Facts:
Defendant
Catalina Santos is the owner of 8 parcels of land located in Parañaque.
Frederick Chua leased the property of defendant and assigned all rights and
interest and participation in the leased property to Lee Ching Bing by deed of
assignment. Lee Ching Bing also assigned all his rights and interest in the
leased property to Parañaque Kings Enterprises, Inc. All of these
contracts/deeds were registered.
Paragraph 9 of the assigned leased (sic) contract provides among
others that:
9. That in case the properties subject of
the lease agreement are sold or encumbered, Lessors shall impose as a condition
that the buyer or mortgagee thereof shall recognize and be bound by all the
terms and conditions of this lease agreement and shall respect this Contract of
Lease as if they are the LESSORS thereof and in case of sale, LESSEE shall have
the first option or priority to buy the properties subject of the lease;
Defendant
Santos sold the eight parcels of land subject of the lease to Defendant David
Raymundo, for a consideration of P5Million, in contravention of the contract of
lease, for the first option or priority to buy was not offered by defendant
Santos to the plaintiff. Santos, realizing the error, she had it reconveyed to
her for the same consideration of P5Million and subsequently the property was
offered for sale to plaintiff for the sum of P15Million, however the period of
10 days to make good of the offer expired. Another deed of sale was executed by
Santos in favor of Raymundo for consideration of P9Million. Hence, the
petitioner filed a complaint before the RTC.
RTC
dismissed the complaint for lack of a valid cause of action. It ratiocinated
that Santos complied with the lease agreement by offering the properties for
sale to the plaintiff and there was a definite refusal on the part of the
plaintiff to accept the offer.
CA
affirmed in toto the ruling of RTC.
Issue:
Whether
or not there is valid cause of action.
Ruling:
Yes.
The principal legal
question, as stated earlier, is whether the complaint filed by herein
petitioner in the lower court states a valid cause of action. Since such question assumes
the facts alleged in the complaint as true, it follows that the determination
thereof is one of law, and not of facts. There is a question of law
in a given case when the doubt or difference arises as to what the law is on a
certain state of facts, and there is a question of fact when the doubt or
difference arises as to the truth or the falsehood of alleged facts.
A cause of action exists if
the following elements are present: (1) a right in favor of the plaintiff by whatever means and under
whatever law it arises or is created; (2) an obligation on the part of the
named defendant to respect or not to violate such right, and (3) an act or
omission on the part of such defendant violative of the right of plaintiff or
constituting a breach of the obligation of defendant to the plaintiff for which
the latter may maintain an action for recovery of damages.
A careful examination of the
complaint reveals that it sufficiently alleges an actionable contractual breach
on the part of private respondents. Under paragraph 9 of the contract of lease between respondent Santos
and petitioner, the latter was granted the first option or priority to purchase
the leased properties in case Santos decided to sell. If Santos never decided to
sell at all, there can never be a breach, much less an enforcement of such
right. But on September 21, 1988,
Santos sold said properties to Respondent Raymundo without first offering these
to petitioner. Santos indeed realized her
error, since she repurchased the properties after petitioner complained. Thereafter, she offered to
sell the properties to petitioner for P15
million, which petitioner, however, rejected because of the ridiculous price. But Santos again appeared to
have violated the same provision of the lease contract when she finally resold
the properties to respondent Raymundo for only P9 million without first
offering them to petitioner at such price. Whether there was actual breach
which entitled petitioner to damages and/or other just or equitable relief, is
a question which can better be resolved after trial on the merits where each
party can present evidence to prove their respective allegations and defenses.
The decision of the RTC and CA are reversed and set
aside. The case is remanded to the RTC for further proceedings.
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