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Spouses Manzanilla and Velasco

The Court of Appeals erred in its decision regarding a dispute over unpaid rent between property owners Alejandro Manzanilla and Remedios Velasco and their tenant, Waterfields Industries Corporation. The Municipal Trial Court and Regional Trial Court both originally ruled in favor of the property owners, finding that Waterfields had failed to pay rent on time as stipulated in the lease agreement. However, the Court of Appeals reversed this decision. The Supreme Court ruled that the Court of Appeals should have only determined whether Waterfields failed to pay rent for the specified months as alleged by the property owners, as this establishes the cause of action for unlawful detainer. By raising issues regarding termination of the contract and compensation that were not relevant to determining whether

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242 views2 pages

Spouses Manzanilla and Velasco

The Court of Appeals erred in its decision regarding a dispute over unpaid rent between property owners Alejandro Manzanilla and Remedios Velasco and their tenant, Waterfields Industries Corporation. The Municipal Trial Court and Regional Trial Court both originally ruled in favor of the property owners, finding that Waterfields had failed to pay rent on time as stipulated in the lease agreement. However, the Court of Appeals reversed this decision. The Supreme Court ruled that the Court of Appeals should have only determined whether Waterfields failed to pay rent for the specified months as alleged by the property owners, as this establishes the cause of action for unlawful detainer. By raising issues regarding termination of the contract and compensation that were not relevant to determining whether

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bananayellowsharpie
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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SPOUSES ALEJANDRO MANZANILLA AND REMEDIOS VELASCO, Petitioners, v.

WATERFIELDS
INDUSTRIES CORPORATION, REPRESENTED BY ITS PRESIDENT, ALIZA MA, Respondent.
G.R. No. 177484, July 18, 2014

Facts:
Manzanilla leased a portion of their lot to Waterfields. However, Waterfields had committed
violations of the lease agreement by not paying the rentals on time.

Waterfields did not deny but alleged that it developed the land. Waterfields claimed that it did
not fail or refuse to pay the monthly rentals but was just utilizing the rental deposit in the amount
of ₱216,000.00 (equivalent to one year rentals) as rental payment in accordance with Section 4
of the original Contract of Lease.

MTC & RTC ruled in favor of Manzanilla.

CA reversed the decision: since the spouses Manzanilla did not allege that there were unpaid
utilities or incidental expenses for the account of Waterfields as of the termination of the
contract, the whole amount of ₱216,000.00 should have been returned by the former to the
latter when the contract was terminated. Not having done so, the spouses Manzanilla therefore,
became debtors of Waterfields insofar as the said amount is concerned. And since Waterfields is
also a debtor of the spouses Manzanilla with respect to the unpaid rentals, compensation should
take place. Consequently, [the spouses Manzanilla] had no cause of action against [Waterfields]
for alleged violation of the Contract, particularly non-payment of rentals.

Issue:
WHETHER OR NOT CA erred in its decision

Ruling:
Yes.
Here, there is no issue with respect to demand. What is in question is the presence of a cause of
action.

The violation of the lease through non-payment of rent is what constitutes the cause of action.
Hence, once the failure to pay rent is established, a cause of action for unlawful detainer arises.
The CA should have therefore limited itself to the determination of whether Waterfields failed
to pay rents for the months of December 1997 to May 1998 as complained of by the spouses
Manzanilla. Upon coming up with an answer to this, the CA should have stopped there since at
that point, it can already conclude whether there exists a cause of action for unlawful detainer,
which as mentioned is the only contentious issue involved in this case.

Failure to pay the rent must precede termination of the contract due to nonpayment of rent. It
therefore follows that the cause of action for unlawful detainer in this case must necessarily arise
before the termination of the contract and not the other way around as what the CA supposed.

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