LVC is the owner of a registered land and a commercial building erected thereon situated in a prime commercial area of Makati City. On March 17, 1993, it entered into a contract of lease with CEM over 596 square meter floor area of the building for a period of seven years with a monthly rental of P149,000.00 at the rate of P250.00 per square meter, and a security deposit equivalent to three-month rentals in the amount of P447,000.00 to guarantee faithful compliance of the terms and conditions of the lease agreement. Among the stipulations in the contract was that the lessee CEM had the right to sublease the premises upon prior written consent of LVC the lessor and payment of transfer fees. After the parties signed the lease of contract, CEM took possession of the subject property.
Barely more than three years or in September 1996, CEM was constrained to stop operations and thereafter defaulted in rental payments. Consequently, on February 1, 1997, LVC asked CEM to vacate the premises and to pay the accrued rentals plus interests amounting to P740,478.91 as of July 31, 1997. In reply, CEM averred that its unpaid rentals amounted only to P698,500.00; and since it made a security deposit of P419,100.00 its outstanding account should only be P279,400.00 after applying the said security deposit. CEM also requested that the interest charges be waived and that it be given time to find a solution to its financial problem. As part of the solution CEM requested LVC’s consent to sublease the premises.
But the negotiations between the parties failed. So on May 27, 1997 LVC reiterated its demand on CEM to pay the unpaid rentals and to vacate the premises. When CEM refused to comply with the demand, LVC filed a complaint for illegal detainer with the MeTC of Makati City.
In answer to the complaint, CEM raised the defense that, under the contract, it had the right to sublease the premises upon prior written consent of LVC but the latter refused to allow it to sublease the premises without justifiable reason.
After due proceedings, the MeTC rendered judgment in favor of LVC holding that CEM was bound by the terms of the contract that it could only sublease the premises upon LVC’s consent. The latter, as owner of the premises and not having waived its right under the contract, had the exclusive right to determine to whom the premises would be sub-leased. Since CEM had indisputably failed to pay the monthly rentals beginning September 1996, in clear breach of the contract, LVC had the right to rescind the same and evict CEM. So the court ordered CEM to vacate the premises, surrender possession thereof and pay the unpaid rentals. This ruling was affirmed by the Regional Trial Court (RTC).
Were the MeTC and the RTC correct?
Yes.
The MeTC and the RTC decisions were upheld by the Supreme Court on both technical and substantial grounds. On the technical aspect, CEM’s appeal to the Court of Appeals (CA) was dismissed because it failed to file its petition within the reglementary period. Under the Rules of Court (Rule 42, Section 1), CEM has 15 days from notice of the decision to file a petition for review with the CA and pay at the same time the docket and other lawful fees. The CA may grant only one additional extension of 15 days within which to file said petition. As a general rule, after the first extension of 15 days, no further extension shall be granted thereafter except for the most compelling reasons and in no case longer than another 15 days. In this case, after being granted by the CA an extension of 15 days, CEM asked for another 15 days because of "heavy volume of work and equally urgent filings in courts and administrative agencies". The CA denied the second extension and dismissed the petition of CEM although it was filed within the second fifteen day extension. And the SC upheld such dismissal. The SC said that the CA is correct in denying the petition for review for being filed out of time because pressure and large volume of work is not such compelling reason for the grant of another extension; it is not an excuse for filing the petition out of time.
On the substantive aspect, the SC said that the findings and conclusions of the MeTC and the RTC are in order. Under the terms of the contract of lease, LVC, as owner-lessor of the premises, had reserved its right to approve the sublease of the same, CEM, having given its consent thereto, was bound by the stipulation. And having failed to pay the monthly rentals, it is deemed to have violated the terms of the contract, warranting its ejectment from the leased premises (Cosmo Entertainment vs. La Ville Commercial, G.R. No. 152801, August 20, 2004). E-mail: jcson@info.com.ph