GR 135721; (May, 2004) (Digest)
G.R. No. 135721 ; May 27, 2004
CHUA TEE DEE, doing business under the name and style of PIONEER ENTERPRISES, petitioner, vs. COURT OF APPEALS and J.C. AGRICOM DEVELOPMENT CORPORATION, INC., respondents.
FACTS
J.C. Agricom Development Corporation (Agricom) owned a rubber plantation. It entered into a 15-year Contract of Lease with Chua Tee Dee (Pioneer Enterprises) on July 22, 1985. The contract stipulated monthly rentals, a security deposit, and granted Pioneer peaceful possession. It also contained an option for Pioneer to match any third-party offer if Agricom decided to sell the property. Pioneer paid the required deposit and took possession. However, Pioneer failed to pay monthly rentals starting October 1985. Agricom sent demand letters, but Pioneer refused payment, claiming Agricom failed to deliver peaceful possession because third-party claimants occupied portions of the land.
Agricom filed a complaint for rescission and collection of sum of money. The Regional Trial Court ruled in favor of Agricom, ordering Pioneer to pay back rentals, interest, and attorney’s fees. The Court of Appeals affirmed the decision. Pioneer elevated the case via a petition for certiorari under Rule 65, arguing the CA committed grave abuse of discretion.
ISSUE
Whether the Court of Appeals committed grave abuse of discretion in affirming the trial court’s ruling that held petitioner liable for back rentals despite the alleged breach by the lessor of the warranty of peaceful possession.
RULING
The Supreme Court dismissed the petition, finding no grave abuse of discretion. A petition for certiorari under Rule 65 is not a substitute for a lost appeal and only corrects jurisdictional errors or acts rendered without jurisdiction or with grave abuse of discretion. The petitioner failed to prove that the CA’s affirmance was tainted by such abuse. On the substantive issue, the Court upheld the petitioner’s liability for back rentals.
The legal logic is grounded in the principle of relativity of contracts and the distinct nature of a lessor’s warranty against eviction. The contract of lease was solely between Agricom and Pioneer. The alleged third-party claimants were not parties to this contract, and their possession preceded the lease. The lessor’s obligation under Article 1654 of the Civil Code is to maintain the lessee in peaceful possession against claims by persons deriving rights from the lessor, not against all forms of disturbance. The disturbances alleged by Pioneer came from third parties asserting their own independent titles, not from Agricom or its successors. Therefore, Agricom did not violate its warranty, and Pioneer’s remedy was a direct action against the intruders, not a suspension of rental payments to Agricom. Pioneer’s failure to pay constituted a clear breach of the lease contract, justifying the award of back rentals, interest, and attorney’s fees.