G.R. No. 166910 - Francisco, Jr. vs. Toll Regulatory Board

On June 2, 1981, Rudy R. Robles, Jr. and Elizabeth R. Robles executed a mortgage contract with the Development Bank of the Philippines (DBP) to secure a loan of P500,000.00.
The mortgaged properties included a parcel of land in Tabunoc, Talisay, Cebu, covered by TCT No. T-47783, together with existing improvements and the yet-to-be-constructed commercial building later known as the State Theatre Building.

On October 28, 1981, Rudy Robles executed a contract of lease in favor of Cebu Bionic Builders Supply, Inc. (Cebu Bionic) represented by Lydia Sia.
The lease contract provided, among other conditions, for:

A monthly rental of P1,000.00 payable in advance.
Automatic month-to-month renewal unless terminated by written notice within fifteen (15) days after receipt.
A special clause granting the lessee the first option to buy, with obligation to match outside offers upon sale of the leased property.

Following the Robles’ failure to settle their loan obligation, DBP initiated extrajudicial foreclosure on the subject properties.
DBP became the lone bidder on February 6, 1987, acquiring ownership via foreclosure, and a final Deed of Sale was issued on October 13, 1988.
Later, during multiple invitations for bid and a negotiated sale process (with several scheduled bid dates), petitioners initially submitted a letter-offer on December 3, 1990 but their offer was not accepted by DBP.
On December 17, 1990, respondents—To Chip, Yap, and Balila—submitted a counter letter-offer on a cash basis, which DBP accepted on December 28, 1990, thereby executing a Deed of Sale transferring the subject properties to them.

After the sale, DBP sent letters to Bonifacio Sia and subsequently to petitioners’ counsel, informing them of the transfer of ownership and ordering Cebu Bionic to vacate within thirty (30) days.
Despite such orders and final demand letters, petitioners continued to pay rentals (notably, a lump sum on March 22, 1991) to DBP, leading to disputes over possession and the right of first refusal.

Petitioners filed a complaint for specific performance, rescission of the deed of sale, cancellation of the deed with damages, and for a preliminary injunction in Civil Case No. CEB-10104.
The Regional Trial Court (RTC) initially ruled in favor of petitioners on April 25, 1997 by acknowledging that DBP had continued the lease by accepting rentals and thereby was bound by the first option clause.
DBP appealed, and after an initial decision by the Court of Appeals (CA) in February 2001 favoring petitioners, issues arose over a Motion for Reconsideration, which was eventually admitted on July 5, 2002, reversing the RTC’s decision and dismissing the petitioners’ claim for rescission.
Subsequent filings and motions reached the Supreme Court through a Petition for Review on Certiorari under Rule 45, challenging both procedural and substantive rulings, including the timing of the Motion for Reconsideration and the existence and terms of any renewed lease.

Whether the verification and certification of non-forum shopping was valid given that it was signed only by one of the petitioners, despite the corporate nature of Cebu Bionic.
Whether only questions of law (and not issues of fact) can be raised in the instant petition before the Supreme Court.

Whether the Court of Appeals erred in admitting the Motion for Reconsideration, which was filed more than six months past the reglementary period, by excusing its procedural lapse on grounds of substantial justice.
Whether there was a contract of lease between petitioners and DBP or a mere presumption of a lease relationship continuing from the prior lease with Rudy Robles.
Whether such contract (or its continuation) contained a valid right of first refusal in favor of petitioners, and if respondents were similarly bound by that right.
Whether the parties’ failure to execute a new written lease or to meet the conditions set forth in DBP’s June 18, 1987 letter terminated the original lease, especially in light of Article 1670 of the Civil Code regarding an implied new lease.
Whether, even assuming an implied lease existed, the first option or right of first refusal should have been revived and protected under the revived terms.
Whether the reversal of the RTC’s decision by the Court of Appeals and the subsequent dismissal of petitioners’ claim for rescission was proper in view of the evidentiary record and legal principles applied.

Who among the parties—petitioners or respondents—has the better right to purchase and occupy the subject properties, particularly in the context of the alleged breach of the first option to buy clause and the effects of foreclosure on existing lease arrangements?