G.R. No. 205348. September 19, 2018
THIRD DIVISION [ G.R. No. 205348, September 19, 2018 ] PHILIPPINE GLOBAL COMMUNICATIONS, INC., PETITIONER V. VIGIL INVESTMENTS, INC. AND JUDITH DUAVIT-VAZQUEZ, RESPONDENTS.An issue regarding a party's compliance with contractual provisions is a question of fact, which cannot be entertained by this Court in a Rule 45 Petition.
This is a Petition for Review on Certiorari[1] under Rule 45 of the 1997 Rules of Civil Procedure, praying that the September 21, 2012 Decision[2] and January 10, 2013 Resolution[3] of the Court of Appeals in CA-G.R. CV No. 94333 be reversed and set aside.[4] The Court of Appeals affirmed the January 7, 2008 Decision[5] of the Regional Trial Court, holding Philippine Global Communications, Inc. (PhilCom) liable to Vigil Investments, Inc. (Vigil) for the payment of rent, while Vigil was liable to PhilCom for the return of security deposit.[6]
On September 30, 2002, PhilCom and Vigil executed a Contract of Lease.[7] PhilCom was represented by its President and Chief Executive Officer Vicente J. Jayme, Jr. and Chief Finance Officer Bernardo D. Lim (Lim) while Vigil was represented by its President and Chief Executive Officer Judith Duavit-Vazquez (Vazquez).[8] Under the Contract of Lease, PhilCom leased from Vigil a 5 5-square-meter commercial space on the 37th floor of The Peak Tower (The Peak) in Salcedo Village, Makati City, and a portion of this building's communications tower.[9]
The Contract of Lease provided:On July 16, 2003, Vazquez visited Lim at the PhilCom office to confirm the information she had received that PhilCom wanted to relocate its office in another building. Lim validated their intention not to renew the lease contract since they found another lessor that offered a lower monthly rent. She stressed that their Contract of Lease would expire on September 30, 2003 and that PhilCom's relocation may not be completed by that time.[11] She "offered that the security deposit be used as a buttress against such eventualities."[12] On the same day, PhilCom sent Vigil a letter[13] to formalize its decision not to renew the lease contract after its expiration.On July 28, 2003, Lim wrote Vigil a letter inquiring on its reason for barring PhilCom employees from entering the leased premises.[14] Vazquez replied[15] to the letter and narrated what she and Lim had discussed on July 16, 2003. She reiterated Vigil's offer to PhilCom:
LEASE PERIOD: ONE (1) YEAR, from 01 October 2002 till 30 September 2003.
LEASE RENTAL RATES: Quarterly lease rental rate (after imputing 10% [Expanded Value-Added Tax] and 5% [Expanded Withholding Tax]) of P2,238,705.00.
ADVANCE RENTAL: P2,238,705.00, inclusive of 10% [Expanded Value-Added Tax] and net of 5% [Expanded Withholding Tax], due immediately upon execution hereof.
SECURITY DEPOSIT: P2,132,100.00, due immediately upon execution hereof.
STANDARD TERMS & CONDITIONS: Appended to this cover sheet and made integral parts of this Contract are the Standard Terms and Conditions applicable to all Contracts of Lease entered into by the Lessor. The Lessee specifically affirms and confirms that it has read and understood the same and agrees to and accepts all of the said terms and conditions without exception.[10]
Vigil offers that Philcom may apply its security deposit to any extensions to its stay in the tower/communication rooms of Vigil BEYOND September 30, 2003. Moreover, subject to our mutual agreement of price and terms, should Philcom need a new contract for interconnection purposes, Vigil is open to applying the remaining security deposit balance, should there be any available.[16]On July 29, 2003, Lim wrote another letter[17] to Vigil. He noted that Vigil did not answer his query on why PhilCom's employees were not allowed entry to the leased premises.[18] He also remarked that Vigil appeared to be "holding [PhilCom's] equipment and operations hostage so as to foil [its] plans to be out of the Leased Premises by the end of September."[19] To prevent further damage allegedly caused to PhilCom, Lim enclosed with the letter a check corresponding to the payment of the rent from July 1, 2003 to September 30, 2003. He demanded that upon Vigil's receipt of PhilCom's payment, its employees should be allowed to enter the premises again. He also demanded the immediate release of their security deposit within 60 days after the expiration of the lease contract.[20]
In a letter dated September 23, 2003, PhilCom's Engineering and Implementation Manager Adel B. Oabel (Oabel) wrote The Peak Administration's Property Manager Engr. Jaime Bernardo (Engr. Bernardo), notifying him that Liberty Telecommunications (Libtel) installed a four (4)-foot antenna system on the antenna tower space leased by PhilCom. He narrated that PhilCom used the antenna system of Libtel for their "leased line requirement."[21] He also inquired if the administration would allow Libtel's antenna system in the tower space. He stated that PhilCom would wait for the administration's approval of antenna retention until September 25, 2003. Otherwise, it would ask Libtel to remove its antenna.[22]
Oabel wrote Engr. Bernardo another letter[23] dated September 25, 2003. This time, Oabel notified him that Bayan Telecommunications Corporation (BayanTel) also installed a six (6)-foot antenna system on the antenna tower space leased by PhilCom. He added that BayanTel had some communications equipment in PhilCom's leased premises on the 37th floor of the building. He inquired if the administration would allow BayanTel's antenna system and equipment to be retained in the building. He also stated that PhilCom would wait for the administration's approval of BayanTel's property retention until September 26, 2003. Otherwise, it would ask BayanTel to remove its properties.[24]
On February 6, 2004, PhilCom filed a Complaint[25] for sum of money against Vigil and Vazquez. It alleged that Vigil refused, to return its security deposit despite repeated demands. It averred that it completely removed its equipment on September 30, 2003. However, it purportedly sent a letter to Vigil, informing it that equipment from BayanTel and Libtel remained in the building. PhilCom offered to remove the equipment of the third parties unless Vigil decided to retain them considering that there were ongoing talks among BayanTel, Libtel, and Vigil.[26]
According to PhilCom, it received a letter dated October 1, 2003 from Vigil, stating that it would not accept the turnover of the leased space and insisting that PhilCom continue with the lease until December 31, 2004. PhilCom sent a letter on December 9, 2003 to Vigil and demanded the return of its security deposit since the 60-day period under the Contract of Lease had passed.[27]
PhilCom alleged that on December 15, 2003, Vigil insisted that PhilCom continue to occupy the commercial space even if the equipment there was owned by BayanTel and Libtel. Vigil likewise asserted that PhilCom had accepted its offer to continue with the lease until December 31, 2004.[28]
Thus, PhilCom was constrained to file a Complaint. It prayed for the award of P2,132,100.00 plus interest as actual damages, P2,000,000.00 as exemplary damages, and P1,000,000.00 as attorney's fees and costs of suit.[29]
In its Answer, Vigil countered that it retained the security deposit since it believed in good faith that PhilCom had accepted and approved the offer of lease extension, in view of the fact that PhilCom remained in the premises despite the expiry of the term of the Contract of Lease. Nonetheless, assuming that the offer was not accepted, Vigil still had the right to retain the security deposit since PhilCom "ha[d] not actually vacated the leased premises."[30]
Vigil added that it did not force PhilCom or any of its employees to agree to the lease extension. The lease extension proposal was merely a simple offer and was made as Vigil's gesture of goodwill to PhilCom's owners. If indeed PhilCom rejected Vigil's offer, then it had no right to remain and use the commercial space, and should have turned over the premises at once. Vigil contended that it had the right to recover from PhilCom the use and possession of the premises.[31]
Vigil likewise stated that it found out that PhilCom had stealthily installed fiber optic cables and other paraphernalia in the building without its knowledge or consent, and without paying the necessary "riser fees"[32] of P5,000.00 per month. Thus, Vigil asserted that it was entitled to recover from PhilCom the amount of P1,230,000.00 as riser fees from 1994 to March 31, 2004. It added that PhilCom should pay monthly riser fees after March 31, 2004 until the cables were removed from the building.[33]
Aside from the riser fees, Vigil sought the recovery of rental payments from PhilCom amounting to P4,477,410.00, which included the 10% Expanded Value-Added Tax and 5% Expanded Withholding Tax, for the period October 1, 2003 to March 31, 2004. Since PhilCom remained in the leased premises even after March 31, 2004, it should pay Vigil P2,238,705.00 for every quarter or a fraction of it thereafter. Vigil also claimed that PhilCom did not pay rent on time for the period July 1, 2003 to September 30, 2003. The rental payments were due on July 1, 2003 but were paid only on July 29, 2003, which earned a late payment interest of 3% per month or a fraction of it, corresponding to the amount of P67,161.15. Vigil likewise prayed that penalty, 3% surcharge, exemplary damages, and attorney's fees be awarded in its favor.[34]
On the other hand, Vazquez stated in her Answer that:
[I]t is clear from Section 5 of the Contract of Lease that the Security Deposit shall guarantee and answer for any and all obligations of plaintiff Philcom to defendant Vigil, including but not limited to the following; viz, damages caused to the leased premises by lessee, its officers, employees, agents, guests and visitors, and third persons who have gained access to the premises with lessee's consent or at its tolerance; bills for utility services consumed by plaintiff; expenses to restore the premises to its original state; amounts charged by defendant Vigil for Philcom's occupation of any area outside the leased premises. The phrase "for any and all obligations" logically includes unpaid rentals or compensation for the lessee's use and occupation of the premises beyond the period of the lease.[35]Vazquez added that PhilCom failed to comply with the conditions required for the return of the security deposit—"that lessee shall have already actually vacated the leased premises and lessee shall have submitted to lessor proof of full payment for the utility services used or consumed by lessee within the leased premises right up to the date lessee actually vacated the leased premises."[36] Moreover, the security deposit would be returned only after applying the necessary deductions. Vazquez reiterated that as of the filing of her Answer, PhilCom continued to use and occupy the leased premises.[37]
During trial, PhilCom presented documentary evidence and the following witnesses: (1) Lim; (2) Comptroller Alfredo A. Pedrosa III; (3) Supervisor for Field Operations Willy Ferrer (Ferrer); (4) Supervisor Eric Frigillana; (5) Lineman Joselito Mangalindan; and (6) Atty. Ma. Patricia L. Alvarez. On the other hand, Vigil presented the following witnesses: (1) Vazquez; (2) Premises Supervisor Alberto Astudillo (Astudillo); and (3) Accountant E-lsa Punzalan (Punzalan). Thereafter, PhilCom prayed that Vigil's right to formally offer its evidence be waived since it did not file any Formal Offer of Evidence. The Regional Trial Court approved PhilCom's prayer.[38]
On January 7, 2008, the Regional Trial Court rendered its Decision,[39] dismissing the Complaint.[40] Before going to the issue of liability of the respective corporations, it found that Vazquez, as president of Vigil, was merely acting on behalf of the corporation.[41] There was also no allegation or evidence that showed that she "should be treated as one with [Vigil]."[42] Hence, Vazquez had no liability in the case.[43]
The Regional Trial Court held that Vigil was justified in withholding the security deposit since PhilCom failed to fully comply with and violated the Contract of Lease's Standard Terms and Conditions. Under the contract, PhilCom, as lessee, shall exclusively use the rented space for the operation of its equipment.[44] It was expressly prohibited to allow third parties "to avail of [Philcom's] right of lease or use over the Leased Premises or any portion thereof."[45] However, PhilCom admitted that it allowed BayanTel and Libtel to interconnect with its facilities. Although it notified Vigil that BayanTel's and Libtel's equipment remained in the premises and that it offered to remove it, it should have clarified the matter with Vigil since the presumption was that PhilCom, as the exclusive lessee, owned whatever property may be found in the premises.[46]
The Regional Trial Court likewise found that the letters regarding the existence of the BayanTel's and Libtel's equipment were addressed to the wrong party. Both letters were addressed to The Peak Administration, which was not a party to the Contract of Lease. The Regional Trial Court held that the separate personalities of The Peak Administration and Vigil should be respected absent any justification for the piercing of the corporate veil.[47]
The Regional Trial Court added that one (1) of PhilCom's witnesses stated that "necessary repairs were made in restoring the leased premises," showing that "equipment and machineries remained in the leased premises even after September 30, 2003,"[48]
On PhilCom's claim for the award of damages, the Regional Trial Court held that it failed to prove that Vigil was at fault or breached the Contract of Lease's Standard Terms and Conditions, which could have warranted the award it sought.[49]
Meanwhile, the Regional Trial Court did not award to Vigil the penalty and interest on PhilCom's late rental payments for the period July 1, 2003 to September 30, 2003 since it did not raise any objection or make any reservation when it received those payments. It likewise denied Vigil's claim for the cost it supposedly incurred in the repair and restoration of the leased premises because it failed to present evidence to substantiate its allegations of repair and restoration.[50]
Further, the Regional Trial Court granted the rental fee being claimed by Vigil but it clarified that this should be deducted from the security deposit:
[B]ased on the evidence presented by [PhilCom], the equipment and machineries were left in the leased premises and considering that defendant Vigil did not offer any evidence which would support its claim that [PhiLCom] occupied the leased premise[s] until June 2004, the Court can only conclude that [PhilCom] or the equipment and machineries of the third-parties were left in the leased premise[s] until October 2003....
However, based on the Contract of Lease, the lease period and payment is on a quarterly basis. Thus, for purposes of computing the rental fee, [PhilCom] is only liable to [Vigil] for the payment of the rental fee covering the period of October 2003 until December 2003 with interest from April 6, 2004 or after the time [Vigil] judicially demanded from [PhilCom] the payment of the same. However, considering that there is a security deposit still under the custody of [Vigil], the latter is directed to file a manifestation as to what were the charges, supported by receipts, etc., made against the security deposit and to return the balance thereof to [PhilCom] after the reasonable charges are made.[51]The Regional Trial Court also granted Vigil's prayer for the award of attorney's fees and fixed it at P100,000.00.[52]
The dispositive portion of the Regional Trial Court January 7, 2008 Decision provided:
WHEREFORE, premises considered, the Complaint filed by plaintiff Philippine Global Communications, Inc. against Vigil Investments, Inc. and Judith Duavit-Vasquez (sic) is hereby DISMISSED but defendant Vigil is directed to return the Security Deposit to the plaintiff after the reasonable and necessary charges have been made thereto. As to the Counterclaim, judgment is hereby rendered declaring plaintiff PHILIPPINE GLOBAL COMMUNICATIONS, INC. liable and hereby ordered to pay defendant VIGIL INVESTMENTS, INC. the following amounts:On October 1, 2010, PhilCom filed an appeal[54] before the Court of Appeals and prayed that the Regional Trial Court January 7, 2008 Decision be modified by directing Vigil to return the security deposit without any charge and with interest, deleting the award of Vigil's attorney's fees and cost of suit, and awarding attorney's fees and cost of suit in its own favor.[55]
1. Php2,238,705.00 as rental fee for the period covering October 2003 until December 2003 plus 12% interest per annum from April 6, 2004 until the whole amount is fully paid;
2. Php100,000.00 as attorney's fees; and
3. Cost of suit.
SO ORDERED.[53]
On September 21, 2012, the Court of Appeals promulgated a Decision,[56] denying PhilCDm's appeal and affirming the assailed decision.[57] It also found that PhilCom and other third parties "continuously occupied the leased premises even after the expiration of their lease agreement on September 30, 2003 ."[58] The testimony of Premises Supervisor Astudillo revealed that several pieces of equipment could still be found inside the leased premises despite the termination of the Contract of Lease.[59] He "took pictures of the equipment and offered them in evidence before the trial court."[60]
The Court of Appeals held that under the Contract of Lease,
[T]he leased premises should be occupied by [PhilCom] as lessee, for its own exclusive use and benefit. Thus, as correctly ruled by the trial court, all equipment located in the leased premises, even if they do not actually belong to [PhilCom] are presumed to be owned by it and for its sole use and benefit. Records show that [PhilCom] allowed the firms Bayantel and Libtel to install and store their equipment and facilities in the leased premises. This being a clear violation of the lease contract, appellee Vigil is entitled to some legal recourse. [PhilCom] having allowed other communication entities to utilize the area and its facilities, the security deposit guarantees, as stipulated in the lease agreement, all undertakings and obligations arising therefrom. Such act of [PhilCom] is considered a contractual violation, and, as the trial court correctly decreed, it cannot demand the return of the full amount of the security deposit. It must be stressed that the security deposit is made in order to ensure faithful compliance with the terms of the lease contract.[61] (Citations omitted)On the notice allegedly given by PhilCom to Vigil regarding the equipment of BayanTel and Libtel, the Court of Appeals ruled that as correctly held by the Regional Trial Court, the letters were "not addressed to the proper party."[62]
Lastly, the Court of Appeals noted that PhilCom presented factual issues.[63] It reiterated that it would "not reverse a finding of fact by the trial court unless the latter has overlooked or ignored some fact or circumstance of sufficient weight or significance, which, if considered, would alter the result of the case."[64] Since PhilCom failed to present any reason for the Court of Appeals to reverse the Regional Trial Court's findings of fact, it sustained the latter's conclusion and decision.[65]
The dispositive portion of the Court of Appeals September 21, 2012 Decision provided:
WHEREFORE, in view of all the foregoing, the instant appeal is hereby DENIED. Accordingly, the assailed decision of Regional Trial Court (RTC), Branch 148, Makati City in Civil Case No. 04-137 is hereby AFFIRMED.On October 16, 2012, PhilCom moved for reconsideration,[67] which was denied by the Court of Appeals in its January 10, 2013 Resolution.[68]
SO ORDERED.[66] (Emphasis in the original)
On March 7, 2013, PhilCom filed a Petition for Review[69] against Vigil and Vazquez before this Court, praying that the September 21, 2012
Decision and the January 10, 2013 Resolution of the Court of Appeals be modified.[70] Respondents filed their Comment[71] on September 11, 2013, while petitioner filed its Reply[72] on September 20, 2013.
On October 7, 2013, this Court issued a Resolution,[73] giving due course to the Petition and requiring the parties to submit their respective memoranda. Petitioner filed its Memorandum[74] on December 17, 2013, while respondents filed their Memorandum[75] on January 17, 2014.
Petitioner argues that the Court of Appeals misapprehended the facts. It insists that it vacated the premises on September 30, 2003, the date when the Contract of Lease expired. It also completed restoring the leased premises, such as painting and filling of holes, at about 11:00 p.m. to 11:30 p.m. of the same day.[76] There was even a joint inspection conducted on October 1, 2003, wherein The Peak's representatives "found the restoration works satisfactory."[77] Respondent Vigil's accountant, Punzalan, even testified that the key was surrendered to respondent Vigil.[78]
Petitioner asserts that the pictures allegedly taken by Astudillo "have no evidentiary value,"[79] since respondent Vigil did not file its Formal Offer of Evidence. It maintains that it should be awarded the security deposit without any deduction because it was able to vacate the rented space on September 30, 2003.[80]
On the presence of third-party equipment in the leased premises, petitioner avers that the equipment remained "with the knowledge and tolerance of Vigil and Vazquez, through Engr. Jaime Bernardo, concurrent building administrator of The Peak and Operations Manager of Vigil."[81] Engr. Bernardo permitted the equipment to remain in the leased premises. This was allegedly acknowledged by respondent Vazquez in her letter dated September 30, 2003.[82] Since petitioner relied on respondents' representation that Engr. Bernardo was authorized to allow the equipment to remain, respondents "are estopped from claiming otherwise."[83] Petitioner stresses that the third-party equipment stayed in the leased premises due to the continuing negotiations between the telecommunications companies and respondent Vigil.[84]
Petitioner adds that respondent Vazquez should be held solidarity liable with respondent Vigil since they used the corporate fiction "to defraud Phil[C]om and evade voluntarily contracted obligations, specifically, the payment of Phil[C]om's security deposit."[85]
Finally, petitioner contends that respondent Vigil's unjust refusal to give back the security deposit compelled it to secure the services of a counsel. It incurred attorney's fees and litigation expenses of P94,070.00, which should be awarded in its favor.[86]
On the other hand, respondents counter that petitioner "only made a pretense of vacating but did not actually vacate the leased premises.[87] Petitioner's witnesses, Lim and Ferrer, even admitted that the equipment of BayanTel and Libtel remained in the leased premises and that it was intentionally left behind since the instruction given to Ferrer was to remove petitioner's equipment only.[88]
Respondents asseverate that petitioner allowed other telecommunications companies to utilize the leased premises, which was expressly prohibited in the Contract of Lease. Considering that the security deposit was created to guarantee that the Contract of Lease's terms would be complied with, petitioner, then, cannot insist that the full amount of security deposit be returned to it.[89]
Lastly, respondents claim that the award of attorney's fees and costs of suit in their favor was correctly granted. They emphasize that petitioner violated the Contract of Lease and failed to vacate the leased premises despite the expiry of the lease.[90]
This Court resolves the following issues:
First, whether or not petitioner Philippine Global Communications, Inc. is entitled to the full amount of security deposit;
Second, whether or not respondent Judith Duavit-Vazquez is solidarily liable to pay petitioner Philippine Global Communications, Inc.'s security deposit;
Third, whether or not petitioner Philippine Global Communications, Inc. is liable to pay respondents Vigil Investments, Inc. and Judith Duavit-Vazquez attorney's fees and cost of suit; and
Finally,.whether or not petitioner Philippine Global Communications, Inc. is entitled to attorney's fees.
Before this Court discusses the substantive issues, it will first pass on the procedural issue.
At the outset, this Court notes that petitioner mainly raises issues which are factual in nature. Petitioner basically wants this Court to rule on whether or not it vacated the leased premises on September 30, 2003. This is a factual issue and involves the review of documentary and testimonial evidence of the parties. This is not proper in a Rule 45 Petition.
Time and again, this Court has reminded litigants that only questions of law may be'raised in a Rule 45 Petition. In Villamor v. Balmores:[91]
Under Rule 45, only questions of law may be raised. There is a question of law "when there is doubt or controversy as to what the law is on a certain [set] of facts." The test is "whether the appellate court can determine the issue raised without reviewing or evaluating the evidence." Meanwhile, there is a question of fact when there is "doubt ... as to the truth or falsehood of facts." The question must involve the examination of probative value of the evidence presented.[92] (Citations omitted)DST Movers Corporation v. People's General Insurance Corporation[93] further explained:
A Rule 45 petition pertains to questions of law and not to factual issues. Rule 45, Section 1 of the 1997 Rules of Civil Procedure is unequivocal:For raising questions of fact, the petition should be dismissed outright. Although this rule admits of exceptions,[95] petitioner fails to show that this case falls under any of them. Nonetheless, even if this Court rules on the merits of the case, the outcome will be the same, with modifications on the interest imposed.
Section 1. Filing of Petition with Supreme Court. — A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.This court's Decision in Cheesman v. Intermediate Appellate Court distinguished questions of law from questions of fact:
As distinguished from a question of law — which exists "when the doubt or difference arises as to what the law is on a certain state of facts" — "there is a question of fact when the doubt or difference arises as to the truth or the falsehood of alleged facts;" or when the "query necessarily invites calibration of the whole evidence considering mainly the credibility of witnesses, existence and relevancy of specific surrounding circumstances, their relation to each other and to the whole and the probabilities of the situation."Seeking recourse from this court through a petition for review on certiorari under Rule 45 bears significantly on the manner by which this court shall treat findings of fact and evidentiary matters. As a general rule, it becomes improper for this court to consider factual issues: the findings of fact of the trial court, as affirmed on appeal by the Court of Appeals, are conclusive on this court. "The reason behind the rale is that [this] Court is not a trier of facts and it is not its duty to review, evaluate, and weigh the probative value of the evidence adduced before the lower courts."
A determination of whether a matter has been established by a preponderance of evidence is, by definition, a question of fact. It entails an appreciation of the relative weight of the competing parties' evidence.[94] (Citations omitted)
The pertinent paragraphs on the security deposit provision in the Standard Terms and Conditions of the Contract of Lease stated:
Section 5. SECURITY DEPOSIT
The security deposit shall guarantee and answer for any and all unpaid obligations of the LESSEE to the LESSOR, including but not limited to the following:Petitioner admits that there were still pieces of equipment in the leased premises after September 30, 2003, albeit it denies being their owner.
(i) (ii) (iii) (iv)
The said security deposit, net of all applicable deductions, shall be returned not earlier than sixty (60) days after the termination of the Lease Period and after submission by LESSEE of proof of full payment of utilities up to the date the Leased Premises are actually vacated. Lacking such proof, the LESSOR can withhold refund of said deposit in full or in part to the extent deemed necessary by the LESSOR.[96] (Emphasis supplied)
Whether or not petitioner owns the pieces of equipment is irrelevant. Section 9 of the Standard Terms and Conditions expressly prohibited the lessee to allow third parties to use the leased premises:
Section 9. LIMITATIONS ON USE OF LEASED PREMISESThis Court finds that as far as respondent-lessor is concerned, all equipment which may be found in the leased premises are deemed owned by petitioner. The contract is clear and provides no room for any other interpretation. Whether there were negotiations between the
Subject to the provisions of Sec. 7 above, the LESSEE further agrees and undertakes that:
(a) (b)
telecommunications companies which actually owned the pieces of equipment and respondent Vigil is immaterial. It is the sole responsibility of petitioner-lessee to ensure that no equipment remained in the leased premises after the expiration of the contract.
As a consequence, petitioner continued using the leased premises by placing equipment there beyond the lease period. It did not actually vacate the premises. There is therefore no basis for the immediate return of security deposit.
The concept of "piercing the corporate veil" was thoroughly discussed in Lanuza, Jr., et al. v. BF Corporation, et al.:[98]
Piercing the corporate veil is warranted when "[the separate personality of a corporation] is used as a means to perpetrate fraud or an illegal act, or as a vehicle for the evasion of an existing obligation, the circumvention of statutes, or to confuse legitimate issues." It is also warranted in alter ego cases "where a corporation is merely a farce since it is a mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation."In this case, petitioner failed to show any circumstance for this Court to disregard the separate personalities of respondents Vazquez and Vigil. Aside from the bare allegation that respondents defrauded petitioner, the latter did not present any evidence showing that the "separate personality of the corporation is being used to perpetrate fraud, illegalities, and injustices."[100] As correctly found by the Regional Trial Court and the Court of Appeals, respondent Vazquez is not liable in this case.
When corporate veil is pierced, the corporation and persons who are normally treated as distinct from the corporation are treated as one person, such that when the corporation is adjudged liable, these persons, too, become liable as if they were the corporation.
Among the persons who may be treated as the corporation itself under certain circumstances are its directors and officers. Section 31 of the Corporation Code provides the instances when directors, trustees, or officers may become liable for corporate acts:
Sec. 31. Liability of directors, trustees or officers. — Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons.Based on the above provision, a director, trustee, or officer of a corporation may be made solidarily liable with it for all damages suffered by the corporation, its stockholders or members, and other persons in any of the following cases:
When a director, trustee or officer attempts to acquire or acquires, in violation of his duty, any interest adverse to the corporation in respect of any matter which has been reposed in him in confidence, as to which equity imposes a disability upon him to deal in his own behalf, he shall be liable as a trustee for the corporation and must account for the profits which otherwise would have accrued to the corporation.
a) The director or trustee willfully and knowingly voted for or assented to a patently unlawful corporate act;Solidary liability with the corporation will also attach in the following- instances:
b) The director or trustee was guilty of gross negligence or bad faith in directing corporate affairs; and
c) The director or trustee acquired personal or pecuniary interest in conflict with his or her duties as director or trustee.
a) "When a director or officer has consented to the issuance of watered stocks or who, having knowledge thereof, did not forthwith file with the corporate secretary his written objection thereto";When there are allegations of bad faith or malice against corporate directors or representatives, it becomes the duty of courts or tribunals to determine if these persons and the corporation should be treated as one. Without a trial, courts and tribunals have no basis for determining whether the veil of corporate fiction should be pierced. Courts or tribunals do not have such prior knowledge. Thus, the courts or tribunals must first determine whether circumstances exist to warrant the courts or tribunals to disregard the distinction between the corporation and the persons representing it. The determination of these circumstances must be made by one tribunal or court in a proceeding participated in by all parties involved, including current representatives of the corporation, and those persons whose personalities are impliedly the same as the corporation. This is because when the court or tribunal finds that circumstances exist warranting the piercing of the corporate veil, the corporate representatives are treated as the corporation itself and should be held liable for corporate acts. The corporation's distinct personality is disregarded, and the corporation is seen as a mere aggregation of persons undertaking a business under the collective name of the corporation.
b) "When a director, trustee or officer has contractually agreed or stipulated to hold himself personally and solidarily liable with the corporation"; and
c) "When a director, trustee or officer is made, by specific provision of law, personally liable for his corporate action."
Hence, when the directors, as in this case, are impleaded in a case against a corporation, alleging malice or bad faith on their part in directing the affairs of the corporation, complainants are effectively alleging that the directors and the corporation are not acting as separate entities. They are alleging that the acts or omissions by the corporation that violated their rights are also the directors' acts or omissions. They are alleging that contracts executed by the corporation are contracts executed by the directors. Complainants effectively pray that the corporate veil be pierced because the cause of action between the corporation and the directors is the same.[99] (Citations omitted)
This Court finds the award of attorney's fees and cost of suit to respondents proper but on a different ground. The grant of attorney's fees and litigation expenses is governed by Article 2208 of the Civil Code, which states:
Article 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except:However, the Regional Trial Court justified the award in this case by stating:
(1) When exemplary damages are awarded;In all cases, the attorney's fees and expenses of litigation must be reasonable.
(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;
(8) In actions for indemnity under workmen's compensation and employer's liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.
Taking into account the guidelines stated under the Code of Professional Responsibility, Canon 20, Rule 20.1 and for humanitarian reason and purpose, the Court finds justification in the prayer of defendant Vigil for the award of attorney's fees but hereby fixed at One Hundred Thousand Pesos (Php100,000.00).[101]The Regional Trial Court is mistaken. Canon 20, Rule 20.1 of the Code of Professional Responsibility provides:
Canon 20 — A lawyer shall charge only fair and reasonable fees:The guidelines under Canon 20 deal with the reasonableness of the fee that a lawyer may impose in consideration of the legal services he or she will render to his or her client. It does not refer to the justification in the grant of attorney's fees and litigation expenses, which is guided by Article 2208 of the Civil Code.
Rule 20.01 A lawyer shall be guided by the following factors in determining his fees:
a) The time spent and the extent of the services rendered or required;
b) The novelty and difficulty of the questions involved;
c) The importance of the subject matter;
d) The skill demanded;
e). The probability of losing other employment as a result of acceptance of the proffered case;
f) The customary charges for similar services and the schedule of fees of the IBP chapter to which he belongs;
g) The amount involved in the controversy and the benefits resulting to the client from the service;
h) The contingency or certainty of compensation;
i) The character of the employment, whether occasional or established; and
j) The professional standing of the lawyer.
Nevertheless, this Court grants the award of attorney's fees and
litigation expenses to respondents since they were compelled to litigate to
protect their interests despite not being at fault or breaching the lease contract.
Lastly, the Court of Appeals and the Regional Trial Court did not err in denying petitioner's prayer for the award of attorney's fees. Contrary to petitioner's claim, respondents were justified in withholding the security deposit. Moreover, petitioner was the one that violated the terms of the Contract of Lease. It would be unjust if this Court rewards petitioner despite its blatant disregard of its obligation under the Contract of Lease.
As earlier stated, this Court modifies the imposed interest consistent with its ruling in Nacar v. Gallery Frames, et al.:[102]
II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:This Court notes that both the security deposit and the rental payments are in the nature of forbearance of money.[104] Thus, both fall under paragraph 1 of Nacar. For back rentals, the parties stipulated that late payments would bear interest of 3% per month and an additional 3% per month as penalty or surcharge:
- When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 6% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.
- When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages, except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
- When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.[103] (Emphasis supplied)
SECTION 4. PAYMENTS TO BE MADE UNDER THIS CONTRACTThere is no showing that petitioner was compelled to sign the Contract of Lease and its Standard Terms and Conditions. Hence, pursuant to their stipulations, the payment of back rentals will bear interest of 3% per month, compounded every quarter. In addition, petitioner will have to pay the penalty or surcharge of 3% per month "of the entire amount due and unpaid, until the account shall have been fully paid."[106]
The monthly lease rentals as well as any of the other amounts herein set forth the payment of which is in default shall bear interest at the rate of THREE PERCENT (3%) per month, compounded every quarter, until the same is fully paid and settled. However, acceptance by the LESSOR of payment of such overdue amounts and/or the corresponding interest charges thereon shall not be construed as a waiver on the part of the LESSOR of its right under Section 16 hereof to cancel or terminate this Contract by reason of such default or breach.
In addition, and by way of liquidated damages for such default, the LESSEE shall be charged a penalty or surcharge equivalent to THREE PERCENT (3%) per month of the entire amount due and unpaid, until the account shall have been fully paid, without prejudice to the actual and consequential damages which the LESSOR may charge to the LESSEE pursuant to the other provisions of this Contract.[105]
For the security deposit, since there was no stipulation on the interest, this Court imposes the legal interest rate of 12% per annum from the time of judicial or extrajudicial demand of the rental fees until June 30, 2013, and 6% per annum from July 1, 2013 until fully paid. In its Complaint, petitioner stated that it first demanded from Vigil the return of the security deposit through a letter on December 9, 2003.[107] The computation of interest should then begin on that date.
WHEREFORE, the petition is DENIED. The Court of Appeals September 21, 2012 Decision and the January 10, 2013 Resolution are AFFIRMED with the following MODIFICATIONS:
1. Vigil Investments, Inc. is directed to return the security deposit to Philippine Global Communications, Inc. after the reasonable and necessary charges have been made to it. The security deposit, net of all charges, shall bear the legal interest of twelve percent (12%) per annum from December 9, 2003 until June 30, 2013, and six percent (6%) per annum from July 1, 2013 until fully paid;SO ORDERED.
2. Philippine Global Communications, Inc. is ordered to pay Vigil Investments, Inc. the following:
- P2,238,705.00 as rental fee for the period covering October 2003 until December 2003 plus interest of three percent (3%) per month, compounded every quarter, until the same is fully paid and settled. In addition, petitioner will have to pay the penalty or surcharge of three percent (3%) per month of the entire amount due and unpaid, until the account shall have been fully paid.
- 1400,000.00 as attorney's fees; and
- Costs of suit.
[1] Rollo, pp. 26-61.
[2] Id. at 63-74. The Decision was penned by Associate Justice Sesinando E. Villon and concurred in by Associate Justices Florito S. Macalino and Socorro B. Inting of the Seventeenth Division, Court of Appeals, Manila.
[3] Id. at 76. The Resolution was penned by Associate Justice Sesinando E. Villon and concurred in by Associate Justices Florito S. Macalino and Socorro B. Inting of the Former Seventeenth Division, Court of Appeals, Manila.
[4] Id. at 56-57. -
[5] Id. at 179-197. The Decision, docketed as Civil Case No. 04-137, was penned by Judge Oscar B. Pimentel of Branch 148, Regional Trial Court, Makati City.
[6] Id. at 197.
[7] Id. at 77-78.
[8] Id. at 77.
[9] Id. at 77 and 179.
[10] Id. at 77.
[11] Id. at 79.
[12] Id. at 80.
[13] Id. at 114.
[14] Id. at 81.
[15] Id. at 79-80.
[16] Id. at 80.
[17] Id. at 81-82.
[18] Id. at 81.
[19] Id.
[20] Id. at 82.
[21] Id. at 115.
[22] Id.
[23] Id. at 116.
[24] Id.
[25] Id. at 88-95.
[26] Id. at 91 and 93.
[27] Id. at 91-92.
[28] Id. at 92.
[29] Id. at 93-94.
[30] Id. at 180.
[31] Id.
[32] Id. at 181. There is no explanation in the records of the case on what "riser fees" are for or how they are computed. They were neither mentioned in the contract nor explained in any of the pleadings filed by Vigil, the party that claimed these fees. By inference, a riser fee is charged for the installation of fiber optic cables.
[33] Id.
[34] Id.
[35] Id.
[36] Id. at 181-182.
[37] Id. at 182.
[38] Id. at 182-188.
[39] Id. at 179-197.
[40] Id. at 197.
[41] Id. at 189.
[42] Id. at 188.
[43] Id. at 189.
[44] Id. at 190-194.
[45] Id. at 192, quoting the Contract of Lease's Standard Terms and Conditions.
[46] Id. at 191-193.
[47] Id. at 193.
[48] Id.
[49] Id. at 195.
[50] Id.
[51] Id. at 195-196."
[52] Id. at 197.
[53] Id.
[54] Id. at 200-238.
[55] Id. at 237.
[56] Id. at 63-74.
[57] Id. at 73-74.
[58] Id. at 69.
[59] Id. at 69-70.
[60] Id. at 70.
[61] Id. at 72-73.
[62] Id. at 73.
[63] Id.
[64] Id. Citation omitted.
[65] Id. at 73.
[66] Id. at 73-74.
[67] Id. at 259-274.
[68] Id. at 76.
[69] Id. at 26-61.
[70] Id. at 56-57.
[71] Id. at 278-282.
[72] Id. at 283-287.
[73] Id. at 288-289.
[74] Id. at 290-327.
[75] Id. at 330-336.
[76] Id. at 303-305.
[77] Id. at 305.
[78] Id. at 307.
[79] Id. at 3 10.
[80] Id. at 308-310.
[81] Id. at 310.
[82] Id. at 315-318.
[83] Id. at 318.
[84] Id. at 318-320. 85. Id. at 323.
[86] Id. at 324. Petitioner claims that it has incurred this amount as of March 9, 2006.
[87] Id. at 333.
[88] Id. 31332-333.
[89] Id. at 333-335.
[90] Id. at 335.
[91] 744 Phil. 31 (2014) [Per J. Leonen, Second Division].
[92] Id. at 44.
[93] Id. at 244-245.
[94] 778 Phil. 235 (2016) [Per J. Leonen, Second Division].
[95] See DST Movers Corporation v. People's General Insurance Corporation, 778 Phil. 235, 247 (2016) [Per J. Leonen, Second Division], citing Cirtek Employees Labor Union v. Cirtek Electronics, Inc., 665 Phil. 784, 789 (2011) [Per J. Carpio Morales, Third Division], which provided the following exceptions:
(1) When the conclusion is a finding grounded entirely on speculation, surmises and conjectures;[96] Rollo, pp. 132-133.
(2) When the inference made is manifestly mistaken, absurd or impossible;
(3) Where there is a grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the findings of fact are conflicting;
(6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee;
(7) When the findings are contrary to those of the trial court;
(8) When the findings of fact are conclusions without citation of specific evidence on which they are based;
(9) When the facts set forth in the petition as well as in the petitioners' main and reply briefs are not disputed by the respondents; and
(10) When the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted by the evidence on record.
[97] Id. at 134-135.
[98] 744 Phil. 612 (2014) [Per J. Leonen, Second Division].
[99] Id. at 636-639.
[100] University of Mindanao, Inc. v. Bangko Senlral ng Pilipinas, et al, 776 Phil. 401, 439 (2016) [Per J. Leoncn, Second Division].
[101] Rollo, p. 197.
[102] 716 Phil. 267 (2013) [Per J. Peralta, En Bane],
[103] Id. at 282-283.
[104] See Nissan Car Lease Phils., Inc. v. Lica Management, Inc., et al., 778 Phil. 146, 165 (2016) [Per J. Jardeleza, Third Division] and Spouses Castro v. Palemuela, et al., 701 Phil. 673, 695 (2013) [Per J. Del Castillo, Second Division]. See also Arco Pulp and Paper Co., Inc., et al. v. Lim, 737 Phil. 133, 157-159 (2014) [Per J. Leonen, Third Division].
[105] Rollo, pp. 131-132.
[106] Id. at 132.
[107] Id. at 92.
