G.R. No. 116896 May 5, 1997
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, petitioner, vs. COURT OF APPEALS, MA. TERESA S. RAYMUNDO-ABARRA, JOSE S. RAYMUNDO, ANTONIO S. RAYMUNDO, RENE S. RAYMUNDO, and AMADOR S. RAYMUNDO, respondents.

FACTS

Petitioner Philippine National Construction Corporation (PNCC) entered into a five-year lease contract with private respondents, the Raymundos, for a parcel of land to be used as a rock crushing plant site. The contract stipulated that the lease would commence upon the issuance of an industrial clearance by the Ministry of Human Settlements. Rent was payable yearly in advance, with the first annual payment due upon the contract’s execution. PNCC obtained a Temporary Use Permit from the Ministry on January 7, 1986. However, claiming financial and technical difficulties, PNCC sought to terminate the contract shortly thereafter, arguing that its rental obligation only began from the permit’s issuance date. The Raymundos refused the pre-termination and demanded payment of the first annual rental. They subsequently filed an action for Specific Performance with Damages.
During trial, after the plaintiffs rested their case, PNCC’s counsel repeatedly sought postponements for the presentation of its evidence. The trial court, after multiple instances of non-appearance and last-minute motions by PNCC’s counsel without proper notice, deemed PNCC to have waived its right to present evidence and submitted the case for decision. The trial court ruled in favor of the Raymundos, a decision affirmed by the Court of Appeals.

ISSUE

The core issues were: (1) Whether PNCC was liable for rentals despite its unilateral decision to cancel the project; and (2) Whether the trial court’s denial of PNCC’s right to present evidence constituted a denial of due process.

RULING

The Supreme Court denied the petition and affirmed the lower courts’ rulings. On the substantive issue, the Court held PNCC liable for the stipulated rentals. The lease contract was a valid and binding obligation. The commencement of the lease term was contingent on the permit’s issuance, but the obligation to pay the first annual rental attached upon the contract’s execution, as expressly stipulated. PNCC’s unilateral decision to abandon the project due to alleged financial difficulties did not constitute a fortuitous event or a valid ground for rescission. The principle of “rebus sic stantibus” was inapplicable as the alleged change in circumstances was not unforeseeable nor of such a character as to render performance impossible. A lessee cannot simply renege on its contractual duties by claiming unprofitability. PNCC’s obligation was solid and enforceable.
On the procedural issue, the Court found no denial of due process. The essence of due process is the opportunity to be heard. PNCC was given ample opportunity but, through the repeated negligence and absence of its counsel, effectively waived its right to present evidence. The trial court acted within its discretion in deeming the evidence waived after multiple postponements and failures to appear. Due process does not mean a party can indefinitely delay proceedings; it was satisfied as PNCC was able to file pleadings and motions, and its counsel’s negligence bound the client.