ANG YU ASUNCION v. CA decision in CA G.R. CV-21123, had now become final and executory.
Dispositive
GR No. 109125, 1994-12-02
Facts:
In 1987, a Second Amended Complaint for Specific Performance was filed by Ann Yu
Asuncion and Keh Tiong, et al., against Bobby Cu Unjieng, Rose Cu Unjieng and Jose
Tan before the Regional Trial Court alleging that:
1. plaintiffs are tenants or lessees of residential and commercial spaces owned by
defendants in Binondo, Manila.
2. On several occasions before October 9, 1986, defendants informed plaintiffs that
they are offering to sell the premises and are giving them priority to acquire the same.
3. During the negotiations, Bobby Cu Unjieng offered a price of P6-million while
plaintiffs made a counter offer of P5-million; that plaintiffs thereafter asked the
defendants to put their offer in writing to which request defendants acceded.
Since defendants failed to specify the terms and conditions of the offer to sell and
because of information received that defendants were about to sell the property,
plaintiffs were compelled to file the complaint to compel defendants to sell the
property to them.
TC found that defendants' offer to sell was never accepted by the plaintiffs for the
reason that the parties 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
CA affirmed with modification saying that there is. no meeting of the minds between
the parties concerning the sale of the property. Absent such requirement, the claim for
specific performance will not lie.
On November 15, 1990, while the case was pending consideration by SC, the Cu
Unjieng spouses executed a Deed of Sale transferring the property in question to Buen
Realty and Development Corporation for the amout of P15,000,000.00
On July 1, 1991, Buen Realty as the new owner of the subject property wrote a letter
to the lessees demanding that the latter vacate the premises.
The lessees filed a Motion for Execution 'The gist of the motion is that the Decision
of the Court dated September 21, 1990 as modified by the Court of Appeals in its
portion of said decision ordered the Deputy Sheriff to implement the writ of execution
ordering defendants to execute deed of sale of property in favor of plaitiffs Ang Yu
Asuncion, Keh Tiong and Arthur Go for the consideration of P15,000,000.
● On 04 December 1991, the appellate court, on appeal to it by private
respondent, set aside and declared without force and effect the above
questioned orders of the court a quo.
Issue:
WON Buen Realty can be held bound by the writ of execution by virtue of the notice
of lis pendens, carried over on TCT No. 195816 issued in the name of Buen Realty, at
the time of the... latter's purchase of the property on 15 November 1991 from the Cu
Unjiengs.
Held: NO
● Ang daming case doctrines sa case but here are the relevant ones
Right of first refusal is not a perfected contract of sale under Article 1458 of the
Civil Code
In the law on sales, the so-called “right of first refusal” is an innovative juridical
relation. Needless to point out, it cannot be deemed a perfected contract of sale under
Article 1458 of the Civil Code.
 Art. 1458. By the contract of sale one of the contracting parties obligates himself
to transfer the ownership and to deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent.
A contract of sale may be absolute or conditional.
In a right of first refusal, while the object might be made determinate, the exercise of
the right, however, would be dependent not only on the grantor’s eventual intention to
enter into a binding juridical relation with another but also on terms, including the
price, that obviously are yet to be later firmed up.
● Prior thereto, it can at best be so described as merely belonging to a class of
preparatory juridical relations governed not by contracts (since the essential
elements to establish the vinculum juris would still be indefinite and
inconclusive) but by, among other laws of general application, the pertinent
scattered provisions of the Civil Code on human conduct.
● Breach cannot justify correspondingly the issuance of writ of execution under
a judgment that merely recognizes its existence nor would it sanction an
action for specific performance without negating the indispensible element
of consensuality in perfected contracts.
● Art 19 of CC can however warrant a recovery for damages.
The proper action for violation of the right of first refusal is to file an action for
damages and NOT writ of execution
● The final judgment in Civil Case No. 87-41058, it must be stressed, has
merely accorded a “right of first refusal” in favor of petitioners (Ang Yu et.
al). The consequence of such a declaration entails no more than what has
heretofore been said.
● In fine, if, as it is here so conveyed to us, petitioners are aggrieved by the
failure of private respondents to honor the right of first refusal, the remedy is
not a writ of execution on the judgment, since there is none to execute, but
an action for damages in a proper forum for the purpose.
Unconditional mutual promise to buy vs. Accepted unilateral promise
● An 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.
● An accepted unilateral promise which specifies the thing to be sold and the
price to be paid, 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, and in sales, it conforms with the
second paragraph of Article 1479 of the Civil Code, viz:
● Observe, however, that the option is not the contract of sale itself. The
optionee has the right, but not the obligation, to buy. Once the option is
exercised timely, i.e., the offer is accepted before a breach of the option, a
bilateral promise to sell and to buy ensues and both parties are then
reciprocally bound to comply with their respective undertakings.
Buen Realty cannot be ousted from the ownership and possession of the property
● Furthermore, whether private respondent Buen Realty Development
Corporation, the alleged purchaser of the property, has acted in good faith or
bad faith and whether or not it should, in any case, be considered bound to
respect the registration of the lis pendens in Civil Case No. 87-41058 are
matters that must be independently addressed in appropriate proceedings.
Buen Realty, not having been impleaded in Civil Case No. 87-41058, cannot
be held subject to the writ of execution issued by respondent Judge, let alone
ousted from the ownership and possession of the property, without first being
duly afforded its day in court.
Equatorial Realty v Mayfair Theater
G.R. No. 106063
November 21, 1996
FACTS:
● Carmelo (Petitioner) owned a 2-storey bldg in Recto, Manila. In 1967 and
1969, he entered into 2 separate CONTRACTS OF LEASE with Mayfair for
the lease of 2 portions of the the bldg which the latter used as a motion picture
theater known as MAXIM and MIRAMAR THEATER. Both lease contracts
contained an identically worded paragraph 8 which reads:
―If the LESSOR should desire to sell the leased premises, the
LESSEE shall be given 30-days exclusive option to purchase the
same.
In the event, however, that the leased premises is sold to someone
other than the LESSEE, the LESSOR is bound and obligated, as it
hereby binds and obligates itself, to stipulate in the Deed of Sale
hereof that the purchaser shall recognize this lease and be bound by
all the terms and conditions thereof.‖
● In 1974 Carmelo informed Mayfair that they wanted to sell the entire property
(and that a certain JOSE ARANETA was offering to buy the whole property
for 1.2M USD. They also asked Mayfair if they wanted to buy the property
for P6-7M.
● Mayfair replied, stating Par. 8 of their contract and communicating his
willingness to purchase the entire property. Carmelo did not reply.
● In 1978, Carmelo sold the property to Equitorial or P11.3M. This prompted
Mayfair to file a case for specific performance and annulment of the sale.
RTC
● Ruled in favor of Carmelo stating, among other things, that paragraph 8 of
the contract is an option clause (under Art 1324) which is not supported by a
separate consideration.
● Under Art 1352, Contracts without cause or with unlawful cause, produce no
effect whatever. The cause is unlawful if it is contrary to law, morals, good
custom, public order or public policy. Therefore contracts without
consideration produce no effect.
CA
● Reversed the RTC saying that paragraph 8 is NOT an option contract/clause
under 1324 but a right of first refusal under 1479, which does not need a
separate distinct consideration.
ISSUE:
WoN paragraph 8 is an option contract/ clause which needs a separate consideration.
RATIO:
● NO, it is a right of first refusal.
● Article 1324 speaks of an "offer" made by an offeror which the offeree may
or may not accept within a certain period.
○ Under this article, the offer may be withdrawn by the offeror before
the expiration of the period and while the offeree has not yet
accepted the offer.
○ However, the offer cannot be withdrawn by the offeror within the
period if a consideration has been promised or given by the offeree
in exchange for the privilege of being given that period within which
to accept the offer.
○ The consideration is distinct from the price which is part of the offer.
The contract that arises is known as option.
○ In the case of Beaumont the SC, defined an option as follows: "A
contract by virtue of which A, in consideration of the payment of a
certain sum to B, acquires the privilege of buying from or selling to
B, certain securities or properties within a limited time at a specified
price."
● Article 1479, second paragraph, on the other hand, contemplates of an
"accepted unilateral promise to buy or to sell a determinate thing for a price
within (which) is binding upon the promisee if the promise is supported by a
consideration distinct from the price."
○ That "unilateral promise to buy or to sell a determinate thing for a
price certain" is called an offer. An "offer", in laws, is a proposal to
enter into a contract.
● Based on the foregoing discussion, it is evident that the provision granting
Mayfair "30-days exclusive option to purchase" the leased premises is NOT
AN OPTION. Although the provision is certain as to the object (the sale of
the leased premises) the price for which the object is to be sold is not stated
in the provision.
○ Otherwise stated, the questioned stipulation is not by itself, an
"option" or the "offer to sell" because the clause does not specify the
price for the subject property.
● Although the provision giving Mayfair "30-days exclusive option to
purchase" cannot be legally categorized as an option, it is, nevertheless, a
valid and binding stipulation. What the trial court failed to appreciate was the
intention of the parties behind the questioned proviso.
● The provision in question is not of the pro-forma type customarily found in a
contract of lease. Even appellees have recognized that the stipulation was
incorporated in the two Contracts of Lease at the initiative and behest of
Mayfair.
● Evidently, the stipulation was intended to benefit and protect Mayfair in its
rights as lessee in case Carmelo should decide, during the term of the lease,
to sell the leased property. This intention of the parties is achieved in two
ways in accordance with the stipulation.
○ The first is by giving Mayfair "30-days exclusive option to
purchase" the leased property. The second is, in case Mayfair would
opt not to purchase the leased property, "that the purchaser (the new
owner of the leased property) shall recognize the lease and be bound
by all the terms and conditions thereof."
○ In other words, paragraph 8 of the two Contracts of lease,
particularly the stipulation giving Mayfair "30-days exclusive
option to purchase the (leased premises)," was meant to provide
Mayfair the opportunity to purchase and acquire the leased property
in the event that Carmelo should decide to dispose of the property.
○ In order to realize this intention, the implicit obligation of Carmelo
once it had decided to sell the leased property, was not only to notify
Mayfair of such decision to sell the property, but, more importantly,
to make an offer to sell the leased premises to Mayfair, giving the
latter a fair and reasonable opportunity to accept or reject the offer,
before offering to sell or selling the leased property to third parties.
● The right vested in Mayfair is analogous to the right of first refusal, which
means that Carmelo should have offered the sale of the leased premises to
Mayfair before offering it to other parties, or, if Carmelo should receive any
offer from third parties to purchase the leased premises, then Carmelo must
first give Mayfair the opportunity to match that offer.

BIBLE BAPTIST CHURCH V. CA and SPS. VILLANUEVA
GR. NO. 126454, NOV. 26, 2004
AZCUNA, J.
Facts:
● The petitioner entered into a contract of lease with the Sps. Villanueva
(PR)
● The PRs are the registered owners of a property located in Malate, Manila
● June 7, 1985: Petitioner Bible Baptist Church entered into a contract of
lease with respondent spouses Villanueva. (Lease period – 15 years)
● Pertinent stipulations of the lease contract are as follows:
○ 3. LESSEE (Bible Baptist) shall pay the LESSOR (Spouses
Villanueva) within 5 days of each calendar month, beginning 12
months from the date of this agreement, a monthly rental of
P10,000, plus 10% escalation clause per year starting on June 7,
1988.
○ 4. That upon signing of the LEASE AGREEMENT, the LESSEE
shall pay the sum of P84,000.00. Said sum is to be paid directly
to the Rural Bank, Valenzuela, Bulacan for the purpose of
redemption of said property which is mortgaged by the LESSOR.
○ 8. That the LESSEE (Bible Baptist) has the option to buy the
leased premises during the 15 years of the lease. If the LESSEE
decides to purchase the premises the terms will be: A) A selling
P1.8 million. B) A down payment agreed upon by both parties.
C) The balance of the selling price may be paid at the rate of
P120,000.00 per year.
● Petitioner Baptist Church seeks to buy the leased premises from the
spouses Villanueva, under the option given to them.
● Baptist Church argues that the consideration supporting the option was
their agreement to pay off the Villanueva's P84,000 loan with the bank,
thereby freeing the subject property from the mortgage encumbrance.
● Baptist Church states that "it is true that it did not pay a separate and
specific sum of money to cover the option alone. But the P84,000 it paid
the Villanuevas in advance should be deemed consideration for the one
contract they entered into – the lease with option to buy."
● Spouses Villanueva argued that the amount of P84,000 was paid for the
rental payments and there is no separate consideration to speak of which
could support the option.
● RTC and CA ruled in favor of Villanueva.
Issues:
● 1) WON the option to buy given to the Baptist Church is founded upon a
consideration. NO
● 2) WON by the terms of the lease agreement, a price certain for the
purchase of the land had been fixed. NO
Held:
● The P84,000 was not paid by Bible Baptist in order to release Spouses
Villanueva’s property from the mortgage but rather for the rental dues
● It must be pointed out that said amount was in fact apportioned into
monthly rentals spread over a period of one year, at P7,000 per month.
Thus, for the entire period of June 1985 to May 1986, petitioner Baptist
Church's monthly rent had already been paid for, such that it only again
commenced paying the rentals in June 1986. This is shown by the
testimony of petitioner Pastor Belmonte where he states that the P84,000
was advance rental equivalent to monthly rent of P7,000 for one year, such
that for the entire year from 1985 to 1986 the Baptist Church did not pay
monthly rent
● This Court agrees with spouses Villanueva that the amount of P84,000 has
been fully exhausted and utilized by the occupation of Bible Baptist of the
premises and there is no separate consideration to speak of which could
support the option.
● A valid option contract has a separate and distinct consideration that
supports it
● 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.
● An option contract needs to be supported by a separate consideration
● The consideration need not be monetary but could consist of other things
or undertakings. However, if the consideration is not monetary, these must
be things or undertakings of value, in view of the onerous nature of the
contract of option. Furthermore, when a consideration for an option
contract is not monetary, said consideration must be clearly specified as
such in the option contract or clause.
 ● In this case, the option was not founded upon a separate and distinct
consideration and that, hence, spouses Villanuevas cannot be compelled to
sell their property to petitioner Baptist Church.
● The option to buy the leased premises was not binding upon the
Villanuevas for non-compliance with Article 1479.
● It found that said option was not supported by a consideration as "no
money was ever really exchanged for and in consideration of the option."
● In addition, the CA determined that in the instant case, "the price for the
object is not yet certain." Having found that the option to buy granted to
the petitioner Baptist Church was not founded upon a separate
consideration, and hence, not enforceable against respondents, this Court
finds no need to discuss whether a price certain had been fixed as the
purchase price.
● RULING: Having found that the option to buy granted to the petitioner
Baptist Church was not founded upon a separate consideration, and hence,
not enforceable against respondents, the Court finds no need to discuss
whether a price certain had been fixed as the purchase price.
Villegas v CA
G.R. No. 111495. August 18, 2006
Carpio, J
Facts:
● The respondent-heirs (RH) inherited a property in Quiapo from their father
who died in 1985. Petitioner-lessees (PL) were the lessees of the said
property since 1959 and owned the the building and improvements
constructed thereon.
● In 1988, in a letter, the Administrative Committee of the RH informed PL
that they have decided to sell the property.
● It also provided therein that they are giving PL the opportunity to exercise
their right of pre-emption within 30 days, otherwise they will offer the land
to other parties.
● PL: asked for extension, thereafter offered 4Million for the property
● The Administrative Committee then 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 within 15 days and that should
the period lapse without any reply from petitioner-lessees, it would mean
that petitioner-lessees were no longer interested in buying the property.
● PL: ok so what’s your asking price? We’re willing to make a nominal
increase
● AC: We have an offer of P5 Million which was submitted to us last month.
If you could offer the same amount we will be very happy to accomodate
you. May we receive your offer on or before Aug. 11, 1988. Please be
guided accordingly.
● PL requested for a meeting with all the heirs to negotatiate the sale of the
property, and informed the Administrative Committee that their final bid
price will be submitted during the meeting. (Aug 11 letter)
● Petitioner-lessees sent their accountant to represent them in the conference
to negotiate the sale of the property. During the conference, the parties
failed to agree on the price and terms for the sale of the property.
● On 18 October 1988, petitioner-lessees wrote another letter to the
Administrative Committee saying that they have been waiting for AC’s
reply to their Aug 11 letter but they never got one. Nevertheless, they are
accepting the 5million asking price but the unpaid taxes shall be borne by
the respondent-heirs.
● AC replied that as previously informed, some of the co-owners were no
longer willing to sell. Only a few who represent 75% of the property were
still willing; thus, the offer to sell the entire property was no longer
effective. They added that the P5M was meant to be the net price, meaning
the taxes should be for the account of the buyers.
● It also provided a counter-offer: the respondent-heirs who were still willing
to sell collectively owned 75% of the property. Their asking price was
P3.8M. PL were given 2 weeks to respond.
● PL did not reply so the property was sold to a third party, Lita Sy. The
other heirs sold the remaining 25% portion of the property to "Villegas
brothers".
● PL then filed an action against respondent-heirs and Spouses Sy for
Annulment of Deed of Sale/Title.
● PL insist that there was already a perfected contract of sale when the R
accepted the P5M offer for the property and that the contract of sale
between RH and Lita Sy should be annulled since it violated the right of
first refusal of PL.
● On the other hand, RH maintain that the P5M offer already lapsed because
petitioner-lessees did not accept the offer within the period granted.
Instead, petitioner-lessees opted for a conference during which the parties
failed to agree on the price. There was therefore no perfected contract of
sale because there was no meeting of minds between the parties.
● RTC: dismiss the complaint, CA affirmed.

Issue: whether or not there was a perfected contract of sale between RH and PL
Held: 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 owners 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,[28] 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. However, there was no meeting
of the minds between the 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 in the letter dated 3 August 1988 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, who was their accountant since
1959, testified that petitioner-lessees did not indicate their offer for the
property in their letter dated 11 August 1988 but instead requested for a
conference with all the heirs of Dr. Lorenzo C. Reyes. Miranda admitted
that the main reason for their request for a conference was because they
knew that not all the heirs of Dr. Lorenzo C. Reyes were interested in
selling the property.
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 dated 3 August 1988 was superseded by the
subsequent offer of respondent-heirs during the conference. Thus, the letter dated
18 October 1988 of petitioner-lessees is merely another counter-offer for the
property in their continuing negotiation for the property. The latest offer of
respondent-heirs was contained in their letter dated 3 November 1988 wherein only
the 75% undivided interest of the property was for sale at P3,825,000. 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. Thus, when respondent-heirs sold the
property to Lita Sy, respondent-heirs did not violate the right of first refusal of
petitioner-lessees. Indeed, petitioner-lessees were given more than ample
opportunity to purchase the property.
Hence, Court upheld the dismissal of the complaint.
ENRICO S. EULOGIO v. SPS. CLEMENTE APELES AND LUZ APELES
GR No. 167884, 2009-01-20
Facts:
● The real property in question consists of a house and lot at Timog Avenue,
Quezon City owned by Spouses Apeles.
● In 1979, the spouses Apeles leased the subject property to Arturo Eulogio
(Arturo), Enrico's father. Upon Arturo's death, his son Enrico succeeded as
lessor of the subject property. Enrico used the subject property as his
residence and place of business.
● On 6 January 1987, the spouses Apeles and Enrico allegedly entered into
a Contract of Lease with Option to Purchase involving the subject
property... purportedly afforded Enrico, before the expiration of the three-
year lease period, the option to purchase the subject... property for a price
not exceeding P1.5 Million
● Before the expiration of the three-year lease period provided in the lease
contract, Enrico exercised his option to purchase the subject property by
 communicating verbally and in writing to Luz his willingness to pay the
agreed purchase price, but the spouses Apeles supposedly ignored Enrico's
manifestation.
● In a letter dated 26 January 1997 to Enrico, the spouses Apeles demanded
that he pay his rental arrears from January 1991 to December 1996 and he
vacate the subject property since it would be needed by the spouses Apeles
themselves.
● Without heeding the demand of the spouses Apeles, Enrico instituted on
23 February 1999 a Complaint for Specific Performance with Damages
against the spouses Apeles before the RTC
● RTC ordered the spouses Apeles to execute a Deed of Sale in favor of
Enrico upon the latter's payment of the agreed amount of consideration.
● CA revered and chose not to accord the disputed contract full faith and
credence
Issues:
WON THE CA COMMITTED REVERSIBLE ERROR WHEN IT BRUSHED
ASIDE THE RULING OF THE COURT A QUO UPHOLDING THE
VALIDITY OF THE CONTRACT OF LEASE WITH OPTION TO
PURCHASE AND IN LIEU THEREOF RULED THAT THE SAID
CONTRACT OF LEASE WAS A FORGERY AND THUS, NULL AND
VOID.
Ruling:No
● In the case at bar, the spouses Apeles were able to overcome the burden of
proof and prove by preponderant evidence in disputing the authenticity and
due execution of the Contract of Lease with Option to Purchase.
● Even assuming for the sake of argument that we agree with Enrico that Luz
voluntarily entered into the Contract of Lease with Option to Purchase and
personally affixed her signature to the said document, the provision on the
option to purchase the subject property incorporated... in said Contract still
remains unenforceable.
● Enrico ultimately wants to compel the spouses Apeles to already execute
the Deed of Sale over the subject property in his favor.
● 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.
● 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.
(Southwestern Sugar and Molasses Company v. Atlantic Gulf and Pacific Co.)
"an accepted unilateral promise" can only have a binding effect if supported by a
consideration, which means that the option can still... be withdrawn, even if accepted, if the
same is not supported by any consideration. Here it is not disputed that the option is without
consideration. It can therefore be withdrawn notwithstanding the acceptance made of it by
appellee.
● The consideration is "the why of the contracts, the essential reason which
moves the contracting parties to enter into the contract."However, by the
very nature of an option contract,as defined in Article 1479, the same is an
onerous contract for which the consideration must be something of value,
although its kind may vary.
● The only consideration agreed upon by the parties in the said Contract
is the supposed purchase price for the subject property in the amount
not exceeding P1.5 Million, which could not be deemed to be the same
consideration for the option contract since the law and jurisprudence
explicitly dictate that for the option contract to be valid, it must be
supported by a consideration separate and distinct from the price.
(Bible Baptist Church v. Court of Appeals.)
Option contract needs to be supported by a separate consideration. The consideration need
not be monetary but could consist of other things or undertakings. However, if the...
consideration is not monetary, these must be things or undertakings of value, in view of the
onerous nature of the option contract. Furthermore, when a consideration for an option
contract is not monetary, said consideration must be clearly specified as such in the option...
contract or clause.
● In the present case, it is indubitable that no consideration was given by
Enrico to the spouses Apeles for the option contract. The absence of
monetary or any material consideration keeps this Court from enforcing
the rights of the parties under said option contract.
Vasquez v Ayala Corp HELD:
G. R. No. 149734
November 19, 2004 YES!

1) An option is a preparatory contract in which one party grants to

FACTS: another, for a fixed period and at a determined price, the privilege to buy
or sell, or to decided WON to enter into a principal contract.
1) The Vasquez Spouses (Sps.) entered into a MOA with Ayala.
a. It binds the party who has given the option NOT to enter
a. Ayala will buy all the shares of stock of the Sps. in Conduit
into the principal contract with any other person during the
Dev’t.
period.
b. The main asset of Conduit is was a 50 hectare property in
2) In a right of first refusal, while the object may be determinate, the
Alabang, which was then being developed by Conduit under a
exercise of the right would be dependent not only on the grantor’s eventual
development plan.
intention to enter into a binding juridical relation with another, but also on
c. Conduit’s development plan was being undertaken by GP
terms, including the price, that are yet to be firmed up.
Construction.
3) Par. 5.15. is a mere right of first refusal!
2) Under the MOA:
a. Although may definite object (sale of the lots), the PERIOD
a. Ayala was to develop the entire property, minus a
and PRICE are not specified.
RETAINED AREA.
b. The phrase “at the prevailing market price at the time of
b. The RETAINED AREA was to be retained by the Sps.
purchase” connotes that there is no definite period within which
c. The area to be developed was called the REMAINING
Ayala is bound to reserve the lots for the Sps. to exercise their
AREA.
privilege to purchase.
d. Ayala agreed to OFFER the REMAINING AREA for sale
c. Neither is there a fixed or determinable price at which the
to the Sps. at the prevailing price at the time of purchase.
lots will be offered for sale.
e. Par. 5.15: (AYALA) agrees to give the (SPS) a first option
d. The price is considered certain if it may be determined with
to purchase the remaining area at the prevailing market price at
reference to another thing certain or if the determination thereof
the time of purchase.
is left to the judgment of a specified / specific persons.
3) The MOA was executed in 1984.
4) Further, Par. 5.15 was inserted into the MOA to give the Sps the first
4) In 1990, the lots were finally developed.
crack to buy the subject lots at the price which Ayala would be willing to
a. The four lots were offered to the Sps. at the prevailing price
accept when it offers the lots for sale.
in 1990.
a. It is not supported by an independent consideration.
b. The Sps. wanted to pay at 1984 prices.
b. Hence not governed by Arts. 1324 and 1749!
5) The RTC held that Par. 5.15 is a valid option contract, being
5) Consequently, the offer may be withdrawn anytime by
supported by a “consideration incorporated in the MOA where the parties
communicating withdrawal to the other party.
had prestations to each other.”
6) In this case, Ayala offered the lots for sale to the Sps at the 1990
6) Upon appeal, the CA reversed the RTC ruling.
price. Insisting on paying it at the 1984 price, the Sps. rejected the offer.
a. Held that Par. 5.15 is a right of first refusal, there being
a. With this rejection, the petitioners lost their right to
no separate consideration.
purchase the lots.
b. Since the Sps. refused Ayala’s offer to sell the lots at the
1990 price, they have effectively waived their right to buy it!

ISSUE: WoN Par 5.15. is a right of first refusal.