Pasricha vs. Don Luis Dison Realty, Inc.

A lessee cannot justify the withholding of rent due to conflicting claims regarding the person authorized to receive payment; the proper remedies are consignation under Article 1256 of the Civil Code or interpleader under Rule 62 of the Rules of Court.

Petitioners Subhash and Josephine Pasricha leased nine units in the San Luis Building from respondent Don Luis Dison Realty, Inc. under two contracts specifying monthly rentals and periodic increments. After a change in the lessor's general manager from Francis Pacheco to Roswinda Bautista, petitioners ceased paying rent, claiming confusion over who was authorized to receive payment and alleging they were prevented from using most of the leased units. Respondent demanded payment and subsequently filed an ejectment suit.

• The Contracts of Lease: Two contracts were executed covering nine units with specific rental rates and 10% increments. The lease for Rooms 36, 37, and 38 was to take effect only upon the vacation of the premises by previous tenants.
• Change in Management and Withholding of Rent: Petitioners paid rent until May 1992. Following the replacement of Pacheco with Bautista as general manager, petitioners refused to pay rent from July to November 1992, citing internal corporate squabbles over who was authorized to receive payment. They paid for December 1992 but withheld payment again from January 1993 onward, citing the non-delivery of Rooms 36, 37, and 38. Petitioners prepared check vouchers but never deposited or consigned the rental payments.
• Ejectment Proceedings: Respondent, through Bautista, sent a final demand letter and subsequently filed a complaint for ejectment before the MeTC.

• Lack of Capacity to Sue: Bautista lacked the legal capacity to institute the ejectment suit on behalf of the corporation without a board resolution.
• Corporate Standing: Respondent corporation lacked standing to sue as a juridical person due to the suspension and eventual revocation of its certificate of registration by the SEC.
• Justified Non-Payment: Non-payment of rentals was justified by the internal squabble over who should receive payment and by respondent's alleged prevention of petitioners from using the leased premises (except Room 35).
• Breach by Lessor: Respondent violated the contract by refusing to turn over Rooms 36, 37, and 38.
• Judicial Inhibition: Justice Reyes should have inhibited himself due to an alleged close association with Bautista's uncle-in-law, resulting in a denial of due process.

• Authority to Sue: Bautista possessed implied authority as general manager and treasurer, which was subsequently substantiated by a Secretary's Certificate.
• Corporate Standing: The SEC later set aside its orders of suspension and revocation, rendering the issue moot; moreover, the ejectment case was filed before the revocation.
• Unjustified Non-Payment: Petitioners' non-payment was unjustified as their prior communications never mentioned the inability to use the rooms, only confusion over payment.
• Separability of Leases: The lease of each room was intended to be separate from the others; thus, the non-delivery of some rooms did not excuse the payment of rentals for the rooms actually delivered and used.

• Capacity to Sue: Whether the ejectment suit should be dismissed due to the alleged lack of legal capacity of the general manager to institute the suit on behalf of the corporation.
• Corporate Standing: Whether the corporation had the standing to sue given the SEC's suspension and revocation of its registration.
• Justified Non-Payment: Whether petitioners' non-payment of rentals was justified by the internal squabble in the respondent company or the alleged prevention from using the leased premises.
• Judicial Inhibition: Whether the failure of Justice Reyes to inhibit constituted a deprivation of due process.

• Capacity to Sue: The capacity of the general manager to sue was affirmed. Substantial compliance, demonstrated by the subsequent presentation of a Secretary's Certificate confirming her authority, justifies the relaxation of procedural rules in the interest of justice.
• Corporate Standing: The corporation possessed standing to sue. The action was instituted before the SEC revoked its certificate of registration. Furthermore, the SEC later set aside the revocation, rendering the issue moot.
• Justified Non-Payment: Non-payment was unjustified. Conflicting claims regarding the right to collect rental payments necessitate consignation under Article 1256 of the Civil Code or an action for interpleader under Rule 62 of the Rules of Court, not unilateral withholding. Mere preparation of check vouchers does not constitute valid tender of payment. Additionally, the leases were separable; the non-delivery of Rooms 36, 37, and 38—whose lease was conditioned on the vacation by previous tenants—did not excuse the obligation to pay rent for the units actually delivered and used.
• Judicial Inhibition: The denial of the motion to inhibit was proper. A motion to inhibit filed after the assailed decision has been rendered is denied, as litigants cannot be permitted to speculate on the court's action. Bias and prejudice cannot be presumed and must stem from an extrajudicial source.

• Substantial Compliance in Corporate Representation — While a person suing on behalf of a corporation must present proof of authority, subsequent and substantial compliance may warrant the relaxation of procedural rules in the interest of justice, especially in highly meritorious cases.
• Consignation and Interpleader as Remedies for Conflicting Claims — When two or more persons claim the same right to collect, the debtor is released from responsibility by the consignation of the sum due. An action for interpleader is proper when conflicting claims upon the same subject matter are made against a person who claims no interest in the subject matter, compelling the claimants to litigate their claims among themselves.
• Judicial Inhibition — A motion to inhibit shall be denied if filed after a member of the court has already given an opinion on the merits. Bias and prejudice cannot be presumed and must be evidenced by a showing of an extrajudicial source resulting in an opinion based on something other than what the judge learned from participation in the case.

• "Technical and procedural rules are intended to help secure, not suppress, the cause of justice; and a deviation from the rigid enforcement of the rules may be allowed to attain that prime objective, for, after all, the dispensation of justice is the core reason for the existence of courts."
• "Well-settled is the rule that tender of payment must be accompanied by consignation in order that the effects of payment may be produced."
• "There is nothing in the contract which would lead to the conclusion that the lease of one or more rooms was to be made dependent upon the lease of all the nine (9) rooms. Accordingly, the use of each room by the lessee gave rise to the corresponding obligation to pay the monthly rental for the same."

• Novelty Phils., Inc. v. Court of Appeals, 458 Phil. 36 (2003) — Followed: The Court relaxed procedural rules and faulted the dismissal of a petition solely on the failure to timely submit proof of authority to sue.
• Pfizer, Inc. v. Galan, 410 Phil. 483 (2001) — Followed: Upheld the sufficiency of a petition verified by an employee absent a board resolution authorizing her to act for the corporation.
• China Banking Corporation v. Mondragon International Philippines, Inc., G.R. No. 164798, November 17, 2005 — Followed: Rules were relaxed because the corporation ratified the manager's status as an authorized signatory.
• Chavez v. Public Estates Authority, 451 Phil. 1 (2003) — Followed: A motion to inhibit shall be denied if filed after a member of the court has given an opinion on the merits.
• Soriano v. Judge Angeles, 393 Phil. 769 (2000) — Followed: Bias and prejudice cannot be presumed and must stem from an extrajudicial source.

• Article 1256, Civil Code — Applied to emphasize that consignation produces the effect of payment when a creditor refuses without just cause to accept it, or when two or more persons claim the same right to collect.
• Section 1, Rule 62, Rules of Court — Applied to clarify that an action for interpleader is proper when conflicting claims upon the same subject matter are made against a person who claims no interest in the subject matter.
• Article 1673, Civil Code — Applied to affirm the lessor's right to judicially eject the lessee for lack of payment of the price stipulated.

Consuelo Ynares-Santiago (Chairperson), Leonardo A. Quisumbing, Ma. Alicia Austria-Martinez, Minita V. Chico-Nazario.