Case Digest (G.R. No. 157568)
Facts:
The case involves Leonardo Chua and the Heirs of Yong Tian as petitioners, against Mutya B. Victorio, represented by her attorney-in-fact Armando Z. Cosme, as the respondent. This matter originated from Civil Cases Nos. 21-2761 and 21-2762, which were ejectment cases filed by respondent Mutya Victorio, the owner of commercial units on Panganiban Street in Santiago City, Isabela, against Leonardo Chua, the occupant of one unit, and the Heirs of Yong Tian, who occupied two units. Previously, there was an earlier ejectment case that resulted in a compromise agreement between the parties, approved by the trial court. The agreement stipulated a 100% increase in rental effective August 1990, with an arrangement for rental reviews every four years, capped at a 25% increase.In September 1994, the respondent demanded a 25% increase based on a rental survey of nearby establishments, but petitioners refused to comply. Consequently, unlawful detainer cases were filed but were initially di
Case Digest (G.R. No. 157568)
Facts:
- Background and Parties
- The case involves respondent Mutya B. Victorio, owner of commercial units on Panganiban Street, Santiago City, Isabela, and petitioners Leonardo Chua and the heirs of Yong Tian, who occupied one and two of these units respectively.
- The dispute originates from multiple ejectment cases where respondent sought to regain possession of her premises due to alleged breaches by the petitioners.
- Prior Ejectment Cases and Compromise Agreement
- Before the present case, respondent had instituted earlier ejectment cases against petitioners.
- In one such case, a compromise agreement was reached and approved by the trial court.
- The agreement provided a 100% rent increase effective August 1990.
- Subsequent rental adjustments were to be reviewed every four years based on prevailing commercial rates, with an increase not exceeding 25%.
- Petitioners were to pay the accrued rental differentials via postdated checks starting November 30, 1991.
- All other terms not inconsistent with the agreement were to remain in full force.
- The 1994 Developments and Subsequent Rental Increase
- In September 1994, respondent conducted a rental survey of comparable commercial establishments along Panganiban Street.
- Based on the survey, respondent demanded a 25% rental increase from petitioners.
- Petitioners refused to pay the increased amount, prompting respondent to file unlawful detainer cases (Civil Cases Nos. II-370 and II-371).
- The Municipal Trial Court in Cities (MTCC) initially dismissed the complaints.
- The dismissal was affirmed by the Regional Trial Court, then reversed by the Court of Appeals (CA), which ordered petitioners to vacate the premises.
- Payment of Increased Rent and Quashing of Execution
- Petitioners contended that supervening events rendered execution unjust because they had eventually acceded to the increased rental demand.
- Evidence showed that petitioners had offered and paid the increased monthly rent as early as January 1996 and throughout the pendency of the cases.
- On this basis, the MTCC quashed the writs of execution previously issued, allowing petitioners to remain in possession.
- The 1998 Rent Increase and Renewed Ejectment Action
- On October 10, 1998, respondent sent a letter notifying petitioners of her intention to further increase the monthly rent from P6,551.25 to P15,000.00 per unit effective November 1, 1998.
- Petitioners refused to pay the new rate, arguing that the allowable increase under the previous compromise agreement was limited to 25% every four years.
- Consequently, respondent initiated new ejectment cases (Civil Cases Nos. 21-2761 and 21-2762).
- The MTCC initially dismissed these complaints for lack of merit.
- The Regional Trial Court later reversed then re-reversed its decision, ultimately affirming the dismissal on March 9, 2000.
- Court of Appeals Ruling and the Termination of the Original Lease
- On May 31, 2001, the Court of Appeals reversed the RTC ruling and held that:
- The compromise agreement was abrogated when petitioners refused the increased rental in 1994, effectively severing the lessor-lessee relationship.
- When respondent subsequently accepted the increased rental payment, an entirely new lease contract was created with its duration being monthly as provided under Article 1687 of the Civil Code.
- The CA, exercising equity, granted petitioners an extension of one year from the finality of its decision to vacate the premises, although this extension was later modified by the Supreme Court.
- Petitioners filed a motion for reconsideration, which was denied on March 11, 2003, leading to the present petition for review on certiorari.
- Submission of the Petition for Review and Final Relief
- Respondent assailed the quashing of the writ of execution directly to the Supreme Court on procedural grounds, but the petition was dismissed.
- The central dispute revolved around whether the compromise agreement continued to govern, with petitioners arguing for its continued application.
- The Supreme Court ultimately found that:
- The compromise agreement governed only the terms relating to rent increase and did not fix the lease duration.
- Non-payment of the increased rental in 1994 and subsequent acceptance of increased rent resulted in a new contract of lease on a monthly basis.
- Petitioners’ unilateral attempt to revive the compromised lease terms was untenable.
Issues:
- Validity and Continued Effectivity of the Compromise Agreement
- Whether the original compromise agreement, which allowed only a 25% increase every four years, continued to govern the lease after petitioners’ refusal to pay the increased rent in 1994.
- Whether petitioners could unilaterally claim that the compromise agreement preserved their right to continue occupancy under its original terms.
- Establishment of a New Lease Contract
- Whether the acceptance of increased rental payments by respondent constituted the formation of a new lease contract with a monthly term as provided under Article 1687 of the Civil Code.
- Whether the new monthly rental regime effectively terminated the prior lessor-lessee relationship embodied in the original agreement.
- Procedural and Substantive Remedies
- Whether the extrajudicial remedies available to the lessor, such as immediate rescission upon breach of statutory payment obligations, were rightly invoked by respondent.
- Whether petitioners’ subsequent payment of increased rental amounts could be considered sufficient to revive or sustain the original contract.
- Extension for Vacating the Premises
- Whether the one-year extension granted by the Court of Appeals was equitable.
- The appropriateness of modifying this extension to a one-month period as ordered by the Supreme Court.
- Res Judicata and Preclusion of Re-litigation
- Whether the issues regarding the validity of the compromise agreement had been conclusively decided in prior ejectment cases and thus are precluded from being re-litigated in the present petition for review.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)