Manila Metal Container Corporation vs Philippine National Bank

[GR No. 166862, December 20, 2006]

Facts:

Petitioner was the owner of 8,015 square meters of parcel of land located in Mandaluyong City, Metro Manila. To secure a P900,000.00
loan it had obtained from respondent Philippine National Bank, petitioner executed a real estate mortgage over the lot. Respondent PNB later
granted petitioner a new credit accommodation. On August 5, 1982, respondent PNB filed a petition for extrajudicial foreclosure of the real
estate mortgage and sought to have the property sold at public auction. After due notice and publication, the property was sold at public action
where respondent PNB was declared the winning bidder. Petitioner sent a letter to PNB, requesting it to be granted an extension of time to
redeem/repurchase the property. Some PNB personnel informed that as a matter of policy, the bank does not accept “partial redemption”. Since
petitioner failed to redeem the property, the Register of Deeds cancelled TCT No. 32098 and issued a new title in favor of PNB.

Meanwhile, the Special Asset Management Department (SAMD) had prepared a statement of account of petitioner’s obligation. It also
recommended the management of PNB to allow petitioner to repurchase the property for P1,574,560.oo. PNB rejected the offer and
recommendation of SAMD. It instead suggested to petitioner to purchase the property for P2,660,000.00, in its minimum market value.
Petitioner declared that it had already agreed to SAMD’s offer to purchase for P1,574,560.47 and deposited a P725,000.00.

Issue:

Whether or not petitioner and respondent PNB had entered into a perfected contract for petitioner to repurchase the property for
respondent.

Ruling:

The SC affirmed the ruling of the appellate court that there was no perfected contact of sale between the parties.

A contract is meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some
service. Under 1818 of the Civil Code, there is no contract unless the following requisites concur:

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1. Consent of the contracting parties;

2. Objection certain which is the subject matter of the contract;

3. Cause of the obligation which is established.

Contract is perfected by mere consent which is manifested by the meeting of the offer and the acceptance upon the thing and causes which are
to constitute the contract. Once perfected, the bind between other contracting parties and the obligations arising therefrom have the form of
law between the parties and should be complied in good faith. The absence of any essential element will negate the existence of a perfected
contract of sale.

The court ruled in Boston Bank of the Philippines vs Manalo:

“A definite agreement as to the price is an essential element of a binding agreement to sell personal or real property because it seriously affects
the rights and obligations of the parties. Price is an essential element in the formation of a binding and enforceable contract of sale. The fixing of
the price can never be left to the decision of one of the contracting parties. But a price fixed by one of the contracting parties, if accepted by the
other, gives rise to a perfected sale.”

In the case at bar, the parties to the contract is between Manila Metal Container Corporation and Philippine National Bank and not to Special
Asset Management Department. Since the price offered by PNB was not accepted, there is no contract. Hence it cannot serve as a binding
juridical relation between the parties.

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CARCELLER V. CA (February 10, 1999)

FACTS:

Respondent State Investment Houses Inc. has a parcel of land in Cebu City leased to petitioner Jose Ramon Carceller with an option to
purchase valid until the expiration of the lease contract.

3 weeks before the expiration of the contract, petitioner made a request to the respondent for the extension of the lease contact so he can have
an ample time to raise enough funds to avail of the option of sale.

Respondent denied the request and a month after the expiration of the contract, petitioner made known his intention to buy the property.

Respondent reiterated the provisions in the contract and asked the petitioner to leave the property, which will now be offered to the general
public for a higher price.

ISSUE:

WON can still exercise his option of sale even after the time to do such has already lapsed.

HELD:

The contract must be interpreted together with the intention of the parties. The letter of the plaintiff to the respondent requesting for
an extension is sufficient proof of his intent to avail of the option of sale.

In contractual relations, the law allows the parties reasonable leeway on the terms of their agreement, which is the law between them. When
petitioner made his intention to buy known to the buyer one month after the expiration of contract is within a reasonable time- frame.

Petitioner may buy the property but not anymore to the price stated in the contract. As such, respondent may increase the price of the land but
only to a reasonable and fair market value.

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 the period designated, and, within that period, to enter into such contract with the one to whom the option was
granted, if the latter should decide to use the option. It is a separate agreement distinct from the contract which the parties may enter into upon
the consummation of the option.

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G.R. No. 97332 October 10, 1991

SPOUSES VILLAMOR, petitioners, vs. COURT OF APPEALS AND SPOUSES MACARIA LABINGISA REYES AND ROBERTO REYES, respondents.

FACTS:

Reyes was the owner of a lot located at Caloocan City, as evidenced by TCT of the Register of Deeds of Rizal. Reyes sold a portion of the
lot (300sqm) to the Spouses Villamor. Earlier, Reyes borrowed money from the spouses which amount was deducted from the total purchase
price of the lot sold. The portion sold to the Villamor spouses is now covered by a different TCT while the remaining portion which is still in the
name of Reyes is covered by a different TCT. Reyes executed a "Deed of Option" in favor of Villamor in which the remaining portion of the lot
would be sold to Villamor under the certain conditions.

According to Macaria Reyes, when her husband, Roberto Reyes, retired, they offered to repurchase the lot sold by them to the Villamor spouses
but Marina Villamor refused and reminded them instead that the Deed of Option in fact gave them the option to purchase the remaining portion
of the lot.

The Villamors, on the other hand, claimed that they had expressed their desire to purchase the remaining portion of the lot but the Reyes had
been ignoring them. Thus, after conciliation proceedings in the barangay level failed, they filed a complaint for specific performance against the
Reyes.

Judgment was rendered by the trial court in favor of the Villamor spouses.

The Court of Appeals rendered a decision reversing the decision of the trial court and dismissing the complaint. The reversal of the trial court's
decision was premised on the finding of respondent court that the Deed of Option is void for lack of consideration.

The Villamor spouses brought the instant petition for review on certiorari.

ISSUE:

Whether the ‘kind’ of Deed of Option in this case was valid

RATIO:

The court a quo, rule that the Deed of Option was a valid written agreement between the parties. The law provides that when the terms
of an agreement have been reduced to writing it is to be considered as containing all such terms, and therefore, there can be, between the

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parties and their successors in interest no evidence of their terms of the agreement, other than the contents of the writing. ... (Section 7 Rule
130 Revised Rules of Court)

A sale must be for a price certain (Art. 1458). The respondent appellate court failed to give due consideration to the evidence which shows that
the Villamor spouses bough an adjacent lot from the brother of Macaria Reyes for only P18.00 per square meter which the respondents Reyes
did not rebut. Thus, expressed in terms of money, the consideration for the deed of option is the difference between the purchase price of the
portion of the lot in 1971 (P70.00 per sq.m.) and the prevailing reasonable price of the same lot in 1971. Whatever it is, (P25.00 or P18.00)
though not specifically stated in the deed of option, was ascertainable. Villamors allegedly paying P52.00 per square meter for the option may,
as opined by the appellate court, be improbable but improbabilities do not invalidate a contract freely entered into by the parties.

The "deed of option" entered into by the parties in this case had unique features. Ordinarily, an optional contract is a privilege existing in one
person, for which he had paid a consideration and which gives him the right to buy, for example, certain merchandise or certain specified
property, from another person, if he chooses, at any time within the agreed period at a fixed price. The first part of the deed covered the
statement on the sale of the 300 square meter portion of the lot to Spouses Villamor at the price of P70.00 per square meter "which was higher
than the actual reasonable prevailing value of the lands in that place at that time (of sale)." The second part stated that the only reason why the
Villamor spouses agreed to buy the said lot at a much higher price is because the vendor (Reyes) also agreed to sell to the Villamors the other
half-portion of 300 square meters of the land. Had the deed stopped there, there would be no dispute that the deed is really an ordinary deed of
option granting the Villamors the option to buy the remaining 300 square meter-half portion of the lot in consideration for their having agreed
to buy the other half of the land for a much higher price. But, the "deed of option" went on and stated that the sale of the other half would be
made "whenever the need of such sale arises, either on our (Reyes) part or on the part of the Spouses Villamor. It appears that while the option
to buy was granted to the Villamors, the Reyes were likewise granted an option to sell. In other words, it was not only the Villamors who were
granted an option to buy for which they paid a consideration. The Reyes as well were granted an option to sell should the need for such sale on
their part arise.

The option offered by Reyes had been accepted by the Villamors, the promise, in the same document. The acceptance of an offer to sell for a
price certain created a bilateral contract to sell and buy and upon acceptance, the offer, ipso facto assumes obligations of a vendee.
Demandability may be exercised at any time after the execution of the deed.

Since there may be no valid contract without a cause of consideration, the promissory is not bound by his promise and may, accordingly
withdraw it. Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results
in a perfected contract of sale.

A contract of sale is, under Article 1475 of the Civil Code, "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 perform of contracts." Since there was,

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between the parties, a meeting of minds upon the object and the price, there was already a perfected contract of sale. What was, however, left
to be done was for either party to demand from the other their respective undertakings under the contract. It may be demanded at any time
either by the private respondents, who may compel the petitioners to pay for the property or the petitioners, who may compel the private
respondents to deliver the property.

However, the Deed of Option did not provide for the period within which the parties may demand the performance of their respective
undertakings in the instrument. The parties could not have contemplated that the delivery of the property and the payment thereof could be
made indefinitely and render uncertain the status of the land. The failure of either parties to demand performance of the obligation of the other
for an unreasonable length of time renders the contract ineffective.

Under Article 1144 (1) of the Civil Code, actions upon written contract must be brought within ten (10) years. The Deed of Option was executed
on November 11, 1971. The acceptance, as already mentioned, was also accepted in the same instrument. The complaint in this case was filed
by the petitioners 17 years from the time of the execution of the contract. Hence, the right of action had prescribed.

It is of judicial notice that the price of real estate in Metro Manila is continuously on the rise. To allow the Villamors to demand the delivery of
the property 17 years after the execution of the deed at the price of only P70.00 per square meter is inequitous. For reasons also of equity and in
consideration of the fact that the Reyes have no other decent place to live, the Court, in the exercise of its equity jurisdiction is not inclined to
grant petitioners' prayer.

Petition is DENIED. The decision of respondent appellate court is AFFIRMED.

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Sanchez v. Rigos

G.R. No. L-25494, 14 June 1972

FACTS:

Nicolas Sanchez and Severina Rigos executed an instrument entitled “Option toPurchase” wherein Mrs. Rigos agreed, promised and
committed to sell to Mr. Sancheza parcel of land for the amount of P1, 510. 00 within two years from the date of the instrument, with the
understanding that the said option shall be deemed terminated and elapsed if Mr. Sanchez shall fail to exercise his right to buy the property
within the stipulated period.

Mrs. Rigos agreed and committed to sell and Mr. Sanchez agreed and committed to buy. But there is nothing in the contract to indicate that her
agreement, promise and undertaking is supported by a consideration distinct from the price stipulated for the sale of the land. Mr. Sanchez has
made several tenders of payment in the said amount within the period before any withdrawal from the contract has been made by Mrs. Rigos,
but were rejected nevertheless.

ISSUE:

Can an accepted unilateral promise to sell without consideration distinct from the price be withdrawn arbitrarily?

RULING:

No. An accepted promise to sell is an offer to sell when accepted becomes a contract of sale.

Since there may be no valid contract without a cause or consideration, the promisor is not bound by his promise and may, accordingly, withdraw
it. Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results in a
perfected contract of sale. This view has the advantage of avoiding a conflict between Articles 1324 – on the general principles on contracts –
and 1479 – on sales – of the Civil Code.

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Article 1324 – When the offeror has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance
by communicating such withdrawal, except when the option is founded upon a consideration, as something paid or promised.

ISSUE:

WON there is a perfected contract of sale between parties?

HELD:

YES. Under the Civil Code, there is no valid contract without a cause or consideration, the promisor is not bound by his promise and may
withdraw it. However, pending the notice of its withdrawal, his accepted promise is in the nature of an offer to sell which if accepted results in a
perfected contract of sale. In this case, the contract between parties became a perfected contract of sale upon acceptance of Rigos of the offer
within the stipulated period even though he was only initially granted an option to buy.

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VASQUEZ V. CA (July 12, 1991)

FACTS:

Petitioner Vasquez and Gayanelo sold their land in Negros Occidental to Respondents Martin Vallejera and Apolonia Olea. In a document
separate from the deed of sale, petitioner was granted a right to repurchase signed by him. Petitioner availed of the right to repurchase but
respondents resisted because of lack of consideration separate from the purchase price and on the ground that the right to repurchase was
made in a separate document.

ISSUE:

WON the petitioner has the right to repurchase under the contract.

HELD:

Petitioner cannot avail of the right to repurchase because it was not accepted by the respondents and no consideration was given. The
document for the right to repurchase was not signed by the respondents and as such, shows no acceptance from the promisee. The right of
repurchase is not a right granted the vendor by the vendee in a subsequent instrument, but is a right reserved by the vendor in the same
instrument of sale as one of the stipulations of the contract. Once the instrument of absolute sale is executed, the vendor can no longer reserve
the right to repurchase, and any right thereafter granted the vendor by the vendee in a separate instrument cannot be a right of repurchase but
some other right like the option to buy in the instant case.

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NIETES V. CA (August 18, 1972)

FACTS:

Petitioner Aquilino Nietes and respondent Dr.Pablo Garcia entered a “Contract of Lease and Option to Buy” where the latter agreed to
lease his Angeles Educational Institute to the former. The rent is set to P5000 per year up to 5 years and that the LESSOR agrees to give the
LESSEE an option to buy the land and the school building, for P100,000 within the period of the Contract of Lease. Nietes paid Garcia P2200 on
Dec.16, 1962 for partial payment on the purchase of the property. Through their lawyers, Garcia decided to rescind the contract while Nietes
expresses his intention to buy the property.

Nietes also deposited 84K to a bank corresponding to the balance for the purchase of the property.

ISSUE:

WON Nietes can aval of his option to buy the property.

HELD:

Nietes can avail of the option to buy because he already expresses his intention to buy the property before the termination of the
contract. The contention of the respondent that the full price of the property should first be paid before the option could be exercised is of no
merit.

The contract doesn’t provide such stipulation and as such, the provision of reciprocal obligations in oblicon should prevail. Notice of the
creditor's decision to exercise his option to buy need not be coupled with actual payment of the price, so long as this is delivered to the owner of
the property upon performance of his part of the agreement.

Nietes had validly and effectively exercised his option to buy the property of Dr. Garcia, at least, on December 13, 1962, when he acknowledged
receipt from Mrs. Nietes of the sum of P2,200 then delivered by her "in partial payment on the purchase of the property" described in the
"Contract of Lease with Option to Buy"

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Ang Yu Asuncion et al. vs. Court of Appeals and Buen Realty Corp.

(G.R. No. 109125, December 2, 1994)

Facts:

Petitioners Ang Yu Asuncion et. al. are lessees of residential and commercial spaces owned by the Unjiengs. They have been leasing the
property and possessing it since 1935 and have been paying rentals.

In 1986, the Unjiengs informed Petitioners Ang Yu Asuncion that the property was being sold and that Petitioners were being given priority to
acquire them (Right of First Refusal). They agreed on a price of P5M but they had not yet agreed on the terms and conditions. Petitioners wrote
to the Unjiengs twice, asking them to specify the terms and conditions for the sale but received no reply. Later, the petitioners found out that
the property was already about to be sold, thus they instituted this case for Specific Performance [of the right of first refusal].

The Trial Court dismissed the case. The trial court also held that the Unjieng’s offer to sell was never accepted by the Petitioners for the reason
that they did not agree upon the terms and conditions of the proposed sale, hence, there was no contract of sale at all. Nonetheless, the lower
court ruled that should the defendants subsequently offer their property for sale at a price of P11-million or below, plaintiffs will have the right
of first refusal.

The Court of Appeals affirmed the decision of the Trial Court.

In the meantime, in 1990, the property was sold to De Buen Realty, Private Respondent in this case. The title to the property was transferred
into the name of De Buen and demanded that the Petitioners vacate the premises.

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Because of this, Petitioners filed a motion for execution of the CA judgement. At first, CA directed the Sheriff to execute an order directing the
Unjiengs to issue a Deed of Sale in the Petitioner’s favour and nullified the sale to De Buen Realty. But then, the CA reversed itself when the
Private Respondents Appealed.

Issues:

Whether or not the Contract of Sale is perfected by the grant of a Right of First Refusal.

Whether or not a Right of First Refusal may be enforced in an action for Specific Performance.

Held:

No. A Right of First Refusal is not a Perfected Contract of Sale under Art. 1458 or an option under Par. 2 Art 1479 or an offer under Art.
1319. In a Right of First Refusal, only the object of the contract is determinate. This means that no vinculum juris is created between the seller-
offeror and the buyer-offeree.

No. Since a contractual relationship does not exist between the parties, a Right of First Refusal may not be enforced through an action for
specific performance. Its conduct is governed by the law on human relations under Art. 19-21 of the Civil Code and not by contract law.

Therefore, the Supreme Court held that the CA could not have decreed at the time the execution of any deed of sale between the Unjiengs and
Petitioners.

Other Rules, Comments and Discussion:

This case is notable because it lays down the rules on options contracts and right of first refusal as well as promises to buy and sell. First, the
Supreme Court discussed the stages of the formation of a sales contract, these are:

Negotiation – covers the period from the time the prospective contracting parties indicate interest in the contract to the time the contract is
concluded (perfected).

Perfection – takes place upon the concurrence of the essential elements thereof. In a sales contract this is governed by Art. 1458

Consummation – begins when the parties perform their respective undertakings under the contract culminating in the extinguishment thereof

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Until the contract is perfected (No. 2), it cannot, as an independent source of obligation, serve as a binding juridical relation. A sales contract is
perfected when a person, called the seller, obligates himself, for a price certain, to deliver and to transfer ownership of a thing or right to
another, called the buyer, over which the latter agrees (Art 1458).

Under Art. 1458, there is no perfection of a sale under a “Contract to Sell”. A Contract to Sell is characterized as a conditional sale and the breach
of the suspensive condition will prevent the obligation to transfer title from acquiring obligatory force.

Promises to Buy and Sell

Unconditional mutual promise to buy and sell – As long as the object is made determinate and the price is fixed, can be obligatory on the parties,
and compliance therewith may accordingly be exacted. The Right of First Refusal falls under this classification.

Accepted unilateral promise – If it specifies the thing to be sold and the price to be paid and when coupled with a valuable consideration distinct
and separate from the price, is what may properly be termed a perfected contract of option. This contract is legally binding. (Par. 2 Art. 1458)
Note however, that the option is a contract separate and distinct from the contract of sale. Once the option is exercised before it is withdrawn, a
bilateral promise to sell and to buy ensues and both parties are then reciprocally bound to comply with their respective undertakings.

Offers with a Period

Where a period is given to the offeree within which to accept the offer, the following rules generally govern:

If the period is not itself founded upon or supported by a consideration – Offeror may withdraw offer at any time before its acceptance (or
knowledge of its acceptance). However, the right to withdraw must not be exercised whimsically or arbitrarily otherwise it can give rise to
damages under Art. 19 of the New Civil Code

If period is founded on a separate consideration – This is a perfected contract of option. Withdrawal of the offer within the period of the option
is deemed a breach of the contract of option (not the sale). “If, in fact, the optioner-offeror withdraws the offer before its acceptance (exercise
of the option) by the optionee-offeree, the latter may not sue for specific performance on the proposed contract (“object” of the option) since it
has failed to reach its own stage of perfection. The optioner-offeror, however, renders himself liable for damages for breach of the option.”

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Earnest money – This is not an offer with a period. Earnest money is distinguished from the option contract if the consideration given will be
considered as a part of the purchase price of the object of the sale. Earnest money is evidence of a perfected contract of sale. (Art. 1482)

Right of First Refusal

This is “an innovative juridical relation” because it is neither a perfected contract of sale under Art. 1458 nor an option contract under par. 2 Art
1479. The object might be made determinate, the exercise of the right, however, is dependent on the offeror’s eventual intention to enter into a
binding juridical relation with another but also on terms and conditions such as price. There is no juridical tie or vinculum juris.

Breach of the right cannot justify correspondingly an issuance of a writ of execution under a court judgement that recognizes its existence, such
as in Ang Yu Asuncion. An action for Specific Performance is not allowed under a Right of First Refusal because doing so would negate the
indispensable element of consensuality in the perfection of contracts.

This right is not inconsequential because it gives right to an action for damages under Art. 19.

Other Acts that Won’t Bind

Public advertisements or solicitations – Construed as mere invitations to make offers and/or proposals.

Related Cases

The cases of Equatorial v. Mayfair and Parañaque Kings v. Court of Appeals held that if a sale happens in violation of a Right of First Refusal
where the buyer is aware of the existence of that right in favor of another (such as when it is written in a lease contract), the sale may be
rescinded and the seller may be forced to offer the property to the party with the Right of First Refusal.

However, the case of Ang Yu Asuncion may still be good law for cases not involving a third-party buyer in bad faith.

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EQUATORIAL REALTY V. MAYFAIR (November 21, 1996)

FACTS:

Petitioner Carmelo and Bauermann Inc. leased its parcel of land with 2-storey building to respondent Mayfair Theater Inc.

They entered a contract which provides that if the LESSOR should desire to sell the leased premises, the LESSEE shall be given 30-days exclusive
option to purchase the same.

Carmelo informed Mayfair that it will sell the property to Equatorial. Mayfair made known its interest to buy the property but only to the extent
of the leased premises.

Notwithstanding Mayfair’s intention, Carmelo sold the property to Equatorial.

ISSUE:

WON the sale of the property to Equatorial is valid.

HELD:

The sale of the property should be rescinded because Mayfair has the right of first refusal. Both Equatorial and Carmelo are in bad faith
because they knew of the stipulation in the contract regarding the right of first refusal.

The stipulation is a not an option contract but a right of first refusal and as such the requirement of a separate consideration for the option, has
no applicability in the instant case. The consideration is built in the reciprocal obligation of the parties.

In reciprocal contract, the obligation or promise of each party is the consideration for that of the other. (Promise to lease in return of the right to
first refusal)

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With regard to the impossibility of performance, only Carmelo can be blamed for not including the entire property in the right of first refusal.
Court held that Mayfair may not have the option to buy the property. Not only the leased area but the entire property.

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Parañaque Kings Enterprises, Inc. vs Court of Appeals 268 SCRA 727. February 26, 1997

Facts:

Defendant Catalina Santos is the owner of 8 parcels of land located in Parañaque. Frederick Chua leased the property of defendant and
assigned all rights and interest and participation in the leased property to Lee Ching Bing by deed of assignment. Lee Ching Bing also assigned all
his rights and interest in the leased property to Parañaque Kings Enterprises, Inc. All of these contracts/deeds were registered.

Paragraph 9 of the assigned leased (sic) contract provides among others that:

9. That in case the properties subject of the lease agreement are sold or encumbered, Lessors shall impose as a condition that the buyer or
mortgagee thereof shall recognize and be bound by all the terms and conditions of this lease agreement and shall respect this Contract of Lease
as if they are the LESSORS thereof and in case of sale, LESSEE shall have the first option or priority to buy the properties subject of the lease;

Defendant Santos sold the eight parcels of land subject of the lease to Defendant David Raymundo, for a consideration of P5Million, in
contravention of the contract of lease, for the first option or priority to buy was not offered by defendant Santos to the plaintiff. Santos, realizing
the error, she had it reconveyed to her for the same consideration of P5Million and subsequently the property was offered for sale to plaintiff
for the sum of P15Million, however the period of 10 days to make good of the offer expired. Another deed of sale was executed by Santos in
favor of Raymundo for consideration of P9Million. Hence, the petitioner filed a complaint before the RTC.

RTC dismissed the complaint for lack of a valid cause of action. It ratiocinated that Santos complied with the lease agreement by
offering the properties for sale to the plaintiff and there was a definite refusal on the part of the plaintiff to accept the offer.

CA affirmed in toto the ruling of RTC.

Issue:

Whether or not there is valid cause of action.

Ruling:

Yes.

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The principal legal question, as stated earlier, is whether the complaint filed by herein petitioner in the lower court states a valid cause of action.
Since such question assumes the facts alleged in the complaint as true, it follows that the determination thereof is one of law, and not of facts.
There is a question of law in a given case when the doubt or difference arises as to what the law is on a certain state of facts, and there is a
question of fact when the doubt or difference arises as to the truth or the falsehood of alleged facts.

A cause of action exists if the following elements are present: (1) a right in favor of the plaintiff by whatever means and under whatever law it
arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right, and (3) an act or omission on the
part of such defendant violative of the right of plaintiff or constituting a breach of the obligation of defendant to the plaintiff for which the latter
may maintain an action for recovery of damages.

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 sell at all, there can never be a breach, much less an
enforcement of such right. But on September 21, 1988, Santos sold said properties to Respondent Raymundo without first offering these to
petitioner. Santos indeed realized her error, since she repurchased the properties after petitioner complained. Thereafter, she offered to sell the
properties to petitioner for P15 million, which petitioner, however, rejected because of the ridiculous price. But Santos again appeared to have
violated the same provision of the lease contract when she finally resold the properties to respondent Raymundo for only P9 million without first
offering them to petitioner at such price. Whether there was actual breach which entitled petitioner to damages and/or other just or equitable
relief, is a question which can better be resolved after trial on the merits where each party can present evidence to prove their respective
allegations and defenses.

The decision of the RTC and CA are reversed and set aside. The case is remanded to the RTC for further proceedings.

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Riviera Filipina Inc. vs. CA

Facts:

Respondent Reyes executed a ten-year renewable Contract of Lease with Riviera involving a 1,018 square meter parcel of land which
was a subject of a Real Estate Mortgage executed by Reyes in favor of Prudential Bank. But the loan with Prudential Bank remained unpaid upon
maturity so the bank foreclosed the mortgage thereon and emerged as the highest bidder at the public auction sale. Reyes decided to sell the
property offered it to Reviera. After seven months, Riviera offered to buy the property but Reyes denied it and increased the price of the
property. Reyes’ counsel informed Riviera that he is selling the property for P6,000 per square meter and to confirm their conversation, Riviera
sent a letter stating his interest in buying the property for the fixed and final price of P5,000 per square meters but Reyes did not accede to said
price.

Then Reyes confided to Traballo and the latter expressed interest in buying the said property for P5,300 per square meter but he did not have
enough amount so he looked for a partner. Despite of the impending expiration of the redemption period of the foreclosed mortgaged property
and the deal between Reyes and Traballo was not yet formally concluded, Reyes decided to approach Riviera and requested Atty. Alinea to
approach Angeles and find out if the latter was still interested in buying the subject property and ask him to raise his offer for the purchase of
the said property a little higher but Riviera said that his offer is P5,000 per square meter so Reyes did not agree.

Cypress and Trading Corporation, were able to come up with the amount sufficient to cover the redemption money, with which Reyes paid to
the Prudential Bank to redeem the subject property and Reyes executed a Deed of Absolute Sale covering the subject property. Cypress and
Cornhill mortgaged the subject property to Urban Development Bank. Riviera sought from Reyes, Cypress and Cornhill a resale of the subject
property to it claiming that its right of first refusal under the lease contract was violated but his attempts were unsuccessful. Riviera filed the suit
to compel Reyes, Cypress, Cornhill and Urban Development Bank to transfer the disputed title to the land in favor of Riviera upon its payment of
the price paid by Cypress and Cornhill.

Issue:

Whether or not petitioner can still exercise his “right of first refusal”.

UB COL LIPA SALES DIGEST Jodel Cris Balita

Held:

No. The held that in order to have full compliance with the contractual right granting petitioner the first option to purchase, the sale of
the properties for the price for which they were finally sold to a third person should have likewise been first offered to the former. Further, there
should be identity of terms and conditions to be offered to the buyer holding a right of first refusal if such right is not to be rendered illusory.
Lastly, the basis of the right of first refusal must be the current offer to sell of the seller or offer to purchase of any prospective buyer. Thus, the
prevailing doctrine is that a right of first refusal means identity of terms and conditions to be offered to the lessee and all other prospective
buyers and a contract of sale entered into in violation of a right of first refusal of another person, while valid, is rescissible.

UB COL LIPA SALES DIGEST Jodel Cris Balita

MACION vs. GUIANI as Presiding Judge of RTC and DE LA VIDA INSTITUTE represented by its president LANZADERAS

G.R. No. 106837 August 4, 1993

FACTS:

Macion and Lanzaderas entered into a contract to sell under which, Lanzaderas assured Macion that they would buy the 2 Parcels of
Land on or before July 31, 1991 in the amount of P1,750,000.00. In the meantime, Macion surrendered the physical possession of the two lots to
Lanzaderas who promptly built an edifice worth P800,000.00.

But on July 31, 1991, the sale did not materialize.

Macion filed a complaint for unlawful detainer against Lanzaderas.

While Lanzaderas filed a complaint for reformation of the contract to sell

The parties then entered into a compromise agreement which stipulated among others that Macion would give Lanzaderas five (5) months from
Feb 6,1992 to raise the amount of P2,060,000.00; that in the event of failure to raise the said amount Lanzaderas would vacate the premises
immediately.

The Board of Trustees of De La Vida College passed thereafter a resolution expressing full support to the said agreement entered into between
the parties.

Subsequently, the trial court approved the compromise agreement dated February 6, 1992.

On May 19,20, and 26, Lanzaderas wrote a letters requesting Macion to execute with them a contract to sell in their favor.

Lanzaderas filed with the trial court an urgent motion for an order directing Macion to execute a contract to sell in private respondent's favor in
accordance with paragraph 7 of the compromise agreement.

On July 8, 1992, Macion filed a motion for execution of judgment alleging that after a lapse of five (5) months from February 6, 1992, that
Lanzaderas has failed to settle their obligations with them.

Judge Guiani denied the motion for execution and directed Macion to execute the required contract to sell in favor of Lanzaderas. Judge Guiani
opined that the proximate cause of Lanzaderas's failure to comply with the compromise agreement was the refusal of Macion to execute a
contract to sell as required under the agreement.

UB COL LIPA SALES DIGEST Jodel Cris Balita

ISSUE:

W/N Judge Giani committed grave abuse of discretion in ordering petitioner to execute a contract to sell in favor of Lanzaderas

HELD:

No.

From Par 7 of the Compromise Agreement, it is clear that the seller is obliged to execute a Deed of Sale upon payment of the full price of P2.06
million. Thereafter, Macion would turn over to Lanzaderas the TCT's.

That even prior to the Compromise Agreement there was already a Contract to sell which was eventually superseded by the compromise
agreement.

The Compromise Agreement gave Lanzaderas the power to demand the execution of a contract of sale within Five Months from Feb 6,1992
upon full payment of purchase price.

That by sending the 3 letters dated May 19,20, and 21, Lanzaderas had in fact demanded the execution of a contract to sell.

That Where the seller promised to execute a deed of absolute sale upon completing payment of the price, it is a contract to sell.

That the sale is still in the executory stage since the passing of title is subject to a suspensive condition, namely, that if Lanzaderas is able to
secure the needed funds to be used in the purchased of the two (2) lots owned by Macion.

A mere executory sale, one where the sellers merely promise to transfer the property at some future date, or where some conditions have to be
fulfilled before the contract is converted from an executory to an executed one, does not pass ownership over the real estate being sold.

An accepted bilateral promise to buy and sell is in a sense similar to, but not exactly the same, as a perfected contract of sale because there is
already a meeting of minds upon the thing which is the object of the contract and upon the price. But a contract of sale is consummated only
upon the delivery and payment.

It cannot be 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 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 respective undertakings.

THEREFORE, IT WAS PROPER FOR JUDGE GUIANI TO ORDER THE EXECUTION OF THE CONTRACT TO SELL.

UB COL LIPA SALES DIGEST Jodel Cris Balita