G.R. No. L-28962 EN BANC November 24, 1972
LEON DE GUZMAN and GENOVEVA RODRIGUEZ DE GUZMAN, plaintiffs-appellants, vs. FRANCISCA T. GUIEB and MACARIO P. GUIEB, defendants-appellees.

FACTS

Defendants-appellees, the Guiebs, were bona fide tenants of a lot from the Ana Sarmiento Estate. In 1948, they acquired a right to purchase it from the Bureau of Lands. In 1954, they sold this right to Teodoro de Guzman, son of the plaintiffs-appellants, with the Director of Lands’ approval. Simultaneously, Teodoro and defendant Francisca Guieb executed a five-year “Option to Purchase” agreement, expiring November 21, 1959, allowing the Guiebs to repurchase the property. Teodoro subsequently obtained title. The Guiebs occupied the lot and paid monthly rentals, though they fell into arrears for over six months during the option period. However, by the expiry date, all rentals for the five years were fully paid.
Before the first option expired, the parties executed a second, identical “Option to Purchase” document dated October 5, 1959. After Teodoro’s death in 1964, his parents (the De Guzmans) inherited the property. The Guiebs continued paying rentals, albeit with significant delays, which the De Guzmans accepted. On July 31, 1964, the Guiebs tendered the full purchase price to exercise the option. The De Guzmans refused and filed an action to quiet title, arguing the option was invalid.

ISSUE

The primary issue is whether the second “Option to Purchase” (Exhibit 16) dated October 5, 1959, is a valid and enforceable agreement that the Guiebs could rightfully exercise.

RULING

The Supreme Court affirmed the trial court’s dismissal of the complaint, upholding the validity of the second option and its exercise by the Guiebs. The Court rejected the appellants’ arguments. First, it held that the October 5, 1959 document was a valid, standalone option contract. It complied with the Statute of Frauds under Article 1403(2) of the Civil Code, as it was a written memorandum signed by the party to be charged, Teodoro de Guzman. There was no legal requirement for it to be labeled a “renewal” of the first option.
Second, the Court ruled that the appellants forfeited their right to declare the option void due to the Guiebs’ rental arrears. The option contract stipulated that failure to pay rentals for six consecutive months would render it null and void. While the Guiebs were in arrears for 45 months, the De Guzmans (and Teodoro before them) accepted the delayed payments in full on July 21, 1964, without protest or action to cancel the option or eject the tenants. This constituted a waiver of the breach. Therefore, when the Guiebs tendered the purchase price on July 31, 1964, the option was still legally effective and they were entitled to exercise it. The appellants’ subsequent ejectment case was filed only after a valid tender had been made.