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[G.R. No. 157391. June 21, 2006]

LIMITLESS POTENTIALS, INC. v. HON. RENATO G. QUILALA

Special Second Division

Sirs/Mesdames:

Quoted hereunder, for your information, is a resolution of this Court dated JUNE 21, 2006

G.R. No. 157391 (Limitless Potentials, Inc. v. Hon. Renato G. Quilala),

G.R. No. 160749 (Roman Catholic Archbishop of em>Manila , Represented by Reverend Msgr. Relando dela Cruz v. Limitless Potentials, Inc.) and

G.R. No. 160816 (Limitless Potentials, Inc. v. Roman Catholic Archbishop of em>Manila , Represented by Reverend Msgr. Relando dela Cruz)

Before the Court are two separate motions for partial reconsideration filed by the Roman Catholic Archbishop of Manila (RCAM) and Limitless Potentials, Inc. (LPI), assailing the Decision dated July 15, 2005, the dispositive portion of which reads:

IN LIGHT OF ALL THE FOREGOING, the Court renders judgment as follows:

1) The Petition in G.R. No. 157391 is DENIED for lack of merit.

2.) The Petitions in G.R. Nos. 160749 and 160816 are PARTIALLY GRANTED. The Decision of the Court of Appeals is SET ASIDE. The Decision and Amended Decision of the RTC are AFFIRMED WITH MODIFICATIONS, thus:

a) The records are REMANDED to the MTC for it to determine, after hearing the parties, the precise amount to be refunded by the Roman Catholic Archbishop of Manila to Limitless Potentials, Inc., if any, in light of the Court's decision;

b) The Roman Catholic Archbishop of Manila is ORDERED to deliver possession of the areas/spaces leased to Limitless Potentials. Inc., covered by the Memorandum of Agreement dated September 28, 1993, except those areas now leased to MCIC; Limitless Potentials, Inc. shall be entitled to remain in possession of the property for the remaining period of the lease, with the corresponding rental rate as provided for in the Memorandum of Agreement dated September 28, 1993.

No costs.

SO ORDERED. [1] cralaw

The factual antecedents are as follows:

RCAM is the owner of advertising spaces located within the compounds of the Our Lady of Guadalupe Minor Seminary and San Carlos Seminary in Guadalupe, Makati City. RCAM, as lessor, and LPI, as lessee, entered into the following agreements for the lease of promotional areas:

(a)Lease Agreement [2] cralaw dated October 20, 1987, wherein RCAM leased to LPI certain advertising spaces from January 31, 1988 until January 31, 1992, at a monthly rental of P11,000.00. The rentals were subject to 15% increase every two years; and

(b)an Amendment To An Agreement [3] cralaw dated November 14, 1989, pursuant to which RCAM and LPI extended the lease period for five years, with a total duration of seven years from February 1, 1990 to March 1, 1997 and wherein the monthly rental was increased to PI2,000.00, subject to a 10% annual increase.

On January 18, 1990, a Sublease Agreement [4] cralaw was entered into by LPI and Astro Advertising, Inc. (Astro) in which the former sublet Lot 28-B to the latter for five years commencing February 1, 1990 up to February 1, 1995. Under the agreement, the monthly rentals were to be paid directly by Astro to the office of the RCAM.

To clarify and consolidate the various agreements previously executed by RCAM and LPI, the parties entered into a Memorandum of Agreement [5] cralaw (MOA) dated September 28, 1993, whereby they disregarded all prior contracts and considered them of no further force and effect. In the MOA, RCAM leased to LPI specific advertising spaces, including those earlier subleased to Astro, for a period of four years, to commence on August 1, 1993 and ending on July 31, 1997, at a monthly rental of P60,783.96 and subject to a 10% annual increment.

When the sublease to Astro expired in February 1995, RCAM did not turn over to LPI the possession of the sublet advertising areas. Instead, the said areas were leased to Macgraphics Carranz International Corporation (MCIC) which erected its own advertising signs thereon.

On October 12, 1995, RCAM, through counsel, sent a letter [6] cralaw to LPI informing its Vice-President for Finance of LPI's delinquency in settling the rental obligations, including the nonpayment of rentals since March 1995, and declaring the MOA rescinded as of October 31, 1995. A final demand letter [7] cralaw was sent to LPI for the arrears in rental payments amounting to P1,021,219.15, which included the rentals due from Astro.

When LPI failed to comply with the final demand letter, RCAM filed a Complaint for Unlawful Detainer against LPI on November 13, 1995 with the Metropolitan Trial Court (MTC) of Makati City, docketed as Civil Case No. 50450.

On October 5, 1996, RCAM dismantled the billboards of LPI in the leased advertising spaces.

On May 25, 2000, the MTC rendered a Decision declaring LPI's possession of the leased premises as lawful, but ordered the same to pay the rentals due from September 1995 until it ceased occupying the leased premises. The MTC declared that since the rentals due from the period of February 1, 1990 to March 1, 1995 amounted to P1,239,635.00, LPI made an overpayment of P344,550.33. The court further pronounced that the payments made directly to RCAM during the first period of the sublease, which was from February 1, 1990 until July 31, 1993, in the amount of P832,920.00, should not be credited to LPI because the latter had donated the amount to RCAM. The MTC maintained that the stipulation contained in the sublease agreement was a stipulation pour autrui under Article 1311 of the New Civil Code. However, the court also maintained that LPI should be credited for the payments made by Astro during the second period, from August 1993, after the MOA took effect, to March 1995. Finally, the MTC held that LPI was obliged to pay rentals in the amount of P414,486.50 from March until October 1995 when the complaint was filed.

LPI appealed the case to the Regional Trial Court (RTC) of Makati City where it was docketed as Civil Case No. 00-1347. On October 10, 2001, the RTC affirmed the decision of the MTC with modification and declared that LPI overpaid RCAM in the amount of P796,421.44. The RTC ruled that LPI should be credited for the rental payments of Astro during the first period of the lease. The RTC rejected the MTC's finding that a stipulation pour autrui was provided in the sublease agreement in favor of RCAM, and discarded the latter's claim that the rentals due from Astro during the said period were LPI's donations to RCAM.

Unsatisfied with the decision, LPI filed a motion for partial reconsideration seeking its reinstatement to the leased premises for the unexpired period of the MOA.

On May 24, 2002, the RTC issued an Order granting the motion of LPI. When LPI filed a motion for execution, the RTC denied the same.

RCAM then filed a Petition for Review on Certiorari with the Court of Appeals (CA). In the CA's Decision promulgated on June 30, 2003, the appellate court set aside the Decision of the RTC and affirmed the MTC Decision. The CA declared that the RTC erred in ordering LPI to be placed in possession of the leased spaces considering that the MOA had long expired; hence, LPI could no longer regain possession of the property as lessee.

Thereafter, RCAM filed a Petition for Review on Certiorari of the Decision of the CA docketed as G.R. No. 160749; LPI filed a similar petition docketed as G.R. No. 160816. Earlier, a petition for certiorari and mandamus had also been filed by LPI assailing certain orders of the RTC; this case was docketed as G.R. No. 157391.

In a Resolution [8] cralaw dated March 30, 2005, this Court ordered the consolidation of G.R. No. 157391 with G.R. Nos. 160749 and 160816.

On July 15, 2005, the Court rendered the partly assailed decision. The Court settled that LPI must pay RCAM the rentals for the leased premises from March 1995 until LPI's eviction therefrom on October 5, 1996, with the exception of the rentals due from the spaces sublet to Astro after February 1995, inasmuch as RCAM did not turn over the said areas to LPI. In fact, RCAM even leased the spaces vacated by Astro to MCIC, in violation of its MOA with LPI. The Court added that the sublease contract between LPI and Astro contains a stipulation pour autrui in favor of RCAM. Next, the Court affirmed that RCAM unlawfully evicted LPI, which is thus entitled to be restored to the possession of the property leased for the unused period of the lease contract. The Court also ruled that the unexpired portion of the contract cannot be affected by the lapse of the period pending the final resolution of the complaint for ejectment filed by the lessor. Lastly, it was decided that the RTC did not commit any grave abuse of discretion in denying LPI's motion for execution of the portion of the RTC's amended decision ordering RCAM to place it in possession of the subject areas. The Court explained that the execution of the judgment pending appeal is proper only if the judgment is in favor of the plaintiff and against the defendant, and not vice versa.

RCAM filed a Motion for Partial Reconsideration [9] cralaw on September 14, 2005 praying that (a) the instant case be referred to the Court en banc; and (b) the decision be partially reconsidered insofar as it ordered RCAM to deliver possession of the areas leased to LPI for the remaining period of the lease agreement embodied in the MOA.

Thereupon, LPI also filed a Motion for Partial Reconsideration [10] cralaw dated September 15, 2005, praying that the decision be partially reconsidered by rectifying the supposed inaccurate findings of facts and law: (a) the sublease contract between LPI and Astro does not contain a stipulation pour autrui, and said matter may not be raised and entertained for the first time on appeal; (b) the correct amount of rentals paid by Astro to RCAM is the sum of P1,255,889.55 not P832,920.00, which former amount should be credited in favor of LPI; (c) LPI has no obligation to pay rentals from March 1995 to October 5, 1996 because it was evicted, deprived and disallowed to make use of the leased premises within said period; (d) LPI is entitled to possession of the leased premises for the remaining or unexpired lease period of 21 months, not only 10 months; and (e) MCIC is bound by the judgment of the MTC, hence, should be ordered to vacate the premises and surrender peaceful possession thereof to LPI.

On October 14, 2005, LPI filed an Opposition to RCAM's motion for partial reconsideration, stating that the motion has no merit.

In the Comment filed by RCAM to LPIs motion for partial reconsideration, it averred that LPI advanced no new arguments and dealt with issues which the Court had already ruled upon in its decision.

The Court notes that the parties' contentions are mere reiterations of the arguments raised in their antecedent pleadings. The merits of the case have already been extensively reviewed in the contested decision and to dawdle longer on them would be extravagantly futile. No new substantial arguments were advanced to warrant the reversal or modification of our Decision. Thus, we find no convincing reason to depart from the ruling subject of this recourse.

RCAM asserts that the Court's ruling, which directed it to deliver to LPI the possession of the areas covered by the MOA for the remaining period of the lease, is not in accord with the applicable laws and prevailing jurisprudence. It further insists that the MOA stipulated a fixed lease period which had long before expired, and that the implementation of the court's ruling would in effect create a lease relation between the parties that would commence beyond the lapse of the lease period provided for in the MOA.

RCAM's avowal is imprecise. We reproduce herein what we stated in our earlier decision, to wit:

A lessee unlawfully evicted by the lessor is entitled to be restored to the possession of the property leased for the "unused period" of the lease contract, counted from his eviction; such "unexpired portion'' of the contract cannot be affected by the lapse of the period pending the final resolution of the complaint for ejectment filed by the lessor.

It bears stressing that in a reciprocal contract, like a lease, the period of the lease must be deemed to have been agreed upon for the benefit of both parties, absent any language therein showing that the term was deliberately fixed for the benefit of either the lessor or the lessee alone. Its continuance, effectivity or fulfillment cannot be made to depend exclusively upon the free and uncontrolled choice of just one party to a lease contract.

In this case, RCAM unilaterally rescinded the contract; it had the billboards of LPI on the spaces/areas leased by the latter dismantled on October 5, 1996, without wailing for the final outcome of the ejectment case. The MTC, RTC and the CA found this unilateral recission of the MOA unlawful. Indisputably, RCAM was obliged lo deliver to LPI the premises which it forcibly took over on the said dale.

It bears stressing that LPI had occupied the leased properly from August 1, 1993 to October 6, 1996, or only three (3) years, two months and two days. Thus, LPI is entitled to remain in the property, as lessee, for the unused portion of the four-year period provided for in the MOA. By so ruling, the Court would thereby be merely enforcing the same. As covenanted, LPI must remain in possession of the property, as lessee, for a period of four (4) years - not a day less. For the Court to do otherwise would be to enrich RCAM at the expense of LPI, allowing the former to profit by its misdeeds. [11] cralaw

It must be stressed that eviction suspends the running of the lease contract during the period of the eviction. When, therefore, the use or possession ceased by reason of an act of the lessor, the right to stay in the premises is interrupted. But where the lessee is given the chance to return and occupy the premises, even after the actual ouster, then the right to take over the leased area is restored. In this case, when RCAM unilaterally rescinded the contract and had the billboards of LPI on the leased spaces dismantled, it in fact made a case of unlawful eviction as aptly found by the lower courts. The landlord's deprivation of the tenant's beneficial use of the property may be such as to constitute an actual eviction from the demised premises. [12] cralaw

RCAM repeatedly insists that the lessee would have no cause of action against the lessor to compel the latter to maintain it in its peaceful enjoyment of the thing rented. Again, RCAM's reliance on the rulings of Goldstein v. Roces [13] cralaw and Chua Tee Dee v. Court of Appeals, et al. [14] cralaw is misplaced for these cases involve deprivation of use in the leased premises by persons other than the lessor .

In the absence of reservations in the lease, the tenant is entitled to exclusive possession as against the landlord, and the landlord has no authority to disturb or interfere with the tenant's occupancy or possession. [15] cralaw Accordingly, an invasion of the tenant's right of possession by the landlord, [16] cralaw including the landlord's unauthorized removal of the tenant's billboard advertisements, constitutes a trespass, for which the landlord is liable in damages to the tenant. The landlord, in general, has no right to interfere with the possession of the leased premises while the MOA is still in effect; otherwise, RCAM may be held liable for the obstruction of the lessee's enjoyment of the areas leased.

A wrongful interference by a landlord with its tenant's possession of the leased premises gives the tenant a right of action against the landlord. [17] cralaw The tenant may have an election of remedies. [18] cralaw Thus, a tenant may elect to sue the landlord for damages suffered by reason of wrongful disturbance of its possession by the landlord. [19] cralaw However, a tenant is not limited to an action for damages; [20] cralaw at least where the lessee has been wrongfully deprived of the possession of the premises, he may also maintain an action to recover possession. [21] cralaw

What is clearly undeniable then, from the combination of the circumstances surrounding the arbitrary dismounting of LPI's poster boards, is that such actions are patently unlawful and against the written stipulations of the MOA, and so RCAM must now answer for its hostile behavior.

Meanwhile, LPI asseverates that there was no stipulation pour autrui in the sublease contract between Astro and LPI and that the matter was never raised in the trial court, hence, could not be raised and entertained for the first time on appeal. Again, we cannot sustain this restated issue for no new substantial arguments were presented to sanction a reversal of our decision, where we likewise stated:

We agree with the ruling of the CA that the sublease contract between LPI and ASTRO contains a stipulation pour autrui in favor of RCAM, which the latter had accepted long before LPI filed its complaint in Civil Case No. 96-949.

x x x x

The definition of stipulation pour autrui is set forth in the second paragraph of the above provision. The requisites for such stipulation are the following: (a) the stipulation in favor of a third person, the third party beneficiary which should be a part, not the whole, of the contract; (b) the contracting parties must have clearly and deliberately conferred a favor upon the third person, not a mere incidental benefit or interest; (c) the favorable stipulations should not be conditioned or compensated by any kind of obligation whatsoever; (d) the third person must have communicated his acceptance to the obligor before its revocation; and (e) neither of the contracting parties bear the legal representation or authorization of the third party.

The third party may be (a) a donee beneficiary; (b) a creditor beneficiary; or (c) an incidental beneficiary. A donee beneficiary is regarded as such only if it appears from the terms of the promisee, in view of the accompanying circumstances, that the purpose of the promisee in obtaining the promise of and/or part of the performance thereof is to make a gift to the beneficiary or to confer upon him a right against the promisee to secure performance neither due nor supposed or asserted to be due from the promisee to the beneficiary.

The intent of the promisee to benefit a third person as a primary party-in-interest is generally said to be controlling. It is not enough that the contract may operate to the benefit of a third party. It must appear that the parties' intent to recognize him as the primary party-in-interest and privy to the promise. Such intent may be gleaned from the construction of the contract in the light of the surrounding circumstances. Intent, in the legal sense, is defined as the purpose to use a particular manner to effect a certain result. Otherwise stated, if the performance of a promise will satisfy an actual or supposed or asserted duty of the promisee to the beneficiary, he is creditor beneficiary and may enforce the promise. The right of recovery of a third-party beneficiary is upon the theory that the contracting parties intended to create a cause of action in his favor. The right of the beneficiary is, however, limited by the terms of the promise.

Absent the intent to benefit a third party, such party is merely an incidental beneficiary. Such party is one who benefits from the contract of another but whose benefit was not the intent of the contracting parties. An incidental beneficiary has no right or obligation under the contract. If, indeed, there is an intent of the parties to a contract to benefit a third person, it matters not whether the stipulation is in the nature of a gift or whether there is an obligation owing from the promisee to the third person.

x x x x

In the present case, a careful study of the surrounding circumstances of the agreement has revealed that RCAM is a third party beneficiary under the sublease agreement between LPI and ASTRO. x x x [22] cralaw

Moreover, the Court is not persuaded with LPl's contention that the issue was not raised in the trial court and therefore could not be entertained for the first time on appeal. As earlier stated in the impugned decision, RCAM never insisted that there was a stipulation pour autrui in its favor. Rather, it was the MTC which declared that the stipulation in the sublease agreement was a stipulation pour autrui under Article 1311 of the New Civil Code.

Another contention of LPI in its motion for partial reconsideration is that the correct amount of rentals paid by Astro to RCAM is the sum of P1,255,889.55 not P832,920.00. It likewise insists that the former amount be credited in its favor, and that it has no obligation to pay rentals from March 1995 to October 5, 1996 because it was evicted, deprived and disallowed to make use of the leased premises within said period.

We do not agree with LPI. Suffice it to say that these claims are factual in nature and were already decided by the MTC in its decision, where it held that payments made directly to RCAM by Astro in the amount of P832,920.00 during the first period should not be credited to LPI because the latter had donated the amount to RCAM. The RTC affirmed the amount (P832,920.00) paid by Astro to RCAM although it stated that the rental payments should be credited to LPI. The CA, as well as this Court, affirmed this part of the MTC's decision. Likewise, the MTC decreed that LPI was obliged to pay rentals from March 1995 to October 1995 when the complaint was filed or only from September 1995 until it stopped occupying the leased premises, considering the MTC's finding that LPI had made an overpayment. Again, this finding was ratified by all the appellate court, including this Court. Besides, the MTC was correct in ruling that LPI continued to occupy the areas leased even after the filing of the complaint for ejectment until its billboards and neon signs erected thereon were dismantled on October 5, 1996 by RCAM. [23] cralaw

Next, LPI asserts that it must be reinstated to the leased premises for the remaining 21 months of the term of the lease and not just for 10 months. In view of the immediately preceding conclusions, we find it nugatory to still advance this issue. It must be sufficiently emphasized that questions of fact are best left to the determination of the lower courts. There is a question of fact when the query necessarily invites calibration of the whole evidence considering mainly the credibility of witnesses, existence and relevance of specific surrounding circumstances, and their relation to each other and to the whole and the probabilities of the situation; [24] cralaw or when the doubt or controversy arises as to the truth or falsity of the alleged facts. [25] cralaw

Findings of fact of the CA and even of the lower courts are final, binding or conclusive on the parties and upon this Court, which will not be ordinarily reviewed or disturbed on appeal. This is in accordance with the elementary rule that the Supreme Court is not a trier of facts. Thus, the findings of fact of the trial court, when supported by substantial evidence, are final and non-reviewable, [26] cralaw and are accorded finality unless there appears in the record some fact or circumstance of weight which might have been overlooked, misunderstood or misappreciated and which, if properly considered, would alter the results of the case. [27] cralaw No such fact or circumstance obtains in the case at bar.

Lastly, we do not subscribe to LPl's asseveration that MCIC is bound by the judgment in the present case even if it is not a party herein and that there is no need to file a separate action against it. LPI tries to defend this justification, arguing that the spaces were leased to MCIC after the complaint for ejectment was filed and during its pendency. Contrary to the contentions of LPI, MCIC was not a transferee pendente lite because it leased the spaces after the sublease to Astro expired in February 1995. A party who was not impleaded in the complaint cannot be bound by the decision rendered therein, for no man shall be affected by a proceeding in which he is a stranger. [28] cralaw Accordingly, since MCIC was not a party to Civil Case No. 50450, the judgment therein is not binding on it for the trial court did not acquire jurisdiction over such party. Otherwise, MCIC will be deprived of the right to due process. [29] cralaw However, LPI is not bereft of other legal remedies. Furthermore, the decretal portion of the assailed decision ordered RCAM to deliver to LPI the possession of the areas leased covered by the MOA with the exception of those areas now leased to MCIC.

WHEREFORE, premises considered, the motions for partial reconsideration filed by the Roman Catholic Archbishop of Manila and Limitless Potentials, Inc. are DENIED. The assailed Decision is AFFIRMED WITH FINALITY.

Very truly yours,

(Sgd.) LUDICHI YASAY-NUNAG


Endnotes:

[1] cralaw Rollo , pp. 276-277 (G.R. No. 157391).

[2] cralaw Rollo , pp. 62-64 (G.R. No. 160749).

[3] cralaw Id. at 65-67.

[4] cralaw Id. at 69-73.

[5] cralaw Id. at 74-77.

[6] cralaw Id. at 78-79.

[7] cralaw Id. at 80.

[8] cralaw Rollo , p. 246 (G.R. No. 157391).

[9] cralaw Id. at 279-292.

[10] cralaw Id. at 293-308.

[11] cralaw Rollo , pp. 273-274 (G.R. No. 157391) (emphasis supplied).

[12] cralaw City of em>New York v. Pike Realty Corporation, 213 N.Y.S. 18, 123 Misc. 260 (1925).

[13] cralaw 34 Phil. 562 (1916).

[14] cralaw G.R. No. 135721, May 27, 2004, 429 SCRA 4I8.

[15] cralaw Zwerin v. Geiss , 237 N.Y.S. 2d 280, 38 Misc. 2d 306 (1963).

[16] cralaw Gronek v. Neuman, 201 N.E. 2d 618 (1964).

[17] cralaw Barkett v. Brucato , 264 P. 2d 978, (1953).

[18] cralaw Seid Pak Sing v. Barker, 240 P. 765, (1925).

[19] cralaw Williams v. Nall , 420 P. 2d 988, 991 (1966).

[20] cralaw Ellis v. Bingham, 150 S.W. 602 (1912).

[21] cralaw Friedlander v. Grand, 174 A. 506, 166 N.J. Eq. 537 (1934).

[22] cralaw Rollo , pp. 264-267 (G.R. No. 157391).

[23] cralaw Rollo , p. 134 (G.R. No. 160749).

[24] cralaw Bagunu v. Piedad , G.R. No. 140975, Decembers 8, 2005, 347 SCRA 571, 573.

[25] cralaw Gomez v. Sta. Ines , G.R. No. 132537, October 14, 2005, 473 SCRA 25, 37.

[26] cralaw Sigaya v. Mayuga , G.R. No. 143254, August 18, 2005, 467 SCRA 341, 352.

[27] cralaw People of the Philippines v. Paulino , G.R. No. 148810, November 18, 2003, 416 SCRA 122, 128, citing People v. Federico, 454 Phil. 814, 823 (2003).

[28] cralaw NHA v. Evangelista, G.R. No. 140945, May 16, 2005, 458 SCRA 469, 471, citing Heirs of Antonio Pael v. Court of Appeals, 382 Phil. 222, 249 (2000); Arcelona vs. Court of Appeals, 345 Phil. 250, 270 (1997).

[29] cralaw Aron v. Realon , G.R. No. 159156, January 31, 2005, 450 SCRA 372, 389.


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