G.R. No. 109125 December 2, 1994
Topics:
Accepted unilateral promise to buy or to sell, Right of first refusal
Doctrines:
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 grantor’s eventual intention 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.
Summary:
Ang Yu Asuncion and others filed a case for Specific Performance against Bobby Cu Unjieng and Jose Tan. The defendants in Binondo owned the residential and commercial spaces that the plaintiffs were occupying or leasing. A petition for review on certiorari was used to appeal the ruling to the Supreme Court. The appeal for insufficiency in content and form was rejected by the Supreme Court. The concerned property was transferred to Buen Realty and Development Corporation by a Deed of Sale signed by the Cu Unjieng spouses.
Facts:
Ang Yu Asuncion and others filed a case for Specific Performance against Bobby Cu Unjieng and Jose Tan. The defendants in Binondo owned the residential and commercial spaces that the plaintiffs were occupying or leasing. Defendants informed the plaintiffs of their offer to sell the property and their priority to purchase it on a number of terms. Plaintiffs submitted a counteroffer of P5 million, while Cu Unjieng offered a price of P6 million. The defendants agreed when the plaintiff requested that they put their offer in writing. Plaintiffs requested a list of the conditions of the offer to purchase. The plaintiffs sent a second letter with the same request after waiting for a response but not getting one. Plaintiffs were required to file the lawsuit to compel defendants to sell the property to them because defendants neglected to explain the terms and circumstances of the agreement to sell and because of information learned indicating the defendants were preparing to sell the property. Defendants raised an unique defense of lack of cause of action and refuted the substantive accusations of the complaint. The lawsuit was rejected by the court on the grounds that there was no contract of sale because the parties could not agree on the terms and circumstances of the proposed sale. The lower court decided that the plaintiffs would have the right of first refusal if the defendants later decided to sell their property for P11 million or less. Plaintiffs filed an appeal with the Court of Appeals, which found that the parties had not reached a consensus over the sale of the property. The claim for specified performance will not be false in the absence of such a condition. A petition for review on certiorari was used to appeal the ruling to the Supreme Court. The appeal for insufficiency in content and form was rejected by the Supreme Court. The concerned property was transferred to Buen Realty and Development Corporation by a Deed of Sale signed by the Cu Unjieng spouses. The lessees have been ordered to leave the premises by Buen Realty, the subject property’s new owner, in a letter. It responded by claiming that Buen Realty and Development Corporation was responsible for bringing the property under notice of lis pendens. The lessees have been ordered to leave the premises by Buen Realty, the subject property’s new owner, in a letter. A Motion for Execution was submitted by the lessees. The defendants are hereby ordered to execute the necessary Deed of Sale of the subject property in favor of plaintiffs Ang Yu Asuncion, Keh Tiong, and Arthur Go for the consideration of P15,000,000 in recognition of plaintiffs’ right of first refusal, and that a new Transfer Certificate of Title be issued in favor of the buyer. The court also ruled that Buen Realty Corporation has been granted a new title.
Issue:
Due to the notice of lis pendens that was carried over on TCT No. 195816 and issued in the name of Buen Realty at the time of the latter’s purchase of the property from the Cu Unjiengs on November 15, 1991, it is possible for Buen Realty to be bound by the writ of execution?
Ruling:
According to Article 1458 of the Civil Code, the so-called “right of first refusal” is a novel legal relationship in sales law and is not a perfected contract of sale. It goes without saying that it cannot be regarded as a perfected sale contract for purposes of Article 1458 of the Civil Code. While the goal of a right of first refusal may be made clear, the exercise of the right would depend on terms, including the price, that have obviously not yet been finalized as well as the grantor’s eventual intention to engage into a legally binding relationship with another. Since the necessary components to establish the vinculum juris would still be ambiguous and inconclusive prior to that, it can only be said to be part of a class of preparatory legal relations that are governed, among other general laws, by the relevant scattered provisions of the Civil Code on human conduct. It must be emphasized that the final judgment in Civil Case No. 87-41058 only granted a “right of first refusal” in favor of petitioners. An action for damages, NOT a writ of execution, should be brought in response to a violation of the right of first refusal (Ang Yu et. al). Such a proclamation has no further ramifications than what has already been stated. In conclusion, the remedy is not a writ of execution on the judgment, as there is none to execute, but an action for damages in a competent forum for the purpose, if, as it is here conveyed to us, petitioners are aggrieved by the failure of private respondents to honor the right of first refusal. Buen Realty cannot be removed from ownership and possession of the property. Without first receiving a reasonable opportunity to present its case in court, Buen Realty, which was not impleaded in Civil Case No. 87-41058, cannot be held subject to the writ of execution issued by the respondent Judge or removed from the ownership and control of the property.