G.R. No. 126454, 26 November 2004
Bible Baptist Church (petitioner Baptist Church) entered into a 15-year contract of lease with Mr. & Mrs. Elmer Tito Medina Villanueva (respondent spouses Villanueva) of a property located in Malate Manila. The contract includes a stipulation of an option to buy the leased premises within the lease period. Petitioner seeks to buy the leased premises from the spouses Villanueva, under the option given to them. Petitioners claim that the Baptist Church “agreed to advance the large amount needed for the rescue of the property but, in exchange, it asked the Villanuevas to grant it a long term lease and an option to buy the property for P1.8 million. They argue that the consideration supporting the option was their agreement to pay off the Villanueva’s P84,000 loan with the bank, thereby freeing the subject property from the mortgage encumbrance.
Respondent on the other hand, contended that the P84,000 has been fully exhausted and utilized by their occupation of the premises and there is no separate consideration to speak of which could support the option. Petitioners further insist that a consideration need not be a separate sum of money. They posit that their act of advancing the money to “rescue” the property from mortgage and impending foreclosure, should be enough consideration to support the option.
Both the Regional Trial Court and the Court of Appeals agree that the option was not founded upon a separate and distinct consideration and that, hence, respondents Villanuevas cannot be compelled to sell their property to petitioner Baptist Church. Hence this petition.
Whether or not the option to buy given to the Baptist Church is founded upon a consideration.
No, for non-compliance of the requirements under Article 1479.
First, petitioners cannot insist that the P84,000 they paid in order to release the Villanuevas’ property from the mortgage should be deemed the separate consideration to support the contract of option. It must be pointed out that said amount was in fact apportioned into monthly rentals spread over a period of one year, at P7,000 per month. Thus, for the entire period of June 1985 to May 1986, petitioner Baptist Church’s monthly rent had already been paid for, such that it only again commenced paying the rentals in June 1986. This is shown by the testimony of petitioner Pastor Belmonte where he states that the P84,000 was advance rental equivalent to monthly rent of P7,000 for one year, such that for the entire year from 1985 to 1986 the Baptist Church did not pay monthly rent.
This Court agrees with respondents that the amount of P84,000 has been fully exhausted and utilized by their occupation of the premises and there is no separate consideration to speak of which could support the option.
Second, petitioners’ reliance on the case of Teodoro v. Court of Appeals13 is misplaced. The facts of the Teodoro case reveal that therein respondent Ariola was the registered lessee of a property owned by the Manila Railroad Co. She entered into an agreement whereby she allowed Teodoro to occupy a portion of the rented property and gave Teodoro an option to buy the same, should Manila Railroad Co. decide to sell the property to Ariola. In addition, Teodoro, who was occupying only a portion of the subject rented property, also undertook to pay the Manila Railroad Co., the full amount of the rent supposed to be paid by the registered lessor Ariola. Consequently, unlike this case, Teodoro paid over and above the amount due for her own occupation of a portion of the property. That amount, which should have been paid by Ariola as lessor, and for her own occupation of the property, was deemed by the Court as sufficient consideration for the option to buy which Ariola gave to Teodoro upon Ariola’s acquiring the property.
Hence, in Teodoro, this Court was able to find that a separate consideration supported the option contract and thus, its enforcement may be demanded. Petitioners, therefore, cannot rely on Teodoro, for the case even supports the respondents’ stand that a consideration that is separate and distinct from the purchase price is required to support an option contract.
*Case digest by JAY MARK P. BALBOSA JD – IV, Andres Bonifacio College, SY 2019 – 2020.