Topic: Breach of Obligations >> Modes of Breach - Mora Solvendi (Vasquez v Ayala

Cororation!

Facts:

Souses Vasquez entered into a Me"orandu" of Agree"ent (MOA! #ith Ayala

Cororation for their share of stoc$s in Conduit %evelo"ent& 'he "ain assets
of Conduit is the )&) hectare of land (divided into Village *+ , and of the %on
Vicente Village! being develoed by Conduit& 'he develo"ent #as underta$en
by .&/& Construction and %evelo"ent&

'he MOA #as signed on Aril ,+ *)0*+ the Closing of the agree"ent #as to
haen #ee$s after the signing& According to the MOA+ Ayala intends to
co"lete its develo"ent lan years after the date of the agree"ent& Also+
that Ayala agreed to give the etitioners a 1rst otion to urchase the
develoed lots at the revailing "ar$et rice at the ti"e of the urchase&
After the e2ecution of the MOA+ Ayala susended the #or$ on Village *& Ayala
then received a letter fro" 3ancer .eneral Builder+ infor"ing that they #ere
clai"ing the a"ount of /*+45)+440&05 as the subcontractor of ./& On March ,,+
*)0,+ ./ not being able to reach an a"icable settle"ent #ith 3ancer+ 3ancer
sued ./ Construction+ Conduit and Ayala& ./ then 1led a cross-clai" against
Ayala& Both 3ance and ./ tried to en6oin Ayala for the devel o"ent of the
roerty& 'he suit #as only ter"inated on 7ebruary *)+ *)08+ after Ayala aid
both ./ and 3ancer&

'he Vasquez souses+ believing that Ayala #as obligated to sell the" the lots
years after the agree"ent+ sent re"inder letters of the aroaching so-called
deadline& Also+ 9ngr& 'urla (an authorized agent of the Vasquez! sent a letter to
Ayala stating that they e2ected :the develo"ent of /hase * to be co"leted
by 7eb *)+ *))5+ years after the legal roble"s #ith the revious contractor
#as settled&; By early *))5+ Ayala #as able to 1nish the develo"ents and
o<ered the lots to the Vasquez at the revailing rice in *))5&

'he Vasquez re6ected the o<er and insisted to ay the *)0 rice (the srcinal
date of the suosed year develo eriod given by Ayala after the agree"ent!

Ayala argues that the MOA only gives the etitioners a 1rst right of refusal and
can therefore not de"and Ayala to sell the roerty at the *)0 rice&

Issue: *& =O Ayala co""itted or "erely e2ressed intent to develo the

roerty #ithin years of the signing of the MOA

,& =O the MOA can roerly be construed as an otion contract or a right of

1rst refusal

& =O the Vasquez souse can co"el Ayala to sell the" the roerty at
the *)0 rice

Held:
 'he MOA seci1cally said :'he Buyer hereby commits that it #ill develo the
?e"aining /roerty into a 1rst class residential subdivision of the sa"e class as
its e# Alabang Subdivision+ and that it intends to co"lete the 1rst hase
under its a"end ed develo"ent lan #ithin years fro" the date of this
Agree"ent; Also+ under Art **@) of the CC+ obligations #hose ful1ll"ent a day
certain has been 12ed shall be de"andable only #hen that day co"es&

=hile the 1rst hrase uses the #ord co""its in reference to the develo"ent
itself+ the #ord intends #as used in relation to the develo"ent of the roerty
#ithin years& t is then un"ista$able that Ayala "erely e2ressed their
intention in co"leting the develo"ent #ithin years&

An otion is a rearatory contract #hich one arty grants another+ for a 12ed
eriod and at a deter"ined rice+ the rivilege to buy or sell+ or to decide
#hether or not to enter into a rincial contract& n a right of 1rst refusal+ #hile
the ob6ect "ight be deter"inate+ the e2ercise of the right #ould be indeendent
not only on the grantors eventual intention to enter into a binding 6uridical
relation #ith another but also on ter"s+ including the rice+ that are yet to be
1r"ed u&

'he Court held that the MOA is a "ere right of 1rst refusal and not an otion
contract& 'he hrase :at the revailing "ar$et rice at the ti"e of the
urchase; connotes that there is no de1nite eriod&

Since it has been established that the MOA is a "ere right of 1rst refusal+ the
Vasquez souses cannot co"el Ayala to sell the" the roerty at the *)0
rice& 'he "o"ent they re6ected the o<er+ etitioners lost their right to
urchase the roerty&

'he etition is %enied&