THIRD DIVISION
NINOY AQUINO
INTERNATIONAL
AIRPORT
AUTHORITY (NAIAA),
Petitioner,
G.
R.
No. 116652
March 10, 2003
-versus-
COURT OF APPEALS,
UNITED BUS LINES AND
JOSE M. SILVA,
Respondents.
D E C I S I O N
CARPIO
MORALES, J.:chanroblesvirtuallawlibrary
Being assailed in the present
petition for review on certiorari is the decision of the Court of
Appeals
in CA-G.R. CV No. 27814, "United Bus Lines, et al., v. Ninoy Aquino
International
Airport Authority."chanrobles virtuallaw libraryred
The following facts
are not in dispute:
By a lease contract
executed on November 22, 1963, the Civil Aeronautics Administration
(CAA),
predecessor of petitioner Ninoy Aquino International Airport Authority
(NAIAA), a government instrumentality, leased to respondent United Bus
Lines (UBL), a single proprietorship owned by its co-respondent Jose M.
Silva (Silva), a portion of the state-owned Lot No. 3270-B-1 under the
CAA's jurisdiction measuring 60,115 square meters which is located at
the
Manila International Airport (MIA) in Pasay City. The lease was
for
a term of 25 years at an annual rental of P1,200.00.[1]
Under the lease contract,
it was the duty of the lessee UBL to, among other things, put up at its
expense a bus terminal and buildings or facilities necessary for the
operation
of a first class land transportation station serving both as a tourist
attraction and the needs of the travelling public in line with plans
and
specifications to be approved by the lessor.[2]chanrobles virtuallaw libraryred
On the part of the CAA,
it warranted that it has good title over the leased premises and bound
itself to indemnify UBL for damages and losses the latter might suffer
due to any restriction, encumbrance or defect in the former's rights to
the premises.[3]
The lease contract contained
a provision on extension of the period of lease under the following
circumstances:
7. Should the
LESSEE, due to war, civil commotion, act of God, or any other cause
beyond
their control, be prevented from occupying the leased premises or be
obliged
to give up possession thereof, the rentals hereinabove agreed upon
shall
abate during the time that the leased premises are not occupied by the
LESSEE. It is, however, agreed that during that time, the LESSOR
may lease the premises to any person or persons until such days as
LESSEE
may occupy them, and the terms of this Contract shall be considered as
extended for a period of time equal to that during which LESSEE was not
in possession of the leased premises. (Emphasis
supplied).[4]chanrobles virtuallaw libraryred
On February 2, 1979,
the CAA filed a case for unlawful detainer against respondents with the
then Pasay City Court, docketed as Civil Case No. 13835, upon the
grounds
that 1) they committed breach of contract, they having failed to build
the bus terminal and other transport facilities in the leased premises
and to pay rentals amounting to P1,975.00 as of June 1, 1978, and 2)
the
CAA needed the premises as relocation site for the Joint Oil Companies
Aviation-Fuel Storage Plant in the interest of safety.[5]
As respondents belatedly
filed their answer to the complaint, the Pasay City Court rendered on
July
28, 1979 a judgment by default in favor of the CAA, ordering
respondents
to vacate the leased premises and granting the other reliefs sought by
the CAA.[6]
On appeal, the then
Court of First Instance of Rizal, Branch 27 in Pasay City, by Decision
of October 28, 1981, finding the unlawful detainer complaint to be one
for rescission of contract, reversed the city court's decision for
having
been rendered without jurisdiction.[7]
And it found the CAA to be without right to pre-terminate the lease
contract
with respondents.chanrobles virtuallaw libraryred
Subsequently, however,
the CAA and respondents entered into a judicially approved compromise
agreement
dated May 7, 1982.[8]
In said compromise agreement, both parties recognized the existence and
effectivity of their November 22, 1963 lease contract, subject to the
amendments
that 1) the lease be for a period of eight more years from the date of
the compromise or an addition of one and half years to the
twenty-five-year
original term thereof, and 2) such portion within the leased premises
needed
for the CAA's Joint Oil Companies Aviation-Fuel Storage Plant be
replaced
or substituted by another property of the CAA. Expressly waived
and
settled under the compromise were all of the parties' respective
claims,
causes of action and demands against one another and all issues that
arose
therefrom.cralaw:red
Less than a year before
the expiration of the amended lease contract or on October 6, 1989,
respondents
filed a complaint, docketed as Civil Case No. 6929, before the Regional
Trial Court (RTC) of Pasay City against the CAA's successor agency, the
NAIAA (petitioner), for Reformation of Contract and Fixing of Term of
Lease.[9]
Alleging that they were
deprived of possession of the leased premises for the entire original
and
extended period of lease due to the presence of squatters in certain
portions
thereof as well as the adverse claims of ownership from some
individuals
and entities, respondents charged that petitioner failed to deliver the
premises for their full, effective and peaceful enjoyment and
possession,
thereby rendering the agreed lease term meaningless and necessitating
the
fixing of a new period for the lessee's benefit. Respondents thus
prayed that the lease agreement be reformed so as to have a new term of
fifteen years, to start running after the premises are totally cleared
by the lessor of any form of disturbance; that all expenses incurred by
them as a result of the filing of the suit be deemed as advanced
rentals;
and that petitioner, together with its officers, employees and
representatives,
be enjoined from engaging with third persons in any manner which might
affect their rights over the premises.cralaw:red
Petitioner denied[10]
respondents' claim of dispossession, insisting that it had complied
with
its duty of placing and maintaining them in complete possession of the
entire leased premises. While it asserted that it cleared the
leased
premises of squatters and other claimants, it nonetheless contended
that
respondents were estopped from alleging any disturbance of their
occupancy
prior to May 7, 1982 by virtue of their waiver embodied in the
compromise
agreement.cralaw:red
And petitioner claimed
that respondents failed to utilize the leased premises for the purpose
as stipulated under the contract, it noting that they had subleased
portions
thereof to several entities which devoted the same to uses that
deviated
from their original intention.chanrobles virtuallaw libraryred
Petitioner sought a
counterclaim of P50,000 in litigation expenses incurred due to the
"groundless"
suit filed by respondents.cralaw:red
Documentary evidence
of respondents consisted of the following: Respondent Silva's
demand
letter dated July 3, 1980[11]
asking the CAA administrator to address the adverse claim of ownership
of the Estate of Don Antonio Rodriguez on the leased premises in view
of
incidents which occurred on June 30 and July 1, 1980 where said
estate's
representatives informed respondents' personnel of its ownership of the
leased premises and even begun construction of improvements thereon; a
September 23, 1981 Order[12]
of Branch 28 of the Court of First Instance of Rizal-Pasay City in
Civil
Case No. 9219-P ("The Estate of Don Antonio and Hermogenes Rodriguez,
represented
by Ms. Judith Rodriguez in her capacity as administratrix of said
estate
v. Teodoro Santos, et al.") enjoining respondent Silva and others from
introducing improvements on the premises; a civil complaint[13]
filed by Shepparton Construction and Development Corporation against
respondents'
sublessees whereby it claimed title to the premises and sought recovery
thereof from them; an October 13, 1983 letter[14]
to respondent Silva from the MIA personnel in-charge of squatters'
relocation,
Federico M. Alba, assuring that the premises would be cleared of
squatters
by December 1983; three letters dated February 1, 1989,[15]
November 25, 1989[16]
and January 26, 1990[17]
from both respondent Silva and his counsel asking the airport general
manager
to place respondents in full possession of the premises by clearing the
same of squatters and other claimants; and two documents pertaining to
Silva's application[18]
for reactivation of his franchise to operate public utility buses and a
pro-forma invoice[19]
pertaining to his purchase of 500 units of buses and additional
200
units of taxis.cralaw:red
At the witness stand,
respondent Silva related his dispossession of about ninety percent of
the
premises due to petitioner's inability to keep away a sizeable number
of
squatters and various entities claiming title thereto.[20]
While he maintained that he had built a garage or terminal for his
twenty
units of taxis in accordance with the lease contract and that the same
contract did not prohibit him from subleasing portions of the leased
premises,
he attributed his partial failure to totally put up first class bus
terminal
facilities to petitioner's non-performance of its obligation to place
the
lessee in complete and peaceful possession thereof.[21]
On the other hand, petitioner's
evidence consisted mainly of the testimony of Felixberto Calma (Calma),
its Commercial Development Officer who was charged with the supervision
of petitioner's concessionaires. Calma denied that respondents
had
been deprived of full possession and enjoyment of the premises, he
inviting
attention to the sublease by them of portions thereof to establishments
operating a restaurant, supermarket, barber shop and tailoring shop.[22]
And he maintained that by 1983 petitioner's personnel had cleared the
premises
of squatters who began entering them in 1980; that although there were
still a few remaining squatters in the premises, their occupancy did
not
affect respondents' business;[23]
and that respondent Silva was no longer operating buses and taxis, and
since the structures on the premises were empty, he did not know if
they
were being utilized or developed for a transportation terminal.[24]chanrobles virtuallaw libraryred
Branch 113 of the Pasay
City RTC rendered judgment in favor of respondents by decision[25]
of May 31, 1990, the dispositive portion of which read as follows:
WHEREFORE, after having
thus considered the evidence on record, testimonial and documentary,
the
Court hereby renders judgment as follows:
1.
The period (sic) the lease contract is declared extended for
another
TEN (10) years from the date of the finality of this decision;
2.
The rental to be paid to the defendant is now P10,000.00 annually for
the
entire area leased;
3.
The counterclaim is dismissed. (Underscoring
supplied).chanrobles virtuallaw libraryred
On appeal by petitioner,
the Court of Appeals affirmed the trial court's decision.[26]
Like the trial court, it found evidence supporting respondents' main
averment
that respondent UBL was dispossessed of certain portions of the leased
premises starting in 1980 up to the expiration of the amended contract
in 1990, hence, it applied the earlier quoted paragraph 7 of the
contract
providing for the extension of the lease for such period as the lessee
is deprived of possession of the premises.cralaw:red
Hence, the present petition
for review on certiorari[27]
faulting the Court of Appeals:
IN SUSTAINING THE
TRIAL
COURT'S FINDING THAT RESPONDENTS ARE ENTITLED TO A TEN-YEAR EXTENSION
OF
THEIR LEASE CONTRACT WITH PETITIONER.
In the main, petitioner
contends that respondents are not entitled to any extension of the
lease
in light of their failure to accomplish the very purpose of the lease
agreement;
that respondents had not been deprived of possession of the premises,
but
even if they were with respect to certain portions thereof, they waived
their right to raise the issue of dispossession in the May 7, 1982
compromise
agreement with petitioner; that paragraph 7 of the lease contract
providing
for extension of the lease applies only where the lessee is totally
dispossessed
of the premises; and that the extension of the period of lease in favor
of respondents impairs petitioner's freedom of contract and is
manifestly
oppressive for being indefinite, the same having been decreed to start
from the date of finality of the trial court's judgment.chanrobles virtuallaw libraryred
The jurisdiction of
this Court over cases brought to it from the Court of Appeals is
limited
to a review of questions of law since the factual conclusions thereon
are
as a rule conclusive.[28]
There are of course exceptions to this rule, but none obtains in the
case
at bar to warrant a scrutiny of the Court of Appeals conclusions which
are supported by the evidence on record[29]
and carry even more weight, it having affirmed the trial court's
factual
conclusions.[30]
The dispossession of
respondent UBL from certain portions of the leased premises for an
approximately
ten-year period from 1980 to 1990 due to incursions of squatters and
other
claimants is an established fact based not only upon respondents'
evidence
but also upon the admissions to that effect by petitioner's own witness
Calma.[31]
In accordance with the lease contract then, the term of the lease
should
be extended for such period as the lessee was deprived of possession of
the premises.cralaw:red
Regardless of the extent
of dispossession, whether total or partial, the provision on extension
of term applies since the lessee's failure to use a portion of the
leased
premises is equivalent to a dispossession from the entire area in
question,
the agreement of the parties being precisely the lease of the whole
60,115
sq. m. of petitioner's lot at the Manila International Airport.cralaw:red
By the terms of the
contract then, petitioner's obligation to deliver to respondent UBL the
entire leased premises and maintain the latter in peaceful,
uninterrupted
possession was indivisible. When respondent UBL could not occupy
and use portions of the leased premises, it was in effect deprived of
possession
thereof for there was incomplete performance by the petitioner of its
principal
prestation, thereby calling for the application of the contractual
provision
on extension of term.cralaw:red
A contract is the law
between the parties and courts have no choice but to enforce such
contract
so long as it is not contrary to law, morals, good customs or public
policy.[32]
Nothing appears objectionable in the lease contract between respondents
and petitioner such that the latter is no less bound by its terms and
conditions
like any other private person or entity that is party to a contract.chanrobles virtuallaw libraryred
Contrary to petitioner's
contention, by no means did respondents through the May 7, 1982
compromise
agreement waive their right to raise the issue of their dispossession
from
the leased premises. The said compromise clearly stated that what
the parties waived were all issues or questions which arose out of or
were
connected with petitioner's unlawful detainer case against
respondents.
Respondents' failure to have full possession of the premises through no
fault of their own was definitely not an issue that was asserted or
touched
upon in both the unlawful detainer case and in the compromise agreement
subsequently executed.cralaw:red
While this Court upholds
the trial court's and appellate court's ruling that respondent UBL is
entitled
to a ten-year extension of the period of lease, it does not uphold that
which reckons the period from the date of finality of the decision of
the
trial court. If that were the case, respondent UBL would hold on
to the leased premises for a period longer than it is entitled under
the
ten-year extension, thereby virtually rendering nugatory petitioner's
right
of ownership over the premises.cralaw:red
The extension must thus
begin on the day following the May 7, 1990 termination of the amended
lease
contract or on May 8, 1990, to last for a 10-year period or up to May
8,
2000. Since respondents have in fact been in continuous and
uninterrupted
possession of the premises since the promulgation of the trial court's
decision of May 31, 1990 and during the pendency of the case at bar,
they
have already occupied the premises in the exercise of their
adjudged
right to the extension for the full period of ten years.chanrobles virtuallaw libraryred
The judgment of the
trial court is thus now deemed enforced.cralaw:red
As for petitioner's
countercharge that respondents did not comply with their obligation as
lessee, the same had not been sufficiently proven. On the
contrary,
evidence shows that respondents built a garage for respondent Silva's
taxis.
And while respondents did sublease portions of the premises to several
persons, there was no express prohibition on the matter in the lease
contract,
hence, there was no violation[33]
thereof.cralaw:red
WHEREFORE, the assailed
decision of the Court of Appeals is hereby AFFIRMED with the
modification
that the ten-year extension of the term of the lease granted in favor
of
respondents should be reckoned from May 8, 1990, and as respondents had
continuously been in possession of the leased property during the
pendency
of this case, their right to the extension or up to May 8, 2000 had
been
enforced. The lease contract between petitioner and respondents
is
now, therefore, deemed terminated.cralaw:red
SO ORDERED.cralaw:red
Puno, J., (Chairman),
Panganiban,
and Sandoval-Gutierrez, JJ.,
concur.
Corona, J., on leave.cralaw:red
____________________________
Endnotes:
[1]
Records, Exhibit "A" at 64-68.
[2]
Id. at 65.chanrobles virtuallaw libraryred
[3]
Id. at 66.
[4]
Id. at 65.
[5]
Records at 20-24.
[6]
Id. at 33-35.chanrobles virtuallaw libraryred
[7]
Id. at 36-40.
[8]
Id., Exhibit "B," at 41-43.
[9]
Records at 44-56.
[10]
Records at 101-110.
[11]
Id., Exhibit "D," at 73-74.
[12]
Records, Exhibit "F" at 77.
[13]
Id., Exhibit "G" at 78-85.
[14]
Id., Exhibit "K" at 143.
[15]
Id., Exhibit "E" at 75-76.
[16]
Id., Exhibit "L" at 144.
[17]
Id., Exhibit "N" at 152.
[18]
Id., Exhibit "I" at 87.
[19]
Id., Exhibit "J" at 88chanrobles virtuallaw libraryred
.
[20]
TSN, October 20, 1989 at 1-16.
[21]
TSN, October 23, 1989 at 1-13.
[22]
TSN, October 27, 1989 at 1-15.chanrobles virtuallaw libraryred
[23]
Ibid.chanrobles virtuallaw libraryred
[24]
TSN, October 27, 1989 at 2-4; April 2, 1990 at 11-12.
[25]
Records at 165-168.chanrobles virtuallaw libraryred
[26]
CA Rollo at 141-150.
[27]
Rollo at 7-36.chanrobles virtuallaw libraryred
[28]
Villaluz v. Court of Appeals, 278 SCRA 540 [1997].
[29]
Heirs of Tan Eng Kee v. Court of Appeals, 341 SCRA 740 [2000].
[30]
Borromeo v. Sun, 317 SCRA 176 [1999].chanrobles virtuallaw libraryred
[31]
TSN, October 27, 1989 at 1-15.chanrobles virtuallaw libraryred
[32]
Heirs of Juan San Andres v. Rodriguez, 332 SCRA 769 [2000].
[33]
New Civil Code, Art. 1650. |