Liga v. Allegro Resources Corp.
REITERATIONFacts
The Antecedents: Ortigas & Company, Limited Partnership (Ortigas) leased a parcel of land to La Paz Investment & Realty Corporation (La Paz) for twenty-five years, commencing January 1, 1976. La Paz was obligated to construct a commercial building, which it did, creating the Greenhills Shopping Arcade (GSA). La Paz then subleased various stalls within the GSA to other parties, including Edsel Liga (Liga), who leased Unit No. 26, Level A. The original lease between Ortigas and La Paz expired on December 31, 2000. Despite the expiration, Liga remained in possession of her leased unit. Procedural History: Following the expiration of the lease with La Paz, Ortigas entered into a new lease agreement with Allegro Resources Corporation (Allegro) on September 3, 2001. Allegro was granted immediate possession and control of the leased premises, including the responsibility to assist in collecting back rentals. Allegro subsequently offered to sublease Unit No. 26 to Liga, and they entered into a rental agreement with Liga agreeing to pay P40,000.00 monthly starting September 1, 2001, plus back rentals from January to August 2001. Liga failed to pay these rentals, prompting Allegro to file an ejectment complaint on March 15, 2002. The Metropolitan Trial Court (MeTC) ruled in favor of Allegro, ordering Liga to vacate and pay back rentals. The Regional Trial Court (RTC) affirmed the MeTC's decision with modifications to the monetary awards. Allegro then appealed to the Court of Appeals (CA), which set aside the RTC's decision, ordering Liga to pay Ortigas back rentals for January to August 2001 and Allegro P40,000.00 monthly rentals from September 2001 onwards. The CA denied Liga's motion for reconsideration. The Petition: Edsel Liga filed a petition for review under Rule 45 of the Rules of Court, assailing the Court of Appeals' decision. Liga argues that the CA erred in ordering her to pay back rentals to Ortigas, as Ortigas was not a party to the ejectment case. She also contends that Allegro was estopped from claiming P40,000.00 monthly rentals due to a prior motion filed with the MeTC, and that she should not be liable for attorney's fees and costs of suit given her willingness to pay appropriate rentals. The Supreme Court ultimately denied the petition, affirming the CA's decision with modifications, specifically deleting the award of back rentals to Ortigas and ordering Liga to pay legal interest on the back rentals due to Allegro.
Issue(s)
Whether the Court of Appeals erred in ordering Liga to pay Ortigas back rentals for the period of January 1, 2001, to August 31, 2001. Whether the Court of Appeals erred in ordering Liga to pay Allegro P40,000.00 monthly rentals starting September 1, 2001, until the property is vacated. Whether the Court of Appeals erred in awarding attorney's fees and costs of suit to Allegro.
Ruling
The Supreme Court denied the petition for review and affirmed the Court of Appeals' Decision with modifications. The award of back rentals for the period of January 1, 2001, to August 31, 2001, to Ortigas & Company, Limited Partnership was deleted. Petitioner Edsel Liga was ordered to pay respondent Allegro Resources Corporation legal interest of twelve percent (12%) per annum on the back rentals from the date of extrajudicial demand on December 15, 2001, until fully paid.
Ratio Decidendi
On the issue of back rentals to Ortigas: The Court sustained Liga's argument that the Court of Appeals erred in awarding back rentals to Ortigas. Firstly, Ortigas was not a party to the case, and it is a fundamental principle that no relief can be granted in a judgment to a stranger to the action. Secondly, Allegro could not justify the award as a legal representative of Ortigas, as it did not aver in its complaint that it was acting as such, nor did it seek the collection of back rentals due to Ortigas. Thirdly, there was no allegation or prayer in the complaint, nor evidence presented, to support Allegro's claim for Ortigas's back rentals. The Court reiterated the principle that a judgment must conform to and be supported by both the pleadings and the evidence, and be in accordance with the theory of the action on which the case was tried, citing Falcon v. Manzano and Lerma v. De la Cruz. On the issue of monthly rentals to Allegro: The Court found no error in the Court of Appeals' order for Liga to pay P40,000.00 monthly rentals to Allegro. The Court emphasized that a contract is the law between the parties, and obligations arising from contracts must be complied with in good faith. Liga had signed the "Rental Information" agreement, thereby acquiescing to the P40,000.00 monthly rental rate. The Court held that parties cannot be permitted to change their minds or disavow their acts to the prejudice of the other party. The filing of a motion to release cash bond by Allegro did not operate as an estoppel, as it did not abandon its claim for the P40,000.00 rental rate, which was also an issue raised in its petition for review before the CA. The Court also cited Sps. Catungal v. Jao to support the procedural soundness and justice served by immediate execution of judgments in ejectment suits, even pending appeal. On the issue of attorney's fees and costs of suit: The Court found that Liga's argument regarding attorney's fees and costs was without merit. Law and jurisprudence support the award of attorney's fees and costs in favor of Allegro, as the award is left to the sound discretion of the court when a party acts in gross and evident bad faith in refusing to satisfy a plainly valid, just, and demandable claim. Liga's obstinate refusal to pay the agreed monthly rental, despite Allegro having performed its obligation by delivering possession of the leased property, demonstrated such bad faith. The Court, however, deemed it proper to award legal interest on the back rentals in favor of Allegro, applying the guidelines in Eastern Shipping Lines, Inc. v. Court of Appeals, specifically the twelve percent (12%) per annum interest on loans or forbearance of money from the time of judicial or extrajudicial demand.
Main Doctrine
A party cannot be granted relief in a judgment if they are not a party to the case. Furthermore, a judgment must conform to and be supported by both the pleadings and the evidence presented, adhering to the theory of the action on which the case was tried. A contract, once entered into, becomes the law between the parties and its stipulations must be complied with in good faith, unless contrary to law, morals, good customs, public order, or public policy.