Sales case digests (Part 1)

8/11/2019 Sales case digests (Part 1)

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ANG YU ASUNCION V. COURT OF APPEALS (1994)

Petitioners/Lessees: Ang Yu Auncion, Arthur Go and Keh Tiong

Lessors: Bobby Cu Unjieng, Rose Cu Unjieng and Jose Tan

Respondent: Court of Appeals

Private Respondent: Buen Realty Development Corporation

Object: residential and commercial spaces in Ongpin St., Binondo, Manila

FACTS:

Petitioners are tenants/lessees of residential and commercial space owned by the lessors.

Lessors informed lessees that they are offering to sell the premises and are giving them priority

to acquire the same. Bobby Cu Unjieng offered a price of P6-million while petitioners made

counter-offer of P5-million. The offer was put into writing.

On 24 October 1986, lessees asked lessors to specify the terms and conditions of the offer to sell

but did not receive any reply so they sent another letter on 28 January 1987.

Lessors failed to specify the terms and conditions of the offer to sell. Lessees received

information that lessors were about to sell the property. Thus they filed a complaint to compel

lessors to sell the property to them.

Trial court found that lessors offer to sell was never accepted by lessees because they did not

agree upon the terms and conditions of the sale thus there was no contract of sale at all. But

court ruled that should the defendants offer their property for sale at a price of P11-million or

below, plaintiffs will have right of first refusal. Lessors need not offer the property to the

plaintiffs if purchase price is higher than P11-million.

Court of Appeals ruled that there was no meeting of the minds concerning the sale of the

property. Claim for specific performance will not lie. CA also granted the same right of first

refusal in the event that the property is sold for a price in excess of P11-million. SC denied the appeal for insufficiency in form and substance.

On 15 November 1990 while appeal in the CA was pending, the Cu Unjieng spouses executed a

Deed of Sale transferring the property to herein Buen Realty for P15-million. Thus, Buen Realty

demanded that the lessees vacate the premises of the property.

Lessees filed a motion for execution.

TC:

Trial court ruled that ordered that a Deed of Sale be executed in favour of Ang Yu Asuncion et al

in consideration of P15-million in recognition of their right of first refusal.

CA:

declared without force and effect the orders of the trial court.

ISSUES:

1. WON lessees right of first refusal has been breach. YES.

2.

WON a writ of execution on the judgment is the proper remedy for the breach. NO.


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RATIO:

1. There was breach because the Cu Unjiengs failed to honor the right of first refusal.

The final judgment on the first civil case has accorded the lessees the right of first

refusal.

2.

The proper remedy is action for damages in a proper forum.

The proper remedy is not writ of execution because there is none to execute.

Also, Buen Realty, not being impleaded in the first civil case, cannot be held subject to

the writ of execution, let alone ousted from the ownership and possession of the

property without being duly afforded its day in court.

Having the right of first refusal does not mean that there is already a perfected contract

of sale under Art. 1458, nor is there an option under Art. 1479, nor an offer under Art.

1319.

The exercise of the right would be dependent not only on the grantors eventual

intention to enter into a binding juridical relation with another but also on terms,

including the price, that are yet to be firmed up. Such belongs to a class of preparatory

juridical relations governed not by contracts, but by provisions of CC on human conduct.


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PARANAQUE KINGS ENTERPRISES, INC. VS. COURT OF APPEALS (1997)

Plaintiff/Petitioners: Paranaque Kings Enterprises, Inc. (PKEI)

Defendants/Respondents: Catalina Santos (owner), represented by Luz Protacio; David A. Raymundo

Object: 8 parcels of land in Paranaque, Metro Manila

FACTS:

Santos owns the subject property. Frederick Chua leased the property. Chua assigned all his

rights, interests and participation in the leased property to Lee Ching Bing who also assigned all

his rights and interest in the leased property to PKEI.

Par. 9 of the deed of assignment provides that if the properties are sold or encumbered, the

lessor shall impose as a condition that the buyer of mortgagee thereof shall recognize and be

bound by all the terms and conditions of this lease agreement, and shall respect the Contract of

Lease as if they are the lessors and in case of sale, lessee shall have the first option or priority to

buy the properties subject of the lease.

On 21 September 1988, Santos sold the 8 parcels of land to David Raymundo for P5-million. She

had the property reconveyed to her for P5-million.

The property was offered for sale to PKEI for P15-million. PKEI was given ten days to make good

of the offer but the period expired. PKEI offered to buy the properties for P5-million.

On 15 May 1989, before they replied to the offer to purchase, Santos executed another deed of

sale in favour of Raymundo for P9-million.

It was only on 17 May 1989 that Santos replied to the letter of the plaintiffs offer to buy, stating

that the period has lapsed and PKEI is not privy to the contract.

PKEI filed complaint for annulment of Deed of Sale.

TC: Dismissed the complaint for lack of valid cause of action.

Santos had complied with Par. 9 of the lease agreement by twice offering the properties for sale

to the plaintiff for P15-M, but PKEI scorned saying the offer was ridiculous. There was definite

refusal.

CA:

Affirmed ruling of CA.

Appellant as prospective buyer cannot dictate its own price and forcibly ram it against the

owner.

ISSUES:

1.

WON the complaint alleging breach of contractual right of first option states a valid cause of

action. YES

2.

WON there is cause of action under PD 1517. NO.

3.

WON the Deed of Assignment included the option to purchase. YES.

4.

WON Raymundo was privy to the Contract of Lease. YES


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RATIO:

1.

There is breach of contractual right of first option.

Santos sold the properties to Raymundo without first offering these to the PKEI. Thereafter,

she repurchased the properties and offered it to PKEI for P15-M. When rejected, she sold

the properties to Raymundo for P9-million without first offering them to petitioner at such

price.

The basis of the right of first refusal must be the current offer to sell of the seller or offer to

purchase of any prospective buyer. Only after the optionee fails to exercise its right of first

priority under the same terms and within the period contemplated, could the owner validly

offer to sell the property to a third person, again, under the same terms as offered to the

optionee.

2. There is no cause of action under PD 1517.

Under Sec. 6 of the PD the terms and conditions of the sale in the exercise of the lessees

right of first refusal to purchase shall be determined by the Urban Zone Expropriation and

Land Management Committee. Hence, certain prerequisites must be complied with by

anyone who wishes to avail himself of the benefits of the decree.

There being no allegation in its complaint that the prerequisites were complied with, it is

clear that the complaint fail to state a cause of action on this ground.

3. The Deed of Assignment included the option to purchase.

Under the first and second assignments it was expressly stated that the assignor sells,

transfers and assigns all his rights, interests and participation over said leased premises.

One of such rights included in the contract of lease and in the assignments of rights was thelessees right of first option or priority to buy the properties as provided in Par. 9 of the

assigned lease contract.

4.

Raymundo was privy to the Contract of Lease since he stepped into the shoes of the owner-

lessor as, by virtue of his purchase, he assumed all the obligations of the lessor under the

lease contract.

In order to accord complete relief to petitioner, Raymundo was a necessary party to the

case. A favourable judgment for the petitioner will affect the rights of Raymundo as the

buyer of the property over which petitioner would like to assert its first option to buy.


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ROSENCOR DEVELOPMENT CORPORATION V. INQUING (2001)

Owners: Heirs of Sps. Tiangco represented by Eufrocina de Leon

Buyer/Petitioner: Rosencor Development Corporation

Lessees/Respondents: Paterno Inquing, Irene Guillermo and Federico Bantugan

Object: two-storey residential apartment in Tomas Morato, Quezon City

FACTS:

Respondents were lessees renting the subject property. They were allegedly verbally

granted by the lessors the pre-emptive right to repurchase the property if they decide to sell

the same.

When Sps. Tiangco died, the lessees were allegedly promised the same pre-emptive right by

the heirs.

In June 1990, lessees received a letter from Atty. Aguila demanding that they vacate the

premises. They refused to leave. De Leon refused to accept the lessees rental payment.

They received letter from de Leon offering to sell to them the property for P2-million.

Lessees offered to buy the property for P1-million. No answer was given by de Leon.

On January 1991, lessees again received a letter from Atty. Aguila advising them that the

heirs of the spouses have sold the property to Rosencor. Lessees asked for a copy of the

deed of sale but such request was turned down. They also offered to tender their rental

payment to de Leon but she refused to accept.

Lessees discovered that the sale between de Leon and Rosencor took place in September

1990 while de Leon made the offer to them only in October 1990. Also the property was

sold for only P726,000. The lessees offered to reimburse de Leon the selling price plus the

an additional P274,000 to complete their P1-million offer. De Leon refused.

Lessees filed the present action.

RTC:

Dismissed the complaint.

Right of redemption on which complaint was based was merely oral and is unenforceable.

CA:

Reversed the decision of RTC

Ordered, among others, the rescission of the Deed of Absolute Sale and reconveyance of the

premises to De Leon.

ISSUES:

1.

WON a right of first refusal is covered by provisions of the CC on Statute of Frauds. NO.

2.

WON respondents have satisfactorily proven their right of first refusal over the property.

3. May a contract of sale entered into in violation of a third partys right of first refusal be

rescinded in order that such third party can exercise said right? YES.

4.

WON the sale in the present case is rescissible.


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RATIO:

1.

A right of first refusal is not among those listed as unenforceable contracts under the statute

of frauds, thus it may be proven by oral evidence.

The application of the provision on Statute of Frauds presupposes the existence of a

perfected, albeit unwritten, contract of sale. A right of first refusal is not by any means a

perfected contract of sale of real property.

It is a contractual grant, not of the sale of the real property involved, but of the right of first

refusal over the property sought to be sold.

2.

Respondents have adequately proven the existence of their right of first refusal.

Bantugan, Guillermo and Inquing uniformly testified that they were promised by the Sps.

Tiangco and later on, by the heirs a right of first refusal over the property.

If de Leon did not recognize their right of first refusal, then she would not have bothered to

offer the property for sale to the respondents.

3.

A contract of sale entered into in violation of a right of first refusal of another person, while

valid, is rescissible.

A contract otherwise valid may be subsequently rescinded by reason of injury to third

persons.

4.

The petitioners did not act in bad faith in entering into the deed of sale over the property. The

property remedy is an action for damages.

UnderArt. 1385 rescission shall not take place when the things which are the object of the

contract are legally in the possession of third persons who did not act in bad faith. In the cases cited in the decision, the Court ordered the rescission of the sales made in

violation of the right of first refusal because the vendees therein could not have acted in

good faith as they were aware or should have been aware of the right of first refusal

granted to another person by the vendors therein.

The evidence on record fails to show that petitioners acted in bad faith. Also, they did not

try to communicate with Atty. Aguila and inform her about their preferential right over the

property.

Bad faith on the part of De Leon does not mean that Rosencor also acted in bad faith.

Sales case digests (Part 1)

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