Facts:

The case revolves around a dispute involving a residential apartment unit (no. 15) situated at the corner of Romualdez and Kalentong Streets in Mandaluyong City. The property was previously owned by Serafia Real Estate, Inc., managed by the Barreto siblings. For over twenty years, the unit was leased to spouses Gil and Beatriz Genguyon, who were informed via a letter dated March 26, 1984, that Serafia's assets would be transferred to A.B. Barretto Enterprises. Anticipating eviction, the tenants formed the Barretto Apartment Tenants Association, electing officers, including Josue Arlegui and Mateo Tan Lu.

Subsequently, without informing the Genguyons, Mateo Tan Lu purchased the apartment unit from A.B. Barretto Enterprises on January 23, 1987. Later, on July 7, 1988, Tan Lu sold the unit to Josue Arlegui, who then demanded that the Genguyons vacate the premises. The Genguyons continued to occupy the unit and filed Civil Case No. 58185 against the Barreto siblings, Tan Lu, an

...

Facts:

Background and Property Information

• The disputed property is a residential apartment unit (No. 15) located at the corner of Romualdez and Kalentong Streets in Mandaluyong City.
• Originally, the unit was owned by Serafia Real Estate, Incorporated – a company owned by several members of the Barretto family – and later, its assets were assigned to A.B. Barretto Enterprises.
• For over twenty (20) years, the apartment unit was leased by the Genguyon spouses.

Chronology of Transactions and Negotiations

• In a letter dated March 26, 1984, tenants, including the Genguyons, were informed by Alberto Barretto of the transfer of Serafia’s assets to A.B. Barretto Enterprises.
• Concerned about potential ejection, the tenants organized themselves as the Barretto Apartment Tenants Association, electing officers such as Josue Arlegui (vice-president) and Mateo Tan Lu (auditor).
• On January 23, 1987, the Genguyons were informed that the unit they were leasing had been sold to Mateo Tan Lu, despite their belief that negotiations were still in progress.
• On July 7, 1988, the Genguyons were notified that Mateo Tan Lu subsequently sold the apartment unit to Josue Arlegui.
• Shortly after the sale, Arlegui’s lawyer sent a demand letter for the Genguyons to vacate the premises, leading Arlegui to file an ejectment case in the Metropolitan Trial Court of Mandaluyong City (Civil Case No. 12647).

Lower Court Proceedings and Litigatory Actions

• The Genguyons, as lessees with an asserted right of first preference, filed Civil Case No. 58185 before the Pasig Regional Trial Court seeking annulment of sale, specific performance, redemption, and damages.
• The RTC initially issued a writ of preliminary injunction on January 11, 1990, and later, on March 22, 1991, rendered a decision favoring defendant Josue Arlegui – dismissing key claims and awarding attorney’s fees in his favor.
• Unsatisfied with the RTC ruling, the Genguyons appealed the decision to the Court of Appeals, where the appellate court made several findings regarding the breach of fiduciary duty and the absence of a legally supportable right of first preference.

Factual Findings on Negotiation and Breach of Trust

• Evidence showed that both Mateo Tan Lu and Josue Arlegui were entrusted with negotiating on behalf of the tenants as members of the tenants’ association.
• The Genguyons asserted that they had a right of first refusal based on their long-term occupancy; however, their claim was challenged based on the applicability of P.D. No. 1517, which covers tenants who have built their homes on leased land.—a qualification not met by apartment dwellers.
• Testimonies and documentary evidence revealed that the officers, by secretly acquiring the subject property and failing to inform the Genguyons of the negotiations, breached the fiduciary trust placed in them.

Certiorari and Subsequent Developments

• While the Court of Appeals rendered its decision in CA-G.R. CV No. 32833 ordering various remedies—including annulment of the sale, execution of a deed of conveyance in favor of the Genguyons, and awarding damages—the Genguyons also initiated an ejectment case which continued separately.
• During the pendency of the proceedings, the Genguyon spouses died (Beatriz on October 18, 2000, and Gil on April 16, 2001), and their heirs were substituted as parties-respondents with the consent of the petitioner.

Issue:

Right of First Preference

• Whether the Genguyon spouses, as lessees who occupied the apartment unit for an extended period, were entitled to a right of first refusal under P.D. No. 1517 (the Urban Land Reform Law).
• Whether the absence of explicit reference to P.D. No. 1517 in the complaint precludes the application of such a statutory right.

Breach of Fiduciary Duty and Constructive Trust

• Whether the actions of Mateo Tan Lu and Josue Arlegui, in purchasing the apartment unit without properly informing the Genguyons, constituted a breach of the fiduciary trust reposed in them as officers of the tenants’ association.
• Whether such acts justify the imposition of a constructive or implied trust in favor of the Genguyon spouses.

Appropriateness of Remedies

• Whether the annulment of the sale and the order to execute a deed of conveyance in favor of the Genguyons (and later, their heirs) are proper remedies.
• Whether awarding nominal damages of P35,000.00, inclusive of attorney’s fees, to the Genguyons is justified under the circumstances.
• The propriety of enjoining the Metropolitan Trial Court from further hearing of the ejectment case, given that judgment in that case had already attained finality.

Mootness and Procedural Posture

• Whether certain issues, particularly those pertaining to the ejectment proceeding, have become moot or merely academic due to the subsequent events and finality of earlier decisions.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)