G.R. No. 130722 . March 27, 2000
SPS. REYNALDO K. LITONJUA and ERLINDA P. LITONJUA and PHIL. WHITE HOUSE AUTO SUPPLY, INC., petitioners, vs. L & R CORPORATION, VICENTE M. COLOYAN in his capacity as Acting Registrar of the Deeds of Quezon City thru Deputy Sheriff ROBERTO R. GARCIA, respondents.

FACTS

This is a Motion for Partial Reconsideration of the Court’s December 9, 1999 Decision. Petitioners, the Litonjua spouses and their corporation, executed a mortgage contract with respondent L & R Corporation. Paragraph 9 of the contract granted the respondent a right of first refusal should the mortgaged property be sold. Petitioners later sold the property to a third party without offering it to the respondent. In the prior Decision, the Court declared paragraph 8 of the same contract (which restricted the mortgagor’s right to sell) as void for being a pactum commissorium, but upheld paragraph 9 (the right of first refusal). The Court ordered the rescission of the subsequent deed of sale for violating this right.
Petitioners now argue that paragraph 9 is also null and void. They contend it is inseparable from the void paragraph 8 and designed to subvert the same public policy. They further argue it is an unenforceable option contract for lack of separate consideration and is a contract of adhesion. Additionally, they claim the defense of rescission of the deed of sale was never invoked by the respondent and was thus waived, and that ruling on it violated their right to due process.

ISSUE

The core issue is whether the Motion for Partial Reconsideration presents meritorious grounds to reverse the Court’s prior Decision upholding the validity and enforceability of paragraph 9 (the right of first refusal) and the consequent rescission of the deed of sale.

RULING

The Motion for Partial Reconsideration is denied. The Court held that the belated challenge to paragraph 9’s validity is procedurally infirm, as petitioners focused solely on paragraph 8 in prior pleadings. On substantive grounds, the arguments lack merit. First, paragraphs 8 and 9 are separable under Article 1420 of the Civil Code; the invalidity of one does not taint the other. Second, a right of first refusal is distinct from an option contract. Following Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc., a right of first refusal does not require a separate consideration, as its cause is embedded in the main agreement—here, the loan secured by the mortgage. The consideration is subsumed in the overall contract.
Third, the contract is not unconscionable merely for being one of adhesion. Petitioners are educated businesspersons and cannot claim to be the weaker party. Moreover, the rule of construing ambiguities against the drafter does not apply as paragraph 9’s terms are clear and unambiguous. Finally, the order of rescission was a necessary legal consequence of upholding the violated right of first refusal, an issue squarely litigated. Respondent’s consistent invocation of this right provided the basis for the remedy; thus, there was no waiver, and petitioners were not denied due process as they fully addressed the violation issue. The prior Decision stands.