G.R. NO. 142672 - BANCO FILIPINO SAVINGS AND MORTGAGE BANK, VS. TALA REALTY SERVICES CORPORATION. D E C I S I O N - Supreme Court E-Library

Ruling

Accordingly, the Central Bank and the Monetary Board were ordered to reorganize Banco Filipino and allow it to resume business. More than 11 years after the execution of the contract of lease, Tala's director, Elizabeth H. Palma, sent Banco Filipino a letter [11] dated June 22, 1993 informing that the lease contract had expired as of August 1992, and that starting September 1992, the contract had been extended on a monthly basis under different terms and conditions including the monthly lease rental. Tala noted, however, that as Banco Filipino had failed to take any definite action towards the renewal of the contract, it (Tala) was free to lease, dispose, sell and/or alienate the property. On April 14, 1994, Tala notified Banco Filipino that by the end of the month, the lease contract would no longer be renewed, hence, it demanded that it vacate the property and pay unpaid rentals amounting to P1,851,180. [12] Banco Filipino did not heed Tala's demands, prompting the latter to file on November 23, 1994 a complaint [13] for ejectment before the Municipal Trial Court (MTC) of San Fernando, La Union. The MTC dismissed the petition after it found that Tala was not the owner of the property and at best was a mere trustee, hence, not entitled to possession. [14] The MTC noted that the property continued to be declared for tax purposes under the name of Banco Filipino which in fact paid the taxes due thereon. [15] And the MTC upheld the validity of the 20-year term lease contract. The MTC further held that on December 11, 1981, Banco Filipino paid the amount of P612,845 as advance rentals for the 11th to the 20th years or from 1992 to 2001. [16] On Tala's claim that the said amount had been applied to Banco Filipino's unpaid rentals from February 1985 to November 1989, the MTC discredited it because: 1) such application was not authorized in the contract of [l]ease (Exhibit 5), and amounted to a unilateral amendment of said contract by the plaintiff. The contract of lease provides in no terms that the advance rentals were to be applied to the rentals due from the 11th through the 20th years of the lease; 2) the application of the advance rentals was not agreed or consented by the defendant; and 3) considering that the closure and receivership of Banco Filipino was declared null and void by the Supreme Court, defendant is not answerable for the acts and/or omissions of the Central Bank and/or its agents during the period of Banco Filipino's closure. [17] On appeal, Branch 27 of the Regional Trial Court of San Fernando, La Union, affirmed the decision of the MTC with the modification that Tala should pay Banco Filipino attorney's fees in the amount of P50,000. [18] Its motion for reconsideration having been denied, [19] Tala elevated the case to the appellate court which affirmed the RTC decision. [20] In its motion and supplemental motion for reconsideration, Tala asserted that the P597,500 that Banco Filipino paid corresponding to the rental for the 11t