Case Digest (G.R. No. 223505)
Facts:
In Parañaque Kings Enterprises, Inc. (“Petitioner”), a corporation with principal office at Dr. A. Santos Avenue, Parañaque, Metro Manila, entered into a lease on March 28, 1977, with Catalina L. Santos (“Santos”), owner of eight parcels of land in Parañaque (TCT Nos. S-19637, S-19638, S-19643 to S-19648). On February 12, 1979, lessee Frederick Chua assigned his rights to Lee Ching Bing, who in turn on August 6, 1979, assigned all rights and interests to Petitioner, with Santos’s express conformity. Paragraph 9 of the lease granted the lessee a first option or priority to buy the subject land should Santos decide to sell or encumber it, and required any transferee to recognize the lease. On September 21, 1988, Santos sold the land to David A. Raymundo for ₱5,000,000 without first offering it to Petitioner. Upon Petitioner’s protest, Santos reconveyed the land to herself at the same price, then offered it to Petitioner for ₱15,000,000, which Petitioner deemed “ridiculous” and decCase Digest (G.R. No. 223505)
Facts:
- Parties and Background
- Parañaque Kings Enterprises, Inc. (petitioner) – Philippine corporation, lessee of eight parcels in Parañaque, Metro Manila.
- Catalina L. Santos (respondent) – registered owner of said parcels, represented by attorney-in-fact Luz B. Protacio.
- David A. Raymundo (respondent) – subsequent purchaser of the parcels.
- Lease and Assignments
- November 28, 1977 – Frederick Chua leases the properties from Santos (registered lease).
- February 12, 1979 – Chua assigns rights to Lee Ching Bing with Santos’s conformity (registered).
- August 6, 1979 – Bing assigns rights to petitioner with Santos’s conformity (registered).
- Paragraph 9 of the lease grants petitioner “first option or priority to buy” if property is sold, and obliges buyer/mortgagee to respect the lease.
- Alleged Breaches
- September 21, 1988 – Santos sells the parcels to Raymundo for ₱5,000,000 without offering petitioner its first option.
- March 5, 1989 – Santos’s letter informs petitioner of the sale; petitioner protests and Santos reconveys and then offers sale to petitioner at ₱15,000,000.
- May 8, 1989 – Petitioner offers ₱5,000,000 within ten days.
- May 15, 1989 – Santos resells to Raymundo for ₱9,000,000 without re-offering petitioner.
- Petitioner alleges collusion, simulation of sale, and suffers damage to its ₱3,000,000 improvements, moral and exemplary damages.
- Procedural History
- March 19, 1991 – Petitioner files complaint for annulment of sale, specific performance, damages, attorney’s fees.
- September 2, 1991 – RTC, Makati (Branch 57) dismisses for lack of cause of action, finding Santos complied by offering at ₱15 M.
- March 29, 1993 – CA affirms, adding no stipulation as to price computation.
- Petition for review under Rule 45 filed with the Supreme Court.
Issues:
- Does the complaint state a valid cause of action for breach of the “first option or priority to buy”?
- Must the grantee of such a right be offered the same terms and conditions as a third-party buyer?
- Can a right of first refusal be enforced by an action for specific performance?
- Did the assignment of the lease include the option to purchase?
- Is Raymundo a proper party and privy to the lease obligations?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)