A & C Minimart Corporation v. Patricia S. Villareal

Summary

A&C Minimart Corporation leased commercial property but stopped paying rent when it learned the lessors (spouses Bonifacio) had no valid ownership. The Villareals, who had acquired the property through execution sale, sued for unpaid rentals and sought 3% monthly penalty interest under the lease contract. While lower courts awarded the penalty interest, the Supreme Court reversed, ruling that the Villareals, not being parties to the lease contract, could not claim contractual benefits including penalty clauses. The Court held that A&C Minimart's rental obligation arose from quasi-contract principles to prevent unjust enrichment, not from the lease contract terms. The decision clarifies that contractual rights and obligations are limited to the parties who executed the contract and their legal successors, emphasizing the privity of contracts doctrine under Philippine law.