G.R. No. 132051, June 25, 2001
TALA REALTY SERVICES CORP., petitioner, vs. BANCO FILIPINO SAVINGS AND MORTGAGE BANK, respondent.

FACTS

Petitioner Tala Realty Services Corporation (Tala) was organized by major stockholders of respondent Banco Filipino Savings and Mortgage Bank (Banco Filipino) to acquire and lease branch sites to the bank, circumventing legal limits on bank investments in real estate. On August 25, 1981, Banco Filipino sold eleven branch sites to Tala, which were then leased back to the bank. A dispute arose over the lease term for the Iloilo City branch. Tala filed an ejectment case, alleging an 11-year lease (expiring August 1992) and non-payment of rentals starting April 1994. Banco Filipino claimed a 20-year lease. The Municipal Trial Court (MTC) and Regional Trial Court (RTC) ruled in favor of Tala, ordering ejectment based on expiration and non-payment. The Court of Appeals initially affirmed but later reversed itself in a Resolution, dismissing the complaint. It applied the “law of the case” principle, citing its final and executory decision in a related case (CA-G.R. SP No. 39104) which upheld the 20-year lease. Tala appealed, arguing that the cited decision was not a valid precedent as the Supreme Court’s dismissal of that case (G.R. No. 127586) was on a technicality, not the merits.

ISSUE

Whether the Court of Appeals erred in applying the “law of the case” principle to dismiss the ejectment complaint based on its prior decision in a related case.

RULING

The Supreme Court GRANTED the petition but MODIFIED the Court of Appeals Resolution. It held that the principle of stare decisis, not “law of the case,” applied. The Court found that its own prior decisions on substantially identical cases between the same parties (G.R. Nos. 129887 and 137980) were controlling precedents. In those cases, the Court upheld the validity of the 20-year lease contract, ruling that the 11-year contract was a forgery. Therefore, Banco Filipino could not be ejected on the ground of lease expiration. However, the Court ruled that Banco Filipino’s failure to pay rentals starting April 1994 constituted a valid ground for ejectment. Consequently, the Court ordered Banco Filipino to vacate the premises and pay Tala the monthly rental of P21,100.00 from April 1994 until it vacates.