Case Digest (G.R. No. 103338)
Facts:
Federico Serra v. The Hon. Court of Appeals and Rizal Commercial Banking Corporation, G.R. No. 103338, January 04, 1994, Supreme Court Second Division, Nocon, J., writing for the Court.Petitioner Federico Serra owned a 374-square-meter parcel in Masbate. In 1975 he negotiated with respondent Rizal Commercial Banking Corporation (RCBC) with a view to RCBC establishing a branch there; on May 20, 1975 the parties executed a written Contract of Lease with Option to Buy. The contract provided a 25-year lease (June 1, 1975–June 1, 2000), an option to purchase within ten years at a price “not greater than TWO HUNDRED TEN PESOS (P210.00) per square meter,” the lessor’s obligation to have the land registered under the Torrens System (expenses for his account), and an empowerment of the lessee to register if the lessor failed to do so. The lessee was authorized to erect a building at its expense, and the contract expressly provided that if the lessee failed to exercise the option within the ten-year period after registration, the building/improvements would become the lessor’s property at lease expiration without reimbursement.
Pursuant to the agreement RCBC constructed a branch building on the land. Within about three years Serra had the parcel registered under Torrens (Original Certificate of Title No. O-232). In a letter dated September 4, 1984 RCBC notified Serra of its intention to exercise the option to buy at the agreed price (totaling about P78,430), but Serra refused to sell. On March 14, 1985 RCBC filed a complaint for specific performance and damages in the Regional Trial Court (RTC), alleging RCBC’s long-standing intent to remain permanently on the property and praying for conveyance at the contract price plus attorney’s fees, exemplary damages and costs.
Serra answered, asserting as special defenses that the contract was a contract of adhesion, that the option lacked consideration distinct from the price and was therefore unenforceable, that RCBC failed to exercise the option within a reasonable time, and that extraordinary inflation had rendered enforcement inequitable; he counterclaimed for rental adjustment and damages. After trial the RTC initially dismissed RCBC’s complaint, holding the option unenforceable for lack of distinct consideration and untimely exercise. On RCBC’s motion for reconsideration, however, the RTC reversed itself by order dated January 9, 1989 and directed Serra to execute a deed of sale for P78,540, awarded P5,000 attorneys’ fees to RCBC, denied Serra’s counterclaim, and imposed costs.
RCBC appealed; in a decision promulgated September 19, 1991 the Court of Appeals (CA-G.R. CV No. 25693, Magsino, J....(Pro-only)
Issues:
- Was the contract a contract of adhesion that should be set aside?
- Was the option to buy supported by a consideration distinct from the price and therefore binding?
- Was the price “not greater than P210.00 per square meter” sufficiently certain to permit specific performance?
- Should the stipulated rent be judicially adjusted because of alleged extraordinary inflation that allegedly ...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)