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    3 Litonjua vs. L & R Corporation

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    Jem
    The Supreme Court of the Philippines ruled on a case involving a loan obtained by spouses Reynaldo and Erlinda Litonjua from L&R Corporation secured by a mortgage on their property. The loan agreement gave L&R the right of first refusal if the property was subsequently sold. The spouses sold the property to Philippine White House Auto Supply without notifying L&R. The Court affirmed the lower court's ruling that the sale was invalid and unenforceable against L&R, as the loan agreement's right of first refusal provision was a valid term that was not followed.

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    3 Litonjua vs. L & R Corporation

    Uploaded by

    Jem
    257 views1 page
    The Supreme Court of the Philippines ruled on a case involving a loan obtained by spouses Reynaldo and Erlinda Litonjua from L&R Corporation secured by a mortgage on their property. The loan agreement gave L&R the right of first refusal if the property was subsequently sold. The spouses sold the property to Philippine White House Auto Supply without notifying L&R. The Court affirmed the lower court's ruling that the sale was invalid and unenforceable against L&R, as the loan agreement's right of first refusal provision was a valid term that was not followed.

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    The Supreme Court of the Philippines ruled on a case involving a loan obtained by spouses Reynaldo and Erlinda Litonjua from L&R Corporation secured by a mortgage on their property. The loan agreement gave L&R the right of first refusal if the property was subsequently sold. The spouses sold the property to Philippine White House Auto Supply without notifying L&R. The Court affirmed the lower court's ruling that the sale was invalid and unenforceable against L&R, as the loan agreement's right of first refusal provision was a valid term that was not followed.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    257 views1 page

    3 Litonjua vs. L & R Corporation

    Uploaded by

    Jem
    The Supreme Court of the Philippines ruled on a case involving a loan obtained by spouses Reynaldo and Erlinda Litonjua from L&R Corporation secured by a mortgage on their property. The loan agreement gave L&R the right of first refusal if the property was subsequently sold. The spouses sold the property to Philippine White House Auto Supply without notifying L&R. The Court affirmed the lower court's ruling that the sale was invalid and unenforceable against L&R, as the loan agreement's right of first refusal provision was a valid term that was not followed.

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    © All Rights Reserved
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    Litonjua vs.

    L & R Corporation
    G.R. No. 130722. December 9, 1999.
    YNARES-SANTIAGO, J.:
    Facts:
    Spouses Reynaldo and Erlinda Litonjua obtained a loan from L & R Corporation in the
    sum of P400,000.00 secured by a mortgage upon their two parcels of land with TCT nos. 197232
    and 197233. Spouses sold the parcels of land to Philippine White House Auto Supply, Inc
    (PWHAS) and the sale was annotated at the back of respective titles. However, L&R
    Corporation did not give prior written consent in case of subsequent encumbrance or alienation
    of the subject properties. The trial court found the sale between spouses Litonjua and PWHAS
    was null and void and unenforceable against L & R Corporation and that the redemption made
    was also null and void. Upon appeal, CA reversed the decision of trial court and held that the
    sale and redemption was valid. Thus, this petition.
    Issue:
    Whether the stipulation granting the mortgagee the right of first refusal is valid and
    enforceable?
    Rule of law:

    Application:
    The right of first refusal has long been recognized as valid in our jurisdiction. The
    consideration for the loan-mortgage includes the consideration for the right of first refusal. Thus,
    while the spouses Litonjua had every right to sell their mortgaged property to PWHAS without
    securing the prior written consent of L & R Corporation, they had the obligation under paragraph
    9, which is a perfectly valid provision, to notify the latter of their intention to sell the property
    and give it priority over other buyers. It is only upon failure of L & R Corporation to exercise its
    right of first refusal could the spouses Litonjua validly sell the subject properties to others, under
    the same terms and conditions offered to L & R Corporation.
    Conclusion:
    WHEREFORE, the Decision appealed from is hereby AFFIRMED ordering the
    rescission of the sale of the mortgaged properties between petitioners spouses Reynaldo and
    Erlinda Litonjua and Philippine White House Auto Supply, Inc. 

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