Army and Navy Club of Manila, Inc. vs. Court of Appeals

A historical landmark declaration does not confer upon a lessee any ownership or possessory right over the leased premises and does not exempt the lessee from judicial ejectment for violation of the lease contract; summary judgment is proper where the pleadings and admissions show no genuine issue of material fact.

The City of Manila owned a 12,705.30-square-meter parcel at South Boulevard corner Manila Bay, Manila, covered by TCT No. 156868/1059, together with the improvements known as the Army and Navy Club of Manila. Army and Navy Club of Manila, Inc. occupied the property under a January 1983 contract of lease with the City. The lease required the lessee to pay annual rent and realty taxes and to construct a modern multi-storey hotel. R.A. 4846, as amended by P.D. 374, declares a state policy to preserve and protect important cultural properties and National Cultural Treasures.

On November 29, 1989, the City of Manila filed an ejectment action against Army and Navy Club of Manila, Inc. with the Metropolitan Trial Court of Manila. The City alleged that it owned a 12,705.30-square-meter parcel at South Boulevard corner Manila Bay, Manila, covered by TCT No. 156868/1059, together with the improvements known as the Army and Navy Club of Manila. The Club occupied the land and building under a Contract of Lease executed in January 1983. Under the lease, the lessee was to construct, at its own expense, a modern multi-storied hotel at a cost of not less than FIFTY MILLION PESOS (P50,000.00) (sic), which would automatically belong to the lessor upon expiration or termination without reimbursement; construction was to commence within one year and be completed as far as practicable within five years from approval by proper government officials, with plans and specifications first approved by the lessor. The lease also required the lessee to pay an annual rent of P250,000.00, payable in twelve equal monthly installments within the first five days of each month, subject to rental adjustment after the first five years at not more than ten per centum per annum every two years or on the basis of the increase in prevailing market value, whichever was higher, and to pay the realty tax due on the land and improvements, as well as government licenses, permits, fees, and charges.

According to the City, the Club failed and refused to construct the required hotel long after the stipulated period and despite demands. The Club also reneged on its rental obligation; its rental account stood at P1,604,166.70 as of May 1989. It violated its undertaking to pay taxes, with aggregate realty tax liability of P3,818,913.81 as of December 1989. The City made repeated demands, rescinded the Contract of Lease, and demanded that the Club vacate, the last demand contained in a letter dated May 24, 1989. The City also alleged that the reasonable rental value for the Club’s continued use and occupancy was P636,467.00 a month.

The Club filed its answer on December 29, 1989. It did not deny the existence of the January 1983 lease contract. It admitted that it failed to pay rents and real estate taxes and to construct a multi-storey building. It claimed that it was unable to fulfill its obligations due to the economic recession in 1984 as an aftermath of the Ninoy Aquino assassination. On February 22, 1990, the Club filed a Motion for Leave to File and for Admission of Amended Answer, allegedly asserting additional special and affirmative defenses. The MTC denied the motion for leave on July 27, 1990 for lack of merit.

The City moved for summary judgment on May 23, 1990, on the ground that there existed no genuine triable issue. The MTC rendered summary judgment on October 5, 1990, ordering the Club and all persons claiming rights under it to vacate and surrender the Army and Navy Club Building, to pay rental arrearages at P250,000.00 per year with a ten percent increase every two years from January 1983 until it vacated and surrendered the premises, with legal interest, and to pay the costs of suit. The RTC affirmed the summary judgment in toto, and the Court of Appeals dismissed the appeal.

On June 29, 1992, the National Historical Institute issued a Certificate of Transfer and Acceptance of Historical Marker to the Army and Navy Club pursuant to R.A. 4846, as amended by P.D. 374. The Club invoked this declaration as a national historical landmark and argued that its existence and site should not be undermined by the ejectment suit. The City observed that the signatories to the certification were officers and members of the Club, making the certification self-serving. No showing was made that the procedure under R.A. 4846 for designating a historical landmark had been complied with, and the declaration was conferred only in 1992, three years after the ejectment action was instituted. The MTC and RTC found no genuine issue of material fact because the Club admitted the lease and its failures. The Court of Appeals observed that the Club had dealt with the City as owner of the leased premises for almost half a century and could not deny the City’s ownership.

• Historical Landmark: Petitioner argued that the Army and Navy Club was declared a national historical landmark by the National Historical Commission on June 29, 1992, and that its existence and site should not be undermined by an ejectment suit; all parties are enjoined by law to preserve it under R.A. 4846, as amended by P.D. 374.
• Denial of Amended Answer: Petitioner maintained that the Court of Appeals seriously erred in affirming the MTC and RTC denial of admission of petitioner’s amended answer.
• Summary Judgment: Petitioner argued that the Court of Appeals erred in affirming the summary judgment rendered by the MTC and RTC.
• Due Process: Petitioner argued that it was denied due process by the rendition of summary judgment against it.
• Public Domain: Petitioner contended, as an incident to the main issue, that the property is of public domain and therefore the contract of lease executed by the City of Manila in its favor is void.

• Historical Marker: Respondent City of Manila observed that the signatories to the certification were officers and members of the Club, making the certification self-serving.
• Summary Judgment: Respondent City of Manila moved for summary judgment on the ground that there exists no genuine triable issue in the case.

• Ejectment and Historical Landmark: Whether the respondent courts gravely erred in upholding petitioner’s ouster from the disputed premises despite its formal declaration as a historical landmark.
• Denial of Amended Answer: Whether the Court of Appeals seriously erred in affirming the MTC and RTC denial of admission of petitioner’s amended answer.
• Summary Judgment: Whether the Court of Appeals erred in affirming the summary judgment rendered by the MTC and RTC.
• Due Process: Whether the Court of Appeals erred in not holding that petitioner was denied due process by the rendition of summary judgment against it.
• Public Domain and Validity of Lease: Whether the property subject matter of the case is of public domain and therefore the contract of lease executed by the City of Manila in favor of petitioner is void.

• Ejectment and Historical Landmark: No. The historical landmark declaration did not confer ownership or possessory rights and did not bar ejectment; petitioner violated lease conditions under Article 1673 of the Civil Code.
• Denial of Amended Answer: No. The amended answer was filed one year after the original answer and set up defenses contradictory to the original answer, contrary to the rules of procedure.
• Summary Judgment: No. Summary judgment was proper because there was no genuine issue as to any material fact; petitioner admitted the lease and its failures.
• Due Process: No. There was no reversible error in the summary judgment; no denial of due process was shown.
• Public Domain and Validity of Lease: No. The petition was denied; petitioner cannot assume an inconsistent position by denying the City’s ownership after admitting it and dealing with the City as owner.

• Ejectment and Historical Landmark: Article 1673 of the New Civil Code permits judicial ejectment when the lessee fails to pay the stipulated price or violates any condition agreed upon in the contract. The Club failed to pay rents for seven consecutive years; as of October 1989, when the action was filed, rental arrears reached P7.2 million; real estate taxes accumulated to P6,551,408.28 as of May, 1971, as stated in the opinion; and the Club failed to erect the required multi-storey hotel. After several demands, the City filed the illegal detainer action. The Club’s historical landmark claim did not defeat ejectment. The Certificate of Transfer and Acceptance of Historical Marker was issued pursuant to R.A. 4846, as amended by P.D. 374, but there was no showing that the statutory procedure for designating a historical landmark was complied with. The City observed that the signatories were officers and members of the Club, making the certification self-serving, and the declaration was issued only in 1992, three years after the ejectment suit, suggesting an afterthought. The certification did not give the Club authority to claim ownership or any right over the property; the law does not grant possessory rights upon such recognition, and the National Historical Commission has no authority to vest ownership or possession. Its authority is limited to supervising restoration, reconstruction, or preservation of the architectural design of the identified historical building. Even assuming the recognition was valid, the historical significance of the Club would not be affected if eviction was warranted, because the Club was merely a lessee that violated its lease obligations.

• Denial of Amended Answer: The Court found no error or abuse of authority in denying the amended answer. It was filed one year after the original answer and set up defenses entirely contradictory to the original answer, contravening the rules of procedure. Having admitted in the original answer that the City was the registered owner and that it leased the property from the City, the Club could not later deny such ownership. The Court of Appeals correctly observed that after dealing with the City as owner and obtaining benefits from that acknowledgment for almost half a century, the Club could not assume an inconsistent position by denying the City’s ownership when the situation called for it; it could not double deal by recognizing the City’s title and entering into a lease, then repudiating ownership after failing to comply with its obligations.

• Summary Judgment: Summary judgment is granted upon motion by a party for expeditious settlement where the pleadings, depositions, admissions, and affidavits show that there are no important questions or issues of fact involved (except as to the amount of damages) and that the moving party is entitled to judgment as a matter of law. In this case, there was no substantial triable issue. The Club did not deny the existence of the January 1983 lease contract; it admitted that it failed to pay rents and real estate taxes and to construct a multi-storey building. Its defense was that it was unable to fulfill its obligations due to the economic recession in 1984 after the Ninoy Aquino assassination. Because there was no genuine issue as to any material fact, summary judgment was proper. The historical landmark argument was not a substantial issue of fact and did not alter or affect the merits of the ejectment suit.

• Due Process: The Court found no reversible error in the summary judgment. Since no genuine triable issue existed and the Club’s admissions established the material facts, the rendition of summary judgment did not deny the Club due process. The procedural objections raised by the Club did not warrant reversal.

• Public Domain and Validity of Lease: The Court found no merit in the petition. It did not separately sustain the claim that the property was public domain and the lease void. Instead, it relied on the Club’s admission of the City’s ownership and its lease of the property. Having dealt with the City as owner and obtained benefits from that acknowledgment for almost half a century, the Club could not assume an inconsistent position by denying the City’s ownership. The lease-based ejectment was upheld.

• Historical landmark designation does not confer possessory rights — Under R.A. 4846, as amended by P.D. 374, the State’s policy is to preserve and protect important cultural properties and National Cultural Treasures. The National Historical Commission’s authority is limited to supervising restoration, reconstruction, or preservation of the architectural design of an identified historical building. Such recognition does not grant the lessee ownership or possessory rights over the property. In this case, the historical marker did not bar the lessee’s ejectment for violation of the lease.
• Ejectment for violation of lease conditions — Article 1673 of the New Civil Code allows the lessor to judicially eject the lessee for lack of payment of the price stipulated and for violation of any condition agreed upon in the contract. The Club’s failure to pay rent and realty taxes and to construct the required hotel justified ejectment.
• Summary judgment — Summary judgment is proper when the pleadings, depositions, admissions, and affidavits show that there are no important questions or issues of fact involved, except as to the amount of damages, and that the moving party is entitled to judgment as a matter of law. The Club’s admissions established the material facts, leaving no genuine triable issue.
• Inconsistent positions or estoppel — A party who admits another’s ownership and deals with that party as owner cannot later deny ownership when the situation calls for it. The Club admitted the City’s registered ownership and leased the property from it; it could not later deny that ownership or claim the lease was void on that ground.
• Amended pleadings — An amended answer filed one year after the original answer and containing defenses entirely contradictory to the original answer may be denied for contravening the rules of procedure. The denial of the amended answer was upheld.

• "Art. 1673. The lessor may judicially eject the lessee for any of the following causes: (1) When the period agreed upon, or that which is fixed for the duration of leases under articles 1682 and 1687, has expired; (2) Lack of payment of the price stipulated; (3) Violation of any of the conditions agreed upon in the contract; (4) When the lessee devotes the thing leased to any use or service not stipulated which causes the deterioration thereof; or if he does not observe the requirement in No. 2 of article 1657, as regards the use thereof. The ejectment of tenants of agricultural lands is governed by special laws." — This is the statutory basis for the ejectment, specifically the lessee’s failure to pay rent and violation of lease conditions.
• "In the case at bar, there is no showing that the above procedure has been complied with. The City of Manila even observed that the signatories thereto are officers and members of the Club making such certification self-serving." — The Court discredited the historical marker because the statutory designation procedure was not shown to have been followed and the certification was self-serving.
• "Nonetheless, such certification does not give any authority to the petitioner to lay claim of ownership, or any right over the subject property. Nowhere in the law does it state that such recognition grants possessory rights over the property to the petitioner." — This states the core ruling that a historical landmark declaration does not confer ownership or possessory rights on the lessee.
• "Considering that there is no genuine issue as to any material fact, a summary judgment is proper. The argument that it was declared a historical landmark, is not a substantial issue of fact which does not, in any way, alter or affect the merit of the ejectment suit." — This explains why summary judgment was proper and why the historical landmark defense did not create a triable issue.

• Manila Prince Hotel vs. GSIS, G.R. No. 122156, February 3, 1997 — Cited in the Court’s discussion of the historical character of property, through the amicus curiae views of Fr. Joaquin Bernas on the classification of historical and cultural properties and the requirements of due process.
• Philippine National Bank vs. Noah’s Ark Sugar Refinery, 226 SCRA 36 (1993) — Cited as authority for the rule on summary judgment under Rule 34.
• Vergara Sr. vs. Suelto, 156 SCRA 753 (1987) — Cited as authority for the rule on summary judgment.
• Mercado vs. Court of Appeals, 162 SCRA 75 (1988) — Cited as authority for the rule on summary judgment.

• Article 1673, New Civil Code — Allows the lessor to judicially eject the lessee for lack of payment of the stipulated price and for violation of any condition agreed upon in the contract. Applied to justify ejectment because the Club failed to pay rent and realty taxes and failed to construct the required hotel.
• Republic Act No. 4846, as amended by Presidential Decree No. 374 — Declares the State policy to preserve and protect important cultural properties and National Cultural Treasures and provides the procedure for designating historical landmarks. Applied to reject the Club’s claim because no showing was made that the statutory procedure was complied with, and the law does not grant possessory rights to the lessee.
• Presidential Decree No. 374 — Amended R.A. 4846 and defines cultural properties, important cultural properties, National Cultural Treasures, and historical sites; it also provides that restoration, reconstruction, and preservation of designated government historical buildings shall be undertaken only with the written permission of the Director of the National Museum. Applied to limit the National Historical Commission’s authority to supervision of architectural restoration and preservation, not ownership or possession.
• Rule 34, Sections 1, 2, and 3, Rules of Court — Governs summary judgment. Applied because the pleadings and admissions showed no genuine issue of material fact and the City was entitled to judgment as a matter of law.
• Rule 10, Section 3, Rules of Court — Cited in connection with amended pleadings. The Court held that the amended answer, filed one year after the original answer and containing contradictory defenses, contravened the rules of procedure.

Padilla, Bellosillo, and Hermosisima, Jr., JJ., concur. Vitug, J., concurs in the result.