GR 180168; (February, 2012) (Digest)
G.R. No. 180168 ; February 27, 2012
MANILA INTERNATIONAL AIRPORT AUTHORITY, Petitioner, vs. AVIA FILIPINAS INTERNATIONAL, INC., Respondent.
FACTS
Petitioner Manila International Airport Authority (MIAA) and respondent Avia Filipinas International, Inc. (AFIC) entered into a one-year lease contract in September 1990 for airport property at a monthly rental of ₱6,580.00. In December 1990, MIAA issued Administrative Order No. 1, revising rental rates effective December 1, 1990, which increased AFIC’s rent to ₱15,996.50. However, MIAA did not demand this new rate from AFIC, who continued paying the original amount. After the contract expired in August 1991, AFIC remained on the premises under an implied monthly lease, still paying the old rental without protest from MIAA. In October 1994, MIAA billed AFIC for the increased rental difference totaling ₱347,300.50, retroactive to September 1991. AFIC paid the new rate prospectively from October 1994 but refused the retroactive lump sum. Consequently, MIAA denied AFIC’s employees access to the premises from July 1997 to March 1998, though AFIC continued rental payments. AFIC sued for damages and injunction.
ISSUE
The core issues were: (1) whether MIAA could unilaterally impose a rental increase retroactively; (2) whether MIAA’s denial of access was justified; and (3) whether AFIC was entitled to attorney’s fees.
RULING
The Supreme Court denied MIAA’s petition and affirmed the Court of Appeals. On the first issue, the Court held that MIAA could not retroactively apply the increased rental. While the lease contract allowed MIAA to revise rates, the increase must be communicated to the lessee to become effective. MIAA’s failure to demand the new rate from AFIC after the Administrative Order’s issuance and its acceptance of the old rental for years constituted a waiver of its right to collect the difference for the period from September 1991 to September 1994. The contract’s provision for automatic termination upon two months of rental arrears did not apply because AFIC was not in arrears, having paid the amount MIAA had consistently accepted.
On the second issue, the Court ruled MIAA’s denial of access was unjustified. Since AFIC was not in default, MIAA’s act of padlocking the premises constituted a taking of the law into its own hands, violating the principle against extrajudicial remedies when no breach of contract existed. Finally, the award of attorney’s fees to AFIC was upheld on grounds of equity and justice, as AFIC was compelled to litigate to protect its rights. The Court also directed compliance with Administrative Circular No. 10-2000 regarding money judgments against government agencies.