JESUS CUENCO, PETITIONER, VS.TALISAY TOURIST SPORTS COMPLEX, INCORPORATED AND MATIAS B. AZNAR III, RESPONDENTS.

Cuenco versus Talisay Tourist Sports Complex

The Case

This is Cuenco versus Talisay Tourist Sports Complex, Incorporated, a dispute between a lessee of a cockpit and the corporation that owned the leased premises. Jesus Cuenco leased the Talisay Tourist Sports Complex to operate a cockpit and posted a deposit of 500,000 pesos to answer for damages to the premises. When the lease expired and a new lessee took over, he demanded the return of his deposit, and when the demand went unheeded he sued for a sum of money, damages, and attorney's fees. The case matters because it is the Court's resolution of the parties' motions for reconsideration of its earlier decision, and it teaches two enduring lessons: the Supreme Court is not a trier of facts, and issues not raised below cannot be raised for the first time on appeal, least of all on a motion for reconsideration.

Procedural History

Cuenco filed a complaint for a sum of money, damages, and attorney's fees before the Regional Trial Court of Cebu City. The trial court ruled in his favor and directed the respondents to return the full amount of the deposit plus interest of three percent per month from August 18, 1998 until full payment. On appeal, the Court of Appeals reversed the trial court. Cuenco then filed a petition for review on certiorari before the Supreme Court. On October 17, 2008, the Court rendered a Decision partly granting the petition, reversing and setting aside the Court of Appeals decision, and reinstating the trial court decision with modifications: that Talisay Tourist Sports Complex, Incorporated alone is liable to return the deposit after deducting the amount of the two months' arrears in rentals, and that the legal interest is six percent on the amount due computed from October 21, 1998, and twelve percent interest thereon upon finality of the decision until full payment. Unsatisfied, both parties moved for reconsideration, and these motions are what the Court resolves in the present decision.

Facts

Jesus Cuenco leased from the respondents the Talisay Tourist Sports Complex for the operation of a cockpit. The lease was for two years, later renewed for four years. In compliance with the lease contract, he gave the respondents a deposit equivalent to six months' rental, amounting to 500,000 pesos, to answer for whatever damages might be caused to the premises during the lease.

Upon the expiration of the lease contract on May 8, 1998, a public bidding was conducted and the contract was awarded to a new lessee. Cuenco then demanded the return of his deposit, but his four demand letters remained unheeded, so he sued.

In the proceedings, the witness Ateniso Coronado testified that Cuenco continued to hold cockfights for two months beyond the expiration of the lease. That declaration was neither questioned nor denied by Cuenco during the trial, on appeal, nor in his memorandum before the Supreme Court. The rental for the last month immediately preceding the expiration of the contract was pegged at 97,916 pesos and 67 centavos, so the two month extension required rent of 195,833 pesos and 34 centavos. As to the repairs, both the trial court and the Court of Appeals found that the new lessee, and not the respondents, underwrote them.

Issues

• Whether or not the motions for reconsideration of both parties, being substantially factual, should be denied for lack of merit.
• Whether or not Cuenco overstayed for two months in the leased premises and is therefore liable for two months' arrears in rentals to be deducted from the deposit.
• Whether or not the respondents are entitled to have the amount they spent for repairs credited in their favor and deducted from the deposit.

Applicable Provisions

Article 1670 of the Civil Code provides:

If at the end of the contract the lessee should continue enjoying the thing leased for fifteen days with the tacit consent of the lessor, and unless a notice to the contrary by the latter has previously been given, it is understood that there has been a tacit renewal of the lease for the entire time fixed in the contract.

The Court of Appeals invoked this provision, in relation to Article 1687, to hold that Cuenco's continued holding of cockfights beyond the expiration of the lease produced an assessment of rentals for the two extended months.

Article 1687 of the Civil Code provides:

If the period for the lease has not been fixed or is indeterminate, the courts may fix a longer term for the lease after the lessee has occupied the premises for over one year.

This provision was applied together with Article 1670 to justify the assessment of rentals for the two extended months of Cuenco's stay.

Ruling

The Court denied both motions for reconsideration for lack of merit, holding that the motions are substantially factual. It reiterated the rule that the Supreme Court is not a trier of facts, and that in a petition for review on certiorari it is discretionary upon the Court whether it will look into the factual determinations of the lower courts. However, because of the conflicting findings of the trial court and the Court of Appeals, the Court took exception and reviewed the records to resolve whether Cuenco is entitled to the return of the deposit.

On the first issue, the Court held that the testimony of Ateniso Coronado that Cuenco continued to hold cockfights for two months beyond the expiration of the lease was neither questioned nor denied by Cuenco during the trial, on appeal, nor in his memorandum. The Court found binding the finding of the Court of Appeals on the matter, quoting it at length, and held that the assessment of rentals for the two extended months came as a necessary consequence pursuant to Articles 1670 and 1687 of the Civil Code in relation to the contract of lease. The rental for the last month immediately preceding the expiration was pegged at 97,916 pesos and 67 centavos, hence the two month extension required rent of 195,833 pesos and 34 centavos.

On the second issue, the Court held that the amount of repairs the respondents wanted credited had no basis, because the trial court ruled, as affirmed by the Court of Appeals, that the new lessee underwrote the repairs and not the respondents.

The Court also laid down a procedural rule, quoting itself:

Well-settled is the rule that issues or grounds not raised below cannot be resolved on review by the Supreme Court, for to allow the parties to raise new issues is antithetical to the sporting idea of fair play, justice and due process.

It added that issues not raised during the trial cannot be raised for the first time on appeal and more especially on motion for reconsideration, and that litigation must end at some point; once the case is finally adjudged, the parties must learn to accept victory or defeat. It noted that on June 27, 2007, the Court required the parties to submit their memoranda and apprised them that no new issues may be raised, and that issues raised in the pleadings but not included in the memoranda shall be deemed waived or abandoned, per Supreme Court Administrative Matter No. 99-2-04-SC.

Doctrine

A Bar candidate must retain these rules. First, the Supreme Court is not a trier of facts; in a petition for review on certiorari, it is discretionary upon the Court whether to look into the factual determinations of the lower courts, although it may take exception where the findings of the trial court and the Court of Appeals conflict. Second, issues or grounds not raised below cannot be resolved on review by the Supreme Court, for to allow the parties to raise new issues is antithetical to the sporting idea of fair play, justice and due process; issues not raised during the trial cannot be raised for the first time on appeal and more especially on motion for reconsideration. Third, under Article 1670 of the Civil Code, if at the end of the contract the lessee continues enjoying the thing leased for fifteen days with the tacit consent of the lessor, and unless a notice to the contrary has previously been given, there is a tacit renewal of the lease for the entire time fixed in the contract; and under Article 1687, if the period of the lease has not been fixed or is indeterminate, the courts may fix a longer term after the lessee has occupied the premises for over one year. These provisions, in relation to the contract of lease, justified the assessment of rentals for the two extended months of Cuenco's stay.

Disposition

The Court denied both the partial motion for reconsideration of Cuenco and the motion for reconsideration of the respondents, leaving standing its earlier Decision holding Talisay Tourist Sports Complex, Incorporated solely liable to return the deposit after deducting the two months' arrears in rentals, with legal interest of six percent from October 21, 1998 and twelve percent upon finality until full payment.

Remember This

The single line worth memorizing is that issues or grounds not raised below cannot be resolved on review by the Supreme Court, for to allow the parties to raise new issues is antithetical to the sporting idea of fair play, justice and due process. Examiners like to use this case on the finality of judgments and the rule against raising new issues on appeal or on motion for reconsideration, and on the Supreme Court's discretionary review of facts where the findings of the trial court and the Court of Appeals conflict.