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Formation of Sale
Facts:
This is a case wherein the Petitioners Sps. Villamor purchased half of the
land owned by the Respondents, Sps. Macaria Reyes, the land is identified
as follows, 600sqm situated at Baesa, Quezon City. The latter’s land was
purchased for a price considerably higher than the previling market price.
They then executed a Deed of Option stating that the only reason why the
Villamor’s agreed to purchase the said lot is because Macaria Reyes agreed
to confer upon them the exclusive right to purchase the other half of the land,
such sale under the deed maybe imposed whenever the need for the sale
arises on the part of either party. Macaria Reyes sought to repurchase the
land, but the Villamors refused. Instead, the Villamors exercised their option
to purchase the other half of the property. Macaria Reyes then refused, thus
the Villamors filed a case for specific performance. Macaria averred that the
option is void for lack of merit.
Held:
The Option was, in fact, the only reason why they purchased the other half
for an expensive price. Since the Villamors exercised their option, this is
tantamount to an acceptance of the offer – a valid and obligatory contract of
sale was thus perfected.
1
PNOC vs Keppel Philippines Holdings, Inc contracting party assumed. Since Keppel was already a Filipino-owned
G. R. No. 202050 corporation, it satisfied the condition that entitled it to purchase the land.
July 25, 2016
J. Brion NOTES:
2
Nicolas Sanchez vs Severina Rigos
G. R. No. L-25494
June 14, 1972
J. Concepcion
Facts:
Held:
The promise (Sanchez) cannot compel the promissor (Rigos) to comply with
the promise unless the former can establish that the promise was for a
consideration. The burden of proof to establish the existence of the
consideration lies with Sanchez. Therefore, there was no valid option
contract in this case. However, an option without consideration is a mere
offer, which is not binding until accepted before it is withdrawn, a valid
contract of sale arise. In this case, even though there was no option contract,
there was nevertheless an offer and acceptance enough to constitute a valid
contract of sale.
3
Ang Su Yu Asuncion, Arthur Go and Keh Tiong vs CA and Buen Realty
Development Corporation
G. R. No. 109125
December 2, 1994
J. Vitug
Facts:
This is case wherein the Petitioner Ang Yu filed a complaint for Specific
Performance againt Spouses Unjieng. That the Petitioners have been
leasing the said parcel of land since 1935. The Spouses Unjieng have
offered to sell the same parcel of land to the Petitioners for 6M and the latter
provided a counter offer of 5M. the Unjieng spouses asked the Petitioner to
specify his terms in writing but the latter failed to do so. They failed to arrive
at any definite agreement. When Ang Yu discovered that the spouses were
planning to sell the property to other, he then sued them for specific
performance. While the case was pending, the spouses sold the units to
Buen Realty for 15M.
Held:
There was no perfected contract of sale yet since there was yet any meeting
of the minds. Thus, there is no ground for specific performance. During the
negotiation stage, any party may withdraw the offer made – especially if it
was not supported by any consideration.
An Option Contract of Right of First Refusal is separate and distinct from the
actual contract of sale – which is the basis for specific performance. The
remedy available to Ang Yu, in case the withdrawal was made capriciously
and arbitrarily, would be to sue on the basis of abuse of right. In case there
was an option contract, timely acceptance would create an obligation to sell
in the part of the vendor; but no such circumstance attends in this case.
4
Equatorial Realty Development. Inc. & Carmelo & Bauermann Inc vs
Mayfair Theater
G. R. No. 106063
November 21, 1996
J. Hermosisima, Jr.
Facts:
For its theaters, Mayfair was leasing a portion of the property in CM Recto,
which Carmelo owns. Under the lease agreement, “if Carmelo should decide
to sell the leased premises, Mayfair shall be given 30day exclusive option to
purchase the same.” Carmelo, through Henry Yang, informed the president
of Mayfair that the former is interested in selling the whole CM Recto
property and that Araneta offered to purchase the same for 1.2M dollars.
Mayfair twice replied through a letter of its intention to exercise its right to
repurchase - but Carmelo never replied. Thereafter, Carmelo sold the entire
property to Equatorial Realty for 11M pesos. Thus, Mayfair instituted an
action for specific performance and annulment of the sale. Carmelo alleges
that the right, being an Option Contract is void for lack of consideration.
Issue: W/N the right to repurchase is an option contract and void for lack of
consideration, No
Held:
The clause in the lease agreement was not an option contract, but a right to
first refusal. It was premised on Carmelo’s decision to sell the said property.
The requirement of separate consideration is already an integral part of the
lease. Carmelo violated such right by not affording Mayfair a chance to
negotiate. It abandoned the negotiations arbitrarily.
Equatorial was likewise in bad faith; it was well aware of the right conferred
upon Mayfair because its lawyers had ample time to review the contract.
That being the case, the contract between Carmelo and Equatorial is
rescissible. Mayfair should be allowed to purchase the entire property for the
price offered by Equatorial. Rights of First Refusal are also governed by the
law on contracts, not the amorphous principles on human relations.
5
Paranaque Kings Enterprises Inc. vs CA, Catalina Santos represented sell at all, there can never be a breach, much less an enforcement of such
by her atty-in-fact Luz B. Protacio and David Raymundo right. But on September 21, 1988, Santos sold said properties to
G. R. No. 111538 Respondent Raymundo without first offering these to petitioner. Santos
February 26, 1997 indeed realized her error, since she repurchased the properties after
J. Panganiban petitioner complained. Thereafter, she offered to sell the properties to
petitioner for P15 million, which petitioner, however, rejected because of the
Facts: ridiculous price. But Santos again appeared to have violated the same
provision of the lease contract when she finally resold the properties to
Catalina Santos owned 8 parcels of land leased to a certain Frederick Chua, respondent Raymundo for only P9 million without first offering them to
who assigned its rights thereto Lee CHing Bing, who in turn assigned said petitioner at such price. Whether there was actual breach which entitled
rights to Paranaque Kings Enterprises, which introduced significant petitioner to damages and/or other just or equitable relief, is a question
improvements on the premises. Under the lease agreement, “in case of sale, which can better be resolved after trial on the merits where each party can
the lessee shall have the option or priority to buy the said properties.” present evidence to prove their respective allegations and defenses
Catalina, in violation of the said stipulation, sold the lot to Raymundo for 5M.
Paranaque Kings notified her of the said breach and she immediately had
the lots reconveyed. She then offered the lot to Paranque Kings for 15M –
but the latter refused claiming that the offer was ridiculous. Catalina
thereafter sold it again to Raymundo for 9M.
Issue: W/N there was compliance with the Right of First Refusal, NO
W/N there was a breach to the Right of First Refusal, YES
In a Right of First Refusal, the seller cannot offer the property to another for
a lower price or under terms more favorable. It must be offered under the
terms and conditions to Paranque Kings; otherwise, the right of first refusal
becomes illusory. Only if Paranque Kings fails to meet the offer may the
property be offered for sale to another buyer – and under the same terms
and conditions as well. The Right of First refusal may also be validly
transferred or assigned – as in the case.
[SAME PRICE]
From the foregoing, the basis of the right of the first refusal* must be the
current offer to sell of the seller or offer to purchase of any prospective
buyer. Only after the grantee** fails to exercise its right of first priority under
the same terms and within the period contemplated, could the owner validly
offer to sell the property to a third person, again, under the same terms as
offered to the grantee
[BREACH]
A careful examination of the complaint reveals that it sufficiently alleges an
actionable contractual breach on the part of private respondents. Under
paragraph 9 of the contract of lease between respondent Santos and
petitioner, the latter was granted the first option or priority to purchase the
leased properties in case Santos decided to sell. If Santos never decided to
6
Rosencor Development Corporation and Rene Joaquin vs Paterno place when things are the object of sale is legally in possession of third
Inquing, Irene Guillermo, Federico Bantugan, Fernando Magbanua and person who did not act in bad faith. Rosencor could not have acted in bad
Lizza TIangco faith because they are not aware of the right of first refusal given verbally.
G. R. No. 140479
March 8, 2001 This does not mean however that respondents are left without any remedy
J. Gonzaga-Reyes for the unjustified violation of their right of first refusal. Their remedy however
is not an action for the rescission of the Deed of Absolute Sale but an action
Facts: for damages against the heirs of the spouses Tiangco for the unjustified
disregard of their right of first refusal.
That the Respondents are the lessees of a two-story residential apartment
located at Tomas Morato since 1971. The lease was not covered by a
contract – however, the lessees were renting the premised for P150/month
and were allegedly verbally granted by the lessors the preemptive right to
purchase the property if ever they decide to sell the same. Upon the death of
Spouses Tiangco in 1975, the management of the property was adjudicated
to to theirs heirs represented by Eufrocina De Leon – that the lessees were
allegedly promised the same preemptive right by the heirs of Tiangcos; they
stayed and allegedly spent their own money for it upkeep. Some time un
June 1990, the lessees received a letter from Atty. Erlinda Aguila demanding
that they should vacate the place – but refused. Later, they received a letter
coming from Eufrocina De Leon offering to sell to them the property that they
were leasing for 2M. In November 1990, Rene Joaquin came to the leased
premised and introduced himself as its new owner. Later, they received a
letter again from Atty. Aguila demanding that they vacate the premises. A
month later, they received a letter form De Leon stated that the heirs of
Tiangcos sold the premises to Resencor – following such another letter from
Atty. Aguila as the counsel of Rosencor demanding that they should pay
rent.
Issue: W/N the right of pre-emptive right of first refusal to the lessees should
be recognized even if it was given verbally, Yes
Held:
The Right of First Refusal is not covered by the Statute of Frauds. The
application of such statute presupposes the existence of a perfected contract
which is not applicable in this case. As such, a right of first refusal need not
be written to be enforceable and can be proved by oral evidence. (In this
case the Right of First Refusal was recognized by De Leon). Lessees have
proven that the lessors admit the right of first refusal given to them when the
property was offered to them by 2M.
7
Dr. Daniel Vazquez and Ma. Luiza M. Vazquez vs Ayala Corporation
G. R. No. 149734
November 19, 2004
J. Tinga
Facts:
Dr. Vazquez owns Conduit Inc. In 1981, Vazquez enters into a Memorandum
of Agreement with Ayala Corp wherein Ayala bought Conduit from Vazquez.
Ayala committed to develop Conduit’s lands including 4 parcels of land
adjacent to Vazquez’s retained land. Be it noted that these parcels of land
were in the 3rd phase of Ayala’s development plan. The MOA provides the ff:
“The BUYER (Ayala) agrees to give the SELLERS (Vazquez) a first option to
purchase four developed lots next to the Retained Area at the prevailing
market price at the time of the purchase.” In 1990, Ayala was able to develop
the said lots. Ayala then offered to sell the parcels of land to Vazquez market
price value in 1990. Vazquez refused the offer. He contended that the
purchase price should be the one from 1981 (time of purchase). Ayala then
lowered the purchase price but Vazquez refused again. Instead he made a
counter offer at a much lower price. This time, Ayala refused.
Held:
The said stipulation is a mere right of first refusal. Although the paragraph
has a definite object, i.e., the sale of the 4 lots, the period within which they
will be offered for sale to Vazquez and, necessarily, the price for which the
subject lots will be sold are not specified. The phrase “at the prevailing
market price at the time of the purchase” connotes that there is no definite
period within which Ayala is bound to reserve the subject lots for Vazquez to
exercise his privilege to purchase. Neither is there a fixed or determinable
price at which subject lots will be offered for sale. The price considered
certain if it may be determined with reference to another thing certain or if
the determination thereof is left to the judgment of a specified person or
persons. Further the stipulation was inserted to give Vazquez the first crack
to but the subject lots at the price which Ayala would be willing to accept
when it offers the subject lots for sale. It is not supported by an independent
consideration.
8
Henry Macion and Angeles Macion vs. Hon Japal Guiani transfer the property at some future date, or where some conditions have to
G. R. No. 106837 be fulfilled before the contract is converted from an executory to an executed
August 4, 1993 one, does not pass ownership over the real estate being sold. It cannot be
J. Romero denied that the compromise agreement, having been signed by both parties,
is tantamount to a bilateral promise to buy and sell a certain thing for a price
Facts: certain. Hence, this gives the contracting parties rights in personam, such
that each has the right to demand from the other the fulfillment of their
Macion and Dela Vida Institute entered into a contract to sell, where the respective undertakings. Demandability may be exercised at any time after
latter assured the former that it will buy the 2 parcels of land in Cotabato City the execution of the Deed.
in or before July 31, 1991 at P1.7M. In the meantime, Dela Vida took
possession of it built an edifice worth 800k. however, on the said date, the
sale did not materialize. Consequently, Macion filed a complaint for unlawful
detainer against Dela Vida, while Dela Vida countered with a complaint for
reformation of the contract to sell. These differences were eventually settled.
In 1992, both parties entered into a compromise agreement where Macion
will give Dela Vida 5months to raise 2.6M and in case of failure to do so,
Dela Vida would vacate the premises. After 2months, Dela Vida alleged that
they had negotiated a loan from BPI and requested Macion to execute a
contract to sell in its favor. However, Macion refused, which prompted De
Vida to file an urgent motion for an order to direct Macion to execute the
contract to sell. In return, Macion filed a motion for execution of judgment
alleging that after 5months, Dela Vida was not able to settle their obligations
with Macion. RTC ruled in favor of Dela Vida.
Issue: W/N it was proper to execute a contract to sell in favor of Dela Vida,
Yes
Held:
Although the compromise agreement does not give Dela Vida the right to
demand from Macion the execution of the contract to sell in its favor. From
this stipulation, it is clear that Macion is obliged to execute a Deed of Sale
and not a Contract to Sell upon payment of the full price of P2.6M.
Thereafter, Macion will turn over to Dela Vida the TCT.
However, a review of the facts reveals that even prior to the signing of the
compromise agreement, both parties had entered into a contract to sell,
which was superseded by a compromise agreement. This compromise
agreement must be interpreted as bestowing upon Dela Vida the power to
demand a contract to sell from Macion. Where Macion promised to execute
a Deed of Absolute Sale upon completing payment of the price, it is a
contract to sell. In the case at bar, the sale is still in the executory stage
since the passing of the title is subject to a suspensive condition – that if
Dela Vida is able to secure needed funds to purchase the properties from
Macion. A mere executory sale, one where the sellers merely promise to