G.R. No. 135805 - Civil Service Commission vs. Dacoycoy

Angel Miranda is the registered owner of a 9,646-square-meter parcel of land located at Niog, Bacoor, Cavite, evidenced by Transfer Certificate of Title No. T-60679.
In 1984, Angel Miranda entered into a month-to-month verbal lease with Executive Machineries and Equipment Corporation (EMECO), a corporation established by his son, Angelito Miranda, for the purpose of constructing and operating a factory.
The lease was set at a rental rate of P8,000 per month, and at first, EMECO complied with the payment schedule.
Following the death of Angelito Miranda in 1988, EMECO defaulted in rental payments but continued to possess the premises.

Angel Miranda demanded accrued rentals (amounting to P280,000 as of May 1991) and announced termination of the oral contract effective June 30, 1991.
Despite subsequent demand letters in June and September 1991, EMECO failed to settle the outstanding rentals or vacate the property.
Florenda Miranda, Angel’s wife and former shareholder in EMECO, subsequently attempted to sublease the property by showing a purported lease document to Wilson Kho, who required the true owner’s signature for his acceptance.

Wilson Kho eventually located Angel Miranda and, with his agreement, G.Q. Garments, Inc. (the petitioner) entered into a formal contract of lease on December 23, 1991.
The lease was for a period of 15 years (from February 1, 1992, to January 31, 2007) at a monthly rental of P30,000 with a deposit and advance rental payment totaling P90,000 initially, followed by additional deposits amounting to a total of P360,000.
As part of the lease terms, the petitioner was authorized to make improvements and secure requisite permits for its factory construction.

On January 27, 1992, Florenda Miranda, accompanied by armed men identifying as policemen, forcibly evicted the petitioner from the leased premises.
During the eviction, equipment, machinery, construction materials, and other property belonging to the petitioner were removed or damaged.
Shortly thereafter, Angel Miranda initiated legal action by filing a complaint for the nullity of the purported contract of lease he claimed was forged, alleging that his signature had been faked in favor of EMECO.

The petitioner instituted an action for damages and recovery of possession before the RTC of Cavite City, alleging forcible eviction and losses amounting to damages of no less than P2,000,000.
Concurrently, a separate ejectment suit was filed against Florenda Miranda, resulting in her eventual eviction from the premises after district court proceedings.
The RTC dismissed the petitioner’s complaint on grounds of litis pendentia, noting the existence of parallel cases, but awarded damages in a limited manner.
The Court of Appeals (CA), upon review, reversed the RTC ruling by dismissing the complaint against Angel Miranda with prejudice and awarded nominal damages against Florenda Miranda, along with attorney’s fees and costs of suit.

The petitioner claimed that it suffered actual damages, notably alleging a loss of P10,000,000 due to the destruction and removal of equipment, machinery, and building materials.
It argued that Angel Miranda, as lessor, had a duty under Article 1654(3) of the New Civil Code to maintain its peaceful and adequate enjoyment of the lease and that his failure to ensure this constituted a breach of warranty.
The petitioner further contended that Angel Miranda should reimburse the P360,000 it had paid as rental deposits because it could not "enjoy" the premises.
In support of its claim, the petitioner cited prior jurisprudence, including De la Cruz vs. Seminary of Manila, asserting that a lessor failing to provide legal possession is liable for damages.

Whether the respondents, particularly Florenda Miranda and EMECO, are liable to the petitioner for the alleged actual damages amounting to P10,000,000.
Whether the evidence presented—primarily the witness testimony and self-serving lists—was sufficient to prove the actual loss suffered by the petitioner.

Whether Angel Miranda, as a lessor, breached his duty under Article 1654(3) of the New Civil Code by failing to secure the petitioner’s peaceful and adequate legal possession of the leased premises.
Whether Angel Miranda should be held liable for the forcible eviction and consequent damages, considering that the disturbance was a result of physical trespass perpetrated by Florenda Miranda and her cohorts.
Whether the petitioner is entitled to recover the P360,000 paid as rental deposit due to its inability to enjoy the leased property.