ANTONIO ENRIQUEZ DE LA CAVADA, plaintiff-appellee,

vs. Its intent to dispose the subject property became more evident
ANTONIO DIAZ, defendant-appellant. when it sent a letter to Carcellar mentioning of the fact that, "said
property is now for sale to the general public”.
Facts:
Plaintiff Antonio dela Cavada and defendant Antonio Diaz made a (2) Buyer- Carcellar
Contract of Option where the latter promised to sell to the former his
Hacienda de Pitogo located in Tayabas together with its coconut and Petitioner's determination to purchase said property is equally
nipa palm trees for 30 and 70 thousand pesos respectively. indubitable. He introduced permanent improvements on the leased
property, demonstrating his intent to acquire dominion in a year's
The contract provides that Dela Cavada has the right to purchase the time.
land until after Diaz acquires its Torrens title.
he even secured an P8 Million loan because he was planning to
Diaz applied two land titles for the hacienda dividing it in two parts. pay the purchase price in one single payment, instead of paying in
After the titles have been issued, Diaz offers to sell to Dela Cavada installment.
only a portion of the entire hacienda.
In our view, petitioner's letter of January 15, 1986 and his formal
exercise of the option on February 18, 1986 were within a reasonable
Issue:
time-frame consistent with periods given and the known intent of the
Won the contract is an optional contract? NO
parties to the agreement dated January 10, 1985. A contrary view
would be harsh and inequituous indeed.
WON Diaz is obliged to sell to Dela Cavada the entire hacienda and
not only a part of it. NO
JMA HOUSE INCORPORATED, Petitioner,
Court:
vs.
(1) It is an absolute promise to sell a definite parcel of land for a
S TA . M O N I C A I N D U S T R I A L a n d D E V E L O P M E N T
fixed price upon definite condition.
CORPORATION and A. GUERRERO DEVELOPMENT
CORPORATION, Respondents.
In the present case, the defendant promised to convey the land in
question to the plaintiff as soon as the same could be registered. Facts:
The plaintiff promised to pay to the defendant P70,000 therefor in
JMA redeemed from Pioneer Savings and Loan Association, Inc. a
accordance with the terms of their contract. The plaintiff stood
property which was foreclosed extrajudicially due to its failure to pay
ready to comply with his part of the contract. The defendant, even
its loan to the latter. It offered to borrow from Sta. Monica Industrial
though he had obtained a registered title to said parcel of land,
and Development Corporation (Sta. Monica) the amount of
refused to comply with his promise.
₱2,300,000.00.
The defendant promised to convey to the plaintiff the land in During the negotiations between JMA and Sta. Monica, the agreed that
question as soon as the same was registered under the Torrens the latter would purchase the property for 4.1m. They also agreed that
system, and the plaintiff promised to pay to the defendant the sum a supplement deed giving JMA the option to repurchase the property
of P70,000, under the conditions named, upon the happening of within a period of two years be executed.
that event. The contract was not, in fact, what is generally
In turn, JMA was able to remit ₱2,300,000.00 to Pioneer.
known as a "contract of option."
JMA executed a Deed of Absolute Sale over the lot, including the
buildings thereon, in favor of Sta. Monica. As agreed upon by the
JOSE RAMON CARCELLER, petitioner,
parties, they also executed an Option to Buy contract in which Sta.
vs.
Monica gave JMA the option to buy the property for ₱4,100,000.00
COURT OF APPEALS and STATE INVESTMENT HOUSES,
within one (1) year from the execution of the Deed Of Absolute Sale
INC., respondents.
on or before July 1, 1987, with a "grace period" of one year
Facts: immediately upon the expiration thereof. In case JMA availed of such
extension, JMA would be obligated to pay an additional amount
Respondent State Investment Houses Inc. has a parcel of land in Cebu
equivalent to 3.5% a month as liquidated damages, until the whole
City leased to petitioner Jose Ramon Caceller with an option to
amount is fully paid and/or the option is finally exercised.
purchase valid until the expiration of the lease contract.
As agreed upon between JMA and Sta. Monica, the latter thenceforth
3weeks before the expiration of the contract, petitioner made a request paid the realty taxes on the property.14 JMA continued collecting the
to the respondent for the extension of the lease contact for 6 mos. so he rentals from the tenants of the buildings with the knowledge and
can have an ample time to raise enough funds to avail of the option of conformity of Sta. Monica.
sale.
In January 26, 1988, Sta. Monica informed JMA and the tenants of the
buildings in the property that due to the failure of JMA to "repurchase"
Respondent denied the request and a month after the expiration of the
the property, it had been sold to AGCOR.
contract, petitioner made known his intention to buy the property.
Despite the sale of the property to AGCOR, Sta. Monica received, on
Respondent reiterated the provisions in the contract and asked the June 30, 1988, five checks from JMA the total amount of
petitioner to leave the property, which will now be offered to the ₱3,000,000.00. However, the checks were dishonored by the drawee
general public for a higher price. Bank.
JMA’s contention:
Issue:
WON can still exercise his option of sale even after the time to do such JMA averred that it had a right to repurchase the property under the
has already lapsed. terms of the Option to Buy Agreement dated June 30, 1986
Sta. Monica’s contention:
Court: YES.
petitioner's letter to SIHI stating his request to extend the lease The alleged "Option to Buy" is not supported by valuable
contract was fair notice to the latter of the former's intent to consideration and, therefore, is unenforceable.
exercise the option.
Issue:
Analysis and construction, however, should not be limited to the words
WON there’s a consideration to support the option to buy contract.
used in the contract, as they may not accurately reflect the parties' true
intent. Court: Yes.
The court looked into the intention of the parties. The option granted to the petitioner has a consideration distinct from
the purchase price of the property for ₱4,100,000.00.
(1) Seller - SIHI
Consideration is "the why of the contract, the essential reason which
moves the contracting parties to enter into the contract."93 The
it is undeniable that SIHI really intended to dispose of said leased
consideration for a contract, including an option, need not be money or
property as shown by the fact that it was actually experiencing
anything of monetary value but may consist of either a benefit or a
financial difficulties hence it was compelled to dispose some of its
detriment to the promisor. There is sufficient consideration for a
assets, among which is the subject property in this case, to
promise if there is any benefit to the promisee or any detriment to the
generate sufficient funds to augment its badly depleted financial
promisor.
resources — This then brought about the execution of the lease
contract with option to purchase between SIHI and the petitioner.
As gleaned from the Option to Buy itself, the agreement was executed land at P70.00 per square meter "which was greatly higher than
by the parties because of the Deed of Absolute Sale they had executed the actual reasonable prevailing price."
on the same occasion.
the first part covered the statement on the sale of the 300 square
The parties agreed to execute a Deed of Absolute Sale, on the meter portion of the lot to Spouses Villamor at the price of P70.00
condition that they execute an Option to Buy, giving petitioner the per square meter "which was higher than the actual reasonable
privilege to repurchase the property within a period of one year, with a prevailing value of the lands in that place at that time (of sale)."
grace period of one year immediately upon the expiration of the The second part stated that the only reason why the Villamor
original one year period. As admitted by Rosita Alberto, the two spouses agreed to buy the said lot at a much higher price is
deeds complemented each other, the Option to Buy being a because the vendor (Reyeses) also agreed to sell to the Villamors
supplement to the Deed of Absolute Sale. In fine, petitioner would the other half-portion of 300 square meters of the land.
not have agreed to sell the property to respondent Sta. Monica
But, the "deed of option" went on and stated that the sale of
unless petitioner was given the option to repurchase the property
the other half would be made "whenever the need of such sale
for the same amount.
arises, either on our (Reyeses) part or on the part of the
However, petitioner failed to exercise its option and notify respondent Spouses Julio Villamor and Marina V. Villamor.
Sta. Monica of its acceptance of the latter’s offer within the timeline
It appears that while the option to buy was granted to the
under the Option to Buy.
Villamors, the Reyeses were likewise granted an option to sell. In
Option to buy was for a period of 1 yr or until July 1, 197 with a 1 yr other words, it was not only the Villamors who were granted an
grace period. In case JMA availed of such extension, it would be option to buy for which they paid a consideration. The Reyeses as
obligated to pay and additional amount equivalent to 3.5% a month as well were granted an option to sell should the need for such sale on
liquidated damages. their part arise.
Petitioner failed to exercise its option on or before June 30, 1987. Since there was, between the parties, a meeting of minds upon the
Neither did petitioner exercise its option and pay the liquidated object and the price, there was already a perfected contract of sale.
damages to respondent Sta. Monica from July 1, 1987 up to June What was, however, left to be done was for either party to demand
1988. from the other their respective undertakings under the contract.
The Option to Buy provides that acceptance must be accompanied by However, the Deed of Option did not provide for the period within
payment of liquidated damages; such payment is a condition precedent which the parties may demand the performance of their respective
to the exercise of the right to buy, and the money must be tendered or undertakings in the instrument.
offered. A mere notice of an intention to accept, or of an acceptance
Under Article 1144 (1) of the Civil Code, actions upon written contract
without such payment or tender, does not constitute a valid
must be brought within ten (10) years. The Deed of Option was
compliance.97 Respondent Sta. Monica’s acceptance of the five checks
executed on November 11, 1971. The acceptance, as already
in the total amount of ₱3,000,000.00 and the cash amount of
mentioned, was also accepted in the same instrument. The
₱57,000.00 on June 30, 1988, as partial payment of petitioner’s
complaint in this case was filed by the petitioners on July 13, 1987,
account did not resuscitate the right which petitioner had by then
seventeen (17) years from the time of the execution of the contract.
already lost, particularly since the property had already been sold and
Hence, the right of action had prescribed.
titled to AGCOR.

EQUATORIAL REALTY DEVELOPMENT, INC. & CARMELO

SPOUSES JULIO D. VILLAMOR AND MARINA VILLAMOR,
& BAUERMANN, INC., petitioners,
petitioners,
vs.
vs.
MAYFAIR THEATER, INC., respondent.
THE HON. COURT OF APPEALS AND SPOUSES MACARIA
LABINGISA REYES AND ROBERTO REYES, respondents. Facts:
Facts: Carmelo owned a parcel of land, together with two 2-storey buildings
constructed thereon
Macaria Labingisa Reyes was the owner of a 600-square meter lot. She
sold a portion of 300 square meters of the lot to the Spouses Villamor. Carmelo entered into a contract of lease with Mayfair whereby the
latter a portion of Carmelo;s propety for use by Mayfair as a motion
Macaria executed a "Deed of Option" in favor of Villamor in which
picture theater and for a term of twenty (20) years. Mayfair thereafter
the remaining 300 square meter portion of the lot would be sold to
constructed on the leased property a movie house known as "Maxim
Villamor under the conditions stated therein.
Theatre.”
It is stated under the contract that:
Mayfair entered into a second contract of lease with Carmelo for the
(1) the price would be P70.00 per sq. meter, which was greatly higher lease of another portion of Carmelo's property for similar use as a
than the actual reasonable prevailing value of lands. movie theater and for a similar term of twenty (20) years. Mayfair put
up another movie house known as "Miramar Theatre"
(2) the only reason why the Spouses agreed to buy the said lot at
the above-stated price of about P70.00 per square meter, is Both contracts of lease provides (sic) identically worded paragraph 8,
because the Reyeses have agreed to sell and convey to them the which reads:
remaining one-half portion still owned by the reyeses,
That if the LESSOR should desire to sell the leased premises, the
whenever the need of such sale arises, either on the part of the
LESSEE shall be given 30-days exclusive option to purchase the same.
reyeses or on their part at the same price of P70.00 per square
meter, In the event, however, that the leased premises is sold to someone
other than the LESSEE, the LESSOR is bound and obligated, as it
The option offered by the Reyeses had been accepted by the the
hereby binds and obligates itself, to stipulate in the Deed of Sale
spouses, the promise, in the same document.
hereof that the purchaser shall recognize this lease and be bound by all
According to Macaria, when her husband, Roberto Reyes, retired in the terms and conditions thereof.
1984, they offered to repurchase the lot sold by them to the Villamor
Carmelo informed Mayfair that it was desirous of selling the entire
spouses but Marina Villamor refused and reminded them instead that
property.
the Deed of Option in fact gave them the option to purchase the
remaining portion of the lot. Carmelo told Mayfair that a certain Jose Araneta was offering to buy
the whole property for $1,200,000.
The Villamors, on the other hand, claimed that they had expressed
their desire to purchase the remaining 300 square meter portion of the On August 19, 1974 Carmelo asked Mayfair if the latter was willing to
lot but the Reyeses had been ignoring them. buy the property for Six to Seven Million Pesos.
Issue: On September 18, 1974, Mayfair sent another letter to Carmelo
purporting to express interest in acquiring the entire building and other
WON the option is void for lack of consideration.
improvements if the price is reasonable.
Court: NO
However, Carmelo sold the entire property to Equatorial for 11.3M
Consideration is "the why of the contracts, the essential reason which
Mayfair instituted the action a quo for specific performance and
moves the contracting parties to enter into the contract."
annulment of the sale of the leased premises to Equatorial
Its shows that the prevailing reasonable price of the same lot in
Carmelo’s contention:
1971 was P18.00 per sqm.
the option to purchase invoked by Mayfair is null and void for lack of
The cause or the impelling reason on the part of private
consideration
respondent executing the deed of option is the petitioner's having
agreed to buy the 300 square meter portion of private respondents' Issue:
(1) Won paragraph 8 provides for an option contract Court: Yes
(2) Won the petitioners acted in bad faith to render Paragraph 8 In order to have full compliance with the contractual right granting
“inutile". petitioner the first option to purchase, the sale of the properties for the
amount of P9 million, the price for which they were finally sold to
Court:
respondent Raymundo, should have likewise been first offered to
(1) No. Paragraph 8 provides for a right of first refusal petitioner.
The court differentiated an option contract and a right of first
The basis of the right of first refusal* must be the current offer to
refusal.
sell of the seller or offer to purchase of any prospective buyer.
The option clause in a contract, in order to be valid and Only after the optionee fails to exercise its right of first priority under
enforceable, must, among other things, indicate the definite the same terms and within the period contemplated, could the owner
price at which the person granting the option, is willing to sell. validly offer to sell the property to a third person, again, under the
same terms as offered to the optionee.
As distinguished from an option contract, in a right of first refusal,
Re: Santos’ contention that the assignment of the lease contract to
while the object might be made determinate, the terms, including
petitioner did not include the option to purchase.
the price, are yet to be firmed up. The price can only be determined
at the time the option to buy is exercised. The provisions of the deeds of assignment with regard to matters
assigned were very clear. Under the first assignment between
An option contract/clause is a separate and distinct contract from Frederick Chua as assignor and Lee Ching Bing as assignee, it was
that which the parties may enter into upon the consummation of the expressly stated that:
option. It must be supported by consideration.
. . . . the ASSIGNOR hereby CEDES,
TRANSFERS and ASSIGNS to herein
In the instant case, the right of first refusal is an integral part of the
ASSIGNEE, all his rights, interest and
contracts of lease. The consideration is built into the reciprocal
participation over said premises afore-described, . .
obligations of the parties.
. . 20 (emphasis supplied)
The consideration for the lease includes the consideration for the And under the subsequent assignment executed between Lee Ching
right of first refusal. Bing as assignor and the petitioner, represented by its Vice President
Vicenta Lo Chiong, as assignee, it was likewise expressly stipulated
that;
(2) Yes.
. . . . the ASSIGNOR hereby sells, transfers and
It appears that there was an exchange of letters evidencing the assigns all his rights, interest and participation
offer and counter-offers made by both parties. over said leased premises, . . . . 21 (emphasis
supplied)
However while there was a series of exchanges of letters
One of such rights included in the contract of lease and, therefore, in
evidencing the offer and counter-offers between the parties,
the assignments of rights was the lessee's right of first option or
Carmelo abandoned the negotiations without giving Mayfair
priority to buy the properties subject of the lease, as provided in
full opportunity to negotiate within the 30-day period.
paragraph 9 of the assigned lease contract. The deed of assignment
need not be very specific as to which rights and obligations were
While it initially recognized Mayfair's right of first refusal,
passed on to the assignee. It is understood in the general provision
Carmelo acted in bad faith when it sold the entire property to
aforequoted that all specific rights and obligations contained in the
Equatorial without informing Mayfair.
contract of lease are those referred to as being assigned.
*Carmelo failed to confer to Mayfair every opportunity to
negotiate within the 30-day stipulated period*
ANG YU ASUNCION, ARTHUR GO AND KEH TIONG,
petitioners,
vs.
PARAÑAQUE KINGS ENTERPRISES, INCORPORATED, THE HON. COURT OF APPEALS and BUEN REALTY
petitioner, DEVELOPMENT CORPORATION, respondents.
vs.
Facts:
COURT OF APPEALS, CATALINA L. SANTOS, represented by
her attorney-in-fact, LUZ B. PROTACIO, and DAVID A. Ang Yu, Go and Keh Tiong are lessees of residential and commercial
RAYMUNDO, respondents. spaces owned by Bobby Cu Unjieng since 1935.
Facts: Buen Realty informed Ang yu that they are offering to sell the
premises and are giving them priority to acquire the same;
Catalina L. Santos is the owner of eight (8) parcels of land.
That during the negotiations, Bobby Cu Unjieng offered a price of P6-
Parañaque Kings Enterprises, by virtue of a deed of assignment,
million while Ang Yu made a counter offer of P5-million;
acquired from Lee Ching Bing all the rights and interest in the leased
property. Ang yu wrote to Bobby Cu Unjieng asking that they specify the terms
and conditions of the offer to sell;
Under paragraph 9 of the contract of lease between Santos and
Parañaque Kings, the latter was granted the "first option or priority" to When they did not receive any reply from Bobby Cu Unjieng, they
purchase the leased properties in case Santos decided to sell. sent another letter dated with the same request.
However on September 21, 1988, Santos sold said properties to Since Bobby Cu failed to specify the terms and conditions of the offer
Respondent Raymundo for 5M without first offering these to to sell and because of information received that Bobby Cu were about
petitioner. to sell the property, Ang yu et al were compelled to file the complaint
to compel defendants to sell the property to them.
Subsequently Santos repurchased the properties from Raymundo after
Parañaque Kings complained of the violation of Par. 9 of the same RE: first case filed by Ang Yu et al
contract.
RTC- there was no contract of sale at all since Bobby Cu’s offer to
Thereafter, she offered to sell the properties to petitioner for P15 sell was never accepted by the Ang Yu for the reason that the
million, which petitioner, however, rejected because of the "ridiculous" parties did not agree upon the terms and conditions of the
price. proposed sale.
Then Santos finally resold the properties to respondent Raymundo for CA- affirmed
only P9 million without first offering them to petitioner at such price.
SC- denied the appeal
RTC and CA - in favor of Santos bec the latter had actually offered the
While the case was pending in SC the Cu Unjieng spouses executed a
subject properties for sale to Parañque Kings prior to the final sale in
Deed of Sale transferring the property in question to herein petitioner
favor of Raymundo, but that the offer was rejected.
Buen Realty and Development Corporation.
According to said courts, with such offer, Santos had verily complied Buen Realty as the new owner of the subject property wrote a letter to
with her obligation to grant the right of first refusal to petitioner. the lessees demanding that the latter vacate the premises.
Issue: RTC- ordered the Cu Unjiengs to execute the necessary Deed of Sale
of the property in litigation in favor of plaintiffs Ang Yu Asuncion et al
WON there’s a breach of the contractual right of “first option or
for 15m in recognition of their right of first refusal.
priority to buy”
The court also set aside the title issued to Buen Realty Corporation for Court of Appeals and the Regional Trial Court relied on Article 1403
having been executed in bad faith. On September 22, 1991, the Judge of the New Civil Code, more specifically the provisions on the statute
issued a writ of execution. of frauds
CA- reversed RTC’s ruling Issue:
Issue: (1) Whether or not a right of first refusal akin to "an agreement for the
leasing of a longer period than one year, or for the sale of real
WON Buen Realty can be bound by the writ of execution
property or of an interest therein" as contemplated by Article 1403,
Court: NO. par. 2(e) of the New Civil Code.
The so-called "right of first refusal” cannot be deemed a perfected (2) Whether or not respondents have satisfactorily proven their right of
contract of sale under Article 1458 of the Civil Code. first refusal over the property subject of the Deed of Absolute Sale
between petitioner Rosencor and Eufrocina de Leon.
An option or an offer would require, among other things,10 a clear
certainty on both the object and the cause or consideration of the (3) Whether or not Deed of Absolute Sale dated September 4, 1990
envisioned contract. In a right of first refusal, while the object between Rosencor and Eufrocina de Leon should be rescinded
might be made determinate, the exercise of the right, however,
Court:
would be dependent not only on the grantor's eventual intention to
enter into a binding juridical relation with another but also on (1) NO
terms, including the price, that obviously are yet to be later firmed
up. Statute of Frauds:
Prior thereto, it can at best be so described as merely belonging to a
The term "statute of frauds" is descriptive of statutes which require
class of preparatory juridical relations governed not by contracts (since
certain classes of contracts to be in writing. This statute does not
the essential elements to establish the vinculum juris would still be
deprive the parties of the right to contract with respect to the
indefinite and inconclusive) but by, among other laws of general
matters therein involved, but merely regulates the formalities of the
application, the pertinent scattered provisions of the Civil Code on
contract necessary to render it enforceable.
human conduct.
Ang Yu’s remedy is not a writ of execution, but an action for *violation of SoF would render a contract unenforceable*
damages.
Right of first refusal is not among those listed as unenforceable
The final judgment in the Civil Case earlier decided by the RTC has
under the SoF.
merely accorded a "right of first refusal" in favor of petitioners.
Nirecognize lang yung right of first refusal ni Ang yu. Wala pang
The application of Article 1403, par. 2(e) of the New Civil Code
contract of sale in this case since the parties failed to agree upon the
presupposes the existence of a perfected, albeit unwritten, contract
terms and conditions of the proposed sale.
of sale. A right of first refusal is not by any means a perfected
The breach of “right of first refusal” cannot justify contract of sale of real property. At best, it is a contractual
correspondingly an issuance of a writ of execution under a grant, not of the sale of the real property involved, but of the
judgment that merely recognizes its existence. right of first refusal over the property sought to be sold.
The remedy is not a writ of execution on the judgment, since there
It is thus evident that the statute of frauds does not contemplate
is none to execute, but an action for damages in a proper forum for
cases involving a right of first refusal. As such, a right of first
the purpose.
refusal need not be written to be enforceable and may be proven by
oral evidence.
ROSENCOR DEVELOPMENT CORPORATION and RENE (2) YES
JOAQUIN, petitioners,
vs. Respondents have adequately proven the existence of their right of
PATERNO INQUING, IRENE GUILLERMO, FEDERICO first refusal.
BANTUGAN, FERNANDO MAGBANUA and LIZZA
TIANGCO, respondents. Respondents presented a letter dated October 9, 1990 where
Eufrocina de Leon, the representative of the heirs of the spouses
Facts:
Tiangco, informed them that they had received an offer to buy the
Inquing et al are the lessees since 1971 of a two-story residential disputed property for P2,000,000.00 and offered to sell the same to
apartment owned by spouses Faustino and Cresencia Tiangco. the respondents at the same price if they were interested.
The lease was not covered by any contract. They were allegedly (3) NO
verbally granted by the the spouses the pre-emptive right to
purchase the property if ever they decide to sell the same. Although a contract of sale entered into in violation of a right
of first refusal of another person, while valid, is rescissible,
Upon the death of the spouses the management of the property was
Inquing et al failed to prove that Roscenor acted in bad faith.
adjudicated to their heirs who were represented by Eufrocina de Leon.
Inquing et al were allegedly promised the same pre-emptive right by
Under Article 1385, rescission shall not take place "when the
the heirs of Tiangcos.
things which are the object of the contract are legally in the
They received a letter from Eufrocina de Leon offering to sell to them possession of third persons who did not act in bad faith."
the property they were leasing for P2,000,000.00
Good faith is always presumed unless contrary evidence is
The lessees offered to buy the property from de Leon for the amount of
adduced.31 A purchaser in good faith is one who buys the property
P1,000,000.00. However no answer was given by de Leon as to their
of another without notice that some other person has a right or
offer to buy the property. However, Rene Joaquin(Vice pres of
interest in such a property and pays a full and fair price at the time
Risencor) came to the leased premises introducing himself as its new
of the purchase or before he has notice of the claim or interest of
owner.
some other person in the property.
They received a letter from de Leon advising them that the heirs of the
late spouses Tiangcos have already sold the property to Rosencor. The rule on constructive notice would be inapplicable as it is
They were also being made to vacat the premises.(pinapademolish din undisputed that the right of first refusal was an oral one and
pala yung property) that the same was never reduced to writing, much less
registered with the Registry of Deeds. In fact, even the lease
They found out that the sale between De Leon and Rene Joaquin/
contract by which respondents derive their right to possess the
Rosencor took place in September 4, 1990 while de Leon made the
property involved was an oral one.
offer to them only in October 1990 and that the property was sold
only for P726,000.00.
Inquing et al failed to present any evidence that prior to the sale of
RTC- in favor of Rosencor. The right of first refusal relied upon by the property on September 4, 1990, petitioners were aware or had
petitioners was not reduced to writing and as such, is notice of the oral right of first refusal.
unenforceable by virtue Art 1403 - statute of frauds.
This does not mean however that respondents are left without any
CA- reversed RTC. Respondents had duly proven the same by
remedy for the unjustified violation of their right of first refusal.
reason of petitioners’ waiver of the protection of the statute by
Their remedy however is not an action for the rescission of the
reason of their failure to object to the presentation of oral evidence
Deed of Absolute Sale but an action for damages against the
of the said right.
heirs of the spouses Tiangco for the unjustified disregard of their
right of first refusal.
MARTA C. ORTEGA, plaintiff-appellant,
vs.
DANIEL LEONARDO, defendant-appellee.
Facts:
plaintiff occupied a parcel of land.
when the administration and disposition of the said Lot I were
assigned by the Government to the Rural Progress Administration2
Ortega asserted her right thereto (as occupant) for purposes of
purchase; that Leonardo also asserted a similar right.
Leonardo asked Ortega to desist from pressing her claim and definitely
promised that if and when he succeeded in getting title to Lot I3 , he
would sell to her a portion thereof with an area of 55.60 square meters.
In return, Ortega would pay for surveying and subdivision of the lot
and should continue holding the lot by paying a monthly rental of P10
until said portion has been segregated and the purchase price fully
paid.
Ortega accepted the offer.
Leonardo finally acquired title thereto;
Relying upon their agreement, Ortega performed his obligation —
paying for the surveying and subdivision of the land.
She also had her son’s house remodelled and it extended over said lot.
Ortega regularly paid him the monthly rental of P10.00;
that after the plans of subdivision and segregation of the lot had been
approved by the Bureau of Lands, Ortega tendered to Leonardo the
purchase price which the latter refused to accept, without cause or
reason.
Leonardo contends that oral agreement to sell is not enforceable that
such is in violation of the SoF
Ortega argues that the contract in question, although verbal, was
partially performed
Issue:
WN there was already partial performance on the part of the plaintiff?

Court: YES

The lower court held that partial performance of a sale contract

occurs only when part of the purchase price is paid

The court held that "Statute of Frauds" lists other acts of partial
performance, such as possession, the making of improvements,
rendition of services, payment of taxes, relinquishment of rights, etc.

Continued possession under an oral contract of sale, by one

already in possession as a tenant, has been held a sufficient part
performance, where accompanied by other acts which characterize
the continued possession and refer it to the contract of purchase.
Especially is this true where the circumstances of the case include the
making of substantial, permanent, and valuable improvements.

The making of valuable permanent improvements on the land by

the purchaser, in pursuance of the agreement and with the
knowledge of the vendor, has been said to be the strongest and the
most unequivocal act of part performance by which a verbal
contract to sell land is taken out of the statute of frauds, and is
ordinarily an important element in such part performance.
Possession by the purchaser together with his making valuable and
permanent improvements on the property which are referable
exclusively to the contract, in reliance on the contract, in the honest
belief that he has a right to make them, and with the knowledge and
consent or acquiescence of the vendor, is deemed a part performance
of the contract.
The complaint in this case described several circumstance
indicating partial performance: relinquishment of rights4
continued possession, building of improvements, tender of
payment plus the surveying of the lot at plaintiff's expense and the
payment of rentals.