G.R. No. 148514. November 26, 2002.
LUCRATIVE REALTY AND DEVELOPMENT CORPORATION, petitioner, vs. RICARDO C. BERNABE JR., respondent.

FACTS

On May 28, 1961, spouses Ambrocio and Lourdes Baal leased a parcel of land in Malate, Manila, to Fil Oil Refinery Corporation (FILOIL) for ten years, renewable for another five. FILOIL built a gasoline station on the property. In 1969, respondent Ricardo Bernabe Jr. acquired the right to manage and operate the station. Later, Petron Corporation took over FILOIL’s assets but allowed Bernabe to continue operations. On November 28, 1977, the Baal spouses obtained a loan from Home Savings Bank and Trust Company (HOME SAVINGS), secured by a real estate mortgage over the Malate property and another in Caloocan. The mortgage was later amended to increase the secured obligation. In August 1980, after the 1961 lease expired, the Baal spouses entered into a new ten-year lease contract with Bernabe, explicitly granting him the right of first refusal if the property was sold. In 1989, the Baals’ loan became overdue, prompting HOME SAVINGS to extrajudicially foreclose the mortgage. The Baals sued to enjoin the auction, leading to a compromise agreement where HOME SAVINGS accepted the Malate property via dacion en pago on December 29, 1989, releasing the Caloocan property. On the same day, HOME SAVINGS sold the Malate property to petitioner Lucrative Realty and Development Corporation (LUCRATIVE REALTY). In January 1990, HOME SAVINGS informed Bernabe to pay rentals directly to the bank. Bernabe invoked his right of first refusal, but HOME SAVINGS denied it on March 7, 1990, claiming the property was acquired through dacion en pago, not sale. On May 1, 1991, HOME SAVINGS asked Bernabe to vacate. Bernabe then filed a complaint for annulment of sale with a prayer for a writ of preliminary injunction against LUCRATIVE REALTY, HOME SAVINGS, and Lourdes Baal, alleging bad faith in denying his right of first refusal. The trial court issued a writ of preliminary injunction on February 20, 1995, later modified to apply only to LUCRATIVE REALTY. Meanwhile, LUCRATIVE REALTY filed an ejectment suit against Bernabe, which eventually reached the Supreme Court, resulting in a dismissal of Bernabe’s appeal on January 15, 1997. During the annulment case, LUCRATIVE REALTY filed a Motion to Dismiss/Demurrer to Evidence and to Lift Injunction, which was denied by Judge Vicente A. Hidalgo. LUCRATIVE REALTY also moved for Judge Hidalgo’s inhibition, which was denied on September 8, 1999. LUCRATIVE REALTY then filed a petition for certiorari with the Court of Appeals, challenging the denial of its demurrer to evidence and the refusal to inhibit, but the appellate court dismissed the petition, citing laches and lack of grave abuse of discretion. LUCRATIVE REALTY appealed to the Supreme Court.

ISSUE

Whether the Court of Appeals erred in affirming the trial court’s denial of petitioner’s demurrer to evidence and motion to lift injunction, and in upholding the trial judge’s refusal to inhibit himself.

RULING

The Supreme Court denied the petition. It held that the right of first refusal granted to Bernabe in the lease contract was supported by sufficient consideration, as the rental payments constituted the consideration for both the lease and the right of first refusal, following the precedent in Equatorial Realty Development, Inc. v. Mayfair Theater, Inc. Thus, Bernabe had a valid cause of action, and the trial court did not gravely abuse its discretion in denying the demurrer to evidence. The Court also found no evidence of partiality or prejudgment by Judge Hidalgo, emphasizing that prejudice and partiality are not presumed. Additionally, the Court of Appeals correctly ruled that the petition for certiorari was filed beyond the 60-day reglementary period under Rule 65, depriving it of jurisdiction. Therefore, the Decision of the Court of Appeals was affirmed.