GR 119107; (March, 2005) (Digest)
G.R. No. 119107, March 18, 2005
JOSE V. LAGON, Petitioner, vs. HONORABLE COURT OF APPEALS and MENANDRO V. LAPUZ, Respondents.
FACTS
Petitioner Jose Lagon purchased two parcels of land from the estate of Bai Tonina Sepi in 1982. Subsequently, private respondent Menandro Lapuz filed a complaint for torts and damages against Lagon. Lapuz claimed he had a renewed lease contract with the deceased Bai Tonina Sepi over the property, which included his right to construct commercial buildings and collect rentals from sub-tenants. He alleged that Lagon, after purchasing the property, interfered with his leasehold rights by collecting these rentals himself. Lagon, in his defense, denied the existence of a valid renewed lease, presenting a certification from the Clerk of Court that no such notarized contract was on file. He asserted he purchased the property in good faith after verifying no encumbrances existed.
The Regional Trial Court ruled in favor of Lapuz, declaring the 1974 lease contract authentic and binding, and awarded him various damages while dismissing Lagon’s counterclaim. The Court of Appeals affirmed this decision. Lagon elevated the case to the Supreme Court, arguing the appellate court erred in upholding the trial court’s findings regarding the lease contract’s validity and the award of damages.
ISSUE
The primary issue is whether the Court of Appeals erred in affirming the trial court’s decision which upheld the validity of the lease contract and awarded damages to Lapuz.
RULING
The Supreme Court reversed the Court of Appeals. The Court held that Lapuz failed to prove the existence of a valid and enforceable lease contract that was binding upon Lagon as a third-party purchaser. The document presented by Lapuz, purportedly a notarized lease renewal, was not recorded in the notarial register of the alleged notary, Atty. Fajardo. A certification from the Office of the Clerk of Court confirmed this lack of record. Under the law, an unrecorded lease is not binding upon third persons. Consequently, Lagon, who purchased the property after a diligent inquiry revealed no claims, was a purchaser in good faith and for value. His act of collecting rentals from the tenants, who were occupying buildings on his own property, did not constitute tortious interference with a non-existent contractual right. Since the foundational claim of a valid lease failed, the award of various damages in favor of Lapuz had no legal basis. The Court also found Lagon’s counterclaim for damages unsubstantiated, as mere litigation worries are not compensable.