FEDERICO SERRA v. THE HON.

said parcel of land under the

COURT OF APPEALS AND RIZAL TORRENS SYSTEM and all
COMMERCIAL BANKING expenses appurtenant thereto
CORPORATION shall be for his sole account.”

G.R. No. 103338 January 4, 1994 "If, for any reason, said parcel of
land is not registered under the
FACTS: TORRENS SYSTEM within the
aforementioned ten-year period,
Disputed in the present case is the the LESSEE shall have the right,
efficacy of a "Contract of Lease with upon termination of the lease to
Option to Buy," entered into between be paid by the LESSOR the
petitioner Federico Serra and private market value of the building and
respondent Rizal Commercial Banking improvements constructed on
Corporation (RCBC). said parcel of land.”

Petitioner is the owner of a parcel of The foregoing agreement was

land located at Quezon St., Masbate. subscribed before the notary public.
Sometime in 1975, respondent bank, in Pursuant to said contract, a building and
its desire to put up a branch in Masbate, other improvements were constructed
negotiated with petitioner for the on the land which housed the branch
purchase of the then unregistered office of RCBC in Masbate, Masbate.
property. On May 20, 1975, a contract of Within three years from the signing of
lease with option to buy was instead the contract, petitioner complied with his
forged by the parties, the pertinent part of the agreement by having the
portion of which reads: property registered and placed under
the Torrens System, for which a Original
"1. The LESSOR leases unto the Certificate of Title was issued by the
LESSEE, and the LESSEE Register of Deeds.
hereby accepts in lease, the
parcel of land described in the Petitioner alleges that as soon as he
first WHEREAS clause, to have had the property registered, he kept on
and to hold the same for a period pursuing the manager of the branch to
of twenty-five (25) years effect the sale of the lot as per their
commencing from June 1, 1975 agreement. It was not until September 4,
to June 1, 2000. The LESSEE, 1984, however, when the respondent
however, shall have the option to bank decided to exercise its option and
purchase said parcel of land informed petitioner, of its intention to buy
within a period of ten (10) years the property at the agreed price. But
from the date of the signing of much to the surprise of the respondent,
this Contract at a price not petitioner replied that he is no longer
greater than TWO HUNDRED selling the property.
TEN PESOS (P210.00) per
square meter. For this purpose, A complaint for specific performance
the LESSOR undertakes, within and damages was filed by respondent
such ten-year period, to register against petitioner. In the complaint,
respondent alleged that during the
negotiations it made clear to petitioner
that it intends to stay permanently on the HELD: The petition is devoid of merit.
property once its branch office is opened
unless the exigencies of the business 1. Yes. The Court held that the
requires otherwise. disputed contract is a contract
of adhesion. There is no dispute
The petitioner, in his defense, stated (1) that the contract is valid and
that the contract having been prepred existing between the parties, as
and drawn by RCBC, it took undue found by both the trial court and
advantage on him when it set in the appellate court. Neither does
loopsided terms; (2) that the option was the Court find the terms of the
not supported by any consideration contract unfairly lopsided to have
distinct from the price and hence not it ignored.
binding upon him; (3) and that as a
condition for the validity and/or efficacy A contract of adhesion is one
of the option, should have been wherein a party, usually a
exercised withtin reasonable time after corporation, prepares the
the registration of the land under the stipulations in the contract, while
Torrens System; that its delayed action the other party merely affixes his
on the option has forfeited whatever its signature or his "adhesion"
claim to the same. thereto. These types of contracts
are as binding as ordinary
Initially, after trial on the merits, the court contracts. Because in reality, the
dismissed the complaint. Although it party who adheres to the contract
found the contract to be valid, the court is free to reject it entirely.
nonetheless ruled that the option to buy Although, the Court stated that it
is unenforceable because it lacked a will not hesitate to rule out blind
consideration distinct from the price and adherence to terms where facts
that RCBC did not exercise its option and circumstances will show that
within reasonable time. it is basically one-sided.

Hence, this petition. Hence, the Court does not find

the situation in this case at bar to
be inequitable. Since the
ISSUES: petitioner is a highly educated
man, who, at the time of the trial
1. Whether or not the disputed was already a CPA-Lawyer, and
contract is a contract of adhesion; when he entered into the
and contract, was already a CPA,
holding a respectable position
2. Whether or not there was no with the Metropolitan Manila
consideration to support the Commission. It is evident that a
option, distinct from the price, man of his stature should have
hence the option cannot be been more cautious in
exercised. transactions he enters into,
 particularly where it concerns price does not affect a contract
valuable properties. He is amply of sale.
equipped to drive a hard bargain
if he would be so minded to. Contracts are to be construed
according to the sense and
3. No. The Court held that there meaning of the terms which the
was consideration to suport parties themselves have used. In
the optionn distinct from the the present dispute, there is
price, hence the can be evidence to show that the
exercised. intention of the parties is to peg
the price at P210 per square
In a decided case (Vda. de meter.
Quirino v. Palarca) "the
consideration for the lessor’s Since the contract is the law
obligation to sell the leased between the parties and if there is
premises to the lessee, should he indeed reason to adjust the rent,
choose to exercise his option to the parties could by themselves
purchase the same, is the negotiate for the amendment of
obligation of the lessee to sell to the contract. Premises
the lessor the building and/or considered, the Court finds that
improvements constructed and/or the contract of "LEASE WITH
made by the former, if he fails to OPTION TO BUY" between
exercise his option to buy said petitioner and respondent bank is
premises." valid, effective and enforceable,
the price being certain and that
In the present case, the there was consideration distinct
consideration is even more from the price to support the
onerous on the part of the lessee option given to the lessee.
since it entails transferring of the
building and/or improvements on WHEREFORE, this petition is hereby
the property to petitioner, should DISMISSED, and the decision of the
respondent bank fail to exercise appellate court is hereby AFFIRMED.
its option within the period
stipulated.

The bugging question then is

whether the price "not greater NOTES:
than TWO HUNDRED PESOS" is
certain or definite. A price is  Petitioner contends that the
considered certain if it is so doctrines laid down in the cases
with reference to another thing of Atkins Kroll v. Cua Hian Tek,
certain or when the 11 Sanchez v. Rigos, 12 and
determination thereof is left to Vda. de Quirino v. Palarca were
the judgment of a specified misapplied in the present case,
person or persons. And because 1) the option given to
generally, gross inadequacy of the respondent bank was not
supported by a consideration given the right to decide to
distinct from the price; and 2) that purchase or not, a certain
the stipulated price of "not merchandise or property, at any
greater than P210.00 per square time within the agreed period, at
meter" is not certain or definite. a fixed price. This being his
prerogative, he may not be
Article 1324 of the Civil Code compelled to exercise the option
provides that when an offeror has to buy before the time expires.
allowed the offeree a certain
period to accept, the offer may be  A promise to buy and sell a
withdrawn at anytime before determinate thing for a price
acceptance by communicating certain is reciprocally
such withdrawal, except when the demandable. An accepted
option is founded upon unilateral promise to buy or to sell
consideration, as something paid a determinate thing for a price
or promised. On the other hand, certain is binding upon the
Article 1479 of the Code promisor if the promise is
provides that an accepted supported by a consideration
unilateral promise to buy and sell distinct from the price. (Article
a determinate thing for a price 1479, New Civil Code) The first
certain is binding upon the is a mutual promise and each
promisor if the promise is has the right to demand from the
supported by a consideration other the fulfillment of the
distinct from the price. obligation. While the second is
merely an offer of one to
In a unilateral promise to sell, another, which if accepted,
where the debtor fails to withdraw would create an obligation to the
the promise before the offeror to make good his promise,
acceptance by the creditor, the provided the acceptance is
transaction becomes a bilateral supported by a consideration
contract to sell and to buy, distinct from the price.
because upon acceptance by the
creditor of the offer to sell by the  Extraordinary inflation exists
debtor, there is already a meeting when there in an unimaginable
of the minds of the parties as to increase or decrease of the
the thing which is determinate purchasing power of the
and the price which is certain. In Philippine currency, or fluctuation
which case, the parties may then in the value of pesos manifestly
reciprocally demand beyond the contemplation of the
performance. parties at the time of the
establishment of the obligation.
Jurisprudence has taught us that
an optional contract is a
privilege existing only in one
party — the buyer. For a
separate consideration paid, he is