CIVIL LAW

EFREN S. QUESADA, PETER CHUA, ARTURO B. PEREJAS, ERLINDA ESCOT A,

CRISANTO H. LIM, VASQUEZ BUILDING SYSTEMS CORPORATION, LION GRANITE
CONSTRUCTION SUPPLY CORPORATION, NELLIE M. MARIVELES, ALEJANDRO V.
VARDELEON III, ANGELITA P. ROQUE, DAVID LU, J.A.O. BUILDERS & DEVELOPMENT
CORPORATION, Petitioners 
vs.
BONANZA RESTAURANTS, INC., Respondent
G.R. No. 207500 November 14, 2016
FACTS:
Bonanza Restaurant, Inc. (Bonanza) is the registered owner of a 9,404-square meter property situated at
1077-1079 EDSA, Balintawak, Quezon City. Efren was Bonanza's General Property Manager while his
brother, Miguel Quesada, was the Company President. Bonanza, represented by Miguel, allegedly leased
the subject lot to Efren. The lease was supposedly "effective July 1, 2003 until such time that it is
replaced or amended by another resolution agreement " and "effective until such time that the parcel of
land is sold." Using the contract of lease, Efren entered into various subleases with third parties (the
sublessees).
Thereafter, Bonanza rescinded the lease contract and formally demanded the return of the subject lot.
They then filed a complaint for unlawful detainer against Efren and his sublessees. It was alleged that
Efren was forestalling the sale of the property and that he had already constructed concrete structure on
the same property in bad faith and without its knowledge or consent to prolong his enjoyment of the lot.
ISSUE:
1. Did Bonanza have basis to unilaterally terminate the lease?
2. Did the lease period already expire?
3. Was there a ground for summary judgment?
RULING:

1. No. The demand did not indicate that Efren breached the lease contract. There was no demand for
him to pay rent or comply with any of his obligations under the lease. Instead, it merely informs
him that Bonanza had unilaterally terminated the lease and demands the surrender of the
property.

However, a contracting party cannot unilaterally terminate a contract unless otherwise stipulated
beforehand. A contract binds both contracting parties; its validity cannot be left to the will of one
of them. To hold otherwise would offend the mutuality of contracts.

Bonanza's complaint theorized that by constructing concrete structures on the property without
Bonanza's permission, Efren effectively forestalled the sale of the property, constructively
fulfilling the resolutory condition of the lease.49 However, this argument is without basis.

There is no logical connection between the construction of concrete structures on the property and
Bonanza's inability to sell it. The argument is a non sequitur. Moreover, the lease contract itself
specifically recognized the lessee's right to construct on the property.
 Bonanza failed to show how any of Efren's constructions go against the permissible use of the
property based on its nature. Accordingly, Bonanza had no basis to unilaterally terminate the
lease without offending the mutuality of contracts.

2. No. There is no merit in Bonanza's contention that the contract which was "effective July 1, 2003
and until such time that it is replaced or amended by another resolution " had expired because the
Board of Directors had already issued a board resolution terminating the lease. Bonanza interprets
the term "resolution" to mean a board resolution from Bonanza. This erroneous interpretation is
offensive to the mutuality and obligatory force of contracts.

A lease contract is onerous in character containing reciprocal obligations; any ambiguities in its
terms are interpreted in favor of the greatest reciprocity of interests.53 Accordingly, "resolution"
or "resolution agreement" should be interpreted to mean a subsequent agreement between the
lessor and the lessee instead of a unilateral resolution from the lessor's board of directors

3. No. First, the contract did not specifically fix the period of the obligation. Therefore, we cannot
conclude that the lease had already expired. While the nature and the circumstances of the
contract make it apparent that a period was intended, this does not authorize the lessor to
unilaterally conclude that the period had lapsed or to summarily eject the lessee. The Civil Code
only grants the lessor the right to ask the courts to fix the period.

Second, the complaint did not allege that Efren had been remiss in the payment of the stipulated
rent.

Third, Bonanza failed to establish that Efren committed a substantial breach - as opposed to a

casual breach - of his legal obligations (both under the contract and under Article 1657 of the
Civil Code) that would defeat the very object of the parties in making the agreement and warrant
the rescission of the contract.

Lastly, Bonanza failed to show that Efren had dedicated the property to a use that is contrary to
its commercial nature and that caused its deterioration. On the contrary, Efren had maintained the
property and made improvements on it.
UNION BANK OF THE PHILIPPINES, Petitioner, v. PHILIPPINE RABBIT BUS LINES,
INC., Respondent.

G.R. No. 205951, July 04, 2016

FACTS:

Petitioner Union Bank of the Philippines is the owner of two parcels of land totaling 1,181 square meters,
with improvements. Respondent Philippine Rabbit Bus Lines, Inc. was the former owner of the lots but it
lost the same by foreclosure to Union Bank; nonetheless, PRBLI continued to occupy the same.

Petitioner and respondent executed a Contract to Sell covering the subject property for P12,208,633.57.
The contract to sell stipulated, among others, that "[a]ll payments required under this Contract to Sell
shall be made by the [buyer] without need of notice, demand, or any other act or deed, at the principal
office address of the [seller];" and that should respondent fail to fully comply with the agreement or in
case the contract is canceled or rescinded, all its installment payments "shall also be forfeited by way of
penalty and liquidated damages" and "applied as rentals for [its] use and possession of the property
without need for any judicial action or notice to or demand upon the [buyer] and without prejudice to
such other rights as may be available to and at the option of the [seller] such as, but not limited to
bringing an action in court to enforce payment of the Purchase Price or the balance thereof and/or for
damages, or for any causes of action allowed by law.”

Respondent failed to fully pay the stipulated price in the contract to sell. Petitioner thus sent a notarized
demand letter entitled "Demand to Pay with Rescission of Three (3) Contracts to Sell. Petitioner sent
another letter-demand to vacate dated May 24, 2004.

However, respondent was unable to pay and petitioner rescinded the contract to sell on February 28,2004.
Despite the fact that the contract to sell has been rescinded, respondent proposed to continue with the
same and issued and tendered to the petitioner three postdated checks in the amount of PI.5 million as
payment. However, only one check in the amount of P500,000.00 cleared and the same was applied as
rental payment.

ISSUE:

Since the contract to sell between Petitioner UBP and Respondent PRBL was already canceled due to
PRBL's failure to pay the purchase price, is UPB still required to issue a demand to pay prior to the filing
of the ejectment case?

RULING:

No. Petitioner essentially argues that since the contract to sell was already rescinded, it was no longer
required to make a demand for payment prior to filing an ejectment suit.

An ejectment case is not limited to lease agreements or deprivations of possession by force,

intimidation, threat, strategy, or stealth. It is as well available against one who withholds possession
after the expiration or termination of his right of possession under an express or implied contract,
such as a contract to sell.
UPB complied with the requirements. It alleged that respondent acquired the right to occupy the subject
property by virtue of the November 8, 2001 Contract to Sell; that respondent failed to pay the required
amortizations and thus was in violation of the stipulations of the agreement; that petitioner made a written
"Demand to Pay with Rescission of Three (3) Contracts to Sell dated November 8, 2001," but respondent
was unable to heed the demand; that respondent lost its right to retain possession of the subject property,
and it was illegally occupying the premises; that petitioner made another demand, this time a written
demand to vacate on May 24, 2004, which respondent received on May 26, 2004; that respondent refused
to vacate the premises; that on May 26, 2005, or within the one-year period required by the Rules, the
ejectment case was filed; and that there is a need to determine the rents and damages owing to petitioner.

It was erroneous for the lower courts to require a demand to pay prior to filing of the ejectment
case. This is not one of the requisites in an ejectment case based on petitioner's contract to sell with
respondent. The full payment of the purchase price in a contract to sell is a positive suspensive condition
whose non-fulfillment is not a breach of contract, but merely an event that prevents the seller from
conveying title to the purchaser; in other words, the non-payment of the purchase price renders the
contract to sell ineffective and without force and effect. Respondent's failure and refusal to pay the
monthly amortizations as agreed rendered the contract to sell without force and effect; it therefore lost its
right to continue occupying the subject property, and should vacate the same.
ANECITA GREGORIO, Petitioner, 
vs.
MARIA CRISOLOGO VDA. DE CULIG, THRU HER ATTORNEY-IN-FACT ALFREDO
CULIG, JR., Respondent.

G.R. No. 180559 January 20, 2016

FACTS:

Respondent Maria Crisologo V da. De Culig is the widow of Alfredo Culig, Sr. During his lifetime,
Alfredo was granted a homestead patent under the Public Land Act (C.A. 141) over a 54,730-square
meter parcel of land in Nuangan, Kidapawan, North Cotabato. Upon his death, an executed an extra-
judicial settlement of estate with simultaneous sale of the property in favor of petitioner spouses Andres
Seguritan and Anecita Gregorio. The property was sold for P25,0000.00, and title to the property was
issued in the name of the spouses.

Respondent filed a complaint demanding the repurchase of the property under the provisions of the Public
Land Act. She alleged that she first approached the spouses personally and offered to pay back the
purchase price of ₱25,000.00 but the latter refused. Subsequently, respondent and her son, Alfredo Culig,
Jr. (petitioner’s attorney-in-fact) wrote letters reiterating their desire to repurchase the property but the
spouses did not answer.

Spouses Seguritan countered that the respondent had no right to repurchase the property since the latter
only wanted to redeem the property to sell it for a greater profit.

ISSUE:

1. Did the respondent validly exercise the right of redemption?

2. Is respondent not entitled to the right of repurchase because respondent intends to resell the
property for profit?
3. Is the dismissal of the motion for reconsideration proper?

RULING:

1. Yes. Petitioner insists that there was no valid redemption since there was no valid tender of
payment nor consignation of the amount of repurchase made by the respondent. Petitioner maintains
that tender of payment of the repurchase price is necessary to exercise the right of redemption. Thus,
when respondent filed to tender payment of the repurchase price, and admitted her failure to consign the
amount in court, she lost her right to repurchase the property. 

It is undisputed that the complaint for repurchase was filed within the reglementary period of five years.
The parties also agreed that there was no consignment of the repurchase price. However, petitioner
argues that consignment is necessary to validly exercise the right of redemption.

Consignment is not necessary to vaildly exercise the right of redemption. We held that the bona
fide tender of the redemption price or its equivalent—consignation of said price in court is not essential
or necessary where the filing of the action itself is equivalent to a formal offer to redeem.
Article 1616 of the Civil Code does not apply in this case. The provision only speaks of the amount to
be tendered when exercising the right to repurchase, but it does not state the procedure to be followed in
exercising the right.

2. No. The main purpose in the grant of a free patent or homestead is to preserve and keep in the
family of the homesteader that portion of public land which the State has given to him so he may have a
place to live with his family and become a happy citizen and a useful member of the society. We have
ruled in several instances, that the right to repurchase of a patentee should fail if the purpose was only
speculative and for profit, or "to dispose of it again for greater profit" or "to recover the land only to
dispose of it again to amass a hefty profit to themselves." In all these instances, we found basis for
ruling that there was intent to sell the property for a higher profit. We find no such purpose in this case.

The burden of proof of such speculative intent is on the petitioner. Petitioner’s bare allegations as to
respondent’s "manifestation of the affluence," "bulging coffers," their being "professionals" and "most
of them are residing in Canada" are not enough to show that petitioner intended to resell the property for
profit.

3. Yes. Petitioner is still bound by her counsel’s acts. A client is bound by the negligence of his
counsel. A counsel, once retained, holds the implied authority to do all acts necessary or, at least,
incidental to the prosecution and management of the suit in behalf of his client, such that any act or
omission by counsel within the scope of the authority is regarded, in the eyes of the law, as the act or
omission of the client himself. A recognized exception to the rule is when the reckless or gross
negligence of the counsel deprives the client of due process of law. For the exception to apply, however,
the gross negligence should not be accompanied by the client's own negligence or malice, considering
that the client has the duty to be vigilant in respect of his interests by keeping himself up-to-elate on the
status of the case. Failing in this duty, the client should suffer whatever adverse judgment is rendered
against him.51

In Pasiona, Jr. v. Court qf Appeals, we declared that the failure to file a motion for reconsideration is
only simple negligence, since it did not necessarily deny due process to his client party who had the
opportunity to be heard at some point of the proceedings.

Moreover, petitioner is also guilty of negligence. By her own admission, she had no knowledge about
the subsequent proceedings after the trial court rendered its decision in 1998, and she just assumed that
the decision was final and binding. A litigant bears the responsibility to monitor the status of his case,
for no prudent party leaves the fate of his case entirely in the hands of his lawyer. Petitioner should have
maintained contact with her counsel from time to time, and informed herself of the progress of their
case, thereby exercising that standard of care "which an ordinarily prudent man bestows upon his
business." It took nine years before petitioner showed interest in her own case. Had she vigilantly
monitored the case, she would have sooner discovered the adverse decision and avoided her plight.