Rongavillavs Court of Appeals

294 SCRA 289 August 17, 1998

Facts:

The property subject of this controversy is a parcel of land owned by sisters Mercedes

and FlorenciaDelaCruzin the proportion of with Juanita Jimenez, their niece and sister

of Dolores Rongavilla (petitioner herein). After theland was subdivided, the Original

Certificate of Title and Transfer Certificate of Title was kept in the possession of

JuanitaJimenez.In May 1976, the Dela Cruz sisters borrowed P2000.00 from the Spouses

Rongavilla for the purpose of having their (Dela Cruzes) rooftop repaired.

A month later, Rongavilla and Jiemnez went to their aunts home, bringing withthem a document typewritten in English for signature of their aunts. When Mercedes asked in

Tagalog what it wasabout, Rongavilla answered that it was just a document

evidencing the P2000.00 loan. On account of that representation,the Dela Cruzes

signed said document. After 4 years (September 1980), Rongavilla went to the house of

Dela Cruz and asked them to vacate the landin question, claiming that she and her

husband were already its new owners. Upon checking with the Office of theRegister of

Deeds, they discovered that their Certificate of Title had been cancelled and a new

one indeed had beenissued in favour of the Rongavillas.

They further discovered that said land had been mortgaged with the

CaviteDevelopment Bank, and only then did they realize that what they had previously

been asked to sign was a deed of sale. The Dela Cruzes filed a complaint before the

Pasay RTC to have the deed of sale declared void and inexistent.

They contended that they did not sell the property, they did not receive any

consideration on the supposed sale, thattheir title to the property was cancelled to their

damage and prejudice. They also claimed moral and exemplary damages.

On the other hand, the Rongavillas allege that the land had been voluntarily sold, that

there was consent to thesale, there was sufficient consideration, that the Dela Cruz

sisters had been fully apprised by the Notary Public as to what the document was

about, that prescription had set in, and that the deed of sale contained all the

requisites of acontract. The trial court ruled that the deed of sale was void and

inexistent. Upon appeal, the CA affirmed this decision.

Issue:

WON the disputed Deed of Sale is void and inexistent

Held:

Yes. As found by the trial court, the Dela Cruz sisters were misled by Rongavilla into

believing that what they signed was a document acknowledging a loan. The consent

was not merely vitiated; it did not exist at all.

The sale of theproperty was far from their minds. As to the issue of consideration, the

court notes that the deed makes mention of a consideration of P2000.00.However,

when the property was mortgaged, its value was P40000.00.

The gross inadequacy of the consideration detersthe Court from believing that the

property was actually sold. It is more reasonable to assume that the amount of P2000.00

in the deed refers to the loan extended by Rongavilla to her aunts.

There was no consideration in thispurported transaction.Moreover, Jimenez and her

layer repeatedly declared that the true consideration paid was P7800.00 and not

theP2000.00 that was stated in the deed of sale. It is also evident in the deed of sale

that the consideration originally typedtherein (P3000.00) was later on substituted by the

handwritten amount (P2000.00).

The Rongavillas may have many possible motives for these alterations, but these

testimonies only establish one thing: the non-sanctity of the deed as apublic instrument.

On the issue of prescription, the Court ruled that the document having been declared

void, the statute of limitations cannot apply. In this case, lack of consent and

consideration made the deeds of sale void altogether andrendered them subject to

attack at any time.

CARCELLER V. CA (February 10, 1999)

FACTS:

Respondent State Investment Houses Inc. has a parcel of land in Cebu City leased to

petitioner Jose Ramon Carceller with an option to purchase valid until the expiration of

the lease contract.

Three weeks before the expiration of the contract, petitioner made a request to the

respondent for the extension of the lease contact so he can have an ample time to

raise enough funds to avail of the option of sale.

Respondent denied the request and a month after the expiration of the contract,

petitioner made known his intention to buy the property.

Respondent reiterated the provisions in the contract and asked the petitioner to leave

the property, which will now be offered to the general public for a higher price.

ISSUE:

WON can still exercise his option of sale even after the time to do such has already

lapsed.

HELD:

The contract must be interpreted together with the intention of the parties. The letter of

the plaintiff to the respondent requesting for an extension is sufficient proof of his intent

to avail of the option of sale.

In contractual relations, the law allows the parties reasonable leeway on the terms of

their agreement, which is the law between them. When petitioner made his intention to

buy known to the buyer one month after the expiration of contract is within a

reasonable time- frame.

Petitioner may buy the property but not anymore to the price stated in the contract. As

such, respondent may increase the price of the land but only to a reasonable and fair

market value.

An option is a preparatory contract in which one party grants to the other, for a fixed

period and under specified conditions, the power to decide, whether or not to enter

into a principal contract. It binds the party who has given the option, not to enter into

the principal contract with any other person during the period designated, and, within

that period, to enter into such contract with the one to whom the option was granted,

if the latter should decide to use the option. It is a separate agreement distinct from the

contract which the parties may enter into upon the consummation of the option.

RIVERA FILIPINA INC v CA

FACTS:

In 1982, Reyes executed a 10-year (renewable) Contract of Lease with Riviera Filipina

over a parcel ofland in EDSA. Under such contract, the lessee is given aright of first

refusal should the lessor decide to sell theproperty during the terms of the lease.

Such property was subject of a mortgage executed byReyes in favor of Prudential

Bank. Since Reyes failed topay the loan with the bank, it foreclosed the mortgageand it

emerged as the highest bidder in the auction sale.

Realizing that he could not redeem the property, Reyesdecided to sell it and offered it

to Riviera Filipina forP5,000/sqm. However, it bargained for P3,500/sqm.Reyes rejected

such offer. After 7 months, it againbargained for P4,000/sqm, which again was rejected

byReyes who asked for P6,000/sqm price. After 2 months,it again bargained for

P5,000/sqm, but since Reyesinsisted on P6,000/sqm price, he rejected Riviera'soffer.

Nearing the expiry of the redemption period, Reyesand Traballo (his friend) agreed that

the latter wouldbuy the same for P5,300. But such deal was not yetformally concluded

and negotiations with Riviera Filipinaonce again transpired but to no avail.

In 1989, Cypress and Cornhill Trading were able tocome up with the amount sufficient

to cover theredemption money, with which Reyes paid to PrudentialBank to redeem

the property. Subsequently, a Deed ofAbsolute Sale was executed in favor of Cypress

andCornhill for P5.4M. Cypress and Cornhill mortgaged theproperty in favor of Urban

Dev. Bank for P3M.Riviera Filipina filed a suit against Reyes, Cypress andCornhill on the

ground that they violated its right of firstrefusal under the lease contract. RTC ruled in

favor ofReyes, Cypress, and Cornhill. On appeal, CA affirmed the decision of the RTC.

ISSUE:

W/N Riviera Filipina lost its right of first refusal

HELD:

YES. As clearly shown by the records andtranscripts of the case, the actions of the

parties to thecontract of lease, Reyes and Riviera, shaped theirunderstanding and

interpretation of the lease provision"right of first refusal" to mean simply that should

thelessor Reyes decide to sell the leased property duringthe term of the lease, such sale

should first be offeredto the lessee Riviera. And that is what exactly ensuedbetween

Reyes and Riviera, a series of negotiations onthe price per square meter of the subject

property withneither party, especially Riviera, unwilling to budgefrom his offer, as

evidenced by the exchange of lettersbetween the two contenders.

It can clearly be discerned from Rivieras letters that Riviera was so intractable in its position and tookobvious advantage of the knowledge of the timeelement in its

negotiations with Reyes as theredemption period of the subject foreclosed

propertydrew near. Riviera strongly exhibited a "take-it or leaveit"attitude in its

negotiations with Reyes. It quoted its"fixed and final" price as Five Thousand

Pesos(P5,000.00) and not any peso more. It voiced out that ithad other properties to

consider so Reyes should decideand make known its decision "within fifteen days."

Riviera even downgraded its offer when Reyes offeredanew the property to it, such that

whatever amountReyes initially receives from Riviera would absolutely beinsufficient to

pay off the redemption price of thesubject property.

Naturally, Reyes had to disagree withRivieras highly disadvantageous offer.Nary a howl of protest or shout of defiance spewedforth from Rivieras lips, as it were, but a seeminglywhimper of acceptance when the counsel of Reyesstrongly expressed in a

letter dated December 5, 1989that Riviera had lost its right of first refusal. Rivieracannot

now be heard that had it been informed of theoffer of Five Thousand Three Hundred

Pesos (P5,300.00)of Cypress and Cornhill it would have matched saidprice. Its stubborn

approach in its negotiations withReyes showed crystal-clear that there was never

anyneed to disclose such information and doing so would be just a futile effort on the

part of Reyes. Reyes wasunder no obligation to disclose the same. Pursuant toArticle

1339 of the New Civil Code, silence orconcealment, by itself, does not constitute fraud,

unlessthere is a special duty to disclose certain facts, or unlessaccording to good faith

and the usages of commerce thecommunication should be made. The general rule

isapplicable in the case at bar since Riviera failed toconvincingly show that either of

the exceptions arerelevant to the case at bar.

OESMER v PARAISO DEV CORP.

FACTS:

Oesmers are co-owners of undivided shares of 2parcels of agricultural and tenanted land in Cavite,which are unregistered and originally owned by theirparents. When their

parents died, they acquired the lotsas heirs by right of succession.

In 1989, Paular, a resident and former Mun. Sec. ofCarmona Cavite, brought Ernesto

Oesmer (one of theheirs) to meet with Lee, President of ParaisoDevelopment Corp, in

Manila for the purpose of brokering the sale of Ernesto's properties to Paraiso Dev.Corp.

A contract to sell was entered into betweenParaiso Dev. Corp and Ernesto as well as

Enriqueta. Acheck in the amount of P100,000 payable to Ernesto wasgiven as option

money.

Eventually, Rizalino, Leonora,BibianoJr, and Librado also signed the Contract to Sell.

However, 2 of their brothers, Adolfo and Jesus, refusedto sign the document.A couple

of months after, the Oesmers informedParaiso (through a letter) that it is rescinding

theContract to Sell and returning the option money.

However, Paraiso did not respond and thus, Oesmersfiled a complaint for declaration of

nullity of theContract to Sell with the RTC, which ruled in favor ofParaiso Dev. Corp. On

appeal, CA modified by declaringthat the Contract to Sell is valid and binding as to

theundivided shares of the six signatories of the document.

ISSUE:

W/N the Contract to Sell is valid as to allsignatories

HELD:

NO. It is true that the signatures of the 5 siblingsdid not confer authority on Ernesto as

agent to sell theirrespective shares in the properties, because suchauthority to sell an

immovable is required to be inwriting. However, those signatures signify their act

ofdirectly (not through an agent) selling their personalshares to Paraiso Dev. Corp.

In the case at bar, the Contract to Sell was perfectedwhen the petitioners consented to

the sale to therespondent of their shares in the subject parcels of landby affixing their

signatures on the said contract. Suchsignatures show their acceptance of what has

beenstipulated in the Contract to Sell and such acceptance was made known to

respondent corporation when theduplicate copy of the Contract to Sell was returned

tothe latter bearing petitioners signatures.

As to petitioner Enriquetas claim that she merelysigned as a witness to the said contract, the contractitself does not say so. There was no single indication inthe said

contract that she signed the same merely as a witness. The fact that her signature

appears on theright-hand margin of the Contract to Sell isinsignificant. The contract

indisputably referred to theHeirs of Bibiano and EncarnacionOesmer, and sincethere is no showing that Enriqueta signed the documentin some other capacity, it can be

safely assumed thatshe did so as one of the parties to the sale.

In the instant case, the consideration of P100, 000.00paid by respondent to petitioners

was referred to asoption money. However, a careful examination of thewords used in the contract indicates that the money isnot option money but earnest money. Earnest moneyand option money are not the same but distinguishedthus:

(a) Earnest money is part of the purchase price,while option money is the money

given as a distinctconsideration for an option contract;

(b) Earnest moneyis given only where there is already a sale, while optionmoney

applies to a sale not yet perfected; and,

(c)when earnest money is given, the buyer is bound to paythe balance, while

when the would-be buyer givesoption money, he is not required to buy, but may

evenforfeit it depending on the terms of the option.