Tan vs. Rodil Enterprises

A party's open-court agreement to pay a stated amount of unpaid rentals, coupled with a motion to deposit the same, is a judicial admission of liability and amount that the party cannot later controvert; the admission is admissible despite the general rule that an offer of compromise in a civil case is not an admission of liability, because the party admitted the existence of the indebtedness while proposing to settle.

Rodil Enterprises had been the lessee of the government-owned Ides O'Racca Building in Binondo, Manila, since 1959. It entered into a Renewal of Contract of Lease with the Republic through the DENR on 18 May 1992 and a Supplementary Contract on 25 May 1992 extending the lease until 1 September 1997. The validity of those contracts was litigated in several actions involving Rodil Enterprises, the Ides O'Racca Building Tenants Association, Inc., and other tenants; the SC upheld them on 29 November 2001 in G.R. Nos. 129609 and 135537, while the Office of the President had earlier declared them of no force and effect in OP Case No. 4968, a ruling that generated separate CA and SC proceedings.

On 18 October 1999, Rodil Enterprises and the Republic, through the DENR, executed a subsequent Contract of Lease over the Ides O'Racca Building, effective retroactively from 1 September 1997 to 21 August 2012 at a monthly rental of P65,206.67, subject to adjustment upon approval of a new appraisal. Rodil Enterprises subleased various units of the property to members of the Ides O'Racca Building Tenants Association, Inc., and subleased a space known as Botica Divisoria to Luciano Tan.

Rodil Enterprises alleged in its Complaint for Unlawful Detainer filed on 13 March 2000 with the MeTC of Manila, Branch 13, docketed as Civil Case No. 166584, that Tan bound himself under a Contract of Sublease to pay P13,750.00 monthly rentals representing the reasonable use and occupancy of the premises. Tan allegedly refused to pay rentals from September 1997 up to the filing of the Complaint and, despite repeated oral and written demands, refused to vacate and pay the rents due. Rodil Enterprises prayed that Tan and those claiming rights under him be ordered to vacate Botica Divisoria, pay P385,000.00 in rentals in arrears, attorney's fees and litigation costs, and P13,750.00 monthly rentals until he vacated.

In his Answer, Tan insisted that he was a legitimate tenant of the government, which owned the Ides O'Racca Building, and not of Rodil Enterprises. He claimed the right to lease the premises pending the disposition and sale of the building, relying on the Office of the President's 8 February 1994 Decision in OP Case No. 4968, which declared the 18 May 1992 Renewal of Contract of Lease and the 25 May 1992 Supplemental Contract between Rodil Enterprises and the Republic without force and effect and directed the DENR to award the lease contract to the Ides O'Racca Building Tenants Association, Inc., of which he was a member. He prayed for dismissal and for the return of whatever amount Rodil Enterprises had collected from 1987 to 1997.

On 27 June 2000, the MeTC issued an Order recognizing an agreement entered into in open court by Tan and Rodil Enterprises. The Order stated that Tan would pay P440,000.00 representing rentals from September 1997 up to the present, the outstanding obligation as of June 2000, on or before 30 June 2000, and would pay monthly rentals of P13,750.00 on or before the fifth day of each month after 30 June 2000. On 14 August 2000, Tan filed a Motion to Allow Defendant to Deposit Rentals, averring that he had agreed to pay all rentals due and subsequent monthly rentals as they fell due; that the rentals in arrears from September 1997 amounted to P467,500.00; and that, in good faith, he would deposit that amount and subsequent monthly rentals as they fell due. He prayed that he be allowed to deposit a Manager's Check for P467,500.00 payable to the City Treasurer of Manila. On 15 August 2000, the MeTC denied the Motion because the prayer to deposit the sum with the City Treasurer of Manila contravened Section 19, Rule 70 of the 1997 Rules of Civil Procedure.

The MeTC found that Tan did not contest the sublease on a monthly basis and that his counsel made frank representations about his liability in the form of rentals, coupled with a proposal to liquidate. It also noted that Tan's indifference to the two demand letters was recognized in the Complaint and Answer. The CA found that Tan was a sublessee who failed to pay rentals from 1 September 1997 and that his open-court agreement and Motion to Allow Defendant to Deposit Rentals acknowledged the existence of the sublease and his non-payment.

• Reliance on Unfinal CA Decision: Petitioner argued that the CA committed grave reversible error when it denied his motion for reconsideration by relying solely and exclusively on the CA's 28 March 2005 Decision in CA-G.R. SP No. 79157 despite that decision not yet being final and executory.
• Forum Shopping: Petitioner argued that Rodil Enterprises was guilty of forum shopping when it filed a Petition for Certiorari with the CA docketed as CA-G.R. SP No. 79517 seeking to nullify the Office of the President's Order of Execution of its 8 February 1994 Decision in OP Case No. 4968, despite its previous Petition for Review of the same Office of the President decision having been dismissed by the CA in its Resolution dated 17 November 1994 for non-compliance with procedural rules.
• Judicial Admission / Offer of Compromise: Petitioner argued that the CA committed serious reversible error and misapprehended the facts and evidence when it ruled that he was a sublessee of Rodil Enterprises and remiss in paying rentals; he maintained that his open-court admission and Motion to Allow Defendant to Deposit Rentals could not be taken as an admission of liability under Section 27, Rule 130 of the Rules of Court because an offer of compromise in a civil case is not a tacit admission of liability.

• Reliance on CA Decision: Respondent asseverated that the CA could not ignore a decision rendered by a division of the same appellate body, as doing so would turn a blind eye on a valid judgment rendered by the same appellate court.

• Finality and Reliance on CA Decision: Whether the CA committed reversible error in denying petitioner's motion for reconsideration by relying on its 28 March 2005 Decision in CA-G.R. SP No. 79157 despite petitioner's claim that the decision had not yet become final and executory.
• Forum Shopping: Whether Rodil Enterprises is guilty of forum shopping in filing CA-G.R. SP No. 79517 after its earlier petition in CA-G.R. SP No. 34586 was dismissed.
• Judicial Admission / Offer of Compromise: Whether petitioner's open-court agreement to pay rentals and his Motion to Allow Defendant to Deposit Rentals constituted a judicial admission of his liability as sublessee and of the unpaid rentals, despite the rule that an offer of compromise in a civil case is not an admission of liability.

• Finality and Reliance on CA Decision: No. The CA did not err in taking notice of its decision in CA-G.R. SP No. 79157, and the finality objection became moot because the ruling had reached finality after the SC denied the petition in G.R. No. 169892 and denied reconsideration with finality.
• Forum Shopping: No. The forum-shopping question is not material to the instant petition; CA-G.R. SP Nos. 79157 and 34586 are separate and distinct from CA-G.R. SP No. 67201, and any forum-shopping issue in CA-G.R. SP No. 79517 should have been raised before the CA in that case.
• Judicial Admission / Offer of Compromise: Yes. Petitioner's open-court agreement to pay P440,000 and P13,750 monthly, reinforced by his Motion to Allow Defendant to Deposit Rentals, was a judicial admission of liability and amount; the exception to the rule excluding compromise offers applies because he admitted indebtedness combined with a proposal to settle.

• Finality and Reliance on CA Decision: The SC rejected petitioner's claim that the CA erred in relying on the 28 March 2005 Decision in CA-G.R. SP No. 79157. It reasoned that for the appellate court to ignore a decision rendered by a division thereof would be to turn a blind eye on a valid judgment rendered by the same appellate body. The SC also held that the contention that the decision had not attained finality had become moot because the ruling in CA-G.R. SP No. 79517 had long reached finality: the SC denied the Petition for Review on Certiorari filed by the Ides O'Racca Building Tenants Association, Inc. in its Resolution dated 25 January 2006, and denied with finality the motion for reconsideration in its Resolution dated 20 March 2006. The SC further noted that on 12 April 2004 the CA issued a Resolution granting petitioner a hearing on his motion for reconsideration because the grounds cited needed clarification, which belied his claim that the resolution on the motion for reconsideration was based solely on the ruling in CA-G.R. SP No. 79517.
• Forum Shopping: The SC defined forum shopping as the act of a party against whom an adverse judgment has been rendered in one forum, seeking another and possibly favorable opinion in another forum other than by appeal or special civil action of certiorari. It held that the question of forum shopping is not even material to the instant petition. Neither CA-G.R. SP No. 79157 nor CA-G.R. SP No. 34586 is before the SC; these cases are separate and distinct from CA-G.R. SP No. 67201. What are assailed in the instant Petition are the CA Decision dated 21 October 2002 and Resolution dated 12 May 2005 in CA-G.R. SP No. 67201, which reversed the RTC and affirmed the MeTC, ordering Tan to vacate and deliver possession to Rodil Enterprises; the matter in controversy is Tan's refusal to pay monthly rentals over Botica Divisoria under the contract of sublease. CA-G.R. SP No. 79157 was a Petition for Review on Certiorari seeking to nullify the Office of the President's Order of Execution of its 8 February 1994 Decision in OP Case No. 4968, while CA-G.R. SP No. 34586 was an appeal on the Decision in OP Case No. 4968. If there had indeed been forum shopping when CA-G.R. SP No. 79517 was instituted during the pendency of CA-G.R. SP No. 34586, the question should have been raised at first instance before the CA in CA-G.R. SP No. 79517. The petition in CA-G.R. SP No. 79517 was already given due course and its ruling had long attained finality when the SC denied the appeal in G.R. No. 169892 with finality in its Resolutions dated 25 January 2006 and 20 March 2006; matters concerning that case are now beyond the jurisdiction of the SC to resolve.
• Judicial Admission / Offer of Compromise: The SC began with the general rule in Section 27, Rule 130 of the Rules of Court that an offer of compromise in a civil case is not an admission of liability and is not admissible in evidence against the offeror. It held, however, that the rule is not iron-clad. In Trans-Pacific Industrial Supplies, Inc. vs. Court of Appeals, the SC explained that to determine admissibility, the circumstances of the case and the intent of the party making the offer should be considered: if a party denies the existence of a debt but offers to pay for the purpose of buying peace and avoiding litigation, the offer is inadmissible; if in the course thereof the party making the offer admits the existence of an indebtedness combined with a proposal to settle the claim amicably, the admission is admissible to prove such indebtedness. In Varadero de Manila vs. Insular Lumber Co., the SC applied the exception because there was neither an expressed nor implied denial of liability, the defendant expressed willingness to pay, and the only question discussed was the amount to be paid. In the case at bar, the MeTC and the CA properly appreciated petitioner's admission as an exception to the general rule. The MeTC found that petitioner did not contest the existence of the sublease and that his counsel made frank representations about his liability in the form of rentals; this expressed admission was coupled with a proposal to liquidate. The Motion to Allow Defendant to Deposit Rentals was deemed an explicit acknowledgment of petitioner's liability on the subleased premises. The CA agreed, and the SC noted that the existence of the Contract of Lease dated 18 October 1999 was not denied by petitioner; the contracts he assailed were those dated 18 and 25 May 1992, whose validity had been upheld by the SC in G.R. Nos. 129609 and 135537. The SC found a categorical admission not only as to liability but also as to the amount of indebtedness: the MeTC Order dated 27 June 2000 was clear that petitioner agreed in open court to pay P440,000 representing unpaid rentals from September 1997 to June 2000, and to pay monthly rentals of P13,750 on or before the fifth day of each month after 30 June 2000. This judicial admission in open court, viewed with his Motion to Allow Defendant to Deposit Rentals stating that rentals due from September 1997 up to the present amounted to P467,500 as of the date of filing, could not now be rejected. An admission made in the pleading cannot be controverted by the party making it and is conclusive as to him; all proofs submitted by him contrary thereto or inconsistent therewith should be ignored whether objection is interposed or not. A judicial admission is an admission made by a party in the course of the proceedings in the same case, for purposes of the truth of some alleged fact, which the party cannot thereafter disprove.

• Judicial admission — An admission made by a party in the course of the proceedings in the same case, verbal or written, accepting for the purposes of the suit the truth of some alleged fact, which the party cannot thereafter disprove. It is conclusive as to the party making it; proofs contrary thereto or inconsistent therewith should be ignored whether objection is interposed or not. The SC applied it to Tan's open-court agreement to pay P440,000 and P13,750 monthly, reinforced by his Motion to Allow Defendant to Deposit Rentals, as admissions of his liability and the amount of unpaid rentals.
• Exception to the rule against admitting offers of compromise — In civil cases, an offer of compromise is generally not an admission of liability and is not admissible against the offeror. The exception applies when the party making the offer admits the existence of an indebtedness combined with a proposal to settle the claim amicably; the admission is then admissible to prove the indebtedness. Whether the offer is admissible depends on the circumstances and the intent of the party making it. The SC applied the exception because Tan did not deny the sublease and admitted liability in rentals while proposing to liquidate.
• Forum shopping — The act of a party against whom an adverse judgment has been rendered in one forum, seeking another and possibly favorable opinion in another forum other than by appeal or special civil action of certiorari. The SC held the question not material to the instant petition because the cases involved were separate and distinct, and any forum-shopping issue in CA-G.R. SP No. 79517 should have been raised before the CA in that case.
• Reliance on a decision of the same appellate court — A division of the CA may take notice of a decision rendered by another division of the same appellate body; to ignore it would be to turn a blind eye on a valid judgment rendered by the same appellate court. The SC applied this in rejecting Tan's challenge to the CA's reliance on its 28 March 2005 Decision in CA-G.R. SP No. 79157.

• "The general rule is an offer of compromise in a civil case is not an admission of liability. It is not admissible in evidence against the offeror. The rule, however, is not iron-clad." — The SC states the general rule on offers of compromise and signals the exception applied to Tan's admission.
• "To determine the admissibility or non-admissibility of an offer to compromise, the circumstances of the case and the intent of the party making the offer should be considered. Thus, if a party denies the existence of a debt but offers to pay the same for the purpose of buying peace and avoiding litigation, the offer of settlement is inadmissible. If in the course thereof, the party making the offer admits the existence of an indebtedness combined with a proposal to settle the claim amicably, then, the admission is admissible to prove such indebtedness" — The SC quotes Trans-Pacific to distinguish a bare offer to buy peace from an admission of indebtedness coupled with a proposal to settle.
• "An admission made in the pleading cannot be controverted by the party making such admission and are conclusive as to him, and that all proofs submitted by him contrary thereto or inconsistent therewith should be ignored whether objection is interposed by a party or not." — The SC explains the conclusive effect of a judicial admission against the party who made it.
• "A judicial admission is an admission made by a party in the course of the proceedings in the same case, for purposes of the truth of some alleged fact, which said party cannot thereafter disprove." — The SC defines judicial admission in affirming that Tan could not reject his open-court agreement and motion to deposit rentals.

• Trans-Pacific Industrial Supplies, Inc. vs. Court of Appeals, G.R. No. 109172, 19 August 1994, 235 SCRA 494 — Relied on for the exception to the rule excluding offers of compromise: an admission of indebtedness combined with a proposal to settle is admissible to prove the debt.
• Varadero de Manila vs. Insular Lumber Co., G.R. No. 21911, 46 Phil. 176 (1924) — Applied the exception where there was no denial of liability, the defendant expressed willingness to pay, and only the amount was discussed.
• Republic vs. Sarabia, G.R. No. 157847, 25 August 2005, 468 SCRA 142 — Cited for the definition of judicial admission.
• Heirs of Trinidad de Leon Vda. De Roxas vs. Court of Appeals, G.R. No. 138660, 5 February 2004, 422 SCRA 101 — Cited for the definition of forum shopping.
• Rodil Enterprises, Inc. vs. Court of Appeals, Carmen Bondoc, Teresita Bondoc-Esto, Divisoria Footwear and Chua Huay Soon and Rodil Enterprises, Inc. vs. Ides O'Racca Building Tenants Association, Inc., G.R. Nos. 129609 and 135537, 422 Phil. 388 (2001) — Controlling precedent upholding the validity of the 18 May 1992 and 25 May 1992 contracts, which Tan had assailed.

• Section 27, Rule 130, 1997 Rules of Civil Procedure — In civil cases, an offer of compromise is not an admission of any liability and is not admissible in evidence against the offeror. The SC applied the general rule but held that Tan's admission fell within the exception because he admitted the existence of indebtedness combined with a proposal to settle.
• Section 4, Rule 129, Revised Rules on Evidence — Defines judicial admission as an admission made in the course of the proceedings in the same case, verbal or written, by a party accepting for the purposes of the suit the truth of some alleged fact, which the party cannot thereafter disprove. The SC affirmed the CA's reliance on Tan's open-court agreement and motion to deposit as judicial admissions.
• Section 19, Rule 70, 1997 Rules of Civil Procedure — Governs immediate execution of judgment and how to stay the same. The MeTC denied Tan's Motion to Allow Defendant to Deposit Rentals because his prayer to deposit the amount with the City Treasurer of Manila contravened this provision.