G.R. No. 103338 January 4, 1994
FEDERICO SERRA, petitioner, vs. THE HON. COURT OF APPEALS AND RIZAL COMMERCIAL BANKING CORPORATION, respondents.

FACTS

Petitioner Federico Serra owned an unregistered parcel of land in Masbate. In 1975, respondent Rizal Commercial Banking Corporation (RCBC), desiring to establish a branch, negotiated with him. Instead of a sale, they executed a “Contract of Lease with Option to Buy.” The contract leased the land to RCBC for 25 years at a monthly rental of P700.00. It granted RCBC the option to purchase the land within ten years from the contract’s signing at a price “not greater than TWO HUNDRED TEN PESOS (P210.00) per square meter.” A key condition was that Serra undertook to register the land under the Torrens system within that ten-year period; if he failed, RCBC could register it as his attorney-in-fact and charge the expenses against rentals. RCBC constructed a bank building on the land. Serra fulfilled his obligation by having the land registered and a title issued within three years. He alleges he repeatedly urged RCBC to buy the property. On September 4, 1984, RCBC informed Serra of its intent to exercise the option at the agreed price. Serra refused to sell. RCBC filed a complaint for specific performance and damages. Serra defended by arguing the contract was a one-sided contract of adhesion, the option lacked consideration distinct from the price, the option was not exercised within a reasonable time, and extraordinary inflation rendered the price unenforceable. He also counterclaimed for rental adjustment and damages. The trial court initially dismissed the complaint but, upon reconsideration, ordered Serra to execute a deed of sale. The Court of Appeals affirmed the trial court’s decision.

ISSUE

The primary issues are: (1) Whether the “Contract of Lease with Option to Buy” is a valid and enforceable contract; (2) Whether the option to buy therein is supported by a consideration distinct from the price; (3) Whether the stipulated price is certain; and (4) Whether there is a basis for adjusting the rental due to inflation.

RULING

The Supreme Court DISMISSED the petition and AFFIRMED the decision of the Court of Appeals.
1. The contract is valid and not a contract of adhesion. While prepared by RCBC, it is binding. Serra, a CPA-Lawyer, was highly educated and capable of understanding and negotiating the terms; he was not in a position of inequality warranting the nullification of the contract.
2. The option is supported by a consideration distinct from the price. The distinct consideration consists of the reciprocal obligations in the contract: Serra’s obligation to cause the registration of the land under the Torrens system within ten years, and RCBC’s obligations to pay rent, construct a building at its expense, and the stipulation that if it failed to exercise the option, the building would become Serra’s property after the lease period without reimbursement. This bilateral promise of reciprocal obligations provides the necessary consideration for the option clause.
3. The price is certain. The phrase “at a price not greater than P210.00 per square meter” sets a maximum ceiling. The parties understood the price to be P210.00 per square meter, as evidenced by RCBC’s offer to buy at that exact rate and Serra’s own testimony acknowledging it as the selling price. Certainty of price is established if it is determinable without the need for a new agreement.
4. There is no basis for rental adjustment. The lease contract was for a fixed term of 25 years with a stipulated rental. The alleged decline in the peso’s purchasing power from 1983 to 1985 did not constitute the “extraordinary inflation” required by law to warrant judicial adjustment, as it was not an unimaginable fluctuation manifestly beyond the parties’ contemplation at the time of the contract.