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Doc. No. 1526;

Page No. 24;

Book No. 38;

Series of 1971. (pp. 25-29, Rollo)

According to Macaria, when her husband, Roberto Reyes, retired in 1984, they offered to repurchase the lot sold by them to

the Villamor spouses but Marina Villamor refused and reminded them instead that the Deed of Option in fact gave them the

option to purchase the remaining portion of the lot.

The Villamors, on the other hand, claimed that they had expressed their desire to purchase the remaining 300 square meter

portion of the lot but the Reyeses had been ignoring them. Thus, on July 13, 1987, after conciliation proceedings in the

barangay level failed, they filed a complaint for specific performance against the Reyeses.

On July 26, 1989, j udgment was rendered by the trial court in favor of the Villamor spouses, the dispositive portion of which

states:

WHEREFORE, and (sic) in view of the foregoing, judgment is hereby rendered in favor of the plaintiffs and

against the defendants ordering the defendant MACARIA LABING-ISA REYES and ROBERTO REYES, to sell

unto the plaintiffs the land covered by T.C.T No. 39934 of the Register of Deeds of Caloocan City, to pay

the plaintiffs the sum of P3,000.00 as and for attorney's fees and to pay the cost of suit.

The counterclaim is hereby DISMISSED, for LACK OF MERIT.

SO ORDERED. (pp. 24-25, Rollo)

Not satisfied with the decision of the trial court, the Reyes spouses appealed to the Court of Appeals on the following

assignment of errors:

1. HOLDING THAT THE DEED OF OPTION EXECUTED ON NOVEMBER 11, 1971 BETWEEN THE PLAINTIFF-

APPELLEES AND DEFENDANT-APPELLANTS IS STILL VALID AND BINDING DESPITE THE LAPSE OF MORE

THAN THIRTEEN (13) YEARS FROM THE EXECUTION OF THE CONTRACT;

2. FAILING TO CONSIDER THAT THE DEED OF OPTION CONTAINS OBSCURE WORDS AND STIPULATIONS

WHICH SHOULD BE RESOLVED AGAINST THE PLAINTIFF-APPELLEES WHO UNILATERALLY DRAFTED AND

PREPARED THE SAME;

3. HOLDING THAT THE DEED OF OPTION EXPRESSED THE TRUE INTENTION AND PURPOSE OF THE

PARTIES DESPITE ADVERSE, CONTEMPORANEOUS AND SUBSEQUENT ACTS OF THE PLAINTIFF-APPELLEES;

4. FAILING TO PROTECT THE DEFENDANT-APPELLANTS ON ACCOUNT OF THEIR IGNORANCE PLACING

THEM AT A DISADVANTAGE IN THE DEED OF OPTION;

5. FAILING TO CONSIDER THAT EQUITABLE CONSIDERATION TILT IN FAVOR OF THE DEFENDANT-

APPELLANTS; and

6. HOLDING DEFENDANT-APPELLANTS LIABLE TO PAY PLAINTIFF-APPELLEES THE AMOUNT OF P3,000.00

FOR AND BY WAY OF ATTORNEY'S FEES. (pp. 31-32, Rollo)

On February 12, 1991, the Court of Appeals rendered a decision reversing the decision of the trial court and dismissing

complaint. The reversal of the trial court's decision was premised on the finding of respondent court that the Deed of

void for lack of consideration.

The Villamor spouses brought the instant petition for review on certiorari on the following grounds:

I. THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE PHRASE WHENEVER THE NEED

SUCH SALE ARISES ON OUR (PRIVATE RESPONDENT) PART OR ON THE PART OF THE SPOUSES JU

VILLAMOR AND MARINA V. VILLAMOR' CONTAINED IN THE DEED OF OPTION DENOTES A SUSPE

CONDITION;

II. ASSUMING FOR THE SAKE OF ARGUMENT THAT THE QUESTIONED PHRASE IS INDEED A CONDTHE COURT OF APPEALS ERRED IN NOT FINDING, THAT THE SAID CONDITION HAD ALREADY BEE

FULFILLED;

III. ASSUMING FOR THE SAKE OF ARGUMENT THAT THE QUESTIONED PHRASE IS INDEED A COND

THE COURT OF APPEALS ERRED IN HOLDING THAT THE IMPOSITION OF SAID CONDITION PREVE

THE PERFECTION OF THE CONTRACT OF SALE DESPITE THE EX PRESS OFFER AND ACCEPTANCE

CONTAINED IN THE DEED OF OPTION;

IV. THE COURT OF APPEALS ERRED IN FINDING THAT THE DEED OF OPTION IS VOID FOR LACK OF

CONSIDERATION;

V. THE COURT OF APPEALS ERRED IN HOLDING THAT A DISTINCT CONSIDERATION IS NECESSARY

SUPPORT THE DEED OF OPTION DESPITE THE EXPRESS OFFER AND ACCEPTANCE CONTAINED TH

(p. 12, Rollo)

The pivotal issue to be resolved in this case is the validity of the Deed of Option whereby the private respondents agre

their lot to petitioners "whenever the need of such sale arises, either on our part (private respondents) or on the part

Villamor and Marina Villamor (petitioners)." The court a quo, rule that the Deed of Option was a valid written agreeme

between the parties and made the following conclusions:

xxx xxx xxx

It is interesting to state that the agreement between the parties are evidence by a writing, hence

controverting oral testimonies of the herein defendants cannot be any better than the document

evidence, which, in this case, is the Deed of Option(Exh. "A" and "A-a")

The law provides that when the terms of an agreement have been reduced to writing it is to be

considered as containing all such terms, and therefore, there can be, between the parties and th

successors in interest no evidence of their terms of the agreement, other than the contents of th

writing. ... (Section 7 Rule 130 Revised Rules of Court) Likewise, it is a general and most inflexibl

that wherever written instruments are appointed either by the requirements of law, or by the cof the parties, to be the repositories and memorials of truth, any other evidence is excluded fro

used, either as a substitute for such instruments, or to contradict or alter them. This is a matter

principle and of policy; of principle because such instruments are in their nature and origin entit

much higher degree of credit than evidence of policy, because it would be attended with great m

if those instruments upon which man's rights depended were liable to be im peached by loose co

evidence. Where the terms of an agreement are reduced to writing, the document itself, being

constituted by the parties as the expositor of their intentions, it is the only instrument of evidenc

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respect of that agreement which the law will recognize so long as it e xists for the purpose of evidence.

(Starkie, EV, pp. 648, 655 cited in Kasheenath vs. Chundy, W.R. 68, cited in Francisco's Rules of Court,

Vol. VII Part I p. 153) (Emphasis supplied, pp. 126-127, Records).

The respondent appellate court, however, ruled that the said deed of option is void for lack of consideration. The appellate

court made the following disquisitions:

Plaintiff-appellees say they agreed to pay P70.00 per square meter for the portion purchased by them

although the prevailing price at that time was only P25.00 in consideration of the option to buy the

remainder of the land. This does not seem to be the case. In the first place, the deed of sale was never

produced by them to prove their claim. Defendant-appellants testified that no copy of the deed of sale

had ever been given to them by the plaintiff-appellees. In the second place, if this was really the

condition of the prior sale, we see no reason why it should be reiterated in the Deed of Option. On thecontrary, the alleged overprice paid by the plaintiff-appellees is given in the Deed as reason for the

desire of the Villamors to acquire the land rather than as a consideration for the option given to them,

although one might wonder why they took nearly 13 years to invoke their right if they really were in due

need of the lot.

At all events, the consideration needed to support a unilateral promise to sell is a dinstinct one, not

something that is as uncertain as P70.00 per square meter which is allegedly 'greatly higher than the

actual prevailing value of lands.' A sale must be for a price certain (Art. 1458). For how much the portion

conveyed to the plaintiff-appellees was sold so that the balance could be considered the consideration

for the promise to sell has not been shown, beyond a mere allegation that it was very much below

P70.00 per square meter.

The fact that plaintiff-appellees might have paid P18.00 per square meter for another land at the time of

the sale to them of a portion of defendant-appellant's lot does not necessarily prove that the prevailing

market price at the time of the sale was P18.00 per square meter. (In fact they claim it was P25.00). It is

improbable that plaintiff-appellees should pay P52.00 per square meter for the privilege of buying whenthe value of the land itself was allegedly P18.00 per square meter. (pp. 34-35, Rollo)

As expressed in Gonzales v. Trinidad, 67 Phil. 682, consideration is "the why of the contracts, the essential reason which moves

the contracting parties to enter into the contract." The cause or the impelling reason on the part of private respondent

executing the deed of option as appearing in the deed itself is the petitioner's having agreed to buy the 300 square meter

portion of private respondents' land at P70.00 per square meter "which was greatly higher than the actual reasonable

prevailing price." This cause or consideration is clear from the deed which stated:

That the only reason why the spouses-vendees Julio Villamor and Marina V. Villamor agreed to buy the

said one-half portion at the above stated price of about P70.00 per square meter, is because I, and my

husband Roberto Reyes, have agreed to sell and convey to them the remaining one-half portion still

owned by me ... (p. 26, Rollo)

The respondent appellate court failed to give due consideration to petitioners' evidence which shows that in 1969 the Villamor

spouses bough an adjacent lot from the brother of Macaria Labing-isa for only P18.00 per square meter which the privaterespondents did not rebut. Thus, expressed in terms of money, the consideration for the deed of option is the difference

between the purchase price of the 300 square meter portion of the lot in 1971 (P70.00 per sq.m.) and the prevailing

reasonable price of the same lot in 1971. Whatever it is, (P25.00 or P18.00) though not specifically stated in the deed of option,

was ascertainable. Petitioner's allegedly paying P52.00 per square meter for the option may, as opined by the appellate court,

be improbable but improbabilities does not invalidate a contract freely entered into by the parties.

The "deed of option" entered into by the parties in this case had unique features. Ordinarily, an optional contract is a p

existing in one person, for which he had paid a consideration and which gives him the right to buy, for example, certai

merchandise or certain specified property, from another person, if he chooses, at any time within the agreed period a

price (Enriquez de la Cavada v. Diaz, 37 Phil. 982). If We look closely at the "deed of option" signed by the parties, We

notice that the first part covered the statement on the sale of the 300 square meter portion of the lot to Spouses Villa

the price of P70.00 per square meter "which was higher than the actual reasonable prevailing value of the lands in tha

that time (of sale)." The second part stated that the only reason why the Villamor spouses agreed to buy the said lot at

higher price is because the vendor (Reyeses) also agreed to sell to the Villamors the other half-portion of 300 square m

the land. Had the deed stopped there, there would be no dispute that the deed is really an ordinary deed of option gra

the Villamors the option to buy the remaining 300 square meter-half portion of the lot in consideration for their havin

to buy the other half of the land for a much higher price. But, the "deed of option" went on and stated that the sale of

other half would be made "whenever the need of such sale arises, either on our (Reyeses) part or on the part of the Sp

Julio Villamor and Marina V. Villamor. It appears that while the option to buy was granted to the Villamors, the Reyese

likewise granted an option to sell. In other words, it was not only the Villamors who were granted an option to buy for

they paid a consideration. The Reyeses as well were granted an option to sell should the need for such sale on their pa

In the instant case, the option offered by private respondents had been accepted by the petitioner, the promise, in the

document. The acceptance of an offer to sell for a price certain created a bilateral contract to sell and buy and upon

acceptance, the offer, ipso facto assumes obligations of a vendee (See Atkins, Kroll & Co. v. Cua Mian Tek, 102 Phil. 94

Demandabilitiy may be exercised at any time after the execution of the deed. In Sanchez v. Rigos, No. L-25494, June 14

45 SCRA 368, 376, We held:

In other words, since there may be no valid contract without a cause of consideration, the prom

not bound by his promise and may, accordingly withdraw it. Pending notice of its withdrawal, hi

accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results i

perfected contract of sale.

A contract of sale is, under Article 1475 of the Civil Code, "perfected at the moment there is a mee ting of minds upon

which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand perfocontracts." Since there was, between the parties, a m eeting of minds upon the object and the price, there was already

perfected contract of sale. What was, however, left to be done was for either party to demand from the other their re

undertakings under the contract. It may be demanded at any time either by the private respondents, who may compe

petitioners to pay for the property or the petitioners, who may compel the private respondents to deliver the propert

However, the Deed of Option did not provide for the period within which the parties may demand the performance of

respective undertakings in the instrument. The parties could not have contemplated that the delivery of the property

payment thereof could be made indefinitely and render uncertain the status of the land. The failure of either parties to

demand performance of the obligation of the other for an unreasonable length of time renders the contract ineffectiv

Under Article 1144 (1) of the Civil Code, actions upon written contract must be brought within ten (10) years. The Dee

Option was executed on November 11, 1971. The acceptance, as already me ntioned, was also accepted in the s ame

instrument. The complaint in this case was filed by the petitioners on July 13, 1987, seventeen (17) years from the tim

execution of the contract. Hence, the right of action had prescribed. There were allegations by the petitioners that the

demanded from the private respondents as early as 1984 the enforcement of their rights under the contract. Still, it w

beyond the ten (10) years period prescribed by the Civil Code. In the case of Santos v. Ganayo,L-31854, September 9, 1982, 116 SCRA 431, this Court affirming and subscribing to the observations of the court a quo

thus:

... Assuming that Rosa Ganayo, the oppositor herein, had the right based on the Agreement to C

and Transfer as contained in Exhibits '1' and '1-A', her failure or the abandonment of her right to

action against Pulmano Molintas when he was still a co-owner of the on-half (1/2) portion of the

square meters is now barred by laches and/or prescribed by law because she failed to bring suc

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within ten (10) years from the date of the written agreement in 1941, pursuant to Art. 1144 of the New

Civil Code, so that when s he filed the adverse claim through her counsel in 1959 she had absolutely no

more right whatsoever on the same, having been barred by laches.

It is of judicial notice that the price of real estate in Me tro Manila is continuously on the rise. To allow the petitioner to

demand the delivery of the property subject of this case thirteen (13) years or seventeen (17) years after the execution of the

deed at the price of only P70.00 per square meter is inequitous. For reasons also of equity and in consideration of the fact that

the private respondents have no other decent place to live, this Court, in the exercise of its equity jurisdiction is not inclined to

grant petitioners' prayer.

ACCORDINGLY, the petition is DENIED. The decision of respondent appellate court is AFFIRMED for reasons cited in this

decision. Judgement is rendered dismissing the complaint in Civil Case No. C-12942 on the ground of prescription and laches.

SO ORDERED.

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G.R. No. L-25494 June 14, 1972

NICOLAS SANCHEZ, plaintiff-appellee,vs.

SEVERINA RIGOS, defendant-appellant.

Santiago F. Bautista for plaintiff-appellee.

Jesus G. Villamar for defendant-appellant.

CONCEPCION,C.J.:p

Appeal from a decision of the Court of First Instance of Nueva Ecija to the Court of Appeals, which certified the case to Us,

upon the ground that it involves a question purely of law.

The record shows that, on April 3, 1961, plaintiff Nicolas Sanchez and defendant Severina Rigos executed an instrument

entitled "Option to Purchase," whereby Mrs. Rigos "agreed, promised and committed ... to sell" to Sanchez the sum of

P1,510.00, a parcel of land situated in the barrios of Abar and Sibot, municipality of San Jose, province of Nueva Ecija, and

more particularly described in Transfer Certificate of Title No. NT -12528 of said province, within two (2) years from said date

with the understanding that said option shall be deemed "terminated and elapsed," if "Sanchez shall fail to exercise his right to

buy the property" within the stipulated period. Inasmuch as several tenders of payment of the sum of Pl,510.00, made by

Sanchez within said period, were rejected by Mrs. Rigos, on March 12, 1963, the former deposited said amount with the Court

of First Instance of Nueva Ecija and commenced against the latter the present action, for specific performance and damages.

After the filing of defendant's answer admitting some allegations of the complaint, denying other allegations thereof, andalleging, as special defense, that the contract between the parties "is a unilateral promise to sell, and the same being

unsupported by any valuable consideration, by force of the New Civil Code, is null and void" on February 11, 1964, both

parties, assisted by their respective counsel, jointly moved for a judgment on the pleadings. Accordingly, on February 28, 1964,

the lower court rendered judgment for Sanchez, ordering Mrs. Rigos to accept the sum judicially consigned by him and to

execute, in his favor, the requisite deed of conveyance. Mrs. Rigos was, likewise, sentenced to pay P200.00, as attorney's fees,

and other costs. Hence, this appeal by Mrs. Rigos.

This case admittedly hinges on the proper application of Article 1479 of our Civil Code, which provides:

ART. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon

the promissor if the promise is supported by a consideration distinct from the price.

In his complaint, plaintiff alleges that, by virtue of the option under consideration, "defendant agreed and committed to sell"and "the plaintiff agreed and committed to buy" the land described in the option, copy of which was annexed to said pleading

as Annex A thereof and is quoted on the margin.1

Hence, plaintiff maintains that the promise contained in the contract is"reciprocally demandable," pursuant to the first paragraph of said Article 1479. Although defendant had really "agreed,

promised and committed" herself to sell the land to the plaintiff, it is not true that the latter had, in turn, "agreed and

committed himself " to buy sa id property. Said Annex A does not bear out plaintiff's allegation to this effect. What is more,

since Annex A has been made "an integral part" of his complaint, the provisions of said instrument form part "and parcel"2

ofsaid pleading.

The option did not impose upon plaintiff the obligation to purchasedefendant's property. Annex A is nota "contract to

and sell." It merely g ranted plaintiff an "option" to buy. And both parties so understood it, as indicated by the caption,

to Purchase," given by them to said instrument. Under the provisions thereof, the defendant "agreed, promised and

committed" herself to sell the land therein described to the plaintiff for P1,510.00, but there is nothing in the contract

indicate that her aforementioned agreement, promise and undertaking is supported by a consideration "distinct from

price" stipulated for the sale of the land.

Relying upon Article 1354 of our Civil Code, the lower courtpresumedthe existence of said consideration, and this wo

to be the main factor that influenced its decision in plaintiff's favor. It should be noted, however, that:

(1) Article 1354 applies to contracts in g eneral, whereas the second paragraph of Article 1479 refers to "sales" in partic

and, more specifically, to "an accepted unilateral promise to buy or to sell." In other words, Article 1479 is controlling

case at bar.

(2) In order that said unilateral promise m ay be "binding upon the promisor, Article 1479 requires the concurrence of a

condition, namely, that the promise be "supported by a consideration distinct from the price." Accordingly, the promis

not compel the promisor to comply with the promise, unless the former establishes the existence of said distinct

consideration. In other words, thepromisee has the burden of proving such consideration. Plaintiff herein has not even

the existence thereof in his complaint.

(3) Upon the other hand, defendant explicitly averred in her answer, and pleaded as a special defense, the absence of

consideration for her promise to sell and, by joining in the petition for a judgment on the pleadings, plaintiff has implie

admitted the truth of said averment in defendant's answer. Indeed as early as March 14, 1908, it had been held, in Ba

v. Casas,3that:

One who prays for judgment on the pleadings without offering proof as to the truth of his own

allegations, and without giving the opposing party an opportunity to introduce evidence, must b

understood to admit the truth of all the material and relevant allegations of the opposing party,

rest his motion for judgment on those allegations taken together with such of his own as are adm

the pleadings. (La Yebana Company vs. Sevilla, 9 Phil. 210). (Emphasis supplied.)

This view was reiterated in Evangelista v. De la Rosa4

and Mercy's Incorporated v. Herminia Verde.5

Squarely in point is Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co.,6from which We quote:

The main contention of appellant is that the option granted to appellee to sell to it barge No. 10

sum of P30,000 under the terms stated above has no legal effect because it is not supported by

consideration and in support thereof it invokes article 1479 of the new Civil Code. The article pr

"ART. 1479. A promise to buy and sell a determinate thing for a price cert

reciprocally demandable.

An accepted unilateral promise to buy or sell a determinate thing for a prcertain is binding upon the promisor if the promise is supported by a cons

distinct from the price."

On the other hand, Appellee contends that, even granting that the "offer of option" is not suppo

any consideration, that option became binding on appellant when the appellee gave notice to it

acceptance, and that having accepted it within the period of option, the offer can no longer be

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withdrawn and in any event such withdrawal is ineffective. In support this contention, appellee invokes

article 1324 of the Civil Code which provides:

"ART. 1324. When the offerer has allowed the offeree a certain period to accept,

the offer may be withdrawn any time before acceptance by communicating such

withdrawal, except when the option is founded upon consideration as something

paid or promised."

There is no question that under article 1479 of the new Civil Code "an option to sell," or "a promise to

buy or to sell," as used in said article, to be valid must be "supported by a consideration distinct from the

price." This is clearly inferred from the context of said article that a unilateral promise to buy or to sell,

even if accepted, is only binding if supported by consideration. In other words, "an accepted unilateral

promise can only have a binding effect if supported by a consideration which means that the option canstill be withdrawn,even if accepted, if the same is not supported by any consideration. It is not disputed

that the option is without consideration. It can therefore be withdrawn notwithstanding the acceptance

of it by appellee.

It is true that under article 1324 of the new Civil Code, the g eneral rule regarding offer and acceptance is

that, when the offerer gives to the offeree a certain period to accept, "the offer may be withdrawn at

any time before acceptance" except when the option is founded upon consideration, but this general

rule must be interpreted as modifiedby the provision of article 1479 above referred to, which applies to

"a promise to buy and se ll" specifically. As already stated, this rule requires that a promise to sell to be

valid must be supported by a consideration distinct from the price.

We are not oblivious of the existence of American authorities which hold that an offer, once accepted,

cannot be withdrawn, regardless of whether it is supported or not by a consideration (12 Am. Jur. 528).

These authorities, we note, uphold the general ruleapplicable to offer and acceptance as contained in

our new Civil Code. But we are prevented from applying them in view of the specific provision embodied

in article 1479. While under the "offer of option" in question appellant has assumed a clear obligation tosell its barge to appellee and the option has been exercised in accordance with its terms, and there

appears to be no valid or justifiable reason for appellant to withdraw its offer, this Court cannot adopt a

different attitude because the law on the matter is clear. Our imperative duty is to apply it unless

modified by Congress.

However, this Court itself, in the case ofAtkins, Kroll and Co., Inc. v. Cua Hian Tek,8decided later that Southwestern Sugar &

Molasses Co. v. Atlantic Gulf & Pacific Co.,9

saw no distinction between Articles 1324 and 1479 of the Civil Code and appliedthe former where a unilateral promise to sell similar to the one sued upon here was involved, treating such promise as an

option which, although not binding as a contract in itself for lack of a separate consideration, nevertheless generated a

bilateral contract of purchase and sale upon acceptance. Speaking through Associate Justice, later Chief Justice, Cesar Bengzon,

this Court said:

Furthermore, an option is unilateral: a promise to sell at the price fixed whenever the offeree should

decide to exercise his option within t he specified time. After accepting the promise and before he

exercises his option, the holder of the option is not bound to buy. He is free either to buy or not to buy

later. In this case, however, upon accepting herein petitioner's offer a bilateral promise to sell and to buyensued, and the respondent ipso factoassumed the obligation of a purchaser. He did not just get the

right subsequently to buy or not to buy. It was not a mere option then; it was a bilateral contract of sale.

Lastly, even supposing that Exh. A granted an option which is not binding for lack of consideration, the

authorities hold that:

"If the option is given without a consideration, it is a mere offer of a contr

sale, which is not binding until accepted. If, however, acceptance is made

withdrawal, it constitutes a binding contract of sale, even though the opti

not supported by a sufficient consideration. ... . (77 Corpus Juris Secundu

See also 27 Ruling Case Law 339 and cases cited.)

"It can be taken for granted, as contended by the defendant, that the opt

contract was not valid for lack of consideration. But it was, at least, an off

which was accepted by letter, and of the acceptance the offerer had know

before said offer was withdrawn. The concurrence of both acts the offe

the acceptance could at all events have generated a contract, if none th

before (arts. 1254 and 1262 of the Civil Code)." (Zayco vs. Serra, 44 Phil. 3

In other words, since there may be no valid contract without a cause or consideration, the promisor is not bound by h

promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise partakes, however,

nature of an offer to sell which, if accepted, results in a perfected contract of sale.

This view has the advantage of avoiding a conflict between Articles 1324 on the ge neral principles on contracts a

on sales of the Civil Code, in line with the cardinal rule of statutory construction that, in construing different prov

one and the same law or code, such interpretation should be favored as will reconcile or harmonize said provisions an

conflict between the same. Indeed, the presumption is that, in the process of drafting the Code, its author has mainta

consistent philosophy or position. Moreover, the decision in Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pac10holding that Art. 1324 is modifiedby Art. 1479 of the Civil Code, in effect, considers the latter as an exceptionto theand exceptions are not favored, unless the intention to the contrary is clear, and it is not so, insofar as said two (2) art

concerned. What is more, the reference, in both the second paragraph of Art. 1479 and Art. 1324, to an option or prom

supported by or founded upon a consideration, strongly suggests that the two (2) provisions intended to enforce or im

the same principle.

Upon mature deliberation, the Court is of the considered opinion that it should, as it hereby reiterates the doctrine laiin theAtkins, Kroll & Co.case, and that, insofar as inconsistent therewith, the view adhered to in the Southwestern Su

Molasses Co.case should be deemed abandoned or modified.

WHEREFORE, the decision appealed from is hereby affirmed, with costs against defendant-appellant Severina Rigos. It

ordered.

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G.R. No. L-51824 February 7, 1992

PERCELINO DIAMANTE, petitioner,vs.

HON. COURT OF APPEALS and GERARDO DEYPALUBUS, respondents.

Hernandez, Velicaria, Vibar & Santiago for petitioner.

Amancio B. Sorongon for private respondent.

DAVIDE, JR.,J.:

Assailed in this petition for review is the Resolution of the respondent Court of Appeals dated 21 March 1979 in C.A.-G.R. No.

SP-04866 setting aside its e arlier decision therein, promulgated on 6 December 1978, which reversed the decision of the then

Court of First Instance (now Regional Trial Court) of Iloilo City. The latter nullified the Orders of the Secretary of the

Department of Agriculture and Natural Resources (DANR) dated 29 August 1969, 20 November 1969 and 21 April 1970,

declared binding the Fishpond Lease Agreement (FLA) issued to private respondent and disallowed petitioner from

repurchasing from private respondent a portion of the fishery lot located at Dumangas, Iloilo, covered by the FLA.

The pleadings of the parties and the decision of the respondent Court disclose the factual antecedents of this case.

A fishery lot, encompassing an area of 9.4 hectares and designated as Lot No. 518-A of the Cadastral Survey of Dumangas,

Iloilo, was previously covered by Fishpond Permit No. F-2021 issued in the name of Anecita Dionio. Upon Anecita's death, her

heirs, petitioner Diamante and Primitivo Dafeliz, inherited the property which they later divided between themselves;

petitioner got 4.4. hectares while Dafeliz got 5 hectares. It is the petitioner's share that is the subject of the presentcontroversy. Primitivo Dafeliz later sold his share to private respondent.

On 21 May 1959, petitioner sold to private respondent his leasehold rights over the property in question for P8,000.00 with the

right to repurchase the same within three (3) years from said date.

On 16 August 1960, private respondent filed an application with the Bureau of Fisheries, dated 12 July 1960, for a fishpond

permit and a fishpond lease agreement over the entire lot, submitting therewith the deeds of sale executed by Dafeliz and the

petitioner.

Pressed by urgent financial needs, petitioner, on 17 October 1960, sold all his remaining rights over the property in question to

the private respondent for P4,000.00.

On 25 October 1960, private respondent, with his wife's consent, executed in favor of the petitioner an Option to Repurchase

the property in question within ten (10) years from said date, with a ten-year grace period.

Private respondent submitted to the Bureau of Fisheries the definite deed of sale; he did not, however, submit the Option to

Repurchase.

Thereafter, on 2 August 1961, the Bureau of Fisheries issued to private respondent Fishpond Permit No. 4953-Q; on 17

December 1962, it approved FLA No. 1372 in the latter's favor.

On 11 December 1963, petitioner, contending that he has a valid twenty-year option to repurchase the subject prope

requested the Bureau of Fisheries to nullify FLA No. 1372 insofar as the said property is concerned. On 18 December 1

letter-complaint was dismissed. Petitioner then sought a reconsideration of the dismissal; the same was denied on 29

1965. His appeal to the Secretary of the DANR was likewise dismissed on 30 October 1968. Again, on 20 November 19

petitioner sought for a reconsideration; this time, however, he was successful. On 29 August 1969, the DANR Secretar

his motion in an Order cancelling FLA No. 1372 and stating, inter alia, that:

Evidently, the application as originally filed, could not be favorably acted upon by reason of the

right of a third party over a portion thereof. It was only the submission of the deed of absolute s

which could eliminate the stumbling block to the approval of the transfer and the iss uance of a p

lease agreement. It was on the basis of this deed of sale, in fact, the one entitled "option to rep

executed barely a week from the execution of the deed of absolute sale, (which) reverted, in eff

status of the land in question to what it was after the execution of the deed of sale with right to

repurchase; that is, the land was again placed under an encumbrance in favor of a third party.

Circumstantially, there is a ground (sic) to believe that the deed of absolute sale was executed m

with the end in view of circumventing the requirements for the approval of the transfer of lease

rights of Diamante in favor of Deypalubos; and the subsequent execution of the "Option to Repu

was made to assure the maintenance of a vendor a retro's rights in favor of Diamante. There wa

therefore, a misrepresentation of an essential or material fact committed by the less ee-appellee

(Deypalubos) in his application for the permit and the lease agreement, without which the same

not have been issued.1

The Secretary based his action on Section 20 of Fisheries Administrative Order No. 60, the second paragraph of which

Any and all of the statements made in the corresponding application shall be considered as esse

conditions and parts of the permit or lease granted. Any false statements in the application of fa

any alteration, change or modification of any or all terms and conditions made therein shall ipso

cause the cancellation of the permit or lease.

Private respondent moved for a reconsideration of this last Order arguing that the DANR Secretary's previous Order of

October 1968 dismissing petitioner's letter-complaint had already become final on the ground that he (private respon

was not served a copy of petitioner's 20 November 1968 motion for reconsideration. On 20 November 1969, private

respondent's motion for reconsideration was denied; a second motion for reconsideration was likewise denied on 20 A

1970.

On 5 May 1970, private respondent filed with the Court of First Instance of Iloilo City a special civil action for certiorar

preliminary injunction (docketed as Civil Case No. 8209), seeking to annul the Secretary's Orders of 20 April 1970, 20 N

1969 and 29 August 1969 on the ground that the Secretary: (1) gravely abused his discretion in not giving him the opp

to be heard on the question of whether or not the Option to Repurchase was forged; and (2) has no jurisdiction to set

FLA No. 1372 as the Order of the Bureau of Fisheries dismissing petitioner's 11 December 1963 letter-complaint had a

become final.

After issuing a temporary restraining order and a writ of preliminary injunction, the lower court tried the case jointly w

Criminal Case No. 520 wherein both the petitioner and a certain Atty. Agustin Dioquino, the Notary Public who notariz

25 October 1960 Option to Repurchase, were charged with falsification of a public document.

After due trial, the lower court acquitted the accused in the criminal case and decided in favor of the private responde

Civil Case No. 8209; the court ruled that: (1) the DANR Secretary abused his discretion in issuing the questioned Order

petitioner cannot repurchase the property in question as the Option to Repurchase is of doubtful validity, and (3) FLA

in the name of private respondent is valid and binding.

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Petitioner appealed to the respondent Court which, on 6 December 1978, reversed the decision of the trial court2on the

ground that no grave abuse of discretion was committed by respondent Secretary inasmuch as private respondent was given

the opportunity to be heard on his claim that the Option to Repurchase is spurious, and that the trial court merely indulged in

conjectures in not upholding its validity. Said the respondent Court:

With all the foregoing arguments appellee had exhaustively adduced to show the spuriousness of the

deed of "Option to Repurchase", appellee can hardly complain of not having been given an opportunity

to be heard, which is all that is necessary in relation to the requirement of notice and hearing in

administrative proceedings. Moreover, appellee never asked for a formal hearing at the first opportunity

that he had to do so, as when he filed his first motion for reconsideration. He asked for a formal hearing

only in his second motion for reconsideration evidently as a mere afterthought, upon realizing that his

arguments were futile without proofs to support them.

The only remaining question, therefore, is whether the Secretary acted with grave abuse of discretion in

giving weight to the alleged execution by appellee of the deed of Option to Repurchase, on the basis of

the xerox copy of said deed as certified by the Notary Public, Agustin Dioquino.

With such documentary evidence duly certified by the Notary Public, which is in effect an affirmation of

the existence of the deed of "Option of Repurchase" (sic) and its due execution, the Secretary may not

be said to have gravely abused his discretion in giving the document enough evidentiary weight to justify

his action in applying the aforequoted provisions of Fisheries Adm. Order No. 60. This piece of evidence

may be considered substantial enough to support the conclusion reached by the respondent Secretary,

which is all that is necessary to sustain an administrative finding of fact (Ortua vs. Encarnacion, 59 Phil.

635; Ang Tibay vs. CIR, 69 Phil. 635; Ramos vs. The Sec. of Agriculture and Natural Resources, et al. L-

29097, Jan. 28, 1974, 55 SCRA 330). Reviewing courts do not re-examine the sufficiency of the evidence

in an administrative case, if originally instituted as such, nor are they authorized to receive additional

evidence that was not submitted to the administrative agency concerned. For common sense dictates

that the question of whether the administrative agency abused its discretion in weighing evidence

should be resolved solely on the basis of the proof that the administrative authorities had before them

and no other (Timbancaya vs. Vicente, L-19100, Dec. 27, 1963, 9 SCRA 852). In the instant case the

evidence presented for the first time before the court a quo could be considered only for the criminal

case heard jointly with this case.

The lower court's action of acquitting the notary public, Agustin Dioquino, and appellant Diamante in

Criminal Case No. 520 for falsification of public document is in itself a finding that the alleged forgery has

not been conclusively established. This finding is quite correct considering the admission of the NBI

handwriting expert that admission of the NBI handwriting expert that he cannot make any finding on the

question of whether appellee's signature on the deed of "Option to Repurchase" is forged or not,

because of the lack of (sic) specimen signature of appellee for comparative examination. The Secretary

may have such signature in the application papers of appellee on file with the former's office upon which

to satisfy himself of (sic) the genuineness of appellee's signature. It would be strange, indeed, that

appellee had not provided the NBI expert with a specimen of his signature when his purpose was to have

an expert opinion that his signature on the questioned document is forged.

On the other hand, as to the signature of his wife, the latter herself admitted the same to be her own.Thus

Q There is a signature below the typewritten words "with

my marital consent" and above the name Edelina Duyo,

whose signature is this?

A That is my signature. (T.s.n., Crim. Case No. 520, A

1971, p. 14).

In not finding in favor of the perfect validity of the "Option to Repurchase," the court a quo mer

indulged in conjectures. Thus, believing the testimony of appellee that the later (sic) could not h

executed the deed of option to repurchase after spending allegedly P12,000.00, and that if ther

really a verbal agreement upon the execution of the deed of absolute sale, as alleged by appella

appellant's right to repurchase, as was stipulated in t he earlier deed of sale, shall be preserved, s

agreement should have been embodied in the deed of sale of October 17, 1960 (Exh. D), the cou

doubted the genuineness of the deed of Option to Repurchase (sic).

It is highly doubtful if appellee had spent P12,000.00 during the period from October 17, 1960 to

October 25, 1960 when the deed of option was executed. Likewise, the right to repurchase coulhave been embodied in the deed of absolute sale since, as the Secretary of DANR found, the pu

the deed of absolute sale is to circumvent the law and insure the approval of appellee's applicat

with his right to 4.4 hectares appearing to be subject to an encumbrance, his application would

been given favorable action.

Above all, the speculation and conjectures as indulged in by the courta quocannot outweigh th

probative effect of the document itself, a certified xerox copy thereof as issued by the Notary Pu

non-presentation of the original having been explained by its loss, as was the testimony of the s

Notary Public, who justly won acquittal when charged with falsification of public document at th

instance of appellee. The fact that the spaces for the document number, page and book numbe

not filled up in the photostatic copy presented by the representative of the Bureau of Records

Management does not militate against the genuineness of the document. It simply means that t

sent to the said Bureau happens to have those spaces unfilled up (sic). But the sending of a copy

document to the Bureau of Records Management attests strongly to the existence of such docu

the original of which was duly executed, complete with the aforesaid data duly indicated thereo

shown by the xerox copy certified true by the Notary Public.

Indeed, in the absence of positive and convincing proof of forgery, a public instrument executed

intervention of a Notary Public must be held in high respect and accorded full integrity, if only u

presumption of the regularity of official functions as in the nature of those upon the presumptio

regularity of official functions as in the nature of those of a notary public (Bautista vs. Dy Bun Ch

OG 179; El Hogar Filipino vs. Olviga, 60 Phil. 17).

Subsequently, the respondent Court, acting on private respondent's motion for reconsideration, promulgated on 21 M

1979 the challenged Resolution3setting aside the earlier decision and affirmed,in toto, the ruling of the trial court, th

. . . the respondent (DANR) Secretary had gone beyond his statutory authority and had clearly ac

abuse of discretion in giving due weight to the alleged option to repurchase whose (sic) genuine

and due execution had been impugned and denied by petitioner-appellee (Deypalubos). While t

certified true copy of the option to repurchase may have been the basis of the respondent Secre

resolving the motion for reconsideration, the Court believes that he should have first ordered th

presentation of evidence to resolve this factual issue considering the conflicting claims of the paearlier pointed out, all that was submitted to the Bureau of Fisheries and consequently to the

respondent Secretary, was a xerox copy of the questioned document which was certified to by a

public to be a copy of a deed found in his notarial file which did not bear any specimen of the sig

of the contracting parties. And assuming that a certification made by a notary public as to the ex

of a document should be deemed an affirmation that such document actually exists. Neverthele

when such claim is impugned, the one who assails the existence of a document should be afford

opportunity to prove such claim, because, at most, the presumption of regularity in the perform

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official duties is merely disputable and can be rebutted by convincing and positive evidence to the

contrary.

His motion for reconsideration having been denied, the petitioner filed the instant petition for review.

Petitioner contends that the Rules of Court should not be strictly applied to administrative proceedings and that the findings of

fact of administrative bodies, absent a showing of arbitrariness, should be accorded respect.

While the petition has merit, petitioner's victory is hollow and illusory for, as shall hereafter be shown, even as We reverse the

assailed resolution of the respondent Court of Appeals, the questioned decision of the Secretary must, nevertheless, be set

aside on the basis of an erroneous conclusion of law with respect to the Option to Repurchase.

The respondent Court correctly held in its decision of 6 December 1978 that the respondent Secretary provided the private

respondent sufficient opportunity to question the authenticity of the Option to Repurchase and committed no grave abuse of

discretion in holding that the same was in fact executed by private respondent. We thus find no sufficient legal and factual

moorings for respondent Court's sudden turnabout in its resolution of 21 March 1979. That private respondent and his wife

executed the Option to Repurchase in favor of petitioner on 25 October 1960 is beyond dispute. As determined by the

respondent Court in its decision of 6 December 1978, private respondent's wife, Edelina Duyo, admitted having affixed her

signature to the said document. Besides, the trial court itself in Criminal Case No. 520 which was jointly tried with the civil case,

acquitted both the petitioners and the notary public, before whom the Option to Repurchase was acknowledged, of the crime

of falsification of said document.

We hold, however, that the respondent Secretary gravely erred in holding that private respondent's non-disclosure and

suppression of the fact that 4.4 hectares of the area subject of the application is burdened with or encumbered by the Option

to Repurchase constituted a falsehood or a misrepresentation of an essential or material fact which, under the second

paragraph of Section 29 of Fisheries Administrative Order No. 60 earlier quoted, "shall ipso facto cause the cancellation of the

permit or lease." In short, the Secretary was of the opinion that the Option to Repurchase was an encumbrance on the

property which affected the absolute and exclusive character of private respondent's ownership over the 4.4 hectares sold to

him by petitioner. This is a clear case of a misapplication of the law on conventional redemption and a misunderstanding of the

effects of a right to repurchase granted subsequently in an instrument different from the original document of sale.

Article 1601 of the Civil Code provides:

Conventional redemption shall take place when the vendor reserves the right to repurchase the thing

sold, with the obligation to comply with the provisions of article 1616 and other stipulations which may

have been agreed upon.

In Villarica, et al. vs. Court of Appeals, et al.,4decided on 29 November 1968, or barely seven (7) days before the respondent

Court promulgated its decision in this case, this Court, interpreting the above Article, held:

The right of repurchase is not a right granted the vendor by the vendee in a subsequent instrument, but

is a right reserved by the vendor in the same instrument of sale as one of the stipulations of the contract.

Once the instrument of absolute sale is executed, the vendor can no longer reserve the right to

repurchase, and any right thereafter granted the vendor by the vendee in a s eparate instrument cannot

be a right of repurchase but some other right like the option to buy in the instant case. . . .

In the earlier case of Ramos, et al. vs. Icasiano, et al.,5decided in 1927, this Court had already ruled that "an agreement to

repurchase becomes a promise to sell when made after the sale, because when the sale is made without such an agreement,

the purchaser acquires the thing sold absolutely, and if he afterwards grants the vendor the rig ht to repurchase, it is a new

contract entered into by the purchaser, as absolute owner already of the object. In that case the vendor has not reserv

himself the right to repurchase."

In Vda. de Cruzo, et al. vs. Carriaga, et al.,6this Court found another occasion to apply the foregoing principle.

Hence, the Option to Repurchase executed by private respondent in the present case, was merely apromise to sell, w

be governed by Article 1479 of the Civil Code which reads as follows:

Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally dem

An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding

the promissor if the promise is supported by a consideration distinct from the price.

A copy of the so-called Option to Repurchase is neither attached to the records nor quoted in any of the pleadings of t

parties. This Court cannot, therefore, properly rule on whether the promise was accepted and a consideration distinct

price, supports the option. Undoubtedly, in the absence of either or both acceptance and separate consideration, the

to sell is not binding upon the promissor (private respondent).

A unilateral promise to buy or sell is a mere offer, which is not converted into a contract except

moment it is accepted. Acceptance is the act that gives life to a juridical obligation, because, bef

promise is accepted, the promissor may withdraw it at any time. Upon acceptance, however, a b

contract to sell and to buy is created, and the offeree ipso facto assumes the obligations of a pu

the offeror, on the other hand, would be liable for damages if he fails to deliver the thing he had

for sale.

xxx xxx xxx

. . . The contract of option is a separate and distinct contract from the contract which the parties

enter into upon the consummation of the option, and a consideration for an optional contract is

important as the consideration for any other kind of contract. Thus, a distinction should be draw

between the consideration for the option to repurchase, and the consideration for the contract

repurchase itself.7

Even if the promise was accepted, private respondent was not bound thereby in the absence of a distinct consideratio

It may be true that the foregoing issues were not squarely raised by the parties. Being, however, intertwined with the

the correctness of the decision of the respondent Secretary and, considering further that the determination of said iss

essential and indispensable for the rendition of a just decision in this case, this Court does not hesitate to rule on them

In Hernandez vs. Andal,9this Court held:

If the appellants' assignment of error be not considered a direct challenge to the decision of thebelow, we still believe that the objection takes a narrow view of practice and procedure contrar

liberal spirit which pervades the Rules of Court. The first injunction of the new Rules (Rule 1, sec

that they "shall be liberally construed in order to promote their object and to assist the parties i

obtaining just, speedy, and inexpensive determination of every action and proceeding." In line w

modern trends of procedure, we are told that, "while an assignment of error which is required b

rule of court has been held essential to appellate review, and only those assigned will be consid

there are a number of cases which appear to accord to the appellate court a broad discretionary

to waive the lack of proper assignment of errors and consider errors not assigned. And an unass

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error closely related to an error properly assigned, or upon which the determination of the question

raised by the error properly assigned is dependent, will be considered by the appellate court

notwithstanding the failure to assign it as error." (4 C.J.S., 1734; 3 C.J., 1341, footnote 77). At the least,

the assignment of error, viewed in this light, authorizes us to examine and pass upon the decision of the

court below.

In Insular Life Assurance Co., Ltd. Employees Association-NATU vs. Insular Life Assurance Co., Ltd.,10

this Court ruled:

. . . (t)he Supreme Court has ample authority to review and resolve matter not assigned and specified as

errors by either of the parties in the appeal if it finds the consideration and determination of the same

essential and indispensable in order to arrive at a just decision in the case.11This Court, thus, has the

authority to waive the lack of proper assignment of errors if the unassigned errors closely relate to errors

properly pinpointed out or if the unassigned errors refer to matters upon which the determination of thequestions raised by the errors properly assigned depend.

12

The same also applies to issues not specifically raised by the parties. The Supreme Court, likewise, has

broad discretionary power, in the resolution of a controversy, to take into consideration matters on

record which the parties fail to submit to the Court as specific questions for determination.13Where the

issues already raised also rest on other issues not specifically presented, as long as the latter issues bear

relevance and close relation to the former and as long as they arise from matters on record, the Court

has the authority to include them in its discussion of the controversy as well as to pass upon them. In

brief, in those cases wherein questions not particularly raised by the parties surface as necessary for the

complete adjudication of the rights and obligations of the parties and such questions fall within the

issues already framed by the parties, the interests of justice dictate that the Court consider and resolve

them.

WHEREFORE, the instant petition is GRANTED. The Resolution of respondent Court of Appeals of 21 March 1979 in C.A.-G.R.

No. SP-04866 and the Decision of the trial court in Civil Case No. 8209, insofar as they declare, for the reasons therein given,

Fishpond Lease Agreement No. 1372, valid and binding, are hereby REVERSED and SET ASIDE. The challenged Orders of therespondent Secretary of Agriculture and Natural Resources of 29 August 1969, 20 November 1969 and 21 April 1970 are

likewise REVERSED and SET ASIDE and Fishpond Lease Agreement No. 1372 is ordered REINSTATED.

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G.R. No. 83759 July 12, 1991

SPOUSES CIPRIANO VASQUEZ and VALERIANA GAYANELO, petitioners,vs.

HONORABLE COURT OF APPEALS and SPOUSES MARTIN VALLEJERA and APOLONIA OLEA, respondents.

Dionisio C. Isidto for petitioners.

Raymundo Lozada, Jr. for private r espondents.

GUTIERREZ,JR., J.:p

This petition seeks to reverse the decision of the Court of Appeals which affirmed the earlier decision of the Regional Trial

Court, 6th Judicial Region, Branch 56, Himamaylan, Negros Occidental in Civil Case No. 839 (for specific performance and

damages) ordering the petitioners (defendants in the civil case) to resell L ot No. 1860 of the Cadastral Survey of Himamaylan,

Negros Occidental to the respondents (plaintiffs in the civil case) upon payment by the latter of the amount of P24,000.00 as

well as the appellate court's resolution denying a motion for reconsideration. In addition, the appellate court ordered the

petitioners to pay the amount of P5,000.00 as necessary and useful expenses in accordance with Article 1616 of the Civil Code.

The facts of the case are not in dispute. They are summarized by the appellate court as follows:

On January 15, 1975, the plaintiffs-spouses (respondents herein) filed this action against the defendants-

spouses (petitioners herein) seeking to redeem Lot No. 1860 of the Himamaylan Cadastre which was

previously sold by plaintiffs to defendants on September 21, 1964.

The said lot was registered in the name of plaintiffs. On October 1959, the same was leased by plaintiffs

to the defendants up to crop year 1966-67, which was extended to crop year 1968-69. After the

execution of the lease, defendants took possession of the lot, up to now and devoted the same to the

cultivation of sugar.

On September 21, 1964, the plaintiffs sold the lot to the defendants under a Deed of Sale for the amount

of P9,000.00. The Deed of Sale was duly ratified and notarized. On the same day and along with the

execution of the Deed of Sale, a separate instrument, denominated as Right to Repurchase (Exh. E), was

executed by the parties granting plaintiffs the right to repurchase the lot for P12,000.00, said Exh. E

likewise duly ratified and notarized. By virtue of the sale, defendants secured TCT No. T-58898 in their

name. On January 2, 1969, plaintiffs sold the same lot to Benito Derrama, Jr., after securing the

defendants' title, for the sum of P12,000.00. Upon the protestations of defendant, assisted by counsel,

the said second sale was cancelled after the payment of P12,000.00 by the defendants to Derrama.

Defendants resisted this action for redemption on the premise that Exh. E is just an option to buy since it

is not embodied in the same document of sale but in a separate document, and since such option is notsupported by a consideration distinct from the price, said deed for right to repurchase is not binding

upon them.

After trial, the court below rendered judgment against the defendants, ordering them to resell lot No.

1860 of the Himamaylan Cadastre to the plaintiffs for the repurchase price of P24,000.00, which amount

combines the price paid for the first sale and the price paid by defendants to Benito Derrama, Jr.

Defendants moved for, but were denied reconsideration. Excepting thereto, defendants-appeal

(Rollo, pp. 44-45)

The petition was given due course in a resolution dated February 12, 1990.

The petitioners insist that they can not be compelled to resell Lot No. 1860 of the Himamaylan Cadastre. They conten

nature of the sale over the said lot between them and the private respondents was that of an absolute deed of s ale an

the right thereafter granted by them to the private respondents (Right to Repurchase, Exhibit "E") can only be either a

to buy or a mere promise on their part to resell the property. They opine that since the "RIGHT TO REPURCHASE" was

supported by any consideration distinct from the purchase price it is not valid and binding on the petitioners pursuant

Article 1479 of the Civil Code.

The document denominated as "RIGHT TO REPURCHASE" (Exhibit E) provides:

RIGHT TO REPURCHASE

KNOW ALL MEN BY THESE PRESENTS:

I, CIPRIANO VASQUEZ, . . ., do hereby grant the spouses Martin Vallejera and Apolonia Olea, the

and assigns, the right to repurchase said Lot No. 1860 for the sum of TWELVE THOUSAND PESOS

(P12,000.00), Philippine Currency, within the period TEN (10) YEARS from the agricultural year 1

1970 when my contract of lease over the property shall expire and until the agricultural year 197

IN WITNESS WHEREOF, I have hereunto signed my name at Binalbagan, Negros Occidental, this

of September, 1964.

SGD. CIPRIANO VASQUEZ

SGD. VALERIANA G. VASQUEZ SGD. FRANCISCO SANICAS

(Rollo, p. 47)

The Court of Appeals, applying the principles laid down in the case of Sanchez v. Rigos, 45 SCRA 368 [1972] decided in

the private respondents.

In the Sanchez case, plaintiff-appellee Nicolas Sanchez and defendant-appellant Severino Rigos executed a document e

"Option to Purchase," whereby Mrs. Rigos "agreed, promised and committed . . . to sell" to Sanchez for the sum of P1,

registered parcel of land within 2 years from execution of the document with the condition that said option shall be de

"terminated and lapsed," if "Sanchez shall fail to exercise his right to buy the property" within the stipulated period. In

same document, Sanchez" . . . hereby agree and conform with all the conditions set forth in the option to purchase exe

my favor, that I bind myself with all the terms and conditions." (Emphasis supplied) The notarized document was signe

by Sanchez and Rigos.

After several tenders of payment of the agreed sum of P1,510.00 made by Sanchez within the stipulated period were

by Rigos, the former deposited said amount with the Court of First Instance of Nueva Ecija and filed an action for spec

performance and damages against Rigos.

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The lower court rendered judgment in favor of Sanchez and ordered Rigos to accept the sum judicially consigned and to

execute in Sanchez' favor the requisite deed of conveyance. Rigos appealed the case t o the Court of Appeals which certified to

this Court on the ground that it involves a pure question of law.

This Court after deliberating on two conflicting principles laid down in the cases of Southwestern Sugar and Molasses Co. v.

Atlantic Gulf and Pacific Co., (97 Phil. 249 [1955]) and Atkins, Kroll & Co., Inc. v. Cua Hian Tek, 102 Phil. 948 [1958]) arrived at

the conclusion that Article 1479 of the Civil Code which provides:

Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon

the promissory if the promise is supported by a consideration distinct from the price.

and Article 1324 thereof which provides:

Art. 1324. When the offerer has allowed the offerer a certain period to accept, the offer may be

withdrawn at any time before acceptance by communicating such withdrawal, except when the option is

founded upon a consideration, as something paid or promised.

should be reconciled and harmonized to avoid a conflict between the two provisions. In effect, the Court abandoned the ruling

in the Southwestern Sugar and Molasses Co. case and reiterated the ruling in the Atkins, Kroll and Co. case, to wit:

However, this Court itself, in the case of Atkins, Kroll and Co., Inc. v. Cua Hian Tek, (102 Phil. 948, 951-

952) decided later than Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co., (supra) saw no

distinction between Articles 1324 and 1479 of the Civil Code and applied the former where a unilateral

promise to sell similar to the one sued upon here was involved, treating such promise as an option

which, although not binding as a contract in itself for lack of separate consideration, nevertheless

generated a bilateral contract of purchase and sale upon acceptance. Speaking through Associate Justice,later Chief Justice, Cesar Bengzon, this Court said:

Furthermore, an option is unilateral: a promise to sel l at the price fixed whenever

the offeree should decide to exercise his option within the specified time. After

accepting the promise and before he e xercises his option, the holder of the option

is not bound to buy. He is free either to buy or not to buy later. In this case

however, upon accepting herein petitioner's offer a bilateral promise to sell and to

buy ensued, and the respondent ipso facto assumed the obligation of a purchaser.

He did not just get the right subsequently to buy or not to buy. It was not a mere

option then; it was bilateral contract of sale.

Lastly, even supposing that Exh. A granted an option which is not binding for lack

of consideration, the authorities hold that

If the option is given without a consideration, it is a mere offer of a contract ofsale, which is not binding until accepted. If, however, acceptance is made before a

withdrawal, it constitutes a binding contract of sale, even though the option was

not supported by a sufficient consideration . . . (77 Corpus Juris Secundum p. 652.

Seealso 27 Ruling Case Law 339 and cases cited.)

This Court affirmed the lower court's decision although the promise to sell was not supported by a consideration distinct from

the price. It was obvious that Sanchez, the promisee, accepted the option to buy before Rigos, the promisor, withdrew the

same. Under such circumstances, the option to purchase was converted into a bilateral contract of sale which bound b

parties.

In the instant case and contrary to the appellate court's finding, it is clear that the right to repurchase was not support

consideration distinct from the price. The rule is that the promisee has the burden of proving such consideration.

Unfortunately, the private respondents, promisees in the right to repurchase failed to prove such consideration. They

even allege the existence thereof in their complaint. (SeeSanchez v. Rigos supra)

Therefore, in order that the Sanchez case can be applied, the evidence must show that the private respondents accept

right to repurchase.

The record, however, does not show that the private respondents accepted the "Right to Repurchase" the land in que

disagree with the appellate court's finding that the private respondents accepted the "right to repurchase" under the fcircumstances: . . as evidenced by the annotation and registration of the same on the back of the t ransfer of certificat

in the name of appellants. As vividly appearing therein, it was signed by appellant himself and witnessed by his wife so

all intents and purposes the Vasquez spouses are estopped from disregarding its obvious purpose and intention."

The annotation and registration of the right to repurchase at the back of the certificate of title of the petitioners can n

considered as acceptanceof the right to repurchase. Annotation at the back of the certificate of title of registered land

the purpose of bindingpurchasers of such registered land. Thus, we ruled in the case of Bel Air Village Association, Inc

Dionisio(174 SCRA 589 [1989]), citingTanchoco v.Aquino (154 SCRA 1 [ 1987]), and Constantino v.Espiritu (45 SCRA 55

[1972]) that purchasers of a registered land are bound by the annotations found at the back of the certificate of title c

the subject parcel of land. In effect, the annotation of the right to repurchase found at the back of the certificate of tit

the subject parcel of land of the private respondents only served as notice of the existence of such unilateral promise

petitioners to resell the same to the private respondents. This, however, can not be equated with acceptance of such

repurchase by the private respondent.

Neither can the signature of the petitioners in the document called "right to repurchase" signify acceptance of the righ

repurchase. The respondents did not sign the offer. Acceptance should be made by the promisee, in this case, the priv

respondents and not the promisors, the petitioners herein. It would be absurd to require the promisor of an option to

accept his own offer instead of the promisee to whom the option to buy is given.

Furthermore, the actions of the private respondents(a) filing a complaint to compel re-sale and their demands for

prior to filing of the complaint cannot be considered acceptance. As stated in Vda. de Zulueta v. Octaviano (121 SCRA

[1983]):

And even granting, arguendo that the sale was apacto de retrosale, the evidence shows that Ol

through her lawyer, opted to repurchase the land only on 16 February 1962, approximately two

beyond the stipulated period, that is not later than May, 1960.

If Olimpia could not locate Aurelio, as she contends, and based on her allegation that the contra

between her was one of sale with right to repurchase, neither, however, did she tender the red

price to private respondent Isauro, but merely wrote him letters expressing her readiness to rep

the property.

It is clear that the mere sending of letters by the vendor expressing his desire to repurchase the

without accompanying tender of the redemption price fell short of the requirements of law. (Le

of Appeals, 68 SCRA 197 [1972])

Neither did petitioner make a judicial consignation of the repurchase price within the agreed pe

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In a contract of sale with a right of repurchase, the redemptioner who may offer to make the repurchase

on the option date of redemption should deposit the full amount in court . . . (Rumbaoa v. Arzaga, 84

Phil. 812 [1949])

To effectively exercise the right to repurchase the vendor a retro must make an actual and s imultaneous

tender of payment or consignation. (Catangcatang v. Legayada, 84 SCRA 51 [1978])

The private respondents' ineffectual acceptance of the option to buy validated the petitioner's refusal to sell the parcel which

can be considered as a withdrawal of the option to buy.

We agree with the petitioners that the case of Vda.de Zulueta v. Octaviano, (supra) is in point.

Stripped of non-essentials the facts of the Zuluetacase are as follows: On November 25, 1952(Emphasis supplied) Olimpia

Fernandez Vda. de Zulueta, the registered owner of a 5.5 hectare riceland sold the lot to private respondent Aurelio B.

Octaviano for P8,600.00 subject to certain terms and conditions. The contract was an absolute and definite sale. On the same

day, November 25, 1952,(Emphasis supplied) the vendee, Aurelio signed another document giving the vendor Zulueta the

"option to repurchase" the property at anytime after May 1958 but not later than May 1960. When however, Zulueta tried to

exercise her "option to buy" the property, Aurelio resisted the same prompting Zulueta to commence suit for recovery of

ownership and possession of the property with the then Court of First Instance of Iloilo.

The trial court ruled in favor of Zulueta. Upon appeal, however, the Court of Appeals reversed the trial court's decision.

We affirmed the appellate court's decision and ruled:

The nature of the transaction between Olimpia and Aurelio, from the context of Exhibit "E" is not a sale

with right to repurchase. Conventional redemption takes place "when the vendor reserves the right to

repurchase the thing sold, with the obligation to comply with the provisions of Article 1616 and other

stipulations which may have been agreed upon. (Article 1601, Civil Code).

In this case, there was no reservation made by the vendor, Olimpia, in the document Exhibit "E" the

"option to repurchase" was contained in a subsequent document and was made by the vendee, Aurelio.

Thus, it was more of an option to buy or a mere promise on the part of the vendee, Aurelio, to resell the

property to the vendor, Olimpia. (10 Manresa, p. 311 cited in Padilla's Civil Code Annotated, Vol. V, 1974

ed., p. 467) As held in Villarica v. Court of Appeals (26 SCRA 189 [1968]):

The right of repurchase is nota right grantedthe vendor by the vendee in a

subsequent instrument,but is a rightreserved by the vendor in the same

instrumentof sale as one of the stipulations of the contract. Once the instrument

of absolute sale is executed, the vendor can no longer reserve the right to

repurchase, and any right thereafter granted the vendor by the vendee in a

separate instrument cannot be a right of repurchase but some other right like the

option to buy in the instant case. . . (Emphasis supplied)

The appellate court rejected the application of the Zulueta case by stating:

. . . [A]s found by the trial court from which we quote with approval below, the said cases involve the

lapse of several days for the execution of separate instruments after the execution of the deed of sale,

while the instant case involves the execution of an instrument, separate as it is, but executed on the

same day, and notarized by the same notary public, to wit:

A close examination of Exh. "E" reveals that although it is a separate document in itself, it is far d

from the document which was pronounced as an option by the Supreme Court in the Villarica ca

option in the Villarica case was executed several days after the execution of the deed of sale. In

present case, Exh. "E" was executed and ratified by the same notary public and the Deed of Sale

No. 1860 by the plaintiffs to the defendants were notarized by the same notary public and ente

same page of the same notarial register . . .

The latter case (Vda. de Zulueta v. Octaviano, supra), likewise involved the execution of the sepa

document after an intervention of several days and the question of laches was decided therein,

not present in the instant case. That distinction is therefore crucial and We are of the opinion th

appellee's right to repurchase has been adequately provided for and reserved in conformity wit

1601 of the Civil Code, which states:

Conventional redemption shall take place when the vendor reserves the right to repurchase the

sold, with the obligation to comply with the provision of Article 1616 and other stipulations whic

have been agreed upon. (Rollo, pp. 46-47)

Obviously, the appellate court's findings are not reflected in the cited decision. As in the instant case, the option to rep

involved in the Zulueta case was executed in a separate document but on the same datethat the deed of definite sale

executed.

While it is true that this Court in the Zulueta case found Zulueta guilty of laches, this, however, was not the primary re

this Court disallowed the redemption of the property by Zulueta. It is clear from the decision that the ruling in the Zulu

was based mainly on the finding that the transaction between Zulueta and Octaviano was not a sale with right to repu

and that the "option to repurchase was but an option to buy or a mere promise on the part of Octaviano to resell the

to Zulueta.

In the instant case, since the transaction between the petitioners and private respondents was not a sale with right to

repurchase, the private respondents cannot avail of Article 1601 of the Civil Code which provides for conventional red

WHEREFORE, the petition is GRANTED. The questioned decision and resolution of the Court of Appeals are hereby REV

and SET ASIDE. The complaint in Civil Case No. 839 of the then Court of First Instance of Negros Occidental 12th Judici

Branch 6 is DISMISSED. No costs.

SO ORDERED.

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G.R. No. 109125 December 2, 1994

ANG YU ASUNCION, ARTHUR GO AND KEH TIONG, petitioners,vs.

THE HON. COURT OF APPEALS and BUEN REALTY DEVELOPMENT CORPORATION, respondents.

Antonio M. Albano for petitioners.

Umali, Soriano & Associates for private respondent.

VITUG,J.:

Assailed, in this petition for review, is the decision of the Court of Appeals, dated 04 December 1991, in CA-G.R. SP No. 26345

setting aside and declaring without force and effect the orders of execution of the trial court, dated 30 August 1991 and 27

September 1991, in Civil Case No. 87-41058.

The antecedents are recited in good detail by the appellate court thusly:

On July 29, 1987 a Second Amended Complaint for Specific Performance was filed by Ang Yu Asuncion

and Keh Tiong, et al., against Bobby Cu Unjieng, Rose Cu Unjieng and Jose Tan before the Regional Trial

Court, Branch 31, Manila in Civil Case No. 87-41058, alleging, among others, that plaintiffs are tenants or

lessees of residential and commercial spaces owned by defendants described as Nos. 630-638 Ongpin

Street, Binondo, Manila; that they have occupied said spaces since 1935 and have been religiously paying

the rental and complying with all the conditions of the lease contract; that on several occasions before

October 9, 1986, defendants informed plaintiffs that they are offering to sell the premises and are giving

them priority to acquire the same; that during the negotiations, Bobby Cu Unjieng offered a price of P6-

million while plaintiffs made a counter offer of P5-million; that plaintiffs thereafter asked the defendants

to put their offer in writing to which request defendants acceded; that in reply to defendant's letter,

plaintiffs wrote them on October 24, 1986 asking that they specify the terms and conditions of the offer

to sell; that when plaintiffs did not receive any reply, they sent another letter dated January 28, 1987

with the same request; that since defendants failed to specify the terms and conditions of the offer to

sell and because of information received that defendants were about to sell the property, plaintiffs were

compelled to file the complaint to compel defendants to sell the property to them.

Defendants filed their answer denying the material allegations of the complaint and interposing a special

defense of lack of cause of action.

After the issues were joined, defendants filed a motion for summary judgment which was granted by the

lower court. The trial court found that defendants' offer to s ell was never accepted by the plaintiffs for

the reason that the parties did not agree upon the terms and conditions of the proposed sale, hence,

there was no contract of sale at all. Nonetheless, the lower court ruled that should the defendants

subsequently offer their property for sale at a price of P11-million or below, plaintiffs will have the right

of first refusal. Thus the dispositive portion of the decision states:

WHEREFORE, judgment is hereby rendered in favor of the defendants and against

the plaintiffs summarily dismissing the complaint subject to the aforementioned

condition that if the defendants subsequently decide to offer their property for

sale for a purchase price of Eleven Million Pesos or lower, then the plaintiffs has

the option to purchase the property or of first refusal, otherwise, defenda

not offer the property to the plaintiffs if the purchase price is higher than

Million Pesos.

SO ORDERED.

Aggrieved by the decision, plaintiffs appealed to this Court in

CA-G.R. CV No. 21123. In a decision promulgated on September 21, 1990 (penned by Justice Seg

G. Chua and concurred in by Justices Vicente V. Mendoza and Fernando A. Santiago), this Court a

with modification the lower court's judgment, holding:

In resume, there was no meeting of the minds between the parties conce

sale of the property. Absent such requirement, the claim for specific perfowill not lie. Appellants' demand for actual, moral and exemplary damages

likewise fail as there exists no justifiable ground for its award. Summary ju

for defendants was properly granted. Courts may render summary judgm

there is no genuine issue as to any material fact and the moving party is e

a judgment as a matter of law (Garcia vs. Court of Appeals, 176 SCRA 815)

requisites obtaining, the decision of the court a quo is legally justifiable.

WHEREFORE, finding the appeal unmeritorious, the judgment appealed fr

hereby AFFIRMED, but subject to the following modification: The court a q

the aforestated decision gave the plaintiffs-appellants the right of first ref

if the property is sold for a purchase price of Eleven Million pesos or lowe

however, considering the mercurial and uncertain forces in our market ec

today. We find no reason not to grant the same right of first refusal to her

appellants in the event that the subject property is sold for a price in exce

Eleven Million pesos. No pronouncement as to costs.

SO ORDERED.

The decision of this Court was brought to the Supreme Court by petition for review on certiorar

Supreme Court denied the appeal on May 6, 1991 "for insufficiency in form and substances" (An

Petition).

On November 15, 1990, while CA-G.R. CV No. 21123 was pending consideration by this Court, th

Unjieng spouses executed a Deed of Sale (Annex D, Petition) transferring the property in questio

herein petitioner Buen Realty and Development Corporation, subject to the following terms and

conditions:

1. That for and in consideration of the sum of FIFTEEN MILLION PESOS

(P15,000,000.00), receipt of which in full is hereby acknowledged, the VEN

hereby sells, transfers and conveys for and in favor of the VENDEE, his hei

executors, administrators or assigns, the above-described property with aimprovements found therein including all the rights and interest in the sai

property free from all liens and encumbrances of whatever nature, excep

pending ejectment proceeding;

2. That the VENDEE shall pay the Documentary Stamp Tax, registration fe

transfer of title in his favor and other expenses incidental to the sale of ab

described property including capital gains tax and accrued real estate taxe

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As a consequence of the sale, TCT No. 105254/T-881 in the name of the Cu Unjieng spouses was

cancelled and, in lieu thereof, TCT No. 195816 was issued in the name of petitioner on December 3,

1990.

On July 1, 1991, petitioner as the new owner of the subject property wrote a letter to the lessees

demanding that the latter vacate the premises.

On July 16, 1991, the lessees wrote a reply to petitioner stating that petitioner brought the property

subject to the notice oflis pendensregarding Civil Case No. 87-41058 annotated on TCT No. 105254/T-

881 in the name of the Cu Unjiengs.

The lessees filed a Motion for Execution dated August 27, 1991 of the Decision in Civil Case No. 87-41058

as modified by the Court of Appeals in CA-G.R. CV No. 21123.

On August 30, 1991, respondent Judge issued an order (Annex A, Petition) quoted as follows:

Presented before the Court is a Motion for Execution filed by plaintiff represented

by Atty. Antonio Albano. Both defendants Bobby Cu Unjieng and Rose Cu Unjieng

represented by Atty. Vicente Sison and Atty. Anacleto Magno respectively were

duly notified in today's consideration of the motion as evidenced by t he rubber

stamp and signatures upon the copy of the Motion for Execution.

The gist of the motion is that the Decision of the Court dated September 21, 1990

as modified by the Court of Appeals in its decision in CA G.R. CV-21123, and

elevated to the Supreme Court upon the petition for review and that the same was

denied by the highest tribunal in its resolution dated May 6, 1991 in G.R. No.

L-97276, had now become final and executory. As a consequence, there was an

Entry of Judgment by the Supreme Court as of June 6, 1991, stating that the

aforesaid modified decision had already become final and executory.

It is the observation of the Court that this property in dispute was the subject of

the Notice of Lis Pendens and that the modified decision of this Court promulgated

by the Court of Appeals which had be come final to the e ffect that should the

defendants decide to offer the property for sale for a price of P11 Million or lower,

and considering the mercurial and uncertain forces in our market economy today,

the same right of first refusal to herein plaintiffs/appellants in the event that the

subject property is sold for a price in excess of Eleven Million pesos or more.

WHEREFORE, defendants are hereby ordered to execute the necessary Deed of

Sale of the property in litigation in favor of plaintiffs Ang Yu Asuncion, Keh Tiong

and Arthur Go for the consideration of P15 Million pesos in recognition of

plaintiffs' right of first refusal and that a new Transfer Certificate of Title be issued

in favor of the buyer.

All previous transactions involving the same property notwithstanding the

issuance of another title to Buen Realty Corporation, is hereby set aside as having

been executed in bad faith.

SO ORDERED.

On September 22, 1991 respondent Judge issued another order, the dispositive portion of which

WHEREFORE, let there be Writ of Execution issue in the above-entitled ca

directing the Deputy Sheriff Ramon Enriquez of this Court to implement sa

of Execution ordering the defendants among others to comply with t he af

Order of this Court within a period of one (1) week from receipt of this