Facts:

The case involves Unicane Food Products Manufacturing, Inc. (petitioner) against the Hon. Court of Appeals and the spouses Pablo and Felisa Manese, spouses Nicanor and Lutgarda Velasquez, and Ciceron Manese (respondents). The events leading to the case began on June 6, 1975, when Felisa Feliciano Manese entered into a contract of lease with Roberto Regala Keh Yung for a parcel of land in San Fernando, Pampanga, for a period of fifteen years at an annual rental of P10,000. Shortly after, an amendment was made to the lease, designating Unicane as the actual lessee while retaining the original terms. Unicane complied with the lease terms, paying advance rentals. In 1987, Felisa and Unicane verbally agreed to extend the lease until December 7, 1997, with Unicane paying an additional advance rental of P20,000.

However, on September 6, 1978, Felisa sold the property to her daughters Lutgarda and Ciceron Manese for P15,000 without her husband’s consent, with the understanding tha...

Facts:

Lease Agreement and Amendment
On June 6, 1975, Felisa Feliciano Manese and Roberto Regala Keh Yung entered into a 15-year lease agreement for a parcel of land in San Fernando, Pampanga, with an option to buy. The lease was amended three days later to reflect that UNICANE FOOD PRODUCTS MANUFACTURING, INC. (UNICANE) was the actual lessee. Both contracts were registered on the title.

Extension of Lease
During the lease, UNICANE and Felisa verbally agreed to extend the lease until December 7, 1997. UNICANE paid advance rentals, and Felisa promised to execute an extended lease contract. However, no formal extension was executed.

Sale of the Property
On September 6, 1978, Felisa sold the property to her daughters, Lutgarda and Ciceron Manese, for P15,000.00, without her husband's consent. The sale was intended to help her daughters financially, with the understanding that the property would be returned to Felisa once they recovered. A new title was issued in the daughters' names, and they later mortgaged the property to Planters Development Bank.

Discovery of the Sale
UNICANE discovered the sale when it attempted to register its advance rental payments as an encumbrance. UNICANE demanded the sale be disregarded, citing its preferential option to buy under the lease agreement. Lutgarda and Ciceron refused to extend the lease beyond 1990, contrary to UNICANE's agreement with Felisa.

Legal Action
On July 10, 1989, UNICANE filed a complaint to annul the sale and enforce its option to buy. The trial court ruled in favor of UNICANE, rescinding the sale and ordering Felisa to sell the property to UNICANE under the same terms. The Court of Appeals reversed this decision, dismissing UNICANE's complaint.

Issue:

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Ruling:

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Ratio:

1. Advance Rentals and Lease Extension
   Under Article 1332 of the Civil Code, when one party is unable to read or understand a contract, the enforcing party must prove that the terms were fully explained. UNICANE failed to do this, and the receipts could not be construed as evidence of a lease extension.

2. Simulated Sale
   A sale requires consideration, and the absence of payment to Felisa rendered the transaction simulated and void. The sale was intended to help her daughters secure a loan, not to transfer ownership.

3. Option to Buy
   The option to buy under the lease agreement expired with the lease in 1990. Since the lease was not renewed, UNICANE's right to purchase the property also expired.