Carceller v.

CA the period designated, and, within that period, to enter into such contract
Petitioner: Jose Carceller with the one to whom the option was granted, if the latter should decide to
Respondents: CA and State Investment Houses, Inc. use the option. It is a separate agreement distinct from the contract which
the parties may enter into upon the consummation of the option.
o Carceller’s letter dated Jan 15, 1986 was fair notice of its intent to
Facts:
 There was a lease contract between Carceller and State Investment Houses exercise the option, despite the request for the extension of lease.
(SIHI), which owned 2 parcels for 18 months, from Aug 1, 1984 to Jan 30, o Carceller acted with honesty and good faith and that he should be
1986 for P10,000. allowed to exercise the option to purchase the lease property.
o With right, option and privilege to purchase by a written notice within  SIHI will not be prejudiced.
the lease period  There will be damage to Carceller as he had introduced
o Document of sale has to be consummated within the month
considerable improvements and had borrowed huge loans
immediately following the month when the lessee exercised his option
 Jan 7, 1986 - 3 weeks before the expiration of the lease, SIHI notified Carceller from Technology Resources Center.
of the impending termination and requested to advise them of his decision on 
the option, on or before Jan 20, 1986. Dispositive:
 Letter dated Jan 15 (received by SIHI on Jan 29): Carceller requested for a 6- WHEREFORE, the instant petition is hereby DENIED. The Decision and the
month extension that he needed ample time to raise sufficient funds. Resolution of the CA are hereby AFFIRMED.
o He averred that he had already made a substantial investment on the
property and had been punctual in paying rentals.
 Feb 14 – SIHI notified Carceller of its disapproval
o Offered to lease to Carceller at P30,000 a month for 1 year
o Informed Carceller of its decision to offer for sale to the general public
 Feb 18 – Carceller notified SIHI that it would exercise the option to purchase.
 Feb 20 – SIHI reiterated its offer, saying that the period to exercise the option
had already lapsed.
o SIHI asked Carceller to vacate.
 Carceller filed for specific performance for SIHI to execute the deed of sale.
 TC: SIHI to execute a deed of sale but the purchase price may be by one shot
payment of P1.8M
 CA: affirmed Carceller’s option to buy but that the purchase price must be
based on the prevailing market price in Bulacao, Cebu
 Petitioner: the prevailing market price should be the value of the property in
Feb 1986 (when the sale would have been consummated)

Issue/s: W/N Carceller should be allowed to exercise the option to purchase

despite delay in giving the required notice – NO

Ratio:
 An option is a preparatory contract in which one party grants to the other, for
a fixed period and under specified conditions, the power to decide, whether
or not to enter into a principal contract. It binds the party who has given the
option, not to enter into the principal contract with any other person during