Case Digest (G.R. No. 143513)
Facts:
Polytechnic University of the Philippines v. Court of Appeals and Firestone Ceramics, Inc., G.R. Nos. 143513 and 143590, November 14, 2001, Supreme Court Second Division, Bellosillo, J., writing for the Court.The dispute arose from long-term lease arrangements between National Development Corporation (NDC) and Firestone Ceramics, Inc. (FIRESTONE) over portions of a ten-hectare estate in Sta. Mesa, Manila (the NDC compound). Beginning with a 24 August 1965 lease (Contract No. C-30-65) covering about 2.90118 hectares for a ten-year term (renewable), FIRESTONE built warehouses and manufacturing facilities. Subsequent related leases followed in 1969 and 1974; a consolidated agreement on 22 December 1978 (Contract No. A-10-78) renewed the lease terms and expressly granted FIRESTONE a right of first refusal to purchase the leased premises should the lessor decide to sell. The leases also included obligations by FIRESTONE to construct improvements on the premises.
In 1988 FIRESTONE sought renewal and later asserted its option to purchase after learning of Memorandum Order No. 214, by which the Office of the President ordered the transfer/conveyance of the NDC compound to Polytechnic University of the Philippines (PUP) at an acquisition cost that would cancel NDC’s obligation to the national government (P57,193,201.64), effectively treating the transaction as a sale for consideration of P554.74 per square meter. FIRESTONE filed suit for specific performance and preliminary injunction to compel NDC to honor its right of first refusal and to enjoin disposition to PUP. The trial court issued a temporary restraining order and later a preliminary injunction against NDC’s sale.
PUP moved to intervene as a purchaser pendente lite; the trial court granted intervention, the Court of Appeals affirmed, and this Court initially denied FIRESTONE’s challenge to intervention but later reinstated PUP’s petition for review on procedural grounds. After trial on the merits, the Regional Trial Court declared the leases valid until 2 June 1999, held the lease contracts interrelated and inseparable, and ordered PUP to sell the leased premises to FIRESTONE at P1,500.00 per square meter. The trial court also sustained Memorandum Order No. 214 as not per se hostile to FIRESTONE’s rights but faulted defendants’ handling of it.
The Court of Appeals affirmed the trial court’s decree ordering sale in favor of FIRESTONE (but deleted awarded attorney’s fees), directing that NDC should have offered the property to FIRESTONE before selling to PUP. PUP and NDC filed motions for reconsideration which were denied. PUP’s subsequent timely filing issues before this Court led initially to dismissal for lateness, p...(Subscriber-Only)
Issues:
- Was PUP’s Petition for Review timely filed and properly entertained by the Court?
- Did the transaction between NDC and PUP constitute a sale (and not a mere transfer) such that any pre-emptive right of FIRESTONE was triggered?
- If a sale occurred, is FIRESTONE’s contractual right of first refusal enforceable, and what are the attendant remedies (pr...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)