G.R. No. 111743 October 8, 1999
Visitacion Gabelo, et al., petitioners, vs. Court of Appeals, Ursula Maglente, et al., respondents.

FACTS

Philippine Realty Corporation (PRC) leased a parcel of land to respondent Ursula Maglente under a contract granting her a right of first priority to purchase the property should PRC decide to sell. The lease contract expressly prohibited subleasing without PRC’s prior written consent. Despite this, Maglente subleased portions of the land to the petitioners, who constructed houses thereon. In March 1987, PRC formally offered to sell the property to Maglente. In February 1988, Maglente formally accepted the offer, indicating her intent to purchase. PRC’s president approved her offer, which included a specified price and payment terms. Maglente subsequently made partial downpayments and, in January 1989, informed PRC that she had co-buyers—the other private respondents—who were also occupying specific portions.
In February 1989, the petitioners, as sublessees and actual occupants, wrote to PRC expressing their own desire to purchase the portions they occupied. Faced with conflicting claims from Maglente’s group and the petitioners, PRC filed an action for interpleader to determine the rightful purchaser.

ISSUE

Whether the Court of Appeals erred in upholding the right of the private respondents, particularly Ursula Maglente and her co-buyers, to purchase the subject property over the claim of the petitioners, who were the actual occupants and sublessees.

RULING

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The legal logic centered on the perfection of a contract of sale and the enforcement of the contractual right of first refusal. The Court held that a contract of sale is perfected at the moment there is a meeting of the minds upon the object and the price. PRC’s written offer to Maglente in 1987 and her unequivocal written acceptance in 1988, which was approved by PRC’s president, constituted a perfected contract of sale. This occurred before the petitioners asserted their own claim in 1989. The subsequent completion of the downpayment by Maglente’s group further solidified this perfected contract.
The petitioners’ status as sublessees and actual occupants did not confer upon them a superior or co-equal right to purchase. Their sublease was created in violation of the main lease contract, which prohibited subleasing without PRC’s written consent. Consequently, they acquired no rights against PRC, the owner. Their proper recourse, if any, was against their immediate lessor, Maglente. The right of first priority was a personal stipulation in favor of the original lessee, Maglente, which she validly exercised. The Court also clarified that the absence of signed formal documents did not negate the perfection of the sale, as a binding contract arises from the meeting of the minds. Therefore, the perfected contract in favor of Maglente and her co-buyers was valid and binding, precluding the petitioners’ belated claim.