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G.R. No. 140182. April 12, 2005
FACTS: Petitioner Tanay Recreation Center and Development Corp. (TRCDC) is the lessee of a
3,090-square meter property located in Sitio Gayas, Tanay, Rizal, owned by Catalina Matienzo
Fausto, under a Contract of Lease. On this property stands the Tanay Coliseum Cockpit operated
by petitioner. The lease contract provided for a 20-year term, subject to renewal within sixty days
prior to its expiration. The contract also provided that should Fausto decide to sell the property,
petitioner shall have the priority right to purchase the same.
On June 17, 1991, petitioner wrote Fausto informing her of its intention to renew the lease.
However, it was Faustos daughter, respondent Anunciacion F. Pacunayen, who replied, asking
that petitioner remove the improvements built thereon, as she is now the absolute owner of the
property. It appears that Fausto had earlier sold the property to Pacunayen and title has already
been transferred in her name. Petitioner filed an Amended Complaint for Annulment of Deed of
Sale, Specific Performance with Damages, and Injunction.
In her Answer, respondent claimed that petitioner is estopped from assailing the validity of the
deed of sale as the latter acknowledged her ownership when it merely asked for a renewal of the
lease. According to respondent, when they met to discuss the matter, petitioner did not demand
for the exercise of its option to purchase the property, and it even asked for grace period to
vacate the premises.
ISSUE: The contention in this case refers to petitioners priority right to purchase, also referred to
as the right of first refusal.
HELD: When a lease contract contains a right of first refusal, the lessor is under a legal duty to
the lessee not to sell to anybody at any price until after he has made an offer to sell to the latter at
a certain price and the lessee has failed to accept it. The lessee has a right that the lessor's first
offer shall be in his favor. Petitioners right of first refusal is an integral and indivisible part of the
contract of lease and is inseparable from the whole contract. The consideration for the lease
includes the consideration for the right of first refusal and is built into the reciprocal obligations of
the parties.
It was erroneous for the CA to rule that the right of first refusal does not apply when the property
is sold to Faustos relative. When the terms of an agreement have been reduced to writing, it is
considered as containing all the terms agreed upon. As such, there can be, between the parties
and their successors in interest, no evidence of such terms other than the contents of the written
agreement, except when it fails to express the true intent and agreement of the parties. In this
case, the wording of the stipulation giving petitioner the right of first refusal is plain and
unambiguous, and leaves no room for interpretation. It simply means that should Fausto decide
to sell the leased property during the term of the lease, such sale should first be offered to
petitioner. The stipulation does not provide for the qualification that such right may be exercised
only when the sale is made to strangers or persons other than Faustos kin. Thus, under the
terms of petitioners right of first refusal, Fausto has the legal duty to petitioner not to sell the
property to anybody, even her relatives, at any price until after she has made an offer to sell to
petitioner at a certain price and said offer was rejected by petitioner.
MARCH 4, 2009
G.R. No. 145736
FACTS: The subject of this controversy is a parcel of land denominated as Lot 249-D-1 (subject
lot) registered in the names of Eduardo and Jorge Llenado. The subject lot once formed part of
Lot 249-D owned by and registered in the name of their father, Cornelio Llenado.

Cornelio leased Lot 249-D-1 to his nephew, Romeo. On March 31, 1978, Cornelio, Romeo and
the latters cousin Orlando executed an Agreement whereby Romeo assigned all his rights to
Orlando. The parties further agreed that Orlando shall have the option to renew the lease
contract and that during the period that the agreement is enforced, the property cannot be sold,
transferred, alienated or conveyed in whatever manner to any third party. Orlando died and his
wife, Wenifreda, took over the operation of the gasoline station. Cornelio sold Lot 249-D to his
children through a deed of sale, denominated as Kasulatan sa Ganap Na Bilihan, for the sum of
P160k. Lot 249-D-1 was sold to Eduardo and Jorge.
Eduardo informed Wenifreda of his desire to take over the subject lot, but the latter refused to
vacate the premises despite repeated demands. Thus, Eduardo filed a complaint for unlawful
detainer against Wenifreda. After Eduardo instituted the unlawful detainer case, Wenifreda
instituted a complaint for annulment of deed of conveyance, title and damages against Eduardo
and Jorge.
Petitioner alleged that the transfer and conveyance of the subject lot was fraudulent and in bad
faith considering that the subject lot was transferred and conveyed to his sons when the lease
was in full force and effect making the sale null and void; that Cornelio verbally promised Orlando
that Orlando or his heirs shall have first priority or option to buy the subject lot. Respondents
claimed that they bought the subject lot from their father for value and in good faith.
ISSUE: Whether or not the sale of the subject lot by Cornelio to his sons is invalid for (1) violating
the prohibitory clause in the lease agreement between Cornelio, as lessor-owner, and Orlando,
as lessee; and (2) contravening the right of first refusal of Orlando over the subject lot.
HELD: No. Sale was valid.
Under Article 1311 of the Civil Code, the heirs are bound by the contracts entered into by their
predecessors-in-interest except when the rights and obligations therein are not transmissible by
their nature, by stipulation or by provision of law. A contract of lease is generally transmissible to
the heirs of the lessor or lessee. It involves a property right and the death of a party does not
excuse non-performance of the contract. The rights and obligations pass to the heirs of the
deceased and the heir is bound to respect the period of the lease.
The parties expressly stipulated in the March 31, 1978 Agreement that Romeo, as lessee, shall
transfer all his rights and interests under the lease contract with option to renew in favor of the
party of Orlando, the latters heirs, successors and assigns indicating the clear intent to allow the
transmissibility of all the rights and interests of Orlando under the lease contract unto his heirs,
successors or assigns. The rights and obligations under the lease contract with option to renew
were transmitted from Orlando to his heirs upon his death. It does not follow, however, that the
lease subsisted at the time of the sale of the subject.
The election of the option to renew the lease in this case cannot be inferred from petitioner
Wenifredas continued possession of the subject lot. It was incumbent upon Wenifreda with the
burden of proof during the trial below to establish by some positive act that Orlando or his heirs
exercised the option to renew the lease. SC held that there was no evidence presented before
the trial court to prove that Orlando or his heirs exercised the option to renew prior to or at the
time of the expiration of the lease. As a result, there was no obstacle to the sale of the subject lot
by Cornelio to respondents Eduardo and Jorge as the prohibitory clause under the lease contract
was no longer in force.
On the issue on the right of first refusal of Orlando and his heirs, SC held that no testimonial
evidence was presented to prove the existence of said right. The claims based on this alleged
right of first refusal cannot be sustained for its existence has not been duly established.


G.R. NO. 177783 , JANUARY 23, 2013
FACTS: The case sprang from a real estate mortgage of two parcels of land in August 1981.
Fausto C. Ignacio mortgaged the properties to Home Bankers Savings and Trust Company
(Bank) as security for a loan extended by the Bank. After Ignacio defaulted in the payment of the
loan, the property was foreclosed and subsequently sold to the Bank in a public auction.Ignacio
offered to repurchase the property. Universal Properties Inc. (UPI), the banks collecting agent
sent Ignacio a letter on March 22, 1984 which contained the terms of the repurchase. However,
Ignacio annotated in the letter new terms and conditions. He claimed that these were verbal
agreements between himself and the Banks collection agent, UPI.No repurchase agreement was
finalized between Ignacio and the Bank. Thereafter the Bank sold the property to third parties.
Ignacio then filed an action for specific performance against the Bank for the reconveyance of the
properties after payment of the balance of the purchase price. He argued that there was implied
acceptance of the counter-offer of the sale through the receipt of the terms by representatives of
UPI. The Bank denied that it gave its consent to the counter-offer of Ignacio. It countered that it
did not approve the unilateral amendments placed by Ignacio.
ISSUE: Whether or not the negotiations between Ignacio and UPI is binding on the Bank.
HELD: A contract of sale is consensual in nature and is perfected upon mere meeting of the
minds. When there is merely an offer by one party without acceptance of the other, there is no
contract. When the contract of sale is not perfected, it cannot, as an independent source of
obligation, serve as a binding juridical relation between the parties.
A contract of sale is perfected only when there is consent validly given. There is no consent when
a party merely negotiates a qualified acceptance or a counter-offer. An acceptance must reflect all
aspects of the offer to amount to a meeting of the minds between the parties.In this case, while it
is apparent that Ignacio proposed new terms and conditions to the repurchase agreement, there
was no showing that the Bank approved the modified offer.
In the absence of conformity or acceptance by properly authorized bank officers of petitioner's
counter-proposal, no perfected repurchase contract was born out of the talks or negotiations
between petitioner and Mr. Lazaro and Mr. Fajardo. Petitioner therefore had no legal right to
compel respondent bank to accept the P600,000 being tendered by him as payment for the
supposed balance of repurchase price.
The negotiations between Ignacio and UPI, the collection agent, were merely preparatory to the
repurchase agreement and, therefore, was not binding on the Bank. Ignacio could not compel the
Bank to accede to the repurchase of the property.
A corporation may only give valid acceptance of an offer of sale through its authorized officers or
agents. Specifically, a counter-offer to repurchase a property will not bind a corporation by mere
acceptance of an agent in the absence of evidence of authority from the corporations board of
G.R. No. L-26872
July 25, 1975
FACTS: Cervantes and his wife owned 3 parcels of land along Buendia where he buildings of
Bormaheco Inc were situated. Beside their property were lots owned by Villonco Realty.
Cervantes entered into several negotiations with Villonco for sale of the Buendia property.
Cervantes made a written offer of P400/sqm with a downpayment of P100,000 to serve as

earnest money. The offer also made the consummation of the sale dependent upon the
acquisition by Bormaheco of a Sta. Ana property. Villonco made a counter-offer stating that the
earnest money was to earn 10% interest p.a. The check was enclosed with the reply letter.
Cervantes accepted and cashed the check. The Sta. Ana Property was awarded to Bormaheco;
the transfer was also duly approved. However, Cervantes sent the check back to Villonco with the
interest thereonstating that he was no longer interested in selling the property. He also claims
that no contract was perfected; Villonco sues for specific performance.
ISSUE: W/N there was a perfected contract of sale
HELD: YES. There was a perfected contract of sale.
The contract of sale is 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 performance, subject to the provisions of the law governing the form of contracts. (Art.
1475 Ibid).
Consent is manifested by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the contract. The offer must be certain and the acceptance
absolute. A qualified acceptance constitutes a counter-offer (Art. 1319, Civil Code). An
acceptance may be express or implied (Art. 1320, Civil Code).
A contract is formed if offer is accepted, whether request for changes in terms is granted or not;
Change does not amount to rejection of offer or a counter-offer. An acceptance may contain a
request for certain changes in the terms of the offer and yet be a binding acceptance. So long as
it is clear that the meaning of the acceptance is positively and unequivocally to accept
the offer. whether such request is granted or not, a contract is formed.
The vendors change in a phrase of the offer to purchase, which change does not essentially
change the terms of the offer, does not amount to a rejection of the offer and the tender or a
counter-offer. (The alleged changes made in the counter-offer are immaterial and are mere
clarifications. The changes of the words Sta. Ana property to another property as well as the
insertion of the number 12 in the date, and the words per annum in the interest are trivial.
There is no incompatibility in the offer and counter-offer. Cervantes assented to the interest and
he, in fact, paid the same. Also, earnest money constitutes prood of the perfection of the contract
of sale and forms part of the consideration. The condition regarding the acquisition of the Sta.
Ana property was likewise fulfilled; there is thus no ground for the refusal of Cervantes to
consummate the sale.