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 and
OVERLAND EXPRESS LINES, INC., respondents.
G.R. No. 124741.January 28, 1999. *

REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA, ESTER ABAD DIZON and JOSEPH ANTHONY DIZON, RAYMUND
vs
A. DIZON, GERARD A. DIZON, and JOSE A. DIZON, JR., petitioners, .COURT OF APPEALS, HON. MAXIMIANO C. ASUNCION, and
OVERLAND EXPRESS LINES, INC., respondents.
Actions;Leases;Where the rentals are paid monthly, the lease, even if verbal may be deemed to be on a monthly basis, expiring at the end of every month
pursuant to Article 1687, in relation to Article 1673 of the Civil Code, and in such case, a demand to vacate is not even necessary for judicial action after the
expiration of every month .Admittedly, no definite period beyond the one-year term of lease was agreed upon by petitioners and private respondent.
However, since the rent was paid on a monthly basis, the period of lease is considered to be from month to month in accordance with Article 1687 of the New
Civil Code. Where the rentals are paid monthly, the lease, even if verbal may be deemed to be on a monthly basis, expiring at the end of every month
pursuant to Article 1687, in relation to Article 1673 of the Civil Code. In such case, a demand to vacate is not even necessary for judicial action after the
expiration of every month.
Same;Same;Options to Purchase;Ejectment;Specific Performance;Jurisdiction;The filing by the lessee of a suit with the Regional Trial Court for specific
performance to enforce the option to purchase does not divest the then City Court of its jurisdiction to take cognizance of the ejectment case .When private
respondent failed to pay the increased rental of P8,000.00 per month in June 1976, the petitioners had a cause of action to institute an ejectment suit against
the former with the then City Court. In this regard, the City Court (now MTC) had exclusive jurisdiction over the ejectment suit. The filing by private
respondent of a suit with the Regional Trial Court for specific performance to enforce the option to purchase did not divest the then City Court of its
jurisdiction to take cognizance over the ejectment case. Of note is the fact that the decision of the City Court was affirmed by both the Intermediate Appellate
Court and this Court.
Same;Same;Same;Where a lessee fails to exercise the option to purchase within the stipulated period, he cannot enforce such option anymore
.Having failed
to exercise the option within the stipulated one-year period, private respondent cannot enforce its option to purchase anymore. Moreover, even assumingargue
ndothat the right to exercise the option still subsists at the time private respondent tendered the amount on June 20, 1975, the suit for specific performance
to enforce the option to purchase was filed only on October 7, 1985 or more than ten (10) years after accrual of the cause of action as provided under Article
1144 of the New Civil Code.
Contracts;Leases;Options to Purchase;The other terms of the original contract of lease which are revived in the implied new lease under Article 1670 of the
New Civil Code are only those terms which are germane to the lessees right of continued enjoyment of the property leasedan implied new lease does not ipso
facto carry with it any implied revival of any option to purchase the leased premises .In this case, there was a contract of lease for one (1) year with option to
purchase. The contract of lease expired without the private respondent, as lessee, purchasing the property but remained in possession thereof. Hence, there
was an implicit renewal of the contract of lease on a monthly basis. The other terms of the original contract of lease which are revived in the implied new lease
under Article 1670 of the New Civil Code are only those terms which are germane to the lessees right of continued enjoyment of the property leased.
ipso facto
Therefore, an implied new lease does not carry with it any implied revival of private respondents option to purchase (as lessee thereof) the leased
premises. The provision entitling the lessee the option to purchase the leased premises is not deemed incorporated in the impliedly renewed contract because
it is alien to the possession of the lessee.
Same;Same;Same;Presumptions;If the presumed will of the parties refers to the enjoyment of possession the presumption covers the other terms of the contract
related to such possession, such as the amount of rental, the date when it must be paid, the care of the property, the responsibility for repairs, etc., but no such
presumption may be indulged in with respect to special agreements which by nature are foreign to the right of occupancy or enjoyment inherent in a contract of
lease .Private respondents right to exercise the option to purchase expired with the termination of the original contract of lease for one year. The rationale of
this Court is that: This is a reasonable construction of the provision, which is based on the presumption that when the lessor allows the lessee to continue
enjoying possession of the property for fifteen days after the expiration of the contract he is willing that such enjoyment shall be for the entire period
corresponding to the rent which is customarily paidin this case up to the end of the month because the rent was paid monthly. Necessarily, if the presumed
will of the parties refers to the enjoyment of possession the presumption covers the other terms of the contract related to such possession, such as the amount
of rental, the date when it must be paid, the care of the property, the responsibility for repairs, etc. But no such presumption may be indulged in with respect
to special agreements which by nature are foreign to the right of occupancy or enjoyment inherent in a contract of lease.
Same;Sales;Sale is a consensual contract and he who alleges it must show its existence by competent proof
.Under Article 1475 of the New Civil Code, the
contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that
moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts. Thus, the elements of a
contract of sale are consent, object, and price in money or its equivalent. It bears stressing that the absence of any of these essential elements negates the
existence of a perfected contract of sale. Sale is a consensual contract and he who alleges it must show its existence by competent proof.
Same;Same;Agency;The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover upon his peril the
authority of the agent.In an attempt to resurrect the lapsed option, private respondent gave P300,000.00 to petitioners (thru Alice A. Dizon) on the
erroneous presumption that the said amount tendered would constitute a perfected contract of sale pursuant to the contract of lease with option to buy. There
was no valid consent by the petitioners (as co-owners of the leased premises) on the supposed sale entered into by Alice A. Dizon, as petitioners alleged agent,
and private respondent. The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover upon his peril the
authority of the agent. As provided in Article 1868 of the New Civil Code, there was no showing that petitioners consented to the act of Alice A. Dizon nor
authorized her to act on their behalf with regard to her transaction with private respondent. The most prudent thing private respondent should have done
was to ascertain the extent of the authority of Alice A. Dizon. Being negligent in this regard, private respondent cannot seek relief on the basis of a supposed
agency.
PETITIONS for review on certiorari of the decisions and resolutions of the Court of Appeals.
The facts are stated in the opinion of the Court.
M.M. Lazaro & Associatesfor petitioners.
Alexander G. Castrofor private respondents.
MARTINEZ,J .:

Two consolidated petitions were filed before us seeking to set aside and annul the decisions and resolutions of respondent Court of Appeals. What
seemed to be a simple ejectment suit was juxtaposed with procedural intricacies which finally found its way to this Court.
G.R. No. 122544:
On May 23, 1974, private respondent Overland Express Lines, Inc. (lessee) entered into a Contract of Lease with Option to Buy with petitioners 1
(
lessors) involving a 1,755.80 square meter parcel of land situated at corner MacArthur Highway and South H Street, Diliman, Quezon City.
The term of the lease was for one (1) year commencing from May 16, 1974 up to May 15, 1975. During this period, private respondent was
granted an option to purchase for the amount of P3,000.00 per square meter. Thereafter, the lease shall be on a per month basis with a monthly
rental of P3,000.00.
For failure of private respondent to pay the increased rental of P8,000.00 per month effective June 1976, petitioners filed an action for ejectment
(Civil Case No. VIII-29155) on November 10, 1976 before the then City Court (now Metropolitan Trial Court) of Quezon City, Branch VIII. On
November 22, 1982, the City Court rendered judgment2ordering private respondent to vacate the leased premises and to pay the sum of P624,
000.00 representing rentals in arrears and/or as damages in the form of reasonable compensation for the use and occupation of the premises
during the period of illegal detainer from June 1976 to November 1982 at the monthly rental of P8,000.00, less payments made, plus 12%
interest per annum from November 18, 1976, the date of filing of the complaint, until fully paid, the sum of P8,000.00 a month starting December
1982, until private respondent fully vacates the premises, and to pay P20,000.00 as and by way of attorneys fees.
Private respondent filed acertiorari
petition praying for the issuance of a restraining order enjoining the enforcement of said judgment and
dismissal of the case for lack of jurisdiction of the City Court.
On September 26, 1984, the then Intermediate Appellate Court3(now Court of Appeals) rendered a decision 4stating that:

x x x, the alleged question of whether petitioner was granted an extension of the option to buy the property; whether such option, if any, extended the lease
or whether petitioner actually paid the alleged P300,000.00 to Fidela Dizon, as representative of private respondents in consideration of the option and,
whether petitioner thereafter offered to pay the balance of the supposed purchase price, are all merely incidental and do not remove the unlawful detainer
supra
case from the jurisdiction of respondent court. In consonance with the ruling in the case of Teodoro, Jr. vs. Mirasol ( ), the above matters may be raised
and decided in the unlawful detainer suit as, to rule otherwise, would be a violation of the principle prohibiting multiplicity of suits. (Original Records, pp. 38-
39).
The motion for reconsideration was denied. On review, this Court dismissed the petition in a resolution dated June 19, 1985 and likewise denied
private respondents subsequent motion for reconsideration in a resolution dated September 9, 1985. 5
On October 7, 1985, private respondent filed before the Regional Trial Court (RTC) of Quezon City (Civil Case No. Q-45541) an action for
Specific Performance and Fixing of Period for Obligation with prayer for the issuance of a restraining order pending hearing on the prayer for a
writ of preliminary injunction. It sought to compel the execution of a deed of sale pursuant to the option to purchase and the receipt of the partial
payment, and to fix the period to pay the balance. In an Order dated October 25, 1985, the trial court denied the issuance of a writ of
preliminary injunction on the ground that the decision of the then City Court for the ejectment of the private respondent, having been affirmed
Intermediate Appellate Court and the Supreme Court, has become final and executory.
by the then
Unable to secure an injunction, private respondent also filed before the RTC of Quezon City, Branch 102 (Civil Case No. Q-46487) on November
15, 1985 a complaint for Annulment of and Relief from Judgment with injunction and damages. In its decision 6dated May 12, 1986, the trial
res judicata
court dismissed the complaint for annulment on the ground of , and the writ of preliminary injunction previously issued was
dissolved. It also ordered private respondent to pay P3,000.00 as attorneys fees. As a consequence of private respondents motion for
reconsideration, the preliminary injunction was reinstated, thereby restraining the execution of the City Courts judgment on the ejectment case.
The two cases were thereafter consolidated before the RTC of Quezon City, Branch 77. On April 28, 1989, a decision 7
was rendered dismissing
private respondents complaint inCivil Case No. Q-45541(specific performance case) and denying its motion for reconsideration inCivil Case No.
46487(annulment of the ejectment case). The motion for reconsideration of said decision was likewise denied.
On appeal,8respondent Court of Appeals rendered a decision 9
upholding the jurisdiction of the City Court of Quezon City in the ejectment case.
It also concluded that there was a perfected contract of sale between the parties on the leased premises and that pursuant to the option to buy
agreement, private respondent had acquired the rights of a vendee in a contract of sale. It opined that the payment by private respondent of
P300,000.00 on June 20, 1975 as partial payment for the leased property, which petitioners accepted (through Alice A. Dizon) and for which an
official receipt was issued, was the operative act that gave rise to a perfected contract of sale, and that for failure of petitioners to deny receipt
thereof, private respondent can therefore assume that Alice A. Dizon, acting as agent of petitioners, was authorized by them to receive the money
in their behalf. The Court of Appeals went further by stating that in fact, what was entered into was a conditional contract of sale wherein
ownership over the leased property shall not pass to the private respondent until it has fully paid the purchase price. Since private respondent
did not consign to the court the balance of the purchase price and continued to occupy the subject premises, it had the obligation to pay the
amount of P1,700.00 in monthly rentals until full payment of the purchase price. The dispositive portion of said decision reads:
WHEREFORE, the appealed decision in Case No. 46487 is AFFIRMED. The appealed decision in Case No. 45541 is, on the other hand, ANNULLED and
SET ASIDE. The defendants-appellees are ordered to execute the deed of absolute sale of the property in question, free from any lien or encumbrance
whatsoever, in favor of the plaintiff-appellant, and to deliver to the latter the said deed of sale, as well as the owners duplicate of the certificate of title to said
property upon payment of the balance of the purchase price by the plaintiff-appellant. The plaintiff-appellant is ordered to pay P1,700.00 per month from
June 1976, plus 6% interest per annum, until payment of the balance of the purchase price, as previously agreed upon by the parties.
SO ORDERED.
Upon denial of the motion for partial reconsideration (Civil Case No. Q-45541) by respondent Court of Appeals,10petitioners elevated the casevia
petition forcertiorari
questioning the authority of Alice A. Dizon as agent of petitioners in receiving private respondents partial payment
amounting to P300,000.00 pursuant to the Contract of Lease with Option to Buy. Petitioners also assail the propriety of private respondents
exercise of the option when it tendered the said amount on June 20, 1975 which purportedly resulted in a perfected contract of sale.
G.R. No. 124741:

Petitioners filed with respondent Court of Appeals a motion to remand the records ofCivil Case No. 38-29155(ejectment case) to the
Metropolitan Trial Court (MTC), then City Court of Quezon City, Branch 38, for execution of the judgment 11dated November 22, 1982 which was
granted in a resolution dated June 29, 1992. Private respondent filed a motion to reconsider said resolution which was denied.
Aggrieved, private respondent filed a petition forcertiorari
, prohibition with preliminary injunction and/or restraining order with this Court (G.
R. Nos. 106750-51) which was dismissed in a resolution dated September 16, 1992 on the ground that the same was a refiled case previously
dismissed for lack of merit. On November 26, 1992, entry of judgment was issued by this Court.
On July 14, 1993, petitioners filed an urgentex-parte
motion for execution of the decision inCivil Case No. 38-29155with the MTC of Quezon
City, Branch 38. On September 13, 1993, the trial court ordered the issuance of a third alias writ of execution. In denying private respondents
motion for reconsideration, it ordered the immediate implementation of the third writ of execution without delay.
On December 22, 1993, private respondent filed with the Regional Trial Court (RTC) of Quezon City, Branch 104 a petition forcertiorari
and
prohibition with preliminary injunction/restraining order (SP. PROC. No. 93-18722) challenging the enforceability and validity of the MTC
judgment as well as the order for its execution.
On January 11, 1994, RTC of Quezon City, Branch 104 issued an order 12
granting the issuance of a writ of preliminary injunction upon private
respondents posting of an injunction bond of P50,000.00.
Assailing the aforequoted order after denial of their motion for partial reconsideration, petitioners filed a petition 13forcertiorari
and prohibition
with a prayer for a temporary restraining order and/or preliminary injunction with the Court of Appeals. In its decision,14the Court of Appeals
dismissed the petition and ruled that:

The avowed purpose of this petition is to enjoin the public respondent from restraining the ejectment of the private respondent. To grant the petition would
be to allow the ejectment of the private respondent. We cannot do that now in view of the decision of this Court inCA-G.R. CV Nos. 25153-54. Petitioners
alleged right to eject private respondent has been demonstrated to be without basis in the said civil case. The petitioners have been shown, after all, to have
no right to eject private respondents.
WHEREFORE, the petition is DENIED due course and is accordingly DISMISSED.
SO ORDERED. 15
Petitioners motion for reconsideration was denied in a resolution16by the Court of Appeals stating that:

This court in its decision inCA-G.R. CV Nos. 25153-54declared that the plaintiff-appellant (private respondent herein) acquired the rights of a vendee in a
contract of sale, in effect, recognizing the right of the private respondent to possess the subject premises. Considering said decision, we should not allow
 status quo
ejectment; to do so would disturb the of the parties since the petitioners are not in possession of the subject property. It would be unfair and unjust
to deprive the private respondent of its possession of the subject property after its rights have been established in a subsequent ruling.
WHEREFORE, the motion for reconsideration is DENIED for lack of merit.
SO ORDERED. 17
Hence, this instant petition.
We find both petitions impressed with merit.
First
. Petitioners have established a right to evict private respondent from the subject premises for non-payment of rentals. The term of the
Contract of Lease with Option to Buy was for a period of one (1) year (May 16, 1974 to May 15, 1975) during which the private respondent was
given an option to purchase said property at P3,000.00 per square meter. After the expiration thereof, the lease was for P3,000.00 per month.
Admittedly, no definite period beyond the one-year term of lease was agreed upon by petitioners and private respondent. However, since the
rent was paid on a monthly basis, the period of lease is considered to be from month to month in accordance with Article 1687 of the New Civil
Code.18Where the rentals are paid monthly, the lease, even if verbal may be deemed to be on a monthly basis, expiring at the end of every month
In such case, a demand to vacate is not even
pursuant to Article 1687, in relation to Article 1673 of the Civil Code.19 necessary for judicial action
after the expiration of every month. 20
When private respondent failed to pay the increased rental of P8,000.00 per month in June 1976, the petitioners had a cause of action to institute
an ejectment suit against the former with the then City Court. In this regard, the City Court (now MTC) had exclusive jurisdiction over the
ejectment suit. The filing by private respondent of a suit with the Regional Trial Court for specific performance to enforce the option to purchase
did not divest the then City Court of its jurisdiction to take cognizance over the ejectment case. Of note is the fact that the decision of the City
Court was affirmed by both the Intermediate Appellate Court and this Court.
Second
. Having failed to exercise the option within the stipulated one-year period, private respondent cannot enforce its option to purchase
arguendo
anymore. Moreover, even assuming that the right to exercise the option still subsists at the time private respondent tendered the
amount on June 20, 1975, the suit for specific performance to enforce the option to purchase was filed only on October 7, 1985 or more than ten
(10) years after accrual of the cause of action as provided under Article 1144 of the New Civil Code. 21
In this case, there was a contract of lease for one (1) year with option to purchase. The contract of lease expired without the private respondent,
as lessee, purchasing the property but remained in possession thereof. Hence, there was an implicit renewal of the contract of lease on a monthly
implied new lease under Article 1670 of the New Civil Code 22
basis. The other terms of the original contract of lease which are revived in the are
only those terms which are germane to the lessees right of continued enjoyment of the property leased. 23Therefore, an implied new lease does
ipso facto
not carry with it any implied revival of private respondents option to purchase (as lessee thereof) the leased premises. The provision
entitling the lessee the option to purchase the leased premises is not deemed incorporated in the impliedly renewed contract because it is alien
to the possession of the lessee. Private respondents right to exercise the option to purchase expired with the termination of the original contract
of lease for one year. The rationale of this Court is that:
This is a reasonable construction of the provision, which is based on the presumption that when the lessor allows the lessee to continue enjoying possession of
the property for fifteen days after the expiration of the contract he is willing that such enjoyment shall be for the entire period corresponding to the rent which
is customarily paidin this case up to the end of the month because the rent was paid monthly. Necessarily, if the presumed will of the parties refers to the
enjoyment of possession the presumption covers the other terms of the contract related to such possession, such as the amount of rental, the date when it
must be paid, the care of the property, the responsibility for repairs, etc. But no such presumption may be indulged in with respect to special agreements
which by nature are foreign to the right of occupancy or enjoyment inherent in a contract of lease. 24
Third. There was no perfected contract of sale between petitioners and private respondent. Private respondent argued
that it delivered the check
of P300,000.00 to Alice A. Dizon who acted as agent of petitioners pursuant to the supposed authority given by petitioner Fidela Dizon, the
payee thereof. Private respondent further contended that petitioners filing of the ejectment case against it based on the contract of lease with
option to buy holds petitioners in estoppel to question the authority of petitioner Fidela Dizon. It insisted that the payment of P300,000.00 as
partial payment of the purchase price constituted a valid exercise of the option to buy.
Under Article 1475 of the New Civil Code, the contract of sale is perfected at the moment there is a meeting of minds upon the thing which is
the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of
the law governing the form of contracts. Thus, the elements of a contract of sale are consent, object, and price in money or its equivalent. It
bears stressing that the absence of any of these essential elements negates the existence of a perfected contract of sale. Sale is a consensual
contract and he who alleges it must show its existence by competent proof. 25
In an attempt to resurrect the lapsed option, private respondent gave P300,000.00 to petitioners (thru Alice A. Dizon) on the erroneous
presumption that the said amount tendered would constitute a perfected contract of sale pursuant to the contract of lease with option to buy.
There was no valid consent by the petitioners (as co-owners of the leased premises) on the supposed sale entered into by Alice A. Dizon, as
petitioners alleged agent, and private respondent. The basis for agency is representation and a person dealing with an agent is put upon inquiry
As provided in Article 1868 of the New Civil Code, 27
and must discover upon his peril the authority of the agent. 26 there was no showing that
petitioners consented to the act of Alice A. Dizon nor authorized her to act on their behalf with regard to her transaction with private respondent.
The most prudent thing private respondent should have done was to ascertain the extent of the authority of Alice A. Dizon. Being negligent in
this regard, private respondent cannot seek relief on the basis of a supposed agency.
In Bacaltos Coal Mines vs. Court of Appeals ,28we explained the rule in dealing with an agent:

Every person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. If he does not make such inquiry, he is
chargeable with knowledge of the agents authority, and his ignorance of that authority will not be any excuse. Persons dealing with an assumed agent,
whether the assumed agency be a general or special one, are bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency
but also the nature and extent of the authority, and in case either is controverted, the burden of proof is upon them to establish it.
For the long years that private respondent was able to thwart the execution of the ejectment suit rendered in favor of petitioners, we now write
fi
to this controversy and shun further delay so as to ensure that this case would really attain finality.
nis
WHEREFORE, in view of the foregoing, both petitions are GRANTED. The decision dated March 29, 1994 and the resolution dated October 19,
1995 in CA-G.R. CV Nos. 25153-54, as well as the decision dated December 11, 1995 and the resolution dated April 23, 1997 in CA-G.R. SP No.
33113 of the Court of Appeals are hereby REVERSED and SET ASIDE.
_____________

Let the records of this case be remanded to the trial court for immediate execution of the judgment dated November 22, 1982 in Civil Case No.
VIII-29155 of the then City Court (now Metropolitan Trial Court) of Quezon City, Branch VIII as affirmed in the decision dated September 26,
1984 of the then Intermediate Appellate Court (now Court of Appeals) and in the resolution dated June 19, 1985 of this Court.
However, petitioners are ordered to REFUND to private respondent the amount of P300,000.00 which they received through Alice A. Dizon on
June 20, 1975.
SO ORDERED.
Davide, Jr.(C.J., Chairman),Melo,Kapunanand Pardo, JJ.,concur.
Petitions granted.
Notes
.Tacit renewal under Art. 1670 of the Civil Code is limited only to the terms of the contract which are germane to the lessees right of
continued enjoyment of the property and does not extend to alien matters, like the option to buy the leased premises. (Vda. de Chua vs.
,229 SCRA 99[1994])
Intermediate Appellate Court
A lessors acquiescence to lessees continued possession of a personal property is in effect a continuation of the contract under the concept of an
Manahan, Jr. vs. Court of Appeals,255 SCRA 202[1996])
implied new lease on a month to month basis under Article 1670 of the Civil Code. (
o0o