Right of First Refusal

It is a right of first priority all things and conditions being equal; there should be identity of the
terms and conditions to be offered to the optionee and all other prospective buyers, with optionee
to enjoy the right of first priority. A deed of sale executed in favor of a third party who cannot be
deemed a purchaser in good faith, and which is in violation of the of the right of first refusal
granted to the optionee is NOT voidable under the Statute of Frauds, such contract is
valid BUT rescissible under Article 1380 to 1381(3) of the New Civil Code (Guzman Bocaling & Co.
vs. Bonnavie; Riviera Filipina, Inc vs. CA et.al. GR No. 117355, April 5, 2002).


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
(Paranaque Kings Enterprises, Inc. vs. CA GR No. 111538, February 26, 1997)

It proceeded to cite several decisions explaining the nature of a suit for
rescission in Guzman, Bocaling and Co. vs. Bonnevie, 206, SCRA 668 and in
Equatorial Realty and Dev., Inc. vs. Mayfair Theater Inc., 264 SCRA 483 where it
ordered the rescission of a contract entered into in violation of a right of first
refusal. And which right could only be exercised if the fraudulent sale in first set
aside or rescinded. In Paraaque Kings Enterprises, Inc. vs. Court of Appeals, 268
SCRA 727, the Supreme Court held that the allegations in a complaint showing
violation of a contractual right of first option or priority to buy properties subject
of the lease constitute a valid cause of action enforceable by an action for
specific performance.

Thus, the prevailing doctrine, as enunciated in the cited cases, is that a
contract of sale entered into in violation of a right of first refusal of another
person, while valid, is rescissible.

Guzman, Bocaling & Co. vs. Bonnevie

A property of the Intestate Estate of Reynoso was leased to Bonnevie by the administratrix for a period of 1 year
with stipulation that if ever the property shall be sold, the lessees shall be given a first priority to purchase the
same, all things and consideration being equal.

According to administratrix she notified Bonnevie by registered mail that she was selling the property however
Bonnevie never replied to the notice. The same was offered and sold to petitioner. The administratrix send a
letter to Bonnevie to vacate the premises but the latter refused.

An action for ejectment was filed which resulted to a compromise agreement; Bonnevie shall vacate the
premises. Bonnevie did not comply hence a motion for execution was filed. While the case was pending,
Bonnevie filed an action to annul the contract of sale to Guzman and the cancellation of the title. Bonnevie
asked the court to require the seller to sell the property to him under the same terms and condition.

The ejectment case was dismissed and when it was appealed the same was consolidated with the other civil case
of annulment of sale. CFI rendered a judgment in favor of Bonnevie. It was affirmed by CA.

SC: There was no satisfactory proof that the letter was sent to Bonnevie; that administratrix
never showed the registry return card.

Even if the letter had been sent to and received by Bonnevie and they did not exercise their right
of first priority, the administrator would still be guilty of violating the contract of lease which
stated that Bonnevie could exercise, all things and conditions being equal.

The fact that Bonnevie had financial problems at that time was no justification for denying them
the first option to buy the property. And even Bonnevie could not buy the property, the
administrator could not sell the property to another for a lower price and under more favorable
terms and conditions.

Guzman & Co. could not be deemed a purchaser in good faith for the record shows that it
categorically admitted it was aware of the lease in favor of Bonnevie, who were actually
occupying the property.

A purchaser in good faith and for value is one who buys the property of another without notice
that some other person has a right to or interest in such property and pays a full and fair price
for the same at the time of such purchase or before he has notice or claim of the interest of
some other person in property.

Petition is DENIED.

Guzman, Bocaling & Co. vs. Bonnevie

A property of the Intestate Estate of Reynoso was leased to Bonnevie by the administratrix for a period of 1 year
with stipulation that if ever the property shall be sold, the lessees shall be given a first priority to purchase the
same, all things and consideration being equal.

According to administratrix she notified Bonnevie by registered mail that she was selling the property however
Bonnevie never replied to the notice. The same was offered and sold to petitioner. The administratrix send a
letter to Bonnevie to vacate the premises but the latter refused.

An action for ejectment was filed which resulted to a compromise agreement; Bonnevie shall vacate the
premises. Bonnevie did not comply hence a motion for execution was filed. While the case was pending,
Bonnevie filed an action to annul the contract of sale to Guzman and the cancellation of the title. Bonnevie
asked the court to require the seller to sell the property to him under the same terms and condition.

The ejectment case was dismissed and when it was appealed the same was consolidated with the other civil case
of annulment of sale. CFI rendered a judgment in favor of Bonnevie. It was affirmed by CA.

SC: There was no satisfactory proof that the letter was sent to Bonnevie; that administratrix
never showed the registry return card.

Even if the letter had been sent to and received by Bonnevie and they did not exercise their right
of first priority, the administrator would still be guilty of violating the contract of lease which
stated that Bonnevie could exercise, all things and conditions being equal.

The fact that Bonnevie had financial problems at that time was no justification for denying them
the first option to buy the property. And even Bonnevie could not buy the property, the
administrator could not sell the property to another for a lower price and under more favorable
terms and conditions.

Guzman & Co. could not be deemed a purchaser in good faith for the record shows that it
categorically admitted it was aware of the lease in favor of Bonnevie, who were actually
occupying the property.

A purchaser in good faith and for value is one who buys the property of another without notice
that some other person has a right to or interest in such property and pays a full and fair price
for the same at the time of such purchase or before he has notice or claim of the interest of
some other person in property.

Petition is DENIED.