au-ust ,., 55 of the Decision in Civi! Case No. 0.$' 3)0 as +odified 1/ the Court of Appea!s in CA$%.&. CD No. , ,*.
On Au-ust *3, 55 , respondent <ud-e issued an order "Anne8 A, Petition# 4uoted as fo!!owsB
Presented 1efore the Court is a 2otion for E8ecution fi!ed 1/ p!aintiff represented 1/ Att/. Antonio A!1ano. Both defendants Bo11/ Cu Cn:ien- and &ose Cu Cn:ien- represented 1/ Att/. Dicente Sison and Att/. Anac!eto 2a-no respective!/ were du!/ notified in toda/;s consideration of the +otion as evidenced 1/ the ru11er sta+p and si-natures upon the cop/ of the 2otion for E8ecution.
The -ist of the +otion is that the Decision of the Court dated Septe+1er , , 553 as +odified 1/ the Court of Appea!s in its decision in CA %.&. CD$, ,*, and e!evated to the Supre+e Court upon the petition for review and that the sa+e was denied 1/ the hi-hest tri1una! in its reso!ution dated 2a/ (, 55 in %.&. No. L$5.,.(, had now 1eco+e fina! and e8ecutor/. As a conse4uence, there was an Entr/ of <ud-+ent 1/ the Supre+e Court as of <une (, 55 , statin- that the aforesaid +odified decision had a!read/ 1eco+e fina! and e8ecutor/.
It is the o1servation of the Court that this propert/ in dispute was the su1:ect of the Notice of Lis Pendens and that the +odified decision of this Court pro+u!-ated 1/ the Court of Appea!s which had 1eco+e fina! to the effect that shou!d the defendants decide to offer the propert/ for sa!e for a price of P 2i!!ion or !ower, and considerin- the +ercuria! and uncertain forces in our +ar7et econo+/ toda/, the sa+e ri-ht of first refusa! to herein
p!aintiffs>appe!!ants in the event that the su1:ect propert/ is so!d for a price in e8cess of E!even 2i!!ion pesos or +ore.
@AE&E=O&E, defendants are here1/ ordered to e8ecute the necessar/ Deed of Sa!e of the propert/ in !iti-ation in favor of p!aintiffs An- Eu Asuncion, Jeh Tion- and Arthur %o for the consideration of P ) 2i!!ion pesos in reco-nition of p!aintiffs; ri-ht of first refusa! and that a new Transfer Certificate of Tit!e 1e issued in favor of the 1u/er.
A!! previous transactions invo!vin- the sa+e propert/ notwithstandin- the issuance of another tit!e to Buen &ea!t/ Corporation, is here1/ set aside as havin- 1een e8ecuted in 1ad faith.
SO O&DE&ED.
On Septe+1er ,,, 55 respondent <ud-e issued another order, the dispositive portion of which readsB
@AE&E=O&E, !et there 1e @rit of E8ecution issue in the a1ove$entit!ed case directin- the Deput/ Sheriff &a+on Enri4ue6 of this Court to i+p!e+ent said @rit of E8ecution orderinthe defendants a+onothers to co+p!/ with the aforesaid Order of this Court within a period of one " # wee7 fro+ receipt of this Order and for defendants to e8ecute the necessar/ Deed of Sa!e of the propert/ in !iti-ation in favor of the p!aintiffs An- Eu Asuncion, Jeh Tion- and Arthur %o for the consideration of P ),333,333.33 and orderinthe &e-ister of Deeds of the Cit/ of 2ani!a, to cance! and set aside the tit!e a!read/ issued in favor of Buen &ea!t/ Corporation which was previous!/ e8ecuted 1etween the !atter and defendants and to re-ister the new tit!e in favor of the aforesaid p!aintiffs An- Eu Asuncion, Jeh Tion- and Arthur %o.
SO O&DE&ED.
On the sa+e da/, Septe+1er ,., 55 the correspondin- writ of e8ecution "Anne8 C, Petition# was issued.
On 3' Dece+1er 55 , the appe!!ate court, on appea! to it 1/ private respondent, set aside and dec!ared without force and effect the a1ove 4uestioned orders of the court a 4uo.
In this petition for review on certiorari, petitioners contend that Buen &ea!t/ can 1e he!d 1ound 1/ the writ of e8ecution 1/ virtue of the notice of !is pendens, carried over on TCT No. 5)0 ( issued in the na+e of Buen &ea!t/, at the ti+e of the !atter;s purchase of the propert/ on ) Nove+1er 55 fro+ the Cu Cn:ien-s.
@e affir+ the decision of the appe!!ate court.
A not too recent deve!op+ent in rea! estate transactions is the adoption of such arran-e+ents as the ri-ht of first refusa!, a purchase option and a contract to se!!. =or read/ reference, we +i-ht point out so+e funda+enta! precepts that +a/ find so+e re!evance to this discussion.
An o1!i-ation is a :uridica! necessit/ to -ive, to do or not to do "Art. )(, Civi! Code#. The o1!i-ation is constituted upon the concurrence of the essentia! e!e+ents thereof, vi6B "a# The vincu!u+ :uris or :uridica! tie which is the efficient cause esta1!ished 1/ the various sources of o1!i-ations "!aw, contracts, 4uasi$contracts, de!icts and 4uasi$de!icts#9 "1# the o1:ect which is the prestation or conduct9 re4uired to 1e o1served "to -ive, to do or not to do#9 and "c# the su1:ect$persons who, viewed fro+ the de+anda1i!it/ of the o1!i-ation, are the active "o1!i-ee# and the passive "o1!i-or# su1:ects.
A+on- the sources of an o1!i-ation is a contract "Art. )., Civi! Code#, which is a +eetinof +inds 1etween two persons where1/ one 1inds hi+se!f, with respect to the other, to -ive so+ethin- or to render so+e service "Art. *3), Civi! Code#. A contract under-oes various sta-es that inc!ude its ne-otiation or preparation, its perfection and, fina!!/, its consu++ation. Ne-otiation covers the period fro+ the ti+e the prospective contractinparties indicate interest in the contract to the ti+e the contract is conc!uded "perfected#. The perfection of the contract ta7es p!ace upon the concurrence of the essentia! e!e+ents thereof. A contract which is consensua! as to perfection is so esta1!ished upon a +ere +eetinof +inds, i.e., the concurrence of offer and acceptance, on the o1:ect and on the cause thereof. A contract which re4uires, in addition to the a1ove, the de!iver/ of the o1:ect of the a-ree+ent, as in a p!ed-e or co++odatu+, is co++on!/ referred to as a rea! contract. In a so!e+n contract, co+p!iance with certain for+a!ities prescri1ed 1/ !aw, such as in a donation of rea! propert/, is essentia! in order to +a7e the act va!id, the prescri1ed for+ 1ein- there1/ an essentia! e!e+ent thereof. The sta-e of consu++ation 1e-ins when the parties perfor+ their respective underta7in-s under the contract cu!+inatin- in the e8tin-uish+ent thereof.
Cnti! the contract is perfected, it cannot, as an independent source of o1!i-ation, serve as a 1indin- :uridica! re!ation. In sa!es, particu!ar!/, to which the topic for discussion a1out the case at 1ench 1e!on-s, the contract is perfected when a person, ca!!ed the se!!er, o1!i-ates hi+se!f, for a price certain, to de!iver and to transfer ownership of a thin- or
ri-ht to another, ca!!ed the 1u/er, over which the !atter a-rees. Artic!e ')0 of the Civi! Code providesB
Art. ')0. B/ the contract of sa!e one of the contractinparties o1!i-ates hi+se!f to transfer the ownership of and to de!iver a deter+inate thin-, and the other to pa/ therefor a price certain in +one/ or its e4uiva!ent.
A contract of sa!e +a/ 1e a1so!ute or conditiona!.
@hen the sa!e is not a1so!ute 1ut conditiona!, such as in a ?Contract to Se!!? where invaria1!/ the ownership of the thin- so!d is retained unti! the fu!fi!!+ent of a positive suspensive condition "nor+a!!/, the fu!! pa/+ent of the purchase price#, the 1reach of the condition wi!! prevent the o1!i-ation to conve/ tit!e fro+ ac4uirin- an o1!i-ator/ force. , In Di-nos vs. Court of Appea!s " )0 SC&A *.)#, we have said that, a!thou-h deno+inated a ?Deed of Conditiona! Sa!e,? a sa!e is sti!! a1so!ute where the contract is devoid of an/ proviso that tit!e is reserved or the ri-ht to uni!atera!!/ rescind is stipu!ated, e.-., unti! or un!ess the price is paid. Ownership wi!! then 1e transferred to the 1u/er upon actua! or constructive de!iver/ "e.-., 1/ the e8ecution of a pu1!ic docu+ent# of the propert/ so!d. @here the condition is i+posed upon the perfection of the contract itse!f, the fai!ure of the condition wou!d prevent such perfection. * If the condition is i+posed on the o1!i-ation of a part/ which is not fu!fi!!ed, the other part/ +a/ either waive the condition or refuse to proceed with the sa!e "Art. )'), Civi! Code#. '
An unconditiona! +utua! pro+ise to 1u/ and se!!, as !on- as the o1:ect is +ade deter+inate and the price is fi8ed, can 1e o1!i-ator/ on the parties, and co+p!iance therewith +a/ accordin-!/ 1e e8acted. )
An accepted uni!atera! pro+ise which specifies the thin- to 1e so!d and the price to 1e paid, when coup!ed with a va!ua1!e consideration distinct and separate fro+ the price, is what +a/ proper!/ 1e ter+ed a perfected contract of option. This contract is !e-a!!/ 1indin-, and in sa!es, it confor+s with the second para-raph of Artic!e '.5 of the Civi! Code, vi6B
Art. '.5.
...
An accepted uni!atera! pro+ise to 1u/ or to se!! a deter+inate thin- for a price certain is 1indin- upon the pro+issor if the pro+ise is supported 1/ a consideration distinct fro+ the price. " ') a# (
O1serve, however, that the option is not the contract of sa!e itse!f. . The optionee has the ri-ht, 1ut not the o1!i-ation, to 1u/. Once the option is e8ercised ti+e!/, i.e., the offer is accepted 1efore a 1reach of the option, a 1i!atera! pro+ise to se!! and to 1u/ ensues and 1oth parties are then reciproca!!/ 1ound to co+p!/ with their respective underta7in-s. 0
Let us e!ucidate a !itt!e. A ne-otiation is for+a!!/ initiated 1/ an offer. An i+perfect pro+ise "po!icitacion# is +ere!/ an offer. Pu1!ic advertise+ents or so!icitations and the !i7e are ordinari!/ construed as +ere invitations to +a7e offers or on!/ as proposa!s. These re!ations, unti! a contract is perfected, are not considered 1indin- co++it+ents. Thus, at an/ ti+e prior to the perfection of the contract, either ne-otiatin- part/ +a/ stop the ne-otiation. The offer, at this sta-e, +a/ 1e withdrawn9 the withdrawa! is effective i++ediate!/ after its +anifestation, such as 1/ its +ai!in- and not necessari!/ when the offeree !earns of the withdrawa! "Laudico vs. Arias, '* Phi!. ,.3#. @here a period is -iven to the offeree within which to accept the offer, the fo!!owin- ru!es -enera!!/ -overnB
" # If the period is not itse!f founded upon or supported 1/ a consideration, the offeror is sti!! free and has the ri-ht to withdraw the offer 1efore its acceptance, or, if an acceptance has 1een +ade, 1efore the offeror;s co+in- to 7now of such fact, 1/ co++unicatin- that withdrawa! to the offeree "see Art. *,', Civi! Code9 see a!so At7ins, Jro!! I Co. vs. Cua, 3, Phi!. 5'0, ho!dinthat this ru!e is app!ica1!e to a uni!atera! pro+ise to se!! under Art. '.5, +odif/in- the previous decision in South @estern Su-ar vs. At!antic %u!f, 5. Phi!. ,'59 see a!so Art. * 5, Civi! Code9 &ura! Ban7 of ParaSa4ue, Inc., vs. &e+o!ado, *) SC&A '359 Sanche6 vs. &i-os, ') SC&A *(0#. The ri-ht to withdraw, however, +ust not 1e e8ercised whi+sica!!/ or ar1itrari!/9 otherwise, it cou!d -ive rise to a da+a-e c!ai+ under Artic!e 5 of the Civi! Code which ordains that ?ever/ person +ust, in the e8ercise of his ri-hts and in the perfor+ance of his duties, act with :ustice, -ive ever/one his due, and o1serve honest/ and -ood faith.?
",# If the period has a separate consideration, a contract of ?option? is dee+ed perfected, and it wou!d 1e a 1reach of that contract to withdraw the offer durin- the a-reed period. The option, however, is an independent contract 1/ itse!f, and it is to 1e distin-uished fro+ the pro:ected +ain a-ree+ent "su1:ect +atter of the option# which is o1vious!/ /et to 1e conc!uded. If, in fact, the optioner$offeror withdraws the offer 1efore its acceptance "e8ercise of the option# 1/ the optionee$offeree, the !atter +a/ not sue for specific perfor+ance on the proposed contract "?o1:ect? of the option# since it has fai!ed to reach its own sta-e of perfection. The optioner$offeror, however, renders hi+se!f !ia1!e for da+a-es for 1reach of the option. In these cases, care shou!d 1e ta7en of the rea! nature of the consideration -iven, for if, in fact, it has 1een intended to 1e part of the consideration for the +ain contract with a ri-ht of withdrawa! on the part of the optionee, the +ain contract cou!d 1e dee+ed perfected9 a si+i!ar instance wou!d 1e an ?earnest +one/? in a contract of sa!e that can evidence its perfection "Art. '0,, Civi! Code#.
In the !aw on sa!es, the so$ca!!ed ?ri-ht of first refusa!? is an innovative :uridica! re!ation. Need!ess to point out, it cannot 1e dee+ed a perfected contract of sa!e under Artic!e ')0 of the Civi! Code. Neither can the ri-ht of first refusa!, understood in its nor+a! concept, per se 1e 1rou-ht within the purview of an option under the second para-raph of Artic!e '.5, afore4uoted, or possi1!/ of an offer under Artic!e * 5 5 of the sa+e Code. An option or an offer wou!d re4uire, a+onother thin-s, 3 a c!ear certaint/ on 1oth the o1:ect and the cause or consideration of the envisioned contract. In a ri-ht of first refusa!, whi!e the o1:ect +i-ht 1e +ade deter+inate, the e8ercise of the ri-ht, however, wou!d 1e dependent not on!/ on the -rantor;s eventua! intention to enter into a 1indin- :uridica! re!ation with another 1ut a!so on ter+s, inc!udin- the price, that o1vious!/ are /et to 1e !ater fir+ed up. Prior thereto, it can at 1est 1e so descri1ed as +ere!/ 1e!on-in- to a c!ass of preparator/ :uridica! re!ations -overned not 1/ contracts "since the essentia! e!e+ents to esta1!ish the vincu!u+ :uris wou!d sti!! 1e indefinite and inconc!usive# 1ut 1/, a+onother !aws of -enera! app!ication, the pertinent scattered provisions of the Civi! Code on hu+an conduct.
Even on the pre+ise that such ri-ht of first refusa! has 1een decreed under a fina! :ud-+ent, !i7e here, its 1reach cannot :ustif/ correspondin-!/ an issuance of a writ of e8ecution under a :ud-+ent that +ere!/ reco-ni6es its e8istence, nor wou!d it sanction an action for specific perfor+ance without there1/ ne-atin- the indispensa1!e e!e+ent of consensua!it/ in the perfection of contracts. It is not to sa/, however, that the ri-ht of first refusa! wou!d 1e inconse4uentia! for, such as a!read/ inti+ated a1ove, an un:ustified disre-ard thereof, -iven, for instance, the circu+stances e8pressed in Artic!e 5 , of the Civi! Code, can warrant a recover/ for da+a-es.
The fina! :ud-+ent in Civi! Case No. 0.$' 3)0, it +ust 1e stressed, has +ere!/ accorded a ?ri-ht of first refusa!? in favor of petitioners. The conse4uence of such a dec!aration entai!s no +ore than what has heretofore 1een said. In fine, if, as it is here so conve/ed to us, petitioners are a--rieved 1/ the fai!ure of private respondents to honor the ri-ht of first refusa!, the re+ed/ is not a writ of e8ecution on the :ud-+ent, since there is none to e8ecute, 1ut an action for da+a-es in a proper foru+ for the purpose.
=urther+ore, whether private respondent Buen &ea!t/ Deve!op+ent Corporation, the a!!e-ed purchaser of the propert/, has acted in -ood faith or 1ad faith and whether or not it shou!d, in an/ case, 1e considered 1ound to respect the re-istration of the !is pendens in Civi! Case No. 0.$' 3)0 are +atters that +ust 1e independent!/ addressed in appropriate proceedin-s. Buen &ea!t/, not havin- 1een i+p!eaded in Civi! Case No. 0.$' 3)0, cannot 1e he!d su1:ect to the writ of e8ecution issued 1/ respondent <ud-e, !et a!one ousted fro+ the ownership and possession of the propert/, without first 1ein- du!/ afforded its da/ in court.
@e are a!so una1!e to a-ree with petitioners that the Court of Appea!s has erred in ho!dinthat the writ of e8ecution varies the ter+s of the :ud-+ent in Civi! Case No. 0.$' 3)0, !ater affir+ed in CA$%.&. CD$, ,*. The Court of Appea!s, in this re-ard, has o1servedB
=ina!!/, the 4uestioned writ of e8ecution is in variance with the decision of the tria! court as +odified 1/ this Court. As a!read/ stated, there was nothin- in said decision * that decreed the e8ecution of a deed of sa!e 1etween the Cu Cn:ien-s and respondent !essees, or the fi8in- of the price of the sa!e, or the cance!!ation of tit!e in the na+e of petitioner "Li+pin vs. IAC, '. SC&A ) (9 Pa+antasan n- Lun-sod n- 2a/ni!a vs. IAC, '* SC&A * 9 De %u6+an vs. CA, *. SC&A .*39 Pastor vs. CA, ,, SC&A 00)#.
It is !i7ewise 4uite o1vious to us that the decision in Civi! Case No. 0.$' 3)0 cou!d not have decreed at the ti+e the e8ecution of an/ deed of sa!e 1etween the Cu Cn:ien-s and petitioners.
@AE&E=O&E, we CPAOLD the Court of Appea!s in u!ti+ate!/ settinaside the 4uestioned Orders, dated *3 Au-ust 55 and ,. Septe+1er 55 , of the court a 4uo. Costs a-ainst petitioners.
SO O&DE&ED.
Narvasa, C.<., Padi!!a, Bidin, &e-a!ado, Davide, <r., &o+ero, Be!!osi!!o, 2e!o, Huiason, Puno and 2endo6a, <<., concur.
Japunan, <., too7 no part.
=e!iciano, <., is on !eave PARAEAF2E KING# ENTERPRI#E#, INCORPORATED, petitioner, vs. CO2RT O1 APPEAL#, CATALINA L. #ANTO#, re/re)e&'e( b= %er 0''or&e= ,& .0c', L23 B. PROTACIO, 0&( DA"ID A. RAYM2NDO, respondents.
PANGANIBAN, J!" Do a!!e-ations in a co+p!aint showin- vio!ation of a contractua! ri-ht of ?first option or priorit/ to 1u/ the properties su1:ect of the !ease? constitute a va!id cause of actionO Is the -rantee of such ri-ht entit!ed to 1e offered the sa+e ter+s and conditions as those -iven
to a third part/ who eventua!!/ 1ou-ht such propertiesO In short, is such ri-ht of first refusa! enforcea1!e 1/ an action for specific perfor+anceO These 4uestions are answered in the affir+ative 1/ this Court in reso!vin- this petition for review under &u!e ') of the &u!es of Court cha!!en-in- the Decision 1 of the Court of Appea!s 2 pro+u!-ated on 2arch ,5, 55*, in CA$%.&. CD No. *'50. entit!ed ?ParaSa4ue Jin-s Enterprises, Inc. vs. Cata!ina L. Santos, et a!.,? which affir+ed the order 4 of Septe+1er ,, 55 , of the &e-iona! Tria! Court of 2a7ati, Branch )., 6 dis+issin- Civi! Case No. 5 $.0( for !ac7 of a va!id cause of action. Facts of the Case On 2arch 5, 55 , herein petitioner fi!ed 1efore the &e-iona! Tria! Court of 2a7ati a co+p!aint, 9 which is reproduced in fu!! 1e!owB P!aintiff, 1/ counse!, respectfu!!/ states thatB . P!aintiff is a private corporation or-ani6ed and e8istin- under and 1/ virtue of the !aws of the Phi!ippines, with principa! p!ace of 1usiness of " sic# Dr. A. Santos Avenue, ParaSa4ue, 2etro 2ani!a, whi!e defendant Cata!ina L. Santos, is of !e-a! a-e, widow, with residence and posta! address at ''' P!ato Street, Ct., Stoc7ton, Ca!ifornia, CSA, represented in this action 1/ her attorne/$in$fact, Lu6 B. Protacio, with residence and posta! address at No, ,, San Antonio Street, 2a-a!!anes Di!!a-e, 2a7ati, 2etro 2ani!a, 1/ virtue of a -enera! power of attorne/. Defendant David A. &a/+undo, is of !e-a! a-e, sin-!e, with residence and posta! address at 5 0 Ja+ias Street, Da+ariSas Di!!a-e, 2a7ati, 2etro 2ani!a, where the/ "sic# +a/ 1e served with su++ons and other court processes. Fero8 cop/ of the -enera! power of attorne/ is hereto attached as Anne8 ?A?. ,. Defendant Cata!ina L. Santos is the owner of ei-ht "0# parce!s of !and !ocated at " sic# ParaSa4ue, 2etro 2ani!a with transfer certificate of tit!e nos. S$ 5(*., S$ 5(*0 and S$ 5('* to S$ 5('0. Fero8 copies of the said tit!e " sic# are hereto attached as Anne8es ?B? to ?I?, respective!/. *. On Nove+1er ,0, 5.., a certain =rederic7 Chua !eased the a1ove$descri1ed propert/ fro+ defendant Cata!ina L. Santos, the said !ease was re-istered in the &e-ister of Deeds. Fero8 cop/ of the !ease is hereto attached as Anne8 ?<?. '. On =e1ruar/ ,, 5.5, =rederic7 Chua assi-ned a!! his ri-hts and interest and participation in the !eased propert/ to Lee Chin- Bin-, 1/ virtue of a deed of assi-n+ent and with the confor+it/ of defendant Santos, the said assi-n+ent was a!so re-istered. Fero8 cop/ of the deed of assi-n+ent is hereto attached as Anne8 ?J?. ). On Au-ust (, 5.5, Lee Chin- Bin- a!so assi-ned a!! his ri-hts and interest in the !eased propert/ to ParaSa4ue Jin-s Enterprises, Incorporated 1/ virtue of a deed of assi-n+ent and with the confor+it/ of defendant Santos, the sa+e was du!/ re-istered, Fero8 cop/ of the deed of assi-n+ent is hereto attached as Anne8 ?L?. (. Para-raph 5 of the assi-ned !eased " sic# contract provides a+onothers thatB ?5. That in case the properties su1:ect of the !ease a-ree+ent are so!d or encu+1ered, Lessors sha!! i+pose as a condition that the 1u/er or +ort-a-ee thereof sha!! reco-ni6e and 1e 1ound 1/ a!! the ter+s and conditions of this !ease a-ree+ent and sha!! respect
this Contract of Lease as if the/ are the LESSO&S thereof and in case of sa!e, LESSEE sha!! have the first option or priorit/ to 1u/ the properties su1:ect of the !ease9? .. On Septe+1er , , 500, defendant Santos so!d the ei-ht parce!s of !and su1:ect of the !ease to defendant David &a/+undo for a consideration of =IDE 2ILLION "P),333,333.33# PESOS. The said sa!e was in contravention of the contract of !ease, for the first option or priorit/ to 1u/ was not offered 1/ defendant Santos to the p!aintiff. Fero8 cop/ of the deed of sa!e is hereto attached as Anne8 ?2?. 0. On 2arch ), 505, defendant Santos wrote a !etter to the p!aintiff infor+in- the sa+e of the sa!e of the properties to defendant &a/+undo, the said !etter was persona!!/ handed 1/ the attorne/$in$fact of defendant Santos, Fero8 cop/ of the !etter is hereto attached as Anne8 ?N?. 5. Cpon !earnin- of this fact p!aintiff;s representative wrote a !etter to defendant Santos, re4uestin- her to rectif/ the error and conse4uent!/ rea!i6in- the error, she had it reconve/ed to her for the sa+e consideration of =IDE 2ILLION "P),333,333.33# PESOS. Fero8 copies of the !etter and the deed of reconve/ance are hereto attached as Anne8es ?O? and ?P?. 3. Su1se4uent!/ the propert/ was offered for sa!e to p!aintiff 1/ the defendant for the su+ of =I=TEEN 2ILLION "P ),333,333.33# PESOS. P!aintiff was -iven ten " 3# da/s to +a7e -ood of the offer, 1ut therefore "sic# the said period e8pired another !etter ca+e fro+ the counse! of defendant Santos, containin- the sa+e tenor of " sic# the for+er !etter. Fero8 copies of the !etters are hereto attached as Anne8es ?H? and ?&?. . On 2a/ 0, 505, 1efore the period -iven in the !etter offerin- the properties for sa!e e8pired, p!aintiff;s counse! wrote counse! of defendant Santos offerin- to 1u/ the properties for =IDE 2ILLION "P),333,333.33# PESOS. Fero8 cop/ of the !etter is hereto attached as Anne8 ?S?. ,. On 2a/ ), 505, 1efore the/ rep!ied to the offer to purchase, another deed of sa!e was e8ecuted 1/ defendant Santos "in favor of# defendant &a/+undo for a consideration of NINE 2ILLION "P5,333,333.33# PESOS. Fero8 cop/ of the second deed of sa!e is hereto attached as Anne8 ?T?. *. Defendant Santos vio!ated a-ain para-raph 5 of the contract of !ease 1/ e8ecutin- a second deed of sa!e to defendant &a/+undo. '. It was on!/ on 2a/ ., 505, that defendant Santos rep!ied to the !etter of the p!aintiff;s offer to 1u/ or two da/s after she so!d her properties. In her rep!/ she stated a+onothers that the period has !apsed and the p!aintiff is not a priv/ " sic# to the contract. Fero8 cop/ of the !etter is hereto attached as Anne8 ?C?. ). On <une ,0, 505, counse! for p!aintiff infor+ed counse! of defendant Santos of the fact that p!aintiff is the assi-nee of a!! ri-hts and interest of the for+er !essor. Fero8 cop/ of the !etter is hereto attached as Anne8 ?D?. (. On <u!/ (, 505, counse! for defendant Santos infor+ed the p!aintiff that the new owner is defendant &a/+undo. Fero8 cop/ of the !etter is hereto attached as Anne8 ?@?.
.. =ro+ the precedin- facts it is c!ear that the sa!e was si+u!ated and that there was a co!!usion 1etween the defendants in the sa!es of the !eased properties, on the -round that when p!aintiff wrote a !etter to defendant Santos to rectif/ the error, she i++ediate!/ have "sic# the propert/ reconve/ed it "sic# to her in a +atter of twe!ve " ,# da/s. 0. Defendants have the sa+e counse! who represented 1oth of the+ in their e8chan-e of co++unication with p!aintiff;s counse!, a fact that !ed to the conc!usion that a co!!usion e8ist "sic# 1etween the defendants. 5. @hen the propert/ was sti!! re-istered in the na+e of defendant Santos, her co!!ector of the renta! of the !eased properties was her 1rother$in$!aw David Santos and when it was transferred to defendant &a/+undo the co!!ector was sti!! David Santos up to the +onth of <une, 553. Fero8 copies of cash vouchers are hereto attached as Anne8es ?F? to ?AA?, respective!/. ,3. The purpose of this unho!/ a!!iance 1etween defendants Santos and &a/+undo is to +is!ead the p!aintiff and +a7e it appear that the price of the !eased propert/ is +uch hi-her than its actua! va!ue of =IDE 2ILLION "P),333,333.33# PESOS, so that p!aintiff wou!d purchase the properties at a hi-her price. , . P!aintiff has +ade considera1!e invest+ents in the said !eased propert/ 1/ erectin- a two ",# store/, si8 "(# doors co++ercia! 1ui!din- a+ountin- to TA&EE 2ILLION "P*,333,333.33# PESOS. This considera1!e i+prove+ent was +ade on the 1e!ief that eventua!!/ the said pre+ises sha!! 1e so!d to the p!aintiff. ,,. As a conse4uence of this un!awfu! act of the defendants, p!aintiff wi!! incurr " sic# tota! !oss of TA&EE 2ILLION "P*,333,333.33# PESOS as the actua! cost of the 1ui!din- and as such defendants shou!d 1e char-ed of the sa+e a+ount for actua! da+a-es. ,*. As a conse4uence of the co!!usion, evi! desi-n and i!!e-a! acts of the defendants, p!aintiff in the process suffered +enta! an-uish, s!eep!ess ni-hts, 1is+irched " sic# reputation which entit!es p!aintiff to +ora! da+a-es in the a+ount of =IDE 2ILLION "P),333,333.33# PESOS. ,'. The defendants acted in a wanton, fraudu!ent, rec7!ess, oppressive or +a!evo!ent +anner and as a deterrent to the co++ission of si+i!ar acts, the/ shou!d 1e +ade to answer for e8e+p!ar/ da+a-es, the a+ount !eft to the discretion of the Court. ,). P!aintiff de+anded fro+ the defendants to rectif/ their un!awfu! acts that the/ co++itted, 1ut defendants refused and fai!ed to co+p!/ with p!aintiffs :ust and va!id and "sic# de+ands. Fero8 copies of the de+and !etters are hereto attached as Anne8es ?JJ? to ?LL?, respective!/. ,(. Despite repeated de+ands, defendants fai!ed and refused without :ustifia1!e cause to satisf/ p!aintiff;s c!ai+, and was constrained to en-a-ed " sic# the services of undersi-ned counse! to institute this action at a contract fee of P,33,333.33, as and for attorne/;s fees, e8c!usive of cost and e8penses of !iti-ation. P#A&5# @AE&E=O&E, it is respectfu!!/ pra/ed, that :ud-+ent 1e rendered in favor of the p!aintiff and a-ainst defendants and orderin- thatB
a. The Deed of Sa!e 1etween defendants dated 2a/ ), 505, 1e annu!!ed and the !eased properties 1e so!d to the p!aintiff in the a+ount of P),333,333.339 1. Dependants "sic# pa/ p!aintiff the su+ of P*,333,333.33 as actua! da+a-es9 c. Defendants pa/ the su+ of P),333,333.33 as +ora! da+a-es9 d. Defendants pa/ e8e+p!ar/ da+a-es !eft to the discretion of the Court9 e. Defendants pa/ the su+ of not !ess than P,33,333.33 as attorne/;s fees. P!aintiff further pra/s for other :ust and e4uita1!e re!iefs p!us cost of suit. Instead of fi!in- their respective answers, respondents fi!ed +otions to dis+iss anchored on the -rounds of !ac7 of cause of action, estoppe! and !aches. On Septe+1er ,, 55 , the tria! court issued the order dis+issin- the co+p!aint for !ac7 of a va!id cause of action. It ratiocinated thusB Cpon the ver/ face of the p!aintiff;s Co+p!aint itse!f, it therefore indu1ita1!/ appears that the defendant Santos had veri!/ co+p!ied with para-raph 5 of the Lease A-ree+ent 1/ twice offerin- the properties for sa!e to the p!aintiff for V ) 2. The said offers, however, were p!ain!/ re:ected 1/ the p!aintiff which scorned the said offer as ?&IDICCLOCS?. There was therefore a definite refusa! on the part of the p!aintiff to accept the offer of defendant Santos. =or in ac4uirin- the said properties 1ac7 to her na+e, and in so +a7in- the offers to se!! 1oth 1/ herse!f "attorne/$in$fact# and throu-h her counse!, defendant Santos was indeed conscientious!/ co+p!/in- with her o1!i-ation under para-raph 5 of the Lease A-ree+ent. . . . . 888 888 888 This is indeed one instance where a Co+p!aint, after 1are!/ co++encin- to create a cause of action, neutra!i6ed itse!f 1/ its su1se4uent aver+ents which erased or e8tin-uished its ear!ier a!!e-ations of an i+pendin- wron-. Conse4uent!/, a1sent an/ actiona1!e wron- in the ver/ face of the Co+p!aint itse!f, the p!aintiffs su1se4uent protestations of co!!usion is 1ereft or devoid of an/ +eanin- or purpose. . . . . The inescapa1!e resu!t of the fore-oin- considerations point to no other conc!usion than that the Co+p!aint actua!!/ does not contain an/ va!id cause of action and shou!d therefore 1e as it is here1/ ordered DIS2ISSED. The Court finds no further need to consider the other -rounds of estoppe! and !aches inas+uch as this reso!ution is sufficient to dispose the +atter. 6 Petitioners appea!ed to the Court of Appea!s which affir+ed in toto the ru!inof the tria! court, and further reasoned thatB . . . . Appe!!ant;s protestations that the P ) +i!!ion price 4uoted 1/ appe!!ee Santos was reduced to P5 +i!!ion when she !ater reso!d the !eased properties to &a/+undo has no va!id !e-a! +oorin-s 1ecause appe!!ant, as a prospective 1u/er, cannot dictate its own price and forci1!/ ra+ it a-ainst appe!!ee Santos, as owner, to 1u/ off her !eased properties considerin- the tota! a1sence of an/ stipu!ation or a-ree+ent as to the price or as to how the price shou!d 1e co+puted under para-raph 5 of the !ease contract, . . . . :
Petitioner +oved for reconsideration 1ut was denied in an order dated Au-ust ,3, 55*.
Aence this petition. Su1se4uent!/, petitioner fi!ed an ?Cr-ent 2otion for the Issuance of &estrainin- Order and>or @rit of Pre!i+inar/ In:unction and to Ao!d &espondent David A. &a/+undo in Conte+pt of Court.? ; The +otion sou-ht to en:oin respondent &a/+undo and his counse! fro+ pursuin- the e:ect+ent co+p!aint fi!ed 1efore the 1aran-a/ captain of San Isidro, ParaSa4ue, 2etro 2ani!a9 to direct the dis+issa! of said e:ect+ent co+p!aint or of an/ si+i!ar action that +a/ have 1een fi!ed9 and to re4uire respondent &a/+undo to e8p!ain wh/ he shou!d not 1e he!d in conte+pt of court for foru+$shoppin-. The e:ect+ent suit initiated 1/ respondent &a/+undo a-ainst petitioner arose fro+ the e8piration of the !ease contract coverin- the propert/ su1:ect of this case. The e:ect+ent suit was decided in favor of &a/+undo, and the entr/ of fina! :ud-+ent in respect thereof renders the said +otion +oot and acade+ic. ssue The principa! !e-a! issue presented 1efore us for reso!ution is whether the afore4uoted co+p!aint a!!e-in- 1reach of the contractua! ri-ht of ?first option or priorit/ to 1u/? states a va!id cause of action. Petitioner contends that the tria! court as we!! as the appe!!ate tri1una! erred in dis+issinthe co+p!aint 1ecause it in fact had not :ust one 1ut at !east three "*# va!id causes of action, to witB " # 1reach of contract, ",# its ri-ht of first refusa! founded in !aw, and "*# da+a-es. &espondents Santos and &a/+undo, in their separate co++ents, aver that the petition shou!d 1e denied for not raisin- a 4uestion of !aw as the issue invo!ved is pure!/ factua! U whether respondent Santos co+p!ied with para-raph 5 of the !ease a-ree+ent U and for not havin- co+p!ied with Section ,, &u!e ') of the &u!es of Court, re4uirin- the fi!inof twe!ve " ,# copies of the petitioner;s 1rief. Both +aintain that the co+p!aint fi!ed 1/ petitioner 1efore the &e-iona! Tria! Court of 2a7ati stated no va!id cause of action and that petitioner fai!ed to su1stantiate its c!ai+ that the !ower courts decided the sa+e ?in a wa/ not in accord with !aw and app!ica1!e decisions of the Supre+e Court?9 or that the Court of Appea!s has ?sanctioned departure 1/ a tria! court fro+ the accepted and usua! course of :udicia! proceedin-s? so as to +erit the e8ercise 1/ this Court of the power of review under &u!e ') of the &u!es of Court. =urther+ore, the/ reiterate estoppe! and !aches as -rounds for dis+issa!, c!ai+inthat petitioner;s pa/+ent of renta!s of the !eased propert/ to respondent &a/+undo fro+ <une ), 505, to <une *3, 553, was an ac7now!ed-+ent of the !atter;s status as new owner$!essor of said propert/, 1/ virtue of which petitioner is dee+ed to have waived or a1andoned its first option to purchase. Private respondents !i7ewise contend that the deed of assi-n+ent of the !ease a-ree+ent did not inc!ude the assi-n+ent of the option to purchase. &espondent &a/+undo further avers that he was not priv/ to the contract of !ease, 1ein- neither the !essor nor !essee adverted to therein, hence he cou!d not 1e he!d !ia1!e for vio!ation thereof. The Court<s #uling Preliminar$ ssue= Failure to File Sufficient Copies of Brief
@e first dispose of the procedura! issue raised 1/ respondents, particu!ar!/ petitioner;s fai!ure to fi!e twe!ve " ,# copies of its 1rief. @e have ru!ed that when non$co+p!iance with the &u!es was not intended for de!a/ or did not resu!t in pre:udice to the adverse part/, dis+issa! of appea! on +ere technica!ities U in cases where appea! is a +atter of ri-ht U +a/ 1e sta/ed, in the e8ercise of the court;s e4uit/ :urisdiction. 10 It does not appear that respondents were undu!/ pre:udiced 1/ petitioner;s nonfeasance. Neither has it 1een shown that such fai!ure was intentiona!. Main ssue= Vali"it$ of Cause of Action @e do not a-ree with respondents; contention that the issue invo!ved is purel$ factua!. The principa! !e-a! 4uestion, as stated ear!ier, is whether the co+p!aint fi!ed 1/ herein petitioner in the !ower court states a va!id cause of action. Since such 4uestion assu+es the facts a!!e-ed in the co+p!aint as true, it fo!!ows that the deter+ination thereof is one of !aw, and not of facts. There is a 4uestion of !aw in a -iven case when the dou1t or difference arises as to what the !aw is on a certain state of facts, and there is a 4uestion of fact when the dou1t or difference arises as to the truth or the fa!sehood of a!!e-ed facts. 11 At the outset, petitioner concedes that when the -round for a +otion to dis+iss is !ac7 of cause of action, such -round +ust appear on the face of the co+p!aint9 that to deter+ine the sufficienc/ of a cause of action, on!/ the facts a!!e-ed in the co+p!aint and no others shou!d 1e considered9 and that the test of sufficienc/ of the facts a!!e-ed in a petition or co+p!aint to constitute a cause of action is whether, ad+ittin- the facts a!!e-ed, the court cou!d render a va!id :ud-+ent upon the sa+e in accordance with the pra/er of the petition or co+p!aint. A cause of action e8ists if the fo!!owin- e!e+ents are presentB " # a ri-ht in favor of the p!aintiff 1/ whatever +eans and under whatever !aw it arises or is created9 ",# an o1!i-ation on the part of the na+ed defendant to respect or not to vio!ate such ri-ht, and "*# an act or o+ission on the part of such defendant vio!ative of the ri-ht of p!aintiff or constitutin- a 1reach of the o1!i-ation of defendant to the p!aintiff for which the !atter +a/ +aintain an action for recover/ of da+a-es. 12 In deter+inin- whether a!!e-ations of a co+p!aint are sufficient to support a cause of action, it +ust 1e 1orne in +ind that the co+p!aint does not have to esta1!ish or a!!e-e facts provin- the e8istence of a cause of action at the outset9 this wi!! have to 1e done at the tria! on the +erits of the case. To sustain a +otion to dis+iss for !ac7 of cause of action, the co+p!aint +ust show that the c!ai+ for re!ief does not e8ist, rather than that a c!ai+ has 1een defective!/ stated, or is a+1i-uous, indefinite or uncertain. 14 E4ua!!/ i+portant, a defendant +ovin- to dis+iss a co+p!aint on the -round of !ac7 of cause of action is re-arded as havin- h/pothetica!!/ ad+itted a!! the aver+ents thereof.
16
A carefu! e8a+ination of the co+p!aint revea!s that it sufficient!/ a!!e-es an actiona1!e contractua! 1reach on the part of private respondents. Cnder para-raph 5 of the contract of !ease 1etween respondent Santos and petitioner, the !atter was -ranted the ?first option or priorit/? to purchase the !eased properties in case Santos decided to se!!. If Santos never decided to se!! at a!!, there can never 1e a 1reach, +uch !ess an enforce+ent of such ?ri-ht.? But on Septe+1er , , 500, Santos so!d said properties to &espondent &a/+undo without first offerin- these to petitioner. Santos indeed rea!i6ed her error, since she repurchased the properties after petitioner co+p!ained. Thereafter, she offered to se!!
the properties to petitioner for P ) +i!!ion, which petitioner, however, re:ected 1ecause of the ?ridicu!ous? price. But Santos a-ain appeared to have vio!ated the sa+e provision of the !ease contract when she fina!!/ reso!d the properties to respondent &a/+undo for on!/ P5 +i!!ion without first offerin- the+ to petitioner at such price. @hether there was actua! 1reach which entit!ed petitioner to da+a-es and>or other :ust or e4uita1!e re!ief, is a 4uestion which can 1etter 1e reso!ved after tria! on the +erits where each part/ can present evidence to prove their respective a!!e-ations and defenses. 19 The tria! and appe!!ate courts 1ased their decision to sustain respondents; +otion to dis+iss on the a!!e-ations of ParaSa4ue Jin-s Enterprises that Santos had actua!!/ offered the su1:ect properties for sa!e to it prior to the fina! sa!e in favor of &a/+undo, 1ut that the offer was re:ected. Accordin- to said courts, with such offer, Santos had veri!/ co+p!ied with her o1!i-ation to -rant the ri-ht of first refusa! to petitioner. @e ho!d, however, that in order to have fu!! co+p!iance with the contractua! ri-ht -rantinpetitioner the first option to purchase, the sa!e of the properties for the a+ount of P5 +i!!ion, the price for which the/ were fina!!/ so!d to respondent &a/+undo, shou!d have !i7ewise 1een first offered to petitioner. The Court has +ade an e8tensive and !en-th/ discourse on the concept of, and o1!i-ations under, a ri-ht of first refusa! in the case of >u*man, Bocaling ; Co. vs. Bonnevie. 16 In that case, under a contract of !ease, the !essees "&au! and Christopher Bonnevie# were -iven a ?ri-ht of first priorit/? to purchase the !eased propert/ in case the !essor "&e/noso# decided to se!!. The se!!inprice 4uoted to the Bonnevies was (33,333.33 to 1e fu!!/ paid in cash, !ess a +ort-a-e !ien of P 33,333.33. On the other hand, the se!!inprice offered 1/ &e/noso to and accepted 1/ %u6+an was on!/ P'33,333.33 of which P *.,)33.33 was to 1e paid in cash whi!e the 1a!ance was to 1e paid on!/ when the propert/ was c!eared of occupants. @e he!d that even if the Bonnevies cou!d not 1u/ it at the price 4uoted "P(33,333.33#, nonethe!ess, &e/noso cou!d not se!! it to another for a lo:er price and undermore favora,le ter+s and conditions without first offerin- said favora1!e ter+s and price to the Bonnevies as we!!. On!/ if the Bonnevies fai!ed to e8ercise their ri-ht of first priorit/ cou!d &e/noso thereafter !awfu!!/ se!! the su1:ect propert/ to others, and on!/ under the sa+e ter+s and conditions previous!/ offered to the Bonnevies. Of course, under their contract, the/ specifica!!/ stipu!ated that the Bonnevies cou!d e8ercise the ri-ht of first priorit/, ?a!! thin-s and conditions 1ein- e4ua!.? This Court interpreted this proviso to +ean that there shou!d 1e identit/ of ter+s and conditions to 1e offered to the Bonnevies and a!! other prospective 1u/ers, with the Bonnevies to en:o/ the ri-ht of first priorit/. @e ho!d that the sa+e ru!e app!ies even without the sa+e proviso if the ri-ht of first refusa! "or the first option to 1u/# is not to 1e rendered illusor$. =ro+ the fore-oin-, the 1asis of the ri-ht of first refusa! G +ust 1e the current offer to se!! of the se!!er or offer to purchase of an/ prospective 1u/er. On!/ after the optionee fai!s to e8ercise its ri-ht of first priorit/ under the sa+e ter+s and within the period conte+p!ated, cou!d the owner va!id!/ offer to se!! the propert/ to a third person, a-ain, under the sa+e ter+s as offered to the optionee. This princip!e was reiterated in the ver/ recent case of 5quatorial #ealt$ vs. Ma$fair Theater, nc. 1: which was decided en ,anc. This Court uphe!d the ri-ht of first refusa! of the !essee 2a/fair, and rescinded the sa!e of the propert/ 1/ the !essor Car+e!o to E4uatoria! &ea!t/ ?considerin- that 2a/fair, which had su1stantia! interest over the su1:ect
propert/, was pre:udiced 1/ its sa!e to E4uatoria! without Car+e!o conferrin- to 2a/fair ever$ opportunit$ to negotiate within the *3$da/ stipu!ated period? "e+phasis supp!ied#. In that case, two contracts of !ease 1etween Car+e!o and 2a/fair provided ?that if the LESSO& shou!d desire to se!! the !eased pre+ises, the LESSEE sha!! 1e -iven *3 da/s e8c!usive option to purchase the sa+e.? Car+e!o initia!!/ offered to se!! the !eased propert/ to 2a/fair for si8 to seven +i!!ion pesos. 2a/fair indicated interest in purchasinthe propert/ thou-h it invo7ed the *3$da/ period. Nothin- was heard thereafter fro+ Car+e!o. =our /ears !ater, the !atter so!d its entire &ecto Avenue propert/, inc!udin- the !eased pre+ises, to E4uatoria! for P ,*33,333.33 without prior!/ infor+in- 2a/fair. The Court he!d that 1oth Car+e!o and E4uatoria! acted in 1ad faithB Car+e!o for 7nowin-!/ vio!atin- the ri-ht of first option of 2a/fair, and E4uatoria! for purchasin- the propert/ despite 1ein- aware of the contract stipu!ation. In addition to rescission of the contract of sa!e, the Court ordered Car+e!o to a!!ow 2a/fair to 1u/ the su1:ect propert/ at the sa+e price of P ,*33,333.33. +o cause of action un"er P.%. 010? Petitioner a!so invo7es Presidentia! Decree No. ) ., or the Cr1an Land &efor+ Law, as another source of its ri-ht of first refusa!. It c!ai+s to 1e covered under said !aw, 1ein- the ?ri-htfu! occupant of the !and and its structures? since it is the !awfu! !essee thereof 1/ reason of contract. Cnder the !ease contract, petitioner wou!d have occupied the propert/ for fourteen " '# /ears at the end of the contractua! period. @ithout pro1in- into whether petitioner is ri-htfu!!/ a 1eneficiar/ under said !aw, suffice it to sa/ that this Court has previous!/ ru!ed that under Section ( 18 of P.D. ) ., ?the ter+s and conditions of the sa!e in the e8ercise of the !essee;s ri-ht of first refusa! to purchase sha!! 1e deter+ined 1/ the Cr1an Tone E8propriation and Land 2ana-e+ent Co++ittee. Aence, . . . . certain prere4uisites +ust 1e co+p!ied with 1/ an/one who wishes to avai! hi+se!f of the 1enefits of the decree.?1; There 1ein- no a!!e-ation in its co+p!aint that the prere4uisites were co+p!ied with, it is c!ear that the co+p!aint did fai! to state a cause of action on this -round. %ee" of Assignment inclu"e" the option to purchase Neither do we find +erit in the contention of respondent Santos that the assi-n+ent of the !ease contract to petitioner did not inc!ude the option to purchase. The provisions of the deeds of assi-n+ent with re-ard to +atters assi-ned were ver/ c!ear. Cnder the first assi-n+ent 1etween =rederic7 Chua as assi-nor and Lee Chin- Bin- as assi-nee, it was e8press!/ stated thatB . . . . the ASSI%NO& here1/ CEDES, T&ANS=E&S and ASSI%NS to herein ASSI%NEE, a!! his ri-hts, interest and participation over said pre+ises afore$descri1ed, . . . . 20 "e+phasis supp!ied# And under the su1se4uent assi-n+ent e8ecuted 1etween Lee Chin- Bin- as assi-nor and the petitioner, represented 1/ its Dice President Dicenta Lo Chion-, as assi-nee, it was !i7ewise e8press!/ stipu!ated that9
. . . . the ASSI%NO& here1/ se!!s, transfers and assi-ns a!! his ri-hts, interest and participation over said !eased pre+ises, . . . . 21 "e+phasis supp!ied# One of such ri-hts inc!uded in the contract of !ease and, therefore, in the assi-n+ents of ri-hts was the !essee;s ri-ht of first option or priorit/ to 1u/ the properties su1:ect of the !ease, as provided in para-raph 5 of the assi-ned !ease contract. The deed of assi-n+ent need not 1e ver/ specific as to which ri-hts and o1!i-ations were passed on to the assi-nee. It is understood in the -enera! provision afore4uoted that all specific rights an" o,ligationscontained in the contract of !ease are those referred to as 1ein- assi-ned. Need!ess to state, respondent Santos -ave her un4ua!ified confor+it/ to 1oth assi-n+ents of ri-hts. #espon"ent #a$mun"o priv$ to the Contract of 9ease @ith respect to the contention of respondent &a/+undo that he is not priv/ to the !ease contract, not 1ein- the !essor nor the !essee referred to therein, he cou!d thus not have vio!ated its provisions, 1ut he is neverthe!ess a proper part/. C!ear!/, he stepped into the shoes of the owner$!essor of the !and as, 1/ virtue of his purchase, he assu+ed a!! the o1!i-ations of the !essor under the !ease contract. 2oreover, he received 1enefits in the for+ of renta! pa/+ents. =urther+ore, the co+p!aint, as we!! as the petition, pra/ed for the annu!+ent of the sa!e of the properties to hi+. Both p!eadin-s a!so a!!e-ed co!!usion 1etween hi+ and respondent Santos which defeated the e8ercise 1/ petitioner of its ri-ht of first refusa!. In order then to accord co+p!ete re!ief to petitioner, respondent &a/+undo was a necessar/, if not indispensa1!e, part/ to the case. 22 A favora1!e :ud-+ent for the petitioner wi!! necessari!/ affect the ri-hts of respondent &a/+undo as the 1u/er of the propert/ over which petitioner wou!d !i7e to assert its ri-ht of first option to 1u/. Aavin- co+e to the conc!usion that the co+p!aint states a va!id cause of action for 1reach of the ri-ht of first refusa! and that the tria! court shou!d thus not have dis+issed the co+p!aint, we find no +ore need to pass upon the 4uestion of whether the co+p!aint states a cause of action for da+a-es or whether the co+p!aint is 1arred 1/ estoppe! or !aches. As these +atters re4uire presentation and>or deter+ination of facts, the/ can 1e 1est reso!ved after tria! on the +erits. @hi!e the !ower courts erred in dis+issin- the co+p!aint, private respondents, however, cannot 1e denied their da/ in court. @hi!e, in the reso!ution of a +otion to dis+iss, the truth of the facts a!!e-ed in the co+p!aint are theoretica!!/ ad+itted, such ad+ission is +ere!/ h/pothetica! and on!/ for the purpose of reso!vin- the +otion. In case of denia!, the +ovant is not to 1e deprived of the ri-ht to su1+it its own case and to su1+it evidence to re1ut the a!!e-ations in the co+p!aint. Neither wi!! the -rant of the +otion 1/ a tria! court and the u!ti+ate reversa! thereof 1/ an appe!!ate court have the effect of stif!in- such ri-ht. 24 So too, the tria! court shou!d 1e -iven the opportunit/ to eva!uate the evidence, app!/ the !aw and decree the proper re+ed/. Aence, we re+and the instant case to the tria! court to a!!ow private respondents to have their da/ in court. @AE&E=O&E, the petition is %&ANTED. The assai!ed decisions of the tria! court and Court of Appea!s are here1/ &EDE&SED and SET ASIDE. The case is &E2ANDED to the &e-iona! Tria! Court of 2a7ati for further proceedin-s.
SO O&DE&ED. +arvasa, C.(., %avi"e, (r., Melo an" Francisco, ((., concur.
TAI&D DIDISION L%.&. No. '3'.5. 2arch 0, ,33 M
&OSENCO& DEDELOP2ENT CO&PO&ATION and &ENE <OAHCIN, petitioners, vs. PATE&NO INHCIN%, I&ENE %CILLE&2O, =EDE&ICO BANTC%AN, =E&NANDO 2A%BANCA and LITTA TIAN%CO, respondents. DECISION %ONTA%A$&EEES, <.B
This is a petition for review on certiorari under &u!e ') of the &u!es of Court see7inreversa! of the DecisionL M of the Court of Appea!s dated <une ,), 555 in CA$%.&. CD No. )*5(*. The Court of Appea!s decision reversed and set aside the DecisionL,Mdated 2a/ *, 55( of Branch , . of the &e-iona! Tria! Court of Hue6on Cit/ in Civi! Case No. H$5*$ 0)0,.
The case was ori-ina!!/ fi!ed on Dece+1er 3, 55* 1/ Paterno In4uin-, Irene %ui!!er+o and =ederico Bantu-an, herein respondents, a-ainst &osencor Deve!op+ent Corporation "hereinafter Q&osencorR#, &ene <oa4uin, and Eufrocina de Leon. Ori-ina!!/, the co+p!aint was one for annu!+ent of a1so!ute deed of sa!e 1ut was !ater a+ended to one for rescission of a1so!ute deed of sa!e. A co+p!aint$for intervention was thereafter fi!ed 1/ respondents =ernando 2a-1anua and Danna Li66a Tian-co. The co+p!aint$in$intervention was ad+itted 1/ the tria! court in an Order dated 2a/ ', 55'.L*M
The facts of the case, as stated 1/ the tria! court and adopted 1/ the appe!!ate court, are as fo!!owsB
QThis action was ori-ina!!/ for the annu!+ent of the Deed of A1so!ute Sa!e dated Septe+1er ', 553 1etween defendants &osencor and Eufrocina de Leon 1ut !ater a+ended "sic# pra/infor the rescission of the deed of sa!e.
P!aintiffs and p!aintiffs$intervenors averred that the/ are the !essees since 5. of a two$ stor/ residentia! apart+ent !ocated at No. )3 To+as 2orato Ave., Hue6on Cit/ covered 1/ TCT No. 5( ( and owned 1/ spouses =austino and Cresencia Tian-co. The !ease was
not covered 1/ an/ contract. The !essees were rentin- the pre+ises then for P )3.33 a +onth and were a!!e-ed!/ ver1a!!/ -ranted 1/ the !essors the pre$e+ptive ri-ht to purchase the propert/ if ever the/ decide to se!! the sa+e.
Cpon the death of the spouses Tian-cos in 5.), the +ana-e+ent of the propert/ was ad:udicated to their heirs who were represented 1/ Eufrocina de Leon. The !essees were a!!e-ed!/ pro+ised the sa+e pre$e+ptive ri-ht 1/ the heirs of Tian-cos since the !atter had 7now!ed-e that this ri-ht was e8tended to the for+er 1/ the !ate spouses Tian-cos. The !essees continued to sta/ in the pre+ises and a!!e-ed!/ spent their own +one/ a+ountin- fro+ P)3,333.33 to P 33,333.33 for its up7eep. These e8penses were never deducted fro+ the renta!s which a!read/ increased to P ,333.33.
In <une 553, the !essees received a !etter fro+ Att/. Er!inda A-ui!a de+andinthat the/ vacate the pre+ises so that the de+o!ition of the 1ui!din- 1e underta7en. The/ refused to !eave the pre+ises. In that sa+e +onth, de Leon refused to accept the !esseesK renta! pa/+ent c!ai+inthat the/ have run out of receipts and that a new co!!ector has 1een assi-ned to receive the pa/+ents. Thereafter, the/ received a !etter fro+ Eufrocina de Leon offerin- to se!! to the+ the propert/ the/ were !easin- for P,,333,333.33. 888.
The !essees offered to 1u/ the propert/ fro+ de Leon for the a+ount of P ,333,333.33. De Leon to!d the+ that she wi!! 1e su1+ittin- the offer to the other heirs. Since then, no answer was -iven 1/ de Leon as to their offer to 1u/ the propert/. Aowever, in Nove+1er 553, &ene <oa4uin ca+e to the !eased pre+ises introducin- hi+se!f as its new owner.
In <anuar/ 55 , the !essees a-ain received another !etter fro+ Att/. A-ui!a de+andinthat the/ vacate the pre+ises. A +onth thereafter, the !essees received a !etter fro+ de Leon advisin- the+ that the heirs of the !ate spouses Tian-cos have a!read/ so!d the propert/ to &osencor. The fo!!owin- +onth Att/. A-ui!a wrote the+ another !etter de+andin- the renta! pa/+ent and introducin- herse!f as counse! for &osencor>&ene <oa4uin, the new owners of the pre+ises.
The !essees re4uested fro+ de Leon wh/ she had disre-arded the pre$e+ptive ri-ht she and the !ate Tian-cos have pro+ised the+. The/ a!so as7ed for a cop/ of the deed of sa!e 1etween her and the new owners thereof 1ut she refused to heed their re4uest. In the sa+e +anner, when the/ as7ed &ene <oa4uin a cop/ of the deed of sa!e, the !atter turned down their re4uest and instead Att/. A-ui!a wrote the+ severa! !etters de+andinthat the/ vacate the pre+ises. The !essees offered to tender their renta! pa/+ent to de Leon 1ut she refused to accept the sa+e.
In Apri! 55, 1efore the de+o!ition can 1e underta7en 1/ the Buidin- Officia!, the 1aran-a/ interceded 1etween the parties herein after which &osencor raised the issue as to the renta! pa/+ent of the pre+ises. It was a!so at this instance that the !essees were furnished with a cop/ of the Deed of Sa!e and discovered that the/ were deceived 1/ de Leon since the sa!e 1etween her and &ene <oa4uin>&osencor too7 p!ace in Septe+1er ', 553 whi!e de Leon +ade the offer to the+ on!/ in Octo1er 553 or after the sa!e with &osencor had 1een consu++ated. The !essees a!so noted that the propert/ was so!d on!/ for P.,(,333.33.
The !essees offered to rei+1urse de Leon the se!!inprice of P.,(,333.33 p!us an additiona! P,.',333.33 to co+p!ete their P ,333.333.33 ear!ier offer. @hen their offer was refused, the/ fi!ed the present action pra/infor the fo!!owin-B a# rescission of the Deed of A1so!ute Sa!e 1etween de Leon and &osencor dated Septe+1er ', 5539 1# the defendants &osencor>&ene <oa4uin 1e ordered to reconve/ the propert/ to de Leon9 and c# de Leon 1e ordered to rei+1urse the p!aintiffs for the repairs of the propert/, or app!/ the said a+ount as part of the price for the purchase of the propert/ in the su+ of P 33,333.33.RL'M
After tria! on the +erits, the &e-iona! Tria! Court rendered a DecisionL)M dated 2a/ *, 55( dis+issin- the co+p!aint. The tria! court he!d that the ri-ht of rede+ption on which the co+p!aint was 1ased was +ere!/ an ora! one and as such, is unenforcea1!e under the !aw. The dispositive portion of the 2a/ *, 55( Decision is as fo!!owsB
Q@AE&E=O&E, in view of the fore-oin-, the Court DIS2ISSES the instant action. P!aintiffs and p!aintiffs$intervenors are here1/ ordered to pa/ their respective +onth!/ renta! of P ,333.33 per +onth rec7oned fro+ 2a/ 553 up to the ti+e the/ !eave the pre+ises. No costs.
SO O&DE&ED.RL(M
Not satisfied with the decision of the tria! court, respondents herein fi!ed a Notice of Appea! dated <une *, 55(. On the sa+e date, the tria! court issued an Order for the e!evation of the records of the case to the Court of Appea!s. On Au-ust 0, 55., respondents fi!ed their appe!!ate 1rief 1efore the Court of Appea!s.
On <une ,), 555, the Court of Appea!s rendered its decisionL.M reversin- the decision of the tria! court. The dispositive portion of the <une ,), 555 decision is as fo!!owsB
Q@AE&E=O&E, pre+ises considered, the appea!ed decision "dated 2a/ *, 55(# of the &e-iona! Tria! Court "Branch , .# in Hue6on Cit/ in Case No. H$5*$ 0)0, is here1/ &EDE&SED and SET ASIDE. In its stead, a new one is rendered orderin-B
" # The rescission of the Deed of A1so!ute Sa!e e8ecuted 1etween the appe!!ees on Septe+1er ', 5539
",# The reconve/ance of the su1:ect pre+ises to appe!!ee Eufrocina de Leon9
"*# The heirs of =austino and Crescencia Tian-co, thru appe!!ee Eufrocina de Leon, to afford the appe!!ants thirt/ da/s within which to e8ercise their ri-ht of first refusa! 1/ pa/in- the a+ount of ONE 2ILLION PESOS "P ,333,333.33# for the su1:ect propert/9 and
"'# The appe!!ants to, in turn, pa/ the appe!!ees 1ac7 renta!s fro+ 2a/ 553 up to the ti+e this decision is pro+u!-ated.
No pronounce+ent as to costs.
SO O&DE&ED.RL0M
Petitioners herein fi!ed a 2otion for &econsideration of the decision of the Court of Appea!s 1ut the sa+e was denied in a &eso!ution dated Octo1er ), 555.L5M
Aence, this petition for review on certiorari where petitioners &osencor Deve!op+ent Corporation and &ene <oa4uin raise the fo!!owin- assi-n+ent of errorsL 3MB
I.
TAE COC&T O= APPEALS %&ADELE E&&ED @AEN IT O&DE&ED TAE &ESCISSION O= TAE ABSOLCTE DEED O= SALE BET@EEN EC=&OCINA DE LEON AND PETITIONE& &OSENCO&.
II.
TAE COC&T O= APPEALS CO22ITTED 2ANI=EST E&&O& IN 2ANDATIN% TAAT EC=&OCINA DE LEON A==O&D &ESPONDENTS TAE OPPO&TCNITE TO EFE&CISE TAEI& &I%AT O= =I&ST &E=CSAL.
III.
TAE COC&T O= APPEALS %&IEDOCSLE E&&ED IN CONCLCDIN% TAAT &ESPONDENTS AADE ESTABLISAED TAEI& &I%AT O= =I&ST &E=CSAL DESPITE PETITIONE&SK &ELIANCE ON TAEI& DE=ENSE BASED ON TAE STATCTE O= =&ACDS.
Eufrocina de Leon, for herse!f and for the heirs of the spouses =austino and Crescencia Tian-co, did not appea! the decision of the Court of Appea!s.
At the onset, we note that 1oth the Court of Appea!s and the &e-iona! Tria! Court re!ied on Artic!e '3* of the New Civi! Code, +ore specifica!!/ the provisions on the statute of frauds, in co+in- out with their respective decisions. The tria! court, in den/in- the petition for reconve/ance, he!d that ri-ht of first refusa! re!ied upon 1/ petitioners was not reduced to writin- and as such, is unenforcea1!e 1/ virtue of the said artic!e. The Court of Appea!s, on the other hand, a!so he!d that the statute of frauds -overns the Qri-ht of first refusa!R c!ai+ed 1/ respondents. Aowever, the appe!!ate court ru!ed that respondents had du!/ proven the sa+e 1/ reason of petitionersK waiver of the protection of the statute 1/ reason of their fai!ure to o1:ect to the presentation of ora! evidence of the said ri-ht.
Both the appe!!ate court and the tria! court fai!ed to discuss, however, the thresho!d issue of whether or not a ri-ht of first refusa! is indeed covered 1/ the provisions of the New Civi! Code on the statute of frauds. The reso!ution of the issue on the app!ica1i!it/ of the statute of frauds is i+portant as it wi!! deter+ine the t/pe of evidence which +a/ 1e considered 1/ the tria! court as proof of the a!!e-ed ri-ht of first refusa!.
The ter+ Qstatute of fraudsR is descriptive of statutes which re4uire certain c!asses of contracts to 1e in writin-. This statute does not deprive the parties of the ri-ht to contract with respect to the +atters therein invo!ved, 1ut +ere!/ re-u!ates the for+a!ities of the contract necessar/ to render it enforcea1!e. Thus, the/ are inc!uded in the provisions of the New Civi! Code re-ardin- unenforcea1!e contracts, +ore particu!ar!/ Art. '3*, para-raph ,. Said artic!e provides, as fo!!owsB
QArt. '3*. The fo!!owin- contracts are unenforcea1!e, un!ess the/ are ratifiedB
888
",# Those that do not co+p!/ with the Statute of =rauds as set forth in this nu+1er. In the fo!!owin- cases an a-ree+ent hereafter +ade sha!! 1e unenforcea1!e 1/ action, un!ess the sa+e, or so+e note or +e+orandu+ thereof, 1e in writin-, and su1scri1ed 1/ the part/ char-ed, or 1/ his a-ent9 evidence, therefore, of the a-ree+ent cannot 1e received without the writin-, or a secondar/ evidence of its contentsB
a# An a-ree+ent that 1/ its ter+s is not to 1e perfor+ed within a /ear fro+ the +a7inthereof9
1# A specia! pro+ise to answer for the de1t, defau!t, or +iscarria-e of another9
c# An a-ree+ent +ade in consideration of +arria-e, other than a +utua! pro+ise to +arr/9
d# An a-ree+ent for the sa!e of -oods, chatte!s or thin-s in action, at a price not !ess than five hundred pesos, un!ess the 1u/er accept and receive part of such -oods and chatte!s, or the evidences, or so+e of the+, of such thin-s in action, or pa/ at the ti+e so+e part of the purchase +one/9 1ut when a sa!e is +ade 1/ auction and entr/ is +ade 1/ the auctioneer in his sa!es 1oo7, at the ti+e of the sa!e, of the a+ount and 7ind of propert/ so!d, ter+s of sa!e, price, na+es of purchasers and person on whose account the sa!e is +ade, it is a sufficient +e+orandu+9
e# An a-ree+ent for the !easin- of a !on-er period than one /ear, or for the sa!e of rea! propert/ or of an interest therein9
f# A representation to the credit of a third person.R
The purpose of the statute is to prevent fraud and per:ur/ in the enforce+ent of o1!i-ations dependin- for their evidence on the unassisted +e+or/ of witnesses 1/ re4uirin- certain enu+erated contracts and transactions to 1e evidenced 1/ a writinsi-ned 1/ the part/ to 1e char-ed.L M 2oreover, the statute of frauds refers to specific 7inds of transactions and cannot app!/ to an/ other transaction that is not enu+erated therein.L ,M The app!ication of such statute presupposes the e8istence of a perfected contract.L *M
The 4uestion now is whether a Qri-ht of first refusa!R is a+on- those enu+erated in the !ist of contracts covered 1/ the Statute of =rauds. 2ore specifica!!/, is a ri-ht of first refusa! a7in to Qan a-ree+ent for the !easin- of a !on-er period than one /ear, or for the sa!e of rea! propert/ or of an interest thereinR as conte+p!ated 1/ Artic!e '3*, par. ,"e# of the New Civi! Code.
@e have previous!/ he!d that not a!! a-ree+ents Qaffectin- !andR +ust 1e put into writinto attain enforcea1i!it/L 'M. Thus, we have he!d that the settin- up of 1oundaries,L )M the ora! partition of rea! propert/L (M, and an a-ree+ent creatin- a ri-ht of wa/L .M are not covered 1/ the provisions of the statute of frauds. The reason si+p!/ is that these a-ree+ents are not a+on- those enu+erated in Artic!e '3* of the New Civi! Code.
A ri-ht of first refusa! is not a+on- those !isted as unenforcea1!e under the statute of frauds. =urther+ore, the app!ication of Artic!e '3*, par. ,"e# of the New Civi! Code presupposes the e8istence of a perfected, a!1eit unwritten, contract of sa!e.L 0M A ri-ht of first refusa!, such as the one invo!ved in the instant case, is not 1/ an/ +eans a perfected contract of sa!e of rea! propert/. At 1est, it is a contractua! -rant, not of the sa!e of the rea! propert/ invo!ved, 1ut of the ri-ht of first refusa! over the propert/ sou-ht to 1e so!dL 5M
It is thus evident that the statute of frauds does not conte+p!ate cases invo!vin- a ri-ht of first refusa!. As such, a ri-ht of first refusa! need not 1e written to 1e enforcea1!e and +a/ 1e proven 1/ ora! evidence.
The ne8t 4uestion to 1e ascertained is whether or not respondents have satisfactori!/ proven their ri-ht of first refusa! over the propert/ su1:ect of the Deed of A1so!ute Sa!e dated Septe+1er ', 553 1etween petitioner &osencor and Eufrocina de Leon.
On this point, we a-ree with the factua! findin-s of the Court of Appea!s that respondents have ade4uate!/ proven the e8istence of their ri-ht of first refusa!. =ederico Bantu-an, Irene %ui!!er+o, and Paterno In4uin- unifor+!/ testified that the/ were pro+ised 1/ the !ate spouses =austino and Crescencia Tian-co and, !ater on, 1/ their heirs a ri-ht of first refusa! over the propert/ the/ were current!/ !easin- shou!d the/ decide to se!! the sa+e. 2oreover, respondents presented a !etterL,3M dated Octo1er 5, 553 where Eufrocina de Leon, the representative of the heirs of the spouses Tian-co, infor+ed the+ that the/ had received an offer to 1u/ the disputed propert/ for P,,333,333.33 and offered to se!! the sa+e to the respondents at the sa+e price if the/ were interested. Deri!/, if Eufrocina de Leon did not reco-ni6e respondentsK ri-ht of first refusa! over the propert/ the/ were !easin-, then she wou!d not have 1othered to offer the propert/ for sa!e to the respondents.
It +ust 1e noted that petitioners did not present evidence 1efore the tria! court contradictin- the e8istence of the ri-ht of first refusa! of respondents over the disputed propert/. The/ on!/ presented petitioner &ene <oa4uin, the vice$president of petitioner &osencor, who ad+itted havin- no persona! 7now!ed-e of the detai!s of the sa!es transaction 1etween &osencor and the heirs of the spouses Tian-coL, M The/ a!so dispensed with the testi+on/ of Eufrocina de LeonL,,M who cou!d have denied the e8istence or 7now!ed-e of the ri-ht of first refusa!. As such, there 1ein- no evidence to the contrar/, the ri-ht of first refusa! c!ai+ed 1/ respondents was su1stantia!!/ proven 1/ respondents 1efore the !ower court.
Aavin- ru!ed upon the 4uestion as to the e8istence of respondentsK ri-ht of first refusa!, the ne8t issue to 1e answered is whether or not the Court of Appea!s erred in orderin- the rescission of the Deed of A1so!ute Sa!e dated Septe+1er ', 553 1etween &osencor and Eufrocina de Leon and in decreein- that the heirs of the spouses Tian-co shou!d afford respondents the e8ercise of their ri-ht of first refusa!. In other words, +a/ a contract of sa!e entered into in vio!ation of a third part/Ks ri-ht of first refusa! 1e rescinded in order that such third part/ can e8ercise said ri-htO
The issue is not one of first i+pression.
In %u6+an, Boca!in- and Co, Inc. vs. BonnevieL,*M, the Court uphe!d the decision of a !ower court orderin- the rescission of a deed of sa!e which vio!ated a ri-ht of first refusa! -ranted to one of the parties therein. The Court he!dB
Q888 Contract of Sa!e was not voida1!e 1ut rescissi1!e. Cnder Artic!e *03 to *0 "*# of the Civi! Code, a contract otherwise va!id +a/ nonethe!ess 1e su1se4uent!/ rescinded 1/ reason of in:ur/ to third persons, !i7e creditors. The status of creditors cou!d 1e va!id!/ accorded the Bonnevies for the/ had su1stantia! interests that were pre:udiced 1/ the sa!e of the su1:ect propert/ to the petitioner without reco-ni6in- their ri-ht of first priorit/ under the Contract of Lease.
Accordin- to To!entino, rescission is a re+ed/ -ranted 1/ !aw to the contractinparties and even to third persons, to secure reparations for da+a-es caused to the+ 1/ a contract, even if this shou!d 1e va!id, 1/ +eans of the restoration of thin-s to their condition at the +o+ent prior to the ce!e1ration of said contract. It is a re!ief a!!owed for the protection of one of the contractinparties and even third persons fro+ a!! in:ur/ and da+a-e the contract +a/ cause, or to protect so+e inco+pati1!e and preferent ri-ht created 1/ the contract. &escission i+p!ies a contract which, even if initia!!/ va!id, produces a !esion or pecuniar/ da+a-e to so+eone that :ustifies its inva!idation for reasons of e4uit/.
It is true that the ac4uisition 1/ a third person of the propert/ su1:ect of the contract is an o1stac!e to the action for its rescission where it is shown that such third person is in !awfu! possession of the su1:ect of the contract and that he did not act in 1ad faith. Aowever, this ru!e is not app!ica1!e in the case 1efore us 1ecause the petitioner is not considered a third part/ in re!ation to the Contract of Sa!e nor +a/ its possession of the su1:ect propert/ 1e re-arded as ac4uired !awfu!!/ and in -ood faith.
Indeed, %u6+an, Boca!in- and Co. was the vendee in the Contract of Sa!e. 2oreover, the petitioner cannot 1e dee+ed a purchaser in -ood faith for the record shows that it cate-orica!!/ ad+itted that it was aware of the !ease in favor of the Bonnevies, who were actua!!/ occup/in- the su1:ect propert/ at the ti+e it was so!d to it. A!thou-h the Contract of Lease was not annotated on the transfer certificate of tit!e in the na+e of the !ate <ose &e/noso and Africa &e/noso, the petitioner cannot den/ actua! 7now!ed-e of such !ease which was e4uiva!ent to and indeed +ore 1indin- than presu+ed notice 1/ re-istration.
A purchaser in -ood faith and for va!ue is one who 1u/s the propert/ of another without notice that so+e other person has a ri-ht to or interest in such propert/ without and pa/s a fu!! and fair price for the sa+e at the ti+e of such purchase or 1efore he has notice of the c!ai+ or interest of so+e other person in the propert/. %ood faith connotes an honest intention to a1stain fro+ ta7in- unconscientious advanta-e of another. Tested 1/ these princip!es, the petitioner cannot tena1!/ c!ai+ to 1e a 1u/er in -ood faith as it had notice of the !ease of the propert/ 1/ the Bonnevies and such 7now!ed-e shou!d have cautioned it to !oo7 deeper into the a-ree+ent to deter+ine if it invo!ved stipu!ations that wou!d pre:udice its own interests.R
Su1se4uent!/L,'M in E4uatoria! &ea!t/ and Deve!op+ent, Inc. vs. 2a/fair Theater, Inc.L,)M, the Court, en 1anc, with three :ustices dissentin-,L,(M ordered the rescission of a contract entered into in vio!ation of a ri-ht of first refusa!. Csin- the ru!inin %u6+an Boca!in- I Co., Inc. vs. Bonnevie as 1asis, the Court decreed that since respondent therein had a ri-ht of first refusa! over the said propert/, it cou!d on!/ e8ercise the said ri-ht if the fraudu!ent sa!e is first set aside or rescinded. ThusB
Q@hat Car+e!o and 2a/fair a-reed to, 1/ e8ecutin- the two !ease contracts, was that 2a/fair wi!! have the ri-ht of first refusa! in the event Car+e!o se!!s the !eased pre+ises. It is undisputed that Car+e!o did reco-ni6e this ri-ht of 2a/fair, for it infor+ed the !atter of its intention to se!! the said propert/ in 5.'. There was an e8chan-e of !etters evidencin- the offer and counter$offers +ade 1/ 1oth parties. Car+e!o, however, did not pursue the e8ercise to its !o-ica! end. @hi!e it initia!!/ reco-ni6ed 2a/fairKs ri-ht of first refusa!, Car+e!o vio!ated such ri-ht when without affordin- its ne-otiations with 2a/fair the fu!! process to ripen to at !east an interface of a definite offer and a possi1!e correspondin- acceptance within the Q*3$da/ e8c!usive optionR ti+e -ranted 2a/fair, Car+e!o a1andoned ne-otiations, 7ept a !ow profi!e for so+e ti+e, and then so!d, without prior notice to 2a/fair, the entire C!aro 2. &ecto propert/ to E4uatoria!.
Since E4uatoria! is a 1u/er in 1ad faith, this findin- renders the sa!e to it of the propert/ in 4uestion, rescissi1!e. @e a-ree with respondent Appe!!ate Court that the records 1ear out the fact that E4uatoria! was aware of the !ease contracts 1ecause its !aw/ers had, prior to the sa!e, studied the said contracts. As such, E4uatoria! cannot tena1!/ c!ai+ that to 1e a purchaser in -ood faith, and, therefore, rescission !ies.
As a!so ear!ier e+phasi6ed, the contract of sa!e 1etween E4uatoria! and Car+e!o is characteri6ed 1/ 1ad faith, since it was 7nowin-!/ entered into in vio!ation of the ri-hts of and to the pre:udice of 2a/fair. In fact, as correct!/ o1served 1/ the Court of Appea!s, E4uatoria! ad+itted that its !aw/ers had studied the contract of !ease prior to the sa!e. E4uatoria!Ks 7now!ed-e of the stipu!ations therein shou!d have cautioned it to !oo7 further into the a-ree+ent to deter+ine if it invo!ved stipu!ations that wou!d pre:udice its own interests.
Since 2a/fair had a ri-ht of first refusa!, it can e8ercise the ri-ht on!/ if the fraudu!ent sa!e is first set aside or rescinded. A!! of these +atters are now 1efore us and so there shou!d 1e no piece+ea! deter+ination of this case and !eave festerin- sores to deteriorate into end!ess !iti-ation. The facts of the case and considerations of :ustice and e4uit/ re4uire that we order rescission here and now. &escission is a re!ief a!!owed for the protection of one of the contractinparties and even third persons fro+ a!! in:ur/ and da+a-e the contract +a/ cause or to protect so+e inco+pati1!e and preferred ri-ht 1/ the contract. The sa!e of the su1:ect rea! propert/ shou!d now 1e rescinded considerin- that 2a/fair, which had su1stantia! interest over the su1:ect propert/, was pre:udiced 1/ the sa!e of the su1:ect propert/ to E4uatoria! without Car+e!o conferrin- to 2a/fair ever/ opportunit/ to ne-otiate within the *3$da/ stipu!ate period.RL,.M
In Parana4ue Jin-s Enterprises, Inc. vs. Court of Appea!s,L,0M the Court he!d that the a!!e-ations in a co+p!aint showin- vio!ation of a contractua! ri-ht of Qfirst option or priorit/ to 1u/ the properties su1:ect of the !easeR constitute a va!id cause of action enforcea1!e 1/ an action for specific perfor+ance. Su++ari6in- the ru!in-s in the two previous!/ cited cases, the Court affir+ed the nature of and conco+itant ri-hts and o1!i-ations of parties under a ri-ht of first refusa!. ThusB
Q@e ho!d however, that in order to have fu!! co+p!iance with the contractua! ri-ht -rantinpetitioner the first option to purchase, the sa!e of the properties for the a+ount of P5,333,333.33, the price for which the/ were fina!!/ so!d to respondent &a/+undo, shou!d have !i7ewise 1een offered to petitioner.
The Court has +ade an e8tensive and !en-th/ discourse on the concept of, and o1!i-ations under, a ri-ht of first refusa! in the case of %u6+an, Boca!in- I Co. vs. Bonnevie. In that case, under a contract of !ease, the !essees "&au! and Christopher Bonnevie# were -iven a ?ri-ht of first priorit/? to purchase the !eased propert/ in case the !essor "&e/noso# decided to se!!. The se!!inprice 4uoted to the Bonnevies was (33,333.33 to 1e fu!!/ paid in cash, !ess a +ort-a-e !ien of P 33,333.33. On the other hand, the se!!inprice offered 1/ &e/noso to and accepted 1/ %u6+an was on!/ P'33,333.33 of which P *.,)33.33 was to 1e paid in cash whi!e the 1a!ance was to 1e paid on!/ when the propert/ was c!eared of occupants. @e he!d that even if the Bonnevies cou!d not 1u/ it at the price 4uoted "P(33,333.33#, nonethe!ess, &e/noso cou!d not se!! it to another for a !ower price and under +ore favora1!e ter+s and conditions without first offerin- said favora1!e ter+s and price to the Bonnevies as we!!. On!/ if the Bonnevies fai!ed to e8ercise their ri-ht of first priorit/ cou!d &e/noso thereafter !awfu!!/ se!! the su1:ect propert/ to others, and on!/ under the sa+e ter+s and conditions previous!/ offered to the Bonnevies.
This princip!e was reiterated in the ver/ recent case of E4uatoria! &ea!t/ vs. 2a/fair Theater, Inc. which was decided en 1anc. This Court uphe!d the ri-ht of first refusa! of the !essee 2a/fair, and rescinded the sa!e of the propert/ 1/ the !essor Car+e!o to E4uatoria! &ea!t/ ?considerin- that 2a/fair, which had su1stantia! interest over the su1:ect propert/, was pre:udiced 1/ its sa!e to E4uatoria! without Car+e!o conferrin- to 2a/fair ever/ opportunit/ to ne-otiate within the *3$da/ stipu!ated period?
In that case, two contracts of !ease 1etween Car+e!o and 2a/fair provided ?that if the LESSO& shou!d desire to se!! the !eased pre+ises, the LESSEE sha!! 1e -iven *3 da/s e8c!usive option to purchase the sa+e.? Car+e!o initia!!/ offered to se!! the !eased propert/ to 2a/fair for si8 to seven +i!!ion pesos. 2a/fair indicated interest in purchasinthe propert/ thou-h it invo7ed the *3$da/ period. Nothin- was heard thereafter fro+ Car+e!o. =our /ears !ater, the !atter so!d its entire &ecto Avenue propert/, inc!udin- the !eased pre+ises, to E4uatoria! for P ,*33,333.33 without prior!/ infor+in- 2a/fair. The Court he!d that 1oth Car+e!o and E4uatoria! acted in 1ad faithB Car+e!o for 7nowin-!/ vio!atin- the ri-ht of first option of 2a/fair, and E4uatoria! for purchasin- the propert/ despite 1ein- aware of the contract stipu!ation. In addition to rescission of the contract of sa!e, the Court ordered Car+e!o to a!!ow 2a/fair to 1u/ the su1:ect propert/ at the sa+e price of P ,*33,333.33.
In the recent case of Liton:ua vs. LI& Corporation,L,5M the Court, a!so citin- the case of %u6+an, Boca!in- I Co. vs. Bonnevie, he!d that the sa!e +ade therein in vio!ation of a ri-ht of first refusa! e+1odied in a +ort-a-e contract, was rescissi1!e. ThusB
Q@hi!e petitioners 4uestion the va!idit/ of para-raph 0 of their +ort-a-e contract, the/ appear to 1e si!ent insofar as para-raph 5 thereof is concerned. Said para-raph 5 -rants upon LI& Corporation the ri-ht of first refusa! over the +ort-a-ed propert/ in the event the +ort-a-or decides to se!! the sa+e. @e see nothin- wron- in this provision. The ri-ht of first refusa! has !on- 1een reco-ni6ed as va!id in our :urisdiction. The consideration for the !oan +ort-a-e inc!udes the consideration for the ri-ht of first refusa!. LI& Corporation is in effect statin- that it consents to !end out +one/ to the spouses Liton:ua provided that in case the/ decide to se!! the propert/ +ort-a-ed to it, then LI& Corporation sha!! 1e -iven the ri-ht to +atch the offered purchase price and to 1u/ the propert/ at that price. Thus, whi!e the spouses Liton:ua had ever/ ri-ht to se!! their +ort-a-ed propert/ to P@AAS without securin- the prior written consent of LI& Corporation, the/ had the o1!i-ation under para-raph 5, which is a perfect!/ va!id provision, to notif/ the !atter of their intention to se!! the propert/ and -ive it priorit/ over other 1u/ers. It is on!/ upon the fai!ure of LI& Corporation to e8ercise its ri-ht of first refusa! cou!d the spouses Liton:ua va!id!/ se!! the su1:ect properties to the others, under the sa+e ter+s and conditions offered to LI& Corporation.
@hat then is the status of the sa!e +ade to P@AAS in vio!ation of L I & Corporation;s contractua! ri-ht of first refusa!O On this score, we a-ree with the A+ended Decision of the Court of Appea!s that the sa!e +ade to P@AAS is rescissi1!e. The case of %u6+an, Boca!in- I Co. v. Bonnevie is instructive on this point.
F F
It was then he!d that the Contract of Sa!e there, which vio!ated the ri-ht of first refusa!, was rescissi1!e.
In the case at 1ar, P@AAS cannot c!ai+ i-norance of the ri-ht of first refusa! -ranted to L I & Corporation over the su1:ect properties since the Deed of &ea! Estate 2ort-a-e containin- such a provision was du!/ re-istered with the &e-ister of Deeds. As such, P@AAS is presu+ed to have 1een notified thereof 1/ re-istration, which e4uates to notice to the who!e wor!d.
F F
A!! thin-s considered, what then are the re!ative ri-hts and o1!i-ations of the partiesO To recapitu!ateB the sa!e 1etween the spouses Liton:ua and P@AAS is va!id, notwithstandinthe a1sence of L I & Corporation;s prior written consent thereto. Inas+uch as the sa!e to P@AAS was va!id, its offer to redee+ and its tender of the rede+ption price, as successor$ in$interest of the spouses Liton:ua, within the one$/ear period shou!d have 1een accepted
as va!id 1/ the L I & Corporation. Aowever, whi!e the sa!e is, indeed, va!id, the sa+e is rescissi1!e 1ecause it i-nored L I & Corporation;s ri-ht of first refusa!.R
Thus, the prevai!in- doctrine, as enunciated in the cited cases, is that a contract of sa!e entered into in vio!ation of a ri-ht of first refusa! of another person, whi!e va!id, is rescissi1!e.
There is, however, a circu+stance which prevents the app!ication of this doctrine in the case at 1ench. In the cases cited a1ove, the Court ordered the rescission of sa!es +ade in vio!ation of a ri-ht of first refusa! precise!/ 1ecause the vendees therein cou!d not have acted in -ood faith as the/ were aware or shou!d have 1een aware of the ri-ht of first refusa! -ranted to another person 1/ the vendors therein. The rationa!e for this is found in the provisions of the New Civi! Code on rescissi1!e contracts. Cnder Artic!e *0 of the New Civi! Code, para-raph *, a contract va!id!/ a-reed upon +a/ 1e rescinded if it is Qunderta7en in fraud of creditors when the !atter cannot in an/ +anner co!!ect the c!ai+ due the+.R 2oreover, under Artic!e *0), rescission sha!! not ta7e p!ace Qwhen the thin-s which are the o1:ect of the contract are !e-a!!/ in the possession of third persons who did not act in 1ad faith.RL*3M
It +ust 1e 1orne in +ind that, un!i7e the cases cited a1ove, the ri-ht of first refusa! invo!ved in the instant case was an ora! one -iven to respondents 1/ the deceased spouses Tian-co and su1se4uent!/ reco-ni6ed 1/ their heirs. As such, in order to ho!d that petitioners were in 1ad faith, there +ust 1e c!ear and convincin- proof that petitioners were +ade aware of the said ri-ht of first refusa! either 1/ the respondents or 1/ the heirs of the spouses Tian-co.
It is a8io+atic that -ood faith is a!wa/s presu+ed un!ess contrar/ evidence is adduced. L* M A purchaser in -ood faith is one who 1u/s the propert/ of another without notice that so+e other person has a ri-ht or interest in such a propert/ and pa/s a fu!! and fair price at the ti+e of the purchase or 1efore he has notice of the c!ai+ or interest of so+e other person in the propert/.L*,M In this re-ard, the ru!e on constructive notice wou!d 1e inapp!ica1!e as it is undisputed that the ri-ht of first refusa! was an ora! one and that the sa+e was never reduced to writin-, +uch !ess re-istered with the &e-istr/ of Deeds. In fact, even the !ease contract 1/ which respondents derive their ri-ht to possess the propert/ invo!ved was an ora! one.
On this point, we ho!d that the evidence on record fai!s to show that petitioners acted in 1ad faith in enterin- into the deed of sa!e over the disputed propert/ with the heirs of the spouses Tian-co. &espondents fai!ed to present an/ evidence that prior to the sa!e of the propert/ on Septe+1er ', 553, petitioners were aware or had notice of the ora! ri-ht of first refusa!.
&espondents point to the !etter dated <une , 553L**M as indicative of petitionersK 7now!ed-e of the said ri-ht. In this !etter, a certain Att/. Er!inda A-ui!a de+anded that respondent Irene %ui!!er+o vacate the structure the/ were occup/in- to +a7e wa/ for its de+o!ition.
@e fai! to see how the !etter cou!d -ive rise to 1ad faith on the part of the petitioner. No +ention is +ade of the ri-ht of first refusa! -ranted to respondents. The na+e of petitioner &osencor or an/ of it officers did not appear on the !etter and the !etter did not state that Att/. A-ui!a was writin- in 1eha!f of petitioner. In fact, Att/. A-ui!a stated durintria! that she wrote the !etter in 1eha!f of the heirs of the spouses Tian-co. 2oreover, even assu+inthat Att/. A-ui!a was indeed writin- in 1eha!f of petitioner &osencor, there is no showin- that &osencor was aware at that ti+e that such a ri-ht of first refusa! e8isted.
Neither was there an/ showin- that after receipt of this <une , 553 !etter, respondents notified &osencor or Att/. A-ui!a of their ri-ht of first refusa! over the propert/. &espondents did not tr/ to co++unicate with Att/. A-ui!a and infor+ her a1out their preferentia! ri-ht over the disputed propert/. There is even no showin- that the/ contacted the heirs of the spouses Tian-co after the/ received this !etter to re+ind the+ of their ri-ht over the propert/.
&espondents !i7ewise point to the !etter dated Octo1er 5, 553 of Eufrocina de Leon, where she reco-ni6ed the ri-ht of first refusa! of respondents, as indicative of the 1ad faith of petitioners. @e do not a-ree. Eufrocina de Leon wrote the !etter on her own 1eha!f and not on 1eha!f of petitioners and, as such, it on!/ shows that Eufrocina de Leon was aware of the e8istence of the ora! ri-ht of first refusa!. It does not show that petitioners were !i7ewise aware of the e8istence of the said ri-ht. 2oreover, the !etter was +ade a +onth after the e8ecution of the Deed of A1so!ute Sa!e on Septe+1er ', 553 1etween petitioner &osencor and the heirs of the spouses Tian-co. There is no showin- that prior to the date of the e8ecution of the said Deed, petitioners were put on notice of the e8istence of the ri-ht of first refusa!.
C!ear!/, if there was an/ indication of 1ad faith 1ased on respondentsK evidence, it wou!d on!/ 1e on the part of Eufrocina de Leon as she was aware of the ri-ht of first refusa! of respondents /et she sti!! so!d the disputed propert/ to &osencor. Aowever, 1ad faith on the part of Eufrocina de Leon does not +ean that petitioner &osencor !i7ewise acted in 1ad faith. There is no showin- that prior to the e8ecution of the Deed of A1so!ute Sa!e, petitioners were +ade aware or put on notice of the e8istence of the ora! ri-ht of first refusa!. Thus, a1sent c!ear and convincin- evidence to the contrar/, petitioner &osencor wi!! 1e presu+ed to have acted in -ood faith in enterin- into the Deed of A1so!ute Sa!e over the disputed propert/.
Considerin- that there is no showin- of 1ad faith on the part of the petitioners, the Court of Appea!s thus erred in orderin- the rescission of the Deed of A1so!ute Sa!e dated Septe+1er ', 553 1etween petitioner &osencor and the heirs of the spouses Tian-co. The ac4uisition 1/ &osencor of the propert/ su1:ect of the ri-ht of first refusa! is an o1stac!e to the action for its rescission where, as in this case, it was shown that &osencor is in !awfu! possession of the su1:ect of the contract and that it did not act in 1ad faith.L*'M
This does not +ean however that respondents are !eft without an/ re+ed/ for the un:ustified vio!ation of their ri-ht of first refusa!. Their re+ed/ however is not an action for the rescission of the Deed of A1so!ute Sa!e 1ut an action for da+a-es a-ainst the heirs of the spouses Tian-co for the un:ustified disre-ard of their ri-ht of first refusa!L*)M.
@AE&E=O&E, pre+ises considered, the decision of the Court of Appea!s dated <une ,), 555 is &EDE&SED and SET ASIDE. The Decision dated 2a/ *, 55( of the Hue6on Cit/ &e-iona! Tria! Court, Branch , . is here1/ &EINSTATED insofar as it dis+isses the action for rescission of the Deed of A1so!ute Sa!e dated Septe+1er ', 553 and orders the pa/+ent of +onth!/ renta!s of P ,333.33 per +onth rec7oned fro+ 2a/ 553 up to the ti+e respondents !eave the pre+ises.
SO O&DE&ED.
2e!o, "Chair+an#, Pan-ani1an, and Sandova!$%utierre6, <<., concur. Ditu-, <., in the resu!t9 reiterated the CourtKs opinion in An- Eu vs. CA ",*0 SC&A (3,#.
D&. DANIEL DATHCET and 2A. LCITA 2. DATHCET, petitioners vs. AEALA CO&PO&ATION, respondent. DECISION TIN%A, <.B
The rise in va!ue of four !ots in one of the countr/Ks pri+e residentia! deve!op+ents, A/a!a A!a1an- Di!!a-e in 2untin!upa Cit/, over a period of si8 "(# /ears on!/, represents 1i+one/. The hu-e price difference !ies at the heart of the present controvers/. Petitioners insist that the !ots shou!d 1e so!d to the+ at 50' prices whi!e respondent +aintains that the prevai!in- +ar7et price in 553 shou!d 1e the se!!inprice.
Dr. Danie! Da64ue6 and 2a. Luisa Da64ue6L M fi!ed this Petition for &eview on CertiorariL,M dated Octo1er , ,33 assai!in- the DecisionL*M of the Court of Appea!s dated Septe+1er (, ,33 which reversed the DecisionL'M of the &e-iona! Tria! Court "&TC# and dis+issed their co+p!aint for specific perfor+ance and da+a-es a-ainst A/a!a Corporation.
Despite their disparate ru!in-s, the &TC and the appe!!ate court a-ree on the fo!!owinantecedentsBL)M
On Apri! ,*, 50 , spouses Danie! Das4ue6 and 2a. Luisa 2. Das4ue6 "hereafter, Das4ue6 spouses# entered into a 2e+orandu+ of A-ree+ent "2OA# with A/a!a Corporation "hereafter, AEALA# with AEALA 1u/infro+ the Da64ue6 spouses, a!! of the !atterKs shares of stoc7 in Conduit Deve!op+ent, Inc. "hereafter, Conduit#. The +ain asset of Conduit was a '5.5 hectare propert/ in A/a!a A!a1an-, 2untin!upa, which was then 1ein- deve!oped 1/ Conduit under a deve!op+ent p!an where the !and was divided into Di!!a-es , , and * of the QDon Dicente Di!!a-e.R The deve!op+ent was then 1ein- underta7en for Conduit 1/ %.P. Construction and Deve!op+ent Corp. "hereafter, %P Construction#.
Cnder the 2OA, A/a!a was to deve!op the entire propert/, !ess what was defined as the Q&etained AreaR consistin- of 0,.*( s4uare +eters. This Q&etained AreaR was to 1e retained 1/ the Da64ue6 spouses. The area to 1e deve!oped 1/ A/a!a was ca!!ed the Q&e+ainin- AreaR. In this Q&e+ainin- AreaR were ' !ots ad:acent to the Q&etained AreaR and A/a!a a-reed to offer these !ots for sa!e to the Da64ue6 spouses at the prevai!inprice at the ti+e of purchase. The re!evant provisions of the 2OA on this point areB
Q)... The BCEE& here1/ co++its that it wi!! deve!op the W&e+ainin- Propert/K into a first c!ass residentia! su1division of the sa+e c!ass as its New A!a1an- Su1division, and that it intends to co+p!ete the first phase under its a+ended deve!op+ent p!an within three "*# /ears fro+ the date of this A-ree+ent. 8 8 8R
). ). The BCEE& a-rees to -ive the SELLE&S a first option to purchase four deve!oped !ots ne8t to the Q&etained AreaR at the prevai!in- +ar7et price at the ti+e of the purchase.R
The parties are a-reed that the deve!op+ent p!an referred to in para-raph ).. is not ConduitKs deve!op+ent p!an, 1ut A/a!aKs a+ended deve!op+ent p!an which was sti!! to 1e for+u!ated as of the ti+e of the 2OA. @hi!e in the Conduit p!an, the ' !ots to 1e offered for sa!e to the Das4ue6 Spouses were in the first phase thereof or Di!!a-e , in the A/a!a p!an which was for+u!ated a /ear !ater, it was in the third phase, or Phase II$c.
Cnder the 2OA, the Das4ue6 spouses +ade severa! e8press warranties, as fo!!owsB
Q*. . The SELLE&S sha!! de!iver to the BCEE&B
888
*. .,. The true and co+p!ete !ist, certified 1/ the Secretar/ and Treasurer of the Co+pan/ showin-B
888
D. A !ist of a!! persons and>or entities with who+ the Co+pan/ has pendin- contracts, if an/.
888
*. .). Audited financia! state+ents of the Co+pan/ as at C!osin- date.
'. Conditions Precedent
A!! o1!i-ations of the BCEE& under this A-ree+ent are su1:ect to fu!fi!!+ent prior to or at the C!osin-, of the fo!!owin- conditionsB
'. . The representations and warranties 1/ the SELLE&S contained in this A-ree+ent sha!! 1e true and correct at the ti+e of C!osin- as thou-h such representations and warranties were +ade at such ti+e9 and
888
(. &epresentation and @arranties 1/ the SELLE&S
The SELLE&S :oint!/ and severa!!/ represent and warrant to the BCEE& that at the ti+e of the e8ecution of this A-ree+ent and at the C!osin-B
888
(.,.*. There are no actions, suits or proceedin-s pendin-, or to the 7now!ed-e of the SELLE&S, threatened a-ainst or affectin- the SELLE&S with respect to the Shares or the Propert/9 and
.. Additiona! @arranties 1/ the SELLE&S
.. . @ith respect to the Audited =inancia! State+ents re4uired to 1e su1+itted at C!osinin accordance with Par. *. .) a1ove, the SELLE& :oint!/ and severa!!/ warrant to the BCEE& thatB
.. . The said Audited =inancia! State+ents sha!! show that on the da/ of C!osin-, the Co+pan/ sha!! own the Q&e+ainin- Propert/R, free fro+ a!! !iens and encu+1rances and that the Co+pan/ sha!! have no o1!i-ation to an/ part/ e8cept for 1i!!in-s pa/a1!e to %P Construction I Deve!op+ent Corporation and advances +ade 1/ Danie! Da64ue6 for which BCEE& sha!! 1e responsi1!e in accordance with Par. , of this A-ree+ent.
.. ., E8cept to the e8tent ref!ected or reserved in the Audited =inancia! State+ents of the Co+pan/ as of C!osin-, and those disc!osed to BCEE&, the Co+pan/ as of the date thereof, has no !ia1i!ities of an/ nature whether accrued, a1so!ute, contin-ent or otherwise, inc!udin-, without !i+itation, ta8 !ia1i!ities due or to 1eco+e due and whether incurred in respect of or +easured in respect of the Co+pan/Ks inco+e prior to C!osin- or arisin- out of transactions or state of facts e8istin- prior thereto.
.., SELLE&S do not 7now or have no reasona1!e -round to 7now of an/ 1asis for an/ assertion a-ainst the Co+pan/ as at c!osin- or an/ !ia1i!it/ of an/ nature and in an/ a+ount not fu!!/ ref!ected or reserved a-ainst such Audited =inancia! State+ents referred to a1ove, and those disc!osed to BCEE&.
888
888
888
..(.* E8cept as otherwise disc!osed to the BCEE& in writin- on or 1efore the C!osin-, the Co+pan/ is not en-a-ed in or a part/ to, or to the 1est of the 7now!ed-e of the SELLE&S, threatened with, an/ !e-a! action or other proceedin-s 1efore an/ court or ad+inistrative
1od/, nor do the SELLE&S 7now or have reasona1!e -rounds to 7now of an/ 1asis for an/ such action or proceedin- or of an/ -overn+enta! investi-ation re!ative to the Co+pan/.
..(.' To the 7now!ed-e of the SELLE&S, no defau!t or 1reach e8ists in the due perfor+ance and o1servance 1/ the Co+pan/ of an/ ter+, covenant or condition of an/ instru+ent or a-ree+ent to which the co+pan/ is a part/ or 1/ which it is 1ound, and no condition e8ists which, with notice or !apse of ti+e or 1oth, wi!! constitute such defau!t or 1reach.R
After the e8ecution of the 2OA, A/a!a caused the suspension of wor7 on Di!!a-e of the Don Dicente Pro:ect. A/a!a then received a !etter fro+ one 2a8i+o De! &osario of Lancer %enera! Bui!der Corporation infor+in- A/a!a that he was c!ai+in- the a+ount of P ,)35,))0.03 as the su1contractor of %.P. Construction...
%.P. Construction not 1ein- a1!e to reach an a+ica1!e sett!e+ent with Lancer, on 2arch ,,, 50,, Lancer sued %.P. Construction, Conduit and A/a!a in the then Court of =irst Instance of 2ani!a in Civi! Case No. 0,$0)50. %.P. Construction in turn fi!ed a cross$c!ai+ a-ainst A/a!a. %.P. Construction and Lancer 1oth tried to en:oin A/a!a fro+ underta7inthe deve!op+ent of the propert/. The suit was ter+inated on!/ on =e1ruar/ 5, 50., when it was dis+issed with pre:udice after A/a!a paid 1oth Lancer and %P Construction the tota! of P',(0(, *.*5.
Ta7in- the position that A/a!a was o1!i-ated to se!! the ' !ots ad:acent to the Q&etained AreaR within * /ears fro+ the date of the 2OA, the Das4ue6 spouses sent severa! Qre+inderR !etters of the approachin- so$ca!!ed dead!ine. Aowever, no de+and after Apri! ,*, 50', was ever +ade 1/ the Das4ue6 spouses for A/a!a to se!! the ' !ots. On the contrar/, one of the !etters si-ned 1/ their authori6ed a-ent, En-r. Eduardo Tur!a, cate-orica!!/ stated that the/ e8pected Qdeve!op+ent of Phase to 1e co+p!eted 1/ =e1ruar/ 5, 553, three /ears fro+ the sett!e+ent of the !e-a! pro1!e+s with the previous contractor.R
B/ ear!/ 553 A/a!a finished the deve!op+ent of the vicinit/ of the ' !ots to 1e offered for sa!e. The four !ots were then offered to 1e so!d to the Das4ue6 spouses at the prevai!inprice in 553. This was re:ected 1/ the Das4ue6 spouses who wanted to pa/ at 50' prices, there1/ !eadin- to the suit 1e!ow.
After tria!, the court a 4uo rendered its decision, the dispositive portion of which statesB
QTAE&E=O&E, :ud-+ent is here1/ rendered in favor of p!aintiffs and a-ainst defendant, orderin- defendant to se!! to p!aintiffs the re!evant !ots descri1ed in the Co+p!aint in the A/a!a A!a1an- Di!!a-e at the price of P'(3.33 per s4uare +eter a+ountin- to P ,*'5,)'3.339 orderin- defendant to rei+1urse to p!aintiffs attorne/Ks fees in the su+ of P,33,333.33 and to pa/ the cost of the suit.R
In its decision, the court a 4uo conc!uded that the Das4ue6 spouses were not o1!i-ated to disc!ose the potentia! c!ai+s of %P Construction, Lancer and De! &osario9 A/a!aKs accountants shou!d have opened the records of Conduit to find out a!! c!ai+s9 the warrant/ a-ainst suit is with respect to Qthe shares of the Propert/R and the Lancer suit does not affect the shares of stoc7 so!d to A/a!a9 A/a!a was o1!i-ated to deve!op within * /ears9 to sa/ that A/a!a was under no o1!i-ation to fo!!ow a ti+e fra+e was to put the Das4ue6es at A/a!aKs +erc/9 A/a!a did not deve!op 1ecause of a s!u+p in the rea! estate +ar7et9 the 2OA was drafted and prepared 1/ the AEALA who shou!d suffer its a+1i-uities9 the option to purchase the ' !ots is va!id 1ecause it was supported 1/ consideration as the option is incorporated in the 2OA where the parties had prestations to each other. LE+phasis supp!iedM
A/a!a Corporation fi!ed an appea!, a!!e-inthat the tria! court erred in ho!dinthat petitioners did not 1reach their warranties under the 2OAL(M dated Apri! ,*, 50 9 that it was o1!i-ed to deve!op the !and where the four "'# !ots su1:ect of the option to purchase are !ocated within three "*# /ears fro+ the date of the 2OA9 that it was in de!a/9 and that the option to purchase was va!id 1ecause it was incorporated in the 2OA and the consideration therefor was the co++it+ent 1/ A/a!a Corporation to petitioners e+1odied in the 2OA.
As previous!/ +entioned, the Court of Appea!s reversed the &TC Decision. Accordin- to the appe!!ate court, A/a!a Corporation was never infor+ed 1eforehand of the e8istence of the Lancer c!ai+. In fact, A/a!a Corporation -ot a cop/ of the Lancer su1contract on!/ on 2a/ ,5, 50 fro+ %.P. ConstructionKs !aw/ers. The Court of Appea!s thus he!d that petitioners vio!ated their warranties under the 2OA when the/ fai!ed to disc!ose LancerKs c!ai+s. Aence, even concedin- that A/a!a Corporation was o1!i-ed to deve!op and se!! the four "'# !ots in 4uestion within three "*# /ears fro+ the date of the 2OA, the o1!i-ation was suspended durin- the pendenc/ of the case fi!ed 1/ Lancer.
Interpretin- the 2OAKs para-raph ).. a1ove$4uoted, the appe!!ate court he!d that A/a!a Corporation co++itted to deve!op the first phase of its own a+ended deve!op+ent p!an and not ConduitKs deve!op+ent p!an. Nowhere does the 2OA provide that A/a!a Corporation sha!! fo!!ow ConduitKs deve!op+ent p!an nor is A/a!a Corporation prohi1ited fro+ chan-in- the se4uence of the phases of the propert/ it wi!! deve!op.
Anent the 4uestion of de!a/, the Court of Appea!s ru!ed that there was no de!a/ as petitioners never +ade a de+and for A/a!a Corporation to se!! the su1:ect !ots to the+. Accordin- to the appe!!ate court, what petitioners sent were +ere re+inder !etters the !ast of which was dated prior to Apri! ,*, 50' when the o1!i-ation was not /et de+anda1!e. At an/ rate, the Court of Appea!s found that petitioners in fact waived the three "*#$/ear period when the/ sent a !etter throu-h their a-ent, En-r. Eduardo Tur!a, statin- that the/ Qe8pect that the deve!op+ent of Phase I wi!! 1e co+p!eted 1/ 5 =e1ruar/ 553, three /ears fro+ the sett!e+ent of the !e-a! pro1!e+s with the previous contractor.RL.M
The appe!!ate court !i7ewise ru!ed that para-raph ). ) a1ove$4uoted is not an option contract 1ut a ri-ht of first refusa! there 1ein- no separate consideration therefor. Since petitioners refused A/a!a CorporationKs offer to se!! the su1:ect !ots at the reduced 553 price of P),333.33 per s4uare +eter, the/ have effective!/ waived their ri-ht to 1u/ the sa+e.
In the instant Petition, petitioners a!!e-e that the appe!!ate court erred in ru!inthat the/ vio!ated their warranties under the 2OA9 that A/a!a Corporation was not o1!i-ed to deve!op the Q&e+ainin- Propert/R within three "*# /ears fro+ the e8ecution of the 2OA9 that A/a!a was not in de!a/9 and that para-raph ). ) of the 2OA is a +ere ri-ht of first refusa!. Additiona!!/, petitioners insist that the Court shou!d review the factua! findin-s of the Court of Appea!s as the/ are in conf!ict with those of the tria! court.
A/a!a Corporation fi!ed a Co++ent on the PetitionL0M dated 2arch ,(, ,33,, contendinthat the petition raises 4uestions of fact and see7s a review of evidence which is within the do+ain of the Court of Appea!s. A/a!a Corporation +aintains that the su1contract 1etween %P Construction, with who+ Conduit contracted for the deve!op+ent of the propert/ under a Construction Contract dated Octo1er 3, 503, and Lancer was not disc!osed 1/ petitioners durin- the ne-otiations. Neither was the !ia1i!it/ for LancerKs c!ai+ inc!uded in the Audited =inancia! State+ents su1+itted 1/ petitioners after the si-ninof the 2OA. These :ustif/ the conc!usion that petitioners 1reached their warranties under the afore$4uoted para-raphs of the 2OA. Since the Lancer suit ended on!/ in =e1ruar/ 505, the three "*#$/ear period within which A/a!a Corporation co++itted to deve!op the propert/ shou!d on!/ 1e counted thence. Thus, when it offered the su1:ect !ots to petitioners in 553, A/a!a Corporation was not /et in de!a/.
In response to petitionersK contention that there was no action or proceedin- a-ainst the+ at the ti+e of the e8ecution of the 2OA on Apri! ,*, 50 , A/a!a Corporation avers that the facts and circu+stances which -ave rise to the Lancer c!ai+ were a!read/ e8tant then. Petitioners warranted that their representations under the 2OA sha!! 1e true and correct at the ti+e of QC!osin-R which sha!! ta7e p!ace within four "'# wee7s fro+ the si-ninof the 2OA.L5M Since the 2OA was si-ned on Apri! ,*, 50 , QC!osin-R was appro8i+ate!/ the third wee7 of 2a/ 50 . Aence, LancerKs c!ai+s, articu!ated in a !etter which A/a!a
Corporation received on 2a/ ', 50 , are a+on- the !ia1i!ities warranted a-ainst under para-raph .. ., of the 2OA.
2oreover, A/a!a Corporation asserts that the warranties under the 2OA are not :ust a-ainst suits 1ut a-ainst a!! 7inds of !ia1i!ities not ref!ected in the Audited =inancia! State+ents. It cannot 1e fau!ted for re!/in- on the e8press warrant/ that e8cept for 1i!!in-s pa/a1!e to %P Construction and advances +ade 1/ petitioner Danie! Da64ue6 in the a+ount of P*0,.((.3', Conduit has no other !ia1i!ities. Aence, petitioners cannot c!ai+ that A/a!a Corporation shou!d have e8a+ined and investi-ated the Audited =inancia! State+ents of Conduit and shou!d now assu+e a!! its o1!i-ations and !ia1i!ities inc!udinthe Lancer suit and the cross$c!ai+ of %P Construction.
=urther+ore, A/a!a Corporation did not +a7e a co++it+ent to co+p!ete the deve!op+ent of the first phase of the propert/ within three "*# /ears fro+ the e8ecution of the 2OA. The provision refers to a +ere dec!aration of intent to deve!op the first phase of its "A/a!a CorporationKs# own deve!op+ent p!an and not ConduitKs. True to its intention, A/a!a Corporation did co+p!ete the deve!op+ent of the first phase "Phase II$A# of its a+ended deve!op+ent p!an within three "*# /ears fro+ the e8ecution of the 2OA. Aowever, it is not o1!i-ed to deve!op the third phase "Phase II$C# where the su1:ect !ots are !ocated within the sa+e ti+e fra+e 1ecause there is no contractua! stipu!ation in the 2OA therefor. It is free to decide on its own the period for the deve!op+ent of Phase II$C. If petitioners wanted to i+pose the sa+e three "*#$/ear ti+eta1!e upon the third phase of the a+ended deve!op+ent p!an, the/ shou!d have fi!ed a suit to fi8 the ti+e ta1!e in accordance with Artic!e 5.L 3M of the Civi! Code. Aavin- fai!ed to do so, A/a!a Corporation cannot 1e dec!ared to have 1een in de!a/.
A/a!a Corporation further contends that no de+and was +ade on it for the perfor+ance of its a!!e-ed o1!i-ation. The !etter dated Octo1er ', 50* sent when petitioners were a!read/ aware of the Lancer suit did not de+and the de!iver/ of the su1:ect !ots 1/ Apri! ,*, 50'. Instead, it re4uested A/a!a Corporation to 7eep petitioners posted on the status of the case. Li7ewise, the !etter dated 2arch ', 50' was +ere!/ an in4uir/ as to the date when the deve!op+ent of Phase wi!! 1e co+p!eted. 2ore i+portant!/, their !etter dated <une ,., 500 throu-h En-r. Eduardo Tur!a e8pressed petitionersK e8pectation that Phase wi!! 1e co+p!eted 1/ =e1ruar/ 5, 553.
Last!/, A/a!a Corporation +aintains that para-raph ). ) of the 2OA is a ri-ht of first refusa! and not an option contract.
Petitioners fi!ed their &ep!/L M dated Au-ust ), ,33, reiteratin- the ar-u+ents in their Petition and contendin- further that the/ did not vio!ate their warranties under the 2OA 1ecause the case was fi!ed 1/ Lancer on!/ on Apri! , 50,, e!even " # +onths and ei-ht "0# da/s after the si-ninof the 2OA on Apri! ,*, 50 . A/a!a Corporation ad+itted that it
received LancerKs c!ai+ 1efore the QC!osin-R date. It therefore had a!! the ti+e to rescind the 2OA. Not havin- done so, it can 1e conc!uded that A/a!a Corporation itse!f did not consider the +atter a vio!ation of petitionersK warrant/.
2oreover, petitioners su1+itted the Audited =inancia! State+ents of Conduit and a!!owed an ac4uisition audit to 1e conducted 1/ A/a!a Corporation. Thus, the !atter 1ou-ht Conduit with Qopen e/es.R
Petitioners a!so +aintain that the/ had no 7now!ed-e of the i+pendin- case a-ainst Conduit at the ti+e of the e8ecution of the 2OA. =urther, the 2OA +a7es A/a!a Corporation !ia1!e for the pa/+ent of a!! 1i!!in-s of %P Construction. Since LancerKs c!ai+ was actua!!/ a c!ai+ a-ainst %P Construction 1ein- its su1$contractor, it is A/a!a Corporation and not petitioners which is !ia1!e.
Li7ewise, petitioners aver that a!thou-h A/a!a Corporation +a/ chan-e the se4uence of its deve!op+ent p!an, it is o1!i-ed under the 2OA to deve!op the entire area where the su1:ect !ots are !ocated in three "*# /ears.
The/ a!so assert that de+and was +ade on A/a!a Corporation to co+p!/ with their o1!i-ation under the 2OA. Apart fro+ their re+inder !etters dated <anuar/ ,', =e1ruar/ 0 and 2arch ), 50', the/ a!so sent a !etter dated 2arch ', 50' which the/ c!ai+ is a cate-orica! de+and for A/a!a Corporation to co+p!/ with the provisions of the 2OA.
The parties were re4uired to su1+it their respective +e+oranda in the &eso!utionL ,M dated Nove+1er 0, ,33,. In co+p!iance with this directive, petitioners su1+itted their 2e+orandu+L *M dated =e1ruar/ ', ,33* on even date, whi!e A/a!a Corporation fi!ed its 2e+orandu+L 'M dated =e1ruar/ ', ,33* on =e1ruar/ ., ,33*.
@e sha!! first dispose of the procedura! 4uestion raised 1/ the instant petition.
It is we!!$sett!ed that the :urisdiction of this Court in cases 1rou-ht to it fro+ the Court of Appea!s 1/ wa/ of petition for review under &u!e ') is !i+ited to reviewin- or revisinerrors of !aw i+puted to it, its findin-s of fact 1ein- conc!usive on this Court as a +atter of -enera! princip!e. Aowever, since in the instant case there is a conf!ict 1etween the factua! findin-s of the tria! court and the appe!!ate court, particu!ar!/ as re-ards the issues of 1reach of warrant/, o1!i-ation to deve!op and incurrence of de!a/, we have to consider the evidence on record and reso!ve such factua! issues as an e8ception to the -enera! ru!e.L )M In an/ event, the su1+itted issue re!atin- to the cate-ori6ation of the ri-ht to purchase -ranted to petitioners under the 2OA is !e-a! in character.
The ne8t issue that presents itse!f is whether petitioners 1reached their warranties under the 2OA when the/ fai!ed to disc!ose the Lancer c!ai+. The tria! court dec!ared the/ did not9 the appe!!ate court found otherwise.
A/a!a Corporation su++ari6es the c!auses of the 2OA which petitioners a!!e-ed!/ 1reached when the/ fai!ed to disc!ose the Lancer c!ai+B
a# C!ause .. . . P that Conduit sha!! not 1e o1!i-ated to an/one e8cept to %P Construction for P*0,.((.3', and for advances +ade 1/ Danie! Da64ue69
1# C!ause .. .,. P that e8cept as ref!ected in the audited financia! state+ents Conduit had no other !ia1i!ities whether accrued, a1so!ute, contin-ent or otherwise9
c# C!ause ..,. P that there is no 1asis for an/ assertion a-ainst Conduit of an/ !ia1i!it/ of an/ va!ue not ref!ected or reserved in the financia! state+ents, and those disc!osed to A/a!a9
d# C!ause ..(.*. P that Conduit is not threatened with an/ !e-a! action or other proceedin-s9 and
e# C!ause ..(.'. P that Conduit had not 1reached an/ ter+, condition, or covenant of an/ instru+ent or a-ree+ent to which it is a part/ or 1/ which it is 1ound.L (M
The Court is convinced that petitioners did not vio!ate the fore-oin- warranties.
The e8chan-es of co++unication 1etween the parties indicate that petitioners su1stantia!!/ apprised A/a!a Corporation of the Lancer c!ai+ or the possi1i!it/ thereof durin- the period of ne-otiations for the sa!e of Conduit.
In a !etterL .M dated 2arch ), 50', petitioner Danie! Da64ue6 re+inded A/a!a CorporationKs 2r. Ado!fo Duarte "2r. Duarte# that prior to the co+p!etion of the sa!e of Conduit, A/a!a Corporation as7ed for and was -iven infor+ation that %P Construction su1$ contracted, presu+a1!/ to Lancer, a -reater percenta-e of the pro:ect than it was a!!owed. Petitioners -ave this infor+ation to A/a!a Corporation 1ecause the !atter inti+ated a desire to Q1rea7 the contract of Conduit with %P.R A/a!a Corporation did not den/ this. In
fact, 2r. DuarteKs !etterL 0M dated 2arch (, 50' indicates that A/a!a Corporation had 7now!ed-e of the Lancer su1contract prior to its ac4uisition of Conduit. A/a!a Corporation even ad+itted that it Qtried to e8p!oreN!e-a! 1asis to discontinue the contract of Conduit with %PR 1ut found this Qnot feasi1!e when infor+ation surfaced a1out the tacit consent of Conduit to the su1$contracts of %P with Lancer.R
At the !atest, A/a!a Corporation ca+e to 7now of the Lancer c!ai+ 1efore the date of C!osin- of the 2OA. LancerKs !etterL 5M dated Apri! *3, 50 infor+in- A/a!a Corporation of its unsett!ed c!ai+ with %P Construction was received 1/ A/a!a Corporation on 2a/ ', 50 , we!! 1efore the QC!osin-RL,3M which occurred four "'# wee7s after the date of si-ninof the 2OA on Apri! ,*, 50 , or on 2a/ ,*, 50 .
The fu!! te8t of the pertinent c!auses of the 2OA 4uoted hereunder !i7ewise indicate that certain +atters pertainin- to the !ia1i!ities of Conduit were disc!osed 1/ petitioners to A/a!a Corporation a!thou-h the specifics thereof were no !on-er inc!uded in the 2OAB
.. . The said Audited =inancia! State+ents sha!! show that on the da/ of C!osin-, the Co+pan/ sha!! own the Q&e+ainin- Propert/R, free fro+ a!! !iens and encu+1rances and that the Co+pan/ sha!! have no o1!i-ation to an/ part/ e8cept for 1i!!in-s pa/a1!e to %P Construction I Deve!op+ent Corporation and advances +ade 1/ Danie! Da64ue6 for which BCEE& sha!! 1e responsi1!e in accordance with Para-raph , of this A-ree+ent.
.. ., E8cept to the e8tent ref!ected or reserved in the Audited =inancia! State+ents of the Co+pan/ as of C!osin-, and those disc!osed to BCEE&, the Co+pan/ as of the date hereof, has no !ia1i!ities of an/ nature whether accrued, a1so!ute, contin-ent or otherwise, inc!udin-, without !i+itation, ta8 !ia1i!ities due or to 1eco+e due and whether incurred in respect of or +easured in respect of the Co+pan/Ks inco+e prior to C!osin- or arisin- out of transactions or state of facts e8istin- prior thereto.
.., SELLE&S do not 7now or have no reasona1!e -round to 7now of an/ 1asis for an/ assertion a-ainst the Co+pan/ as at C!osin- of an/ !ia1i!it/ of an/ nature and in an/ a+ount not fu!!/ ref!ected or reserved a-ainst such Audited =inancia! State+ents referred to a1ove, and those disc!osed to BCEE&.
888 888
888
..(.* E8cept as otherwise disc!osed to the BCEE& in writin- on or 1efore the C!osin-, the Co+pan/ is not en-a-ed in or a part/ to, or to the 1est of the 7now!ed-e of the SELLE&S, threatened with, an/ !e-a! action or other proceedin-s 1efore an/ court or ad+inistrative
1od/, nor do the SELLE&S 7now or have reasona1!e -rounds to 7now of an/ 1asis for an/ such action or proceedin- or of an/ -overn+enta! investi-ation re!ative to the Co+pan/.
..(.' To the 7now!ed-e of the SELLE&S, no defau!t or 1reach e8ists in the due perfor+ance and o1servance 1/ the Co+pan/ of an/ ter+, covenant or condition of an/ instru+ent or a-ree+ent to which the Co+pan/ is a part/ or 1/ which it is 1ound, and no condition e8ists which, with notice or !apse of ti+e or 1oth, wi!! constitute such defau!t or 1reach.RL, M LE+phasis supp!iedM
Aence, petitionersK warrant/ that Conduit is not en-a-ed in, a part/ to, or threatened with an/ !e-a! action or proceedin- is 4ua!ified 1/ A/a!a CorporationKs actua! 7now!ed-e of the Lancer c!ai+ which was disc!osed to A/a!a Corporation 1efore the QC!osin-.R
At an/ rate, A/a!a Corporation 1ound itse!f to pa/ a!! 1i!!in-s pa/a1!e to %P Construction and the advances +ade 1/ petitioner Danie! Da64ue6. Specifica!!/, under para-raph , of the 2OA referred to in para-raph .. . , A/a!a Corporation undertoo7 responsi1i!it/ Qfor the pa/+ent of a!! 1i!!in-s of the contractor %P Construction I Deve!op+ent Corporation after the first 1i!!in- and an/ pa/+ents +ade 1/ the co+pan/ and>or SELLE&S sha!! 1e rei+1ursed 1/ BCEE& on c!osin- which advances to date is P , )5,3 ,.0..RL,,M
The 1i!!in-s 7nowin-!/ assu+ed 1/ A/a!a Corporation necessari!/ inc!ude the Lancer c!ai+ for which %P Construction is !ia1!e. Proof of this is A/a!a CorporationKs !etterL,*M to %P Construction dated 1efore QC!osin-R on 2a/ ', 50 , infor+in- the !atter of A/a!a CorporationKs receipt of the Lancer c!ai+ e+1odied in the !etter dated Apri! *3, 50 , ac7now!ed-inthat it is ta7in- over the contractua! responsi1i!ities of Conduit, and re4uestin- copies of a!! su1$contracts affectin- the Conduit propert/. The pertinent e8cerpts of the !etter readB
In this connection, we wish to infor+ /ou that this +ornin- we received a !etter fro+ 2r. 2a8i+o D. De! &osario, President of Lancer %enera! Bui!ders Corporation apprisin- us of the e8istence of su1contracts that the/ have with /our corporation. The/ have a!so furnished us with a cop/ of their !etter to /ou dated *3 Apri! 50 .
Since we are ta7in- over the contractua! responsi1i!ities of Conduit Deve!op+ent, Inc., we 1e!ieve that it is necessar/, at this point in ti+e, that /ou furnish us with copies of a!! /our su1contracts affectin- the propert/ of Conduit, not on!/ with Lancer %enera! Bui!ders Corporation, 1ut a!! su1contracts with other parties as we!!NL,'M
Huite te!!in-!/, A/a!a Corporation even attached to its Pre$Tria! BriefL,)M dated <u!/ 5, 55, a cop/ of the !etterL,(M dated 2a/ ,0, 50 of %P ConstructionKs counse! addressed to Conduit furnishin- the !atter with copies of a!! su1$contract a-ree+ents entered into 1/ %P Construction. Since it was addressed to Conduit, it can 1e presu+ed that it was the !atter which -ave A/a!a Corporation a cop/ of the !etter there1/ disc!osin- to the !atter the e8istence of the Lancer su1$contract.
The ine!ucta1!e conc!usion is that petitioners did not vio!ate their warranties under the 2OA. The Lancer su1$contract and c!ai+ were su1stantia!!/ disc!osed to A/a!a Corporation 1efore the QC!osin-R date of the 2OA. A/a!a Corporation cannot disavow 7now!ed-e of the c!ai+.
2oreover, whi!e in its correspondence with petitioners, A/a!a Corporation did +ention the fi!inof the Lancer suit as an o1stac!e to its deve!op+ent of the propert/, it never actua!!/ 1rou-ht up nor sou-ht redress for petitionersK a!!e-ed 1reach of warrant/ for fai!ure to disc!ose the Lancer c!ai+ unti! it fi!ed its AnswerL,.M dated =e1ruar/ ., 55,.
@e now co+e to the correct interpretation of para-raph ).. of the 2OA. Does this para-raph e8press a co++it+ent or a +ere intent on the part of A/a!a Corporation to deve!op the propert/ within three "*# /ears fro+ date thereofO Para-raph ).. providesB
)... The BCEE& here1/ co++its that it wi!! deve!op the W&e+ainin- Propert/K into a first c!ass residentia! su1division of the sa+e c!ass as its New A!a1an- Su1division, and that it intends to co+p!ete the first phase under its a+ended deve!op+ent p!an within three "*# /ears fro+ the date of this A-ree+entN.L,0M
Nota1!/, whi!e the first phrase of the para-raph uses the word Qco++itsR in reference to the deve!op+ent of the Q&e+ainin- Propert/R into a first c!ass residentia! su1division, the second phrase uses the word QintendsR in re!ation to the deve!op+ent of the first phase of the propert/ within three "*# /ears fro+ the date of the 2OA. The variance in wordin- is si-nificant. @hi!e Qco++itRL,5M connotes a p!ed-e to do so+ethin-, QintendRL*3M +ere!/ si-nifies a desi-n or proposition.
Att/. Leopo!do =rancisco, for+er Dice President of A/a!a CorporationKs !e-a! division who assisted in draftin- the 2OA, testifiedB
COC&T
Eou on!/ as7 what do /ou +ean 1/ that intent. <ust answer on that point.
ATTE. BLANCO
DonKt ta!7 a1out standard.
@ITNESS
A @e!!, the word intent here, /our Aonor, was used to e+phasi6e the tentative character of the period of deve!op+ent 1ecause it wi!! 1e noted that the sentence refers to and I 4uote Qto co+p!ete the first phase under its a+ended deve!op+ent p!an within three "*# /ears fro+ the date of this a-ree+ent, at the ti+e of the e8ecution of this a-ree+ent, /our Aonor.R That a+ended deve!op+ent p!an was not /et in e8istence 1ecause the 1u/er had +anifested to the se!!er that the 1u/er cou!d a+end the su1division p!an ori-ina!!/ 1e!on-in- to the se!!er to confor+ with its own standard of deve!op+ent and second, /our Aonor, "interrupted#L* M
It is thus un+ista7a1!e that this para-raph +ere!/ e8presses an intention on A/a!a CorporationKs part to co+p!ete the first phase under its a+ended deve!op+ent p!an within three "*# /ears fro+ the e8ecution of the 2OA. Indeed, this para-raph is so p!ain!/ worded that to +isunderstand its i+port is dep!ora1!e.
2ore foca! to the reso!ution of the instant case is para-raph )..Ks c!ear reference to the first phase of A/a!a CorporationKs a+ended deve!op+ent p!an as the su1:ect of the three "*#$/ear intended ti+efra+e for deve!op+ent. Even petitioner Danie! Da64ue6 ad+itted on cross$e8a+ination that the para-raph refers not to ConduitKs 1ut to A/a!a CorporationKs deve!op+ent p!an which was /et to 1e for+u!ated when the 2OA was e8ecutedB
HB Now, turnin- to Section ).. of this 2e+orandu+ of A-ree+ent, it is stated as fo!!owsB QThe Bu/er here1/ co++its that to deve!op the re+ainin- propert/ into a first c!ass residentia! su1division of the sa+e c!ass as New A!a1an- Su1division, and that the/ intend to co+p!ete the first phase under its a+ended deve!op+ent p!an within three /ears fro+ the date of this a-ree+ent.R
Now, +/ 4uestion to /ou, Dr. Das4ue6 is that there is no dispute that the a+ended deve!op+ent p!an here is the a+ended deve!op+ent p!an of A/a!aO
AB
Ees, sir.
HB In other words, it is not E8hi1it QD$)R which is the ori-ina! p!an of ConduitO
AB
No, it is not.
HB This E8hi1it QD$)R was the p!an that was 1ein- fo!!owed 1/ %P Construction in 50 O
AB
Ees, sir.
HB And point of fact durin- /our direct e8a+ination as of the date of the a-ree+ent, this a+ended deve!op+ent p!an was sti!! to 1e for+u!ated 1/ A/a!aO
AB
Ees, sir.L*,M
As correct!/ he!d 1/ the appe!!ate court, this ad+ission is crucia! 1ecause whi!e the su1:ect !ots to 1e so!d to petitioners were in the first phase of the Conduit deve!op+ent p!an, the/ were in the third or !ast phase of the A/a!a Corporation deve!op+ent p!an. Aence, even assu+inthat para-raph ).. e8presses a co++it+ent on the part of A/a!a Corporation to deve!op the first phase of its a+ended deve!op+ent p!an within three "*# /ears fro+ the e8ecution of the 2OA, there was no para!!e! co++it+ent +ade as to the ti+efra+e for the deve!op+ent of the third phase where the su1:ect !ots are !ocated.
Lest it 1e for-otten, the point of this petition is the a!!e-ed fai!ure of A/a!a Corporation to offer the su1:ect !ots for sa!e to petitioners within three "*# /ears fro+ the e8ecution of the 2OA. It is not that A/a!a Corporation co++itted or intended to deve!op the first phase of its a+ended deve!op+ent p!an within three "*# /ears. @hether it did or did not is actua!!/ 1eside the point since the su1:ect !ots are not !ocated in the first phase an/wa/.
@e now co+e to the issue of defau!t or de!a/ in the fu!fi!!+ent of the o1!i-ation.
Artic!e
(5 of the Civi! Code providesB
Art. (5. Those o1!i-ed to de!iver or to do so+ethin- incur in de!a/ fro+ the ti+e the o1!i-ee :udicia!!/ or e8tra:udicia!!/ de+ands fro+ the+ the fu!fi!!+ent of their o1!i-ation.
Aowever, the de+and 1/ the creditor sha!! not 1e necessar/ in order that de!a/ +a/ e8istB
" # @hen the o1!i-ation or the !aw e8press!/ so dec!ares9 or
",# @hen fro+ the nature and the circu+stances of the o1!i-ation it appears that the desi-nation of the ti+e when the thin- is to 1e de!ivered or the service is to 1e rendered was a contro!!in- +otive for the esta1!ish+ent of the contract9 or
"*# @hen de+and wou!d 1e use!ess, as when the o1!i-or has rendered it 1e/ond his power to perfor+.
In reciproca! o1!i-ations, neither part/ incurs in de!a/ if the other does not co+p!/ or is not read/ to co+p!/ in a proper +anner with what is incu+1ent upon hi+. =ro+ the +o+ent one of the parties fu!fi!!s his o1!i-ation, de!a/ 1/ the other 1e-ins.
In order that the de1tor +a/ 1e in defau!t it is necessar/ that the fo!!owin- re4uisites 1e presentB " # that the o1!i-ation 1e de+anda1!e and a!read/ !i4uidated9 ",# that the de1tor de!a/s perfor+ance9 and "*# that the creditor re4uires the perfor+ance :udicia!!/ or e8tra:udicia!!/.L**M
Cnder Artic!e 5* of the Civi! Code, o1!i-ations for whose fu!fi!!+ent a da/ certain has 1een fi8ed sha!! 1e de+anda1!e on!/ when that da/ co+es. Aowever, no such da/ certain was fi8ed in the 2OA. Petitioners, therefore, cannot de+and perfor+ance after the three "*# /ear period fi8ed 1/ the 2OA for the deve!op+ent of the first phase of the propert/ since this is not the sa+e period conte+p!ated for the deve!op+ent of the su1:ect !ots. Since the 2OA does not specif/ a period for the deve!op+ent of the su1:ect !ots, petitioners shou!d have petitioned the court to fi8 the period in accordance with Artic!e 5.L*'M of the Civi! Code. As no such action was fi!ed 1/ petitioners, their co+p!aint for specific perfor+ance was pre+ature, the o1!i-ation not 1ein- de+anda1!e at that point. Accordin-!/, A/a!a Corporation cannot !i7ewise 1e said to have de!a/ed perfor+ance of the o1!i-ation.
Even assu+inthat the 2OA i+poses an o1!i-ation on A/a!a Corporation to deve!op the su1:ect !ots within three "*# /ears fro+ date thereof, A/a!a Corporation cou!d sti!! not 1e
he!d to have 1een in de!a/ since no de+and was +ade 1/ petitioners for the perfor+ance of its o1!i-ation.
As found 1/ the appe!!ate court, petitionersK !etters which dea!t with the three "*#$/ear ti+eta1!e were a!! dated prior to Apri! ,*, 50', the date when the period was supposed to e8pire. In other words, the !etters were sent 1efore the o1!i-ation cou!d 1eco+e !e-a!!/ de+anda1!e. 2oreover, the !etters were +ere re+inders and not cate-orica! de+ands to perfor+. 2ore i+portant!/, petitioners waived the three "*#$/ear period as evidenced 1/ their a-ent, En-r. Eduardo Tur!aKs !etter to the effect that petitioners a-reed that the three "*#$/ear period shou!d 1e counted fro+ the ter+ination of the case fi!ed 1/ Lancer. The !etter reads in partB
I. Co+p!etion of Phase I
As per the +e+orandu+ of A-ree+ent a!so dated Apri! ,*, 50 , it was underta7en 1/ /our -oodse!ves to co+p!ete the deve!op+ent of Phase I within three "*# /ears. Dr. I 2rs. Da64ue6 were +ade to understand that /ou were una1!e to acco+p!ish this 1ecause of !e-a! pro1!e+s with the previous contractor. These !e-a! pro1!e+s were reso!ved as of =e1ruar/ 5, 50., and Dr. I 2rs. Da64ue6 therefore e8pect that the deve!op+ent of Phase I wi!! 1e co+p!eted 1/ =e1ruar/ 5, 553, three /ears fro+ the sett!e+ent of the !e-a! pro1!e+s with the previous contractor. The reason for this is, as /ou 7now, that securit/$wise, Dr. I 2rs. Da64ue6 have 1een advised not to construct their residence ti!! the surroundin- area "which is Phase I# is deve!oped and occupied. The/ have 1een an8ious to 1ui!d their residence for 4uite so+e ti+e now, and wou!d !i7e to receive assurance fro+ /our -oodse!ves re-ardin- this, in co+p!iance with the a-ree+ent.
II. Option on the ad:oinin- !ots
@e have a!read/ written /our -oodse!ves re-ardin- the intention of Dr. I 2rs. Da64ue6 to e8ercise their option to purchase the two !ots on each side "a tota! of ' !ots# ad:acent to their Q&etained AreaR. The/ are concerned that a!thou-h over a /ear has e!apsed since the sett!e+ent of the !e-a! pro1!e+s, /ou have not presented the+ with the si6e, confi-uration, etc. of these !ots. The/ wou!d appreciate 1ein- provided with these at /our ear!iest convenience.L*)M
2anifest!/, this !etter e8presses not on!/ petitionersK ac7now!ed-e+ent that the de!a/ in the deve!op+ent of Phase I was due to the !e-a! pro1!e+s with %P Construction, 1ut a!so their ac4uiescence to the co+p!etion of the deve!op+ent of Phase I at the +uch !ater date of =e1ruar/ 5, 553. 2ore i+portant!/, 1/ no stretch of se+antic interpretation can it 1e construed as a cate-orica! de+and on A/a!a Corporation to offer the su1:ect !ots for sa!e
to petitioners as the !etter +ere!/ articu!ates petitionersK desire to e8ercise their option to purchase the su1:ect !ots and concern over the fact that the/ have not 1een provided with the specifications of these !ots.
The !etters of petitionersK chi!dren, <uan 2i-ue! and Dictoria Da64ue6, dated <anuar/ ,*, 50'L*(M and =e1ruar/ 0, 50'L*.M can a!so not 1e considered cate-orica! de+ands on A/a!a Corporation to deve!op the first phase of the propert/ within the three "*#$/ear period +uch !ess to offer the su1:ect !ots for sa!e to petitioners. The !etter dated <anuar/ ,*, 50' reads in partB
Eou wi!! understand our interest in the co+p!etion of the roads to our propert/, since we cannot deve!op it ti!! /ou have constructed the sa+e. A!!ow us to re+ind /ou of our 2e+orandu+ of A-ree+ent, as per which /ou co++itted to deve!op the roads to our propert/ Qas per the ori-ina! p!ans of the co+pan/R, and that
. The 1ac7 portion shou!d have 1een deve!oped 1efore the front portion P which has not 1een the case.
,.
The who!e pro:ect P front and 1ac7 portions 1e co+p!eted 1/ 50'.L*0M
The !etter dated =e1ruar/ 0, 50' is si+i!ar!/ worded. It statesB
In this re-ard, we wou!d !i7e to re+ind /ou of Artic!es ).. and ).5 of our 2e+orandu+ of A-ree+ent which states respective!/BNL*5M
Even petitioner Danie! Da64ue6K !etterL'3M dated 2arch ), 50' does not +a7e out a cate-orica! de+and for A/a!a Corporation to offer the su1:ect !ots for sa!e on or 1efore Apri! ,*, 50'. The !etter reads in partB
Nand that we e8pect fro+ /our -oodse!ves co+p!iance with our 2e+orandu+ of A-ree+ent, and a definite date as to when the road to our propert/ and the deve!op+ent of Phase I wi!! 1e co+p!eted.L' M
At 1est, petitionersK !etters can on!/ 1e construed as +ere re+inders which cannot 1e considered de+ands for perfor+ance 1ecause it +ust appear that the to!erance or 1enevo!ence of the creditor +ust have ended.L',M
The petition fina!!/ as7s us to deter+ine whether para-raph ). ) of the 2OA can proper!/ 1e construed as an option contract or a ri-ht of first refusa!. Para-raph ). ) statesB
). ) The BCEE& a-rees to -ive the SELLE&S first option to purchase four deve!oped !ots ne8t to the Q&etained AreaR at the prevai!in- +ar7et price at the ti+e of the purchase.L'*M
The Court has c!ear!/ distin-uished 1etween an option contract and a ri-ht of first refusa!. An option is a preparator/ contract in which one part/ -rants to another, for a fi8ed period and at a deter+ined price, the privi!e-e to 1u/ or se!!, or to decide whether or not to enter into a principa! contract. It 1inds the part/ who has -iven the option not to enter into the principa! contract with an/ other person durin- the period desi-nated, and within that period, to enter into such contract with the one to who+ the option was -ranted, if the !atter shou!d decide to use the option. It is a separate and distinct contract fro+ that which the parties +a/ enter into upon the consu++ation of the option. It +ust 1e supported 1/ consideration.L''M
In a ri-ht of first refusa!, on the other hand, whi!e the o1:ect +i-ht 1e +ade deter+inate, the e8ercise of the ri-ht wou!d 1e dependent not on!/ on the -rantorKs eventua! intention to enter into a 1indin- :uridica! re!ation with another 1ut a!so on ter+s, inc!udin- the price, that are /et to 1e fir+ed up.L')M
App!ied to the instant case, para-raph ). ) is o1vious!/ a +ere ri-ht of first refusa! and not an option contract. A!thou-h the para-raph has a definite o1:ect, i.e., the sa!e of su1:ect !ots, the period within which the/ wi!! 1e offered for sa!e to petitioners and, necessari!/, the price for which the su1:ect !ots wi!! 1e so!d are not specified. The phrase Qat the prevai!in- +ar7et price at the ti+e of the purchaseR connotes that there is no definite period within which A/a!a Corporation is 1ound to reserve the su1:ect !ots for petitioners to e8ercise their privi!e-e to purchase. Neither is there a fi8ed or deter+ina1!e price at which the su1:ect !ots wi!! 1e offered for sa!e. The price is considered certain if it +a/ 1e deter+ined with reference to another thin- certain or if the deter+ination thereof is !eft to the :ud-+ent of a specified person or persons.L'(M
=urther, para-raph ). ) was inserted into the 2OA to -ive petitioners the first crac7 to 1u/ the su1:ect !ots at the price which A/a!a Corporation wou!d 1e wi!!in- to accept when it offers the su1:ect !ots for sa!e. It is not supported 1/ an independent consideration. As such it is not -overned 1/ Artic!es *,' and '.5 of the Civi! Code, vi6B
Art. *,'. @hen the offeror has a!!owed the offeree a certain period to accept, the offer +a/ 1e withdrawn at an/ ti+e 1efore acceptance 1/ co++unicatin- such withdrawa!, e8cept when the option is founded upon a consideration, as so+ethinpaid or pro+ised.
Art. '.5. A pro+ise to 1u/ and se!! a deter+inate thin- for a price certain is reciproca!!/ de+anda1!e.
An accepted uni!atera! pro+ise to 1u/ or to se!! a deter+inate thin- for a price certain is 1indin- upon the pro+issor if the pro+ise is supported 1/ a consideration distinct fro+ the price.
Conse4uent!/, the QofferR +a/ 1e withdrawn an/ti+e 1/ co++unicatin- the withdrawa! to the other part/.L'.M
In this case, A/a!a Corporation offered the su1:ect !ots for sa!e to petitioners at the price of P(,)33.33>s4uare +eter, the prevai!in- +ar7et price for the propert/ when the offer was +ade on <une 0, 553.L'0M Insistin- on pa/infor the !ots at the prevai!in- +ar7et price in 50' of P'(3.33>s4uare +eter, petitioners re:ected the offer. A/a!a Corporation reduced the price to P),333.33>s4uare +eter 1ut a-ain, petitioners re:ected the offer and instead +ade a counter$offer in the a+ount of P,,333.33>s4uare +eter.L'5M A/a!a Corporation re:ected petitionersK counter$offer. @ith this re:ection, petitioners !ost their ri-ht to purchase the su1:ect !ots.
It cannot, therefore, 1e said that A/a!a Corporation 1reached petitionersK ri-ht of first refusa! and shou!d 1e co+pe!!ed 1/ an action for specific perfor+ance to se!! the su1:ect !ots to petitioners at the prevai!in- +ar7et price in 50'.
@AE&E=O&E, the instant petition is DENIED. No pronounce+ent as to costs.
SO O&DE&ED.
Puno, "Chair+an#, Austria$2artine6, Ca!!e:o, Sr., and Chico$Na6ario, <<., concur.
%.&. No. '3 0,. Apri! ,, ,33)
TANAE &EC&EATION CENTE& AND DEDELOP2ENT CO&P., Petitioners, vs. CATALINA 2ATIENTO =ACSTOX and ANCNCIACION =ACSTO PACCNAEEN, &espondents.
DECISION
ACST&IA$2A&TINET, <.B
Petitioner Tana/ &ecreation Center and Deve!op+ent Corp. "T&CDC# is the !essee of a *,353$s4uare +eter propert/ !ocated in Sitio %a/as, Tana/, &i6a!, owned 1/ Cata!ina 2atien6o =austo, under a Contract of Lease e8ecuted on Au-ust , 5. . On this propert/ stands the Tana/ Co!iseu+ Coc7pit operated 1/ petitioner. The !ease contract provided for a ,3$/ear ter+, su1:ect to renewa! within si8t/ da/s prior to its e8piration. The contract a!so provided that shou!d =austo decide to se!! the propert/, petitioner sha!! have the ?priorit/ ri-ht? to purchase the sa+e.,
On <une ., 55 , petitioner wrote =austo infor+in- her of its intention to renew the !ease.* Aowever, it was =austoKs dau-hter, respondent Anunciacion =. Pacuna/en, who rep!ied, as7in- that petitioner re+ove the i+prove+ents 1ui!t thereon, as she is now the a1so!ute owner of the propert/.' It appears that =austo had ear!ier so!d the propert/ to Pacuna/en on Au-ust 0, 553, for the su+ of P 3,333.33 under a ?Jasu!atan n- Bi!ihan Patu!u/an n- Lupa,?) and tit!e has a!read/ 1een transferred in her na+e under Transfer Certificate of Tit!e "TCT# No. 2$*)'(0.(
Despite efforts, the +atter was not reso!ved. Aence, on Septe+1er ', 55 , petitioner fi!ed an A+ended Co+p!aint for Annu!+ent of Deed of Sa!e, Specific Perfor+ance with Da+a-es, and In:unction, doc7eted as Civi! Case No. *.,$2..
In her Answer, respondent c!ai+ed that petitioner is estopped fro+ assai!in- the va!idit/ of the deed of sa!e as the !atter ac7now!ed-ed her ownership when it +ere!/ as7ed for a renewa! of the !ease. Accordin- to respondent, when the/ +et to discuss the +atter, petitioner did not de+and for the e8ercise of its option to purchase the propert/, and it even as7ed for -race period to vacate the pre+ises.0
After tria! on the +erits, the &e-iona! Tria! Court of 2oron-, &i6a! "Branch .0#, rendered :ud-+ent e8tendin- the period of the !ease for another seven /ears fro+ Au-ust , 55 at a +onth!/ renta! of P 3,333.33, and dis+issed petitionerKs c!ai+ for da+a-es.5
On appea!, doc7eted as CA$%.&. CD No. '*..3, the Court of Appea!s "CA# affir+ed with +odifications the tria! courtKs :ud-+ent per its Decision dated <une ', 555. 3 The dispositive portion of the decision readsB
@AE&E=O&E, the appea!ed decision is A==I&2ED AND ACCO&DIN%LE 2ODI=IED AS DISCCSSED.
=urther+ore, we reso!vedB
.3. That T&CDC DACATE the !eased pre+ises i++ediate!/9
,.3. To %&ANT the +otion of Pacuna/en to a!!ow her to withdraw the a+ount of P*,3,333.33, deposited accordin- to records, with this court.
*.3. To order T&CDC to 2AJE TAE NECESSA&E ACCOCNTIN% re-ardin- the a+ounts it had a!read/ deposited "for unpaid renta!s for the e8tended period of seven L.M /ears of the contract of !ease#. In case it had not /et co+p!eted its deposit, to i++ediate!/ pa/ the re+ainin- 1a!ance to Pacuna/en.
'.3. To order T&CDC to PAE the a+ount of P 3,333.33 as +onth!/ renta!, with re-ard to its continued sta/ in the !eased pre+ises even after the e8piration of the e8tended period of seven ".# /ears, co+puted fro+ Au-ust , 550, unti! it fina!!/ vacates therefro+.
SO O&DE&ED.
In arrivin- at the assai!ed decision, the CA ac7now!ed-ed the priorit/ ri-ht of T&CDC to purchase the propert/ in 4uestion. Aowever, the CA interpreted such ri-ht to +ean that it sha!! 1e app!ica1!e on!/ in case the propert/ is so!d to stran-ers and not to =austoKs re!ative. The CA stated that ?"T#o interpret it otherwise as to co+prehend a!! sa!es inc!udin- those +ade to re!atives and to the co+pu!sor/ heirs of the se!!er at that wou!d 1e an a1surdit/,? and ?her "=austoKs# on!/ +otive for such transfer was precise!/ one of preservin- the propert/ within her 1!ood!ine and that so+eone ad+inister the propert/.? , The CA a!so ru!ed that petitioner a!read/ ac7now!ed-ed the transfer of ownership and is dee+ed to have waived its ri-ht to purchase the propert/. * The CA even further went on to ru!e that even if the sa!e is annu!!ed, petitioner cou!d not achieve
an/thin- 1ecause the propert/ wi!! 1e eventua!!/ transferred to Pacuna/en after =austoKs death. '
Petitioner fi!ed a +otion for reconsideration 1ut it was denied per &eso!ution dated Septe+1er ', 555. )
Dissatisfied, petitioner e!evated the case to this Court on petition for review on certiorari, raisin- the fo!!owin- -roundsB
TAE AONO&ABLE COC&T O= APPEALS CO22ITTED SE&IOCS &EDE&SIBLE E&&O& IN AOLDIN% TAAT TAE CONT&ACTCAL STIPCLATION %IDIN% PETITIONE& TAE P&IO&ITE &I%AT TO PC&CAASE TAE LEASED P&E2ISES SAALL ONLE APPLE I= TAE LESSO& DECIDES TO SELL TAE SA2E TO ST&AN%E&S9
TAE AONO&ABLE COC&T O= APPEALS CO22ITTED SE&IOCS &EDE&SIBLE E&&O& IN AOLDIN% TAAT PETITIONE&KS P&IO&ITE &I%AT TO PC&CAASE TAE LEASED P&E2ISES IS INCONSEHCENTIAL. (
The principa! 1one of contention in this case refers to petitionerKs priorit/ ri-ht to purchase, a!so referred to as the ri-ht of first refusa!.
PetitionerKs ri-ht of first refusa! in this case is e8press!/ provided for in the notari6ed ?Contract of Lease? dated Au-ust , 5. , 1etween =austo and petitioner, to witB
.. That shou!d the LESSO& decide to se!! the !eased pre+ises, the LESSEE sha!! have the priorit/ ri-ht to purchase the sa+e9 .
@hen a !ease contract contains a ri-ht of first refusa!, the !essor is under a !e-a! dut/ to the !essee not to se!! to an/1od/ at an/ price unti! after he has +ade an offer to se!! to the !atter at a certain price and the !essee has fai!ed to accept it. The !essee has a ri-ht that the !essor;s first offer sha!! 1e in his favor. 0 PetitionerKs ri-ht of first refusa! is an inte-ra! and indivisi1!e part of the contract of !ease and is insepara1!e fro+ the who!e contract. The consideration for the !ease inc!udes the consideration for the ri-ht of first refusa! 5 and is 1ui!t into the reciproca! o1!i-ations of the parties.
It was erroneous for the CA to ru!e that the ri-ht of first refusa! does not app!/ when the propert/ is so!d to =austoKs re!ative.,3 @hen the ter+s of an a-ree+ent have 1een reduced to writin-, it is considered as containin- a!! the ter+s a-reed upon. As such, there can 1e, 1etween the parties and their successors in interest, no evidence of such ter+s other than the contents of the written a-ree+ent, e8cept when it fai!s to e8press the true intent and a-ree+ent of the parties., In this case, the wordin- of the stipu!ation -ivinpetitioner the ri-ht of first refusa! is p!ain and una+1i-uous, and !eaves no roo+ for interpretation. It si+p!/ +eans that shou!d =austo decide to se!! the !eased propert/ durin- the ter+ of the !ease, such sa!e shou!d first 1e offered to petitioner. The stipu!ation does not provide for the 4ua!ification that such ri-ht +a/ 1e e8ercised on!/ when the sa!e is +ade to stran-ers or persons other than =austoKs 7in. Thus, under the ter+s of petitionerKs ri-ht of first refusa!, =austo has the !e-a! dut/ to petitioner not to se!! the propert/ to an/1od/, even her re!atives, at an/ price unti! after she has +ade an offer to se!! to petitioner at a certain price and said offer was re:ected 1/ petitioner. Pursuant to their contract, it was essentia! that =austo shou!d have first offered the propert/ to petitioner 1efore she so!d it to respondent. It was on!/ after petitioner fai!ed to e8ercise its ri-ht of first priorit/ cou!d =austo then !awfu!!/ se!! the propert/ to respondent.
The ru!e is that a sa!e +ade in vio!ation of a ri-ht of first refusa! is va!id. Aowever, it +a/ 1e rescinded, or, as in this case, +a/ 1e the su1:ect of an action for specific perfor+ance.,, In &iviera =i!ipina, Inc. vs. Court of Appea!s,,* the Court discussed the concept and interpretation of the ri-ht of first refusa! and the conse4uences of a 1reach thereof, to witB
. . . It a!! started in 55, with %u6+an, Boca!in- I Co. v. Bonnevie where the Court he!d that a !ease with a proviso -rantin- the !essee the ri-ht of first priorit/ ?a!! thin-s and conditions 1ein- e4ua!? +eant that there shou!d 1e identit/ of the ter+s and conditions to 1e offered to the !essee and a!! other prospective 1u/ers, with the !essee to en:o/ the ri-ht of first priorit/. A deed of sa!e e8ecuted in favor of a third part/ who cannot 1e dee+ed a purchaser in -ood faith, and which is in vio!ation of a ri-ht of first refusa! -ranted to the !essee is not voida1!e under the Statute of =rauds 1ut rescissi1!e under Artic!es *03 to *0 "*# of the New Civi! Code.
Su1se4uent!/ in 55', in the case of An- Eu Asuncion v. Court of Appea!s, the Court en 1anc departed fro+ the doctrine !aid down in %u6+an, Boca!in- I Co. v. Bonnevie and refused to rescind a contract of sa!e which vio!ated the ri-ht of first refusa!. The Court he!d that the so$ca!!ed ?ri-ht of first refusa!? cannot 1e dee+ed a perfected contract of sa!e under Artic!e ')0 of the New Civi! Code and, as such, a 1reach thereof decreed under a fina! :ud-+ent does not entit!e the a--rieved part/ to a writ of e8ecution of the :ud-+ent 1ut to an action for da+a-es in a proper foru+ for the purpose.
In the 55( case of E4uatoria! &ea!t/ Deve!op+ent, Inc. v. 2a/fair Theater, Inc., the Court en 1anc reverted 1ac7 to the doctrine in %u6+an Boca!in- I Co. v. Bonnevie statin- that
rescission is a re!ief a!!owed for the protection of one of the contractinparties and even third persons fro+ a!! in:ur/ and da+a-e the contract +a/ cause or to protect so+e inco+pati1!e and preferred ri-ht 1/ the contract.
Thereafter in 55., in ParaSa4ue Jin-s Enterprises, Inc. v. Court of Appea!s, the Court affir+ed the nature of and the conco+itant ri-hts and o1!i-ations of parties under a ri-ht of first refusa!. The Court, su++ari6in- the ru!in-s in %u6+an, Boca!in- I Co. v. Bonnevie and E4uatoria! &ea!t/ Deve!op+ent, Inc. v. 2a/fair Theater, Inc., he!d that in order to have fu!! co+p!iance with the contractua! ri-ht -rantinpetitioner the first option to purchase, the sa!e of the properties for the price for which the/ were fina!!/ so!d to a third person shou!d have !i7ewise 1een first offered to the for+er. =urther, there shou!d 1e identit/ of ter+s and conditions to 1e offered to the 1u/er ho!din- a ri-ht of first refusa! if such ri-ht is not to 1e rendered i!!usor/. Last!/, the 1asis of the ri-ht of first refusa! +ust 1e the current offer to se!! of the se!!er or offer to purchase of an/ prospective 1u/er.
The prevai!in- doctrine therefore, is that a ri-ht of first refusa! +eans identit/ of ter+s and conditions to 1e offered to the !essee and a!! other prospective 1u/ers and a contract of sa!e entered into in vio!ation of a ri-ht of first refusa! of another person, whi!e va!id, is rescissi1!e.,'
It was a!so incorrect for the CA to ru!e that it wou!d 1e use!ess to annu! the sa!e 1etween =austo and respondent 1ecause the propert/ wou!d sti!! re+ain with respondent after the death of her +other 1/ virtue of succession, as in fact, =austo died in 2arch 55(, and the propert/ now 1e!on-s to respondent, 1ein- =austoKs heir.,)
=or one, =austo was 1ound 1/ the ter+s and conditions of the !ease contract. Cnder the ri-ht of first refusa! c!ause, she was o1!i-ated to offer the propert/ first to petitioner 1efore se!!init to an/1od/ e!se. @hen she so!d the propert/ to respondent without offerin- it to petitioner, the sa!e whi!e va!id is rescissi1!e so that petitioner +a/ e8ercise its option under the contract.
@ith the death of =austo, whatever ri-hts and o1!i-ations she had over the propert/, inc!udin- her o1!i-ation under the !ease contract, were trans+itted to her heirs 1/ wa/ of succession, a +ode of ac4uirin- the propert/, ri-hts and o1!i-ation of the decedent to the e8tent of the va!ue of the inheritance of the heirs. Artic!e * of the Civi! Code providesB
A&T. * . Contracts ta7e effect on!/ 1etween the parties, their assi-ns and heirs, e8cept in case where the ri-hts and o1!i-ations arisin- fro+ the contract are not trans+issi1!e 1/ their nature, or 1/ stipu!ation or 1/ provision of !aw. The heir is not !ia1!e 1e/ond the va!ue of the propert/ he received fro+ the decedent.
A !ease contract is not essentia!!/ persona! in character.,( Thus, the ri-hts and o1!i-ations therein are trans+issi1!e to the heirs. The -enera! ru!e is that heirs are 1ound 1/ contracts entered into 1/ their predecessors$in$interest e8cept when the ri-hts and o1!i-ations arisin- therefro+ are not trans+issi1!e 1/ " # their nature, ",# stipu!ation or "*# provision of !aw.,.
In this case, the nature of the ri-hts and o1!i-ations are, 1/ their nature, trans+issi1!e. There is a!so neither contractua! stipu!ation nor provision of !aw that +a7es the ri-hts and o1!i-ations under the !ease contract intrans+issi1!e. The !ease contract 1etween petitioner and =austo is a propert/ ri-ht, which is a ri-ht that passed on to respondent and the other heirs, if an/, upon the death of =austo.
In DJC Ao!din-s Corporation vs. Court of Appea!s,,0 the Court he!d that the Contract of Lease with Option to Bu/ entered into 1/ the !ate Encarnacion Barto!o+e with DJC Ao!din-s Corporation was 1indin- upon her so!e heir, Dictor, even after her de+ise and it su1sists even after her death. The Court ru!ed thatB
. . . Indeed, 1ein- an heir of Encarnacion, there is privit/ of interest 1etween hi+ and his deceased +other. Ae on!/ succeeds to what ri-hts his +other had and what is va!id and 1indin- a-ainst her is a!so va!id and 1indin- as a-ainst hi+. This is c!ear fro+ ParaSa4ue Jin-s Enterprises vs. Court of Appea!s, where this Court re:ected a si+i!ar defense$
@ith respect to the contention of respondent &a/+undo that he is not priv/ to the !ease contract, not 1ein- the !essor nor the !essee referred to therein, he cou!d thus not have vio!ated its provisions, 1ut he is neverthe!ess a proper part/. C!ear!/, he stepped into the shoes of the owner$!essor of the !and as, 1/ virtue of his purchase, he assu+ed a!! the o1!i-ations of the !essor under the !ease contract. 2oreover, he received 1enefits in the for+ of renta! pa/+ents. =urther+ore, the co+p!aint, as we!! as the petition, pra/ed for the annu!+ent of the sa!e of the properties to hi+. Both p!eadin-s a!so a!!e-ed co!!usion 1etween hi+ and respondent Santos which defeated the e8ercise 1/ petitioner of its ri-ht of first refusa!.
In order then to accord co+p!ete re!ief to petitioner, respondent &a/+undo was a necessar/, if not indispensa1!e, part/ to the case. A favora1!e :ud-+ent for the petitioner wi!! necessari!/ affect the ri-hts of respondent &a/+undo as the 1u/er of the propert/ over which petitioner wou!d !i7e to assert its ri-ht of first option to 1u/.,5 "E+phasis supp!ied#
Li7ewise in this case, the contract of !ease, with a!! its conco+itant provisions, continues even after =austoKs death and her heirs +ere!/ stepped into her shoes.*3 &espondent, as an heir of =austo, is therefore 1ound to fu!fi!! a!! its ter+s and conditions.
There is no persona! act re4uired fro+ =austo such that respondent cannot perfor+ it. =austoKs o1!i-ation to de!iver possession of the propert/ to petitioner upon the e8ercise 1/ the !atter of its ri-ht of first refusa! +a/ 1e perfor+ed 1/ respondent and the other heirs, if an/. Si+i!ar!/, nonperfor+ance is not e8cused 1/ the death of the part/ when the other part/ has a propert/ interest in the su1:ect +atter of the contract.*
The CA !i7ewise found that petitioner ac7now!ed-ed the !e-iti+ac/ of the sa!e to respondent and it is now 1arred fro+ e8ercisin- its ri-ht of first refusa!. Accordin- to the appe!!ate courtB
Second, when T&CDC, in a !etter to =austo, si-nified its intention to renew the !ease contract, it was Pacuna/en who answered the !etter on <une 5, 55 . In that !etter Pacuna/en de+anded that T&CDC vacate the !eased pre+ises within si8t/ "(3# da/s and infor+ed it of her ownership of the !eased pre+ises. The pertinent portion of the !etter readsB
=urther!/, p!ease 1e advised that the !and is no !on-er under the a1so!ute ownership of +/ +other and the undersi-ned is now the rea! and a1so!ute owner of the !and.
Instead of raisin- a how! over the contents of the !etter, as wou!d 1e its e8pected and natura! reaction under the circu+stances, T&CDC surprisin-!/ 7ept si!ent a1out the who!e thin-. As we +entioned in the factua! antecedents of this case, it even invited Pacuna/en to its specia! 1oard +eetin- particu!ar!/ to discuss with her the renewa! of the !ease contract. A-ain, durin- that +eetin-, T&CDC did not +ention an/thin- that cou!d 1e construed as cha!!en-in- Pacuna/enKs ownership of the !eased pre+ises. Neither did T&CDC assert its priorit/ ri-ht to purchase the sa+e a-ainst Pacuna/en.*,
The essentia! e!e+ents of estoppe! areB " # conduct of a part/ a+ountin- to fa!se representation or concea!+ent of +ateria! facts or at !east ca!cu!ated to conve/ the i+pression that the facts are otherwise than, and inconsistent with, those which the part/ su1se4uent!/ atte+pts to assert9 ",# intent, or at !east e8pectation, that this conduct sha!! 1e acted upon 1/, or at !east inf!uence, the other part/9 and "*# 7now!ed-e, actua! or constructive, of the rea! facts.**
The records are 1ereft of an/ proposition that petitioner waived its ri-ht of first refusa! under the contract such that it is now estopped fro+ e8ercisin- the sa+e. In a !etter dated <une ., 55 , petitioner wrote to =austo as7in- for a renewa! of the ter+ of !ease.*' Petitioner cannot 1e fau!ted for +ere!/ see7in- a renewa! of the !ease contract 1ecause o1vious!/, it was wor7in- on the assu+ption that tit!e to the propert/ is sti!! in =austoKs na+e and the !atter has the so!e authorit/ to decide on the fate of the propert/. Instead, it was respondent who rep!ied, advisin- petitioner to re+ove a!! the i+prove+ents on the propert/, as the !ease is to e8pire on the st of Au-ust 55 . &espondent a!so infor+ed petitioner that her +other has a!read/ so!d the propert/ to her.*) In order to reso!ve the +atter, a +eetin- was ca!!ed a+on- petitionerKs stoc7ho!ders, inc!udin- respondent, on <u!/ ,., 55 , where petitioner, a-ain, proposed that the !ease 1e renewed. &espondent, however, dec!ined. @hi!e petitioner +a/ have sou-ht the renewa! of the !ease, it cannot 1e construed as a re!in4uish+ent of its ri-ht of first refusa!. Estoppe! +ust 1e intentiona! and une4uivoca!.*(
A!so, in the e8cerpts fro+ the +inutes of the specia! +eetin-, it was further stated that the possi1i!it/ of a sa!e was !i7ewise considered.*. But respondent a!so refused to se!! the !and, whi!e the i+prove+ents, ?if for sa!e sha!! 1e su1:ect for appraisa!.?*0 After respondent refused to se!! the !and, it was then that petitioner fi!ed the co+p!aint for annu!+ent of sa!e, specific perfor+ance and da+a-es.*5 PetitionerKs acts of see7in- a!! possi1!e avenues for the a+ena1!e reso!ution of the conf!ict do not a+ount to an intentiona! and une4uivoca! a1andon+ent of its ri-ht of first refusa!.
&espondent was we!! aware of petitionerKs ri-ht to priorit/ of sa!e, and that the sa!e +ade to her 1/ her +other was +ere!/ for her to 1e a1!e to ta7e char-e of the !atterKs affairs. As ad+itted 1/ respondent in her Appe!!eeKs Brief fi!ed 1efore the CA, vi6.B
After <une 5, 55 , T&CDC invited Pacuna/en to +eetin- with the officers of the corporation. . . . In the sa+e +eetin-, Pacuna/enKs attention was ca!!ed to the provision of the Contract of Lease had 1/ her +other with T&CDC, particu!ar!/ para-raph . thereof, which statesB
.. That shou!d the !essor decide to se!! the !eased pre+ises, the LESSEE sha!! have the priorit/ ri-ht to purchase the sa+e.
Of course, in the +eetin- she had with the officers of T&CDC, Pacuna/en e8p!ained that the sa!e +ade in her favor 1/ her +other was :ust a for+a!it/ so that she +a/ have the proper representation with T&CDC in the a1sence of her parents, +ore so that her father had a!read/ passed awa/, and there was no +a!ice in her +ine "sic# and that of her +other, or an/ intention on their part to deceive T&CDC. A!! these notwithstandin-, and for her to show their -ood faith in dea!in- with T&CDC, Pacuna/en started the -round wor7 to reconve/ ownership over the who!e !and, now covered 1/ Transfer Certificare "sic# of Tit!e
No. 2$,)5, to and in the na+e of her +other "=austo#, 1ut the !atter was 1eco+in- sic7!/, o!d and wea7, and the/ found no ti+e to do it as ear!/ as the/ wanted to.'3 "E+phasis supp!ied#
%iven the fore-oin-, the ?Jasu!atan n- Bi!ihan Patu!u/an n- Lupa? dated Au-ust 0, 553 1etween =austo and respondent +ust 1e rescinded. Considerin-, however, that =austo a!read/ died on 2arch (, 55(, durin- the pendenc/ of this case with the CA, her heirs shou!d have 1een su1stituted as respondents in this case. Considerin- further that the Court cannot dec!are respondent Pacuna/en as the so!e heir, as it is not the proper foru+ for that purpose, the ri-ht of petitioner +a/ on!/ 1e enforced a-ainst the heirs of the deceased Cata!ina 2atien6o =austo, represented 1/ respondent Pacuna/en.
In ParaSa4ue Jin-s Enterprises, Inc. vs. Court of Appea!s,' it was ru!ed that the 1asis of the ri-ht of the first refusa! +ust 1e the current offer to se!! of the se!!er or offer to purchase of an/ prospective 1u/er. It is on!/ after the -rantee fai!s to e8ercise its ri-ht of first priorit/ under the sa+e ter+s and within the period conte+p!ated, cou!d the owner va!id!/ offer to se!! the propert/ to a third person, a-ain, under the sa+e ter+s as offered to the -rantee. The circu+stances of this case, however, dictate the app!ication of a different ru!in-. An offer of the propert/ to petitioner under identica! ter+s and conditions of the offer previous!/ -iven to respondent Pacuna/en wou!d 1e ine4uita1!e. The su1:ect propert/ was so!d in 553 to respondent Pacuna/en for a +eas!/ su+ of P 3,333.33. O1vious!/, the va!ue is in a s+a!! a+ount 1ecause the sa!e was 1etween a +other and dau-hter. As ad+itted 1/ said respondent, ?the sa!e +ade in her favor 1/ her +other was :ust a for+a!it/ so that she +a/ have the proper representation with T&CDC in the a1sence of her parentsN?', Conse4uent!/, the offer to 1e +ade to petitioner in this case shou!d 1e under reasona1!e ter+s and conditions, ta7in- into account the fair +ar7et va!ue of the propert/ at the ti+e it was so!d to respondent.
In its co+p!aint, petitioner pra/ed for the cance!!ation of TCT No. 2$*)'(0 in the na+e of respondent Pacuna/en,'* which was issued 1/ the &e-ister of Deeds of 2oron- on =e1ruar/ ., 55 .'' Cnder ordinar/ circu+stances, this wou!d 1e the !o-ica! effect of the rescission of the ?Jasu!atan n- Bi!ihan Patu!u/an n- Lupa? 1etween the deceased =austo and respondent Pacuna/en. Aowever, the circu+stances in this case are not ordinar/. The 1u/er of the su1:ect propert/ is the se!!erKs own dau-hter. If and when the tit!e "TCT No. 2$*)'(0# in respondent Pacuna/enKs na+e is cance!!ed and reinstated in =austoKs na+e, and thereafter ne-otiations 1etween petitioner and respondent Pacuna/en for the purchase of the su1:ect propert/ 1rea7 down, then the su1:ect propert/ wi!! a-ain revert to respondent Pacuna/en as she appears to 1e one of =austoKs heirs. This wou!d certain!/ 1e a windin- route to traverse. Sound reason therefore dictates that tit!e shou!d re+ain in the na+e of respondent Pacuna/en, for and in 1eha!f of the other heirs, if an/, to 1e cance!!ed on!/ when petitioner successfu!!/ e8ercises its ri-ht of first refusa! and purchases the su1:ect propert/.
Petitioner further see7s the award of the fo!!owin- da+a-es in its favorB " # P 33,333.33 as actua! da+a-es9 ",# P , 33,333.33 as co+pensation for !ost -oodwi!! or reputation9 "*# P 33,333.33 as +ora! da+a-es9 "'# P 33,333.33 as e8e+p!ar/ da+a-es9 ")# P)3,333.33 as attorne/Ks fees9 "(# P ,333.33 appearance fee per hearin-9 and ".# the costs of suit.')
Accordin- to petitioner, respondentKs act in fencin- the propert/ !ed to the c!osure of the Tana/ Co!iseu+ Coc7pit and petitioner was una1!e to conduct coc7fi-hts and -enerate inco+e of not !ess than P 33,333.33 unti! the end of Septe+1er 55 , aside fro+ the e8pected renta!s fro+ the coc7pit space !essees in the a+ount of P ,333.33.'(
Cnder Artic!e , 55 of the Civi! Code, it is provided thatB
E8cept as provided 1/ !aw or 1/ stipu!ation, one is entit!ed to an ade4uate co+pensation on!/ for such pecuniar/ !oss suffered 1/ hi+ as he has du!/ proved. Such co+pensation is referred to as actua! or co+pensator/ da+a-es. "E+phasis supp!ied#
The ru!e is that actua! or co+pensator/ da+a-es cannot 1e presu+ed, 1ut +ust 1e proved with reasona1!e de-ree of certaint/. A court cannot re!/ on specu!ations, con:ectures, or -uesswor7 as to the fact and a+ount of da+a-es, 1ut +ust depend upon co+petent proof that the/ have 1een suffered 1/ the in:ured part/ and on the 1est o1taina1!e evidence of the actua! a+ount thereof. It +ust point out specific facts, which cou!d afford a 1asis for +easurin- whatever co+pensator/ or actua! da+a-es are 1orne.'.
In the present case, there is no 4uestion that the Tana/ Co!iseu+ Coc7pit was c!osed for two +onths and T&CDC did not -ain an/ inco+e durin- said period. But there is nothinon record to su1stantiate petitionerKs c!ai+ that it was 1ound to !ose so+e P ,333.33 fro+ such c!osure. T&CDCKs president, A+1rosio Sacra+ento, testified that the/ suffered inco+e !osses with the c!osure of the coc7pit fro+ Au-ust ,, 55 unti! it re$opened on Octo1er ,3, 55 .'0 2r. Sacra+ento, however, cannot state with certaint/ the a+ount of such unrea!i6ed inco+e.'5 2eanwhi!e, T&CDCKs accountant, 2er!e Cru6, stated that 1ased on the corporationKs financia! state+ent for the /ears 553 and 55 ,)3 the/ derived the a+ount of P ,3,333.33 as annua! inco+e fro+ rent.) =ro+ said financia! state+ent, it is safe to presu+e that T&CDC -enerated a +onth!/ inco+e of P 3,333.33 a +onth "P ,3,333.33 annua! inco+e divided 1/ , +onths#. At 1est therefore, whatever actua! da+a-es that petitioner suffered fro+ the coc7pitKs c!osure for a period of two +onths can 1e reasona1!/ su++ed up on!/ to P,3,333.33.
Such award of da+a-es sha!! earn interest at the !e-a! rate of si8 percent "(G# per annu+, which sha!! 1e co+puted fro+ the ti+e of the fi!inof the Co+p!aint on Au-ust ,,, 55 ,
unti! the fina!it/ of this decision. After the present decision 1eco+es fina! and e8ecutor/, the rate of interest sha!! increase to twe!ve percent " ,G# per annu+ fro+ such fina!it/ unti! its satisfaction, this interi+ period 1ein- dee+ed to 1e e4uiva!ent to a for1earance of credit.), This is in accord with the -uide!ines !aid down 1/ the Court in Eastern ShippinLines, Inc. vs. Court of Appea!s,)* re-ardin- the +anner of co+putin- !e-a! interest, vi6.B
II. @ith re-ard particu!ar!/ to an award of interest in the concept of actua! and co+pensator/ da+a-es, the rate of interest, as we!! as the accrua! thereof, is i+posed, as fo!!owsB
. @hen the o1!i-ation is 1reached, and it consists in the pa/+ent of a su+ of +one/, i.e., a !oan or for1earance of +one/, the interest due shou!d 1e that which +a/ have 1een stipu!ated in writin-. =urther+ore, the interest due sha!! itse!f earn !e-a! interest fro+ the ti+e it is :udicia!!/ de+anded. In the a1sence of stipu!ation, the rate of interest sha!! 1e ,G per annu+ to 1e co+puted fro+ defau!t, i.e., fro+ :udicia! or e8tra:udicia! de+and under and su1:ect to the provisions of Artic!e (5 of the Civi! Code.
,. @hen an o1!i-ation, not constitutin- a !oan or for1earance of +one/, is 1reached, an interest on the a+ount of da+a-es awarded +a/ 1e i+posed at the discretion of the court at the rate of (G per annu+. No interest, however, sha!! 1e ad:ud-ed on un!i4uidated c!ai+s or da+a-es e8cept when or unti! the de+and can 1e esta1!ished with reasona1!e certaint/. Accordin-!/, where the de+and is esta1!ished with reasona1!e certaint/, the interest sha!! 1e-in to run fro+ the ti+e the c!ai+ is +ade :udicia!!/ or e8tra:udicia!!/ "Art. (5, Civi! Code# 1ut when such certaint/ cannot 1e so reasona1!/ esta1!ished at the ti+e the de+and is +ade, the interest sha!! 1e-in to run on!/ fro+ the date the :ud-+ent of the court is +ade "at which ti+e 4uantification of da+a-es +a/ 1e dee+ed to have 1een reasona1!/ ascertained#. The actua! 1ase for the co+putation of !e-a! interest sha!!, in an/ case, 1e on the a+ount fina!!/ ad:ud-ed.
*. @hen the :ud-+ent of the court awardin- a su+ of +one/ 1eco+es fina! and e8ecutor/, the rate of !e-a! interest, whether the case fa!!s under para-raph or para-raph ,, a1ove, sha!! 1e ,G per annu+ fro+ such fina!it/ unti! its satisfaction, this interi+ period 1ein- dee+ed to 1e 1/ then an e4uiva!ent to a for1earance of credit.)'
Petitioner a!so c!ai+s the a+ount of P , 33,333.33 as co+pensation for !ost -oodwi!! or reputation. It a!!e-ed that ?with the un:ust and wron-fu! conduct of the defendants as a1ove$descri1ed, p!aintiff stands to !ose its -oodwi!! and reputation esta1!ished for the past ,3 /ears.?))
An award of da+a-es for !oss of -oodwi!! or reputation fa!!s under actua! or co+pensator/ da+a-es as provided in Artic!e ,,3) of the Civi! Code, to witB
Art. ,,3). Da+a-es +a/ 1e recoveredB
" # =or !oss or i+pair+ent of earnin- capacit/ in cases of te+porar/ or per+anent persona! in:ur/9
",# =or in:ur/ to the p!aintiffKs 1usiness standin- or co++ercia! credit.
Even if it is not recovera1!e as co+pensator/ da+a-es, it +a/ sti!! 1e awarded in the concept of te+perate or +oderate da+a-es.)( In arrivin- at a reasona1!e !eve! of te+perate da+a-es to 1e awarded, tria! courts are -uided 1/ the ru!in- thatB
. . . There are cases where fro+ the nature of the case, definite proof of pecuniar/ !oss cannot 1e offered, a!thou-h the court is convinced that there has 1een such !oss. =or instance, in:ur/ to one;s co++ercia! credit or to the -oodwi!! of a 1usiness fir+ is often hard to show certaint/ in ter+s of +one/. Shou!d da+a-es 1e denied for that reasonO The :ud-e shou!d 1e e+powered to ca!cu!ate +oderate da+a-es in such cases, rather than that the p!aintiff shou!d suffer, without redress fro+ the defendant;s wron-fu! act. "Araneta v. Ban7 of A+erica, '3 SC&A '', ')#).
In this case, aside fro+ the ne1u!ous a!!e-ation of petitioner in its a+ended co+p!aint, there is no evidence on record, whether testi+onia! or docu+entar/, to ade4uate!/ support such c!ai+. Aence, it +ust 1e denied.
PetitionerKs c!ai+ for +ora! da+a-es +ust !i7ewise 1e denied. The award of +ora! da+a-es cannot 1e -ranted in favor of a corporation 1ecause, 1ein- an artificia! person and havin- e8istence on!/ in !e-a! conte+p!ation, it has no fee!in-s, no e+otions, no senses. It cannot, therefore, e8perience ph/sica! sufferin- and +enta! an-uish, which can 1e e8perienced on!/ 1/ one havin- a nervous s/ste+.)0 Petitioner 1ein- a corporation,)5 the c!ai+ for +ora! da+a-es +ust 1e denied.
@ith re-ard to the c!ai+ for e8e+p!ar/ da+a-es, it is a re4uisite in the -rant thereof that the act of the offender +ust 1e acco+panied 1/ 1ad faith or done in wanton, fraudu!ent or +a!evo!ent +anner.(3 2oreover, where a part/ is not entit!ed to actua! or +ora! da+a-es, an award of e8e+p!ar/ da+a-es is !i7ewise 1ase!ess.( In this case, petitioner fai!ed to show that respondent acted in 1ad faith, or in wanton, fraudu!ent or +a!evo!ent +anner.
Petitioner !i7ewise c!ai+s the a+ount of P)3,333.33 as attorne/Ks fees, the su+ of P ,333.33 for ever/ appearance of its counse!, p!us costs of suit. It is we!! sett!ed that no pre+iu+ shou!d 1e p!aced on the ri-ht to !iti-ate and not ever/ winnin- part/ is entit!ed to an auto+atic -rant of attorne/;s fees. The part/ +ust show that he fa!!s under one of the instances enu+erated in Artic!e ,,30 of the Civi! Code. In this case, since petitioner was co+pe!!ed to en-a-e the services of a !aw/er and incurred e8penses to protect its interest and ri-ht over the su1:ect propert/, the award of attorne/Ks fees is proper. Aowever there are certain standards in fi8in- attorne/;s fees, to witB " # the a+ount and the character of the services rendered9 ",# !a1or, ti+e and trou1!e invo!ved9 "*# the nature and i+portance of the !iti-ation and 1usiness in which the services were rendered9 "'# the responsi1i!it/ i+posed9 ")# the a+ount of +one/ and the va!ue of the propert/ affected 1/ the controvers/ or invo!ved in the e+p!o/+ent9 "(# the s7i!! and the e8perience ca!!ed for in the perfor+ance of the services9 ".# the professiona! character and the socia! standin- of the attorne/9 and "0# the resu!ts secured, it 1ein- a reco-ni6ed ru!e that an attorne/ +a/ proper!/ char-e a +uch !ar-er fee when it is contin-ent than when it is not.(, Considerinthe fore-oin-, the award of P 3,333.33 as attorne/Ks fees, inc!udin- the costs of suit, is reasona1!e under the circu+stances.
@AE&E=O&E, the instant Petition for &eview is PA&TIALLE %&ANTED. The Court of Appea!sK Decision dated <une ', 555 in CA$%.&. CD No. '*..3 is 2ODI=IED as fo!!owsB
" # the ?Jasu!atan n- Bi!ihan Patu!u/an n- Lupa? dated Au-ust 0, 553 1etween Cata!ina 2atien6o =austo and respondent Anunciacion =austo Pacuna/en is here1/ dee+ed rescinded9
",# The Aeirs of the deceased Cata!ina 2atien6o =austo who are here1/ dee+ed su1stituted as respondents, represented 1/ respondent Anunciacion =austo Pacuna/en, are O&DE&ED to reco-ni6e the o1!i-ation of Cata!ina 2atien6o =austo under the Contract of Lease with respect to the priorit/ ri-ht of petitioner Tana/ &ecreation Center and Deve!op+ent Corp. to purchase the su1:ect propert/ under reasona1!e ter+s and conditions9
"*# Transfer Certificate of Tit!e No. 2$*)'(0 sha!! re+ain in the na+e of respondent Anunciacion =austo Pacuna/en, which sha!! 1e cance!!ed in the event petitioner successfu!!/ purchases the su1:ect propert/9
"'# &espondent is O&DE&ED to pa/ petitioner Tana/ &ecreation Center and Deve!op+ent Corporation the a+ount of Twent/ Thousand Pesos "P,3,333.33# as actua! da+a-es, p!us interest thereon at the !e-a! rate of si8 percent "(G# per annu+ fro+ the fi!inof the Co+p!aint unti! the fina!it/ of this Decision. After this Decision 1eco+es fina! and
e8ecutor/, the app!ica1!e rate sha!! 1e twe!ve percent " ,G# per annu+ unti! its satisfaction9 and,
")# &espondent is O&DE&ED to pa/ petitioner the a+ount of Ten Thousand Pesos "P 3,333.33# as attorne/Ks fees, and to pa/ the costs of suit.
"(# Let the case 1e re+anded to the &e-iona! Tria! Court, 2oron-, &i6a! "Branch .0# for further proceedin-s on the deter+ination of the ?reasona1!e ter+s and conditions? of the offer to se!! 1/ respondents to petitioner, without pre:udice to possi1!e +ediation 1etween the parties.
The rest of the unaffected dispositive portion of the Court of Appea!sK Decision is A==I&2ED.
SO O&DE&ED.
Puno, "Chair+an#, Ca!!e:o, Sr., Tin-a, and Chico$Na6ario, <<., concur.
=I&ST DIDISION
POLETECANIC CNIDE&SITE O= TAE PAILIPPINES, Petitioner,
$ versus $
%OLDEN AO&ITON &EALTE CO&PO&ATION, &espondent.
%.&. No.
0*( ,
8$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$8
NATIONAL DEDELOP2ENT CO2PANE, Petitioner,
$ versus $
%OLDEN AO&ITON &EALTE CO&PO&ATION, &espondent.
%.&. No.
0',(3
PresentB
PCNO, C.<., Chairperson, CA&PIO 2O&ALES, LEONA&DO$DE CAST&O, BE&SA2IN, and DILLA&A2A, <&., <<.
Pro+u!-atedB
2arch ), ,3 3 8$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$8
DECISION
DILLA&A2A, <&., <.B
The a1ove$tit!ed conso!idated petitions fi!ed under &u!e ') of the 55. &u!es of Civi! Procedure, as a+ended, see7 to reverse the DecisionL M dated <une ,), ,330 and &eso!ution dated Au-ust ,,, ,330 of the Court of Appea!s "CA# in CA$%.&. CD No. 0'*55 which affir+ed the DecisionL,M dated Nove+1er ,), ,33' of the &e-iona! Tria! Court "&TC# of 2a7ati Cit/, Branch '' in Civi! Case No. 00$,,*0. The undisputed facts are as fo!!owsB Petitioner Nationa! Deve!op+ent Co+pan/ "NDC# is a -overn+ent$ owned and contro!!ed corporation, created under Co++onwea!th Act No. 0,, as a+ended 1/ Co+. Act No. * and Presidentia! Decree "P.D.# No. ((0. Petitioner Po!/technic Cniversit/ of the Phi!ippines "PCP# is a pu1!ic, non$sectarian, non$profit educationa! institution created in 5.0 1/ virtue of P.D. No. *' . In the ear!/ si8ties, NDC had in its disposa! a ten " 3#$hectare propert/ !ocated a!onPure6a St., Sta. 2esa, 2ani!a. The estate was popu!ar!/ 7nown as the NDC Co+pound and covered 1/ Transfer Certificate of Tit!e Nos. 5,00), 3*3 and ')'.3. On Septe+1er ., 5.., NDC entered into a Contract of Lease "C$**$..# with %o!den Aori6on &ea!t/ Corporation "%A&C# over a portion of the propert/, with an area of ,,'3. s4uare +eters for a period of ten " 3# /ears, renewa1!e for another ten " 3# /ears with +utua! consent of the parties.L*M On 2a/ ', 5.0, a second Contract of Lease "C$ ,$.0# was e8ecuted 1etween NDC and %A&C coverin- *,,,,.03 s4uare +eters, a!so renewa1!e upon +utua! consent after the e8piration of the ten " 3#$/ear !ease period. In addition, %A&C as !essee was -ranted the Qoption to purchase the area !eased, the price to 1e ne-otiated and deter+ined at the ti+e the option to purchase is e8ercised.RL'M Cnder the !ease a-ree+ents, %A&C was o1!i-ed to construct at its own e8pense 1ui!din-s of stron- +ateria! at no !ess than the stipu!ated cost, and other i+prove+ents which sha!! auto+atica!!/ 1e!on- to the NDC as !essor upon the e8piration of the !ease period. Accordin-!/, %A&C introduced per+anent i+prove+ents and structures as re4uired 1/ the ter+s of the contract. After the co+p!etion of the industria! co+p!e8 pro:ect, for which %A&C spent P) +i!!ion, it was !eased to various +anufacturers, industria!ists and other 1usiness+en there1/ -eneratin- hundreds of :o1s.L)M On <une *, 500, 1efore the e8piration of the ten " 3#$/ear period under the second !ease contract, %A&C wrote a !etter to NDC indicatin- its e8ercise of the option to renew the !ease for another ten " 3# /ears. As no response was received fro+ NDC, %A&C sent another !etter on Au-ust ,, 500, reiteratin- its desire to renew the contract and a!so re4uestin- for priorit/ to ne-otiate for its purchase shou!d NDC opt to se!! the !eased
pre+ises.L(M NDC sti!! did not rep!/ 1ut continued to accept renta! pa/+ents fro+ %A&C and a!!owed the !atter to re+ain in possession of the propert/. So+eti+e after Septe+1er 500, %A&C discovered that NDC had decided to secret!/ dispose the propert/ to a third part/. On Octo1er , , 500, %A&C fi!ed in the &TC a co+p!aint for specific perfor+ance, da+a-es with pre!i+inar/ in:unction and te+porar/ restrainin- order.L.M In the +eanti+e, then President Cora6on C. A4uino issued 2e+orandu+ Order No. , ' dated <anuar/ (, 505, orderin- the transfer of the who!e NDC Co+pound to the Nationa! %overn+ent, which in turn wou!d conve/ the said propert/ in favor of PCP at ac4uisition cost. The +e+orandu+ order cited the serious need of PCP, considered the QPoor 2anKs Cniversit/,R to e8pand its ca+pus, which ad:oins the NDC Co+pound, to acco++odate its -rowin- student popu!ation, and the wi!!in-ness of PCP to 1u/ and of NDC to se!! its propert/. The order of conve/ance of the 3.* $hectare propert/ wou!d auto+atica!!/ resu!t in the cance!!ation of NDCKs tota! o1!i-ation in favor of the Nationa! %overn+ent in the a+ount of P)., 5*,,3 .('.L0M On =e1ruar/ ,3, 505, the &TC issued a writ of pre!i+inar/ in:unction en:oinin- NDC and its attorne/s, representatives, a-ents and an/ other persons assistin- it fro+ proceedin- with the sa!e and disposition of the !eased pre+ises.L5M On =e1ruar/ ,*, 505, PCP fi!ed a +otion to intervene as part/ defendant, c!ai+inthat as a purchaser pendente !ite of a propert/ su1:ect of !iti-ation it is entit!ed to intervene in the proceedin-s. The &TC -ranted the said +otion and directed PCP to fi!e its Answer$in$Intervention.L 3M PCP a!so de+anded that %A&C vacate the pre+ises, insistin- that the !atterKs !ease contract had a!read/ e8pired. Its de+and !etter unheeded 1/ %A&C, PCP fi!ed an e:ect+ent case "Civi! Case No. *'' (# 1efore the 2etropo!itan Tria! Court "2eTC# of 2ani!a on <anuar/ ', 55 .L M Due to this deve!op+ent, %A&C fi!ed an A+ended and>or Supp!e+enta! Co+p!aint to inc!ude as additiona! defendants PCP, Aonora1!e E8ecutive Secretar/ Oscar Or1os and <ud-e Ernesto A. &e/es of the 2ani!a 2eTC, and to en:oin the afore$+entioned defendants fro+ prosecutin- Civi! Case No. *'' ( for e:ect+ent. A te+porar/ restrainin- order was su1se4uent!/ issued 1/ the &TC en:oinin- PCP fro+ prosecutin- and <ud-e =rancisco Bri!!antes, <r. fro+ proceedin- with the e:ect+ent case.L ,M In its Second A+ended and>or Supp!e+enta! Co+p!aint, %A&C ar-ued that 2e+orandu+ Order No. , ' is a nu!!it/, for 1ein- vio!ative of the writ of in:unction issued 1/ the tria! court, apart fro+ 1ein- an infrin-e+ent of the Constitutiona! prohi1ition a-ainst i+pair+ent of o1!i-ation of contracts, an encroach+ent on !e-is!ative functions and a 1i!! of attainder. In the a!ternative, shou!d the tria! court ad:ud-e the +e+orandu+ order as va!id, %A&C contended that its e8istin- ri-ht +ust sti!! 1e respected 1/ a!!owin- it to purchase the !eased pre+ises.L *M Pre$tria! was set 1ut was suspended upon a-ree+ent of the parties to await the fina! reso!ution of a si+i!ar case invo!vin- NDC, PCP and another !essee of NDC, =irestone Cera+ics, Inc. "=irestone#, then pendin- 1efore the &TC of Pasa/ Cit/.L 'M
On Nove+1er ', ,33 , this Court rendered a decision in %.&. Nos. '*) * "Po!/technic Cniversit/ of the Phi!ippines v. Court of Appea!s# and '*)53 "Nationa! Deve!op+ent Corporation v. =irestone Cera+ics, Inc.#,L )M which dec!ared that the sa!e to PCP 1/ NDC of the portion !eased 1/ =irestone pursuant to 2e+orandu+ Order No. , ' vio!ated the ri-ht of first refusa! -ranted to =irestone under its third !ease contract with NDC. @e thus decreedB @AE&E=O&E, the petitions in %.&. No. '*) * and %.&. No. '*)53 are DENIED. Inas+uch as the first contract of !ease fi8ed the area of the !eased pre+ises at ,.53 0 hectares whi!e the second contract p!aced it at ,.(3 hectares, !et a -round surve/ of the !eased pre+ises 1e i++ediate!/ conducted 1/ a du!/ !icensed, re-istered surve/or at the e8pense of private respondent =I&ESTONE CE&A2ICS, INC., within two ",# +onths fro+ the fina!it/ of the :ud-+ent in this case. Thereafter, private respondent =I&ESTONE CE&A2ICS, INC., sha!! have si8 "(# +onths fro+ receipt of the approved surve/ within which to e8ercise its ri-ht to purchase the !eased propert/ at P ,)33.33 per s4uare +eter, and petitioner Po!/technic Cniversit/ of the Phi!ippines is ordered to reconve/ the propert/ to =I&ESTONE CE&A2ICS, INC., in the e8ercise of its ri-ht of first refusa! upon pa/+ent of the purchase price thereof.
SO O&DE&ED.L (M
The &TC resu+ed the proceedin-s and when +ediation and pre$tria! fai!ed to sett!e the case a+ica1!/, tria! on the +erits ensued.L .M On Nove+1er ,), ,33', the &TC rendered its decision upho!din- the ri-ht of first refusa! -ranted to %A&C under its !ease contract with NDC and orderin- PCP to reconve/ the said portion of the propert/ in favor of %A&C. The dispositive portion readsB @AE&E=O&E, pre+ises considered, :ud-+ent is here1/ rendered in favor of the p!aintiff and a-ainst the defendants orderin- the p!aintiff to cause i++ediate -round surve/ of the pre+ises su1:ect of the !eased contract under Lease Contract No. C$**$.. and C$ ,$.0 +easurin- ,,'3. and *,,,,.0 s4uare +eters respective!/, 1/ a du!/ !icensed and re-istered surve/or at the e8pense of the p!aintiff within two +onths fro+ receipt of this Decision and thereafter, the p!aintiff sha!! have si8 "(# +onths fro+ receipt of the approved surve/ within which to e8ercise its ri-ht to purchase the !eased propert/ at P))'..' per s4uare +eter. And fina!!/, the defendant PCP, in whose na+e the propert/ is tit!ed, is here1/ ordered to reconve/ the aforesaid propert/ to the p!aintiff in the e8ercise of its ri-ht of its option to 1u/ or first refusa! upon pa/+ent of the purchase price thereof.
The defendant NDC is here1/ further ordered to pa/ the p!aintiff attorne/Ks fees in the a+ount of P 33,333.33.
The case a-ainst defendant E8ecutive Secretar/ is dis+issed and this decision sha!! 1ind defendant 2etropo!itan Tria! Court, Branch ,3 of 2ani!a.
@ith costs a-ainst defendants NDC and PCP.
SO O&DE&ED.L 0M
NDC and PCP separate!/ appea!ed the decision to the CA.L 5M B/ Decision of <une ,), ,330, the CA affir+ed in toto the decision of the &TC.L,3M Both the &TC and the CA app!ied this CourtKs ru!inin Po!/technic Cniversit/ of the Phi!ippines v. Court of Appea!s "supra#, considerin- that %A&C is si+i!ar!/ situated as a !essee of NDC whose ri-ht of first refusa! under the !ease contract was vio!ated 1/ the sa!e of the propert/ to PCP without NDC havin- first offered to se!! the sa+e to %A&C despite the !atterKs re4uest for the renewa! of the !ease and>or to purchase the !eased pre+ises prior to the e8piration of the second !ease contract. The CA further a-reed with the &TCKs findinthat there was an i+p!ied renewa! of the !ease upon the fai!ure of NDC to act on %A&CKs repeated re4uests for renewa! of the !ease contract, 1oth ver1a! and written, and continuin- to accept +onth!/ renta! pa/+ents fro+ %A&C which was a!!owed to continue in possession of the !eased pre+ises. The CA a!so re:ected the ar-u+ent of NDC and PCP that even assu+inthat %A&C had the ri-ht of first refusa!, said ri-ht pertained on!/ to the second !ease contract, C$ ,$ .0 coverin- *,,,,.03 s4uare +eters, and not to the first !ease contract, C$**$.. coverin,,'3. s4uare +eters, which had a!read/ e8pired. It sustained the &TCKs findinthat the two ",# !ease contracts were interre!ated 1ecause each for+ed part of %A&CKs industria! co+p!e8, such that 1usiness operations wou!d 1e rendered use!ess and inoperative if the first contract were to 1e detached fro+ the other, as si+i!ar!/ he!d in the afore$+entioned case of Po!/technic Cniversit/ of the Phi!ippines v. Court of Appea!s. Petitioner PCP ar-ues that respondentKs ri-ht to e8ercise the option to purchase had e8pired with the ter+ination of the ori-ina! contract of !ease and was not carried over to the su1se4uent i+p!ied new !ease 1etween respondent and petitioner NDC. As testified to 1/ their witnesses Leticia Ca1anto- and Att/. &hoe! 2a1a66a, there was no a-ree+ent or docu+ent to the effect that respondentKs re4uest for e8tension or renewa! of the su1:ect contracts of !ease for another ten " 3# /ears was approved 1/ NDC. Aence, respondent can no !on-er e8ercise the option to purchase the !eased pre+ises when the sa+e were conve/ed to PCP pursuant to 2e+orandu+ Order No. , ' dated <anuar/ (, 505, !onafter the e8piration of C$**$.. and C$ ,$.0 in Septe+1er 500.L, M Petitioner PCP further contends that whi!e it is conceded that there was an i+p!ied new !ease 1etween respondent and petitioner NDC after the e8piration of the !ease contracts, the sa+e did not inc!ude the ri-ht of first refusa! ori-ina!!/ -ranted to respondent. The CA shou!d have app!ied the ru!inin Di6on v. 2a-sa/sa/L,,M that the !essee cannot an/ +ore e8ercise its option to purchase after the !apse of the one " #$/ear period of the !ease contract. @ith the i+p!icit renewa! of the !ease on a +onth!/ 1asis, the other ter+s of the ori-ina! contract of !ease which are revived in the i+p!ied new !ease under Artic!e (.3 of the Civi! Code are on!/ those ter+s which are -er+ane to the
!esseeKs ri-ht of continued en:o/+ent of the propert/ !eased. The provision entit!in- the !essee the option to purchase the !eased pre+ises is not dee+ed incorporated in the i+p!ied!/ renewed contract 1ecause it is a!ien to the possession of the !essee. Conse4uent!/, as in this case, respondentKs ri-ht of option to purchase the !eased pre+ises was not vio!ated despite the i+p!ied!/ renewed contract of !ease with NDC. &espondent cannot favora1!/ invo7e the decision in %.&. Nos. '*) * and '*)53 "Po!/technic Cniversit/ of the Phi!ippines v. Court of Appea!s# for the si+p!e reason, a+onothers, that un!i7e in said cases, the contracts of !ease of respondent with NDC were not +utua!!/ e8tended or renewed for another ten " 3# /ears. Thus, when the !eased pre+ises were conve/ed to PCP, respondent did not an/ +ore have an/ ri-ht of first refusa!, which incidenta!!/ appears on!/ in the second !ease contract and not in the first !ease contract.L,*M On its part, petitioner NDC assai!s the CA in ho!dinthat the contracts of !ease were i+p!ied!/ renewed for another ten " 3#$/ear period. The provisions of C$**$.. and C$ ,$.0 c!ear!/ state that the !essee is -ranted the option Qto renew for another ten " 3# /ears with the +utua! consent of 1oth parties.R As re-ards the continued receipt of renta!s 1/ NDC and possession 1/ the respondent of the !eased pre+ises, the i+p!ied!/ renewed !ease was on!/ +onth$to$+onth and not ten " 3# /ears since the renta!s are 1ein- paid on a +onth!/ 1asis, as he!d in Di6on v. 2a-sa/sa/.L,'M Petitioner NDC further fau!ts the CA in sustainin- the &TCKs decision which erroneous!/ -ranted respondent the option to purchase the !eased pre+ises at the rate of P))'..' per s4uare +eter, the sa+e rate for which NDC so!d the propert/ to petitioner PCP and>or the Nationa! %overn+ent, which is the +ere ac4uisition cost thereof. It +ust 1e noted that such consideration or rate was i+posed 1/ 2e+orandu+ Order No. , ' under the pre+ise that it sha!!, in effect, 1e a sa!e and>or purchase fro+ one " # -overn+ent a-enc/ to another. It was intended +ere!/ as a transfer of one " # user of the Nationa! %overn+ent to another, with the 1eneficiar/, PCP in this case, +ere!/ returninto the petitioner>transferor the cost of ac4uisition thereof, as appearin- on its accountin1oo7s. It does not in an/ wa/ ref!ect the true and fair +ar7et va!ue of the propert/, nor was it a price a Qwi!!in- se!!erR wou!d de+and and accept for partin- with his rea! propert/. Such 1enefit, therefore, cannot 1e e8tended to respondent as a private entit/, as the !atter does not share the sa+e poc7et, so to spea7, with the Nationa! %overn+ent.L,)M The issue to 1e reso!ved is whether or not our ru!inin Po!/technic Cniversit/ of the Phi!ippines v. Court of Appea!s app!ies in this case invo!vin- another !essee of NDC who c!ai+ed that the option to purchase the portion !eased to it was si+i!ar!/ vio!ated 1/ the sa!e of the NDC Co+pound in favor of PCP pursuant to 2e+orandu+ Order No. , '. @e ru!e in the affir+ative. The second !ease contract contained the fo!!owin- provisionB
III. It is +utua!!/ a-reed 1/ the parties that this Contract of Lease sha!! 1e in fu!! force and effect for a period of ten " 3# /ears counted fro+ the effectivit/ of the pa/+ent of renta! as provided under su1$para-raph "1# of Artic!e I, with option to renew for another ten " 3# /ears with the +utua! consent of 1oth parties. In no case shou!d the renta!s 1e increased 1/ +ore than 33G of the ori-ina! a+ount fi8ed.
Lessee sha!! a!so have the option to purchase the area !eased, the price to 1e ne-otiated and deter+ined at the ti+e the option to purchase is e8ercised. LE2PAASIS SCPPLIEDM
An option is a contract 1/ which the owner of the propert/ a-rees with another person that the !atter sha!! have the ri-ht to 1u/ the for+erKs propert/ at a fi8ed price within a certain ti+e. It is a condition offered or contract 1/ which the owner stipu!ates with another that the !atter sha!! have the ri-ht to 1u/ the propert/ at a fi8ed price within a certain ti+e, or under, or in co+p!iance with certain ter+s and conditions9 or which -ives to the owner of the propert/ the ri-ht to se!! or de+and a sa!e.L,(M It 1inds the part/, who has -iven the option, not to enter into the principa! contract with an/ other person durin- the period desi-nated, and, within that period, to enter into such contract with the one to who+ the option was -ranted, if the !atter shou!d decide to use the option. L,.M Cpon the other hand, a ri-ht of first refusa! is a contractua! -rant, not of the sa!e of a propert/, 1ut of the first priorit/ to 1u/ the propert/ in the event the owner se!!s the sa+e. L,0M As distin-uished fro+ an option contract, in a ri-ht of first refusa!, whi!e the o1:ect +i-ht 1e +ade deter+inate, the e8ercise of the ri-ht of first refusa! wou!d 1e dependent not on!/ on the ownerKs eventua! intention to enter into a 1indin- :uridica! re!ation with another 1ut a!so on ter+s, inc!udin- the price, that are /et to 1e fir+ed up.L,5M As the option to purchase c!ause in the second !ease contract has no definite period within which the !eased pre+ises wi!! 1e offered for sa!e to respondent !essee and the price is +ade su1:ect to ne-otiation and deter+ined on!/ at the ti+e the option to 1u/ is e8ercised, it is o1vious!/ a +ere ri-ht of refusa!, usua!!/ inserted in !ease contracts to -ive the !essee the first crac7 to 1u/ the propert/ in case the !essor decides to se!! the sa+e. That respondent was -ranted a ri-ht of first refusa! under the second !ease contract appears not to have 1een disputed 1/ petitioners. @hat petitioners assai! is the CAKs erroneous conc!usion that such ri-ht of refusa! su1sisted even after the e8piration of the ori-ina! !ease period, when respondent was a!!owed to continue sta/inin the !eased pre+ises under an i+p!ied renewa! of the !ease and without the ri-ht of refusa! carried over to such +onth$to$+onth !ease. Petitioners thus +aintain that no ri-ht of refusa! was vio!ated 1/ the sa!e of the propert/ in favor of PCP pursuant to 2e+orandu+ Order No. , '. PetitionersK position is untena1!e. @hen a !ease contract contains a ri-ht of first refusa!, the !essor has the !e-a! dut/ to the !essee not to se!! the !eased propert/ to an/one at an/ price unti! after the !essor has +ade an offer to se!! the propert/ to the !essee and the !essee has fai!ed to accept it. On!/ after the !essee has fai!ed to e8ercise his ri-ht of first priorit/ cou!d the !essor se!! the propert/ to other 1u/ers under the sa+e ter+s and conditions offered to the !essee, or under ter+s and conditions +ore favora1!e to the !essor.L*3M &ecords showed that durin- the hearin- on the app!ication for a writ of pre!i+inar/ in:unction, respondent adduced in evidence a !etter of Antonio A. Aenson dated ) <u!/ 500 addressed to 2r. <a7e C. La-onera, Director and Specia! Assistant to E8ecutive
Secretar/ Cata!ino 2acarae-, reviewin- a proposed +e+orandu+ order su1+itted to President Cora6on C. A4uino transferrin- the who!e NDC Co+pound, inc!udin- the pre+ises !eased 1/ respondent, in favor of petitioner PCP. This !etter was offered in evidence 1/ respondent to prove the e8istence of docu+ents as of that date and even prior to the e8piration of the second !ease contract or the !apse of the ten " 3#$/ear period counted fro+ the effectivit/ of the renta! pa/+ent $$ that is, one hundred and fift/ " )3# da/s fro+ the si-ninof the contract "2a/ ', 5.0#, as provided in Art. I, para-raph "1# of C$ ,$.0, or on Octo1er , 500. &espondent thus ti+e!/ e8ercised its option to purchase on Au-ust ,, 500. Aowever, considerin- that NDC had 1een ne-otiatin- throu-h the Nationa! %overn+ent for the sa!e of the propert/ in favor of PCP as ear!/ as <u!/ ), 500 without first offerin- to se!! it to respondent and even when respondent co++unicated its desire to e8ercise the option to purchase -ranted to it under the !ease contract, it is c!ear that NDC vio!ated respondentKs ri-ht of first refusa!. Cnder the pre+ises, the +atter of the ri-ht of refusa! not havin- 1een carried over to the i+p!ied!/ renewed +onth$to$+onth !ease after the e8piration of the second !ease contract on Octo1er , , 500 1eco+es irre!evant since at the ti+e of the ne-otiations of the sa!e to a third part/, petitioner PCP, respondentKs ri-ht of first refusa! was sti!! su1sistin-. Petitioner NDC in its +e+orandu+ contended that the CA erred in app!/in- the ru!inin Po!/technic Cniversit/ of the Phi!ippines v. Court of Appea!s pointin- out that the case of !essee =irestone Cera+ics, Inc. is different 1ecause the !ease contract therein had not /et e8pired whi!e in this case respondentKs !ease contracts have a!read/ e8pired and never renewed. The date of the e8piration of the !ease contract in said case is Dece+1er * , 505 which is prior to the issuance of 2e+orandu+ Order No. , ' on <anuar/ (, 505. In contrast, respondentKs !ease contracts had a!read/ e8pired "Septe+1er 500# at the ti+e said +e+orandu+ order was issued.L* M Such contention does not ho!d water. As a!read/ +entioned, the rec7onin- point of the offer of sa!e to a third part/ was not the issuance of 2e+orandu+ Order No. , ' on <anuar/ (, 505 1ut the co++ence+ent of such ne-otiations as ear!/ as <u!/ 500 when respondentKs ri-ht of first refusa! was sti!! su1sistin- and the !ease contracts sti!! in force. Petitioner NDC did not 1other to respond to respondentKs !etter of <une *, 500 infor+init of respondentKs e8ercise of the option to renew and re4uestin- to discuss further the +atter with NDC, nor to the su1se4uent !etter of Au-ust ,, 500 reiteratin- the re4uest for renewin- the !ease for another ten " 3# /ears and a!so the e8ercise of the option to purchase under the !ease contract. Petitioner NDC had dis+issed these !etters as Q+ere infor+ative in nature, and a re4uest at its 1est.RL*,M Perusa! of the !etter dated Au-ust ,, 500, however, 1e!ies such c!ai+ of petitioner NDC that it was +ere!/ infor+ative, thusB
Au-ust ,, 500
AON. ANTONIO AENSON
%enera! 2ana-er NATIONAL DEDELOP2ENT CO2PANE *.. Se"n#. %i! <. Pu/at Avenue 2a7ati, 2etro 2ani!a
&E=B
Contract of Lease Nos. C$**$.. I C$ ,$.0
Dear SirB
This is further to our ear!ier !etter dated <une *, 500 for+a!!/ advisin- /our -oodse!ves of our intention to e8ercise our option for another ten " 3# /ears. Shou!d the Nationa! Deve!op+ent Co+pan/ opt to se!! the propert/ covered 1/ said !eases, we a!so re4uest for priorit/ to ne-otiate for its purchase at ter+s and>or conditions +utua!!/ accepta1!e.
As a 1ac7-rounder, we wish to infor+ /ou that since the start of our !ease, we have i+proved on the propert/ 1/ constructin- 1ode-a$t/pe 1ui!din-s which present!/ house a!! !e-iti+ate tradin- and +anufacturin- concerns. These 1usiness are su1stantia! ta8pa/ers, e+p!o/ not !ess than *33 e+p!o/ees and contri1ute even forei-n earnin-s.
It is in this conte8t that we are re4uestin- for the e8tension of the !ease contract to prevent serious econo+ic disruption and dis!ocation of the 1usiness concerns, as we!! as provide ourse!ves, the !essee, an opportunit/ to recoup our invest+ents and o1tain a fair return thereof.
Eour favora1!e consideration on our re4uest wi!! 1e ver/ +uch appreciated.
ver/ tru!/ /ours,
TIC AAN TEN% PresidentL**M
As to petitionersK ar-u+ent that respondentKs ri-ht of first refusa! can 1e invo7ed on!/ with respect to the second !ease contract which e8press!/ provided for the option to purchase 1/ the !essee, and not in the first !ease contract which contained no such c!ause, we sustain the &TC and CA in findinthat the second contract, coverin- an area of *,,,,.03 s4uare +eters, is interre!ated to and insepara1!e fro+ the first contract over ,,'3. s4uare +eters. The structures 1ui!t on the !eased pre+ises, which are ad:acent to each other, for+ part of an inte-rated s/ste+ of a co++ercia! co+p!e8 !eased out to +anufacturers, fa1ricators and other 1usinesses. Petitioners su1+itted a s7etch p!an and pictures ta7en of the drivewa/s, in an effort to show that the !eased pre+ises can 1e used separate!/ 1/ respondent, and that the two ",# !ease contracts are distinct fro+ each other.L*'M Such was a desperate atte+pt to downp!a/ the co++ercia! purpose of respondentKs su1stantia! i+prove+ents which -reat!/ contri1uted to the increased va!ue of the !eased pre+ises. To prove that petitioner NDC had considered the !eased pre+ises as a sin-!e unit, respondent su1+itted evidence showin- that NDC issued on!/ one " # receipt for the renta! pa/+ents for the two portions.L*)M &espondent further presented the 1!ueprint p!an prepared 1/ its witness, En-r. A!e:andro E. Tinio, who supervised the construction of the structures on the !eased pre+ises, to show the 1ui!din- concept as a one$stop industria! site and inte-rated co++ercia! co+p!e8.L*(M In fine, the CA was correct in dec!arin- that there e8ists no :ustifia1!e reason not to app!/ the sa+e rationa!e in Po!/technic Cniversit/ of the Phi!ippines v. Court of Appea!s in the case of respondent who was si+i!ar!/ pre:udiced 1/ petitioner NDCKs sa!e of the propert/ to PCP, as to entit!e the respondent to e8ercise its option to purchase unti! Octo1er 500 inas+uch as the 2a/ ', 5.0 contract e+1odied the option to renew the !ease for another ten " 3# /ears upon +utua! consent and -ivin- respondent the option to purchase the !eased pre+ises for a price to 1e ne-otiated and deter+ined at the ti+e such option was e8ercised 1/ respondent. It is to 1e noted that 2e+orandu+ Order No. , ' itse!f dec!ared that the transfer is Qsu1:ect to such !iens>!eases e8istin- Lon the su1:ect propert/M.R ThusB ...we now proceed to deter+ine whether =I&ESTONE shou!d 1e a!!owed to e8ercise its ri-ht of first refusa! over the propert/. Such ri-ht was e8press!/ stated 1/ NDC and =I&ESTONE in par. FD of their third contract deno+inated as A$ 3$.0 e8ecuted on ,, Dece+1er 5.0 which, as found 1/ the courts a 4uo, was interre!ated to and insepara1!e fro+ their first contract deno+inated as C$*3$() e8ecuted on ,' Au-ust 5() and their second contract deno+inated as C$,($(0 e8ecuted on 0 <anuar/ 5(5. Thus $
Shou!d the LESSO& desire to se!! the !eased pre+ises durin- the ter+ of this A-ree+ent, or an/ e8tension thereof, the LESSO& sha!! first -ive to the LESSEE, which sha!! have the ri-ht of first option to purchase the !eased pre+ises su1:ect to +utua! a-ree+ent of 1oth parties.
In the instant case, the ri-ht of first refusa! is an inte-ra! and indivisi1!e part of the contract of !ease and is insepara1!e fro+ the who!e contract. The consideration for the ri-ht is 1ui!t into the reciproca! o1!i-ations of the parties. Thus, it is not correct for petitioners to insist that there was no consideration paid 1/ =I&ESTONE to entit!e it to the
e8ercise of the ri-ht, inas+uch as the stipu!ation is part and parce! of the contract of !ease +a7in- the consideration for the !ease the sa+e as that for the option.
It is a sett!ed princip!e in civi! !aw that when a !ease contract contains a ri-ht of first refusa!, the !essor is under a !e-a! dut/ to the !essee not to se!! to an/1od/ at an/ price unti! after he has +ade an offer to se!! to the !atter at a certain price and the !essee has fai!ed to accept it. The !essee has a ri-ht that the !essorKs first offer sha!! 1e in his favor.
The option in this case was incorporated in the contracts of !ease 1/ NDC for the 1enefit of =I&ESTONE which, in view of the tota! a+ount of its invest+ents in the propert/, wanted to 1e assured that it wou!d 1e -iven the first opportunit/ to 1u/ the propert/ at a price for which it wou!d 1e offered. Consistent with their a-ree+ent, it was then i+p!icit for NDC to have first offered the !eased pre+ises of ,.(3 hectares to =I&ESTONE prior to the sa!e in favor of PCP. On!/ if =I&ESTONE fai!ed to e8ercise its ri-ht of first priorit/ cou!d NDC !awfu!!/ se!! the propert/ to petitioner PCP.L*.M LE2PAASIS SCPPLIEDM
As we further ru!ed in the afore$cited case, the contractua! -rant of a ri-ht of first refusa! is enforcea1!e, and fo!!owin- an ear!ier ru!inin E4uatoria! &ea!t/ Deve!op+ent, Inc. v. 2a/fair Theater, Inc.,L*0M the e8ecution of such ri-ht consists in directin- the -rantor to co+p!/ with his o1!i-ation accordin- to the ter+s at which he shou!d have offered the propert/ in favor of the -rantee and at that price when the offer shou!d have 1een +ade. @e then deter+ined the proper rate at which the !eased portion shou!d 1e reconve/ed to respondent 1/ PCP, to who+ the !essor NDC so!d it in vio!ation of respondent !esseeKs ri-ht of first refusa!, as fo!!owsB
It now 1eco+es apropos to as7 whether the courts a 4uo were correct in fi8in- the proper consideration of the sa!e at P ,)33.33 per s4uare +eter. In contracts of sa!e, the 1asis of the ri-ht of first refusa! +ust 1e the current offer of the se!!er to se!! or the offer to purchase of the prospective 1u/er. On!/ after the !essee$-rantee fai!s to e8ercise its ri-ht under the sa+e ter+s and within the period conte+p!ated can the owner va!id!/ offer to se!! the propert/ to a third person, a-ain, under the sa+e ter+s as offered to the -rantee. It appearin- that the who!e NDC co+pound was so!d to PCP for P))'..' per s4uare +eter, it wou!d have 1een +ore proper for the courts 1e!ow to have ordered the sa!e of the propert/ a!so at the sa+e price. Aowever, since =I&ESTONE never raised this as an issue, whi!e on the other hand it ad+itted that the va!ue of the propert/ stood at P ,)33.33 per s4uare +eter, then we see no co+pe!!in- reason to +odif/ the ho!din-s of the courts a 4uo that the !eased pre+ises 1e so!d at that price.L*5M LE2PAASIS SCPPLIEDM
In the !i-ht of the fore-oin-, we ho!d that respondent, which did not offer an/ a+ount to petitioner NDC, and neither disputed the P ,)33.33 per s4uare +eter actua! va!ue of NDCKs propert/ at that ti+e it was so!d to PCP at P))'..' per s4uare +eter, as du!/ considered 1/ this Court in the =irestone case, shou!d 1e 1ound 1/ such deter+ination. Accordin-!/, the price at which the !eased pre+ises shou!d 1e so!d to respondent in the e8ercise of its ri-ht of first refusa! under the !ease contract with petitioner NDC, which was pe--ed 1/ the &TC at P))'..' per s4uare +eter, shou!d 1e ad:usted to P ,)33.33 per s4uare +eter, which +ore accurate!/ ref!ects its true va!ue at that ti+e of the sa!e in favor of petitioner PCP. Indeed, 1asic is the ru!e that a part/ to a contract cannot uni!atera!!/ withdraw a ri-ht of first refusa! that stands upon va!ua1!e consideration.L'3M @e have cate-orica!!/ ru!ed that it is not correct to sa/ that there is no consideration for the -rant of the ri-ht of first refusa! if such -rant is e+1odied in the sa+e contract of !ease. Since the stipu!ation for+s part of the entire !ease contract, the consideration for the !ease inc!udes the consideration for the -rant of the ri-ht of first refusa!. In enterin- into the contract, the !essee is in effect statin- that it consents to !ease the pre+ises and to pa/ the price a-reed upon provided the !essor a!so consents that, shou!d it se!! the !eased propert/, then, the !essee sha!! 1e -iven the ri-ht to +atch the offered purchase price and to 1u/ the propert/ at that price.L' M @e have further stressed that not even the avowed pu1!ic we!fare or the constitutiona! priorit/ accorded to education, invo7ed 1/ petitioner PCP in the =irestone case, wou!d serve as !icense for us, and an/ part/ for that +atter, to destro/ the sanctit/ of 1indin- o1!i-ations. @hi!e education +a/ 1e prioriti6ed for !e-is!ative and 1ud-etar/ purposes, it is dou1tfu! if such i+portance can 1e used to confiscate private propert/ such as the ri-ht of first refusa! -ranted to a !essee of petitioner NDC.L',M C!ear!/, no reversi1!e error was co++itted 1/ the CA in sustainin- respondentKs contractua! ri-ht of first refusa! and orderin- the reconve/ance of the !eased portion of petitioner NDCKs propert/ in its favor. @AE&E=O&E, the petitions are DENIED. The Decision dated Nove+1er ,), ,33' of the &e-iona! Tria! Court of 2a7ati Cit/, Branch '' in Civi! Case No. 00$,,*0, as affir+ed 1/ the Court of Appea!s in its Decision dated <une ,), ,330 in CA$%.&. CD No. 0'*55, is here1/ A==I&2ED with 2ODI=ICATION in that the price to 1e paid 1/ respondent %o!den Aori6on &ea!t/ Corporation for the !eased portion of the NDC Co+pound under Lease Contract Nos. C$**$.. and C$ ,$.0 is here1/ increased to P ,)33.33 per s4uare +eter. No pronounce+ent as to costs.
2CTCAL P&O2ISE TO BCE AND SELL

G.R. No. 106837 August 4, 1993 HENRY MACION and ANGELE MACION, petitioners, vs. HON. !A"AL M. G#IANI, $n %$s &a'a&$t( as ")*s$d$ng !udg* o+ t%* R*g$ona, -)$a, Cou)t .)an&% 14, Cota/ato C$t( and 0ELA 1I0A IN -I-#-E )*')*s*nt*d /( M . !O E"HINE LAN2A0ERA , respondents. Leonardo J. Rendon for petitioners.
Mama Dalandag for private respondent Dela Vida Institute.
ROMERO, J.: The subject of this litigation revolves around two (2) parcels of adjoining lots owned by petitioners which are the proposed extension sites of De La ida !nstitute, an educational institution located in "otabato "ity. #n $pril 2%, &''&, the petitioners and private respondent entered into a contract to sell under which ter(s, private respondent, as president of De la ida !nstitute, assured petitioners that they would buy the said properties on or before )uly *&, &''& in the a(ount of +&,,-.,....... !n the (eanti(e, petitioners surrendered the physical possession of the two lots to private respondent who pro(ptly built an edifice worth +/..,....... 1 0ut on )uly *&, &''&, the sale did not (ateriali1e. "onse2uently, petitioners filed a co(plaint for unlawful detainer against private respondent (3T"" "ivil "ase 4o. 2,*'). !n retaliation, private respondent filed a co(plaint for refor(ation of the contract to sell executed on $pril 2%, &''& ("ivil "ase -'2). 3 $fterwards, the parties (et to settle their differences. #n 5ebruary %, &''2, the parties entered into a co(pro(ise agree(ent which stipulated a(ong others that petitioners would give private respondent five (-) (onths to raise the a(ount of +2,.%.,......6 3 that in the event of failure to raise the said a(ount within the designated period, private respondent would vacate the pre(ises i((ediately. The co(pro(ise agree(ent, inter alia, provided7 %. that upon the execution of this agree(ent, the defendant will furnish the plaintiff with xerox copy of the land title for each lot which the latter (ay use for the purpose of providing infor(ation in securing a loan fro( any financing or ban8ing institution of their choice. ,. that if within the period of five (-) (onths fro( and after 5ebruary %, &''2, the plaintiff succeeds in obtaining funds for the purpose of settling their obligations with defendants in the total su( of +2,.%.,...... the latter shall oblige the(selves to execute, sign and deliver to the for(er the corresponding Deed of 9ale for the two (2) lots which is the subject of this case and turn:over to said plaintiff the owner;s duplicate copy of T"T 4os. T:22..< and T:22..- of the =egistry of Deeds for the "ity of "otabato. !n affir(ation of the co(pro(ise agree(ent, the 0oard of Trustees of De La ida "ollege passed thereafter a resolution expressing full support to the said agree(ent entered into between the parties. 4 #n 3arch &., &''2, private respondent wrote petitioners that >the co(pro(ise agree(ent we have had in the presence of )udge ?uiani is not the sa(e as per attached xerox copy you gave us.> !n that letter, which essentially was a counter proposal, private respondent said that the price of +2,.%.,...... was higher than they were willing to pay in the a(ount of +2,...,...... only. 4 #ther (atters ta8en up in the letter were7 De la ida !nstitute would ad(it students and hold classes until )uly %, &''2 but in case they (private respondent) fail to deliver the said a(ount, they would voluntarily vacate the pre(ises and that >in the event that the ban8 and other lending institutions give its nod and approval to our loan and re2uire the sub(ission of other docu(ents, you will give to us the Deed of 9ale and #wner;s copies of the Titles of the two (2) to t expedite release of the a(ount concerned.> 6 #n 3arch 2-, &''2, the trial court approved the co(pro(ise agree(ent dated 5ebruary %, &''2. Two (2) (onths after, private respondents, alleging that they had negotiated a loan fro( the 0an8 of the +hilippine !slands, wrote letters dated 3ay &', 2. and 2% re2uesting petitioners to execute with the( a contract to sell in their favor. #n 3ay 2/, &''2, private respondent filed with the trial court an urgent (otion for an order directing petitioners to execute a contract to sell in private respondent;s favor in accordance with paragraph , of the co(pro(ise agree(ent. 7 #n )uly /, &''2, petitioners filed a (otion for execution of judge(ent alleging that after a lapse of five (-) (onths fro( 5ebruary %, &''2, private respondent have failed to settle their obligations with petitioners. 8
!n its order dated $ugust %, &''2, respondent judge denied the (otion for execution and directed petitioners to execute the re2uired contract to sell in favor of private respondent. =espondent judge opined that the proxi(ate cause of private respondent;s failure to co(ply with the co(pro(ise agree(ent was the refusal of petitioners to execute a contract to sell as re2uired under the agree(ent. =espondent judge added that petitioners should have executed the contract to sell because anyway they would not be prejudiced since there was no transfer of ownership involved in a contract to sell. 9 @ence this instant petition for certiorari, with prayer for a te(porary restraining order enjoining respondent judge fro( enforcing its $ugust %, &''2 order. #n #ctober ,, &''2, petitioners filed an #(nibus Argent 3otion praying that private respondent be ordered to consign with the court below +&*-,...... representing rentals fro( 3ay &''& to )anuary &''2. !n our resolution dated 4ove(ber &/, &''2, we granted said prayer. #n 3arch ', &''2, private respondent consigned with the #ffice of the "ler8 of "ourt the su( of +&*-,....... #n 3arch 2', &''*, petitioners filed with the lower court a (otion to withdraw the consigned a(ount and on $pril -, &''*, the trial court released the consigned a(ount to petitioners. 10 The issue in the case at bar is whether or not respondent judge co((itted grave abuse of discretion in ordering petitioner to execute a contract to sell in favor of private respondent. Be dis(iss the petition. The resolution of this case hinges on whether the co(pro(ise agree(ent gives private respondent:buyer the right to de(and fro( petitioner:sellers the execution of a contract to sell in favor of the for(er. $pparently, paragraph , of the co(pro(ise agree(ent does not give such right to private respondent:buyer. To wit7 ,. that if within the period of five (-) (onths fro( and after 5ebruary %, &''2, the plaintiff succeeds in obtaining funds for the purpose of settling their obligations with defendants in the total su( of +2,.%.,...... the latter shall oblige the(selves to execute, sign and deliver to the for(er the corresponding Deed of Sale for the two (2) lots which is the subject of this case and turn:over to said plaintiff the owner;s duplicate copy of T"T 4os. T:22..< and T:22..- of the =egistry of Deeds for the "ity of "otabato. (!talics provided). 5ro( the aforecited paragraph, it is clear that the seller is obliged to execute a Deed of 9ale and not a "ontract to 9ell upon pay(ent of the full price of +2..% (illion. Thereafter, the sellers would turn over to the buyers, respondents herein, the owner;s duplicate copy of Transfer "ertificate of Title 4os. T:22..< and T:22..-. @owever, in the interpretation of the co(pro(ise agree(ent, we (ust delve in the conte(poraneous and subse2uent acts of the parties to fatho( the real intention of the parties. 11 $ review of the facts reveal that even prior to the signing of the co(pro(ise agree(ent and the filing of "ivil "ase 4o. -'2 before the trial court, the parties had already entered into a contract to sell. Thereafter, when the transaction failed to (ateriali1e, the parties filed suits against each other6 petitioners, their unlawful detainer case, and private respondent a co(plaint for refor(ation of contract, alleging that petitioners in fact had caused the preparation of the contract to sell dated $pril 2%, &''& with the understanding that the land would be used as a collateral in obtaining a loan with D0+. 9aid contract to sell was superseded by the co(pro(ise agree(ent entered into on 5ebruary %, &''2 containing the above2uoted paragraph. !t (ust be recalled that private respondent was given five (-) (onths fro( 5ebruary %, &''2, i. e., on or before )uly %, &''2 to secure the purchase price of the two (2) lots. Be note that within the ti(e fra(e agreed upon by the parties, private respondents wrote three (*) letters dated (ay &', 2. and 2% re2uesting petitioners to execute a contract to sell in its favor. Ander these factual circu(stances, we opine that the co(pro(ise agree(ent (ust be interpreted as bestowing upon private respondent:buyer the power to de(and a contract to sell fro( petitioner:sellers. Bhere the seller pro(ised to execute a deed of absolute sale upon co(pleting pay(ent of the price, it is a contract to sell. 13 !n the case at bar, the sale is still in the executory stage since the passing of title is subject to a suspensive condition, na(ely, that if private respondent is able to secure the needed funds to be used in the purchased of the two (2) lots owned by petitioners. $ (ere executory sale, one where the sellers (erely pro(ise to transfer the property at so(e
future date, or where so(e conditions have to be fulfilled before the contract is converted fro( an executory to an executed one, does not pass ownership over the real estate being sold. 13 !n our jurisdiction, it has been that an accepted bilateral pro(ise to buy and sell is in a sense si(ilar to, but not exactly the sa(e, as a perfected contract of sale because there is already a (eeting of (inds upon the thing which is the object of the contract and upon the price. 14 0ut a contract of sale is consu((ated only upon the delivery and pay(ent. !t cannot be denied that the co(pro(ise agree(ent, having been signed by both parties, is tanta(ount to a bilateral pro(ise to buy and sell a certain thing for a price certain. @ence, this gives the contracting parties rights in personam, such that each has the right to de(and fro( the other the fulfill(ent of their respective underta8ings. 14 De(andability (ay be exercised at any ti(e after the execution of the Deed. 16 The order of respondent judge directing petitioners to issue a contract to sell does not place petitioners in any danger of losing their property without consideration, for, to repeat, in a contract to sell there is no i((ediate transfer of ownership. !n contracts to sell, pay(ent is a positive suspensive condition, failure of which does not constitute a breach but an event that prevents the obligation of the vendor to convey title fro( (ateriali1ing, in accordance with $rticle &&/< of the "ivil "ode. 17 +etitioners as pro(isors were never obliged to convey title before the happening of the suspensive condition. !n fact, nothing stood in the way of their selling the property to another after a unsuccessful de(and for said price upon the expiration of the ti(e agreed upon. 9ince the period given by the petitioners under the co(pro(ise agree(ent has already lapsed, we order the trial court to fix anew a period within which private respondents could secure the needed funds for the purchase of the land. 18 3oreover, considering that private respondents have only consigned rentals fro( 3ay &''& to )anuary &''2 and have since accepted students for the present school year, it is only proper that they be ordered to deposit the (onthly rentals collected thereafter with the trial court. B@C=C5#=C, the instant petition is D!93!99CD. +etitioners are hereby ordered to CDC"ATC a contract to sell in favor of private respondents. #n the other hand, private respondent is ordered to DC+#9!T with the trial court current rentals pending consu((ation of the transaction between the parties. The trial court is ordered to 5!D anew the period within which private respondents (ay be given the opportunity to raise funds for the purchase of the two (2) adjoining lots owned by petitioners. 9# #=DC=CD. Feliciano, Bidin, Melo and Vitug, JJ., concur.

POLICITACION

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

POLICITACION

Uploaded by

Copyright:

Available Formats

POLICITACION G.R. No.

166862 December 20, 2006

CALLE<O, S&., <.B

The Case for the Petitioner

In his co+p!aint, the petitioner a!!e-ed, inter a!ia, the fo!!owin-B

,nd PAE2ENT P ,3,333

CAECJ NO. TOTAL P 3,(, .)' ,* ,0 P *3,(, .)'

.<u!io Tia+son $ $ $ $ $ $ ,. &enato %o6un $ $ $ $ $ $

P 3,333 ,(,('0.'3 ' ,)3 . 3 ,,, ,(.30 ',0( .* ,',,*..(, $$$$$$

','().53 ,* ,. ,* ,.5 ,* ,0' ,* ,5 ,* ,0* $$$$$$ $$$$$$

,* ,0) )(,('0.'3 ) ,)3 . 3 *,, ,(.30 ,',0( .* *',,*..(,

,* ,03 $$$$$$ $$$$$$

),333 $$$$$$ 3,333

$$$$$$ $$$$$$ $$$$$$

),333 $$$$$$ 3,333

,0. Au-usto To!entino ,5. Si8to Aernande6

),333 $$$$$$ 3,333 $$$$$$ $$$$$$

,*.0..3 $$$$$$ $$$$$$ $$$$$$

,* ,.3 $$$$$$ $$$$$$ $$$$$$ $$$$$$

3,333 $$$$$$ $$$$$$

A cop/ of the !etter is hereto attached as Anne8 ?A? etc.9

'. 2a7in- the @rit of Pre!i+inar/ In:unction per+anent9

HB But /ou have not +et an/ of these LacsonsO

AB Not /et, sir.

AB I do not 7now, sir.

AB I a+ aware of that, sir.*5

@e are one with the Court of Appea!s in its ru!in- thatB

A B @hen there are "sic# no +ore !e-a! i+pedi+ent e8ist, sir.

A B @e have a-reed to that, sir.

<ust answer the 4uestion, 2r. Ta/a-.

Ees, Eour Aonor.

H B Did /ou e8p!ain to the+O

H B @hat did /ou te!! the+O

HB Incidenta!!/, do /ou 7new "sic# these Lacsons individua!!/O

POLYTECHNIC 2NI"ER#ITY O1 THE PHILIPPINE#, Petitioner,

G.R. No. 184612

GOLDEN HORI3ON REALTY CORPORATION,

"ILLARAMA, !R., J.$

@ith costs a-ainst defendants NDC and PCP.

Contract of Lease Nos. C$**$.. I C$ ,$.0

Eour favora1!e consideration on our re4uest wi!! 1e ver/ +uch appreciated.

ver/ tru!/ /ours,

TIC AAN TEN% President7448

2EANIN% O= SEPA&ATE CONSIDE&ATION %.&. No. 5.**, Octo1er 3, 55

Tran4ui!ino =. 2eris for petitioners.

A-ripino %. 2or-a for private respondents.

The facts of the case are as fo!!owsB

2A&INA DILLA2O& &OBE&TO &EEES

Si-ned in the Presence OfB

2A&IANO T. SCNI%A &OSALINDA S. EC%ENIO

&EPCBLIC O= TAE PAILIPPINES# CITE O= 2ANILA # S.S.

The counterc!ai+ is here1/ DIS2ISSED, for LACJ O= 2E&IT.

SO O&DE&ED. "pp. ,'$,), &o!!o#

Narvasa "Chair+an# and Cru6, <<., concur.

%riSo$A4uino, <., too7 no part.

NO SEPA&ATE CONSIDE&ATION %.&. No. L$,)'5' <une ', 5.,

NICOLAS SANCAET, p!aintiff$appe!!ee, vs. SEDE&INA &I%OS, defendant$appe!!ant.

Santia-o =. Bautista for p!aintiff$appe!!ee.

<esus %. Di!!a+ar for defendant$appe!!ant.

Castro, <., too7 no part.

ANTONIO, <., concurrin-B

I concur in the opinion of the Chief <ustice.

ANTONIO, <., concurrin-B

I concur in the opinion of the Chief <ustice.

,* ,0) )(,('0.'3 ) ,)3 . 3 ,, ,(.30 ,',0( . ',,..(,