Scribd
Upload
109 views2 pages

Riviera Filipina v. CA

The Supreme Court upheld the lessee's loss of right of first refusal when it refused to match the increasing price offered by the lessor for the property, despite multiple opportunities given by the lessor to purchase. While a right of first refusal typically requires offering the same price and terms to the lessee as an outside buyer, the Court ruled negotiations between the parties fulfilled this right, as the lessor acted in good faith in repeatedly offering the property to the lessee. When the lessee clearly did not intend to match the price, the lessor was free to sell to a third party offering a higher price without violating the lessee's right.

Uploaded by

Norberto Sarigumba III
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
109 views2 pages

Riviera Filipina v. CA

The Supreme Court upheld the lessee's loss of right of first refusal when it refused to match the increasing price offered by the lessor for the property, despite multiple opportunities given by the lessor to purchase. While a right of first refusal typically requires offering the same price and terms to the lessee as an outside buyer, the Court ruled negotiations between the parties fulfilled this right, as the lessor acted in good faith in repeatedly offering the property to the lessee. When the lessee clearly did not intend to match the price, the lessor was free to sell to a third party offering a higher price without violating the lessee's right.

Uploaded by

Norberto Sarigumba III
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Riviera Filipina v.

Court of Appeals
380 SCRA 245

ISSUE:

Whether or not the lessee has already lost its right of first refusal.

SALIENT FACTS:

1. A company and a private individual entered into a lease agreement with a right of
first refusal in favor of the former in the event that the latter should decide to sell the
subject property.

2. Pursuant to the agreed right of first refusal, when the lessor decided to sell the
property, he offered it to the lessee for a price of Php 5,000 per square meter, but
the lessee bargained for it to be lowered to Php 3,500 per square meter.

3. After some time, the lessee offered Php 4,000, but the lessor rejected the offer since
he has already increased the price to Php 6,000 due to development projects in the
vicinity of the subject property.

4. The lessee remained firm in its position of not matching the price of the lessor
offering a final amount of Php 5,000 and because of which, the lessor sent a letter to
the lessee informing that the right of first refusal has already been lost.

5. At this point, a friend of the lessor turned out to be an interested buyer of the
property and offered Php 5,300 per square meter for it.

6. But because the lessor still wanted to give preference to the lessee, he approached
the latter once again saying that if the lessee could only increase their offer “for a
bit,” then the lessor would still be willing to sell the property for such an amount.

7. The lessee refused to further increase the offer which consequently prompted the
lessor to finalize the sale of the property with his friend.

8. The lessee then assailed the said sale arguing that their right of first refusal was not
given to them.

SUPREME COURT HELD:


The lessee already lost its right of first refusal when it adamantly refused to match the
price of the subject property despite the earnest efforts of the lessor to offer it to them
during multiple occasions. A right of first refusal simply means that should the lessor
decide to sell the leased property during the term of the lease, such sale should first be
offered to the lessee.

In the case at bar, the series of negotiations that transpire between the lessor and
lessee on the basis of such preference is a compliance even when no final purchase
agreement is perfected between the parties. When it was clear that the lessee had no
intention of matching the purchase price of the land, the lessor was then at liberty to
offer the sale to a third party who paid a higher price, and there is no violation in the
right of the lessee.

CRITIQUE AND ANALYSIS:

The loss of the right of first refusal of the lessee was correctly upheld. In its ruling, the
Court first laid down the prevailing doctrine provided by jurisprudence that a right of first
refusal means the identity of terms and conditions to be offered to the lessee. Put
simply, the purchase price offered to a third party must also be first offered to the lessee
in order to fulfill the latter’s right of first refusal.

However, the specifics of this case prompted the Court to rule that the right of refusal
has already been complied with even if the lessor did not explicitly offer anymore to the
lessee the price of Php 5,300 for the property, which was the amount that the third party
was willing to pay. According to the Court, there was good faith on the part of the lessor
when it persistently offered the property to the lessee urging them to match the set
price. Thus, the negotiations between the lessor and lessee was more than sufficient to
give rise to a full compliance to the lessee’s right of first refusal in accordance with the
standards set by jurisprudence.

You might also like