Ang Yu Asuncion vs CA 9APR G.R. No.

109125, December 2, 1994 FACTS: Petitioners allege that they are tenants or lessees of residential and commercial spaces owned by defendants in Ongpin Street, Binondo, Manila since 1935 and that on several occasions before October 9, 1986, defendants informed plaintiffs that they are offering to sell the premises and are giving them priority to acquire the same. During the negotiations, Bobby Cu Unjieng offered a price of P6-million while petitioners made a counter offer of P5-million. On October 24, 1986, petitioners asked the respondents to specify the terms and conditions of the offer to sell. Petitioners now raise that since respondents failed to specify the terms and conditions of the offer to sell and because of information received that the latter were about to sell the property, plaintiffs were compelled to file the complaint to compel defendants to sell the property to them. The trial court found that the respondents offer to sell was never accepted by the petitioners for the reason that they did not agree upon the terms and conditions of the proposed sale, hence, there was no contract of sale at all. The Court of Appeals affirmed the decision of the lower court. This decision was brought to the Supreme Court by petition for review on certiorari which subsequently denie d the appeal on May 6, 1991 for insufficiency in form and substance. On November 15, 1990, while CA-G.R. CV No. 21123 was pending consideration by this Court, the Cu Unjieng spouses executed a Deed of Sale transferring the property in question to herein respondent Buen Realty and Development Corporation, for P15,000,000.00. On July 1, 1991, respondent as the new owner of the subject property wrote a letter to the petitioners demanding that the latter vacate the premises. On July 16, 1991, the petitioners wrote a reply to respondent corporation stating that the latter brought the property subject to the notice of lis pendens regarding Civil Case No. 87-41058 annotated on TCT No. 105254/T-881 in the name of the Cu Unjiengs. The lessees filed a Motion for Execution dated August 27, 1991 of the Decision in Civil Case No. 87-41058 as modified by the Court of Appeals in CA-G.R. CV No. 21123. On August 30, 1991, the RTC ordered the Cu Unjiengs to execute the necessary Deed of Sale of the property in litigation in favor of plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go for the consideration of P15 Million pesos in recognition of petitioners right of first refusal and that a new Transfer Certificate of Title be issued in favor of the buyer. The court also set aside the title issued to Buen Realty Corporation for having been executed in bad faith. On September 22, 1991, the Judge issued a writ of execution. On 04 December 1991, the appellate court, on appeal to it by private respondent, set aside and declared without force and effect the above questioned orders of the court a quo. ISSUE Whether or not Buen Realty can be bound by the writ of execution by virtue of the notice of lis pendens, carried over on TCT No. 195816 issued in the name of Buen Realty, at the ti me of the latters purchase of the property on 15 November 1991 from the Cu Unjiengs. HELD We affirm the decision of the appellate court. In the law on sales, the so-called right of first refusal is an innovative juridical relation. Needless to point out, it cannot be deemed a perfected contract of sale under Article 1458 of the Civil Code. In a right of first refusal, while the object might be made determinate, the exercise of the right, however, would be dependent not only on the grantors eventual i ntention to enter into a binding juridical relation with another but also on terms, including the price, that obviously are yet to be later firmed up. Prior thereto, it can at best be so described as merely belonging to a class of preparatory juridical relations governed not by contracts (since the essential elements to establish the vinculum juris would still be indefinite and inconclusive) but by, among other laws of general application, the pertinent scattered provisions of the Civil Code on human conduct. The final judgment in Civil Case No. 87-41058, it must be stressed, has merely accorded a right of first refusal in favor of petitioners. The consequence of such a declaration entails no more than what has heretofore been said. In fine, if, as it is here so conveyed to us, petitioners are aggrieved by the failure of private respondents to honor the right of first refusal, the remedy is not a writ of execution on the judgment, since there is none to execute, but an action for damages in a proper forum for the purpose. Furthermore, Buen Realty, not having been impleaded in Civil Case No. 87-41058, cannot be held subject to the writ of execution issued by respondent Judge, let alone ousted from the ownership and possession of the property, without first being duly afforded its day in court.

PABALAN, DANICA V.OBLICON CASE DIGESTEQUATORIAL vs. MAYFAIRG.R. No. 106063November 21, 1996FACTS: -

Petitioners are Carmelo & Bauermann, Inc (owner/seller/lessor) Equatorial Realty Development, Inc(buyer)Respondent is Mayfair Theater, Inc (lessee)Carmelo owned a parcel of land with two 2-storey buildings (covered by 4 land titles) at RectoIn 1967, 2 portions of the property (covered by 2 titles) was leased to Mayfair for 20 yearsIn 1978, Carmelo sold the entire Recto property to Equatorial for P11,300,000Mayfair petitioned for annulment of the sale on the ground that it was violative of Paragraph 8 of theContract of lease between respondent and Carmelo, which reads: That if the LESSOR should desire to sell the leased premises, the LESSEE shal l be given 30-days exclusive option to purchase the same. The Trial court ruled in favor of herein petitioners on the ground that Paragraph 8 was interpreted as anoption contractMayfair appealed and the CA reversed the decision of the Trial court saying that Paragraph 8 should be interpreted as a right of first refusal and not an option contract ISSUES: 1. Whether Paragraph 8 constitutes an option contract clause or a right of first refusal2. WON sale of property to Equatorial is valid HELD: SC ruled in favor of Mayfair ordering recission of the deed of sale and granting him right of first refusal to buy the property at P11,300,000. The issues were held as follows:1. RIGHT OF FIRST REFUSAL . The SC agreed with the CAs ruling that Paragraph 8 cannot constit ute an option clause (covered in Article 1324 & 1479 of the Civil Code) for the lack of definite purchasing price in the agreement. Furthermore, the SC ruled that the stipulation in question was created to manifest a reciprocal obligation to guard the interest of Mayfair in case of sale of the property: (1)to give him the option to purchase the property or (2)to ensure that purchaser of the property shall recognize the lease agreement earlier made. As such, Paragraph 8 is considered a right of first refusal. 2.NO . Both Carmelo and Equatorial acted in bad faith for entering into Contract of Sale knowing that Paragraph 8 (right of first refusal) was agreed upon in the Contract of Lease and that Mayfair (another party) was interested in the property in question