Case Digest (G.R. No. 133879)
Facts:
In Equatorial Realty Development, Inc. v. Mayfair Theater, Inc. (G.R. No. 133879, November 21, 2001), petitioner Equatorial Realty Development, Inc. (“Equatorial”) challenges the dismissal by the Regional Trial Court (RTC) of Manila, Branch 8, of its complaint for collection of rentals or reasonable compensation against respondent Mayfair Theater, Inc. (“Mayfair”). The controversy arose from an earlier suit between Mayfair and Carmelo & Bauermann, Inc. (“Carmelo”), the original owner of a two‐storey building and land on Claro M. Recto Avenue, Manila, leased to Mayfair in 1967 and 1969 for 20 years with a right of first refusal. In July 1978, Carmelo sold the property to Equatorial for ₱11,300,000 without offering it to Mayfair. Mayfair sued in RTC Branch 7 for annulment of the sale, specific performance of its purchase option, and damages. The trial court ruled for Carmelo and Equatorial, but the Court of Appeals reversed. On November 21, 1996, the Supreme Court in G.R. No.Case Digest (G.R. No. 133879)
Facts:
- Antecedent transactions
- Carmelo & Bauermann, Inc. owned a parcel of land with two 2-storey buildings on Claro M. Recto Avenue, Manila (TCT No. 18529).
- On June 1, 1967 and March 31, 1969, Carmelo leased portions of the buildings to Mayfair Theater, Inc. for 20 years each (Maxim and Miramar Theaters), granting Mayfair a 30-day right of first refusal on any sale.
- On July 31, 1978, Carmelo sold the entire property to Equatorial Realty Development, Inc. for ₱11.3 million without offering it to Mayfair; Equatorial thereafter collected rents and filed ejectment suits against Mayfair.
- Litigation up to 1996 (Mother Case, G.R. No. 106063)
- Mayfair sued Carmelo and Equatorial for annulment of the sale, specific performance of its option, and damages. The RTC ruled for Carmelo/Equatorial; the CA reversed.
- On November 21, 1996, this Court denied Mayfair’s petition, rescinded the 1978 sale, ordered Carmelo to return the purchase price to Equatorial, directed Equatorial to reconvey the lots to Carmelo, and required Carmelo to let Mayfair buy the property for ₱11.3 million. The decision became final on March 17, 1997.
- Post-1996 execution and subsequent events
- Carmelo was defunct; Mayfair deposited ₱11.3 million less ₱847,000 withholding tax with the RTC as purchase price; the Clerk of Court executed a reconveyance to Carmelo and a deed of sale to Mayfair; titles were reissued to Mayfair.
- The CA in 1998 ruled Mayfair may not deduct the ₱847,000; this Court in G.R. No. 136221 (May 12, 2000) affirmed strict execution of the 1996 decision and denied the deduction.
- Meanwhile, on September 18, 1997, Equatorial filed Civil Case No. 97-85141 in RTC Branch 8 for back rentals and reasonable compensation for Mayfair’s occupation after lease expiry (1987/1989).
- Lower court disposition in 1998
- Mayfair moved to dismiss on grounds of forum-shopping and bar by prior judgment.
- On March 11, 1998, the RTC granted the motion, dismissed Equatorial’s complaint, and held the rescinded sale “void ab initio,” concluding Equatorial was not owner and could not claim rentals. A reconsideration motion was denied.
Issues:
- Substantive issue
- Did the RTC err in dismissing Equatorial’s complaint by deeming the 1978 sale void from inception, thereby depriving Equatorial of ownership and rental rights?
- Is Equatorial entitled to back rentals or reasonable compensation despite the rescission of the sale?
- Procedural issue
- Did the RTC base its dismissal on a ground not raised in Mayfair’s Motion to Dismiss or not recognized under Rule 16, and was the dismissal therefore improper?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)