LUCRATIVE REALTY AND DEVELOPMENT CORPORATION, PETITIONER, VS. RICARDO C. BERNABE JR., RESPONDENT.

This petition for certiorari assails the Decision of 23 October 2000^[1] of
the Court of Appeals as well as its Resolution
of 31 May 2001^[2]
rejecting the imputation of grave abuse of discretion on the part of Judge
Vicente A. Hidalgo in denying the demurrer to evidence of petitioner Lucrative
Realty and Development Corporation (LUCRATIVE REALTY) and its motion to inhibit
him for the reason that his actuations were within the limits of his
discretion.

On 28 May 1961 spouses Ambrocio and Lourdes Baal entered into a
contract of lease with Fil Oil Refinery Corporation (FILOIL) whereby the firm
leased from the couple a parcel of land located at corner Agno Street and
Quirino Avenue, Malate, Manila, with an area of 1,762.50 square meters for a
period of ten (10) years renewable for another five (5) years at the option of
the lessee. After the execution of the
contract FILOIL immediately constructed a gasoline station on the leased
premises.

Sometime in 1969 respondent Ricardo Bernabe Jr. acquired the
right to manage and operate the gasoline station. Some years later the assets of FILOIL, including the Malate
gasoline station being operated by respondent, were taken over by Petron
Corporation (PETRON). Respondent
Bernabe Jr. however was allowed to continue with its operation.

On 28 November 1977 the Baal spouses obtained a loan of P750,000.00
from the Home Savings Bank and Trust Company (HOME SAVINGS) and as security
therefor executed a real estate mortgage over two (2) of their properties, a
parcel of land located in Caloocan, and the Malate property subject of this
controversy.

A year later the spouses were granted by HOME SAVINGS an
additional credit of P135,000.00 for which the deed of real estate
mortgage the spouses earlier executed was amended to increase the secured loan
obligation to P885,000.00.

In August 1980, with the expiration of the 1961 lease contract,
the Baal spouses entered a new contract of lease with respondent Bernabe Jr.
for a period of ten (10) years and granting respondent explicitly the right of
first refusal in the event the leased property would be sold.

Sometime in 1989 the obligation of the spouses with the bank
became overdue. HOME SAVINGS was thus constrained to extrajudicially foreclose
the mortgage on the Caloocan and Malate properties and a public auction was
scheduled for their disposition. As
sole bidder HOME SAVINGS was awarded the ownership of the properties and a
certificate of sale was issued in its favor.

Meanwhile, in an effort to prevent the foreclosure of the
mortgaged properties, the Baal spouses instituted an action to enjoin the
scheduled auction sale. When the case
was being tried the parties entered into a compromise agreement whereby HOME
SAVINGS agreed to accept the Malate property as full satisfaction of the
spouses’ obligation; accordingly, the Caloocan property was released from the
mortgage. Pursuant further to their
compromise agreement, the Baals executed on 29 December 1989 a dacion en pago transferring ownership of
the Malate property to HOME SAVINGS. On
the very same day, HOME SAVINGS acquired the property it sold the same to
petitioner LUCRATIVE REALTY.

Sometime in January 1990 HOME SAVINGS wrote respondent Bernabe
Jr. telling him to pay henceforth his leased rentals directly to the bank. Believing that HOME SAVINGS had already
foreclosed the mortgage, respondent Bernabe invoked his right of first refusal
to purchase the Malate property. On 7
March 1990 HOME SAVINGS denied the offer of respondent to exercise his right of
first refusal claiming that it acquired the property from the Baal spouses
through dacion en pago and not
through sale. A year later, or on 1 May
1991, HOME SAVINGS wrote respondent to vacate the property as his lease would
not be renewed.

Aggrieved, respondent filed a complaint for annulment of sale
with prayer for the issuance of a writ of preliminary injunction against
petitioner LUCRATIVE REALTY, HOME SAVINGS and Lourdes Baal.^[3] In
his complaint, respondent alleged that even before HOME SAVINGS foreclosed the
mortgage on the Malate property, he had already notified the bank of his right
of first refusal as well as his intention to redeem it. He attributed bad faith on the part of
LUCRATIVE REALTY, HOME SAVINGS and the spouses Baal in hastening the transfer
of the property in favor of petitioner to deny him his right to purchase the
leased premises. In support of his
complaint respondent emphasized that even after selling the Malate property in
favor of petitioner LUCRATIVE REALTY, HOME SAVINGS in palpable bad faith
continued to represent itself as owner of the property.

After the complaint was filed, the trial court conducted hearings
to determine the propriety of the issuance of the writ of preliminary
injunction prayed for by respondent. The parties were required to submit their memoranda in support of their respective
positions. While respondent invoked his
right of first refusal to purchase the contested property, petitioner LUCRATIVE
REALTY insisted that respondent’s “so-called preferential right” did
not constitute a valid and binding contract because it was not supported by a
consideration.

After the parties were heard on the matter of the issuance of a
writ of preliminary injunction, the trial court ruled that the application for
injunctive relief would be resolved after the presentation of respondent’s
evidence in chief.

Meanwhile, on 24 February 1992 petitioner LUCRATIVE REALTY
instituted an ejectment suit in the Metropolitan Trial Court of Manila against
respondent Bernabe Jr. After trial, judgment was rendered ordering respondent
to vacate the contested property.^[4]
Respondent appealed to the Regional Trial Court which rendered a contrary
opinion and found him entitled to the possession of the disputed property.^[5]
Consequently, petitioner elevated his case to the Court of Appeals.

On 20 February 1995 the trial court hearing the complaint for annulment
of sale issued the writ of preliminary injunction in favor of respondent.^[6]
Upon receipt of the order HOME SAVINGS immediately moved for its modification
on the ground that since it already sold the property to LUCRATIVE REALTY it
was no longer in a position to comply with the writ. Thus the order was modified to limit the application of the writ
to petitioner LUCRATIVE REALTY only.

After Lourdes Baal had concluded with the presentation of her
evidence and while the petition for review in the ejectment case was pending
before the Court of Appeals, petitioner LUCRATIVE REALTY filed a Motion to Dismiss/Demurrer to Evidence and
to Lift Injunction before the trial court.

On 30 May 1996 the Court of Appeals granted petitioner’s plea for
a reversal of the decision in the ejectment case and ordered that respondent
Bernabe Jr. be evicted from the premises. Consequently, respondent appealed to the Supreme Court.

While petitioner prevailed in its ejectment suit before the Court
of Appeals, its Motion to Dismiss/Demurrer
to Evidence and to Lift Injunction was however denied by the trial
court. Petitioner timely moved for
reconsideration.

Meanwhile, in a Resolution
dated 15 January 1997 the Supreme Court dismissed Bernabe’s appeal in the
ejectment suit. Upon receipt of the
aforesaid resolution, petitioner immediately filed an Omnibus Motion before the trial court asking Judge Vicente A.
Hidalgo to inhibit himself and to immediately resolve its Motion for Reconsideration.

Two (2) years and a half later, or on 8 September 1999, Judge
Hidalgo finally issued an Order
denying petitioner’s Omnibus Motion. Petitioner went to the Court of Appeals on
certiorari attributing grave abuse of discretion on the part of the trial court
judge for not lifting the writ of injunction and for refusing to recuse himself
from the case.

In its petition before the Court of Appeals, LUCRATIVE REALTY
argued that it was error for the trial court to have issued the questioned writ
of preliminary injunction and charged Judge Hidalgo with “unmistakable partiality” when the latter purportedly refused to act
on several of its motions with dispatch.

In dismissing the petition, the Court of Appeals ruled that
petitioner was already barred by laches when it questioned the propriety of the
issuance of the writ. According to the
appellate court, while petitioner received the trial court’s Order granting respondent’s prayer for
the issuance of a writ of injunction on 4 March 1995, it was only on 12 June
1995 that it moved for its lifting. Again, after the denial of its motion, it took petitioner another five
(5) months to move for reconsideration. Still later, upon the denial of its motion for reconsideration, it took
petitioner another ten (10) months to question through certiorari proceedings
the reasonableness of the trial court’s Order. Such belated action, according to the
appellate court, constituted laches warranting a presumption that petitioner
abandoned its right or declined to assert it. Further, the Court of Appeals held that there was insufficient evidence
to support the conclusion that Judge Hidalgo gravely abused his discretion when
he denied petitioner’s motion to dismiss the annulment suit and to inhibit
himself from hearing the case.

To this judgment of the Court of Appeals, petitioner excepts
alleging that it was error for the appellate court to have affirmed the trial
court’s denial of its Motion to
Dismiss/Demurrer to Evidence and to Lift Injunction despite the existence
of well-established grounds in support thereof. Petitioner further argues that under Art. 1479 of the Civil Code
an accepted unilateral promise to buy or to sell a determinate thing which is
not supported by a consideration distinct from the price does not produce a
binding contract. According to petitioner,
respondent Bernabe Jr. himself has admitted that his preferential right to
purchase the disputed property is not supported by consideration separate from
the rent regularly paid for the leased premises; as such he cannot claim any
cause of action as against petitioner, as well as its co-defendants, thereby
justifying the dismissal of the complaint.

We do not agree. In Equatorial Realty Development, Inc., v.
Mayfair Theater, Inc.,^[7] we
categorically ruled that it is not correct to say that there is no consideration
for the grant of the right of first refusal if such grant is embodied in the
same contract of lease. Since the
stipulation forms part of the entire lease contract, the consideration for the
lease includes the consideration for the grant of the right of first
refusal. In entering into the contract,
the lessee is in effect stating that it consents to lease the premises and to
pay the price agreed upon provided the lessor also consents that, should it
sell the leased property, then, the lessee shall be given the right to match
the offered purchase price and to buy the property at that price.

In light of the foregoing, we affirm the finding of the Court of
Appeals that there is no ground to impute grave abuse of discretion on the part
of Judge Hidalgo for denying petitioner’s demurrer to evidence. Respondent Bernabe’s testimony that apart
from his rental payment he gave no other consideration for the grant of the
right did not defeat his cause of action as against petitioner. For, as mentioned earlier, rent paid by the
lessee constitutes sufficient consideration for the grant of a right of first
refusal aside from the fact that such right is stipulated in the same contract
of lease.

Nor can we indulge in the unfounded assumptions of partiality and
prejudgment hurled by petitioner LUCRATIVE REALTY against Judge Hidalgo. It ill behooves us to hold a judge as biased
or prejudiced simply because he took time in resolving a motion for resolution. Prejudice and partiality are not to be
presumed especially if weighed against a judge’s legal obligation to administer
justice “without respect to person and do equal right to the poor and the
rich.”^[8]

Lastly, the Court of Appeals disallowed the petition for
certiorari taken by petitioner for the reason that it was filed beyond the
sixty (60)-day period prescribed under Sec. 4, Rule 65 of the Rules of
Court. The appellate court stressed
that while the Order granting the
writ of preliminary injunction was issued by the trial court on 20 February
1995 and the motion for the lifting of the writ was denied on 5 June 1996 it
was only on 16 November 1999, or well beyond the sixty (60)-day reglementary
period, when petitioner questioned the propriety of its issuance. It is of course beyond question that the
lapse of the mandated period deprives an appellate court of jurisdiction to
alter an otherwise final order rendered by a lower court. There is then every reason to uphold the Decision of the Court of Appeals denying
the petition for certiorari.

WHEREFORE, finding no reversible error in the Decision sought to be reviewed, the
instant petition is DENIED.

SO ORDERED.

Mendoza, Quisumbing, and
Callejo, Sr., JJ., concur.

Austria-Martinez, J., no part
being a party to CA Decision.

^[1]
Decision penned by Associate Justice Mercedes Gozo-Dadole, concurred in by
Associate Justices Ma. Alicia Austria-Martinez (now Associate Justice of this
Court) and Hilarion L. Aquino (now retired); Rollo, pp. 37-51.

^[2]
Id., p. 52.

^[3]
Docketed as Civil Case No. 91-58227.

^[4]
Decision penned by Judge Antonio I. De Castro, MeTC-Br. 29, Manila.

^[5]
Decision penned by Judge Rosmari D. Carandang, RTC-Br. 12, Manila.

^[6]
Order for issuance of writ of preliminary injunction issued by Judge Vicente A.
Hidalgo, RTC-Br. 37, Manila.

^[7]
332 Phil. 525 (1996).

^[8]
Sec. 3, Judiciary Act of 1948.