Case Summary (G.R. No. 201176)
Facts of the Case
The dispute arose from a lease contract between Cely Sy, as the lessor, and Andokas Litson Corporation, as the lessee, concerning a 316 square-meter lot in Manila, leased for five years with stipulated rent and deposit payments totaling P480,000.00. Andokas alleged a breach of contract due to Sy’s failure to settle an unpaid electricity bill, causing delays in the construction of their outlet. Subsequent delays from another tenant, Mediapool, Inc., further hindered Andokas's operations, culminating in a complaint for rescission filed in early 2008 after Sy's inaction on multiple requests for resolution.
Trial Court Proceedings
The Regional Trial Court (RTC) scheduled a pre-trial for May 26, 2008. However, Sy failed to appear, and her motion to reset the pre-trial due to another hearing was denied. Consequently, the RTC allowed Andokas to present its case ex-parte. On July 24, 2008, the RTC ruled in favor of Andokas, awarding damages for breach of contract, while dismissing Sy's counterclaim.
Court of Appeals Ruling
On appeal, Sy contended that her absence constituted a deprivation of her right to present evidence. However, the Court of Appeals affirmed the RTC’s decision, emphasizing Sy’s repeated failures to fulfill her obligations under the lease. The appellate court justified the ex-parte ruling by determining that Sy's motion for postponement was unsubstantiated and highlighted the significant disruptions caused by her inaction.
Supreme Court Analysis of Due Process
The Supreme Court held that the denial of postponement did not infringe upon Sy's right to due process, indicating that reasonable opportunities to present evidence had been afforded. The Court referenced prior doctrine affirming that due process is preserved when parties can adequately defend their interests within judicial proceedings.
Central Issue of Rescission
Article 1191 of the Civil Code recognizes the right to rescind obligations in reciprocal contracts, such as leases. Through Article 1659, it is established that if either party fails to uphold their obligations (i.e., the lessor to ensure the lessee's enjoyment of the property), the aggrieved party is entitled to rescission or damages.
Breach of Obligation
The Court determined that Sy had failed to maintain the premises or address the issues raised by Andokas, thus constituting a breach of her contractual obligations. Sy's inability to resolve the unpaid MERALCO bills compounded the alleged breaches, supporting the rescissi
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Case Overview
- The case involves a Petition for Review on Certiorari challenging the Decision of the Court of Appeals dated January 20, 2010, and the subsequent Resolution dated April 29, 2010, which denied the motion for reconsideration.
- The case centers on a rescission of contract filed by Andokas Litson Corporation (respondent) against the spouses Socrates Sy and Cely Sy (petitioners), the lessors of a property in Sta. Cruz, Manila.
Parties Involved
- Petitioners: Spouses Socrates Sy and Cely Sy, who are the registered owners of a 316 square-meter lot.
- Respondent: Andokas Litson Corporation, a business engaged in selling grilled chicken and pork across the Philippines.
Lease Agreement Details
- The lease contract was signed on July 5, 2005, for a duration of five years.
- Monthly rent was set at P60,000 for the first two years, P66,000 for the third year, and a 10% escalation for the fourth and fifth years.
- The lessee, Andokas, was required to pay a total of P480,000, comprising four months of advance rent and a security deposit.
Allegations Leading to Rescission
- Andokas claimed that while applying for an electrical connection, it discovered an unpaid Manila Electric Company (MERALCO) bill of P400,000 attributed to Sy.
- Furthermore, construction delays were caused by another tenant, Mediapool, Inc., which had a billboard structure on the leased property.
- Andokas filed a complaint for rescission of the contract on February 13, 2008, after repeated inaction from Sy regarding th