Carlos Super Drug Corporation v. Bank of the Philippine Islands
REITERATIONFacts
The Antecedents: Petitioner Carlos Super Drug Corporation (CSDC) leased two units (Bays 4 and 5) from respondent Bank of the Philippine Islands (BPI). BPI filed an unlawful detainer case against CSDC for non-payment of rentals. The parties entered into a compromise agreement, approved by the MeTC, stipulating a new monthly rental of P26,116.39 for a term of one year effective November 16, 1988, and the execution of a new lease contract. Procedural History: CSDC paid a reduced amount and did not sign a new contract, citing a remark by BPI's counsel. BPI filed a motion for writ of execution to eject CSDC, which the MeTC denied, stating the compromise agreement did not provide for ejection and that enforcing it would modify the final judgment. BPI then filed a second unlawful detainer case, alleging lease expiration and non-payment of rentals. The MeTC dismissed the second case, finding the lease had not expired unless a new contract was executed, but ordered CSDC to pay back rentals and future monthly rentals. Both parties appealed to the RTC. The RTC affirmed the dismissal but on the ground of lack of jurisdiction of MeTC Branch 38, stating BPI should have sought enforcement in the first case before MeTC Branch 35. On appeal, the Court of Appeals reversed the RTC, upholding the MeTC Branch 38's jurisdiction, finding the lease expired, and that an implied new lease was created, ordering CSDC to vacate and pay rentals. The Petition: CSDC filed a petition for review on certiorari, questioning the Court of Appeals' ruling on jurisdiction, lease expiration, and the order to vacate.
Issue(s)
Whether private respondent can validly file an unlawful detainer case (Civil Case No. 2996) before the MeTC, Branch 38, Quezon City, notwithstanding the compromise agreement entered into between the same parties in an earlier unlawful detainer case (Civil Case No. 48285) before the MeTC-Branch 35, Quezon City; Whether the lease period provided for in the compromise agreement had expired; Whether the petitioner may be ordered to vacate the subject premises.
Ruling
The petition is denied. The Court of Appeals did not commit a reversible error in its assailed decision.
Ratio Decidendi
On the issue of filing a new unlawful detainer case: The Court held that the filing of the second unlawful detainer case before MeTC Branch 38 was proper. While BPI had previously sought execution of the compromise agreement before MeTC Branch 35, that court denied the motion for ejectment because the compromise agreement did not provide for ejection as a remedy for violation. To grant such a plea would have modified the final judgment, which is impermissible. The second case was predicated on the violation of the terms and conditions of the lease contract embodied in the compromise agreement, specifically the expiration of the lease and non-payment of rentals, which falls within the exclusive original jurisdiction of municipal trial courts in unlawful detainer cases under B.P. Blg. 129, as amended by R.A. No. 7691. The Court distinguished this from seeking to enforce the compromise agreement itself, which would have been the remedy before MeTC Branch 35. On the issue of lease expiration: The Court affirmed the Court of Appeals' finding that the lease period provided for in the compromise agreement had expired. Paragraph 3 of the compromise agreement explicitly stated a term of "one year" effective November 16, 1988. Therefore, the lease expired on November 16, 1989. CSDC's contention that the lease had not expired was based on the remark about an "imaginary line" and the failure to execute a new contract, but the compromise agreement itself clearly defined the term. On the issue of ordering CSDC to vacate: Since the lease agreement had expired and CSDC failed to pay the agreed rentals and refused to vacate the premises, it was unlawfully withholding possession. This entitled BPI to file an unlawful detainer case. The Court of Appeals correctly ordered CSDC to vacate the leased premises and return possession to BPI, and to pay the rentals due thereon in accordance with the compromise agreement. CSDC's assertion of estoppel regarding Bay 5 was also dismissed, as the Court of Appeals found that CSDC was notified of the disapproval of its request for relinquishment, and it knowingly entered into the compromise agreement for both bays.
Main Doctrine
An unlawful detainer case may be filed based on the expiration of a lease contract and the lessee's failure to pay rentals and vacate the premises, even if a prior compromise agreement existed, provided that the prior action sought enforcement of the compromise and the court denied a motion for ejectment on the ground that the compromise did not provide for ejection as a remedy for violation.