GR 137980; (June, 2000) (Digest)
G.R. No. 137980 ; June 20, 2000
TALA REALTY SERVICES CORP., petitioner, vs. BANCO FILIPINO SAVINGS AND MORTGAGE BANK, respondent.
FACTS
Petitioner Tala Realty was organized by major stockholders of respondent Banco Filipino to hold the bank’s branch site properties, circumventing statutory limits on bank real estate holdings. In 1981, respondent sold eleven properties, including a Davao branch site, to petitioner, which were then leased back to the bank. A dispute arose over which of two conflicting lease contracts—an 11-year contract presented by petitioner or a 20-year contract presented by respondent—governed their relationship. Under the 11-year contract, the lease expired in 1992. Petitioner alleged a subsequent month-to-month lease, while respondent claimed the 20-year contract was valid. Negotiations for new terms failed. Respondent paid rent at the old rate until March 1994, then ceased all payments. Petitioner filed an ejectment case.
ISSUE
Whether respondent Banco Filipino may be judicially ejected from the leased premises despite a pending issue on the validity of the controlling lease contract.
RULING
Yes, respondent may be ejected. The Supreme Court applied the principle of stare decisis to the factual finding in a prior case between the same parties ( G.R. No. 129887 ) that the 20-year lease contract was valid. However, the Court distinguished the instant case based on a critical factual difference: respondent’s complete cessation of rental payments starting April 1994. Under Article 1673(2) of the Civil Code, failure to pay the stipulated rent is a ground for judicial ejectment. The Court cited T & C Development Corporation v. Court of Appeals, ruling that a lessee disputing a rental increase must not stop payment entirely but should consign the amount believed to be due. By wholly abandoning its rental payments, respondent gave petitioner a valid cause for ejectment independent of the contract validity issue. Consequently, while bound by the prior ruling upholding the 20-year lease, the Court granted the petition for ejectment due to respondent’s payment default. Respondent was ordered to vacate the premises and pay accrued rentals at the old rate from April 1994 until vacation.