Guzman v. Raoul S.V. Bonnevie

Summary

This case involved a dispute over the violation of a lessee's contractual right of first priority to purchase leased property. The administratrix of an estate leased a 600 sq.m. property to the Bonnevies with a contract provision granting them first priority to purchase. When she allegedly offered to sell the property to them for P600,000 cash (less mortgage), but they claimed no notice was received, she sold it to Guzman, Bocaling & Co. for only P400,000 with more favorable payment terms. The Supreme Court upheld lower courts' decisions annulling the sale, ruling it was rescissible under Civil Code provisions protecting injured third parties. The Court found the buyer was not in good faith since they had actual knowledge of the lease, and that the lessor violated the equal terms requirement by offering different conditions to different buyers. The decision reinforced contractual rights of first priority and the availability of rescission to protect parties with substantial interests injured by otherwise valid contracts.