Facts:
Spouses
Gil and Beatriz Genguyon were tenants for more than twenty years of residential apartment unit number fifteen located at the corner of Romualdez and Kalentong Streets, Mandaluyong City. The unit belonged to
Serafia Real Estate, Incorporated (Serafia), whose owners included
Alberto, Alfonso, and Simeon Barretto and their siblings
Rosa B. Ochoa and Teresita B. Alcantara. In a letter dated March 26, 1984, the tenants were informed by Alberto Barretto that Serafia and its assets had been assigned and transferred to
A.B. Barretto Enterprises. Apprehensive of possible ejection, the tenants formed the
Barretto Apartment Tenants Association, electing
Josue Arlegui as vice-president and
Mateo Tan Lu as auditor to represent them in negotiations for the purchase of their respective units. The
Genguyon spouses were later surprised to learn on January 23, 1987 that their unit had already been sold to
Mateo Tan Lu, yet they continued to occupy and pay rentals. On July 7, 1988, they were informed that Tan Lu had sold the unit to
Josue Arlegui, after which they received a demand from Arlegui’s lawyer to vacate. When they refused, Arlegui filed an action for
ejectment in the Metropolitan Trial Court of Mandaluyong City, Branch 60, docketed as
Civil Case No. 12647. In response, the spouses filed in the Regional Trial Court of Pasig City, Branch 67,
Civil Case No. 58185, seeking
annulment of sale,
specific performance,
redemption, and
damages with preliminary injunction against the Barrettos, Tan Lu, and Arlegui. The trial court, on January 11, 1990, issued a writ of preliminary injunction directing the MTC to desist in the ejectment case. On March 22, 1991, the RTC ruled for Arlegui, dismissing the complaint for lack of merit and lifting the injunction against the MTC. Meanwhile, the ejectment case proceeded and on October 6, 1992, the MTC ordered the spouses to vacate and pay rentals and attorneys fees; the RTC affirmed the MTC judgment on January 25, 1993. On February 14, 1996, the Court of Appeals in
CA-G.R. CV No. 32833 reversed the RTC and annulled the sale, ordered reconveyance by requiring Arlegui to execute a deed of conveyance upon payment, awarded nominal damages to the spouses, and dismissed the permanent injunction issue as unjustified given the state of the ejectment case. Arlegui moved for reconsideration, but it was denied on September 12, 1996, prompting Arlegui’s petition for review. During the Supreme Court proceedings, the spouses’ heirs sought substitution after the death of
Gil on April 16, 2001 and
Beatriz on October 18, 2000, which the Court granted. Ultimately, the Supreme Court denied the petition but modified the Court of Appeals’ dispositive outcome to recognize conveyance to the heirs instead of the spouses.
Issues:
Whether the
Genguyon spouses (now represented by their heirs) were entitled to relief on the theory that they had a right of first refusal and, in any case, whether the subsequent purchase by
Mateo Tan Lu and the later purchase by
Josue Arlegui created liability through
fiduciary breach and a resulting
constructive trust, including the propriety of damages and the injunction/dismissal of the ejectment case.
Ruling:
Ratio:
Doctrine: