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Vasquez vs. Ayala Corp 5. Vasquez refused the offer.

Vasquez contended that the purchase

G.R. No. 149734. November 19, 2004 price should be P460/sq. m. which was the market price in 1981
(time of purchase).
DR. DANIEL VAZQUEZ and MA. LUIZA M. VAZQUEZ, petitioners vs.
6. Ayala then lowered the purchase price to P5k/sq. m. but Vasquez
refused again. Instead he made a counter offer to buy the lots at
AYALA CORPORATION, respondent. P2k/sq. m. This time, Ayala refused.

RULING: WHEREFORE, the instant petition is DENIED. No pronouncement as to costs.

DOCTRINE: An option is a preparatory contract in which one party grants to another, for a ISSUE:
fixed period and at a determined price, the privilege to buy or sell, or to decide whether or not to
enter into a principal contract. It binds the party who has given the option not to enter into the Whether or not Paragraph 5.15 of the MOA is an option contract
principal contract with any other person during the period designated, and within that period,
to enter into such contract with the one to whom the option was granted, if the latter should
decide to use the option. It is a separate and distinct contract from that which the parties may
enter into upon the consummation of the option. It must be supported by consideration
No. The said paragraph is a mere right of first refusal.


1. Although the paragraph has a definite object, i.e., the sale of the 4
1. Daniel Vasquez owns Conduit Development, Inc. In 1981, Vasquez
lots, the period within which they will be offered for sale to Vasquez
enters into a Memorandum of Agreement (MOA) with Ayala
and, necessarily, the price for which the subject lots will be sold are
Corporation wherein Ayala bought Conduit from Vasquez.
not specified.
2. Ayala committed to develop Conduits lands including 4 parcels of
2. The phrase at the prevailing market price at the time of the
land adjacent to Vasquez retained land. Be it noted that these
purchase connotes that there is no definite period within which
parcels of land were in the 3rdphase of Ayalas development plan.
Ayala is bound to reserve the subject lots for Vasquez to exercise
Paragraph 5.15 of the MOA provides:
his privilege to purchase.
3. Neither is there a fixed or determinable price at which the subject
5.15. The BUYER (AYALA) agrees to give the SELLERS (Vasquez) a
lots will be offered for sale. The price is considered certain if it may
first option to purchase four developed lots next to the Retained
be determined with reference to another thing certain or if the
Area at the prevailing market price at the time of the purchase.
determination thereof is left to the judgment of a specified person
or persons.
3. In 1990, Ayala was able to develop the said lots. (This was after
4. Further, paragraph 5.15 was inserted into the MOA to give Vasquez
some slump, and some litigation between Conduits former
the first crack to buy the subject lots at the price, which Ayala
contractor (GP construction) and GPs subcontractor (Lancer
would be willing to accept when it offers the subject lots for sale. It
is not supported by an independent consideration.
4. Ayala then offered to sell the 4 parcels of land to Vasquez at
P6.5k/sq. m. which was the market price in 1990.