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Facts: Petitioner PURE FOODS CORPORATION decided to install two generators in its food processing plant in San Roque,

Marikina City to recover from losses due to the series of power failures. Consequently, bidding for the supply and installation of the generators was held. Several suppliers and dealers were invited to attend a pre-bidding conference to discuss the conditions, propose scheme and specifications that would best suit the needs of PUREFOODS. Out of the eight (8) prospective bidders who attended the pre-bidding conference, only three (3) bidders, namely, respondent FAR EAST MILLS SUPPLY CORPORATION (hereafter FEMSCO. FEMSCO started the PUREFOODS project and bought the necessary materials. However, PUREFOODS unilaterally canceled the award because significant factors were uncovered which dictates the cancellation and warrant a total review and re-bid of the said project. Consequently, FEMSCO protested the cancellation of the award and sought a meeting with PUREFOODS. However, on 26 March 1993, before the matter could be resolved, PUREFOODS already awarded the project and entered into a contract with JARDINE NELL, a division of Jardine Davies, Inc. which incidentally was not one of the bidders. FEMSCO sued PUREFOODS for reneging on its contract and JARDINE for its unwarranted interference and inducement. Issues: Whether or not there existed a perfected contract between PUREFOODS and FEMSCO.

And granting there existed a perfected contract, whether there is any showing that JARDINE induced or connived with PUREFOODS to violate the latter's contract with FEMSCO. Held: The Supreme Court held that there was no issue as regards the subject matter of the contract and the cause of the obligation. The controversy lies in the consent whether there was an acceptance of the offer, and if so, if it was communicated, thereby perfecting the contract. Since petitioner PUREFOODS started the process of entering into the contract by conducting bidding, Art. 1326 of the Civil Code, which provides that advertisements for bidders are simply invitations to make proposals applies. The Supreme Court also re-stated the distinguishment between a condition imposed on the perfection of a contract and a condition imposed merely on the performance of an obligation. While failure to comply with the first condition results in the failure of a contract, failure to comply with the second merely gives the other party options and/or remedies to protect his interests.
Hernando R. Penalosa vs. Severino Santos G.R. No. 133749 August 23, 2001 Facts: Severino sold his property to henry. Henry applied for a loan with philam life. As It was already approved pending the submission of certain documents such as the owners duplicate of transfer certificate of title which is in possession of severino. Henry already took possession of the property in question after ejectment of the lessees. He also paid an ernest money of 300,000 under the premise that it shall be forfeited in favor of severino in case of nonpayment. Severino now claims ownership over the property claiming that henry did not pay for the property, therefore there was no sale to speak

of. Issue: whether or not there is a contract of sale perfected in this case. Held: there was a perfected contract of sale due to the second deed of sale. The basic characteristic of an absolutely simulated or fictitious contract is that the apparent contract is not really desired or intended to produce legal effects or alter the juridical situation of the parties in any way. However, in this case, the parties already undertook certain acts which were directed towards fulfillment of their respective covenants under the second deed, indicating that they intended to give effect to their agreement. 30Further, the fact that Severino executed the two deeds in question, primarily so that petitioner could eject the tenant and enter into a loan/mortgage contract with Philam Life, is to our mind, a strong indication that he intended to transfer ownership of the property to petitioner. For why else would he authorize the latter to sue the tenant for ejectment under a claim of ownership, if he truly did not intend to sell the property to petitioner in the first place? Needless to state, it does not make sense for Severino to allow petitioner to pursue the ejectment case, in petitioner's own name, with petitioner arguingthat he had bought the property from Severino and thus entitled to possession thereof, if petitioner did not have any right to the property. Also worth noting is the fact that in the case filed by Severino's tenant against Severino and petitioner in 1989, assailing the validity of the sale made to petitioner, Severino explicitly asserted in his sworn answer to the complaint that the sale was a legitimate transaction. He further alleged that the ejectment case filed by petitioner against the tenant was a legitimate action by an owner against one who refuses to turn over possession of his property. It should be emphasized that the nonappearance of the parties before the notary public who notarized the deed does not necessarily nullify nor render the parties' transaction void ab initio. We have held previously that the provision of Article 1358 of the New Civil Code on the necessity of a public document is only for convenience, not for validity or enforceability. Failure to follow the proper form does not invalidate a contract. Where a contract is not in the form prescribed by law, the parties can merely compel each other to observe that form, once the contract has been perfected.
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This is consistent with the basic

principle that contracts are obligatory in whatever form they may have been entered into, provided all essential requisites are present. The elements of a valid contract of sale under Art. 1458 of the Civil Code are: (1) consent or meeting of the minds; (2) determinate subject matter; and (3) price certain in money or its equivalent.
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In the instant case, the second deed reflects the presence of all these elements and as such, there is already a perfected contract of sale. The non-payment of the contract price merely results in a breach of contract for nonperformance and warrants an action for rescission or specific performance under Article 1191 of the Civil Code. Be that as it may, we agree with petitioner that although the law allows rescission as a remedy for breach of contract, the same may not be availed of by respondents in this case. To begin with, it was Severino who prevented full payment of the stipulated price when he refused to deliver the owner's original duplicate title to 3Philam Life. His refusal to cooperate was unjustified, because as Severino himself admitted, he signed the deed precisely to enable petitioner to acquire the loan. He also knew that the property was to be given as security therefor. Thus, it cannot be said that petitioner breached his obligation towards Severino since the former has always been willing to and could comply with what was incumbent upon him. In sum, the only conclusion which can be deduced from the aforesaid circumstances is that ownership of the property has been transferred to petitioner. WHEREFORE, the petition is GRANTED. .PAKISTAN INTERNATIONAL AIRLINES CORPORATION v OPLE ; 28, 1990FELICIANO September
NATURE Petition for certiorari to review the order of the Minister of Labor FACTS - On 2 December 1978, petitioner Pakistan International Airlines Corporation (PIA), a foreign corporation licensed to do business in the Philippines, executed in Manila two separate contracts of employment, one with private respondent Farrales and the other with private respondent Mamasig. The contracts provided in pertinent portion as follows: "5. DURATION OF EMPLOYMENTAND PENALTY This agreement is for a period of three years, but can be extended by the mutual consent of the parties. xxxxxxxxx 6. TERMINATION xxxxxxxxx Notwithstanding anything to contrary as herein provided, PIA reserves the right to terminate this agreement at any time by giving the EMPLOYEE notice in writing in advance one month before the intended termination or in lieu

thereof, by paying the EMPLOYEE wages equivalent to one month's salary. xxxxxxxxx 10. APPLICABLE LAW: This agreement shall be construed and governed under and by the laws of Pakistan, and only the Courts of Karachi, Pakistan shall have the jurisdiction to consider any matter arising out of or under this agreement. - Respondents then commenced training in Pakistan. After their training period, they began discharging their job functions as flight attendants, with base station in Manila and flying assignments to different parts of the Middle East and Europe. - On 2 August 1980, roughly one year and four months prior to the expiration of the contracts of employment, PIA sent separate letters both dated 1 August 1980 to private respondents Farrales and Mamasig advising both that their services as flight attendants would be terminated "effective 1 September 1980, conformably to clause 6 (b) of the employment agreement [they had] executed with [PIA]." - On 9 September 1980, private respondents Farrales and Mamasig jointly instituted a complaint for illegal dismissal and non-payment of company benefits and bonuses, against PIA with the then Ministry of Labor and Employment (MOLE). After several unfruitful attempts at conciliation, both parties were ordered to submit their position papers and evidence supporting their respective positions. The PIAsubmitted its position paper, but no evidence, and there claimed that both private respondents were habitually absent and bringing in from abroad sizeable quantities of "personal effects"; and that PIA personnel at the Manila International Airport had been discreetly warned by customs officials to advise private respondents to discontinue that practice. PIA further claimed that the services of both private respondents were terminated pursuant to the provisions of the employment contract. - In his Order dated 22 January 1981, Regional Director Estrella ordered the reinstatement of private respondents with full backwages or, in the alternative, the payment to them of the amounts equivalent to their salaries for the remainder of the fixed three-year period of their employment contracts; the payment to private respondent Mamasig of an amount equivalent to the value of a round trip ticket Manila-USA-Manila; and payment of a bonus to each of the private respondents equivalent to their one-month salary. The Order stated that 1) private respondents had attained the status of regular employees after they had rendered more than a year of continued service; 2) the stipulation limiting the period of the employment contract to three years was null and void as violative of the provisions of the Labor Code and its implementing rules and regulations on regular and casual employment and, 3) the dismissal, having been carried out without the requisite clearance from the MOLE, was illegal and entitled private respondents to reinstatement with full backwages. - On appeal, in an Order dated 12 August 1982, Hon. Leogardo, Jr., Deputy Minister, MOLE, adopted the findings of fact and conclusions of the Regional Director and affirmed the latter's award save for the portion thereof giving PIA the option, in lieu of reinstatement, "to pay each of the complainants [private respondents] their salaries corresponding to the unexpired portion of the contract[s] [of employment] x ''. - In the instant Petition for Certiorari, PIA assails the award of the Regional Director and the Order of the Deputy Minister for having been issued in disregard and in violation of Petitioner's rights under the employment contracts with private respondents. PIA invokes paragraphs 5 and 6 of its contract of employment with private respondents Farrales and Mamasig, arguing that its relationship with them was governed by the provisions of its contract rather than by the general provisions of the Labor Code. Paragraph 5 of that contract set a term of three years for that relationship, extendible by agreement between the parties; while paragraph 6 provided that, notwithstanding any other provision in the contract, PIA had the right to terminate the employment agreement at any time by giving one-month's notice to the employee or, in lieu of such notice, one-month's salary. ISSUE WON the principle of party autonomy in contracts is absolute HELD NO - A contract freely entered into should, of course, be respected since a contract is the law between the parties. The principle of party autonomy in contracts is not, however, an absolute principle. The rule in Article 1306, of our Civil Code is that the contracting parties may establish such stipulations as they may deem convenient, "provided they are not contrary to law, morals, good customs, public order or public policy." Thus, counter-balancing the principle of autonomy of contracting parties is the equally general rule that provisions of applicable law, especially provisionsthe fixed three-year period ostensibly granted by paragraph 5 by rendering such period in effect a facultative one at the option of the employer PIA. For PIA claims to be authorized to shorten that term, at any time and for any cause satisfactory to

itself, to a one-month period, or even less by simply paying the employee a month's salary. Because the net effect of paragraphs 5 and 6 of the agreement here involved is to render the employment of private respondents Farrales and Mamasig basically employment at the pleasure of PIA, the Court considers that paragraphs 5 and 6 were intended to prevent any security of tenure from accruing in favor of private respondents even during the limited period of three years, and thus to escape completely the thrust of Articles 280 and 281 of the Labor Code. - PIA cannot take refuge in paragraph 10 of its employment agreement which specifies, firstly; the law of Pakistan as the applicable law of the agreement and, secondly, lays the venue for settlement of any dispute arising out of or in connection with the agreement "only [in] courts of Karachi, Pakistan". The first clause of paragraph 10 cannot be invoked to prevent the application of Philippine labor laws and regulations to the subject matter of this case, i.e., the employeremployee relationship between petitioner PIA and private respondents. We have already pointed out that that relationship is much affected with public interest and that the otherwise applicable Philippine laws and regulations cannot be rendered illusory by the parties agreeing upon some other law to govern their relationship. - Neither may PIA invoke the second clause of paragraph 10, specifying the Karachi courts as the sole venue for the settlement of disputes between the contracting parties. Even a cursory scrutiny of the relevant circumstances of this case will show the multiple and substantive contacts between Philippine law and Philippine courts, on the one hand, and the relationship between the parties, upon the other: the contract was not only executed in the Philippines, it was also performed here, at least partially; private respondents are Philippine citizens and residents, while petitioner, although a foreign corporation, is licensed to do business (and actually doing business) and hence resident in the Philippines; lastly, private respondents were based in the Philippines in between their assigned flights to the Middle East and Europe. All the above contracts point to the Philippine courts and administrative agencies as a proper forum for the resolution of contractual disputes between the parties. Under these circumstances, paragraph 10 of the employment agreement cannot be given effect so as to oust Philippine agencies and courts of the jurisdiction vested upon them by Philippine law. Finally, and in any event, the petitioner PIA did not undertake to plead and prove the contents of Pakistan law on the matter; it must therefore be presumed that the applicable provisions of the law of Pakistan are the same as the applicable provisions of Philippine law. GO vs Cordero

Facts: Sometime in 1996, Mortimer F. Cordero, Vice-President of Pamana Marketing Corporation (Pamana), ventured into the business of marketing inter-island passenger vessels. After contacting various overseas fast ferry manufacturers from all over the world, he came to meet Tony Robinson, an Australian national based in Brisbane, Australia, who is the Managing Director of Aluminium Fast Ferries Australia (AFFA). Between June and August 1997, Robinson signed documents appointing Cordero as the exclusive distributor of AFFA catamaran and other fast ferry vessels in the Philippines. SEACAT 25. As such exclusive distributor, Cordero offered for sale to

prospective buyers the 25-meter Aluminium Passenger catamaran known as the

After negotiations with Felipe Landicho and Vincent Tecson, lawyers of Allan C. Go who is the owner/operator of ACG Express Liner of Cebu City, a single proprietorship, Cordero was able to close a deal for the purchase of two (2) SEACAT 25 as evidenced by the Memorandum of Agreement dated August 7, 1997. Accordingly, the parties executed Shipbuilding Contract No. 7825 for one (1) high-speed catamaran (SEACAT 25) for the price of US$1,465,512.00. Per agreement between Robinson and Cordero, the latter shall receive commissions totalling US$328,742.00, or 22.43% of the purchase price, from the sale of each vessel. Cordero made two (2) trips to the AFFA Shipyard in Brisbane, Australia, and on one (1) occasion even accompanied Go and his family and Landicho, to monitor the progress of the building of the vessel. He shouldered all the expenses for airfare, food, hotel accommodations, transportation and entertainment during these trips. He also spent for long distance telephone calls to communicate regularly with Robinson, Go, Tecson and Landicho. However, Cordero later discovered that Go was dealing directly with Robinson when he was informed by Dennis Padua of Wartsila Philippines that Go was canvassing for a second catamaran engine from their company which provided the ship engine for the first SEACAT 25. Padua told Cordero that Go instructed him to fax the requested quotation of the second engine to the Park Royal Hotel in Brisbane where Go was then staying. Cordero tried to contact Go and Landicho to confirm the matter but they were nowhere to be found, while Robinson refused to answer his calls. Cordero immediately flew to Brisbane to clarify matters with Robinson, only to find out that Go and Landicho were already there in Brisbane negotiating for the sale of the second SEACAT 25. Despite repeated follow-up calls, no explanation was given by Robinson, Go, Landicho and Tecson who even made Cordero believe there would be no further sale between AFFA and ACG Express Liner. On August 21, 1998, Cordero instituted Civil Case No. 98-35332 seeking to hold Robinson, Go, Tecson and Landicho liable jointly and solidarily for conniving and conspiring together in violating his exclusive distributorship in bad faith and

wanton disregard of his rights, thus depriving him of his due commissions (balance of unpaid commission from the sale of the first vessel in the amount of US$31,522.01 and unpaid commission for the sale of the second vessel in the amount of US$328,742.00) and causing him actual, moral and exemplary damages, including P800,000.00 representing expenses for airplane travel to Australia, telecommunications bills and entertainment, on account of AFFAs untimely cancellation of the exclusive distributorship agreement. Cordero also prayed for the award of moral and exemplary damages, as well as attorneys fees and litigation expenses. Robinson filed a motion to dismiss grounded on lack of jurisdiction over his person and failure to state a cause of action, asserting that there was no act committed in violation of the distributorship agreement. Said motion was denied by the trial court on December 20, 1999. Robinson was likewise declared in default for failure to file his answer within the period granted by the trial court. As for Go and Tecson, their motion to dismiss based on failure to state a cause of action was likewise denied by the trial court on February 26, 1999. Subsequently, they filed their Answer denying that they have anything to do with the termination by AFFA of Corderos authority as exclusive distributor in the Philippines. On the contrary, they averred it was Cordero who stopped communicating with Go in connection with the purchase of the first vessel from AFFA and was not doing his part in making progress status reports and airing the clients grievances to his principal, AFFA, such that Go engaged the services of Landicho to fly to Australia and attend to the documents needed for shipment of the vessel to the Philippines. As to the inquiry for the Philippine price for a Wartsila ship engine for AFFAs other on-going vessel construction, this was merely requested by Robinson but which Cordero misinterpreted as indication that Go was buying a second vessel. Moreover, Landicho and Tecson had no transaction whatsoever with Cordero who had no document to show any such shipbuilding contract. As to the supposed meeting to settle their dispute, this was due to the malicious demand of Cordero to be given US$3,000,000 as otherwise he will expose in the media the alleged undervaluation of the vessel with the BOC. In any case,

Cordero no longer had cause of action for his commission for the sale of the second vessel under the memorandum of agreement dated August 7, 1997 considering the termination of his authority by AFFAs lawyers on June 26, 1998. On May 31, 2000, the trial court rendered its judgment in favor of Plaintiff and against defendants Allan C. Go, Tony Robinson, Felipe Landicho, and Vincent Tecson. On January 29, 2001, the CA rendered judgment granting the petition for certiorari in CA-G.R. SP No. 60354 and setting aside the trial courts orders of execution pending appeal. The case before the Supreme Court is a consolidation of the petitions for review under Rule 45 separately filed by Go (G.R. No. 164703) and Cordero (G.R. No. 164747). Issue: (1) Whether petitioner Cordero has the legal personality to sue the respondents for breach of contract; and

(2) whether the respondents may be held liable for damages to Cordero for his unpaid commissions and termination of his exclusive distributorship appointment by the principal, AFFA.

Held: While it is true that a third person cannot possibly be sued for breach of contract because only parties can breach contractual provisions, a contracting party may sue a third person not for breach but for inducing another to commit such breach. Article 1314 of the Civil Code provides: Art. 1314. Any third person who induces another to violate his contract shall be liable for damages to the other contracting party. The elements of tort interference are: (1) existence of a valid contract; (2) knowledge on the part of the third person of the existence of a contract; and (3) interference of the third person is without legal justification. The presence of the first and second elements is not disputed. Through the letters issued by Robinson attesting that Cordero is the exclusive distributor of AFFA in the Philippines, respondents were clearly aware of the contract between Cordero and AFFA represented by

Robinson. In fact, evidence on record showed that respondents initially dealt with and recognized Cordero as such exclusive dealer of AFFA high-speed catamaran vessels in the Philippines. In that capacity as exclusive distributor, petitioner Go entered into the Memorandum of Agreement and Shipbuilding Contract No. 7825 with Cordero in behalf of AFFA.

The rule is that the defendant found guilty of interference with contractual relations cannot be held liable for more than the amount for which the party who was inducted to break the contract can be held liable. Respondents Go, Landicho and Tecson were therefore correctly held liable for the balance of petitioner Corderos commission from the sale of the first SEACAT 25, in the amount of US$31,522.09 or its peso equivalent, which AFFA/Robinson did not pay in violation of the exclusive distributorship agreement, with interest at the rate of 6% per annum from June 24, 1998 until the same is fully paid. Respondents having acted in bad faith, moral damages may be recovered under Article 2219 of the Civil Code.

Villanueva vs CA G.R. No. 107624 Subject: Sales Doctrine: meeting of the minds as to price is essential Facts: This is a petition assailing the decision of the CA dismissing the appeal of the petitioners. CA rendered that there was no contract of sale. - In 1985, Gamaliel Villanueva (tenant) of a unit in the 3-door apartment building owned by defendants-spouses (now private respondents) Jose Dela Cruz and Leonila dela Cruz located at Project 8, Quezon City. - About February of 1986, Dela Cruz offered said parcel of land with the 3-door apartment building for sale and plaintiffs, son and mother, showed interest in the property. - Because said property was in arrears(overdue) in the payment of the realty taxes, dela Cruz approached Irene Villanueva and asked for a certain amount to pay for the taxes so that the property would be cleared of any incumbrance. - Irene Villanueva gave P10,000.00 on two occasions. It was agreed by them that said P10,000.00 would form part of the sale price of P550,000.00. - Dela Cruz went to plaintiff Irene Villanueva bringing with him Mr. Ben Sabio, a

tenant of one of the units in the 3-door apartment building and requested Villanueva to allow said Sabio to purchase one-half (1/2) of the property where the unit occupied by him pertained to which the plaintiffs consented, so that they would just purchase the other half portion and would be paying only P265,000.00, they having already given an amount of P10,000.00 used for paying the realty taxes in arrears. - Accordingly the property was subdivided and two (2) separate titles were secured by defendants Dela Cruz. Mr. Ben Sabio immediately made payments by installments. - March 1987 Dela Cruz executed in favor of their co-defendants, the spouses Guido Pili and Felicitas Pili, a Deed of Assignment of the other one-half portion of the parcel of land wherein plaintiff Gamaliel Villanuevas apartment unit is situated, purportedly as full payment and satisfaction of an indebtedness obtained from defendants Pili. - the Transfer Certificate of Title No. 356040 was issued in the name of defendants Pili on the same day. - The plaintiffs came to know of such assignment and transfer and issuance of a new certificate of title in favor of defendants Pili. - plaintiff Gamaliel Villanueva complained to the barangay captain of Bahay Turo, Quezon City, on the ground that there was already an agreement between defendants Dela Cruz and themselves that said portion of the parcel of land owned by defendants Dela Cruz would be sold to him. As there was no settlement arrived at, the plaintiffs elevated their complaint to this Court through the instant action. - RTC rendered its decision in favor of Dela Cruz. CA affirmed. ISSUE: WON there was a perfected sale between Villanueva and Dela Cruz. HELD: - Petitioners contend that private respondents counsel admitted that P10,000 is partial or advance payment of the property. Necessarily then, there must have been an agreement as to price, hence, a perfected sale. They cite Article 1482 of the Civil Code which provides that (w)henever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract. - Private respondents contradict this claim with the argument that (w)hat was clearly agreed (upon) between petitioners and respondents Dela Cruz was that the P10,000.00 primarily intended as payment for realty tax was going to form part of the consideration of the sale if and when the transaction would finally be consummated. Private respondents insist that there was no clear agreement as to the true amount of consideration. - Dela Cruz testimony during the cross-examination firmly negated any price agreement with petitioners because he and his wife quoted the price of P575,000.00 and did not agree to reduce it to P550,000.00 as claimed by petitioner. - Villanueva on cross-examination: After the Deed of Sale relative to the purchase of the property was prepared, Mr. dela Cruz came to me and told me that he talked with

one of the tenants and he offered to buy the portion he was occupying if I will agree and I will cause the partition of the property between us. Villanueva said that he agreed and that the price 550,000 was to be divided into two. (Sabio and Villanueva) *The contract which the appellant is referring to was not presented to the court and the appellant did not use all effort to produce the said contract. - SC: The price of the leased land not having been fixed, the essential elements which give life to the contract were lacking. It follows that the lessee cannot compel the lessor to sell the leased land to him. The price must be certain, it must be real, not fictitious. A contract of sale is not void for uncertainty when the price, though not directly stated in terms of pesos and centavos, can be made certain by reference to existing invoices identified in the agreement. In this respect, the contract of sale is perfected. The price must be certain, otherwise there is no true consent between the parties. There can be no sale without a price. - In the instant case, however, what is dramatically clear from the evidence is that there was no meeting of mind as to the price, expressly or impliedly, directly or indirectly. - Sale is a consensual contract. He who alleges it must show its existence by competent proof. Here, the very essential element of price has not been proven. - Lastly, petitioners claim that they are ready to pay private respondents is immaterial and irrelevant as the latter cannot be forced to accept such payment, there being no perfected contract of sale in the first place.

ANG YU V. CA (December 02, 1994)


FACTS: Petitioner Ang Yu Asuncion and Keh Tiong leased a property of respondents Bobby Cu Unjieng, Rose Cu Unjieng and Jose Tan in Binondo Manila. Respondents informed plaintiffs that they are offering to sell the premises and are giving them priority to acquire the same. Respondents 6M for the property but petitioners offered 5M. Respondents acceted and asked petitioners to put in writing the terms and conditions but the latter never provided such. When defendants were about to sell the property, plaintiffs were compelled to file the complaint to compel defendants to sell the property to them. Court recognizes the right of first refusal of the petitioner. Notwithstanding the courts decision, respondent sold the property to Buen Realty and Development Corporation.

ISSUE: WON petitioners can demand specific performance to the respondents to sell to them the property. HELD: The petitioners never accepted the offer when they refused to make the terms and condition of the sale. As such, respondents has the right to sell the property to other parties. Even if 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
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