Guzman, Bocaling & Co. Vs.

Bonnevie

G.R. No. 86150, March 2, 1992

FACTS:

Africa Valdez de Reynoso, as an administratrix, leased a parcel of land belonging to the

intestate property of Jose L. Reynoso to Raoul S. Bonnevie and Christopher Bonnevie for a
period of one year beginning August 8, 1976. Their agreement mentions the existence of a right
of first priority to purchase if the land was to be sold. Reynoso alleged that on November 3,
1976 she notified respondents by registered mail that she was selling the leased premises for
P600,000 and that she was giving respondents 30 days from receipt of the letter to purchase
the property. On January 20, 1977, Reynoso sent another letter to the respondents informing
them that the property had been sold. Respondents wrote back to Reynoso that they did not
receive her first letter and that they were constrained to refuse Reynosos request to terminate
the lease. Reynoso went on with the sale in favor of Guzman, Bocaling & Co. for a lesser price,
and filed an ejectment case against the Bonnevies. Respondents filed an action for annulment
of the sale. Later on, after the consolidation of both cases, The Court of First Instance ruled that
the deed of sale executed by Reynoso in favor of Guzman, Bocaling & Co. was null and void.
The Court of Appeals affirmed the lower courts decision and clarified that the Contract of Sale
was not voidable but rather it was rescissible.

ISSUE:

Was the Court of Appeals correct in holding that the Contract of Sale was not voidable but was
instead rescissible?

HELD:

No. Under Article 1380 to 1381 (3) of the Civil Code, a contract otherwise valid may nonetheless
be subsequently rescinded by reason of injury to third persons, like creditors. The status of
creditors could be validly accorded the Bonnevies for they had substantial interests that were
prejudiced by the sale of the subject property to the petitioner without recognizing their right of
first priority under the Contract of Lease. Rescission is a remedy granted by law to the
contracting parties and even to third persons, to secure reparation for damages caused to them
by a contract, even if this should be valid, by means of the restoration of things to their condition
at the moment prior to the celebration of said contract. It is a relief allowed for the protection of
one of the contracting parties and even third persons from all injury and damage the contract
may cause, or to protect some incompatible and preferent right created by the contract.
Recission implies a contract which, even if initially valid, produces a lesion or pecuniary damage
to someone that justifies its invalidation for reasons of equity. They may not claim that their right
of first priority was successfully respected since the price offered to the Bonnevies was not the
same price offered to the petitioner. The right of first priority requires that the lesser price and
specific conditions to be offered must be also offered to the holder of the said right so that a
lawful sale may take place.