2/24/2016

G.R.No.154765

Republic of the Philippines

Supreme Court
Manila

THIRDDIVISION

PEDROT.BERCERO,

G.R.No.154765
Petitioner,

Present:

YNARESSANTIAGO,J.,

Chairperson,
versus

AUSTRIAMARTINEZ,

CALLEJO,SR.,

CHICONAZARIO,and

NACHURA,JJ.
CAPITOLDEVELOPMENT

[1]

Promulgated:
CORPORATION,
Respondent.

March29,2007
xx

DECISION

AUSTRIAMARTINEZ,J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the
[2]
RevisedRulesofCourtassailingtheDecision datedFebruary11,2002oftheCourtof
[3]
Appeals(CA)inCAG.R.CVNo.56484whichsetasidetheDecision datedMay27,
1996oftheRegionalTrialCourt,Branch88,QuezonCity(RTCBranch88)inCivilCase
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[4]
No. Q9211732, and the CA Resolution dated August 29, 2002 which denied
petitionersMotionforReconsideration.

Thefactualbackgroundofthecaseisasfollows:

On January 31, 1983, Capitol Development Corporation (respondent) leased its

commercial building and lot located at 1194 EDSA, Quezon City to R.C. Nicolas
Merchandising, Inc., (R.C. Nicolas) for a 10year period or until January 31, 1993 with
the option for the latter to make additional improvements in the property to suit its
[5]
businessandtosubleaseportionsthereoftothirdparties.

R.C.Nicolasconvertedthespaceintoabowlingandbilliardscenterandsubleased
separate portions thereof to Midland Commercial Corporation, Jerry Yu, Romeo
Tolentino, Julio Acuin, Nicanor Bas, and Pedro T. Bercero (petitioner). Petitioners
subleasecontractwithR.C.NicolaswasforathreeyearperiodoruntilAugust16,1988.
[6]

Meanwhile,forfailuretopayrent,respondentfiledanejectmentcaseagainstR.C.
NicolasbeforetheMetropolitanTrialCourt,Branch41,QuezonCity(MeTCBranch41),
docketed as Civil Case No. 52933. Respondent also impleaded the sublessees of R.C.
Nicolasaspartiesdefendants.

During the pendency of Civil Case No. 52933, several sublessees including
[7]
petitioner, entered into a compromise settlement with respondent. In the compromise
settlement,thesublesseesrecognizedrespondentasthelawfulandabsoluteownerofthe
property and that the contract between respondent and R.C. Nicolas had been lawfully
terminatedbecauseofthelattersnonpaymentofrentandthatthesublesseesvoluntarily
surrendered possession of the premises to respondent that the sublessees directly
executed lease contracts with respondent considering the termination of leasehold rights
ofR.C.Nicolas.

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Petitionerenteredintoaleasecontractwithrespondentforathreeyearperiod,from
[8]
August16,1988toAugust31,1991.

OnOctober21,1988,respondentandpetitioner,aswellasseveralothersublessees
of R.C. Nicolas, filed a Joint Manifestation and Motion in Civil Case No. 52933,
manifestingtotheMeTCBranch41thattheyenteredintoacompromisesettlementand
movedthatthenamesofthesublesseesaspartiesdefendantsbedroppedandexcluded.
[9]

OnNovember14,1988,R.C.Nicolasfiledacomplaintforejectmentandcollection
of unpaid rentals against petitioner before the Metropolitan Trial Court, Branch 39,
[10]
Quezon City (MeTCBranch 39), docketed as Civil Case No. 0668.
On April 18,
1989, MeTCBranch 39 rendered a Decision in favor of R.C. Nicolas and ordered the
[11]
evictionofpetitionerfromtheleasedpremises.

Dissatisfied,petitionerfiledanappealbeforetheRegionalTrialCourt,Branch78,
Quezon City (RTCBranch 78). R.C. Nicolas filed a Motion for Execution Pending
Appealwhichwasopposedbypetitioner.

InanOrderdatedOctober4,1990,RTCBranch78directedtheissuanceofawrit
ofexecutionpendingappealsincepetitionerfailedtofilea
supersedeas bond and periodically deposit the rentals due during the pendency of the
[12]
[13]
appeal.
Accordingly, on October 22, 1990 a writ of execution was issued.
[14]
SometimeinNovember1990,petitionerwasevictedfromtheleasedpremises.

PetitionerassailedtheOrderdatedOctober4,1990inapetitionforcertiorariwith
theCA,docketedasCAG.R.SPNo.23275,butthepetitionwasdeniedduecourseand
[15]
dismissedbytheCAinaDecisiondatedDecember28,1990.

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On September 3, 1991, respondent filed a Manifestation in Civil Case No. 52933

urging MeTCBranch 41 to order R.C. Nicolas to desist from harassing respondent and
petitioner,andtoconfirmrespondentsrightofpossessiontothepremisesinthelightof
[16]
theejectmentcasefiledbyR.C.Nicolasagainstpetitioner.

Twomonthslater,oronNovember13,1991,MeTCBranch41renderedaDecision
inCivilCaseNo.52933infavorofrespondentandorderedR.C.Nicolastopayitsunpaid
[17]
rentalsfromSeptember1986untilOctober1988.

Meanwhile, since his eviction in November 1990, petitioner made repeated

demands on respondent for the restoration of his possession of the commercial space
[18]
leasedtohimtonoavail.

Thus, on March 24, 1992, petitioner filed a complaint for sum of money with
attachment and mandatory injunction with damages against the respondent before the
[19]
RTCBranch88,docketedasCivilCaseNo.Q9211732.

[20]
OnMay27,1996,RTCBranch88rendereditsDecision
infavorofpetitioner,
thedispositiveportionofwhichreads:

WHEREFORE,premisesrendered,thisCourtfindsfortheplaintiffandordersthe
defendant:

1) to restore plaintiffs possession of the rented building located at 1194 EDSA,

QuezonCityforthenextthreeyearseffectivefromreceiptofthecopyofthisdecision

2)topaytheplaintiffthefollowing:
a.P480,000.00actualdamages
b.P50,000.00moraldamages
c.P50,000.00exemplarydamages
d.P50,000.00attorneysfees

3)topaythecosts.

Accordingly, the counterclaim filed by the defendant Capitol Development

CorporationisherebyDISMISSED.
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[21]
SOORDERED.

TheRTCheldthatrespondentmiserablyfailedtocomplywithitsobligationunder
Article1654oftheNewCivilCodeduetoitsapathyandfailuretoextendanyassistance
tothepetitionerandwas,therefore,liablefortherestorationofpetitionerspossessionand
the payment of actual damages corresponding to lost profit, cash, generator, and other
items petitioner lost due to the eviction, as well as moral and exemplary damages and
attorneysfees.

Dissatisfied,respondentfiledanappealwiththeCA,docketedasCAG.R.CVNo.
56484.

[22]
OnFebruary11,2002,theCArendereditsDecision
settingasidetheDecision
ofRTCBranch88,towit:

WHEREFORE, premises considered, the Decision dated May 27, 1996 of the Regional
Trial Court of Quezon City, Branch 88, in Civil Case No. Q9211732, is hereby
REVERSEDandSETASIDE.Nopronouncementastocosts.

Applying the equitable principle of estoppel, the CA held that although respondent as
lessor failed to ensure the peaceful possession of petitioner as its lessee in the subject
premises,thelatterisnotentitledtodamagessincehewasawareofthefactswhichledto
hisousterfromthesubjectpremisesandthatpetitionerwaswellawarethatrespondent
hada10yearleasecontractwithR.C.Nicolaswhichwassubjectofanejectmentsuitthat
wasstillpendinglitigationwhenpetitionerexecutedaleasecontractwithrespondent.

[23]
OnMarch5,2002,petitionerfiledhisMotionforReconsideration.
OnAugust
29, 2002, the CA issued its Resolution denying petitioners Motion for Reconsideration.
[24]

Hence,thepresentPetitionanchoredonthefollowinggrounds:

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I.

THE HONORABLE COURT OF APPEALS CLEARLY COMMITTED GRAVE

ERRORANDABUSEOFDISCRETIONINAPPLYINGTHE
PRINCIPLEOFESTOPPELTOPETITIONER

II.

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR BY

DISREGARDING THE LAW, JURISPRUDENCE AND EVIDENCE IN DELETING
THEAWARDMADEBYTHELOWERCOURTOFDAMAGESANDREVERSING
THE THREE (3) YEAR POSSESSION OF THE SUBJECT PROPERTY GIVEN TO
[25]
THEPETITIONER

Petitionerarguesthattheprincipleofestoppelisinapplicablebecausehedealtwith
respondentingoodfaithandrelieduponthelattersrepresentationsthattheleaseofR.C.
Nicolaswasalreadyterminatedatthetimehecontractedwiththelatterthatrespondent
assuredhimthatithadavalidandlegalrighttoenterintoanewleasecontractwithhim
that he is entitled to damages since respondent did not even lift a finger to protect him
whenR.C.Nicolasfiledanejectmentcaseagainsthimandthatrespondentactedinutter
badfaithwhenitstillrefusedtorestorehispossessionafterhewasevictedinNovember
1990,notwithstandingthathisleasecontractwithrespondentwasvaliduntilAugust31,
1991.

Respondent,ontheotherhand,countersthattheCAcorrectlyappliedtheprinciple
of estoppel since petitioner voluntarily entered into a lease agreement with respondent
despite full knowledge that the latters lease with R.C. Nicolas over the subject premise
hadyettobejudiciallyterminatedandthatpetitionerknewthatatthetimehecontracted
withrespondent,hestillhadexistingobligationstoR.C.Nicolasrelatingtotheirsublease
agreement.

UnderArticle1654(3)oftheNewCivilCode,towit:

Art.1654.Thelessorisobliged:

xxxx

(3)Tomaintainthelesseeinthepeacefulandadequateenjoymentoftheleasefor
theentiredurationofthecontract.
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itisthedutyofthelessortoplacethelesseeinthelegalpossessionofthepremisesandto
[26]
maintainthepeacefulpossessionthereofduringtheentiretermofthelease.
Tofully
appreciate the importance of this provision, the comment of Manresa on said article is
worthmentioning:

The lessor must see that the enjoyment is not interrupted or disturbed, either by
others acts x x x or by his own.By his own acts, because, being the person principally
obligatedbythecontract,hewouldopenlyviolateitif,ingoingbackonhisagreement,he
shouldattempttorenderineffectiveinpracticetherightinthethinghehadgrantedtothe
lessee and by others acts, because he must guarantee the right he created, for he is
obligatedtogivewarrantyinthemannerwehavesetforthinourcommentaryonarticle
1553, and, in this sense, it is incumbent upon him to protect the lessee in the latters
[27]
peacefulenjoyment.

The obligation of the lessor arises only when acts, termed as legal trespass
(perturbaciondederecho), disturb, dispute, object to, or place difficulties in the way of
the lessees peaceful enjoyment of the premises that in some manner or other cast doubt
upon the right of the lessor by virtue of which the lessor himself executed the lease, in
[28]
whichcasethelessorisobligatedtoanswerforsaidactoftrespass.
Thelesseehasthe
right to be respected in his possession and should he be disturbed therein, he shall be
restoredtosaidpossessionbythemeansestablishedbythelaworbytheRulesofCourt.
[29]
Possessionisnotprotectionagainstarightbutagainsttheexerciseofarightbyones
[30]
ownauthority.

Petitioner claims that respondent as lessor was obliged to restore his possession
followinghisevictionfromthepremises.TheCourtdisagrees.

Voidareallcontractsinwhichthecauseorobjectdoesnotexistatthetimeofthe
[31]
transaction.
Inthepresentcase,theleasecontractbetweenpetitionerandrespondent
is void for having an inexistent cause respondent did not have the right to lease the
propertytopetitionerconsideringthatitsleasecontractwithR.C.Nicolaswasstillvalid
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andsubsisting,albeitpendinglitigation.HavinggrantedtoR.C.Nicolastherighttouse
andenjoyitspropertyfrom1983to1993,respondentcouldnotgrantthatsamerightto
petitionerin1988.Whenpetitionerenteredintoaleasecontractwithrespondent,thelatter
was still obliged to maintain R.C. Nicolass peaceful and adequate possession and
enjoymentofitsleaseforthe10yeardurationofthecontract.

Respondents unilateral rescission of its lease contract with R.C. Nicolas, without
waitingforthefinaloutcomeoftheejectmentcaseitfiledagainstthelatter,isunlawful.A
leaseisareciprocalcontractanditscontinuance,effectivityorfulfillmentcannotbemade
todependexclusivelyuponthefreeanduncontrolledchoiceofjustonepartytoalease
[32]
contract.
Thus, the lease contract entered into between petitioner and respondent,
duringthependencyoftheleasecontractwithR.C.Nicolas,isvoid.

There is no merit to petitioners claim of good faith in dealing with respondent.

Goodfaithisordinarilyusedtodescribethatstateofminddenotinghonestyofintention,
and freedom from knowledge of circumstances which ought to put the holder upon
[33]
inquiry
anhonestintentiontoabstainfromtakinganyunconscientiousadvantageof
another, even through technicalities of law, together with absence of all information,
[34]
notice, or benefit or belief of facts which render the transaction unconscientious.
BeingprivytothependencyoftheejectmentcaseinvolvingtheleaseholdrightsofR.C.
Nicolas since he was impleaded as a partydefendant in said ejectment case, petitioner
cannot feign innocence of the existence thereof. Petitioner was fully aware that R.C.
Nicolashadaleasecontractwithrespondentwhichwassubjectofapendinglitigation.

Itiswellsettledthatpartiestoavoidagreementcannotexpecttheaidofthelaw
the courts leave them as they are, because they are deemed in pari delicto or in equal
[35]
fault.
No suit can be maintained for its specific performance, or to recover the
propertyagreedtobesoldordelivered,orthemoneyagreedtobepaid,ordamagesforits
[36]
violation,andnoaffirmativereliefofanykindwillbegiventooneagainsttheother.
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[37]
Eachmustbeartheconsequencesofhisownacts.
Theywillbeleftwheretheyhave
placedthemselvessincetheydidnotcomeintocourtwithcleanhands.

Insum,theunderlyingcaseforsumofmoneyfiledbypetitioneragainstrespondent
cannotprosper,hisrightofactionbeinganchoredonacontractwhich,forallintentsand
purposes,hasnolegalexistenceandeffectfromthestart.Avoidorinexistentcontractis
equivalent to nothing it is absolutely wanting in civil effects it cannot be the basis of
[38]
actionstoenforcecompliance.

WHEREFORE, the present petition is DENIED for lack of merit. The assailed
Decision and Resolution of the Court of Appeals in CAG.R. CV No. 56484 are
AFFIRMED.PetitionersComplaintandrespondentsCounterclaiminCivilCaseNo.Q
9211732areDISMISSED.Costsagainstpetitioner.

SOORDERED.

MA.ALICIAAUSTRIAMARTINEZ
AssociateJustice

WECONCUR:

CONSUELOYNARESSANTIAGO
AssociateJustice
Chairperson

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ROMEOJ.CALLEJO,SR.
AssociateJustice

MINITAV.CHICONAZARIO
AssociateJustice

ANTONIOEDUARDOB.NACHURA
AssociateJustice

ATTESTATION

IattestthattheconclusionsintheaboveDecisionhadbeenreachedinconsultationbefore
thecasewasassignedtothewriteroftheopinionoftheCourtsDivision.

CONSUELOYNARESSANTIAGO
AssociateJustice
Chairperson,ThirdDivision

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division
ChairpersonsAttestation,itisherebycertifiedthattheconclusionsintheaboveDecision
hadbeenreachedinconsultationbeforethecasewasassignedtothewriteroftheopinion
oftheCourtsDivision.
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REYNATOS.PUNO
ChiefJustice

[1]
ThepresentpetitionimpleadedtheCourtofAppealsasrespondent.However,underRule45,Section4oftheRevised
Rules of Court, the present petition may be filed without impleading the lower courts and judges thereof as
petitionersorrespondents.Hence,theCourtdeletedTheCourtofAppealsfromthetitle.
[2]
PennedbyJusticeMercedesGozoDadoleandconcurredinbyJusticesSalvadorJ.Valdez,Jr.andJuanQ.Enriquez,Jr.
CArollo,pp.92103.
[3]
OriginalRecords,pp.258266.
[4]
CArollo,p.143.
[5]
Records,p.56.
[6]
Id.at53.
[7]
Id.at84.
[8]
Id.at4.
[9]
Id.at61.
[10]
Id.at171.
[11]
ExhibitsH,folderofexhibits,p.5.
[12]
Records,p.216.
[13]
Id.at219.
[14]
TSN,August17,1993,testimonyofPedroT.Bercero,p.14.
[15]
Records,p.221.
[16]
Id.at64.
[17]
Id.at5560.
[18]
Id.at13.
[19]
Id.at1.
[20]
Supranote3.
[21]
Id.at266.
[22]
Supranote2.
[23]
Id.at106.
[24]
Supranote4.
[25]
Rollo,p.254.
[26]
LimitlessPotentials,Inc.v.Quilala,G.R.No.157391,July15,2005,463SCRA586,611612DelaCruzv.Seminary
ofManila,18Phil.330,335(1911).
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[27]
CMSInvestmentandManagementCorporationv.IntermediateAppellateCourt,No.L64325,October3,1985,139
SCRA75,84Goldsteinv.Roces,34Phil.562,564(1916).
[28]
LiwaywayPublications,Inc.v.PermanentConcreteWorkersUnion,195Phil.51,64(1981).
[29]
NEWCIVILCODE,Article539,provides:
Art.539.Everypossessorhasarighttoberespectedinhispossessionandshouldhebedisturbedthereinheshallbe
protectedinorrestoredtosaidpossessionbythemeansestablishedbythelawsandtheRulesofCourt.
Apossessordeprivedofhispossessionthroughforcibleentrymaywithintendaysfromthefilingofacomplaint
presentamotiontosecurefromthecompetentcourt,intheactionforforcibleentry,awritofpreliminarymandatory
injunctiontorestorehiminhispossession.Thecourtshalldecidethemotionwithinthirty(30)daysfromfiling
thereof.
[30]
Tolentino,NEWCIVILCODE(1987),Vol.II,p.241.
[31]
NEWCIVILCODE,Article1409,reads:
Art.1409.Thefollowingcontractsareinexistentandvoidfromthebeginning:
xxxx
(3)Thosewhosecauseorobjectdidnotexistatthetimeofthetransaction
xxxx
Thesecontractscannotberatified.Neithercantherighttosetupthedefenseofillegalitybewaived.
[32]
Limitless Potentials, Inc. v. Quilala, supra note 27, at 613 LL and Company Development and AgroIndustrial
Corporationv.HuangChaoChun,428Phil.665,677(2002).
[33]
Woodenv.CivilServiceCommission,G.R.No.152884,September30,2005,471SCRA512,531DeGuzmanv.Delos
Santos,442Phil.428,438(2002).
[34]
CivilServiceCommissionv.Maala,G.R.No.165253,August18,2005,467SCRA390,399BlacksLawDictionary,
6th ed.,1990,p.693.
[35]
Menchavezv.Teves,Jr.,G.R.No.153201,January26,2005,449SCRA380,393.
[36]
Rellosav.GawCheeHun,93Phil.827,831(1953)PomeroysEquityJurisprudence,Vol.3,5th ed.,p.728.
[37]
TheCityofAngelesv.CourtofAppeals,329Phil.812,838(1996)TejaMarketingv. Intermediate Appellate Court,
G.R.No.L65510,March9,1987,148SCRA347,352.
[38]
Republicv.Lao,G.R.No.141941,May4,2006,489SCRA424,430Tolentino,CommentariesandJurisprudenceon
theCivilCodeofthePhilippines,Vol.IV,200led.,pp.629630.

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