ROSENCOR V. INQUING (March 08, 2001)

FACTS:

Respondents are tenants of a two-storey residential apartment in Tomas Morato QC. The lease was not covered by any contract.

Lessees were verbally given by the lessors the pre-emptive right to purchase the property in case of sale.

The original lessors died and their heir also promised the lessees the same pre-emptive right to purchase. The new lessors represented by Eufrocina de Leon demanded the lessees to vacate the property because the building will allegedly be demolished but after the lessees declined, she sent them a letter offering to sell the property for 2M. Lessees made a counter offer of 1M but no reply was made by the lessors.

De leon subsequently informed the lessees that the property was already sold to Rosencor. Lessees claimed that they were deceived because the property was already sold to Rosencor before it was offered to them. They offered to reimburse the payment to the lessors but the offer was declined as hence, this petition.

ISSUE:

WON the lessors should recognize the pre-emptive right of the lessees even if it was only given verbally.

HELD:

The right of first refusal is not covered by the Statute of Frauds. The application of such statute presupposes the existence of a perfected contact which is no applicable in this case. As such, a right of first refusal need not be written to be enforceable and can be proved by oral evidence.

Lessees have proven that the lessors admit the right of first refusal given to them when the property was offered to them by 2M.

The prevailing doctrine is that a contract of sale entered in violation of right of first refusal is rescissible. However, this doctrine cannot be applied here because the vendees (Rosencor) is in good faith. Under Art.1358, recission cannot take place when things which are the object of sale is legally in possession of third person who did not act in bad faith.

Rosencor could not have acted in bad faith because they are not aware of the right of first refusal given verbally. Respondents should instead file for damages.