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G.R. No. 137980. June 20, 2000




The instant Petition presents a classic example where the application of the principle of stare decisis comes into play.

The facts may be summarized as follows:

Sometime in 1979, respondent Banco Filipino Savings and Mortgage Bank faced a legal problem with respect to its branch site holdings. Republic Act No. 337, otherwise known as the General Banking Act, provides that banks may only invest in real estate up to fifty percent (50%) of their net worth.1 This ceiling on real estate holdings posed a bar to respondents plans for expansion and to address the problem, its major stockholders agreed to set up an entity to which its existing branch sites may be unloaded. The said entity would also acquire new branch sites for it, with all such branch sites, including those unloaded, to be leased to respondent bank. It was thus that petitioner was organized, its name TALA being an acronym of four (4) of the major stockholders and directors of respondent, namely: Antonio Tiu, Tomas B. Aguirre, Nancy Lim Ty and Pedro B. Aguirre.

On August 25, 1981, pursuant to the foregoing arrangement, respondent sold eleven (11) real estate properties housing its branch sites to petitioner, including the Davao branch site subject of the instant suit. Immediately following the sale, petitioner leased the same branch sites to respondent. According to respondent, petitioner was merely holding out such properties for it for a three percent (3%) per annum add-on to their carrying cost. Respondent further claims that it was part of their agreement that the said properties would be returned to it at its pleasure at the same transfer price.

At present, therefore, there stand pending cases filed by respondent against petitioner for reconveyance of all such branch sites held by petitioner on the ground that the latter is a mere trustee of respondent.

The present Petition, however, stems from an action for ejectment wherein the issue was which of two (2) different contracts of lease presented by each party governs them. For its part, petitioner presents an 11-year amended lease contract allegedly executed on August 25, 1981 before Notary Public Generoso Fulgencio. On the other hand, respondent presents a 20-year lease contract executed on the same date, August 25, 1981, but before Notary Public Jose Dimaisip.

The lease arrangement subject of this case also covered the other branch sites held by petitioner in other locations, i.e., Malabon, Sta. Cruz, R. Hidalgo, Paraaque, Marikina, Malolos, Cabanatuan, Lucena, Urdaneta, La Union, Iloilo and Cotabato. Aside from the present case, therefore, other similar cases for ejectment have been filed where, ultimately, the question of which among the two lease contracts is valid becomes an issue.

Under the terms of the eleven-year amended contract presented by petitioner, the lease expired on August 31, 1992. Petitioner claims that thereafter, the lease was extended on a month-to-month basis on the condition that whatever terms and conditions are agreed upon would retroact to September 1, 1992. The parties negotiations failed to yield any results, whereupon petitioner informed respondent that the rental rates shall be those it submitted to the latter, which were based on a study by the Asian Appraisal Co., Inc., retroactive to September 1, 1992. More particularly, rates were as follows: Two Hundred Thousand Eight Hundred Forty Pesos (P200,840.00) monthly with a rental escalation of ten percent (10%) per year, with four months deposit, four months advance deposit, and a Five Hundred Thousand Peso (P500,000.00) goodwill.

Respondent refused to comply with these terms. Instead, it continued to pay rent in the old monthly rate until March 31, 1994, when it totally ceased paying any rent. This prompted petitioner to demand from respondent, in a letter dated April 14, 1994, payment of its accrued rentals. Petitioner also gave notice to respondent that at the end of the month, the month-to-month lease over the premises would no longer be renewed. This was followed by a letter, dated May 2, 1994, demanding that respondent pay its obligations under the lease and vacate the premises.

On March 27, 1995, petitioner instituted a Complaint for Ejectment against respondent before the Municipal Trial Court of Davao City, docketed as Civil Case No. 2109-95. On June 5, 1995, respondent filed its Answer. After the submission of the parties respective Position Papers, the court a quo rendered its Decision on July 20, 1995,2 dismissing the Complaint on the ground of lack of jurisdiction, after finding that the real issue, i.e., which of the two contracts of lease was controlling, was not capable of pecuniary estimation.

On appeal, the Regional Trial Court of Davao City affirmed the decision in toto on June 13, 1996.3 With the denial of its Motion for Reconsideration, petitioner filed a Petition for Review with the Court of Appeals,4 docketed as CA-G.R. SP No. 48667.

On January 12, 1999, the Court of Appeals rendered its now questioned Decision,5 holding that both lower courts erred in refusing to exercise jurisdiction over the case when the issue of validity of lease contract is intertwined with the issue of possession. However, it dismissed the Petition to maintain judicial stability and consistency, it appearing that in other similar ejectment suits brought before the Court of Appeals, the twenty-year lease contract presented by respondent had been upheld. Petitioners Motion for Reconsideration was granted in that respondent was ordered to pay unpaid rentals to petitioner.6 Subsequently, however, on Motion for Reconsideration of respondent, the Court of Appeals reversed itself and revoked its order for payment of back rentals.7cräläwvirtualibräry

Petitioner now seeks a reversal of the Decision of the Court of Appeals upon the following grounds





In its favor, respondent argues that "only decisions of the Supreme Court establish jurisprudence or doctrines." And that is exactly what we are faced with at present.

On February 17, 2000, the Second Division of this Court, through Mr. Justice Sabino R. De Leon, Jr., rendered a Decision in G.R. No. 129887 between the same parties, this time involving respondents Urdaneta, Pangasinan branch, finding the eleven-year lease contract presented by petitioner as a forgery and consequently upholding the validity of the twenty-year lease contract. Resolving this identical issue, the Decision states, to wit - Rtc

"Second. Petitioner Tala Realty insists that its eleven (11)-year lease contract controls. We agree with the MTC and the RTC, however, that the eleven (11)-year contract is a forgery because (1) Teodoro O. Arcenas, then Executive Vice-President of private respondent Banco Filipino, denied having signed the contract; (2) the records of the notary public who notarized the said contract, Atty. Generoso S. Fulgencio, Jr., do not include the said document; and (3) the said contract was never submitted to the Central Bank as required by the latters rules and regulations (Rollo, pp. 383-384.).

Clearly, the foregoing circumstances are badges of fraud and simulation that rightly make any court suspicious and wary of imputing any legitimacy and validity to the said lease contract.

Executive Vice-President Arcenas of private respondent Banco Filipino testified that he was responsible for the daily operations of said bank. He denied having signed the eleven (11)-year contract and reasoned that it was not in the interest of Banco Filipino to do so (Rollo, p. 384). That fact was corroborated by Josefina C. Salvador, typist of Banco Filipinos Legal Department, who allegedly witnessed the said contract and whose initials allegedly appear in all the pages thereof. She disowned the said marginal initials (Id., p. 385).

The Executive Judge of the RTC supervises a notary public by requiring submission to the Office of the Clerk of Court of his monthly notarial report with copies of acknowledged documents thereto attached. Under this procedure and requirement of the Notarial Law, failure to submit such notarial report and copies of acknowledged documents has dire consequences including the possible revocation of the notarys notarial commission.

The fact that the notary public who notarized petitioner Tala Realtys alleged eleven (11)-year lease contract did not retain a copy thereof for submission to the Office of the Clerk of Court of the proper RTC militates against the use of said document as a basis to uphold petitioners claim. The said alleged eleven (11)-year lease contract was not submitted to the Central Bank whose strict documentation rules must be complied with by banks to ensure their continued good standing. On the contrary, what was submitted to the Central Bank was the twenty (20)-year lease contract.

Granting arguendo that private respondent Banco Filipino deliberately omitted to submit the eleven (11)-year contract to the Central Bank, we do not consider that fact as violative of the res inter alios acta aliis non nocet (Section 28, Rule 130, Revised Rules of Court provides, viz.: "Sec. 28. Admission by third party The rights of a party cannot be prejudiced by an act, declaration or omission of another, except as hereinafter provided."; Compania General de Tabacos v. Ganson, 13 Phil. 472, 477[1909]) rule in evidence. Rather, it is an indication of said contracts inexistence.

It is not the eleven (11)-year lease contract but the twenty (20)-year lease contract which is the real and genuine contract between petitioner Tala Realty and private respondent Banco Filipino. Considering that the twenty (20)-year lease contract is still subsisting and will expire in 2001 yet, Banco Filipino is entitled to the possession of the subject premises for as long as it pays the agreed rental and does not violate the other terms and conditions thereof (Art. 1673, New Civil Code)."

In light of the foregoing recent Decision of this Court, we have no option but to uphold the twenty-year lease contract over the eleven-year contract presented by petitioner. It is the better practice that when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases where the facts are substantially the same. "Stare decisis et non quieta movere."[9] katarungan

That the principle of stare decisis applies in the instant case, even though the subject property is different, may be gleaned from the pronouncement in Negros Navigation Co., Inc. vs. Court of Appeals,[10] to wit

"Petitioner criticizes the lower courts reliance on the Mecenas case, arguing that although this case arose out of the same incident as that involved in Mecenas, the parties are different and trial was conducted separately. Petitioner contends that the decision in this case should be based on the allegations and defenses pleaded and evidence adduced in it or, in short, on the record of this case.

The contention is without merit. What petitioner contends may be true with respect to the merits of the individual claims against petitioner but not as to the cause of the sinking of its ship on April 22, 1980 and its liability for such accident, of which there is only one truth. Otherwise, one would be subscribing to the sophistry: truth on one side of the Pyrenees, falsehood on the other!

Adherence to the Mecenas case is dictated by this Courts policy of maintaining stability in jurisprudence in accordance with the legal maxim "stare decisis et non quieta movere" (Follow past precedents and do not disturb what has been settled.) Where, as in this case, the same questions relating to the same event have been put forward by parties similarly situated as in a previous case litigated and decided by a competent court, the rule of stare decisis is a bar to any attempt to relitigate the same issue (J.M. Tuason & Corp. v. Mariano, 85 SCRA 644 [1978]). In Woulfe v. Associated Realties Corporation (130 N.J. Eq. 519, 23 A. 2d 399, 401 [1942]), the Supreme Court of New Jersey held that where substantially similar cases to the pending case were presented and applicable principles declared in prior decisions, the court was bound by the principle of stare decisis. Similarly, in State ex rel. Tollinger v. Gill (75 Ohio App., 62 N.E. 2d 760 [1944]), it was held that under the doctrine of stare decisis a ruling is final even as to parties who are strangers to the original proceeding and not bound by the judgment under the res judicata doctrine. The Philadelphia court expressed itself in this wise: "Stare decisis simply declares that, for the sake of certainty, a conclusion reached in one case should be applied to those which follow, if the facts are substantially the same, even though the parties may be different" (Heisler v. Thomas Colliery Co., 274 Pa. 448, 452, 118A, 394, 395 [1922]. Manogahela Street Ry, Co. v. Philadelphia Co., 350 Pa. 603, 39 A. 2d 909, 916 [1944]; In re Burtts Estate, 353 Pa. 217, 4 A. 2d 670, 677 [1945]). Thus, in J. M. Tuason v. Mariano, supra, this Court relied on its rulings in other cases involving different parties in sustaining the validity of a land title on the principle of "stare decisis et non quieta movere."

(underscoring, Ours)

Here, therefore, even if the property subject of the Decision of G.R. No. 129887 is located in Urdaneta, Pangasinan while that in the instant case is located in Davao, we can very well apply the conclusion in G.R. No. 129887 that it is the twenty-year lease contract which is controlling inasmuch as not only are the parties the same, but more importantly, the issue regarding its validity is one and the same and, hence, should no longer be relitigated.

Petitioner is even barred from questioning our adherence to the ruling in G.R. No. 129887 since it categorically declared in its Petition that the same was "likewise filed so that any favorable ruling in said petitions (referring to G.R. Nos. 129887 and 132051) may be extended or made to apply in the instant case."11 Petitioner cannot now complain that the ruling in G.R. No. 129887 regarding the validity of the twenty-year lease contract is not binding in this case simply because the same is unfavorable to it.

Coming now to the issue of whether or not respondent should be ejected for non-payment of rentals, we do not agree with the ruling in G.R. No. 129887 that since the unpaid rentals demanded by petitioner were based on a new rate which it unilaterally imposed and to which respondent did not agree, there lies no ground for ejectment. In such a case, there could still be ground for ejectment based on non-payment of rentals. The recent case of T & C Development Corporation vs. Court of Appeals[12] is instructional on this point. It was there cautioned that --

"The trial court found that private respondent had failed to pay the monthly rental of P1,800.00 from November 1992 to February 16, 1993, despite demands to pay and to vacate the premises made by petitioner. Even if private respondent deposited the rents in arrears in the bank, this fact cannot alter the legal situation of private respondent since the account was opened in private respondents name. Clearly, there was cause for the ejectment of private respondent. Although the increase in monthly rentals from P700.00 to P1,800.00 was in excess of 20% allowed by B.P. Blg. 877, as amended by R.A. No. 6828, what private respondent could have done was to deposit the original rent of P700.00 either with the judicial authorities or in a bank in the name of, and with notice to, petitioner. As this Court held in Uy v. Court of Appeals (178 SCRA 671, 676 [1989]):

The records reveal that the new rentals demanded since 1979 (P150.00 per month) exceed that allowed by law so refusal on the part of the lessor to accept was justified. However, what the lessee should have done was to deposit in 1979 the previous rent. This deposit in the Bank was made only in 1984 indicating a delay of more than four years.

From the foregoing facts, it is clear that the lessor was correct in asking for the ejectment of the delinquent lessee. Moreover, he should be granted not only the current rentals but also all the rentals in arrears. This is so even if the lessor himself did not appeal because as ruled by this Court, there have been instances when substantial justice demands the giving of the proper reliefs." (Underscoring, ours)

While advance rentals appear to have been made to be applied for the payment of rentals due from the eleventh year to the twentieth year of the lease, to wit

"3. That upon the signing and execution of this Contract, the LESSEE shall pay the LESSOR ONE MILLION TWENTY THOUSAND PESOS ONLY (P1,020,000.00) Philippine Currency representing advance rental to be applied on the monthly rental for the period from the eleventh to the twentieth year",13cräläwvirtualibräry

the records show that such advance rental had already been applied for rent on the property for the period of August, 1985 to November, 1989.14cräläwvirtualibräry

Thus, when respondent stopped paying any rent at all beginning April, 1994, it gave petitioner good ground for instituting ejectment proceedings.15 We reiterate the ruling in T & C Development Corporation, supra, that if ever petitioner took exception to the unilateral or illegal increase in rental rate, it should not have completely stopped paying rent but should have deposited the original rent amount with the judicial authorities or in a bank in the name of, and with notice to, petitioner. This circumstance, i.e., respondents failure to pay the rent at the old rate, does not appear in G.R. No. 129887. Thus, while we are bound by the findings of this Courts Second Division in that case under the principle of stare decisis, the fact that respondents failure to pay any rentals beginning April 1994, which provided ground for its ejectment from the premises, justifies our departure from the outcome of G.R. No. 129887. In this case, we uphold petitioners right to eject respondent from the leased premises.

WHEREFORE , for the reasons aforestated, the instant Petition is GRANTED. The Decision in CA-G.R. SP No. 48667 is SET ASIDE insofar as it denies the prayer for ejectment of petitioner.

Judgment is rendered ordering respondent to vacate the subject premises and to restore possession thereof to petitioner. Respondent is also ordered to pay rent in the amount of P20,500.00 per month computed from April, 1994 until such time as it vacates the subject property, with interest thereon at the legal rate.

No pronouncement as to costs.


Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur.


1 Sections 25 and 34 of which provide, as follows:

"Sec. 25. Any commercial bank may purchase, hold and convey real estate for the following purposes:

(a)....such as shall be necessary for its immediate accommodation in the transaction of its business: Provided, however, that the total investment in such real estate and improvements thereof, including bank equipment, shall not exceed fifty percent (50%) of net worth xxx xxx."

"Sec. 34. Savings and mortgage banks may purchase, hold and convey real estate under the same conditions as those governing commercial banks as specified in Section twenty-five of this Act."

2 Records, pp. 228-237.

3 Civil Case No. 24, 109-96; Id., pp. 342-351.

4 Id., pp. 6-371.

5 Id., pp. 503-513.

6 Resolution, 15 March 1999, Rollo, pp. 295-297.

7 Amended Resolution, 26 August 1999.

8 Petition for Review, p. 6; Rollo, p. 13.

9 Alura v. Court of Appeals, G.R. No. 129221, 305 SCRA 303 (1999)

10 G.R. No. 110398, 281 SCRA 534, 542-543 (1997)

11 Petition for Review, p. 7; Rollo, p. 14.

12 G.R. No. 118381, 26 October 1999.

13 Contract of Lease, p. 2; Records, p. 157.

14 See Annexes "K" and "L" of Affidavit of Elizabeth Palma; Records, pp. 152-154.

15 Art. 1673(2) of the New Civil Code gives lack of payment of the price stipulated as ground for a lessor to judicially eject a lessee.

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