Equatorial Devt v Mayfair

21 Nov 2001
GR 133879
FACTS:
Carmelo & Baurmann (Carmelo) owned a parcel of land with two 2 storey buildings on CM Recto Ave.
Carmelo entered into a Contract of Lease with Mayfair Theater Inc. ("Mayfair") for a period of 20 years. The
lease covered a portion of the second floor and mezzanine of a two-storey building which respondent used as
a movie house Maxim Theater.
They entered into a 2nd Contract of Lease for another portion of the property - part of 2nd floor + 2 store
spaces and the mezzanine which became Miramar Theater, also for a period of 20 years.
Both leases contained a provision granting Mayfair a right of first refusal to purchase the subject properties.
Re : Right of First Refusal (ROFR)
Carmelo sold the properties to Equatorial for 11.3M. Mayfair filed a complaint with RTC. RTC ruled in favor of
Carmelo & Equatorial. The CA reversed the judgment upon appeal.
Re: Ownership and Possession
Another case was filed by Equatorial regarding action for collection of a sum of money against Mayfair
for rentals of the premises after the lease contracts expired. Equatorial stated it was the owner and Mayfair has
to pay rentals. RTC dismissed the complaint. Hence the current petition.
ISSUE/S:
1. WON Equatorial is entitled to the rentals?
HELD:
1. No. Equatorial never took actual control and possession of the property sold.
Mayfair objected to the sale via the court action (in ROFR case). Also, they had continuous actual
possession of the property.
Hence, respondent's opposition to the transfer of the property by way of sale to Equatorial was a legally
sufficient impediment that effectively prevented the passing of the property into the latter's hands.
Equatorial was never put in actual and effective control or possession of the property because
of Mayfair's timely objection. (Deed of Sale to Equatorial was rescinded)
The fact that Mayfair paid rentals to Equatorial during the litigation should not be interpreted to mean
either actual delivery or ipso facto recognition of Equatorials title.
Also, Equatorial was deemed to be in bad faith as they bought the property with knowledge that Mayfair
had right to purchase the property.
SC DECISION:
Petition Denied.