THIRD DIVISION
[G.R. No. 224868. June 26, 2019.]
OFELIA D. CRUZ, petitioner, vs.CHILDREN'S MEDICAL CENTER PHILIPPINES AND GENERAL HOSPITAL, INC., respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution dated June 26, 2019, which reads as follows:
"G.R. No. 224868 (OFELIA D. CRUZ, petitioner v. CHILDREN'S MEDICAL CENTER PHILIPPINES AND GENERAL HOSPITAL, INC., respondent). — This Court resolves a Petition for Review on Certiorari, 1 filed under Rule 45 of the Rules of Court, praying that the Court of Appeals' July 8, 2015 Decision 2 and May 26, 2016 Resolution 3 in CA-G.R. CV No. 99250 be reversed and set aside.
Since 1991, Ofelia D. Cruz (Cruz) had been renting a canteen space within the premises of the Children's Medical Center Philippines and General Hospital, Inc. (Children's Medical Center). 4 Their Lease Contract read in part:
Section I
TERM AND RENEWAL
1.1 This lease shall be for a period of five (5) years, commencing from October 01, 2000 to September 30, 2005, renewable for such period and under such terms and conditions as may be agreed upon by the parties at least one (1) month prior to the expiration hereof.
Section II
RENTAL
2.1 The monthly rental of the leased premises shall be Twenty Thousand Pesos (P20,000.00) net of tax, subject to an escalation rate of seven percent (7%) per annum on a cumulative basis.
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2.3 The monthly rental shall be payable during the first week of each month starting on October 01, 2000.
Section III
USE OF PREMISES
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e. In case the LESSEE has an outstanding obligation under this contract, the LESSOR, as well as its employees, agents and representatives, without any need of a court order are hereby granted the right and authority without incurring civil or criminal liability of any kind to prevent the LESSEE, her employees, agents or representatives from taking out furniture or equipment from the leased premises and to sell the same at a public or private sale, and the proceeds thereof applied if the deposit referred to in paragraph 2 hereof is not sufficient to cover such outstanding obligation, until such obligation is settled. aScITE
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Section XXI
BREACH OR DEFAULT OF CONDITION
21.1 The LESSOR and the LESSEE agree that all covenants and agreement (sic) herein contained shall be deemed conditions as well as covenants and that if default or breach be made of any of them this lease may be terminated and cancelled by either party. 5
On July 23, 2004, Cruz filed a Complaint 6 against Children's Medical Center for breach of contract, claiming that the hospital had forcefully taken over the canteen.
Cruz alleged that on September 20, 2003, the hospital administrator, Edgardo M. Cailao (Cailao), asked that Cruz and her employee, Mary Grace Pedaria (Pedaria), go to his office, claiming that he was authorized by the Children's Medical Center's President and Board of Trustees. Since Cruz was in the province then, she asked Pedaria to go alone. 7
Later, Cruz further narrated, Pedaria told her how Cailao had again demanded that she surrender possession and control over the leased premises, and that they do it within the day. Cailao had also said that, should Cruz fail to comply, he would take possession of the premises the next day. 8
Cruz alleged that the following day, at around 2:00 p.m., Cailao, together with security guards and other hospital officials, forcibly took possession of the premises, without any court order. She claimed that the canteen equipment in the leased premises, which Cailao had allegedly inventoried during the takeover, were used by the Children's Medical Center administration to operate the canteen itself. 9
Cruz prayed that the hospital pay her for her unrealized profit, rentals for the use of her canteen equipment, moral and exemplary damages, attorney's fees, and costs of suit. 10
In its Amended Answer with Counterclaim, 11 Children's Medical Center claimed that Cruz had repeatedly failed to pay her monthly rental, water, and electricity bills. Despite repeated demands, Cruz did not settle her obligations. 12 Thus, in a letter dated July 28, 2003, Children's Medical Center demanded that she vacate the premises and surrender possession within a 30-day period, as well as pay the unpaid rentals and utilities amounting to P775,109.56, plus interest, and attorney's fees. The hospital added that it would judicially eject Cruz and charge her with P22,898.00 as rental fees should she fail to comply with the demand. 13
Children's Medical Center further stated that it filed a criminal case against Cruz after the P400,000.00 post-dated check she issued, supposedly as partial payment of her obligations, had bounced. 14
By way of counterclaim, Children's Medical Center prayed that Cruz pay her unpaid obligations, damages, litigation expenses, and attorney's fees. 15
The Regional Trial Court ruled in Cruz's favor. In its April 30, 2012 Decision, 16 it found that Children's Medical Center breached its Lease Contract with Cruz when it ejected her from the leased premises. Cruz had the right to occupy the premises from October 1, 2000 to September 30, 2005 and, in turn, Children's Medical Center had the right to a P20,000.00 monthly rental. 17 The trial court noted that under the contract, in the event of Cruz's outstanding obligation, Children's Medical Center should have sold her equipment and apply the proceeds to the obligation until it is settled. 18 Instead, the hospital took over the canteen premises, taking advantage of Cruz's absence. 19
Moreover, the Regional Trial Court found that Children's Medical Center also violated Article 19 of the Civil Code, which mandates that persons should exercise their rights with justice, honesty, and good faith. Thus, it awarded Cruz actual damages, computed based on her projected profits from the canteen for the months remaining from her ejectment until the expiry of the Lease Contract on September 30, 2005, as well as the amount that Cruz would have earned from renting out her property located in the premises. 20 HEITAD
The Regional Trial Court also awarded Cruz moral damages, exemplary damages, and attorney's fees. It dismissed Children Medical Center's countersuit due to its failure to submit the originals of the exhibits in its formal offer of evidence. 21
The dispositive portion of the Regional Trial Court Decision read:
WHEREFORE, in the light of the foregoing, judgment is hereby in favor of the plaintiff and against the defendant ordering the latter to pay and/or reimburse plaintiff the following amounts:
a). Nine Hundred Sixty Thousand Pesos (P960,000.00) as and by way of Actual Damages;
b). Two Hundred Thousand Pesos (P200,000.00) as and by way of Moral Damages;
c). Two Hundred Thousand Pesos (P200,000.00) as and by way of Exemplary Damages;
d). One Hundred Thousand Pesos (P100,000.00) as and by way of Attorney's Acceptance Fees; and
e). Fourteen Thousand Four Hundred Fifty Seven Pesos and Fifty Centavos (P14,457.50) as costs of suit.
Defendant's counter-claim is hereby dismissed.
IT IS SO ORDERED. 22
The Court of Appeals partially granted Children's Medical Center's appeal. In its July 8, 2015 Decision, 23 it found that both parties breached their respective obligations. It agreed with the trial court that Children's Medical Center breached the contract when it ejected Cruz from the leased premises, and awarded Cruz moral damages for this. But it also held that Cruz breached the contract first by having outstanding obligations, for which she should also be held liable. 24 The dispositive portion of the Court of Appeals Decision read:
WHEREFORE, premises considered, the appeal is hereby PARTIALLY GRANTED. The Decision dated April 30, 2012 of the Regional Trial Court of Quezon City, Branch 92, in Civil Case No. Q-04-53230 is SET ASIDE, and a new one is ENTERED:
1. Finding both Plaintiff-Appellee Ofelia D. Cruz and Defendant-Appellant Children's Medical Center Philippines and General Hospital, Inc. guilty of breach of their respective obligations under the Contract of Lease;
2. Ordering Plaintiff-Appellee Ofelia D. Cruz to pay her outstanding obligations to Defendant-Appellant Children's Medical Center Philippines and General Hospital, Inc. in the form of unpaid monthly rent and utilities as prayed for in the defendant-appellant's Amended Answer with Counterclaim, to wit:
a. unpaid monthly rent in the amount of P596,932.40,
b. unpaid electricity consumption in the amount of P316,503.47, Philippine currency,
c. unpaid water consumption in the amount of P38,249.93, Philippine currency,
d. legal interest on all these outstanding obligations at the rate of six percent (6%) per annum from the date of the finality of this Decision until fully paid,
3. Ordering Defendant-Appellant Children's Medical Center Philippines and General Hospital, Inc. to pay moral damages to Plaintiff-Appellee Ofelia D. Cruz in the amount of P100,000.00, Philippine currency.
SO ORDERED. 25
In its May 26, 2016 Resolution, 26 the Court of Appeals denied Cruz's Motion for Reconsideration. It rejected her argument that Children's Medical Center's counterclaim should have been dismissed for failure to pay docket fees, because as of September 21, 2004, the payment of filing fees for compulsory counterclaims had been suspended under the Office of the Court Administrator Circular No. 96-2009. 27
The Court of Appeals also rejected Cruz's claim that the monetary award in favor of Children's Medical Center would result in double recovery since she had already been ordered to pay Children's Medical Center P400,000.00 in another case, CA-G.R. SP No. 126700. It found that the issue in that case was limited to the civil aspect of a Batas Pambansa Blg. 22 case, and the order to pay P400,000.00 represented only the face value of the check involved. It further reasoned that Cruz did not show that she had already settled her financial obligation in either CA-G.R. SP No. 126700 or this case. 28 ATICcS
Thus, Cruz filed this Petition for Review on Certiorari. 29 In turn, Children's Medical Center filed its Comment. 30
Petitioner argues that the trial court did not acquire jurisdiction over respondent's counterclaim, because respondent did not pay the required filing fees. 31 Furthermore, she avers that respondent's counterclaims were not properly proven during trial as it failed to submit the originals of its exhibits in evidence. 32
Petitioner also insists that under the in pari delicto rule, the Court of Appeals should not have granted the reliefs prayed for by respondent, since both parties were at fault. She asserts that repossession of premises subject of a lease contract must be in accordance with the law governing the lessor-lessee relationship. She points out that under the law, the lessor may judicially eject the lessee for, among others, lack of payment of the price stipulated. Respondent, she claims, neither observed this procedure nor took any action before the court, quasi-judicial, or administrative body in evicting her. 33
For its part, respondent maintains that the Court of Appeals did not err in awarding its counterclaim, as payment of filing fees for its counterclaim was not required at the time petitioner filed her Complaint. 34 Moreover, it insists that the in pari delicto rule is not applicable here since respondent is not equally culpable to petitioner, who was the principal violator of the contract. 35
The issues for this Court's resolution are:
First, whether or not the Court of Appeals erred in finding that there was no need for respondent Children's Medical Center Philippines and General Hospital, Inc. to pay filing fees for the Regional Trial Court to acquire jurisdiction over its counterclaims;
Second, whether or not the Court of Appeals erred in awarding respondent its counterclaim, despite its failure to submit original exhibits during trial; and
Finally, whether or not the Court of Appeals erred in finding that both petitioner Ofelia D. Cruz and respondent were in breach of contract.
The Petition is denied.
A petition for review on certiorari under Rule 45 shall only pertain to questions of law. 36 Petitioner has failed to show any error of law committed by the Court of Appeals in modifying the Regional Trial Court Decision.
For one, the Court of Appeals has pointed out that payment of filing fees for compulsory counterclaims had been suspended as of September 21, 2004, as stated in the Office of the Court Administrator Circular No. 96-2009. 37 Despite this, petitioner sloppily repeats her argument on respondent's nonpayment of filing fees, without showing how the Court of Appeals committed an error of law.
As for the conclusion that both petitioner and respondent breached their contractual obligations, as well as the award of respondent's counterclaim, the Court of Appeals based its findings on the terms of the Lease Contract itself and facts that can be gleaned from the record, including petitioner's own testimony. It reasoned:
The Contract of Lease created reciprocal obligations between Ofelia D. Cruz and Children's Medical Center. Ofelia D. Cruz, as lessee, is obliged to pay the price of the lease, which includes monthly rent and payment for utilities, while Children's Medical Center, as lessor, is obliged to maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract.
However, under Section XXI of the Contract of Lease, in case of default or breach committed by any of the parties, the lease may be terminated and cancelled by either party. The power to terminate was exercised by Defendant-Appellant Children's Medical Center through a letter dated July 28, 2003, addressed to Plaintiff-Appellee Ofelia D. Cruz, and signed by the defendant-appellant's legal counsel. After informing the plaintiff-appellee that her "outstanding obligation in the form of unpaid rentals and utilities" has ballooned to P775,109.56, the defendant-appellant relayed its decision to terminate the lease contract with her. Then, the defendant-appellant demanded that the plaintiff-appellee vacate the canteen premises and surrender its possession to the defendant-appellant. Children's Medical Center likewise demanded that Ofelia D. Cruz settle all her unpaid obligations with the former; otherwise, she would be charged, in addition to her outstanding obligations, reasonable rental for the use and occupancy of the premises and she would be ejected judicially.
Plaintiff-Appellee Ofelia D. Cruz does not deny incurring the "outstanding obligation in the form of unpaid rentals and utilities" referred to by the defendant-appellant. During her testimony, she even related that there had been proposals and counter-proposals from her and the defendant-appellant as to how she could settle her outstanding obligations. . . .
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Unfortunately, however, Plaintiff-Appellee Ofelia D. Cruz failed to settle her account with the defendant-appellant, so the latter was constrained to send a demand letter to the plaintiff-appellee, which she acknowledged, . . . TIADCc
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The records clearly indicate that Plaintiff-Appellee Ofelia D. Cruz failed to discharge her burden, as lessee, to pay the price of the lease according to the terms stipulated. She breached the conditions of the agreement. Hence, the defendant-appellant acted within its authority when it terminated the agreement pursuant to Section XXI of the Contract of Lease. It is likewise clear that the lessee's breach spawned the conflict that is now before Us on appeal. Otherwise stated, Ofelia D. Cruz was the first infractor or, to borrow the term used by the defendant-appellant, the "principal violator" of the contract. 38 (Citations omitted)
On the issue of respondent's failure to submit original exhibits during trial, the question of how much petitioner owed for unpaid water and electricity bills is an evidentiary matter that this Court generally does not review in petitions for review on certiorari. 39 In any case, a close examination of the Court of Appeals Decision shows that it directed petitioner to pay respondent outstanding monthly rent and utilities based on the provisions of the Lease Contract, 40 which petitioner did not dispute.
Besides, even if this Court decided to look into this question, there is no basis to decrease the award. Petitioner neither explains how the amount the Court of Appeals arrived at was wrong nor provides her own substantiated figures.
Thus, this Court finds no reversible error in the Court of Appeals' determination of the amounts for which petitioner is liable.
Petitioner claims that under Article 1412 of the Civil Code, where both parties have breached a contract, neither may be entitled to relief. 41 However, Article 1412 42 refers to parties to contracts with an unlawful or forbidden cause. There is no basis to apply this provision here.
Lastly, petitioner argues that respondent alone is at fault and should bear the consequences of its act because it took the law into its own hands in taking over the canteen. 43 However, she offers no legal basis to support this position. It was precisely respondent's act of ejecting petitioner that made the Court of Appeals find both parties at fault, and caused it to award Cruz the amount of P100,000.00 as moral damages. Had respondent not breached the Lease Contract by ejecting petitioner, then petitioner would have been solely at fault, and she would not have been awarded any damages at all.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The Court of Appeals' July 8, 2015 Decision and May 26, 2016 Resolution in CA-G.R. CV No. 99250 are AFFIRMED.
SO ORDERED."
Very truly yours,
(SGD.) WILFREDO V. LAPITANDivision Clerk of Court
Footnotes
1.Rollo, pp. 18-50.
2.Id. at 87-101. The Decision was penned by Associate Justice Ramon A. Cruz, and concurred in by Associate Justices Marlene Gonzales-Sison and Ma. Luisa C. Quijano Padilla of the Seventeenth Division, Court of Appeals, Manila.
3.Id. at 7-9. The Resolution was penned by Associate Justice Ramon A. Cruz, and concurred in by Associate Justices Marlene Gonzales-Sison and Ma. Luisa C. Quijano Padilla of the Former Seventeenth Division, Court of Appeals, Manila.
4.Id. at 75.
5.Id. at 56-60, Contract of Lease.
6.Id. at 51-55.
7.Id. at 51-52.
8.Id. at 52.
9.Id.
10.Id. at 54.
11.Id. at 67-74.
12.Id. at 70-71.
13.Id. at 77.
14.Id. at 71.
15.Id. at 73.
16.Id. at 75-86.
17.Id. at 80.
18.Id. at 82.
19.Id. at 82-83.
20.Id. at 83-84.
21.Id. at 84.
22.Id. at 85-86.
23.Id. at 87-101.
24.Id. at 97-99.
25.Id. at 99-100.
26.Id. at 7-9.
27.Id. at 8.
28.Id.
29.Id. at 18-50.
30.Id. at 172-190.
31.Id. at 25-28.
32.Id. at 28-31.
33.Id. at 31-39.
34.Id. at 179-182.
35.Id. at 182.
36.RULES OF COURT, Rule 45, sec. 1.
37.Rollo, p. 103.
38.Id. at 95-97.
39.SeePascal v. Burgos, 776 Phil. 167 (2016) [Per J. Leonen, Second Division].
40.Rollo, p. 99.
41.Id. at 39.
42.CIVIL CODE, art. 1412 provides:
ARTICLE 1412. If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following rules shall be observed:
(1) When the fault is on the part of both contracting parties, neither may recover what he has given by virtue of the contract, or demand the performance of the other's undertaking;
(2) When only one of the contracting parties is at fault, he cannot recover what he has given by reason of the contract, or ask for the fulfillment of what has been promised him. The other, who is not at fault, may demand the return of what he has given without any obligation to comply with his promise.
43.Rollo, pp. 40-43.