G.R. No. 140182 - Tanay Recreation Center and Development Corp. vs. Fausto

Tanay Recreation Center and Development Corp. (TRCDC) was lessee of a 3,090-square meter parcel in Sitio Gayas, Tanay, Rizal, where it operated the Tanay Coliseum Cockpit.
Catalina Matienzo Fausto was the registered owner and lessor under a notarized Contract of Lease dated August 1, 1971, providing a twenty-year term, renewal within sixty days prior to expiration, and a contractual priority right (right of first refusal) in favor of TRCDC to purchase the leased premises should the lessor decide to sell.

On August 8, 1990, Fausto executed a "Kasulatan ng Bilihan Patuluyan ng Lupa" selling the property to her daughter, Anunciacion Fausto Pacunayen, for P10,000.00; Transfer Certificate of Title No. M-35468 was issued in Pacunayen’s name on February 7, 1991.
On June 17, 1991, TRCDC wrote Fausto seeking renewal of the lease; Pacunayen replied (June 19, 1991) asserting ownership and demanding removal of improvements and vacation of the premises.

TRCDC filed an original Complaint on August 22, 1991 and an Amended Complaint for Annulment of Deed of Sale, Specific Performance with Damages, and Injunction (Civil Case No. 372-M) on September 4, 1991.
Respondent Pacunayen answered and pleaded estoppel, alleging TRCDC acknowledged her ownership and did not timely assert its option to purchase.
The Regional Trial Court, Branch 78, Morong, Rizal, after trial, extended the lease for seven years from August 1, 1991 at a monthly rental of P10,000.00 and dismissed TRCDC's claim for damages.
On appeal, the Court of Appeals (CA) in CA-G.R. CV No. 43770 rendered a Decision dated June 14, 1999 which affirmed with modifications: ordered TRCDC to vacate, allowed Pacunayen to withdraw P320,000.00 deposit, required accounting and deposit of unpaid rentals for extended term, and imposed monthly rent of P10,000.00 from August 1, 1998 unti...(Subscriber-Only)

Whether the lease clause granting TRCDC a priority right to purchase applied to any sale by Fausto, including sales to relatives such as Pacunayen, or only to sales to strangers.

Whether the sale from Fausto to Pacunayen was rescissible for breach of TRCDC's right of first refusal and, if so, what relief TRCDC was entitled to obtain.

Whether Fausto's death extinguished the obligation to offer the property to TRCDC and whether Fausto's heirs, represented by Pacunayen, were bound by the lease and subject to remedies.