Case Summary (G.R. No. 152440)
Factual Background
Petitioner and SIHI entered into a lease agreement on January 10, 1985, for a term of 18 months at a monthly rental of 10,000 pesos. The contract granted the Lessee an option to purchase the property for a total of 1,800,000 pesos, with specific payment terms outlined. The lease was set to expire on January 30, 1986. As the termination approached, SIHI notified the petitioner of the lease's impending end and requested confirmation on exercising the purchase option by January 20, 1986.
Request for Extension and Notification to Exercise Option
Petitioner, on January 15, 1986, sought a six-month extension citing financial difficulties in raising sufficient funds required for the purchase. However, SIHI denied this request on February 14, 1986, subsequently notifying the petitioner to vacate the property. On February 18, 1986, shortly after the denial, the petitioner formally exercised the option to purchase the property, offering to make the down payment.
Trial Court Decision
The Regional Trial Court of Cebu City ruled in favor of the petitioner, ordering SIHI to execute a deed of sale for the property at the originally agreed price. The trial court found the delay in notification to be non-fatal to the exercise of the option, allowing the petitioner to proceed. This decision led SIHI to appeal to the Court of Appeals.
Court of Appeals' Ruling
The Court of Appeals affirmed the trial court's judgment but modified the terms regarding the purchase price. The court determined that the purchase price should reflect the prevailing market price for properties in Bulacao, Cebu City, rather than the original contract price. Both parties' motions for reconsideration were subsequently denied, prompting the petition for review.
Legal Analysis
The core issue addressed was whether the petitioner could validly exercise the option despite the delay in notification. The court articulated that an option to purchase establishes a preparatory contract that must adhere to its stipulated conditions. The court found the petitioner’s initial request for an extension did not negate the underlying intent to purchase, emphasizing that reasonable interpretations of contractual intent should be made evident in light of the surrounding circumstances.
Effect of Delay
While SIHI argued there was a significant delay in exercising the option, the court, after evaluating the context, concluded that the delay was neither substantial nor fundamentally detrimental to the agreement. The decision underscored the need to balance contract terms with equitable considerations regarding the intentions of the parties involved.
Subsequent Acts and Intent to Sell
The court noted that SIHI's prior financial difficultie
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Case Overview
- The case involves a petition for review of the Decision dated September 21, 1995, by the Court of Appeals in CA-G.R. CV No. 37520, along with a Resolution dated April 25, 1996, which denied both parties' motions for partial reconsideration or clarification.
- The controversy centers around the interpretation of a lease agreement with an option to purchase two parcels of land in Bulacao, Cebu City, owned by the private respondent, State Investment Houses, Inc. (SIHI).
- The Regional Trial Court of Cebu City initially ruled in favor of the petitioner, allowing him to purchase the property at the agreed price of P1,800,000.00, which was later modified by the Court of Appeals to reflect the prevailing market price.
Factual Background
- SIHI is the registered owner of two parcels of land, totaling 9,774 square meters, covered by Transfer Certificate of Titles Nos. T-89152 and T-89153.
- On January 10, 1985, a lease agreement with an option to purchase was executed between petitioner and SIHI, establishing a monthly rental of P10,000.00 for 18 months, with an option to purchase the property for P1,800,000.00.
- The lease provided that the option could be exercised within the lease period, concluding on January 30, 1986.
Events Leading to the Dispute
- On January 7, 1986, SIHI notified the petitioner of the impending termination of the lease and requested a decision regarding the purchase option by January 20, 1986.
- The petitioner requested a six-month extension on January 15, 1986, citing the need for more time to secure funding for the purchase.
- SIHI disapprove