VILLEGAS v CA
There was an exchange
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.
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.
LAND BANK OF THE PHILIPPINES VS EUSEBIO
GR NO 160143 JULY 2, 2014
Facts:
Respondent Eusebio, Jr., owner of a 790.4-hectare parcel
of land situated in Masbate, voluntarily offered to sell his land to
the government through the Department of Agrarian Reform for
P19.5 million. DAR offered to purchase the land for P3 million but it
was rejected by respondent. Petitioner Land Bank made a
revaluation of the land but was rejected again by respondent.
Meanwhile, LBP opened a trust account in favor of Eusebio, and
then the DAR immediately took physical possession of the property,
had the TCT cancelled in favor of the Republic of the Philippines,
and distributed the property to the farmer-beneficiaries. The parties
then referred the determination of just compensation with the
DARAB. Respondent still finding the valuation unacceptable, filed
before the RTC-Special Agrarian Court an action for determination
and payment of just compensation against DAR and LBP. During
trial, separate valuation reports were submitted, with the DAR and
LBP using the guidelines/formula under RA 6657 in their
computation. In its judgment, the RTC-SAC brushed aside the
valuations fixed by DAR and LBP, and found instead as
considerable just compensation the amount (P25 million) prayed
for by respondent. Both parties appealed, but CA affirmed the
judgment in toto.
Issue:
Whether the RTC-SAC committed grave abuse of
discretion in the determination of just compensation for the
property
Ruling:
YES.
The determination of just compensation is essentially a
judicial function that the Courts exercise within the parameters of
the law; the RTC-SAC’s valuation in this case is erroneous for having
been rendered outside the contemplation of the law.
In the exercise of the essentially judicial function of determining just
compensation, the RTC-SAC is not granted unlimited discretion. It
must consider and apply the R.A. No. 6657-enumerated factors
and the DAR formula (that reflects these factors) as they provide
the uniform framework or structure by which just compensation for
property subject to agrarian reform should be determined.
A determination of just compensation based merely on
“conscience” – a consideration entirely outside the contemplation
of the law – is the precise situation that we find in this case. To be
clear, other than in “conscience,” the RTC-SAC did not point to
any particular consideration that impelled it to set the just
compensation at ₱25 million. In fact, a reading of the RTC-SAC’s
decision reveals a marked absence of any grounds by which it
anchored its determination, more so of any explanation why it
fixed the amount of ₱25 million. This marked absence of basis,
taken together with these other considerations, convinced us that
the RTC-SAC completely, even arbitrarily, relied on the amount that
respondent prayed for in their complaint in fixing the property’s just
compensation. This blind reliance on respondent’s prayer and the
utter disregard of the prescribed factors and formula clearly
amount to grave abuse of discretion for having been taken outside
the contemplation of the law.
 Thus, the court set aside, as grave abuse of discretion, the
just compensation of ₱25 million that the RTC-SAC fixed for
Eusebio’s property. Accordingly, the court likewise set aside, for
grave error, the CA’s decision that affirmed in toto this RTC-SAC’s
valuation.

Manila International Airport Authority v. Court of Appeals,

G.R. No. 15560 (July 20, 3006)

Facts:
MIAA received Final Notices of Real Estate Tax
Delinquency from the City of Parañaque for the taxable years 1992
to 2001. MIAA’s real estate tax delinquency was estimated at P624
million. The City of Parañaque, through its City Treasurer, issued
notices of levy and warrants of levy on the Airport Lands and
Buildings. The Mayor of the City of Parañaque threatened to sell at
public auction the Airport Lands and Buildings should MIAA fail to
pay the real estate tax delinquency.

MIAA filed a petition sought to restrain the City of

Parañaque from imposing real estate tax on, levying against, and
auctioning for public sale the Airport Lands and Buildings. The City
of Parañaque contended that Section 193 of the Local
Government Code expressly withdrew the tax exemption privileges
of “government-owned and-controlled corporations” upon the
effectivity of the Local Government Code. Thus, MIAA cannot
claim that the Airport Lands and Buildings are exempt from real
estate tax.

MIAA argued that Airport Lands and Buildings are owned

by the Republic. The government cannot tax itself. The reason for
tax exemption of public property is that its taxation would not inure
to any public advantage, since in such a case the tax debtor is
also the tax creditor.

Issue:
Whether or not the City of Parañaque can impose real
tax, levy against and auction for public sale the Airport Lands and
Buildings.

Held:
MIAA is Not a Government-Owned or Controlled
Corporation. The Airport Lands and Buildings of MIAA are property
of public dominion and therefore owned by the State or the
Republic of the Philippines. No one can dispute that properties of
public dominion mentioned in Article 420 of the Civil Code, like
“roads, canals, rivers, torrents, ports and bridges constructed by the
State,” are owned by the State. The term “ports” includes seaports
and airports. The MIAA Airport Lands and Buildings constitute a
“port” constructed by the State.

Under Article 420 of the Civil Code, the MIAA Airport

Lands and Buildings are properties of public dominion and thus
owned by the State or the Republic of the Philippines. The Airport
Lands and Buildings are devoted to public use because they are
used by the public for international and domestic travel and
transportation. The fact that the MIAA collects terminal fees and
other charges from the public does not remove the character of
the Airport Lands and Buildings as properties for public use. The
charging of fees to the public does not determine the character of
the property whether it is of public dominion or not. Article 420 of
the Civil Code defines property of public dominion as one
“intended for public use.”

The Court has also ruled that property of public dominion,

being outside the commerce of man, cannot be the subject of an
auction sale. Properties of public dominion, being for public use,
are not subject to levy, encumbrance or disposition through public
or private sale. Any encumbrance, levy on execution or auction
sale of any property of public dominion is void for being contrary to
public policy. Essential public services will stop if properties of public
dominion are subject to encumbrances, foreclosures and auction
sale. This will happen if the City of Parañaque can foreclose and
compel the auction sale of the 600-hectare runway of the MIAA for
non-payment of real estate tax.