Case Summary (G.R. No. 144268)
Lease and Sublease Arrangement
PNR initially leased the lot to Sampaguita for three years at a monthly rental with an annual escalation clause. Sampaguita entered into a special arrangement with Belgravia, allowing the latter to construct a warehouse on the leased lot. Although Belgravia was supposed to use the warehouse for its own business, it subleased the entire warehouse to Datalift pursuant to a one-year lease beginning October 1990, at a monthly rental of P40,000. Datalift continued to occupy the warehouse after the contract expired, apparently by verbal agreement or tacit consent. Subsequently, Belgravia unilaterally increased the rent to P60,000, and later to P130,000, prompting Datalift to stop paying.
Legal Proceedings Initiated by Respondents
Sampaguita and Belgravia filed a complaint for ejectment with the Metropolitan Trial Court (MeTC) due to nonpayment of rent and sought recovery of unpaid rentals, attorney’s fees, and costs. Defendants Datalift and Aquino raised defenses: Sampaguita lacked cause of action due to no privity in the Datalift-Belgravia lease; prohibition of subleasing under the PNR-Sampaguita contract; expiration of that contract; and Belgravia’s lack of ownership or leasehold interest over the property. They counterclaimed for refund of rents paid and damages.
MeTC Decision and Judicial Reasoning on Rent Increase
The MeTC ruled partially in favor of plaintiffs, reducing the alleged arrears to a reasonable monthly rental of P80,000. The court found the unilateral increase from P60,000 to P130,000 unreasonable and unconscionable in view of the original rent and prior increases. The MeTC rejected the defense questioning Belgravia’s ownership or leasehold; it held that the plaintiffs had proven their lessee rights. The court ordered the defendants to vacate, pay arrears computed from adjusted rental amounts, attorney’s fees, and costs.
RTC and Court of Appeals Affirmations
The Regional Trial Court affirmed the MeTC decision, rejecting appellants’ arguments concerning lack of a new lease between PNR and Sampaguita and confirming the reasonableness of rental amounts determined. The Court of Appeals likewise dismissed the petitioners’ appeal, affirming the RTC judgment with minor modifications, specifically deleting attorney’s fees awarded by the RTC.
Supreme Court’s Review and Application of the Law
The Supreme Court affirmed the Court of Appeals’ ruling, holding the petition lacked merit particularly on the issues of the existence of an implied new lease between PNR and Sampaguita, and the petitioners’ lack of standing to question this relationship. The Court found no evidence that the PNR-Sampaguita lease was terminated, and by tacit conduct, the lease was impliedly renewed. The Court cited Section 2, Rule 131 of the Rules of Court, emphasizing that tenants cannot question their landlord’s title at the inception of the lease relationship—a conclusive presumption that precludes lessees from disputing their lessor’s right.
Legal Doctrine on Conclusive Presumptions and Tenant’s Rights
The Court emphasized the doctrine of conclusive presumptions which preclude lessees from contesting their landlord’s title or better right of possession once a valid lease relationship is established. As long as Datalift recognized Belgravia as lessor, by entering into and continuing the lease, Datalift cannot challenge Belgravia’s right over the premises. Any dispute about title between PNR and Sampaguita or Belgravia was deemed extraneous to the ejectment case.
Correction of Rental Increment Dates and Final Orders
While affirming the dismissal, the Court corrected an error in the c
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Case Syllabus (G.R. No. 144268)
Background and Parties Involved
- The case concerns an ejectment suit filed by Sampaguita Brokerage, Inc. and Belgravia Realty & Development Corporation against Datalift Movers, Inc. and Jaime B. Aquino.
- Datalift Movers, Inc. (hereinafter Datalift) used a warehouse located on a 3,967.70 square meter lot in Pandacan, Manila, owned by the Philippine National Railways (PNR).
- Sampaguita Brokerage, Inc. (hereinafter Sampaguita) leased the lot from PNR starting July 1, 1987, with a contract ending June 30, 1990, with monthly rentals and a yearly 10% increase clause.
- Belgravia Realty & Development Corporation (hereinafter Belgravia), a sister company of Sampaguita, constructed a warehouse on the leased lot but sublet it to Datalift under a written one-year lease contract starting October 5, 1990.
- Datalift continued to occupy the warehouse after expiration of the contract, initially by mutual agreement or acquiescence.
- Belgravia unilaterally increased the monthly rent twice: from P 40,000 to P 60,000 (June–October 1994), then to P 130,000 (from November 1994 onward).
- Datalift stopped paying rent due to the sharp increases, prompting Sampaguita to seek ejectment and demand payments for rental arrears.
Procedural History
- The Metropolitan Trial Court (MeTC), later the Regional Trial Court (RTC), and the Court of Appeals (CA) all ruled in favor of the respondents, ordering ejectment and payment of unpaid rentals and attorney’s fees.
- MeTC ruled that although the increase to P 130,000 was excessive, a reasonable increase to P 80,000 from November 1994 was justified.
- The MeTC rejected Datalift’s claims that Sampaguita lacked cause of action as it was not party to the lease with Belgravia, and also rejected challenges to Belgravia’s right to possession of the premises.
- RTC and CA affirmed the MeTC's decisions with minor modifications, including deletion of attorney’s fees award by the CA.
- Petitioners elevated the case to the Supreme Court via a petition for review and sought temporary restraining orders or preliminary injunction.
Issues Presented
- Whether an implied new lease existed between PNR and Sampaguita after the expiration of the original lease contract.
- Whether Datalift had the legal standing (personality) to question the existence or validity of the lease relationship between PNR and Sampaguita.
- Whether the unilateral increase of rent by Belgravia was valid and the correct amount due as rental arrears.
- Whether respondents had the cause of action to sue for ejectment given their relationship to the property and the lease arrangements.
Supreme Court’s Findings and Legal Reasoning
- The Court affirmed the existence of an implied new lease between PNR and Sampaguita based on the tacit