BAGUIO CITY—The Second Division of the Supreme Court affirmed the previous rulings of the Court of Appeals that upheld the decision of a lower court dismissing the petition of the Hilltop Market Fish Vendors Association against the local government against the closure of the Rillera building, popularly known as the fish section of the market vendors, for lack of merit.
The SC decision, which was received by the city last Aug. 4, said “We deny the petition. We affirm the decision dated November 27, 2008 and the resolution dated May 15, 2009 of the court of appeals.”
Associate Justice Antonio Carpio said since the contract has already commenced, Hilltop has been occupying the Rillera building even after the termination of the lease period. The contract of lease provides the period of lease is 25 years and it is renewable for the same period at the option of both parties.
Based on the proceedings of the Regional Trial Court, Hilltop started occupying the area in 1974 and 25 years have lapsed without the parties renewing the contract which is already deemed terminated.
Thus, Baguio City is justified in taking over the Rillera building being its owner under the contract of lease.
The SC said “a reciprocal contract like a lease the period must be deemed to have been agreed upon for the benefit of both parties, absent language showing that the term was deliberately set for the benefit of the lessee or lessor alone. The continuance, effectivity and fulfillment of a contract of lease cannot be made to depend exclusively upon the free and uncontrolled and no equality exists between the lessor and lessee since the life of the contract would be dictated solely by the lessee.”
The case dates to June 22, 1974 when the Hilltop Market Fish Vendors Association Inc. represented by their president Gerardo Rillera and the city represented by then Mayor Lardizabal entered a lease over a city owned lot located at the hilltop area with an area of 568.80 square meters.
The lease contract provided a period of 25 years renewable for the same period with a rental of P25,000 with the first payment commencing upon the issuance of the City Engineering Office of the certificate of full occupancy of the building to be constructed at the lot.
In an 11-page decision signed by Associate Justice Antonio Carpio for the division dated July 20, 2017, the SC denied the petition for review filed by the association because in the contract of lease, one of the parties binds himself to give to another the enjoyment or use of a thing or a price certain and for a period which may be definite or indefinite and being a consensual contract, a lease is perfected at the moment there is a meeting of the minds upon the thing and the cost or consideration which are to constitute the contract.
“Thereafter, the lessor is obliged to deliver that thing which is the object of the contract in such a condition as to render it for the use intended, and the lessee is obliged to use the thing is a diligent father of a family, devoting it to the use stipulated or that which may be inferred from the thing leased.”
The High Court noted the relevant provisions of the lease contract between Hilltop and the local government are that the lessor leases unto the lessee, and the latter hereby accepts in lease from the former, that area of 568.80 square meters the same being occupied by the fish vendors and where the construction of the fish market was done which is located at the Hilltop market under the terms and conditions that the location plan prepared by the City Engineer’s Office be made part of the contract.
The period of the lease will be 25 years renewable for the same period at the option of both parties, that the annual lease rental shall be P25,000 payable within the first 30 days of each year; the first payment to commence immediately upon issuance of the City Engineer’s Office of the certificate of full occupancy of the entire building to be constructed, provided further, that before the certification of full occupancy of the building is issued, the local government shall continue collecting market fees due from the vendors who would be allowed to occupy any portion of the structure which will belong to the city;
That the annual lease rental of P25,000 shall be for 15 years from date of effectivity of the contract and for the remaining 10 years, the parties shall determine another rate of rental that may be deemed equitable by the lessor and that the building to be constructed by the vendors on the city lot shall subsequently be owned by the city at the termination of the lease period without payment or reimbursement for its cost.
The decision pointed out from the moment the contract is perfected, the parties are bound to fulfill what they have expressly stipulated, and thus, the local government gave the use and enjoyment of its lot to the association.
Both the Regional Trial Court (RTC) Branch 3 and the CA found that upon the execution of the contract on June 22, 1974, Hilltop took possession of the lot and constructed the Rillera building on it and thereafter, its members occupied the building and conducted business up to the present.
The SC pointed out the findings of fact of the RTC and CA are final and conclusive and cannot be reviewed on appeal by the high tribunal.
Since the association exercised its right as lessee based on the contract and the law, the SC asserted it has no basis in claiming that the contract of lease did not commence and contrary to Hilltop’s contention, the issuance of certificate of occupancy was not a suspensive condition which determines the perfection of the contract or its effectivity, thus, the lease contract specifically provides that the annual lease rental shall be P25,000 payable within the first 30 days of every year; the first payment to commence immediately upon issuance by the City Engineer’s Office of the certificate of full occupancy of the entire building to be constructed.
The SC explained clearly, the issuance of the certificate is only a condition that will make Hilltop start paying the annual lease rental to the local government and because the certificate of occupancy was not issued, the payment of annual lease rentals did not commence and that the contract constitutes the law between the parties and they are bound by its stipulations.
“If the terms of a contract are clear and leave no doubt as to the intention of the contracting parties, the literal meaning of its stipulations shall control,” the decision stressed.
The high tribunal underscored Hilltop failed to distinguish between a condition imposed upon the perfection of the contract and a condition imposed on the performance of an obligation and failure to comply with the first condition results in the failure of a contract, while the failure to comply with the second condition only gives the other party the option to either refuse to proceed or to waive the condition and in the said case, the condition, which is the issuance of the occupancy certificate was imposed only for the obligation to pay the rent to commence and payment of the price or the rent, in the said case goes into the performance of the contract and has nothing to do with the perfection of the contract.
According to the decision, Hilltop is also estopped from claiming that the lease contract did not commence since it based its occupancy of the Rillera building on the contract of lease.
On hilltop’s allegation that it completed the building as early as 1975, the SC stated records show that the City Council issued resolutions demanding for the rescission of the lease contract for its failure to complete the construction of the Rillera building.
The SC cited undeniably, Hilltop failed to comply with its obligations under the lease contract since it failed to complete the requirements for the issuance of the occupancy certificate and maintain the sanitation of the Rillera building and the said certificate was not issued because of the blatant fault of the association, thus, the party at fault which is Hilltop cannot use the non-issuance of the occupancy certificate to its advantage because the non-issuance was due to its fault.