Riviera Filipina v CA

Facts:
- In 1982, respondent Reyes executed a contract of lease over a land in Quezon CIty with Riviera.
- The property was subject to a Real Estate Mortgage executed by Reyes in favor of Prudential
bank. Upon maturity, the bank foreclosed the property.
- The date of redemption was limited to March 7 1989. Reyes then decided to sell the property.
- In the ease agreement with Rivera, PARAGRAPH 11 states that LESSEE shall have the right of
first refusal should the LESSOR decide to sell the property during the term of the lease,"
7 Reyes offered to sell the subject property to Riviera, through its President Vicente C.
Angeles, for Five Thousand Pesos (P5,000.00) per square meter. However, Angeles
bargained for Three Thousand Five Hundred Pesos (P3,500.00) per square meter. Since
Reyes was not amenable to the said price and insisted on Five Thousand Pesos
(P5,000.00) per square meter, Angeles requested Reyes to allow him to consult the other
members of the Board of Directors of Riviera. There were repeated negotiation between
Reyes and Riviera but they could not settle.
- On December 4, 1988, Reyes offered the subject property to Rolando P. Traballo,
President of Cypress Construction & Development Corporation. The following day, Traballo
bargained for P5,300.00 per square meter. Reyes accepted the same. However, since
Traballo did not have the amount at that moment, Reyes told him to look for a partner
for that purpose. In January 1989, Reyes decided to approach anew Riviera but the latter
insisted on his offer of P5,000 only. In February 1989, Cypress and its partner, Cornhill
Trading Corporation, were able to come up with the amount sufcient to cover the
redemption money, with which Reyes paid to the Prudential Bank.
- Thereafter, Riviera claimed that its right of rst refusal under the lease contract was
violated, thus, it led a suit to compel Reyes, Cypress, Cornhill and Urban Development
Bank to transfer the disputed title of the land in its favor upon payment of the price
paid by Cypress and Cornhill. After trial, the court a quo dismissed the complaint as well
as the counterclaims and cross-claims. On appeal, the appellate court affirmed the
decision of the trial court in its entirety. Hence, this petition.
Issue:
- Wether or not there was a violation of Riviera’s right of First Refusal
Held:
- No
- An examination of the attendant particulars of the case do not persuade us to uphold
Riviera's view. As clearly shown by the records and transcripts of the case, the actions of
the parties to the contract of lease, Reyes and Riviera, shaped their understanding and
interpretation of the lease provision "right of first refusal" to mean simply that should
the lessor Reyes decide to sell the leased property during the term of the lease, such
sale should first be offered to the lessee Riviera. And that is what exactly ensued
between Reyes and Riviera, a series of negotiations on the price per square meter of the
subject property with neither party, especially Riviera, unwilling to budge from his offer,
as evidenced by the exchange of letters between the two contenders.