G.R. No. 142347 - Abanilla vs. Commission on Audit

Petitioner Cely Sy owns a 316‑square‑meter lot located at 1940 Felix Huertas Street, Sta. Cruz, Manila.
Respondent Andokas Litson Corporation is engaged in the business of selling grilled chicken and pork, with outlets nationwide.
On July 5, 2005, Sy and Andokas entered into a five‑year lease agreement concerning the said lot.

Rental payments were fixed at ₱60,000.00 per month for the first two years and ₱66,000.00 per month for the third, fourth, and fifth years, with an annual escalation of 10% from the fourth year onward.
The contract required the lessee to pay, upon signing, an advance rental deposit equivalent to four months’ rent (₱240,000.00) and a security deposit also equivalent to four months’ rent (₱240,000.00), totaling ₱480,000.00.
Payment was effected by check from Andokas to Sy.

Andokas alleged that while processing an electrical connection for improvements to be constructed on the lot, a system‑generated statement revealed an unpaid MERALCO bill of ₱400,000.00 allegedly incurred by Sy.
Andokas further complained that its intended outlet store construction was hindered by delays resulting from another tenant, MediaPool, Inc., whose billboard structure on a portion of the leased premises disrupted the use of the property.
Despite sending an initial letter on August 25, 2005, followed by three subsequent letters, Sy failed to address the delay effectively.

Andokas filed a complaint for rescission of contract on February 13, 2008, seeking recovery of the advance rental and deposit, as well as damages amounting to ₱627,000.00 (inclusive of cost of money, mobilization cost, and unrealized income).
The Regional Trial Court (RTC) set a pre‑trial conference for May 26, 2008.
On May 23, 2008, Sy’s counsel filed an Urgent Motion to Reset the Pre‑Trial Conference, alleging a conflicting court appearance, but the motion was denied due to lack of sufficient evidentiary support.
At the pre‑trial conference, Sy and her counsel failed to appear, and consequently, the RTC permitted Andokas to present its evidence ex parte on June 2, 2008.
On July 24, 2008, the RTC rendered a decision in favor of Andokas, ordering Sy to pay various sums including the deposited ₱480,000.00 with interest, plus additional charges.
Sy appealed the RTC’s ruling, arguing violations of her due process rights, contractual assumptions regarding delay risks, and the imposition of legal interest.
On January 20, 2010, the Court of Appeals affirmed the RTC’s decision.

Whether Sy’s failure to appear at the pre‑trial conference, without presenting a valid cause as mandated by Section 4 of Rule 18, effectively forfeited her right to contest the evidence presented ex parte.
Whether the denial of Sy’s urgent motion to postpone the pre‑trial conference constituted a breach of her right to due process.

Whether Sy’s failure to maintain the leased premises in a condition fit for the purpose intended—ensuring peaceful and adequate enjoyment for Andokas—amounted to a breach of contract.
Whether the delays in the construction of the billboard structure, despite an express contractual provision requiring prior written approval, justified Andokas’s rescission of the lease contract.
Whether the alleged unpaid MERALCO bill contributed to a substantial breach of the contractual obligations.

Whether the calculation and application of legal interest—from 6% per annum post‑judgment up to 12% per annum after finality—was appropriate under the circumstances and consistent with established case law.