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EVIDENCE | B2015 CASE DIGESTS

Tan vs. Rodil Enterprises


December 18, 2006 Chico-Nazario, J. Francis

Rodil filed a complaint for Unlawful Detainer against Tan alleging that Tan bound himself to pay under a Contract of Sublease, the amount of P13,750 as monthly rentals and that Tan refused to pay from September 1997 up to the time of the filing of the complaint in March, 2000. Tan insists that he is a legitimate tenant of the government, not of Rodil. As such, he has the right to lease the said premises pending the disposition of the building. He based his claim on the fact that on February 8, 1994, the Office of the President declared the Renewal of Contract of Lease and the Supplemental Contract to be without force and effect. The MeTC issued an Order, recognizing an agreement entered into in open court by Tan and Rodil. The Order declared: On second call, the parties and counsel agreed in principle in open court to the following terms to put an end to this civil case for ejectment between them: 1.) that [Tan] will pay P440,000.00 representing rentals from September, 1997 up to the present, which is the outstanding obligation of [Tan] as of June, 2000, on or before June 30, 2000; and 2.) [Tan] will pay the monthly rentals computed at P13,750.00 on or before the 5th day of each month after June 30, 2000. On August 14, 2000, Tan filed a Motion to Allow Defendant to Deposit Rentals averring that he had agreed to pay all the rentals due on the subject premises and to pay the subsequent monthly rentals as they fall due; that the rentals in arrears from September 1997 amounted to P467,500; and in line with his good faith in dealing with Rodil, he would like to deposit the aforesaid amount, and the subsequent monthly rentals as they fall due. He prayed that he be allowed to deposit the Managers Check for the amount ofP467,500 payable to the City Treasurer of Manila. The MeTC denied the Motion because the prayer contravenes Section 19, Rule 70 of the 1997 Rules of Civil Procedure.

SUMMARY: Tan admitted in open rentals to Rodil and then made a deposit rentals. Tan alleges that admissible because it is an offer of 130.

court his liability to pay motion to allow him to such admission is not compromise under Rule

DOCTRINE: The general rule is an offer of compromise in a civil case is not an admission of liability. It is not admissible in evidence against the offeror. There is an exception to this rule. To determine the admissibility or non-admissibility of an offer to compromise, the circumstances of the case and the intent of the party making the offer should be considered. If in the course thereof, the party making the offer admits the existence of an indebtedness combined with a proposal to settle the claim amicably, then, the admission is admissible to prove such indebtedness FACTS: Rodil Enterprises is a lessee of the Ides ORacca Building since 1959. The Ides ORacca Building in Binondo, Manila, is owned by the Republic of the Philippines. In May 18, 1992, Rodil and the Republic entered into a Renewal of a Contract of Lease. In May 25, 1992, the parties entered into a subsequent Supplementary Contract extending the lease agreement until 1 September 1997. On October 18, 1999, a subsequent Contract of Lease was drawn between Rodil and the Republic, effective retroactively from September 1, 1997 to August 21, 2012 at a monthly rental of P65,206. Rodil subleased various units of the property to members of the Ides ORacca Building Tenants Association, Inc. A space thereof, known as Botica Divisoria was subleased to Luciano Tan.

EVIDENCE | B2015 CASE DIGESTS

The MeTC rendered a decision in favor of Rodil. The court said that Tan did not contest the sublease on a monthly basis, and in fact admitted it. The court cannot overlook the frank representations by Tans counsel of the Tans liability in the form of rentals, coupled with a proposal to liquidate. The RTC reversed the MeTC decision stating that during the pre-trial conference held in the lower court, proposals and counter-proposals emanated from the parties counsels, which was normally inspired by the desire to "buy peace" or to put an end to the troubles of litigation. The act of defendant in the midst of pre-trial is not an admission of any liability and therefore, should not be considered admissible evidence against him. The CA ruled that Tan made an implied admission of the existence of a contract of sublease between him and Rodil on the subject premises; and that he had reneged in the payment of rentals since 1 September 1997. It also deemed Tans Motion to Allow Defendant to Deposit Rentals as another admission in favor of Rodil. ISSUES: Whether or not the Admission made by Tan is excluded by Rule 130 as an offer of compromise. RATIO: No, such rule is not absolute. It has an exception as will be discussed below. RULING: Tan posits that the said admission, made in open court, and then, reiterated in his Motion to Allow Defendant to Deposit Rentals, cannot be taken as an admission of his liability, citing Section 27, Rule 130 of the Rules of Court, which states that an offer of compromise in a civil case is not a tacit admission of liability. The general rule is an offer of compromise in a civil case is not an admission of liability. It is not admissible in evidence against the offeror. There is an exception to this rule. In

Trans-Pacific Industrial Supplies, Inc. v. Court of Appeals the SC held that: To determine the admissibility or non-admissibility of an offer to compromise, the circumstances of the case and the intent of the party making the offer should be considered. Thus, if a party denies the existence of a debt but offers to pay the same for the purpose of buying peace and avoiding litigation, the offer of settlement is inadmissible. If in the course thereof, the party making the offer admits the existence of an indebtedness combined with a proposal to settle the claim amicably, then, the admission is admissible to prove such indebtedness In Varadero de Manila v. Insular Lumber Co, the SC applied the exception where in such case, there was neither an expressed nor implied denial of liability, but during the course of the abortive negotiations therein, the defendant expressed a willingness to pay the plaintiff. Finding that there was no denial of liability, and considering that the only question discussed was the amount to be paid, the Court did not apply the rule of exclusion of compromise negotiations. In this case, the MeTC found that Tan did not contest the existence of the sublease, and his counsel made frank representations anent the formers liability in the form of rentals. This expressed admission was coupled with a proposal to liquidate. The Motion to Allow Defendant to Deposit Rentals was deemed by the MeTC as an explicit acknowledgment of petitioners liability on the subleased premises. The Court of Appeals agreed with the MeTC. Also, the existence of the Contract of Lease of 1999 between Rodil and RP was not denied by Tan. Tan also admitted the amount of indebtedness in the form of rentals due. In Tans Motion to Allow Defendant to Deposit Rentals, he stated that the rentals due on the premises in question from September 1997 up to the present amounted to P467,500, as of the date of filing the Motion.

EVIDENCE | B2015 CASE DIGESTS

DISPOSITIVE: Petition is DENIED. There was an admission by Tan in this case. He should leave the premises and pay rentals.

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