There are three stages of contracts which are the preparation, perfection, and consummation. Every contract needs to be perfected. In order for a contract to be perfected, the offer of an offeror should be accepted or agreed upon by the offeree.
In the below case, we will be tackling about a case where they were discussing about perfection of a contract, and how contracts really should be perfected.
ANG YU ASUNCION, ARTHUR GO AND KEH TIONG vs. THE HON. COURT OF APPEALS and BUEN REALTY DEVELOPMENT CORPORATION
FACTS:
Petitioners filed a complaint against Unjiengs, before the Regional Trial Court alleging that Unjiengs informed petitioners that they are offering to sell the premises and are giving them priority to acquire the same; that during the negotiations, Unjiengs offered a price of P6-million while petitioners made a counter offer of P5-million; that petitioners thereafter asked the Unjiengs to put their offer in writing to which request defendants acceded; that in reply to Unjiengs letter, plaintiffs asked to specify the terms and conditions of the offer to sell; that when petitioners did not receive any reply, they sent another letter; that 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, petitioners were compelled to file the complaint to compel Unjiengs to sell the property to them.
Judgment was rendered in favor of the Unjiengs and against the petitioners summarily dismissing the complaint subject to the aforementioned condition that if the defendants subsequently decide to offer their property for sale for a purchase price of 11 million or lower, then the petitioners has the option to purchase the property or of first refusal, otherwise, defendants need not offer the property to the Petitioners if the purchase price is higher than Php11 million.
While the case was pending consideration by the SC, the Unjieng spouses executed a Deed of Sale to the private defendant. Private defendant wrote a letter to the petitioners demanding that the latter vacate the premises. Petitioners replied stating that petitioner brought the property subject to the notice of lis pendens regarding Civil Case No. 87-41058 annotated on TCT No. 105254/T-881 in the name of the Cu Unjiengs.
The petitioners filed a Motion for Execution to the RTC who ordered defendants to execute the necessary Deed of Sale of the property in litigation in favor of the Petitioners for the consideration of P15,000,000.00 and ordering the Register of Deeds of the City of Manila, to cancel and set aside the title already issued in favor of private defendant. The appellate court, on appeal to it by private defendant, set aside and declared without force and effect the above questioned orders of the court a quo. Hence, this petition.
ISSUE:
Whether or not the right of first refusal in deemed a perfected contract of sale.
RULING:
No. 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. Neither can the right of first refusal, understood in its normal concept,Ā per seĀ be brought within the purview of an option under the second paragraph of Article 1479, aforequoted, or possibly of an offer under Article 1319 of the same Code. An option or an offer would require, among other things, a clear certainty on both the object and the cause or consideration of the envisioned contract. 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 theĀ vinculum jurisĀ 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.
Even on the premise that such right of first refusal has been decreed under a final judgment, like here, its breach cannot justify correspondingly an issuance of a writ of execution under a judgment that merely recognizes its existence, nor would it sanction an action for specific performance without thereby negating the indispensable element of consensuality in the perfection of contracts. It is not to say, however, that the right of first refusal would be inconsequential for, such as already intimated above, an unjustified disregard thereof, given, for instance, the circumstances expressed in Article 19 of the Civil Code, can warrant a recovery for damages.
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. 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.
If you would want to read the full text of the case, here is the link from lawphil.net which is a reliable source of full text of many cases: https://lawphil.net/judjuris/juri1994/dec1994/gr_109125_1994.html
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