Sen Po Ek Marketing Corporation v. Martinez
REITERATIONFacts
The Antecedents: Sofia P. Martinez was the registered owner of two parcels of land in Tacloban City. She initially leased these lots to Yu Siong, father of the principals of petitioner Sen Po Ek Marketing Corporation (Sen Po Ek), for ten years, with the condition that a commercial building constructed by the lessee would become the lessor's property upon lease expiration. The lease contract was renewed multiple times, with the last written contract expiring on January 1, 1987. During the lease, Sofia sold the lots and the building to her daughter, Teodora P. Martinez, a sale executed in 1979 but notarized in 1985. After the last lease expired, Sen Po Ek continued occupying the premises and paying rentals, first to Sofia until her death in 1989, and thereafter to her heirs, including Teodora. Procedural History: On January 9, 1990, Sen Po Ek filed a complaint against Teodora P. Martinez, seeking to annul the 1979 deed of sale between Sofia and Teodora, asserting a right of first refusal under R.A. No. 1162 and P.D. No. 1517. While this case was pending, Teodora sold the property to the Tiu Uyping brothers on January 12, 1990. Sen Po Ek amended its complaint to include the Tiu Uyping brothers and sought the nullity of this second sale. The Regional Trial Court (RTC) ruled in favor of Sen Po Ek, rescinding the deed of sale to the Tiu Uyping brothers and granting Sen Po Ek the first preference to buy the property. The private respondents appealed to the Court of Appeals (CA), which reversed the RTC's decision, dismissing Sen Po Ek's complaint. Sen Po Ek's motion for reconsideration was denied, leading to the present petition. The Petition: Petitioner Sen Po Ek Marketing Corporation seeks review on certiorari of the Court of Appeals' decision and resolution. The petition raises four issues: (1) whether the CA erred in upholding the validity of the sale between Sofia and Teodora, contrary to the RTC's finding of nullity; (2) whether the CA erred in denying Sen Po Ek's legal and equitable right to purchase the property over the Tiu Uypings; (3) whether the CA erred in upholding the validity of the sale between Teodora and the Tiu Uypings; and (4) whether the CA arbitrarily gave weight to the testimony of respondent's witness while discrediting petitioner's witness, despite the former's lack of authority to sell. Sen Po Ek argues that the sale between Sofia and Teodora was simulated and void, and that it possessed a right of first refusal based on its long-term lease and Teodora's notice of intent to sell.
Issue(s)
Whether the sale between Sofia Martinez and her daughter Teodora Martinez was valid. Whether petitioner Sen Po Ek has a legal and equitable right to purchase the property in question as against the Tiu Uyping brothers. Whether the Court of Appeals erred in upholding the validity of the Deed of Sale between Teodora Martinez and the Tiu Uyping brothers. Whether the Court of Appeals acted arbitrarily in giving weight to the testimony of Governor Petilla and discrediting that of Alfredo Yu Siong.
Ruling
The petition is denied. The sale between Sofia Martinez and Teodora Martinez is declared void for being simulated. However, the subsequent sale between Teodora Martinez and the Tiu Uyping brothers is considered valid and binding due to ratification by the other co-heirs of Sofia. Petitioner Sen Po Ek does not have a right of first refusal to assert against the private respondents.
Ratio Decidendi
On the validity of the sale between Sofia Martinez and Teodora Martinez: The Court found the sale between Sofia and Teodora to be absolutely simulated and therefore void under Article 1409(2) of the Civil Code. Several badges of simulation were noted: the significant delay in notarization (six years), Teodora signing lease contracts as an instrumental witness instead of an owner, Sofia retaining control and enjoyment of the premises, and Sofia continuing to receive rentals until her death. These factors indicated that the sale was not intended to have any legal effect between Sofia and Teodora, leading to the conclusion that the first sale transaction was fictitious. On petitioner Sen Po Ek's right of first refusal: The Court held that Sen Po Ek did not have a right of first refusal. The cited laws, P.D. No. 1517 (Urban Land Reform Act) and R.A. No. 1162, were found inapplicable as Tacloban City was not proclaimed an urban land reform zone, and R.A. No. 1162 pertains to land in Manila. Article 1622 of the Civil Code, concerning adjoining owners' right of redemption for speculative small urban lands, was also inapplicable as Sen Po Ek was a lessee, not an adjoining owner. Furthermore, no right of first refusal was stipulated in any of the lease contracts, and Teodora's letter of November 11, 1989, was merely a notice of intention to sell, not a binding offer, as it lacked a specific price. The Court emphasized that a promise to buy or sell requires a determinate thing for a price certain to be binding, and an accepted unilateral promise needs consideration distinct from the price. The subsequent actions of Sen Po Ek in delaying their decision and failing to formalize an offer before Teodora committed to sell to the Uypings further negated any claim of a perfected contract or enforceable right. On the validity of the sale between Teodora Martinez and the Tiu Uyping brothers: While Teodora, as only one of Sofia's co-heirs, had no authority to sell the entire lot, her sale to the Tiu Uyping brothers was rendered valid and binding through the subsequent ratification by her co-heirs via a "Confirmation of Sale of Land and Improvements." This ratification cured the defect of Teodora selling more than her undivided share, making the contract enforceable against all heirs. On the credibility of witnesses and the Court of Appeals' findings: The Court found no arbitrary or capricious decision by the Court of Appeals in giving weight to Governor Petilla's testimony and discrediting Alfredo Yu Siong's. The CA's assessment of Alfredo Yu Siong's credibility was based on his inconsistent testimonies, which the appellate court found to be prevarication. The Court agreed that Governor Petilla, as an officer of the court, deserved full faith and credence. The CA's conclusion that Sen Po Ek conceived a plot to belatedly offer to buy the property at a higher price to make the Uypings' offer appear a pittance was a factual finding that the Supreme Court found no reason to disturb.
Main Doctrine
A notice of intention to sell, without a specified price, does not constitute a binding offer to sell, and an unaccepted promise to buy or sell is not binding unless supported by a consideration distinct from the price. A contract of sale is perfected upon a meeting of the minds on the thing and the price.