G.R. No. 122544 and G.R. No. 124741 January 28, 1999
REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BLAZA, ESTER ABAD DIZON and JOSEPH ANTHONY DIZON, RAYMUND A. DIZON, GERARD A. DIZON, and JOSE A. DIZON, JR., petitioners, vs. COURT OF APPEALS and OVERLAND EXPRESS LINES, INC., respondents. ( G.R. No. 122544 )

REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA, ESTER ABAD DIZON and JOSEPH ANTHONY DIZON, RAYMUND A. DIZON, GERARD A. DIZON, and Jose A. DIZON, JR., petitioners, vs. COURT OF APPEALS, HON. MAXIMIANO C. ASUNCION, and OVERLAND EXPRESS LINES, INC., respondents. (G.R. No. 124741)

FACTS

On May 23, 1974, private respondent Overland Express Lines, Inc. (lessee) entered into a Contract of Lease with Option to Buy with petitioners (lessors) involving a parcel of land in Quezon City. The lease term was for one year from May 16, 1974 to May 15, 1975, with an option to purchase at P3,000.00 per square meter. After the term, the lease continued on a month-to-month basis at a monthly rental of P3,000.00. For failure to pay the increased rental of P8,000.00 per month effective June 1976, petitioners filed an ejectment case (Civil Case No. VIII-29155) on November 10, 1976. The City Court rendered judgment on November 22, 1982, ordering private respondent to vacate, pay arrears/damages, and pay attorney’s fees. This judgment was affirmed by the then Intermediate Appellate Court and the Supreme Court, becoming final and executory. Subsequently, private respondent filed two cases before the RTC: an action for Specific Performance and Fixing of Period (Civil Case No. Q-45541) and a complaint for Annulment of and Relief from Judgment (Civil Case No. Q-46487). These were consolidated. The RTC dismissed both complaints. On appeal, the Court of Appeals rendered a decision upholding the City Court’s jurisdiction in the ejectment case but concluding there was a perfected conditional contract of sale. It ordered petitioners to execute a deed of sale upon private respondent’s payment of the balance, and ordered private respondent to pay P1,700.00 monthly from June 1976 plus interest until full payment. Petitioners filed a certiorari petition ( G.R. No. 122544 ) questioning the authority of an alleged agent and the propriety of the exercise of the option. Separately, after the ejectment judgment became final, petitioners moved for its execution. The MTC ordered a third alias writ. Private respondent challenged this via a petition for certiorari in the RTC (Branch 104), which granted a preliminary injunction. Petitioners then filed a petition for certiorari (G.R. No. 124741) with the Court of Appeals, which dismissed it. Petitioners elevated this dismissal to the Supreme Court.

ISSUE

The primary issue is whether the Court of Appeals erred in ruling that a perfected conditional contract of sale existed between the parties, arising from the lessee’s exercise of the option to buy, thereby converting the lessee’s status from a mere lessee to a vendee in possession, which would affect the enforceability of the final ejectment judgment.

RULING

The Supreme Court ruled that no perfected contract of sale existed. The option to buy was not exercised within the one-year lease term (May 16, 1974 to May 15, 1975). The alleged partial payment of P300,000.00 was made on June 20, 1975, which was beyond the option period. The Court found no evidence that Alice A. Dizon, who allegedly received the payment, was authorized as an agent of the petitioners to accept payment and perfect the sale. The official receipt presented was insufficient to prove agency. Since the option was not timely exercised, the lease continued on a month-to-month basis. The ejectment case was properly filed due to private respondent’s failure to pay the increased rent, and the judgment therein had long become final and executory. The Court of Appeals’ decision annulling the RTC decision in the specific performance case and ordering the execution of a deed of sale was reversed and set aside. The Supreme Court reinstated the RTC decision dismissing private respondent’s complaint for specific performance. Regarding G.R. No. 124741, the Supreme Court held that the RTC (Branch 104) acted with grave abuse of discretion in issuing the preliminary injunction against the execution of the final ejectment judgment. The ejectment judgment was final and its execution was a ministerial duty. The injunction was annulled, and the MTC was ordered to proceed with the execution.