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CA the period designated, and, within that period, to enter into such contract
Petitioner: Jose Carceller with the one to whom the option was granted, if the latter should decide to
Respondents: CA and State Investment Houses, Inc. use the option. It is a separate agreement distinct from the contract which
the parties may enter into upon the consummation of the option.
o Carceller’s letter dated Jan 15, 1986 was fair notice of its intent to
Facts:
There was a lease contract between Carceller and State Investment Houses exercise the option, despite the request for the extension of lease.
(SIHI), which owned 2 parcels for 18 months, from Aug 1, 1984 to Jan 30, o Carceller acted with honesty and good faith and that he should be
1986 for P10,000. allowed to exercise the option to purchase the lease property.
o With right, option and privilege to purchase by a written notice within SIHI will not be prejudiced.
the lease period There will be damage to Carceller as he had introduced
o Document of sale has to be consummated within the month
considerable improvements and had borrowed huge loans
immediately following the month when the lessee exercised his option
Jan 7, 1986 - 3 weeks before the expiration of the lease, SIHI notified Carceller from Technology Resources Center.
of the impending termination and requested to advise them of his decision on
the option, on or before Jan 20, 1986. Dispositive:
Letter dated Jan 15 (received by SIHI on Jan 29): Carceller requested for a 6- WHEREFORE, the instant petition is hereby DENIED. The Decision and the
month extension that he needed ample time to raise sufficient funds. Resolution of the CA are hereby AFFIRMED.
o He averred that he had already made a substantial investment on the
property and had been punctual in paying rentals.
Feb 14 – SIHI notified Carceller of its disapproval
o Offered to lease to Carceller at P30,000 a month for 1 year
o Informed Carceller of its decision to offer for sale to the general public
Feb 18 – Carceller notified SIHI that it would exercise the option to purchase.
Feb 20 – SIHI reiterated its offer, saying that the period to exercise the option
had already lapsed.
o SIHI asked Carceller to vacate.
Carceller filed for specific performance for SIHI to execute the deed of sale.
TC: SIHI to execute a deed of sale but the purchase price may be by one shot
payment of P1.8M
CA: affirmed Carceller’s option to buy but that the purchase price must be
based on the prevailing market price in Bulacao, Cebu
Petitioner: the prevailing market price should be the value of the property in
Feb 1986 (when the sale would have been consummated)
Ratio:
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