GR 128119; (October, 1997) (Digest)
G.R. No. 128119 October 17, 1997
MURLI SADHWANI, GOBIND SADHWANI, HARESH SADHWANI and NARESH SADHWANI, petitioners, vs. THE HONORABLE COURT OF APPEALS, ORIENT ELECTRONICS CORP., HOMOBONO SAWIT, (represented by the heirs), and SILVER SWAN MANUFACTURING CO., INC., respondents.
FACTS
Homobono Sawit leased his property to Orient Electronics Corporation under a contract granting Orient a right of first refusal should Sawit decide to sell. Orient, having the right to sublease, entered into two sublease contracts with petitioners Sadhwanis. The whereas clauses of these sublease contracts stated that the main Sawit-Orient lease contract was attached and made an integral part thereof. In December 1988, Sawit sold the property to Silver Swan Manufacturing Co., Inc. Petitioners protested, claiming they acquired the right of first refusal from Orient by virtue of the sublease contracts incorporating the main lease. They also alleged an oral agreement allowing them to repurchase the property from Silver Swan.
The Regional Trial Court ruled in favor of petitioners, holding that the sublease contracts effectively assigned Orient’s right of first refusal to them. The Court of Appeals reversed, ruling there was no such assignment and that petitioners, by making a counteroffer of P3.5 million instead of accepting an alleged P4 million offer, forfeited any right to buy.
ISSUE
The core issues are: (1) whether the sublease contracts assigned Orient Electronics’ right of first refusal to the petitioners; and (2) whether petitioners were offered the property by Sawit but forfeited the right by making a counteroffer.
RULING
The Supreme Court denied the petition and affirmed the Court of Appeals. On the first issue, the Court held that the incorporation by reference of the main lease contract into the sublease agreements did not constitute an assignment of the right of first refusal. The sublease contracts clearly established a landlord-tenant relationship between Orient and the Sadhwanis, not an assignment of all of Orient’s rights. The right of first refusal is a personal privilege granted to the lessee; it is not automatically transferred by a mere sublease absent a clear stipulation to that effect. The contractual terms showed no intent to assign this specific right.
On the second issue, the Court found petitioners’ claim of a firm P4 million offer from Sawit unsubstantiated. The alleged offer was communicated by Lydia Sawit, but petitioners admitted she later told them to deal directly with Homobono Sawit, indicating she lacked authority. Petitioners’ subsequent counteroffer of P3.5 million, which was ignored, demonstrated no meeting of the minds. The burden of proof was on petitioners, and they failed to convincingly establish that a valid offer was made to them which they could accept. Therefore, no right of first refusal was violated, and the sale to Silver Swan was valid.