Case Digest (G.R. No. 126454)
Facts:
On June 7, 1985, Bible Baptist Church and its pastor, Reuben Belmonte (petitioners), entered into a fifteen-year lease with Mr. & Mrs. Elmer Tito Medina Villanueva (respondents) for a store space at No. 2436 Leon Guinto Street, Malate, Manila. Under the Lease Agreement, petitioners paid an initial ₱84,000 directly to redeem the property from mortgage, which they treated as advance rent of ₱7,000 per month for one year. Thereafter, petitioners agreed to pay monthly rentals of ₱10,000 beginning June 1986, with a 10% annual escalation clause commencing June 7, 1988. The title remained with petitioners until expiration of the lease or until petitioners exercised their option to buy the premises at a selling price of ₱1.8 million, with a down payment to be agreed upon and the balance payable at ₱120,000 per annum. Paragraph 13 of the contract provided for the award of reasonable attorney’s fees upon breach. Petitioners sought to compel respondents to sell under the option, but the ReCase Digest (G.R. No. 126454)
Facts:
- Contract of Lease with Option to Buy
- On June 7, 1985, Bible Baptist Church (lessee) and Mr. & Mrs. Elmer Tito Medina Villanueva (lessors), owners of the property at No. 2436 (formerly 2424) Leon Guinto St., Malate, Manila, executed a 15-year lease.
- Key stipulations:
- Monthly rent of ₱10,000, payable five days after each calendar month starting June 7, 1986, with a 10% annual escalation beginning June 7, 1988.
- Upon signing, lessee paid ₱84,000 to redeem the mortgage on the property; title to remain with the church until lease expiration or exercise of purchase option.
- Lessor to remove existing tenants by March 15, 1986; if not, rent reduced by ₱3,000 per month until vacancy.
- Lessee may renovate the premises for church use.
- Lessee granted an option to buy during the lease for ₱1.8 million, with down payment “agreed upon by both parties” and balance payable at ₱120,000 per year.
- Procedural History
- Lessee sought to enforce the purchase option; RTC denied injunctive relief and option enforcement for lack of separate consideration, ordered reimbursement of real estate taxes and permitted consignment of monthly rentals.
- Court of Appeals affirmed, ruling the option unenforceable for want of distinct consideration and uncertain price.
- Petitioners elevated the case by certiorari to the Supreme Court.
Issues:
- Whether the option to buy was supported by a separate and distinct consideration.
- Whether the lease agreement fixed a price certain for the purchase.
- Whether petitioners are entitled to attorney’s fees under the lease.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)