A&C MINIMART V.

VILLAREAL 535 SCRA 489

FACTS: The appellate court ordered petitioner A & C Minimart Corporation to pay respondents Patricia Villareal, Tricia Ann Villareal and Claire Hope Villareal, a
monthly interest of 3% on the total amount of rental and other charges not paid on time, in addition to the unpaid rental and other charges which the trial court
ordered petitioner to pay.

The subject property is a one-storey commercial building constructed on a parcel of land located at Aguirre St., BF Homes, Parañaque, Metro Manila. Petitioner
leased the six stalls/units of the subject property from Joaquin Bonifacio, under a lease agreement dated 3 August 1992, and which expired on 3 August 1997. A
Lease Contract, dated 22 January 1998, was executed between petitioner and Teresita Bonifacio renewing the earlier contract for another five years.

However, ownership of the subject property is under dispute. Respondents and spouses Joaquin and Teresita Bonifacio (spouses Bonifacio) claim ownership over the
subject property.

The respondents claim ownership based on a sale of property on execution pending appeal in a separate case. Civil Case No. 16194 is an independent action for
damages filed by respondents against spouses Eliseo and Erna Sevilla (spouses Sevilla), original owners of the disputed property, arising from the murder of Jose
Villareal, the husband of respondent Patricia Villareal and father of respondents Tricia Ann and Claire Hope Villareal. In its Decision dated 2 April 1990, Branch 132
of the RTC of Makati awarded damages to respondents in the amount of P10,882,040.00. Thereafter, the Makati RTC, Branch 132, issued a writ of execution
pending appeal. Deputy Sheriff Eulalio Juanson levied on two parcels of land registered under the name of the Sevillas covered by Transfer Certificates of Title
(TCT) No. 41338 and No. 41339, issued by the Register of Deeds of Parañaque City, and a one-storey commercial building built thereon.

On 17 September 1990, Deputy Sheriff Juanson sold the subject property at a public auction to respondent Patricia Villareal, the sole and highest bidder therein. The
Certificate of Sale, dated 17 September 1990, was registered and annotated in TCT No. 41338 and No. 41339 as Entry 6621 on 18
September 1990.6 The spouses Sevilla filed an appeal questioning the damages awarded and execution orders issued by the Makati RTC, Branch 132 in Civil Case
No. 16194, which is now pending before the Supreme Court and docketed as G.R. No. 150824.

On the other hand, the spouses Bonifacio claim to have purchased the property from the spouses Sevilla. Twice they challenged the Villareals’ ownership of the
property. The first was on 12 September 1990, when they filed Civil Case No. 90-2551 against respondent Patricia Villareal before Branch 58, later unloaded to
Branch 63, of the Makati RTC, for declaration of nullity of levy on real property, damages and injunction with prayer for issuance of a temporary restraining order
against the sheriff of the Makati RTC, Branch 132. They allegedly bought the property from the spouses Sevilla on 17 June 1986, but were unable to transfer the
titles to their names when they discovered that notice of levy on execution was already annotated in the TCTs.7 On 8 November 1994, the Makati RTC, Branch 63,
declared that the Deed of Sale in favor of the Bonifacios was null and void and thus dismissed the complaint filed by the spouses Bonifacio for lack of merit. The
spouses Bonifacio filed an appeal, docketed as C.A. G.R. CV No. 48478, which was dismissed by the Court of Appeals. The dismissal of the said case became final
and executory on 27 December 1997.

Despite the final and executory decision dismissing the claim of the Bonifacios, the latter, for the second time filed on 25 January 1999, Civil Case No. 99-037
against respondent Patricia Villareal for Declaration of Ownership, Annulment and Cancellation of Attachment, Notice of Levy, and Execution Sale with Damages
at Branch 257 of the Parañaque RTC, which was dismissed in an Order dated 8 November 1999. They filed an appeal of the dismissal with the Court of Appeals,
docketed as CA-G.R. SP No. 60176, which was likewise dismissed in a Decision, dated 22 October 2004.10 An appeal was filed before the Supreme Court,
docketed as G.R. No. 175857, but the same was denied in a Resolution dated 14 March 2007.

Meanwhile, upon learning that the spouses Bonifacio’s claim of ownership over the subject property had been seriously challenged and denied in the Decision dated
8 November 1994 of the Makati RTC, Branch 63, in Civil Case No. 90-2551, petitioner stopped paying its rentals on the subject property on 2 March 1999, in
violation of the renewed Lease Contract dated 22 January 1998.

On 19 July 1999, respondents filed a case for Unlawful Detainer with Damages, against the petitioner before Branch 78 of the Metropolitan Trial Court (MTC) of
Parañaque City. Respondents also filed a case against the spouses Bonifacio for the recovery of the advanced rentals paid to the latter by the petitioner. The spouses
Bonifacio also filed a separate case against the petitioner for Unlawful Detainer. The cases were consolidated and heard by the Parañaque MTC, Branch 78,
docketed as Civil Cases No. 11200, 11201, and 11262. The Parañaque MTC, Branch 78, dismissed the cases on the ground that the issue of possession in this case
was intertwined with the issue of ownership, and that it lacked the jurisdiction to determine the issue of ownership.

ISSUE: WON the Villareals are entitled to the benefits (rentals and interests) of the contract of lease entered into between "A & C minimart corp." and Teresita
Bonifacio.

RULING: Petitioner argues that respondents are not entitled to the 3% penalty stipulated under the Lease Contract dated 22 January 1998, which becomes payable
to the lessor whenever the petitioner incurs delay in the payment of its rentals. This argument is well-taken.

It is a well-known rule that a contractual obligation or liability, or an action ex- contractu, must be founded upon a contract, oral or written, either express or
implied. If there is no contract, there is no corresponding liability and no cause of action may arise therefrom.22 This is provided for in Article 1311 of the Civil
Code:

ART. 1311. Contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obligations arising
from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the
property he received from the decedent.

The Lease Contract dated 22 January 1998, was executed between the spouses Bonifacio and petitioner. It is undisputed that none of the respondents had taken part,
directly or indirectly, in the contract in question. Respondents also did not enter into contract with either the lessee or the
lessor, as to an assignment of any right under the Lease Contract in question. The Lease Contract, including the stipulation for the 3% penalty interest, was bilateral
between petitioner and Teresita Bonifacio. Respondents claim ownership over the subject property, but not as a successor-in-interest of the spouses Bonifacios. They
purchased the property in an execution sale from the spouses Sevilla. Thus, respondents cannot succeed to any contractual rights which may accrue to the spouses
Bonifacio.

In the present case, the spouses Bonifacio, who were named as the lessors in the Lease Contracts, dated 3 August 1992 and 22 January 1998, are already adjudged not
to be the real owners of the subject property. In Civil Case No. 90-2551, Branch 63 of the Makati RTC declared that the Deed of Sale, executed on 17 June 1986,
between the spouses Bonifacio and the spouses Sevilla was a forgery and, hence, did not validly transfer ownership to the spouses Bonifacio. At present, there is a
pending appeal before the Supreme Court docketed as G.R. No. 150824, which would determine who between the respondents and the spouses Sevilla are the rightful
owners of the property.

Since the spouses Bonifacio are not the owners of the subject property, they cannot unjustly benefit from it by collecting rent which should accrue to the rightful
owners of the same. Hence, the Makati RTC, Branch 132, had set up a bank account where the rent due on the subject property should be deposited and kept in trust
for the real owners thereto.

The petitioner A & C Minimart Corporation is not obligated to pay the penalty interest of 3% per month on the total amount of rental and other charges
not paid on time pursuant to the Contract of Lease dated 22 January 1998