Case Digest (G.R. No. 123581)
Facts:
The case involves petitioners Rodrigo B. Bangayan, Benjamin B. Bangayan, and others against respondents the Honorable Court of Appeals and Angelita Ocampo Lim. The events leading to the case began on July 6, 1988, when Teofista Ocampo and Petronilla Lingat entered into a Contract of Lease for a property located at 2309 Severino Street, Sta. Cruz, Manila, with a monthly rental of P7,000. The lease included specific provisions, notably that the lessee could only use the premises for an automobile supply and parts company and as a dwelling for employees, and that the lessee was prohibited from subleasing or assigning the lease without the lessor's written consent. The contract also granted Ocampo a right of first option to purchase the property if it were sold.
On January 2, 1990, Atty. Almario Amador, representing Lingat, notified Ocampo that she could exercise her right of first option within 30 days. However, negotiations stalled over the selling price. On February 22, ...
Case Digest (G.R. No. 123581)
Facts:
1. Lease Agreement and Key Provisions:
- On July 6, 1988, Teofista Ocampo and Petronilla Lingat entered into a Contract of Lease for a property located at 2309 Severino Street, Sta. Cruz, Manila. The lease included a two-story building and was set at a monthly rental of P7,000.00.
- The lease contract contained specific provisions:
- Paragraph 4: The lessee (Ocampo) was restricted to using the premises exclusively for an automobile supply and parts company and partly as a dwelling place for her employees. Any other use required the lessor's written consent.
- Paragraph 5: The lessee was prohibited from subleasing, assigning, transferring, or encumbering the lease rights under any circumstances.
- Paragraph 8: The lessee was granted the first option to purchase the property if the lessor decided to sell it. If sold to a third party, the lease contract would remain binding on the new owner.
2. Negotiations for Sale:
- On January 2, 1990, Atty. Almario Amador, counsel for Petronilla Lingat, notified Teofista Ocampo of her right to exercise the first option to purchase the property within 30 days.
- Ocampo inquired about the selling price, but negotiations stalled over who should first propose a price.
- On February 22, 1990, Atty. Amador terminated the negotiations, stating that Ocampo had failed to exercise her first option within the stipulated period. The property was then offered to other buyers on a "first come, first serve" basis.
3. Sale to the Bangayans:
- In March 1990, Petronilla Lingat agreed to sell the property to Rodrigo, Roberto, and Benjamin Bangayan for P1,000,000.00. Partial payment was made.
- On April 5, 1990, Atty. Amador informed Ocampo of the sale to the Bangayans and canceled the lease contract due to alleged breaches of its terms. Ocampo was asked to vacate the premises and pay unpaid rentals.
- On May 7, 1990, Petronilla Lingat executed a Deed of Absolute Sale in favor of the Bangayans. A new Transfer Certificate of Title (TCT No. 193035) was issued, with Ocampo's adverse claim annotated.
4. Legal Proceedings:
- Ocampo refused to vacate, leading to an ejectment case filed by the Bangayans. The Metropolitan Trial Court ruled against Ocampo, a decision upheld by higher courts.
- On September 18, 1990, Ocampo filed a complaint (Civil Case No. 90-54459) against Petronilla Lingat and the Bangayans, seeking annulment of the sale, cancellation of the title, reconveyance, and damages.
- Teofista Ocampo died in October 1991 and was substituted by her daughter, Angelita Ocampo Lim, who claimed to have been assigned the right of first option by her mother.
5. Trial Court and Court of Appeals Decisions:
- The Regional Trial Court (RTC) dismissed Ocampo's case, ruling that her death terminated the lease contract and extinguished her rights, including the first option.
- The Court of Appeals reversed the RTC, declaring the sale to the Bangayans null and void, ordering the cancellation of TCT No. 193035, and directing Petronilla Lingat to offer the property to Angelita Ocampo Lim.
Issue:
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Ruling:
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Ratio:
Contractual Rights and Assignability:
- Under Article 1311 of the Civil Code, contractual rights and obligations are generally transmissible to heirs and assigns, unless they are personal in nature or prohibited by stipulation or law.
- In this case, the lease contract explicitly prohibited assignment of lease rights, making Ocampo's right of first option non-transferable.
Personal Nature of Lease Contracts:
- Lease contracts are personal agreements between the lessor and lessee. The death of either party typically terminates the contract unless otherwise stipulated.
- The Court emphasized that the right of first option was not an independent right but a component of the lease agreement, which ceased to exist upon Ocampo's death.
Strict Compliance with Contract Terms:
- The Court upheld the principle that contractual terms must be strictly enforced. Ocampo's failure to exercise her first option within the agreed period and her attempt to assign the right violated the lease contract's terms.
No Novation by Substitution:
- The assignment of the lease or any rights under it would constitute novation by substitution, which requires the lessor's consent. Since no consent was given, the assignment was invalid.