G.R. No. 175554 - Liga vs. Allegro Resources Corp.

On 10 October 1975, Ortigas & Company, Limited Partnership (Ortigas) executed a lease agreement with La Paz Investment & Realty Corporation (La Paz) for a parcel of land in San Juan, Metro Manila (now part of San Juan City) covering 5,514 square meters.
The lease was for a period of twenty-five (25) years, effective from 1 January 1976 until 31 December 2000.
Under the lease's terms, La Paz was obligated to construct a two- or three-storey concrete framed commercial building (the Greenhills Shopping Arcade or GSA), designed for subdivision into various stalls to be subleased.
La Paz complied by building the GSA and subdividing it into individual stalls, one of which was unit No. 26, Level A.

One of the sub-lessees was Edsel Liga (Liga), who obtained the leasehold right over Unit No. 26, Level A.
Despite the expiration of the original lease (31 December 2000), Liga was allowed by Ortigas to remain in possession of the property.
The stallholders, represented by the Greenhills Shoppesville Unit Lessees’ Association, Inc. (GSULAI), attempted repeatedly to secure an extension of their leasehold rights, but Ortigas denied these overtures.

On 30 August 2001, Ortigas informed the GSULAI about the impending lease of the GSA to Allegro Resources Corporation (Allegro).
On 3 September 2001, Ortigas and Allegro executed a Contract of Lease accompanied by an Addendum specifying that Allegro would take immediate possession and control of the leased premises upon signing.
Allegro, as the new lessee, then offered to sublease Unit No. 26, Level A to Liga under a separate agreement known as the Rental Information.

Liga agreed to pay a monthly rental of P40,000.00 starting 1 September 2001.
In addition, she agreed to settle back rentals for the period from January to August 2001, due to Ortigas.
Upon signing, Liga submitted one month’s advance rental and one month’s security deposit, each amounting to P40,000.00.

Liga complied by paying the deposits upon execution of the sublease agreement but subsequently failed to pay the agreed monthly rentals and the back rentals.
On 15 March 2002, Allegro filed a complaint for ejectment before the Metropolitan Trial Court (MeTC) of San Juan, Metro Manila, Branch 57.
The MeTC rendered a decision in favor of Allegro ordering Liga to:

Vacate the disputed stall.
Pay back rentals for the period when she occupied the property without proper authority.
Compensate for the period of occupancy from 1 January 2001 to 31 August 2001, holding that her possession had been merely by virtue of Ortigas’ tolerance.

The Regional Trial Court (RTC) affirmed the MeTC's decision with modifications regarding the monetary awards.

The RTC extended the lease period for two years at P20,000.00 per month.
It adjusted the payment obligations by ordering Liga to pay P80,000.00 as back rentals for September 2001 to February 2002 and a monthly rental of P20,000.00 thereafter until the premises were vacated.

Allegro filed a petition for review under Rule 42 before the Court of Appeals, seeking modification of the RTC’s decision.
The Court of Appeals, in a Decision dated 25 January 2006, granted Allegro’s petition by:

Back rentals of P20,000.00 per month to Ortigas for the period from 1 January 2001 to 31 August 2001.
Back rentals of P40,000.00 per month to Allegro from 1 September 2001 until the premises were vacated.

Liga raised issues in her petition for review before the Supreme Court, chiefly questioning:

Whether the Court of Appeals erred in ordering Liga to pay back rentals for the period 1 January 2001 to 31 August 2001 in favor of Ortigas, given that Ortigas is not a party to the suit.

The contention rests on the principle that judgment cannot extend relief to non-parties.
Liga argued that awarding such back rentals was inconsistent with the doctrine that no judgment may bind a stranger.

Whether Liga’s acquiescence to pay a monthly rental of P40,000.00 under the Rental Information should bind her despite her subsequent refusal and assertions invoking estoppel based on Allegro’s prior actions.

Liga contended that by filing a Motion to Release Cash Bond in Favor of Plaintiff, Allegro had signified its concurrence with a lower monthly rental of P20,000.00.
This raised the issue of whether the contractual stipulations should be modified by such conduct or remain binding as originally agreed.

Whether the award of attorney’s fees and costs of suit against Liga was appropriate, considering that she was willing and able to pay the appropriate rentals as evidenced by her prior deposits.