Case Digest (G.R. No. 247472)
Facts:
Eliseo N. Hao v. Emerlinda S. Galang, G.R. No. 247472, October 06, 2021, the Supreme Court Third Division, Carandang, J., writing for the Court.Petitioner Eliseo N. Hao executed a written lease dated February 25, 2011 over property owned by respondent Ermelinda S. Galang, for a five-year term beginning April 1, 2011, at a monthly rent of P100,000 for the establishment of a diagnostic center. In March 2011, Hao and others organized Suremed Diagnostic Center Corp. (SUREMED); Hao was the company’s initial president, and SUREMED thereafter occupied the leased premises and operated its business there.
In 2012, Dr. Ramon Ragos replaced Hao as SUREMED president. Galang prepared a revised lease substituting SUREMED for Hao, but SUREMED refused to execute it; despite that refusal, SUREMED continued in occupancy. SUREMED began delaying rental payments in 2013 and defaulted in 2014. Galang sent demand letters to Dr. Ragos (as SUREMED president) and later to Hao; by June 2014 arrears totaled approximately P540,655.75. After unsuccessful demands, Galang filed an unlawful detainer suit on June 13, 2014 against Hao and SUREMED.
At the Metropolitan Trial Court (MTC), SUREMED denied liability for lack of privity; Hao argued he acted only as corporate representative and asserted estoppel and that SUREMED was the actual occupant; he filed a cross-claim against SUREMED. In a Decision dated July 25, 2017, the MTC found Hao primarily liable as the lessee-signatory and dismissed the unlawful detainer against SUREMED; it awarded arrears and attorney’s fees against Hao and dismissed Hao’s cross-claim. The Regional Trial Court (RTC), Quezon City, Branch 98, affirmed the MTC in a Resolution dated April 27, 2018, holding there was no substitution of debtor or novation. The Court of Appeals (CA), in a Decision dated May 10, 2019 (CA-G.R. SP No. 157869), likewise affirmed the RTC, sustaining Hao’s personal liability and the dismissal of his cross-claim given the dismissal of the case against SUREMED.
Hao filed a petition for review on certiorari under Rule 45 to this Court, reiterating that the lease was a pre-incorporation (subjective novation) transaction for SUREMED’s benefit, that SUREMED issued checks and occupied the premises, and that Galang’s acceptance of payments and prior demand letters to SUREME...(Pro-only)
Issues:
- Did the Court of Appeals and lower courts correctly hold that petitioner Hao is personally liable for rental arrears under the lease he signed?
- Was there a valid substitution or novation that made SUREMED the obligor in place of Hao such that SUREMED (and not Hao) should bear liability?
- Should moral and exemplary damages be awarded against Galang for institut...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)