VILLEGAS v CA

Facts:

The Reyes Family were the owners of the subject property, which they inherited the property from their father, Dr. Lorenzo C.
Reyes. Villegas and Sanchez were the lessees of the property since 1959. Petitioner-lessees owned the building and
improvements constructed on the property.

The Administrative Committee of the heirs of Dr. Lorenzo C. Reyes informed petitioner-lessees that the heirs have decided to
sell the property. After replying, the Administrative Committee informed petitioner-lessees of their receipt of notice of the
P4,000,000 bid price. The Administrative Committee wrote that they requested petitioner-lessees to increase their bid for the
property but the latter failed to make another offer so the heirs have decided to sell to another buyer who offered a higher
price. Nevertheless, the Administrative Committee indicated in the letter that they would wait for a reply. Petitioner-lessees
were willing to make a nominal increase to their bid price of P4,000,000 but the Administrative Committee sent a letter to
petitioner-lessees replied that they have an offer of P5 Million. A conference was held, but the parties did not come into an
agreement. Eventually, petitioner-lessees have finally accepted the asking price of P5,000,000.00, but without payment of taxes
and other costs.

However at this time, only 75% share thereof, were still interested in selling their shares. They also rejected the offer of
petitioner-lessees, as they wanted the purchase price to be net sales. Eventually, respondent-heirs sold their 75% undivided
interest in the property for P3,825,000 to Lita Sy. The other heirs sold the remaining 25% portion of the property to Villegas.

Petitioner-lessees filed an action against respondent-heirs and Spouses Sy which the RTC dismissed. This was affirmed by the
CA. During this period, the Spouses Sy filed a complaint for Specific Performance against the heirs of Villegas, which the RTC
granted. This was affirmed by the CA.

Issue:

1. Whether the contract of sale between respondent-heirs and Lita Sy violated the right of first refusal of petitioner-lessees
(relevant issue)

2. Whether Lita Sy, as co-owner of the property, validly and seasonably exercised her right to redeem the 25% undivided
interest in the property, which undivided interest the other co-owners had sold to Atanacio M. Villegas and Agripino M. Villegas

Ruling:

1. NO. A right of first refusal is a contractual grant, not of the sale of a property, but of the first priority to buy the property in
the event the owner sells the same. The exercise of the right of first refusal is dependent not only on the owner’s eventual
intention to sell the property but also on the final decision of the owner as regards the terms of the sale including the price.

When a lease contains a right of first refusal, the lessor has the legal duty to the lessee not to sell the leased property to anyone
at any price until after the lessor has made an offer to sell the property to the lessee and the lessee has failed to accept it. Only
after the lessee has failed to exercise his right of first priority could the lessor sell the property to other buyers under the same
terms and conditions offered to the lessee, or under terms and conditions more favorable to the lessor.

The records show that the heirs of Dr. Lorenzo C. Reyes did recognize the right of first refusal of petitioner-lessees over the
property. This is clear from the letter dated 19 May 1988 informing petitioner-lessees that the property they were leasing is for
sale. There was an exchange of letters between the Administrative Committee and petitioner-lessees evidencing the offer and
counter-offer of both parties.
Where a time is stated in an offer for its acceptance, the offer is terminated at the expiration of the time given for its
acceptance. The offer may also be terminated when the person to whom the offer is made either rejects the offer outright or
makes a counter-offer of his own.

The offer of P5,000,000 already lapsed when petitioner-lessees failed to accept it within the period granted. The offer was
superseded by the new offer of respondent-heirs during the conference. However, it appears from the records that no
settlement was reached between the parties during their conference. Even petitioner-lessees’ witness Miranda testified that
petitioner-lessees did not indicate their offer for the property in their letter but instead requested for a conference with all the
heirs of Dr. Lorenzo C. Reyes.

Petitioner-lessees admit that there was an ongoing negotiation for the sale of the property. Precisely, the P5,000,000 price for
the property indicated by the Administrative Committee in the letter was superseded by the subsequent offer of respondent-
heirs during the conference. Thus, the letter of petitioner-lessees is merely another counter-offer for the property in their
continuing negotiation for the property. When petitioner-lessees opted not to respond to this offer, respondent-heirs had the
right to sell the property to other buyers.

Petitioner-lessees already exercised their right of first refusal when they refused to respond to the latest offer of respondent-
heirs, which amounted to a rejection of the offer. Upon petitioner-lessees’ failure to respond to this latest offer of respondent-
heirs, the latter could validly sell the property to other buyers under the same terms and conditions offered to petitioner-
lessees.

2. NO. The records reveal that Lita Sy received the complaint for Annulment of Deed of Sale/Title, Specific Performance, and
Consignation of Rentals with Damages filed by petitioner-lessees. On the same date, Lita Sy also received together with the
complaint the Deed of Sale of the 25% portion of the property.

Lita Sy and the other defendants in that case filed their answer. In their answer, Lita Sy invoked her right to redeem the
property.

The ruled however, that there was no valid and effective offer to redeem the 25% undivided interest in the property. Although
Lita Sy invoked her right to redeem the property in the answer filed with the RTC Branch 2, she failed to consign in court the
redemption price. Well-settled is the rule that a formal offer to redeem must be accompanied by a valid tender of the
redemption price and that the filing of a judicial action, plus the consignation of the redemption price within the period of
redemption, is equivalent to a formal offer to redeem. Only by such means can the buyer become certain that the offer to
redeem is one made seriously and in good faith. A buyer can not be expected to entertain an offer of redemption without
attendant evidence that the redemptioner can, and is willing to, accomplish the repurchase immediately. While consignation of
the tendered price is not always necessary because legal redemption is not made to discharge a pre-existing debt, a valid
tender is indispensable, for the reasons already stated. Of course, consignation of the price would remove all controversy as to
the petitioner's ability to pay at the proper time.

In this case, Lita Sy failed to consign in court the redemption price when she invoked her right to redeem the 25% portion of the
property in the answer filed with the RTC Branch 2. The evidence does not show that Lita Sy ever tendered the redemption
price to the Villegas brothers. Considering that there was no tender of the redemption price, nor was there consignation of the
redemption price, we hold that there was no valid exercise of the right of redemption.

EULOGIO v SPOUSES APELES(Kim Claudio)

Facts:
In 1979, Sps. Apeles leased their house and lot in QC to Arturo Eulogio, Enrico’s father. Upon his father’s death, Enrico
succeeded as lessee. He used the property as his residence and place of business. He was engaged in buying and selling
imported cars. On 1987, Sps. Apeles and Eulogio allegedly entered into a contract of lease with an option to purchase involving
the said property. According to the contract, Atty. Luz Apeles was authorized to enter in behalf of her husband Clemente. The
contract gave Enrico before the expiration of the three-year lease period the option to purchase the property for a price not
exceeding P1.5million.

Before the expiration, Enrico exercised his option to purchase by communicating verbally and in writing to Luz but the spouses
ignored his manifestation. This prompted Enrico to seek the help of the barangay to enforce his right to purchase the subject
property, but despite several notices, the spouses failed to appear before the barangay for settlement proceedings. Hence, it
issued to Enrico a Certificate to File Action.

Enrico filed a case with the RTC claiming his right based on paragraph 5 of the Contract of Lease with Option to Purchase
vesting him the right to acquire ownership of the subject property after paying the agreed amount of consideration. He
testified for himself as the sole witness.

On the other hand, the spouses denied that Luz signed the contract claiming that the signature of Luz therein is a forgery. They
presented some specimens of her signature to show the difference. They also established by documentary evidence that Luz
was out of the country at the time of the execution of the contract. In rebuttal, Enrico said that Luz signed the contract upon
returning to the Philippines and that she took it with her and upon returning it to him, it was already notarized. The RTC ruled in
favor of Enrico.

The spouses appealed to the CA which granted their appeal. Enrico filed an MR but was denied. Hence, this case.

Issue:
W/N the option to purchase was enforceable. NO
W/N the CA erred in disturbing the factual findings of the RTC as regards the contract. NO

Held:
The Contract with an Option to Purchase remains unenforceable. An option is a contract by which the owner of the property
agrees with another person that the latter shall have the right to buy the former’s property at a fixed price within a certain
time. It is a condition offered or contract by which the owner stipulates with another that the latter shall have the right to
buy the property at a fixed price within a certain time, or under, or in compliance with certain terms and conditions; or
which gives to the owner of the property the right to sell or demand a sale.

An option is not of itself a purchase, but merely secures the privilege to buy. It is not a sale of property but a sale of the right to
purchase. It is simply a contract by which the owner of the property agrees with another person that he shall have the right to
buy his property at a fixed price within a certain time. He does not sell his land; he does not then agree to sell it; but he does
sell something, i.e., the right or privilege to buy at the election or option of the other party. Its distinguishing characteristic is
that it imposes no binding obligation on the person holding the option, aside from the consideration for the offer.

It is also sometimes called an "unaccepted offer" and is sanctioned by Article 1479 of the Civil Code:
Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the
promise is supported by a consideration distinct from the price.
The second paragraph of Article 1479 provides for the definition and consequent rights and obligations under an option
contract. For an option contract to be valid and enforceable against the promissor, there must be a separate and distinct
consideration that supports it. In this case, there was none.

As to the other issue, Enrico’s insistence on the infallibility of the findings of the RTC seriously impairs the discretion of the
appellate tribunal to make independent determination of the merits of the case appealed before it. Certainly, the Court of
Appeals cannot swallow hook, line, and sinker the factual conclusions of the trial court without crippling the very office of
review. Although we have indeed held that the factual findings of the trial courts are to be accorded great weight and respect,
they are not absolutely conclusive upon the appellate court. However, it must be noted that in an appeal via Rule 41 to the CA,
the parties may raise both questions of fact and law.