G.R. No. 207500 - Quesada vs. Boza Restaurants, Inc.

Respondent Bonanza Restaurants, Inc. is the registered owner of a 9,404‐square meter lot at 1077-1079 EDSA, Balintawak, Quezon City, covered by TCT No. RT-65703.
In 2003, Efren S. Quesada served as Bonanza’s General Property Manager while his brother Miguel Quesada was the Company President.

On July 1, 2003, Bonanza, represented by Miguel Quesada, allegedly leased the subject lot to Efren.
The lease was described as “effective July 1, 2003 until such time that it is replaced or amended by another resolution agreement” and “effective until such time that the parcel of land is sold.”
The contract required Efren to include a mandatory 60-day pre-termination clause in any sublease agreements and to provide Bonanza with copies of these agreements.

Using the lease contract, Efren entered into various subleases with third parties.
Bonanza later raised issues with the sublease agreements, alleging that they omitted the required pre-termination clause, and claimed that Efren was forestalling the sale of the property.
Bonanza discovered that Efren had constructed concrete improvements on the property without its knowledge or consent, allegedly to further prolong his possession.

On February 7, 2008, Bonanza rescinded the lease by sending a demand letter to Efren, and on February 11, 2008, it similarly notified the sublessees.
Bonanza filed a complaint for unlawful detainer on March 26, 2008, alleging:

The subleases did not include the mandatory 60-day pre-termination clause.
Efren had repeatedly ignored Bonanza’s objections and was preventing the sale of the property.
The unauthorized construction of concrete structures constituted bad faith and fulfilled the resolutory condition of the lease.
A subsequent board resolution dated January 8, 2008, canceled the lease.

Efren, in his April 14, 2008 answer, denied any breach or bad faith, arguing that Bonanza lacked the unilateral power to rescind the lease and that if rescission was warranted, the proper forum was the RTC.

The Metropolitan Trial Court (MeTC) initially dismissed Bonanza’s complaint for prematurity, holding that the unilateral cancellation was not legally justified and that the complaint was premature because it had not been established that Efren violated the lease.
The Regional Trial Court (RTC) reversed the MeTC decision by ejecting Efren and his sublessees, ruling that the complaint sufficiently alleged unlawful detainer and noting that the lease was simulated because Miguel had no Board authority.
On appeal, the Court of Appeals (CA) affirmed the RTC’s decision on January 16, 2013, and later denied Efren’s motion for reconsideration on June 5, 2013.

Efren contended that Bonanza was estopped from denying the lease’s validity and that it had effectively ratified the agreement by accepting sublease proceeds over several years.
Bonanza argued that Efren’s actions, particularly the unauthorized construction, indicated a unilateral breach by attempting to forestall the sale of the property, thus justifying its rescission and ejectment proceedings.

Whether Bonanza’s filing of an ejectment suit for unlawful detainer was proper without first filing a case for rescission before the RTC.
Whether the matter should have been addressed in a summary ejectment proceeding or a full trial given the contractual disputes and the alleged unilateral cancellation.

Whether the lease was simulated or unenforceable due to lack of proper authority on the part of Miguel Quesada and other corporate procedural defects.
Whether Bonanza’s unilateral rescission of the lease was legally justified without a contractual stipulation permitting such action.

Whether Bonanza made a proper written demand in accordance with Rule 70, Section 2 of the Rules of Court.
Whether the demand letter sufficiently asked Efren to pay or comply with the lease conditions and to vacate the property.

Whether Efren’s construction of improvements on the property constituted a substantial breach justifying termination of the lease.
Whether the alleged actions by Efren amounted to a constructive fulfillment of the resolutory condition in the lease contract.