Hilltop Market Fish Vendors' Assn. v. Yaranon
REITERATIONFacts
The Antecedents: Petitioner Hilltop Market Fish Vendors' Association, Inc. (Hilltop) entered into a Contract of Lease with respondent City of Baguio for a lot to construct a building. The lease period was 25 years, renewable. The annual rental was ₱25,000.00, with the first payment commencing upon the issuance of a Certificate of full occupancy by the City Engineer's Office. Before the Certificate was issued, the City could collect market fees. Hilltop constructed the Rillera building but never obtained the Certificate of Occupancy. The City Council passed resolutions rescinding the contract due to Hilltop's failure to complete the building. The building was later found to be unsanitary and unsafe. The City Mayor issued an administrative order to close and take over the building. Procedural History: Hilltop filed a complaint for injunction against the implementation of the administrative order. The Regional Trial Court (RTC) dismissed the complaint, finding the contract of lease expired and the building unsanitary and dangerous. The Court of Appeals (CA) affirmed the RTC's decision, ruling that the contract was perfected, Hilltop was estopped from claiming the lease period had not begun, and the City's actions were justified. The Petition: Hilltop filed a petition for review, assailing the CA's decision and resolution, raising issues regarding the perfection of the contract, estoppel, withholding of the occupancy permit, and damages.
Issue(s)
Whether the Court of Appeals erred in finding that the contract of lease entered into by the parties was already perfected. Whether the Court of Appeals erred in ruling that the petitioner is estopped from claiming that the period of lease has not yet begun. Whether the Court of Appeals erred in finding that respondents properly withheld the issuance of the occupation permit to petitioner. Whether the Court of Appeals erred in not ruling on and awarding the damages prayed for by petitioner.
Ruling
The petition is denied. The Decision dated 27 November 2008 and the Resolution dated 15 May 2009 of the Court of Appeals in CA-G.R. CV No. 88472 are affirmed.
Ratio Decidendi
On the perfection of the contract of lease: The Court held that the contract of lease was perfected because there was a meeting of the minds on the essential elements: the lot (thing) and the annual rental and ownership of the building upon termination (cause or consideration). The issuance of the Certificate of Occupancy was not a suspensive condition for the perfection of the contract, but rather a condition for the commencement of the obligation to pay rent. Since the essential elements were agreed upon, the contract was perfected from the moment of execution. On estoppel and the commencement of the lease period: The Court ruled that Hilltop was estopped from claiming that the lease period had not begun. Hilltop occupied the Rillera building and conducted business in it even without the Certificate of Occupancy. By its continued silence and occupancy, Hilltop acquiesced to the state of things and waived the condition for the commencement of rent payment. It would be inequitable for Hilltop to assert that the certificate was a condition prior to its occupancy when it did not protest and only became persistent in obtaining the certificate when the lease term had already expired. On the withholding of the occupation permit: The Court found that the City Engineer's Office did not issue the Certificate of Occupancy due to Hilltop's own fault. Hilltop failed to complete the building and maintain its sanitation as required by the contract and ordinances. The records showed the building was unsanitary, unsafe, and even used for illegal activities. Therefore, Hilltop, being the party at fault for the non-issuance, could not use this non-issuance to its advantage to claim the lease period had not commenced. On damages: The Court found no basis for granting damages to Hilltop. Since the contract of lease had commenced and its period had expired, and the City of Baguio was justified in taking over the building as its owner under the contract, Hilltop's claim for damages was without merit. The Court reiterated the principle that parties who do not come to court with clean hands cannot be allowed to profit from their own wrongdoing.
Main Doctrine
The issuance of a Certificate of Occupancy is a condition for the commencement of rental payments, not a suspensive condition for the perfection or effectivity of a contract of lease. A party who fails to fulfill its obligations under the contract, leading to the non-issuance of such a certificate, cannot use the non-issuance to its advantage to claim that the lease period has not commenced.