G.R. No. 127695 (December 3, 2001)
Topics: Option Contract, Reciprocal Obligation
Summary:
Faustino Duray sued the Bacus heirs for specific performance after they refused to sell him a piece of land in Cebu. The CA later upheld the RTC’s finding in favor of the Durays and ordered them to perform their end of the bargain.
The Durays had an option to buy the property from the Bacus family, but were not obligated to make the payment until after they exercised their option. The payment of the purchase price by the creditor is contingent upon the execution and delivery of the deed of sale by the debtor.
Doctrines:
Obligations under an option to buy are reciprocal obligations. The performance of one obligation is conditioned on the simultaneous fulfillment of the other obligation.
In reciprocal obligations, neither party incurs in delay if the other party does not comply or is not ready to comply in a proper manner with what is incumbent upon him. Only from the moment one of the parties fulfills his obligation, does delay by the other begin.
Reciprocal Obligations- Those which arise from the same cause, and in which each party is a debtor and a creditor of the other, such that the obligation of one is dependent upon the obligation of the other. They are to be performed simultaneously such that the performance of one is conditioned upon the simultaneous fulfillment of the other
Facts:
A piece of agricultural property in Cebu with a total land area of 3,002 square meters was leased by Luis Bacus to Faustino Duray in 1984. The lease included a six-year term that ended in 1990 with an option to purchase provision.
According to the aforementioned option, the lessee had the only and absolute right to purchase 2,000 square meters at a price of P200 per square meter five years from the effective date of the contract. According to the peso’s exchange rate against the US dollar, which was 14 pesos at the time the contract was executed, that rate will be proportionately adjusted.
Luis Bacus passed away in 1989, just before the contract’s expiration date, and Duray had already notified his heirs that they were prepared and willing to exercise their right to buy the property under the option to purchase provision.
Due to the heirs’ refusal to sell, Duray sued the Bacus heirs for specific performance.
He demonstrated that he is prepared and capable of upholding his end of the bargain with Bacus.
The CA later upheld the RTC’s finding in favor of the Durays.
Issue:
Whether the heirs of Luis Bacus be compelled to sell the portion of the lot under the option to buy clause?
Ruling:
Yes, Obligations under an option to buy are reciprocal obligations. The performance of one obligation is conditioned on the simultaneous fulfillment of the other obligation. In other words, in an option to buy, the payment of the purchase price by the creditor is contingent upon the execution and delivery of the deed of sale by the debtor.
The Durays were only required to inform the Bacus of their decision and preparedness to pay the price when they exercised their option to purchase the property; they were not yet obligated to make the payment. They weren’t obligated to pay until the Bacus actually executed and delivered the deed of sale.
Even though they hadn’t yet delivered the payment or made a consignment before the contract’s expiration, the Durays didn’t suffer a delay. In reciprocal obligations, neither party incurs in delay if the other party does not comply or is not ready to comply in a proper manner with what is incumbent upon him. Only from the moment one of the parties fulfills his obligation, does delay by the other begin. The petition is DENIED and the decision of the Court of Appeals is AFFIRMED.