Guzman, Bocaling v.

Bonnevie

206 SCRA 675 (1992)

1st Division. Cruz, J.

Right of first refusal

SUMMARY: Reynoso leased a parcel of land to respondents and granted them a right of first
refusal. Reynoso then sold the land to the petitioners for a lower price than respondents.
Petitioners are now the defendants in an action for rescission by respondents to rescind the sale
and cancel the TCT. Court ruled that Reynoso was in violation of the terms of the Contract of
Lease and the petitioners were buyers in bad faith. Sale rescinded.

FACTS:

1. Respondents took out a lease on a parcel of land owned by Reynoso. The lease contract
had a stipulation that respondents would be given the right of first refusal should Reynoso
put the land up for sale: “20. – In case the LESSOR desires or decides to sell the leased
property, the LESSEES shall be given a first priority to purchase the same, all things and
considerations being equal.
2. Reynoso sent a letter to respondents informing them that the land would be put up for sale
for P600k less a mortgage loan of P100k.
3. Reynoso, claiming that respondents defaulted on their right of first refusal, sold the land to
petitioners for P400k (P137.5k paid in cash, the balance payable when property was cleared
of tenants).
4. Due to respondents failure to leave the premises. Reynoso filed an ejectment case. While
the ejectment case was pending, respondents filed a case to rescind the sale of the land
and cancellation of the TCT.
5. Regarding the ejectment case, the lower courts ruled in favor of plaintiff (Reynoso). With
regard to the rescission case, the lower court ruled in favor of respondents, ordering the sale
to be rescinded. Petitioners now appeal. Petitioner raised the defense that since the action
was one of annulment, respondent is not a party to bring the suit because he is a stranger to
the Contract of Sale between petitioner and Reynoso.

ISSUE/HELD/RATIO:

W/N sale was rescissible - Yes

Respondents’ right of first refusal was not complied with

 The Court said that the respondent’s receipt of the letter of the sale was spurious since
there was no submission of evidence that respondent had received the letter. Even if the
letter was received, Reynoso would still be guilty for violating the right of first refusal since
 she offered the same property to another for better terms.

The remedy is rescission under Art. 1380

 In order to defeat an action for rescission, it should be shown that the subject matter is in the
possession of 3rd persons in good faith. Both are lacking in this case since petitioners are
the vendees in the Contract of Sale i.e. they are not 3rd persons, and that they categorically
admitted that they knew of the contract of lease in favor of the respondents, who were
actually occupying the land at the time of the sale. Petitioner has only itself to blame since it
should have inquired into the details of the Contract of Lease.

 Petitioner cannot tenably claim to be a buyer in good faith as it had notice of the lease of the
property by the respondents and such knowledge should have cautioned it to look deeper
into the agreement to determine if it involved stipulations that would prejudice its own
interests.

RULING: Petition DENIED.