GR 168071; (December, 2006) (Digest)
G.R. No. 168071 ; December 18, 2006
LUCIANO TAN, petitioner, vs. RODIL ENTERPRISES, respondent.
FACTS
Respondent Rodil Enterprises, as lessee of the Ides O’Racca Building owned by the Republic of the Philippines, subleased a portion (Botica Divisoria) to petitioner Luciano Tan. Rodil Enterprises filed an unlawful detainer complaint against Tan before the Metropolitan Trial Court (MeTC), alleging his failure to pay rentals from September 1997 despite demands. Tan defended himself by asserting he was a legitimate tenant of the government, not of Rodil Enterprises. He relied on a 1994 Office of the President (OP) Decision that had declared Rodil’s 1992 lease contracts with the government void and directed the award of the lease to the Tenants Association, of which Tan was a member. During the MeTC proceedings, the parties entered into an in-court agreement where Tan agreed to pay accrued rentals, but he later failed to comply, prompting the MeTC to rule in favor of Rodil Enterprises.
ISSUE
The core issue is whether Luciano Tan, as a sublessee, can validly refuse to pay rentals to the sublessor, Rodil Enterprises, based on a challenged administrative ruling that purportedly nullified Rodil’s head lease with the government.
RULING
The Supreme Court ruled in favor of Rodil Enterprises and ordered Tan to pay accrued rentals and vacate the premises. The Court emphasized the principle of relativity of contracts under Article 1311 of the Civil Code. The sublease contract between Rodil Enterprises and Tan is binding solely between them. Tan cannot invoke the OP’s 1994 Decision, which concerned the validity of the head lease between Rodil and the Republic, to evade his obligations under the sublease. As a sublessee, Tan is not privy to that head contract; his right to possess the premises is derived from and dependent on Rodil’s right as sublessor. The Court further noted that the OP’s 1994 Decision had been effectively superseded. A subsequent 1999 Resolution from the OP itself held the 1994 ruling in abeyance, and more importantly, this Court’s final 2001 Decision in related consolidated cases (G.R. Nos. 129609 & 135537) definitively upheld the validity of Rodil’s lease contracts with the government. Therefore, Rodil Enterprises possessed a valid and subsisting leasehold right, conferring upon it the legal personality to collect rentals from and eject its sublessee, Tan, for non-payment.