All or nothing

Sometimes multiplicity of suits cannot be avoided because the subject matter of cases with interconnected issues is under the jurisdiction of different lower courts. In several instances, the decisions of the lower courts on the interrelated issues are conflicting. One court deciding in favor of one party while the other deciding in favor of said party’s opponent. Thus when these cases with conflicting decisions reach the Supreme Court on different dates, the SC has to make two separate rulings resolving the interconnected issues. And in such a case the conflict can only be ended with finality if the separate SC decisions sustain only one of the conflicting decisions of the lower courts. This is illustrated in this case of Elmer.

The case involved 3 parcels of land registered in the name of GSIS and the five-storey Government Corporate Counsel Centre erected thereon. Originally it was the subject of a lease-purchase agreement dated June 22, 1978 where the GSIS agreed to sell the site and the Centre to the Republic of the Philippines (government) through the Office of the Government Corporate Counsel (OGCC).

On May 10, 1982 however, another lease purchase agreement involving the same property was executed this time among the GSIS, the government and Elmer, wherein the first agreement was to be cancelled upon its approval by the President. Under this second agreement; (1) GSIS shall sell the Centre to Elmer for P2 million with P200,000 as down payment and the interest-bearing balance payable in 15 annual installments; (2) Elmer shall have the right to take immediate possession of the ground floor and to sublease the same; (3) the government waives its rights under the first agreement in consideration of which Elmer would allow OGCC to lease the second to the fifth floor and the rear parking area for P100,000 per annum until GSIS has completed construction of its new building or has made available any of its acquired property acceptable to OGCC; (4) the term of the lease shall be 5 years from its effectivity renewable for another 2 years at the government’s option.

Upon execution in 1982, Elmer immediately started paying the installments to the GSIS while the OGCC for its part paid him the rentals for the 2nd to the 5th floor. In 1987 upon expiration of the lease term the government manifested its intent not to renew it anymore. So Elmer requested OGCC to vacate the leased premises. In reply OGCC informed Elmer that starting 1987, OGCC would be paying monthly rental direct to GSIS since the second agreement was not approved by the President although the words "approved, 11, April 1982-Ferdinand Marcos" were written on its upper right hand corner.

Following OGCC’s refusal to vacate and to pay the monthly rental, Elmer filed a suit for ejectment in the Metropolitan Trial Court (MeTC). For its defense OGCC asserted that the second agreement is null and void as fraud and undue influence attended its execution. In fact OGCC said it has also filed a suit in the Regional Trial Court (Branch 41) for the annulment of said agreement.

Of the two cases, Elmer’s ejectment was first decided on December 5, 1994 in his favor ordering GSIS and OGCC to vacate the centre. On appeal this was affirmed by the RTC (Branch 29) on January 9, 1996. The OGCC elevated this decision to the Court of Appeals (CA) which likewise affirmed the RTC Branch 29 decision on September 30, 1998. This CA decision was elevated by OGCC to the SC for review

Meantime, two weeks earlier or on September 14, 1998, the RTC Branch 41 ruled in favor of OGCC and struck down the second agreement as a nullity for being prohibited by law and giving unwarranted benefits to Elmer. It was Elmer’s turn now to appeal the case to the CA. But the CA turned down his appeal and affirmed the RTC Br. 41 decision on June 27, 2003. On further review by the SC, the latter likewise affirmed this CA decision by its ruling dated January 23, 2006.

Following this January 23, 2006 ruling, the SC thus ruled also in favor of OGCC in its petition for review of the September 30, 1998 CA decision in favor of Elmer. According to the SC, Elmer’s right to physical possession as an incident to his claim of ownership over the centre and the corresponding duty of the OGCC to respect such right hinges on the validity of the second agreement subject of the case before RTC Branch 41. If valid, and assuming that the full lease-purchase price has been paid, the second agreement invests Elmer with dominion over the centre and all rights flowing from ownership. If invalid, then Elmer has absolutely nothing to support his claim of ownership. As it is since the second agreement was struck down as an absolute nullity for causing undue injury to the government and giving unwarranted benefits to Elmer, his ejectment suit can no longer prosper, his right of action being anchored on a contract which, for all intents and purposes, has no legal existence and effect from the start. A void or inexistent contract is equivalent to nothing; it is absolutely wanting in civil effects; it cannot be the basis of actions to enforce compliance. So it must be for the second agreement in favor of Elmer, concluded the SC (Republic vs. LA’O, G.R.141941, May 4, 2006)

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