G.R. No. 126454 November 26, 2004
BIBLE BAPTIST CHURCH and PASTOR REUBEN BELMONTE, petitioners, vs. COURT OF APPEALS and MR. & MRS. ELMER TITO MEDINA VILLANUEVA, respondents.

FACTS

Petitioner Bible Baptist Church entered into a 15-year lease contract with respondent spouses Villanueva, the owners of a property in Manila. A key stipulation in the contract granted the Church an “option to buy” the leased premises at any time during the lease term for P1.8 million, with terms for a down payment “agreed upon by both parties” and an annual installment of P120,000. The Church also advanced P84,000 to redeem the property from a bank mortgage, with the title to be held by the Church until lease expiration or purchase.
During the lease, the Church sought to exercise the option to buy. The spouses Villanueva refused to sell. The Church filed a case for specific performance, arguing the option was part of the binding lease agreement. The Regional Trial Court ruled against the Church, a decision affirmed by the Court of Appeals.

ISSUE

The primary issue is whether the option to buy contained in the lease contract is valid and enforceable against the respondents.

RULING

The Supreme Court denied the petition and affirmed the lower courts’ decisions. The option to buy is not enforceable for lack of a separate consideration, as required under Article 1479 of the Civil Code. The Court explained that an option contract is a distinct agreement—a unilateral promise to sell—that must be supported by consideration separate from the price of the object. This consideration validates the offer and makes it irrevocable within the agreed period.
The Court rejected the Church’s argument that the P84,000 advance payment for mortgage redemption constituted the consideration for the option. This payment was integral to the lease contract itself, specifically for securing possession of the premises, and was not a distinct price paid to make the option binding. The lease and the option, though in one document, are separate agreements. Since no separate consideration was proven for the option promise, it remained a mere unaccepted offer that the owners could validly withdraw. Consequently, the claim for attorney’s fees was also denied. The ruling underscores that a contractual right of first refusal or option, without a separate consideration, is not a demandable obligation.