GR 109125; (December, 1994) (Digest)
G.R. No. 109125 December 2, 1994
ANG YU ASUNCION, ARTHUR GO AND KEH TIONG, petitioners, vs. THE HON. COURT OF APPEALS and BUEN REALTY DEVELOPMENT CORPORATION, respondents.
FACTS
Petitioners Ang Yu Asuncion, et al., were long-term lessees of a property owned by the Cu Unjieng spouses. Negotiations for the sale of the property to the petitioners broke down as the parties could not agree on a price and terms. Petitioners filed a complaint for specific performance. The trial court, via summary judgment, dismissed the complaint, finding no perfected contract of sale due to the lack of a meeting of the minds. However, it granted petitioners a right of first refusal should the property be sold for P11 million or less. The Court of Appeals affirmed but modified the judgment, extending the right of first refusal to apply regardless of the selling price. This decision became final after the Supreme Court denied a petition for review. Subsequently, the Cu Unjieng spouses sold the property to respondent Buen Realty Development Corporation for P15 million. Petitioners then moved for execution of the final judgment to enforce their right of first refusal.
ISSUE
Whether the final judgment granting petitioners a right of first refusal can be enforced through a writ of execution against the property’s new owner, Buen Realty.
RULING
No. The Supreme Court, speaking through Justice Vitug, ruled that the writ of execution was improperly issued. The Court clarified the nature of a right of first refusal. It is not a perfected contract of sale, nor does it grant an actionable right to compel a sale. It is merely a contractual grant that, once recognized in a final judgment, obligates the grantor (the original owners, the Cu Unjiengs) to extend the first offer to the grantee (petitioners) under the terms offered to a third party. The judgment created an obligation solely for the Cu Unjieng spouses. It did not create a real right or lien that attached to the property itself. Consequently, the judgment could only be enforced against the parties bound by it—the Cu Unjiengs. Buen Realty, as a third-party buyer, was not a party to the original suit and was not bound by the personal obligation created by that judgment. The proper remedy for the petitioners, if they believed the sale violated their right, was not execution but a separate action for specific performance against the Cu Unjieng spouses, which could no longer be pursued as the property had already been sold to an innocent purchaser for value. The Court of Appeals correctly annulled the orders of execution.