De La Cavada vs.

Antonio Diaz  There is nothing in the law nor in public

G.R. No. L-11668 | April 1, 1918 policy which prohibits the parties in a civil
Option Contract | Johnson, J. | Guanco, E. litigation from making such an agreement.
 While the law concedes to parties litigant,
Facts generally, the right to have their proof taken
1. Antonio Enriquez de la Cavada and Antonio Diaz in the presence of the judge, such a right is a
executed a ‘contract of option’ which provides that renounceable one.
Diaz grants de la Cavada the option to purchase his  In a civil action, the parties litigant have a
hacienda consisting of 100 and odd hectares within right to agree outside of the court, upon the
the period necessary for the issuance of a Torrens facts in litigation. Under certain conditions,
title by the government, and for which de la Cavada the parties litigant have a right to take the
will pay Diaz 70,000 pesos. depositions of witnesses and submit the
2. In another letter, de la Cavada expressed his intention sworn statements in that form to the court.
to buy the lot, to send a surveyor to survey the  Having agreed to the method of taking the
property and to apply for a Torrens title. Diaz proof, and the same having been taking in
conformed to this. compliance with said agreement, it is now
3. Soon after the execution of said contract, and in too late, there being no law to the contrary,
partial compliance with the terms thereof, Diaz for them to deny and repudiate the effect of
presented two petitions in the Court of Land their agreement.
Registration, each for the purpose of obtaining the 2. W/N the court erred in declaring the contract a
registration of a part of the “Hacienda de Pitogo”. valid obligation, for the reason that it had not
 Said petitions were granted, and each parcel been admitted in evidence, and W/N the same is
was registered and a certificate of title was null and void for failure of consideration –
issued for each part under the Torrens  An examination of the proof shows that said
system to the defendant. contract was offered in evidence and
4. Later, however, pretending to comply with the terms of admitted as proof without objection.
the contract, Diaz offered to transfer to de la Cavada  Not only was the contract before the court by
only one of the two subject parcels, which was only a reason of its having been presented in
part of the hacienda. evidence, but defendant himself made said
5. De la Cavada refused to accept the certificate of title contract an integral part of his pleadings.
for only a part of the hacienda arguing that 1) it was
 The defendant admitted the execution and
only a part of the “Hacienda de Pitogo”, and 2) he was
delivery of the contract, and alleged that he
offered the whole hacienda under the contract.
made an effort to comply with its terms.
6. Diaz argued that the contract of sale mentioned that
 In regards to the second objection, it may be
“Hacienda de Pitogo” included only 100 hectares,
said that (a) the contract was for the sale of
more or less, of the said “hacienda”, and that by
a definite parcel of land; (b) that it was
offering to convey to the de la Cavada a portion of
reduced to writing; (c) that the defendant
siad “hacienda” composed of “100 hectares, more or
promised to convey to the plaintiff said
less,” he had already complied with his end of the
parcel of land; (d) that the plaintiff promised
contract.
to pay therefore the sum of P70,000 in the
7. De la Cavada argued that he had purchased all of
manner prescried in the contract; (e) that the
said “hacienda”, and that the same contained, at
defendant admitted to the execution and
least, 100 hectares, more or less. The lower court
delivery of the contract and alleged that he
sustained the contention of de la Cavada.
made an effort to comply with the same; (f)
8. After the issue had been joined between the parties
that no defense or prevention was made in
upon their pleadings, they entered into an agreement
the lower court that there was no
with reference to the method of presenting their proof.
consideration for his contract.
9. A civil action was instituted by the plaintiff for the
purpose of requiring the defendant to comply the  A promise made by one party, if made in
option contract and for damages for Diaz’s accordance with the fors required by the
noncompliance. law, may be a good consideration
Issues/Ratio (causa) for a promise made by another
1. W/N parties may execute an agreement on the party (Article 1274). In other words, the
method of presenting their proof – YES causa need not pass from one to the
other at the time the contract is entered
into.
 3. W/N the agreement was a contract of option –
NO
 An optional contract is a privilege existing in
one person, for which he had paid a
consideration, which gives him the right to
buy, for example, certain merchandise of
certain specified, from another person, if he
chooses, at any time within the agreed
period, at a fixed price.
 The contract of option is a separate and
distinct contract from the contract which the
parties may enter into upon the
consummation of the option.
 A consideration for an optional contract is
just as important as the consideration for any
other kind of contract. If there was no
consideration for the contract of option, then
it cannot be enforced any more than any
other contract where no consideration exists.
 A contract of option is a contract by virtue of
the terms which the terms which the parties
thereto promise and obligate themselves to
enter into another contract at a future time,
upon the happening of certain events, or the
fulfillment of certain conditions.
4. W/N Diaz is obliged to sell to de la Cavada the
entire hacienda and not only a part of it - YES
 The contract is complete, provided they have
complied with the forms required by the law.
The consideration also need not be paid at
the time of the promise.
 De la Cavada stood ready to comply with his
part of the contract. Diaz, even though he
had already obtained a registered title to said
parcel of land, refused to comply with his
promise.
 The contract has already been perfected
and Diaz may be compelled to fulfill his
end of the deal.
Ruling
Judgment of lower court AFFIRMED. Diaz to pay de
la Cavada the sum of 20,000 pesos with interest at the rate of
6 per cent per annum in the event of the failure of Diaz to
execute conveyance as aforesaid in the contract.