GR 143263; (January, 2004) (Digest)
G.R. No. 143263; January 29, 2004
TALA REALTY SERVICES CORPORATION, Petitioner, vs. BANCO FILIPINO SAVINGS AND MORTGAGE BANK, Respondent.
FACTS
Banco Filipino, to comply with banking laws limiting real estate holdings, facilitated the formation of TALA Realty by its major stockholders. On August 25, 1981, Banco Filipino sold several branch sites, including one in Marikina, to TALA. Simultaneously, two sets of lease contracts were executed for these properties: one set for a 20-year term with a monthly rental and an advance rental payment, and another set for an 11-year term requiring a security deposit. Banco Filipino was closed by the Central Bank in 1985 but was later ordered reopened.
In 1992, after the 11-year lease period lapsed, TALA demanded that Banco Filipino vacate the premises and pay alleged rental arrears. Upon refusal, TALA filed an ejectment case. The Metropolitan Trial Court initially dismissed the complaint as premature, finding the 20-year lease still effective. The Regional Trial Court reversed, but the Court of Appeals ultimately reinstated the dismissal, upholding the 20-year contract as binding.
ISSUE
Whether the Court of Appeals erred in dismissing the ejectment complaint by upholding the 20-year lease contract and finding no valid ground for ejectment based on non-payment of rent or expiration of the lease.
RULING
The Supreme Court denied TALA’s petition but modified the appellate court’s reasoning, applying the principle of stare decisis and the doctrine of in pari delicto. The Court cited its prior ruling in a related case involving the same parties and similar transactions, where it declared both parties in equal fault for executing two conflicting lease contracts designed to circumvent banking laws. Consequently, neither party can seek affirmative relief against the other from these illicit agreements. The legal logic is rooted in the maxim that when parties are equally guilty, the law will leave them where they are and will not aid either one.
The Court clarified that at the time the ejectment suit was filed, no ground for ejectment existed. There was no expiration of the governing lease, as the 20-year term was still running, and there was no valid basis for claiming non-payment of rent, as the demanded amounts were not stipulated in the controlling contract. Any loss suffered by TALA due to the bank’s closure was deemed attributable to the Central Bank’s actions, not to Banco Filipino. The Supreme Court thus affirmed the dismissal of the complaint, leaving the parties in their respective positions as a consequence of their mutual deception.