G.R. No. 119872 July 7, 1997
REMEDIOS NAVOA RAMOS, petitioner, vs. COURT OF APPEALS, HON. PRESIDING JUDGE, Regional Trial Court, Branch 93, Quezon City, and SPS. MANUEL and ESMERALDA MALAPIT, respondents.

FACTS

Petitioner Remedios Navoa Ramos is the owner of a factory space in Quezon City. On September 30, 1988, she entered into a contract of lease with private respondents, spouses Manuel and Esmeralda Malapit. The contract contained stipulations, including: (1) that on the 5th year, the lessee shall change the principal Yakal posts into reinforced concrete posts at their expense, with failure to comply automatically terminating the contract; (2) a provision for automatic rental increase or decrease depending on inflation or devaluation; and (3) that monthly rental is due every first week of the month, with a 20% penalty for delay, and termination if delay reaches 3 months. On May 24, 1994, petitioner filed a complaint for ejectment before the Metropolitan Trial Court (MeTC) of Quezon City, alleging private respondents’ failure to comply with their undertakings under the lease contract without valid reason. The MeTC ruled in favor of petitioner, rejecting private respondents’ defenses. On appeal, the Regional Trial Court (RTC) reversed the MeTC decision and dismissed the case, awarding damages to private respondents. Petitioner filed a petition for review in the Court of Appeals, but it was dismissed for failure to attach a certified true copy of the MeTC decision. Petitioner’s motion for reconsideration was denied, prompting this petition for review on certiorari.

ISSUE

1. Whether the Court of Appeals erred in dismissing petitioner’s appeal for procedural defect.
2. Whether the RTC erred in reversing the MeTC decision and awarding damages to private respondents.
3. Whether private respondents violated the lease contract, providing grounds for ejectment.

RULING

1. The Court of Appeals erred in dismissing the appeal. The MeTC decision was not a “disputed decision” as petitioner was not appealing from it; only a true copy was required as part of the record. The procedural defect should have been set aside to correct patent injustice, as rules of procedure are tools to promote substantial justice.
2. The RTC erred in reversing the MeTC decision and in awarding damages. The awards of exemplary damages, attorney’s fees, and actual damages were made without evidence and in gross disregard of legal requirements, such as the need for express findings under Article 2208 of the Civil Code for attorney’s fees.
3. Private respondents violated the lease contract, providing grounds for ejectment under Article 1673(3) of the Civil Code. First, they failed to change the yakal posts into reinforced concrete posts on the fifth year as required. The RTC’s finding that petitioner prevented this was not supported, as any modification needed to be in writing per the contract. Second, they failed to pay rent for three consecutive months (March, April, and May 1994), as rent was due in the first week of each month, constituting arrears for three months and triggering automatic termination under the contract. However, petitioner’s claim for increased rent due to inflation was untenable, as Article 1250 of the Civil Code requires an official declaration by the Central Bank, which was absent.
The Supreme Court REVERSED the resolutions of the Court of Appeals and REINSTATED the decision of the Metropolitan Trial Court.