G.R. No. 126647 July 29, 1998
LEBERMAN REALTY CORPORATION and ARAN REALTY and DEVELOPMENT CORPORATION, petitioners, vs. JOSEPH TYPINGCO and THE COURT OF APPEALS, respondents.

FACTS

Petitioners Leberman Realty Corporation and Aran Realty and Development Corporation are the registered co-owners of four parcels of land in Binondo, Manila. In March 1989, respondent Joseph Typingco learned the properties were for sale. After meetings with the petitioners’ officers, a handwritten agreement dated March 20, 1989, was executed wherein petitioners accepted Typingco’s offer to buy for P43,888,888.88. Typingco made a down payment of P100,000. On April 4, 1989, the parties executed a formal Contract to Sell. The total consideration was P43,888,888.88, with a P200,000 down payment (including the earlier P100,000). The balance was to be paid under specific conditions: 70% within seven days from notice that the properties were cleared of tenants/squatters, or if Typingco opted to pay despite the premises not being cleared, within seven days from his notice to exercise that option; the remaining 30% within one day from notice that all tax obligations on the sale were fully paid. The sellers obligated themselves to clear the properties of all tenants/occupants/squatters within eighteen months from the contract date. The contract provided that if the sellers failed to clear the premises within eighteen months, it would be automatically cancelled or rescinded. Crucially, the contract granted Typingco an option: from the seventh to the eighteenth month, he could either pay the balance (even if premises were not cleared) and demand a deed of absolute sale, or cancel/rescind the contract. If he failed to exercise the option to pay after the eighteenth month, the contract would be deemed automatically cancelled. In all cases of rescission, the P200,000 down payment would be returned without interest.
On September 11, 1989 (within the eighteen-month period but before the start of the seventh-month option period), petitioners sent letters to Typingco rejecting the Contract to Sell, claiming its terms were grossly disadvantageous and the officers acted beyond their authority. They enclosed checks to return the P200,000 down payment and informed him they would initiate a complaint for annulment. Typingco returned the checks, protested, and filed a complaint for specific performance and damages in the Regional Trial Court on September 26, 1989. Petitioners moved to dismiss, arguing the complaint was filed prematurely as Typingco’s cause of action would accrue only in the seventh month (October 1989) when his option period began. The trial court denied the motion and, after trial, ruled in favor of Typingco, ordering petitioners to execute a deed of absolute sale. The Court of Appeals affirmed the trial court’s decision. Petitioners elevated the case to the Supreme Court via a petition for review on certiorari.

ISSUE

Whether the respondent’s complaint for specific performance was filed prematurely, as his cause of action had not yet accrued at the time of filing since the option period under the Contract to Sell had not yet commenced.

RULING

No, the complaint was not filed prematurely. The Supreme Court affirmed the decision of the Court of Appeals. The Court held that the respondent’s cause of action accrued upon the petitioners’ unilateral and unjustified repudiation of the Contract to Sell through their letters dated September 11, 1989. By rejecting the contract and declaring their intention to have it annulled, the petitioners rendered it unnecessary and futile for Typingco to wait for the commencement of the option period (the seventh month) before seeking judicial relief. Their act of repudiation was a breach of their contractual commitment, which gave rise to an immediate cause of action. The Court found it illogical for the petitioners to invoke the option clause to ward off the suit when it was their own wrongful act of rejecting the entire contract that preempted the respondent’s exercise of the option. Silence or inaction by Typingco could have been construed as acquiescence to the repudiation. Therefore, the filing of the complaint was not premature.