Case Digest (G.R. No. 172243)
Facts:
In Riviera Filipina, Inc. v. Court of Appeals, G.R. No. 117355, decided April 5, 2002, Riviera Filipina, Inc. (Riviera) leased from Juan L. Reyes a 1,018-sqm parcel along EDSA, Quezon City, under a ten-year renewable contract starting August 1, 1982, which included a right of first refusal clause in paragraph 11. Reyes had mortgaged the land to Prudential Bank, which foreclosed and set redemption to expire March 7, 1989. Unable to redeem, Reyes offered the property to Riviera at varying prices—initially ₱5,000 per sqm, later ₱4,000, but Riviera would not exceed ₱5,000. Reyes’ counsel formally served Riviera’s ten-day notice in November 1988 to exercise its right at ₱6,000 per sqm net of taxes. Riviera replied it needed time and later confirmed its final offer at ₱5,000 per sqm. In December 1988, Riviera’s counsel was informed it had “lost” its pre-emptive right. Meanwhile, Reyes negotiated with Rolando Traballo (for Cypress) and Cornhill Trading Corp. at ₱5,300 per sqm, paid offCase Digest (G.R. No. 172243)
Facts:
- Lease contract and right of first refusal
- On November 23, 1982, Juan L. Reyes (lessor) and Riviera Filipina, Inc. (lessee) executed a ten-year renewable lease over a 1,018 sqm parcel along EDSA, Quezon City, with paragraph 11 granting Riviera the right of first refusal on any sale during the lease term.
- The land was mortgaged to Prudential Bank; upon Reyes’s default, the bank extrajudicially foreclosed and set a redemption deadline of March 7, 1989.
- Negotiations with Riviera
- Beginning October 1988, Reyes offered the property at ₱6,000/sqm net; Riviera’s President first counter-offered ₱3,500/sqm, then ₱4,000, and finally a firm ₱5,000, all rejected by Reyes.
- In letters dated December 2, 1988 and February 4, 1989, Riviera confirmed its “fixed and final” offer of ₱5,000/sqm with time-limited acceptance; on December 5, 1988, Reyes’s counsel notified Riviera that it had waived its right by non-acceptance.
- Sale to third parties and litigation
- In December 1988, Reyes negotiated with Cypress and Cornhill, and on May 1, 1989 sold the land to them for ₱5,300/sqm; they then mortgaged it to Urban Development Bank.
- On August 31, 1989, Riviera sued Reyes, Cypress, Cornhill and the bank to enforce its right of first refusal and compel transfer of title; the RTC dismissed the case in March 1990, the CA affirmed in June 1994, and denied reconsideration in September 1994.
Issues:
- Whether Riviera lost its contractual right of first refusal by refusing to match Reyes’s selling price.
- Whether Reyes’s non-disclosure of the third-party offer constituted fraud, violating Article 1339 of the Civil Code.
- Whether the death of Reyes without timely substitution deprived the Court of Appeals of jurisdiction.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)