Heirs of Luis Bacus vs. Court of Appeals

HEIRS OF LUIS BACUS vs. Court of Appeals
371 SCRA 295 (Art. 1169)

Facts:
On June 1, 1984, Bacus leased to private respondent Faustino Duray a parcel of agricultural land.

The lease was for 6 years ending May 31, 1990. The contract contained an option to buy clause which had the exclusive & irrevocable right to buy the property within 5 yrs after the effectivity of contract.

Close to the expiration, Bacus died. Duray informed the heir of Bacus that they are willing & ready to purchase the property under option to buy.

However, Petitioner Bacus refuse to sell the property without first receiving the payment of purchase price before the land would be delivered to Duray which the latter filed a complaint.

Issue:
WON Duray opted to buy the property covered by lease contract with option to buy, were they already required to deliver the money or consign it in court before petitioner execute the deed of transfer? NO \
WON did Duray incur in delay when they did not deliver the purchase price or consign it in court on or before the expiration of the contract? NO

Held:
The obligation under option to buy is a reciprocal obligation. The performance of one obligation is conditioned on the simultaneous fulfillment of the other obligation. The payment of the purchase price by the creditor is contingent upon the execution and delivery of a deed of sale by the debtor.

In this case, private respondent Duray opted to buy the property, their obligation was to advise petitioner of their decision & readiness to pay the price. They were not obliged to make actual payment. Only upon execution of deed of sale were they required to pay.

Notice of the creditor’s decision to exercise his option to buy need not be coupled with actual payment of the price, so long as this is delivered to the owner of the property upon performance of his part of the agreement. Consequently, since the obligation was not yet due, consignation in court of the purchase price was not yet required (Nietes vs CA, 46 SCRA 654).

Consignation is the act of depositing the thing due with the court or judicial authorities whenever the creditor cannot accept or refuses to accept payment and it generally requires a prior tender of payment. Consignation is not proper because the debt is not due and owing.

Under Art. 1169, provides that reciprocal obligation, neither party incurs in delay if the other 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 begins.

In this case, private respondent Duray already communicated their interest to buy before the contact expires & it was the petitioner who refused because they want the money first. Thus, as there was no compliance yet with what is incumbent upon the petitioner, PR had not incurred delay when the cashier’s check was issued even after the contract expired.

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