G.R. No. L-45461. November 29, 1983
PONCIANO L. ALMEDA, PETITIONER, VS. THE HONORABLE COURT OF APPEALS, HON. NELLY L. ROMERO-VALDELLON, IN HER CAPACITY AS JUDGE; ALBERTO FIGUEROA; AND DEPUTY SHERIFF EUSTAQUIO PARA…
MELENCIO-HERRERA, J.:
At bar is a Petition for Review on Certiorari seeking to
set aside the Decision of the then Court of Appeals in CA-G.R. No. 05901-R,
which upheld, with qualification, the Order dated September 27, 1976 of the
Court of First Instance of Rizal, Branch XXII, in Civil Case No. 15051.
The factual backdrop of the case is recited in the Decision of
the Trial Court, thus:
“x x x on February 2, 1970 plaintiff (petitioner Ponciano L.
Almeda) and defendant (private respondent Alberto Figueroa) entered into a
Contract of Lease (Exh. A) wherein the ‘entire ground floor except lobby’ of
the Almeda Building No. 3 located at the corner of Roxas Blvd. and San Luis
Street, Pasay City, was leased to the defendant for a period of five years from
March 1, 1970 at a monthly rental of P8,000.00 payable in advance on or before
the 5th day of each month; that under said contract of lease, it is stipulated
that the leased premises shall be utilized for restaurant business, operation
of coin operated machines and other allied activities; that on April 10, 1970
the plaintiff and the defendant entered into another contract of lease (Exh. C)
covering an area of 500 square meters of land at the back of Almeda Building
No. 3 for a period of ten years from April 1, 1970 ‘unless sooner terminated’
for a monthly rental of P2,500.00 payable in advance on or before the 5th day
of each month during the lease. In the lease of 500 square meters of
land, it is stipulated that the
building to be constructed therein shall be used as a kitchen in the operation
of defendant’s restaurant and that said building shall be built at the
exclusive expense of the defendant; that the premises consisting of the ground
of the Almeda Building No. 3 was used and still being used as a restaurant
under the tradename of ‘Wells Fargo Restaurant’; that the 500 square meters of
land and the building constructed thereon by
the defendant at the expense of more than P500,000.00 is being used for
kitchen purposes and allied activities of the defendant; that the defendant due
to the inadequacy of water and air-conditioning system of the building was
forced to make the necessary improvement in order to remedy the inadequacy of
the water supply and the
air-conditioning system and in doing so was forced to effect certain changes
and innovation and improvements in the premises to maintain the patronage of
the restaurant, ‘Wells Fargo’; that in the construction of the said
alterations, innovations, or improvements there was no written consent given by
the plaintiff to the defendant in violation of paragraph nine (9) of the
contract (Exhs. A & C) which is the law between plaintiff and
defendant.”
xxx xxx[1]
On August 9, 1981, petitioner filed an action for Cancellation
of Lease Contract with Damages against private respondent in the former Court
of First Instance of Rizal, Branch XXII, docketed as Civil Case No. 15051, on
the ground that respondent had violated
certain terms and conditions of the contract, to wit: (1) he made improvements on the leased premises without the
written consent of petitioner; (2) he defaulted in the payment of lease
rentals; (3) he failed to maintain peace and order within the vicinity of the
leased premises; and, (4) he utilized the annex building at the back of Almeda
Building No. 3 as a gambling casino.
The Trial Court, with
Judge Nicanor Sison presiding, finding that the improvements, alterations or
innovations introduced by respondent at the ground floor of Almeda Building No.
3 as well as in the building constructed on the 500 square meter land were made
without the prior written consent of petitioner, and that he had defaulted in the payment of monthly rentals, rendered a Decision on May 13, 1975 ordering the
cancellation of the lease contracts and their Addendum, and ordered respondent
to vacate the two premises, pay attorney’s fees of P5,000.00 and the costs of suit.
On July 9, 1975, the Trial Court, upon petitioner’s motion,
ordered the execution of its judgment pending appeal. Private respondent sought to annul said Order in a petition for Certiorari
filed with the Court of Appeals, docketed as CA-G.R. No. SP-04756. Said Appellate Court dismissed the petition
on February 27, 1976 and sustained the validity of the Order of execution
pending appeal.[2]
An ordinary appeal from the same Decision of May 13, 1975 by private
respondent to the Court of Appeals
(CA-G.R. No. 58726-R) was likewise dismissed on November 25, 1976 for his
failure to file appellant’s Brief.
After the Decision in CA-G.R. No. SP-04756 had attained finality,
petitioner filed in the Trial Court, a Motion for the issuance of an Alias Writ
of Execution, which after hearing, was granted on July 26, 1976.
On July 28, 1976, respondent Sheriff implemented the Alias Writ
and turned over to petitioner the possession of the premises involved. On August 5, 1976, private respondent filed
a Motion to allow him to enter the premises, which had been padlocked by
respondent Sheriff, to take out several articles and personal items left inside
the building, claiming that respondent Sheriff implemented the Writ in a hasty
manner, which prevented him from taking out those articles. Petitioner opposed the Motion, but
respondent Judge granted the same on August 16, 1976.
Petitioner moved for
reconsideration of the foregoing Order stating that he would be left without any security nor assurance that private respondent would pay the costs to
restore the premises to its original condition, which, according to the
architect’s estimate, would amount to P331,000.00. The Court denied reconsideration on September 7, 1976, and
authorized the special Sheriff to enforce the Order of August 16, 1976.
On September 8, 1976,
petitioner filed an Urgent Motion to require private respondent to submit a
list of items to be withdrawn from Almeda Building No. 3 and its Annex, and for
the Court to allow only the withdrawal of those items which do not partake of the nature of permanent improvements. Private respondent opposed the motion
praying that an ocular inspection of the premises be made instead, to put an end to the controversy as to
the nature of the things sought to be removed. Respondent Judge conducted the ocular inspection on September 27, 1976
and issued the challenged Order on the same date, stating that the items sought
to be taken out by FIGUEROA may be easily removed from the building and,
therefore, “do not partake of
the nature of permanent improvements.” Said Order also authorized respondent
Sheriff to withdraw the items enumerated by FIGUEROA’s counsel during the ocular
inspection.
Petitioner assailed the
validity of the foregoing Order in a Petition for Certiorari filed on September 28, 1976 with the
former Court of Appeals, docketed as CA-G.R. No. SP-05901-R It appears that on the basis of the lower Court’s Order
of September 27, 1976, respondent was able to take out of the premises all the
movable items left therein, but by virtue of the filing of the Petition for Certiorari
with the then Court of Appeals and the Restraining Order issued in connection
therewith, respondent Sheriff was not able to remove a six-door freezer, a
centralized air-conditioning unit with two blowers, a water tank and a water
pump. These remain as the only
controverted items.
On December 27, 1976, respondent Appellate Court
affirmed the Order authorizing removal of those items but required the posting
of a bond corresponding to the cost of repairing the damage to be caused to the
leased premises by reason of such removal. We quote the dispositive portion of respondent Court’s Decision:
“WHEREFORE, the order of respondent Judge dated September 27,
1976 (Annex N) is hereby upheld, subject to the qualification that before the
private respondent shall be given possession of the remaining items, to wit,
the freezers, air-conditioners, water tank and water pump, he shall be required
to put up a performance bond or some other under taking in an amount to be
ascertained by the respondent Judge, corresponding to the cost of repairing the
damage caused to the leased premises by reason of the installation and removal
of said items. The writ of preliminary
injunction in this case shall be deemed lifted only after such undertaking or
performance bond shall have been filed and approved by respondent Judge. There shall be no costs.”
Petitioner moved for reconsideration but the Appellate Court
denied the same. Hence, this Petition
with the following errors assigned:
“I
“Respondent Court of Appeals erred when it granted private
respondent the right to withdraw improvements from the leased premises
introduced by private respondent in bad faith and without the written consent
of the lessor (petitioner) having been first obtained despite numerous legal
precedence enunciated by this Honorable Supreme Court in several cases
sustaining the view that improvements introduced by a lessee within the leased
premises contrary to an agreement with the lessor that prior consent must first
be obtained before such introduction cannot be removed by lessee much less is
the costs thereof reimbursed.
II
Moreover, even assuming that the private respondent could remove
the improvements even though he introduced the same without the prior written
consent of the petitioner, still the Honorable respondent Court of Appeals
erred in authorizing the removal of the said improvements because the same was
granted despite a clear showing that the removal of the improvements would
result in injury to the premises.
III
While the Honorable Court of Appeals concedes private respondent’s
obligation to restore the premises to its original state and this is a
confirmation of the fact that injury to the premises would be sustained if the
removal is effected, the Honorable Court of Appeals erred when it merely
required the undertaking to be limited to the restoration cost occasioned by
the removal of the improvements selected by private respondent to the
exclusion of all other unauthorized improvements introduced within the leased
premises, the removal and the restoration cost which are substantial.”
Simply put, the issues
are: (1) whether the lessee who
introduced unauthorized improvements is entitled to remove them; (2) whether
the lessee could remove the improvements if injury or damage would be
sustained by the leased premises; and (3) whether the lessee’s undertaking
could be limited to the cost of repairing the damage caused to the leased
premises by reason of the installation and removal of the items sought to be
withdrawn. These issues were not
litigated before the Trial Court nor were they touched upon in the questioned
Order of September 27, 1976; the Trial Court, in said Order, merely held that
the items sought to be taken out are
not permanent in nature, and hence, may be removed.
Nonetheless, in the
interest of settling this controversy, we affirm the ruling of
respondent Appellate Court upholding, with qualification, the assailed Order of
September 27, 1976. It correctly
applied paragraph 5 of the Addendum to the Contract of Lease,[3] reading:
“5. Lessee is hereby given the right to remove all
the improvements that he may introduce in the leased premises provided the
Lessee shall restore it in the original condition, wear and tear excluded, and
provided further that should the Lessee shall fail to remove the improvements
which he may introduce thereon within a reasonable time, Lessor shall be given
the right to retain the same on the expiration of the Lease, without prejudice
to Lessor requiring Lessee to remove the same.”
As observed by the
Appellate Court, private respondent is given the right to remove “all
improvements that he may introduce in the leased premises” without
qualifying whether the improvements contemplated are permanent or not.
Petitioner contends,
however, that the above proviso should be read in conjunction with paragraph 9
of the Lease Contract requiring prior written consent of the lessor before the
lessee may introduce improvements. Said
paragraph 9 stipulates:
“NINTH – LESSEE shall not make any alterations,
improvements or additions on the leased premises without the prior written
consent of OWNER. All such alterations,
improvements or additions made with the OWNER’s consent shall upon termination
of the lease, belong to the OWNER who shall acquire all the rights thereto
without reimbursing LESSEE therefor, unless the OWNER elects to compel LESSEE
to remove them forthwith, in which event LESSEE shall undertake such removal at
his own expense, restoring the premises in the same condition in which he
received them from OWNER.”
By the very tenor of the
foregoing provision, permanent improvements are being referred to. There would be no point to demand written
consent by the lessor prior to the installation of removable improvements by
the lessee. Of note, as found during
the ocular inspection by the Trial Court, the improvements introduced by
private respondent did not partake of the nature of permanent improvements and
could be easily removed from the building, hence, the Order authorizing their
removal. Principally governing the controversy,
therefore, is Paragraph 5, which authorizes removal of all improvements
provided that the leased premises were restored to their original
condition. The Appellate Court has
provided petitioner with the necessary safeguard by requiring the posting of a
performance bond or undertaking to that effect prior to removal. The interests of the lessor, therefore, are
sufficiently protected. Private
respondent-lessee, for his part, has always been willing to undertake the
necessary repairs to restore the premises to their original condition. Necessarily and justly, too, as found by
respondent Appellate Court, those repairs should be limited to the cost of
repairing the damaged caused by reason of removal, and to restore the premises
to its original condition. To hold
otherwise, as petitioner contends, would be to expand unduly the concept of
lease.
It should also be observed that, as stressed by private respondent, the premises, originally for an office
and display room, were leased specifically for a restaurant
business and for a kitchen. The
facilities introduced and sought to be removed, therefore, were indispensable
to keep that business going. Petitioner-lessor should have known that those improvements had, of
necessity, to be introduced to make them suitable to the use for which the lease
was intended. But independently of the
foregoing, and more importantly,
is the finding of fact of the
Appellate Court, which is binding on us, that the controverted improvements
were not permanent. Under the contract of
the parties, therefore, which is the law between them, those improvements may be removed.
WHEREFORE, finding
the judgment under review in accordance with law and the evidence, the
same is hereby affirmed.
Costs against petitioner.
SO ORDERED.
Teehankee, (Chairman), Plana, Relova, and Gutierrez, Jr., JJ., concur.
[1]
pp. 15-16, CA Rollo.
[2]
pp. 22-28, ibid.
[3]
Annex “I”, Answer of
Respondent, Court of Appeals, p. 75, CA Rollo.