Case Digest (G.R. No. 183612) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Polytechnic University of the Philippines v. Golden Horizon Realty Corporation (G.R. Nos. 183612 & 184260, decided March 15, 2010), petitioners National Development Company (NDC) and Polytechnic University of the Philippines (PUP) challenged the Regional Trial Court (RTC) of Makati City’s November 25, 2004 decision in Civil Case No. 88-2238, as affirmed by the Court of Appeals on June 25, 2008. In 1977 and 1978, NDC, a government-owned corporation, leased parcels of its Sta. Mesa estate to Golden Horizon Realty Corporation (GHRC) under two ten-year renewable contracts granting GHRC an option to purchase (i.e., a right of first refusal) on the leased land. GHRC built an industrial complex thereon and, before the first lease expired, sought renewal and reaffirmed its desire to purchase. NDC failed to respond but continued accepting rent. Unbeknownst to GHRC, NDC was negotiating the sale of the entire property to PUP pursuant to Memorandum Order No. 214 (January 6, 1989), co Case Digest (G.R. No. 183612) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Properties
- National Development Company (NDC) – a government-owned and controlled corporation established under Commonwealth Act No. 182 (amended) and P.D. No. 668.
- Golden Horizon Realty Corporation (GHRC) – lessee of portions of the NDC Compound.
- Polytechnic University of the Philippines (PUP) – public educational institution created by P.D. No. 1341, intervenor-purchaser pendente lite.
- Lease Contracts and Improvements
- September 7, 1977 – C-33-77, lease of 2,407 m² for 10 years, renewable for another 10 years by mutual consent; no purchase option clause.
- May 4, 1978 – C-12-78, lease of 3,222.80 m² for 10 years, renewable by mutual consent; contains “option to purchase … price to be negotiated and determined at the time the option … is exercised.”
- GHRC constructs buildings at its expense (P5 million), leases to manufacturers, generates jobs.
- Exercise of Option to Renew and Request for Purchase
- June 13, 1988 and August 12, 1988 – GHRC formally requests renewal for another 10 years and priority to purchase.
- NDC does not respond but continues to accept GHRC’s rent and allows possession.
- Memorandum Order No. 214 and PUP’s Involvement
- January 6, 1989 – President Aquino’s Memorandum Order directs transfer of NDC Compound to the National Government for conveyance to PUP at acquisition cost (P554.74/m²).
- February 20, 1989 – RTC issues preliminary injunction enjoining sale.
- February 23, 1989 – PUP intervenes as defendant; January 14, 1991 – PUP files ejectment case against GHRC.
- Parallel Litigation and SC Firestone Decision
- GHRC’s Amended Complaint enjoins PUP’s ejectment suit; asserts Memorandum Order No. 214 is null and violates contracts.
- Proceedings suspended pending SC decision in PUP v. Firestone Ceramics, Inc. (G.R. Nos. 143513 & 143590).
- RTC and CA Decisions in GHRC v. NDC and PUP
- November 25, 2004 – RTC upholds GHRC’s right of first refusal under both leases (interrelated), orders reconveyance at P554.74/m², awards P100,000 attorney’s fees.
- June 25, 2008 – Court of Appeals affirms RTC, finds implied renewal of leases and applicability of Firestone precedent.
- Petitions to the Supreme Court
- G.R. No. 183612 – PUP’s petition, argues right of first refusal expired with the original lease and did not carry over to implied month-to-month renewal; purchase-option clause in C-12-78 only.
- G.R. No. 184260 – NDC’s petition, contends no implied ten-year renewal, only month-to-month; sale price (P554.74/m²) reflects government-to-government transfer, not fair market value.
Issues:
- Whether the right of first refusal granted to GHRC under the lease contracts survived until NDC’s negotiations with PUP.
- Whether the implied renewal of the leases carried over GHRC’s option-to-purchase/right of first refusal.
- Whether the lease contracts (C-33-77 and C-12-78) are interrelated and inseparable for purposes of GHRC’s rights.
- What is the proper purchase price in case of reconveyance under GHRC’s right of first refusal.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)