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102 SUPREME COURT REPORTS ANNOTATED

Vasquez vs. Court of Appeals

*
G.R. No. 83759. July 12, 1991.

SPOUSES CIPRIANO VASQUEZ and VALERIANA

GAYANELO, petitioners, vs. HONORABLE COURT OF
APPEALS and SPOUSES MARTIN VALLEJERA and
APOLONIA OLEA, respondents.

Sales; Right to Repurchase; The promisee has the burden of

proving that the right to repurchase was supported by a
consideration distinct from the price.—In the instant case and
contrary to the appellate court’s finding, it is clear that the right
to repurchase was not supported by a consideration distinct from
the price. The rule is that

_________________

29 Siliman University v. Benarao, et al., G.R. No. 46613, Feb. 26, 1990;
Mangubat v. Osmeña, 105 Phil. 1308 (unrep.); Baguio v. Rodriguez, 105 Phil. 1323
(unrep.)

30 Pascual v. Provincial Board of Nueva Ecija, 106 Phil. 466; Prudential Bank
v. Gapultos, G.R. No. 41835 and Prudential Bank v. Serrano, G.R. No. 49293, Jan.
19, 1990; Cebu Oxygen & Acetylene Co., Inc. v. Drilon, et al., G.R. No. 82849, Aug.
2, 1989.

* THIRD DIVISION.

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the promisee has the burden of proving such consideration.

Unfortunately, the private respondents, promisees in the right to
repurchase failed to prove such consideration. They did not even
allege the existence thereof in their complaint. (See Sanchez v.
Rigos supra) Therefore, in order that the Sanchez case can be
applied, the evidence must show that the private respondents
accepted the right to repurchase.

Same; Same; The annotation and registration of the right to

repurchase at the back of the certificate of title of the petitioners
can not be considered as acceptance of the right to repurchase.
—The annotation and registration of the right to repurchase at
the back of the certificate of title of the petitioners can not be
considered as acceptance of the right to repurchase. Annotation at
the back of the certificate of title of registered land is for the
purpose of binding purchasers of such registered land. Thus, we
ruled in the case of Bel Air Village Association, Inc. v. Dionisio
(174 SCRA 589 [1989]), citing Tanchoco v. Aquino (154 SCRA 1
[1987]), and Constantino v. Espiritu (45 SCRA 557 [1972]) that
purchasers of a registered land are bound by the annotations
found at the back of the certificate of title covering the subject
parcel of land. In effect, the annotation of the right to repurchase
found at the back of the certificate of title over the subject parcel
of land of the private respondents only served as notice of the
existence of such unilateral promise of the petitioners to resell the
same to the private respondents. This, however, can not be
equated with acceptance of such right to repurchase by the
private respondent.

Same; Same; The signature of the petitioners in the document

called right to repurchase does not signify acceptance of the right
to repurchase.—Neither can the signature of the petitioners in the
document called “right to repurchase” signify acceptance of the
right to repurchase. The respondents did not sign the offer.
Acceptance should be made by the promisee, in this case, the
private respondents and not the promisors, the petitioners herein.
It would be absurd to require the promisor of an option to buy to
accept his own offer instead of the promisee to whom the option to
buy is given.

PETITION for review from the decision and resolution of

the Court of Appeals.

The facts are stated in the opinion of the Court.

     Dionisio C. Isidto for petitioners.

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     Raymundo Lozada, Jr. for private respondents.

104

104 SUPREME COURT REPORTS ANNOTATED

Vasquez vs. Court of Appeals

GUTIERREZ, JR., J.:

This petition seeks to reverse the decision of the Court of

Appeals which affirmed the earlier decision of the Regional
Trial Court, 6th Judicial Region, Branch 56, Himamaylan,
Negros Occidental in Civil Case No. 839 (for specific
performance and damages) ordering the petitioners
(defendants in the civil case) to resell Lot No. 1860 of the
Cadastral Survey of Himamaylan, Negros Occidental to the
respondents (plaintiffs in the civil case) upon payment by
the latter of the amount of P24,000.00 as well as the
appellate court’s resolution denying a motion for
reconsideration. In addition, the appellate court ordered
the petitioners to pay the amount of P5,000.00 as necessary
and useful expenses in accordance with Article 1616 of the
Civil Code.
The facts of the case are not in dispute. They are
summarized by the appellate court as follows:

“On January 15, 1975, the plaintiffs­spouses (respondents herein)

filed this action against the defendants­spouses (petitioners
herein) seeking to redeem Lot No. 1860 of the Himamaylan
Cadastre which was previously sold by plaintiffs to defendants on
September 21, 1964.
“The said lot was registered in the name of plaintiffs. On
October 1959, the same was leased by plaintiffs to the defendants
up to crop year 1966­67, which was extended to crop year 1968­69.
After the execution of the lease, defendants took possession of the
lot, up to now and devoted the same to the cultivation of sugar.
On September 21, 1964, the plaintiffs sold the lot to the
defendants under a Deed of Sale for the amount of P9,000.00. The
Deed of Sale was duly ratified and notarized. On the same day
and along with the execution of the Deed of Sale, a separate
instrument, denominated as Right to Repurchase (Exh. E), was
executed by the parties granting plaintiffs the right to repurchase
the lot for P12,000.00, said Exh. E likewise duly ratified and
notarized. By virtue of the sale, defendants secured TCT No. T­
58898 in their name. On January 2, 1969, plaintiffs sold the same

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lot to Benito Derrama, Jr., after securing the defendants’ title, for
the sum of P12,000.00. Upon the protestations of defendant,
assisted by counsel, the said second sale was cancelled after the
payment of P12,000.00 by the defendants to Derrama.
Defendants resisted this action for redemption on the premise
that Exh. E is just an option to buy since it is not embodied in the
same document of sale but in a separate document, and since such
option is

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Vasquez vs. Court of Appeals

not supported by a consideration distinct from the price, said deed

for right to repurchase is not binding upon them.
After trial, the court below rendered judgment against the
defen­dants, ordering them to resell lot No. 1860 of the
Himamaylan Ca­dastre to the plaintiffs for the repurchase price
of P24,000.00, which amount combines the price paid for the first
sale and the price paid by defendants to Benito Derrama, Jr.
Defendants moved for, but were denied reconsideration.
Except­ing thereto, defendants­appealed, x x x.” (Rollo, pp. 44­45)

The petition was given due course in a resolution dated

February 12, 1990.
The petitioners insist that they can not be compelled to
resell Lot No. 1860 of the Himamaylan Cadastre. They
contend that the nature of the sale over the said lot
between them and the private respondents was that of an
absolute deed of sale and that the right thereafter granted
by them to the private respondents (Right to Repurchase,
Exhibit “E”) can only be either an option to buy or a mere
promise on their part to resell the property. They opine
that since the “RIGHT TO REPURCHASE” was not
supported by any consideration distinct from the purchase
price it is not valid and binding on the petitioners pursu­
ant to Article 1479 of the Civil Code.
The document denominated as “RIGHT TO
REPURCHASE” (Exhibit E) provides:

“RIGHT TO REPURCHASE

KNOW ALL MEN BY THESE PRESENTS:

I, CIPRIANO VASQUEZ, x x x x, do hereby grant the spouses

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Martin Vallejera and Apolonia Olea, their heirs and assigns, the
right to repurchase said Lot No. 1860 for the sum of TWELVE
THOUSAND PESOS (P12,000.00), Philippine Currency, within
the period TEN (10) YEARS from the agricultural year 1969­1970
when my contract of lease over the property shall expire and until
the agricultural year 1979­1980.
IN WITNESS WHEREOF, I have hereunto signed my name at
Binalbagan, Negros Occidental, this 21st day of September, 1964.

SGD. CIPRIANO VASQUEZ

SGD. VALERIANA G. VASQUEZ      SGD. FRANCISCO

SANICAS”
(Rollo, p. 47)

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106 SUPREME COURT REPORTS ANNOTATED

Vasquez vs. Court of Appeals

The Court of Appeals, applying the principles laid down in

the case of Sanchez v. Rigos, 45 SCRA 368 [1972] decided
in favor of the private respondents.
In the Sanchez case, plaintiff­appellee Nicolas Sanchez
and defendant­appellant Severino Rigos executed a
document entitled “Option to Purchase,” whereby Mrs.
Rigos “agreed, promised and committed x x x to sell” to
Sanchez for the sum of P1,510.00, a registered parcel of
land within 2 years from execution of the document with
the condition that said option shall be deemed “terminated
and lapsed,” if “Sanchez shall fail to exercise his right to
buy the property” within the stipulated period. In the same
document, Sanchez” x x x hereby agree and conform with
all the conditions set forth in the option to purchase
executed in my favor, that I bind myself with all the terms
and conditions.” (Emphasis supplied) The notarized
document was signed both by Sanchez and Rigos.
After several tenders of payment of the agreed sum of
P1,510.00 made by Sanchez within the stipulated period
were rejected by Rigos, the former deposited said amount
with the Court of First Instance of Nueva Ecija and filed an
action for specific performance and damages against Rigos.
The lower court rendered judgment in favor of Sanchez
and ordered Rigos to accept the sum judicially consigned
and to execute in Sanchez’ favor the requisite deed of
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conveyance. Rigos appealed the case to the Court of

Appeals which certified to this Court on the ground that it
involves a pure question of law.
This Court after deliberating on two conflicting
principles laid down in the cases of Southwestern Sugar
and Molasses Co. v. Atlantic Gulf and Pacific Co., (97 Phil.
249 [1955]) and Atkins, Kroll & Co., Inc. v. Cua Hian Tek,
102 Phil. 948 [1958]) arrived at the conclusion that Article
1479 of the Civil Code which provides:

“ART. 1479. A promise to buy and sell a determinate thing for a

price certain is reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate
thing for a price certain is binding upon the promissor if the
promise is supported by a consideration distinct from the price.”

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Vasquez vs. Court of Appeals

and Article 1324 thereof which provides:

“ART. 1324. When the offerer has allowed the offeree a certain
period to accept, the offer may be withdrawn at any time before
acceptance by communicating such withdrawal, except when the
option is founded upon a consideration, as something paid or
promised.

should be reconciled and harmonized to avoid a conflict

between the two provisions. In effect, the Court abandoned
the ruling in the Southwestern Sugar and Molasses Co.
case and reiterated the ruling in the Atkins, Kroll and Co.
case, to wit:

“However, this Court itself, in the case of Atkins, Kroll and Co.,
Inc. v. Cua Hian Tek, (102 Phil. 948, 951­952) decided later than
Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific
Co., (supra) saw no distinction between Articles 1324 and 1479 of
the Civil Code and applied the former where a unilateral promise
to sell similar to the one sued upon here was involved, treating
such promise as an option which, although not binding as a
contract in itself for lack of separate consideration, nevertheless
generated a bilateral contract of purchase and sale upon
acceptance. Speaking through Associate Justice, later Chief
Justice, Cesar Bengzon, this Court said:

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“ ‘Furthermore, an option is unilateral: a promise to sell at the price fixed

whenever the offeree should decide to exercise his option within the
specified time. After accepting the promise and before he exercises his
option, the holder of the option is not bound to buy. He is free either to
buy or not to buy later. In this case however, upon accepting herein
petitioner’s offer a bilateral promise to sell and to buy ensued, and the
respondent ipso facto assumed the obligation of a purchaser. He did not
just get the right subsequently to buy or not to buy. It was not a mere
option then; it was bilateral contract of sale. Lastly, even supposing that
Exh. A granted an option which is not binding for lack of consideration,
the authorities hold that
“ ‘If the option is given without a consideration, it is a mere offer of a
contract of sale, which is not binding until accepted. If, however,
acceptance is made before a withdrawal, it constitutes a binding contract
of sale, even though the option was not supported by a sufficient
consideration. x x x.’ (77 Corpus Juris Secundum p. 652. See also 27
Ruling Case Law 339 and cases cited.)”

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108 SUPREME COURT REPORTS ANNOTATED

Vasquez vs. Court of Appeals

This Court affirmed the lower court’s decision although the

promise to sell was not supported by a consideration
distinct from the price. It was obvious that Sanchez, the
promisee, accepted the option to buy before Rigos, the
promisor, withdrew the same. Under such circumstances,
the option to purchase was converted into a bilateral
contract of sale which bound both parties.
In the instant case and contrary to the appellate court’s
finding, it is clear that the right to repurchase was not
supported by a consideration distinct from the price. The
rule is that the promisee has the burden of proving such
consideration. Unfortunately, the private respondents,
promisees in the right to repurchase failed to prove such
consideration. They did not even allege the existence
thereof in their complaint. (See Sanchez v. Rigos supra)
Therefore, in order that the Sanchez case can be applied,
the evidence must show that the private respondents
accepted the right to repurchase.
The record, however, does not show that the private
respondents accepted the “Right to Repurchase” the land in
question. We disagree with the appellate court’s finding
that the private respondents accepted the “right to
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repurchase” under the following circumstances: x x as

evidenced by the annotation and registration of the same
on the back of the transfer of certificate of title in the name
of appellants. As vividly appearing therein, it was signed
by appellant himself and witnessed by his wife so that for
all intents and purposes the Vasquez spouses are estopped
from disregarding its obvious purpose and intention.”
The annotation and registration of the right to
repurchase at the back of the certificate of title of the
petitioners can not be considered as acceptance of the right
to repurchase. Annotation at the back of the certificate of
title of registered land is for the purpose of binding
purchasers of such registered land. Thus, we ruled in the
case of Bel Air Village Association, Inc. v. Dionisio (174
SCRA 589 [1989]), citing Tanchoco v. Aquino (154 SCRA 1
[1987]), and Constantino v. Espiritu (45 SCRA 557 [1972])
that purchasers of a registered land are bound by the
annotations found at the back of the certificate of title
covering the subject parcel of land. In effect, the annotation
of the right to repurchase found at the back of the
certificate of title over the subject

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parcel of land of the private respondents only served as

notice of the existence of such unilateral promise of the
petitioners to resell the same to the private respondents.
This, however, can not be equated with acceptance of such
right to repurchase by the private respondent.
Neither can the signature of the petitioners in the
document called “right to repurchase” signify acceptance of
the right to repurchase. The respondents did not sign the
offer. Acceptance should be made by the promisee, in this
case, the private respondents and not the promisors, the
petitioners herein. It would be absurd to require the
promisor of an option to buy to accept his own offer instead
of the promisee to whom the option to buy is given.
Furthermore, the actions of the private respondents—(a)
filing a complaint to compel re­sale and their demands for
resale prior to filing of the complaint cannot be considered
acceptance. As stated in Vda. de Zulueta v. Octaviano (121
SCRA 314 [1983]):
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“And even granting, arguendo that the sale was a pacto de retro
sale, the evidence shows that Olimpia, through her lawyer, opted
to repurchase the land only on 16 February 1962, approximately
two years beyond the stipulated period, that is, ‘not later than
May, 1960.’
If Olimpia could not locate Aurelio, as she contends, and based
on her allegation that the contract between her was one of sale
with right to repurchase, neither, however, did she tender the
redemption price to private respondent Isauro, but merely wrote
him letters expressing her readiness to repurchase the property.
‘It is clear that the mere sending of letters by the vendor
expressing his desire to repurchase the property without
accompanying tender of the redemption price fell short of the
requirements of law.’ (Lee v. Court of Appeals, 68 SCRA 197
[1972])
Neither did petitioner make a judicial consignation of the
repurchase price within the agreed period.
‘In a contract of sale with a right of repurchase, the
redemptioner who may offer to make the repurchase on the option
date of redemption should deposit the full amount in court x x x.’
(Rumbaoa v. Arzaga, 84 Phil. 812 [1949])
‘To effectively exercise the right to repurchase the vendor a
retro must make an actual and simultaneous tender of payment
or consig­nation.’ (Catangcatang v. Legayada, 84 SCRA 51 [1978])

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Vasquez vs. Court of Appeals

The private respondents’ ineffectual acceptance of the

option to buy validated the petitioner’s refusal to sell the
parcel which can be considered as a withdrawal of the
option to buy.
We agree with the petitioners that the case of Vda. de
Zulueta v. Octaviano, (supra) is in point.
Stripped of non­essentials the facts of the Zulueta case
are as follows: On November 25, 1952 (Emphasis supplied)
Olimpia Fernandez Vda. de Zulueta, the registered owner
of a 5.5 hectare riceland sold the lot to private respondent
Aurelio B. Octaviano for P8,600.00 subject to certain terms
and conditions. The contract was an absolute and definite
sale. On the same day, November 25, 1952, (Emphasis
supplied) the vendee, Aurelio signed another document
giving the vendor Zulueta the “option to repurchase” the
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property at anytime after May 1958 but not later than May
1960. When, however, Zulueta tried to exercise her “option
to buy” the property, Aurelio resisted the same prompting
Zulueta to commence suit for recovery of ownership and
possession of the property with the then Court of First
Instance of Iloilo.
The trial court ruled in favor of Zulueta. Upon appeal,
however, the Court of Appeals reversed the trial court’s
decision.
We affirmed the appellate court’s decision and ruled:

“The nature of the transaction between Olimpia and Aurelio, from

the context of Exhibit “E” is not a sale with right to repurchase.
Conventional redemption takes place ‘when the vendor reserves
the right to repurchase the thing sold, with the obligation to
comply with the provisions of Article 1616 and other stipulations
which may have been agreed upon. (Article 1601, Civil Code).
In this case, there was no reservation made by the vendor,
Olimpia, in the document Exhibit “E”. The ‘option to repurchase’
was contained in a subsequent document and was made by the
vendee, Aurelio. Thus, it was more of an option to buy or a mere
promise on the part of the vendee, Aurelio, to resell the property to
the vendor, Olimpia. (10 Manresa, p. 311 cited in Padilla’s Civil
Code Annotated, Vol. V, 1974 ed., p. 467) As held in Villarica v.
Court of Appeals (26 SCRA 189 [1968]):

“ ‘The right of repurchase is not a right granted the vendor by the vendee
in a subsequent instrument, but is a right reserved by the vendor in the
same instrument of sale as one of the stipulations of the contract. Once
the instrument of absolute

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Vasquez vs. Court of Appeals

sale is executed, the vendor can no longer reserve the right to repurchase,
and any right thereafter granted the vendor by the vendee in a separate
instrument cannot be a right of repurchase but some other right like the
option to buy in the instant case. x x x’ (Italics our)”

The appellate court rejected the application of the Zulueta

case by stating:

“x x x [A]s found by the trial court from which we quote with

approval below, the said cases involve the lapse of several days for

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the execution of separate instruments after the execution of the

deed of sale, while the instant case involves the execution of an
instrument, separate as it is, but executed on the same day, and
notarized by the same notary public, to wit:
“A close examination of Exh. “E” reveals that although it is a
separate document in itself, it is far different from the document
which was pronounced as an option by the Supreme Court in the
Villarica case. The option in the Villarica case was executed
several days after the execution of the deed of sale. In the present
case, Exh. “E” was executed and ratified by the same notary
public and the Deed of Sale of Lot No. 1860 by the plaintiffs to the
defendants were notarized by the same notary public and entered
in the same page of the same notarial register x x x.”
The latter case (Vda. de Zulueta v. Octaviano, supra), likewise
involved the execution of the separate document after an
intervention of several days and the question of laches was
decided therein, which is not present in the instant case. That
distinction is therefore crucial and We are of the opinion that the
appellee’s right to repurchase has been adequately provided for
and reserved in conformity with Article 1601 of the Civil Code,
which states:
“ ‘Conventional redemption shall take place when the vendor
reserves the right to repurchase the thing sold, with the
obligation to comply with the provision of Article 1616 and other
stipulations which may have been agreed upon.’ ” (Rollo, pp. 46­
47)

Obviously, the appellate court’s findings are not reflected

in the cited decision. As in the instant case, the option to
repurchase involved in the Zulueta case was executed in a
separate document but on the same date that the deed of
definite sale was executed.
While it is true that this Court in the Zulueta case found
Zulueta guilty of laches, this, however, was not the primary
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Vasquez vs. Court of Appeals

reason why this Court disallowed the redemption of the

property by Zulueta. It is clear from the decision that the
ruling in the Zulueta case was based mainly on the finding
that the transaction between Zulueta and Octaviano was
not a sale with right to repurchase and that the “option to
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repurchase was but an option to buy or a mere promise on

the part of Octaviano to resell the property to Zulueta.
In the instant case, since the transaction between the
petitioners and private respondents was not a sale with
right to repurchase, the private respondents cannot avail of
Article 1601 of the Civil Code which provides for
conventional redemption.
WHEREFORE, the petition is GRANTED. The
questioned decision and resolution of the Court of Appeals
are hereby REVERSED and SET ASIDE. The complaint in
Civil Case No. 839 of the then Court of First Instance of
Negros Occidental 12th Judicial District Branch 6 is
DISMISSED. No costs.
SO ORDERED.

          Fernan (C.J., Chairman), Feliciano, Bidin and

Davide, Jr., JJ., concur.

Petition granted. Decision and resolution reversed and

set aside.

Note.—Since the case at bar involves the exercise of the

right to repurchase, as showing that petitioner made a
valid tender of payment is sufficient. (Legaspi vs. Court of
Appeals, 142 SCRA 82.)

——o0o——

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