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Dizon v. Court of Appeals

(Martinez; First Division; 28 January 1999)

Nature: review on certiorari of the decisions and resolutions of the Court of Appeals

Facts:

Overland Express Lines (lessee/tenant) entered into a lease contract with option to buy withthe Dizons (lessor/landlord) involving a 1755.80 sq. m. parcel of land in Diliman, Quezon City.

The term of the lease was for 1 year (May 1974 to May 1975) and during this time, the

lessee can exercise the option to purchase the property for 3000 pesos per sq. m. thereafter,

the lease was to be on a monthly basis for 3000 pesos a month.

For failure to pay the increased rental of 8000 pesos per month effective June 1976, theDizons filed an ejectment suit against the lessee. RTC found favor with the Dizons and

ordered lessee to vacate property and pay rentals in arrears plus interests and attorneys

fees.

The lessor filed a certiorari petition for the issuance of a TR

Oand for dismissal of the case for

lack of jurisdiction.

IAC denied Overlands motion and ruled that the trial court had jurisdiction to decide theissues of WON petitioner was granted an extension of the option to buy the property, etc. in

the ejectment suit because to rule otherwise would be a violation of the principle of

prohibiting multiplicity of suits. MR was also denied. On review, SC also dismissed and

denied MR.

In 1985, Overland filed an action for specific performance and fixing of a period forobligation with a prayer for TRO. They sought to compel the Dizons to execute a deed of sale

pursuant to the option to purchase and receipt of the partial payment and to fix the period

to pay the balance. RTC denied on the ground that the trial court decision upheld by the CA

and SC was already final.

Overland filed another case in the trial court for annulment of and relief from judgment.Trial court denied because of res judicata. But an MR resulted in the reinstatement of a

preliminary injunction, restraining the execution of the judgment in the ejectment case.

2 cases were consolidated. RTC dismissed the cases. On appeal, CA said that there was aperfected contract of sale between the lessor and lessee on the leased premises and that

pursuant to the option to buy, Overland had acquired the rights of a vendee in a contract of

sale. CA said the 300,000 partial payment made by Overland in 1975 given to Alice Dizon was

the operative fact which gave rise to the perfected contract of sale. CA ordered Overland to

pay the balance and the Dizons to execute a deed of sale.

Dizons appealed this decision.

Issue:

1. WON the Dizons were correct in that there was no contract of sale between the parties.

Held:

1. YES.

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The Dizons have established the right to evict Overland. After the lease expired, it became alease on a monthly basis. The NCC provides that a lease on a monthly basis expires at the

end of every month and in such a case, a demand is not even necessary for judicial action

after the expiration of every month. When Overland failed to pay the rentals, petitioner had

the cause of action to file the ejectment suit.

Overland failed to exercise the option within the 1 year period and cannot enforce its option

to purchase anymore. Even assuming there is still the option, Overland only filed the action

for specific performance in October 1985 or more than 10 years after accrual of the cause of

action. An implied new lease, as the renewal of the lease on a monthly basis is considered,

does not ipso facto carry with it any implied revival of option to purchase.

There was NO PERFECTED CONTRACT OF SALE between the parties. Elements of a contractof sale are: consent, object, and a price certain. In this case, there was no valid consent on

the part of the Dizons on the supposed sale entered into by Alice Dizon (the one who

received the 300,000 downpayment) with Overland. There was no showing that she was

given the authority to sell the property. The prudent thing that Overland shouldve done was

to ascertain the authority of Alice Dizon.

Dispositive: petition granted. CA decision against the Dizons are SET ASIDE.