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LEASE Dimaculangan prayed to the trial court that the complaint be dismissed and a favorable

G.R. No. L-68021 February 20, 1989 judgment be rendered in her favor.
HEIRS OF FAUSTA DIMACULANGAN, petitioners, Pending trial of the case, Fausta Dimaculangan died. She was substituted by her children
vs. as defendants.
THE HONORABLE INTERMEDIATE APPELLATE COURT and FELIMON After trial, the presiding judge of the City Court of Pasay found that the premises in question
UY, respondents. is partly residential and partly commercial; that defendant has no arrears and that the latter
Jerry D. Bañares for petitioners. replied to plaintiff s demand letter and paid by way of money orders her rentals which were
Luis T. Tuason, Jr. for private respondent. however, returned unclaimed.
On October 16, 1980, the aforementioned court rendered a decision increasing the monthly
FERNAN, C.J.: rentals and fixing a definite period for the term of the lease, the dispositive portion of which
This is a petition for review on certiorari of the July 2, 1984 decision of the Third Special reads:
Cases Division, Intermediate Appellate Court, in AC-G.R. SP. No. 01230, entitled "Heirs of WHEREFORE, AND IN VIEW OF THE FOREGOING, the defendant is
Fausta Dimaculangan v. Hon. Baltazar R. Dizon, et al." dismissing for lack of merit the hereby ordered to pay the plaintiff the amount of P500.00 per month, as
petition for review of the Orders dated June 6, 1983 and July 13, 1983, issued by the monthly rental from August 1978 to August 1980; defendant shall be
Regional Trial Court of Pasay City, Branch CXIII in Civil Case No. 8865-P which in turn granted a Contract of Lease for two (2) years from August 1980 to August
affirmed on appeal the October 16, 1980 decision of Hon. Mariano A. Lacsamana, then 1982 of which the defendant shall pay the plaintiff a monthly rental of
presiding judge, Pasay City Court, Branch 11, in Civil Case No. 13591, entitled "Felimon Uy P750.00; the party-litigants are ordered to pay the amount of P1,500.00 to
v. Fausta Dimaculangan, for Ejectment". their respective counsels by way of attorney's fees; and the party-litigates
Fausta Dimaculangan and her children, petitioners herein, occupy by lease an apartment (sic) shall equally pay the costs of suit.
located at No. 2490 E. Zamora St., Pasay City, at a monthly rental of P260.00. They have SO ORDERED. 3
been living in said premises since 1961. To augment its income, the family maintains therein On Appeal, the Regional Trial Court, Branch CXIII, Pasay City, affirmed the aforesaid
a sari-sari store and bakes hot pan de sal to sell to the general public. The capital decision of the City Court and denied petitioner's motion for reconsideration. 4
investment involved is claimed to be P3,200.00 only. On review by certiorari, the Intermediate Appellate Court, now Court of Appeals, dismissed
On July 5, 1978, private respondent Felimon Uy sent Fausta Dimaculangan a registered the petition for lack of merit. 5
letter informing her that the property which she has been occupying has been sold to him Hence, the instant petition for review, raising the following issues for the resolution of this
and should she desire to continue occupying the same, she should sign a contract of lease Court:
for a period of two (2) years at a monthly rental of P1,500.00. Receiving no reply to his 1. May the trial court in a complaint for ejectment increase the rental
letter, the private respondent sent a second one, demanding payment of P750.00 covering agreed upon by the parties, and in the instant case, from the agreed
unpaid rentals for the months of August, September and October, 1978 but still he received P250.00 to P500.00, and then to P750.00, without violating the provisions
no answer to his-demand. Thus, he filed with the City Court of Pasay City a complaint for of existing laws;
ejectment 1 praying, among others, that said court render judgment ordering Fausta 2. May the trial court alter the agreement of the parties by shortening the
Dimaculangan and all persons claiming rights under her to vacate the leased premises. period of the lease from an indefinite period within the purview of
In her answer with compulsory counterclaim, 2 Fausta Dimaculangan admitted that she Presidential Decree No. 20, the law in force at the time, and of the
received plaintiff's letter of July 5, 1978 but claimed that she sent plaintiff a reply which was amendatory Batas Pambansa Blg. 25, to a fixed two (2) years;
however returned undelivered because plaintiff distorted his address. She denied having 3. In two dismissing the petition for review, and in effect, affirming the
been in default in her monthly rentals to the plaintiff, and alleged that she has never been in judgments of the Metropolitan Trial Court, and the Regional Trial Court,
default during the entire period of her occupancy of the premises since 1961 up to the has the Honorable Intermediate Appellate Court committed a grave abuse
present. In fact she tried to pay the plaintiff who did not want to collect the monthly rentals, of discretion amounting to lack or absence of jurisdiction, or at least a
even in the form of money orders which were however, returned unclaimed. She countered grave reversible error of a question of law, and/or of fact and law,
that the filing of the complaint was just a scheme to compel her to agree to the capricious correctible by the instant petition ? 6
and whimsical demand for an unconscionable increase in the monthly rental from P250.00 It has been established that petitioners have been occupying the leased premises on a
to P1,500.00, in clear violation of the provisions of P.D. No. 20, as amended. She further verbal contract since 1961 at a monthly rent of P250.00, and that although no fixed period
alleged that when she received the plaintiff s letter of October 3, 1978, she caused the for the duration of the lease has been agreed upon the original lessor and lessee, the
payment of the rentals for August, September and October, 1978. Defendant Fausta rentals were paid monthly.

Under the circumstances, there appears to be no dispute that subject contract of lease is At any rate, the period fixed by respondent Judge which appears acceptable to the lessor
covered by P.D. 20 and later by B.P. No. 25. has expired in 1982 and has therefore become moot and academic, aside from the fact that
The decisive issue therefore, in this case, is whether or not subject contract of lease is for with private respondent's conformity, it has become the latter's term which is well within his
an indefinite period, for the purpose of applying Presidential Decree No. 20. authority; that is, to terminate the contract and enter into a new one.
The pertinent provision of P.D. No. 20 reads: WHEREFORE, the petition is hereby dismissed for lack of merit, with costs against the
SEC. 4. — Except when the lease is for a definite period, the provisions of petitioner.
paragraph (1) of Article 1673 of the Civil Code of the Philippines insofar SO ORDERED.
as they refer to dwelling unit or land on which another's dwelling is located
shall be suspended until otherwise provided; but other provisions of the
Civil Code and the Rules of Court of the Philippines on lease contracts,
insofar as they are not in conflict with the provisions of this act, shall
apply.
To exempt the lease from the application of P.D. No. 20, it must be one with a definite
period.
It will be recalled that the agreement between the original lessor and lessee was unwritten,
so that it is difficult to determine with certainty the terms and conditions agreed upon.
Be that as it may, it is undisputed that the rentals are paid monthly. This Court had already
ruled that leases are deemed on a "month-to-month basis", if rentals therefore are paid
monthly. 7
Similarly, it is well settled that a lease contract "on a month-to month basis" provides for a
definite period and may be terminated at the end of any month. 8 By express exception of
P.D. No. 20, judicial ejectment lies when the lease is for a definite period or when the fixed
or definite period agreed upon has expired. 9
Even more recently, this Court clarified that "(I)n exempting from suspension ejectments on
the ground of the expiration of the lease period, Section 4 of Presidential Decree No. 20
made no distinction between oral and written lease contracts and no distinction may,
therefore, be inferred. Consequently, at the time of filing her action the private respondent
had a clear and indubitable right to eject the petitioners, the period of the latter's lease
expiring at the end of every monthly period ... 10 The Court further pointed out that the Rent
Control Law now in force, Batas Pambansa Blg. 877, has erased the distinction between
oral and written leases insofar as expiration of the lease period as a ground for judicial
ejectment in leases covered by said law, is concerned. 11
In view of the foregoing, there appears to be no necessity to discuss the other issues in this
case; more specifically whether or not the trial court may increase the rental and/or alter the
period of the lease from an indefinite period to a definite period; both issues having become
moot and academic.
Citing the case of Mabalot v. Madela Jr. 12 the Court of Appeals ruled that the petition has
been rendered moot and academic by the death of the lessee Fausta Dimaculangan, which
terminated the lease in her favor. It will be noted however, that in the aforecited case, those
seeking to continue in possession of the premises were not the heirs of the lessee but
merely members of the lessee's household, which does not apply in the case at bar, where
petitioners are the lessee's children. Authorities are of the view that lease is not essentially
personal in character, thus the right is transmissible to the heirs. 13

Metro Manila. informed Mr. Check Vouchers and Check No. to be increased by 10% at the end of each said company would no longer act in any representative capacity for the Fermins five year period. 9. for a term of ten (10) years. including Roberto E..682. On May 31. shall 12. 5.50 by Key Management materials worth not less than P200. (Exh. naming and constituting GANCAYCO. to exercise general control ALPAS. Defendants expressed strong exception and objection to the aforesaid lateral 2. spouses Roberto E. respectively. have been constructed by the LESSEE on the leased properties.000. JR. marital consent from Maylinda Ferraren. It was never signed by plaintiffs up to this day. executed a General Power of Attorney vs. 1987.. Alpas (herein defendants) 6. 1986 to advance. dated March 17. as collection agent of the plaintiffs as lessors and lessees. 4. AGRA & Co.800. their heirs or assigns. 1986. Corporation in its letter dated May 14. "2"). Fermin and Maylinda Ferraren (herein them. at its own option and discretion tendered payment of the sum of Ten Thousand Six Hundred Eighty-Two & 50/100 terminate the lease. and supervision over his property in the Philippines. that the rental shall be 1987. 1987 (Exhibit "16". who was tasked. Puno. informed defendants that said company was appointed document is registered and annotated on the Original Certificate of Title attorney-in-fact for the administration of the leased premises and to collect rentals No.. Inc. increased by ten (10) percent at the end of each five (5) year period. On April 2. Eduviges Espinas vda de Martin as his HON.00) as partial payment for the annual rental covering March 15. of termination. Alpas that they were unilaterally terminating the lease effective 18 April FIVE THOUSAND PESOS per annum. attorney-in-fact. without any acknowledged receipt of P10. as agent. Ms. FERMIN and MAY LINDA FERRAREN. 95146 May 6.G. (10) year term. respondents. Defendants built on the leased premises a warehouse structure of strong application of payment of their remittance of P10. Key Management Corp. 1976. 188395 for (10) years.00 yearly. 11.. in another letter (Exh. In a letter dated 20 April 1. Fermin for herself and as attorney-in-fact of Ismael J. 1987. provided. Mr. 1988. The pertinent provisions of the contract of lease which lie at the core of this Fermin (Exhibit "6"). plaintiffs) and spouses Meliton P.: and appointing the latter to be their true and lawful attorney-in-fact (Exh.50) covering balance of the annual rental from March 16. property. While in the United States of America.). In a letter dated 08 May 1987 Atty. Mandaluyong.000. as principal. Jr. "9") dated 12 March 1987 2) The rental for the property leased hereunder shall be at the rate of advised Mr. including 12% interest per annum on rental in arrears. "16-A" and "16-B"). Inc.R. 10. years upon mutual agreement of the parties. through his lawyer answered Key Management Corp. respectively). after giving the LESSORS a previous written notice in Pesos (P10. controversy are quoted hereunder: 8. represented by its president. in October. representative a document entitled 'Lease of Real Property' already signed by 1. at least one hundred eighty (180) days from the effectivity date March 15. Andres for private respondents.00.. and advising to refer all matters to the Fermin's attorney-in-fact. AND LUCY D. received the letter together with Mr. "A"). with SPOUSES ROBERTO E. Rose B. her other children. 1991 3.50.. Jose J. "12".682. in a letter counted from the effectivity of this lease agreement. Pinatubo Street. petitioners. (Exh. defendants sent plaintiffs The facts as found by the trial court are not disputed. Fermin (plaintiff in this case). Key Management Corp. 1980. Agag & Dumlao Associates for petitioners. entered into a Property Administration Agreement with AGRA & Co. 7.682. AGRA & Co. naming and constituting his mother. 157 Pesos (P1. Eduviges E. and Lucy D. In a letter dated 6 February 1987. 1985 Eduviges E. (Exh. the LESSEE may. 1987 (Exhibits "3" and "4"). all improvements which are permanent in nature that may P10. Roberto Fermin. "5". renewable for another term of ten (10) years upon mutual agreement of the parties. Alpas. among other things. further obligation to reimburse the LESSEES. entered into a contract of lease covering the collected payment from the defendants the sum of One Thousand Eight Hundred parcel of land (375 square meters) owned by the spouses Fermin at No. ALPAS.. On March 15. Key Management Corporation in the letter dated 04 March 1987 and 09 March 1) The term of the lease shall be ten (10) years counted from the date the 1987 (Exhibits "7" and "8"). Benemerito of Key Management priority to purchase the property if the LESSOR decides to sell said Corporation reiterated the demand to pay and to vacate.50 (Exhibit "11". 1987. Inc.. 4) Upon termination of the lease agreement occurring after the first ten Alpas' Statement of Account. "10"). J.. Alpas that Rental was fixed at P5. . Before the expiration of the ten (10) year period. 1986 to March 15. but with notice of its application. No.. "15") Key Management Corporation become properties of the LESSORS. The renewal of a contract of lease is the issue addressed by this petition. 395344 and the lease shall be renewable for another term of ten (10) due thereon. COURT OF APPEALS and SPOUSES MELITON P. Alpas. 14. advising the latter that the lease agreement had already 3) The parties hereby agree that during the renewal period after the ten been renewed for another term of ten (10) years from 16 March 1986 (Exh. That the LESSEE has the 13. Reyes. "13" and "14". On November 14.682.

3 question that private respondents expressed their desire to renew the lease by another 10 Nothing is more settled than the rule that the terms of a written contract are binding on the years at the rate of the rental stipulated in the lease agreement.682. On May 14. terminate the lease.000. 1989.12 In another letter of same date addressed to one Atty. the the lessors decide to sell said property. but with notice of SETTING ASIDE THE DECISION OF THE REGIONAL TRIAL COURT DATED its application to accrued rentals at P2.50 as rental up to March 15. without any further Petitioners appealed to the Regional Trial Court (RTC) of Pasig.50. Atty. While there is no 1670 IN RELATION TO ARTICLE 1687. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN 1987.4 .000. Benemerito private 3.800. ARGUENDO THAT ONE WAS CREATED. 1989. Otherwise.1âwphi1 In the interpretation of the provisions of a written contract. 1. parties.900.000. it cannot be said that the lease agreement had been TEN (10) YEAR PERIOD AS PROVIDED IN THE CONTRACT OF LEASE (EXH. 1989 WHICH ORDERED THE DISMISSAL OF THE premises. 1987. shall become properties of the lessors.00 a month leaving an outstanding balance of OCTOBER 23. should follow the literal meaning of the stipulation. is set aside and a new one is entered. Jose J. 1986 to March 15. 10 In a letter dated April 20.7 Upon termination of the lease after the first 10 years. ASSUMING for another 10 years. the lessee (10) years from 15 March 1986 (Exhibit "8". On August 31. Defendants/appellees are ordered to vacate the premises and to pay the rentals for Nevertheless.1âwphi1 The stipulation of the parties is clear in "A" OR "l") INSTEAD OF ON A YEAR-TO-YEAR BASIS AS PROVIDED IN ART.00 covering the balance of the annual rental from March 16. the Decision dated April desire to renew the lease when they sent petitioners' representative a prepared lease 14. private respondents objected in writing to the aforesaid COMPLAINT FOR BEING PREMATURE AND FOR LACK OF CAUSE OF application of payment of their remittance of P10. as collection agent of petitioners its use at P5. petitioners filed a complaint for ejectment in the Metropolitan Trial previous written notice in advance.000.00 monthly. through counsel. Metro Manila against private respondents for refusal of the latter to termination.2 letter dated March 12.9 Key Management Corporation which was appointed by petitioners as attorney-in-fact No pronouncement as to costs. and "18-B"). 1986 (the expiry date of the first term of 10 years) to March 15. IS THE SAME AS THE ORIGINAL From the foregoing set of facts. WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRIEVIOUSLY In a letter of May 8.1987. are permanent in nature that may have been constructed by the lessee on the leased the trial court rendered a decision dismissing the complaint with costs de officio. finding the instant petition to be well-taken.5 The agreed rental is P5. Obviously. Inc. 1987. private respondents manifested their WHEREFORE. defendants' counsel. 1986. 1987 that the lease agreement was terminated effective April 18. after giving the lessors a On August 10.00 the period from March 15. 15. replied in a letter dated March 17. 1986 to March 17. this petition for review where the issues raised are as follows— 1988 including 12% interest per annum on rentals in arrears. 1987 addressed to Atty.00 as of April 15. advised private respondent Meliton Alpas in a SO ORDERED.682.1987. properties. the appellate court rendered a decision setting aside the another term of ten (10) years from March 16.00 as partial payment for the annual amount of P2. In another letter dated May 14. A motion for reconsideration filed by private respondents was denied in an order dated 1987.8 dispositive part of which reads— Before the expiration of the 10 year term of the lease. "18-A". Benemerito of Key Management Corporation ERRED IN REINSTATING IN TOTO THE DECISION OF THE TRIAL COURT reiterated the demand that private respondents pay the accrued rentals and vacate the DATED APRIL 14. the evident intention of the there was no meeting of the minds as to the rate of the rental. that such a renewal is subject to the mutual agreement of the parties. Key Management Corporation acknowledged receipt of P10. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN respondents reiterated said objection and stated that the lease had already been renewed HOLDING THAT THE PERIOD OF THE IMPLIED NEW LEASE. effectively renewed for another 10 years.00 for every month thereafter until defendants/appellees shall rental covering March 15. Benemerito. on May 31. 1987 addressed February 21. a decision was promulgated setting aside the appealed decision. NEW CIVIL COVE. their heirs or assigns.682. P13. reiterated his stand on the matter of lease shall be renewable for another term of 10 years upon mutual agreement of the payment made by the defendants of the Pl0. 1987 and the collected from private respondents the sum of P 1.. As there was no agreement parties must prevail.00 per annum with the escalation clause that the rental including 12% interest per annum on rental in arrears and that the contract of lease shall be increased by 10% at the end of each five-year period counted from the effectivity of between the plaintiff and defendants had already been renewed for another ten the lease agreement. 1986 and tendered payment of the sum of decision of the RTC and reinstating the decision rendered by the inferior court.500. have rendered the premises to plaintiffs/appellants. all improvements which agree to an increased rental of P2. AGRA & Co.6 After the 10-year term and during the renewal period. Metro Manila. 1988. apparently petitioners would parties thereto. Ismael Andres.00 month for renewal of the lease. 1990. at his/their own option and discretion.11 2. Corporation. 1989. wherein on obligation to reimburse the lessees.000. at least 180 days from the effective date of Court of Mandaluyong. the courts be willing to renew said lease if the rentals are increased to P2.50 by Key Management ACTION. Said respondent. Hence. 1990. Private respondents then filed a petition for review with the Court of to Key Management Corporation that the lease agreement had already been renewed for Appeals. 1988. for the administration of the leased premises. to wit: agreement already signed by them but it was never signed nor returned by petitioners.1 may.. On April 14. The lessee has the priority to purchase the property if October 23. 1987. Jose J. P10. A reading of the lease agreement shows that it is for a term of ten (10) years and that the Atty.682.

and the decision of the Regional Trial Court dated October 23. Article 1670 of the Civil Code so provides for this situation. SO ORDERED. 1990 is REVERSED and SET ASIDE. not for the period of the original contract. then the term of the lease may not be considered to have been renewed for another 10 years. then it is understood that there is an implied new lease. . with costs against private respondents. However. the private respondents continued to occupy the premises for more than 15 days with the acquiescence of petitioners.00 as demanded by petitioners until private respondents vacate the premises. The questioned decision of the Court of Appeals dated August 31. The other terms of the original contract shall be revived. There is thus an implied renewal of the lease from year to year. not for the period of the original contract. The extension of the lease for one year from March 16. the petition is hereby GRANTED. but from year to year. 1989 is hereby REINSTATED and AFFIRMED with the above modification as to rental. but for the time established in articles 1682 and 1687. and unless a notice to the contrary by either party has previously been given. it is understood that there is an implied new lease. the rate of monthly rental should be P2. since after the expiration of the lease agreement.150.reached. from March 16. 1986 to March 15. 1987. Art. If at the end of the contract the lessee should continue enjoying the thing leased for fifteen days with the acquiescence of the lessor. However.00 considering the escalation clause of 10% after every five (5) years. 1987 shall be at the agreed monthly rental in the contract of P6.000. WHEREFORE. 1670.

Ruperto 1. Thus: "Defendants. Civil Case No.' .' rescinded by virtue of the above Civil Code provision. LORENTE O.1 So it was held by respondent Court of "Of course. clearly. A careful respondents.00). respectively the lessees and sublessees Article 1659 of the Civil ask for rescission in view of their refusal to recognize the existence of the lease contract. the contract of lease being pay rentals for six (6) consecutive months shall automatically annul this contract."6 to [private respondents] it stands clear that they violated the aforequoted provision of 2. now petitioners. Gonzales for petitioners. is the right of private judgment of the lower court. Vda. 63700. Thirty Pesos (P30. then private respondents have no right to ask for the with the provision of paragraph 3 thereof.. refused to recognize the The complaint for rescission was filed by private respondents who succeeded to the rights existence and/or binding effect of the lease contract. de Gaerlan from which the disputed two lots this judicial stand until final decision was had in the ejectment case. Code. contending that there is the period of twelve months and. 1971 (P15.. with only issue" whether defendants. paragraph 3 of the said lease contract providing 'That failure on the part of the [lessee] to The judgment was in favor of private respondents as plaintiffs.G. was in arrears for however take exception to the said remedy by rescission. A and the appellees maintained of the previous lessor. the defendants prevent This is how respondent Court resolved the issue: "While claiming to have committed no automatic cancellation of the contract but did not depress the owner to ask for the rescission such violations.R. On the contrary. entitles [private respondents] to YARISANTOS respondents. now private respondents. shall be maintained. Much is made in the third error assigned of private respondents being bereft of the right to Tan and Pedro Pamintuan. lessor or the lessee should not comply with the obligations set forth in articles 1654 and Cesar R. We cannot do otherwise. 1959 or a month after they filed their petitioners Tan and Pamintuan provided for an agreed monthly rental of P15.'" 5 respondents as plaintiffs against petitioners as defendants on November 12.. beginning the month of October. The facts as found by respondent Court conclusion that no error of law could be imputed to respondent Court. now petitioner.. YARISANTOS and LOURDES O. Philippine Currency for the two lots.00 for the two.. It was likewise assigned as the second error that in view of a previous favorable decision paragraph 2 of the contract of lease 'That the agreed monthly rental of [Fifteen Pesos] by the Court of First Instance of Manila of a consignation case filed by private petitioner Tan . is thus applicable.. 1958. Yarisantos.: From the decision of respondent Court of Appeals of October 30. never claimed to have offered to pay the rental at the end of each month month.' [So] vs. Refusal on plaintiffs' part to recognize the existence promptly at the end of every month for each lot or P30. defendants' remedy is another provision that failure on the part of the lessee to pay the rental for six consecutive not to violate their own obligation under Exhibit A but to make tender of payment of such months would automatically annul the contract. there would have been no necessity for the stipulation in paragraph 2 of the pleadings and they do now formally admit here. . Exh. With [their] above admission that 'no such monthly payments were ever made' by them the provision that such rentals should be paid 'promptly at the end of every month' . We affirm. Philippine Currency.. . It was never contemplated that the rentals were to be payable every six months. No. Yarisantos and Lourdes O.3 different grounds. payable promptly at the end of every month for each lot or PEDRO PAMINTUAN and RUPERTO D. It considered as "the one and lessees a six-month period of grace if the lessor can rescind the lease contract anyway. Indeed. [petitioners] nevertheless admit that ['they] in their pleadings nor at any time of the contract failure of the lessee to pay the stipulated rentals promptly at the end of every during the trial.. Patrocinio A.. the lease entered into and/or binding effect of the said lease contract Exhibit A is only like saying that the latter on October 10. The lease contract in favor of private with the Municipal Court of Manila in December. 1951 to expire at the discretion of the lessee after twenty years.00). the lessors Llorente O.. . with respect to the second lot. a petition for review was filed with this Tribunal. as before us. There was would not accept payment of rentals thereunder. purchased. if refused. Defendants' argument at page 20 of their brief runs thus: 'What good is there to grant the An appeal was then taken to respondent Court of Appeals. .. we do not overlook' . In making deposit rentals at six-month intervals. obligation 'to pay the price of the lease according to the COURT OF APPEALS. left no doubt that there was indeed such a failure to do so on the part of petitioners. petitioners. they impliedly admitted in their otherwise. Canonizado for private respondents. defendant. the aggrieved party may ask for the rescission of the. as claimed by 1659 of the Code is different from the automatic annulment of same contract in accordance them in their answer to said complaint. . that with respect to the first lot.. In such a situation.. situated in Sampaloc. that the defense of the appellants (against such failure to Appeals. said violation of lessees' .00 payable complaint in these proceedings. which grants the right to the lessor in the event of the failure on the part of the lessee Such an argument was raised and rejected by respondent Court of Appeals in these words: to comply with his obligations. . no such monthly payments were ever made' contract. They arise from different cases and are based on rescission or annulment of the said contract of lease. Ruperto Tan. pay every months) is that the appellees as early as May. 1959 alleged Nor is this all that was said by respondent Court Appeals on the matter. Manila were. the contract of lease for nonpayment of rentals on time. J. 1657. 1958. contract and indemnification for damages or only the latter. rescind said contract of lease under Article 1659 of the same Code providing that 'If the Rudolfo L. to make consignation thereof in court. the intention that the lessee should pay rentals monthly is emphasized by . for a period of eight months.' " 4 FERNANDO. had violated the provision in the contract of but a month's failure pay the same rentals?' The aforequoted argument was neatly lease as to the monthly rental being promptly paid at the end of every month as claimed by answered by the lower court as follows: 'The right to rescind the contract pursuant to Article plaintiffs. allowing the contract to remain in force. If they had not vioIated said provision.. to rescind a perusal of the records of the case and the legal grounds in support of this petition yields. TAN. L-28367 November 29.2 The complaint for rescission filed by private rentals and. 1967 affirming the The question before respondent Court of Appeals. terms stipulated' (Article 1657 of the New Civil Code).

. Costs "automatically annul this contract. payment of rentals for six consecutive months was such a serious breach as to WHEREFORE." subject-matter and causes of action in the said cases are distinct from those in the instant The special stipulation between the parties "that failure on the part of the [lessee] to pay the case. and respondent therewith. The appellate court therefore correctly ruled that the contractual stipulations covered different situations."7 Such a defense was thus unavailing. for nonpayment of the stipulated monthly rental at the and of the month. as correctly stated by incompatible with the lessor's above right to rescind the lease or to judicially eject the lessee respondent Court." They may have even intended such automatic against petitioners. each enforceable as the cause should arise — in consonance with the Separate Opinions rule of construction that contracts should read as a whole and their specific provisions harmonized and given effect accordingly . rule of construction that contracts should read as a whole and their specific provisions Thus: "And. J. lessee should not comply with his obligation of paying the price (rental of the lease according to the terms stipulated). the last error assigned being obviously untenable. The lessor is therefore entitled under Article 1659. not be necessary. JJ. that if the harmonized and given effect accordingly. Appellant claims that she had 1673. Civil Code.J. lease could not be rescinded is devoid of merit. Carpizo. 1967 is affirmed.against private respondents to compel the latter to accept the rentals at the rate of P15. In the instant case. therewith. Castro. appellant failed and refused to pay the monthly stipulated rental I concur. The lessor is therefore entitled under Article 1659. recovery would lie against private respondents and in favor of petitioners on their counter. in the sense that resort to court action would Concepcion. subject to such 3. although in reality the lessee may in bad faith refuse to honor and comply Reyes.8 penned by Justice Barrera. there payment of rentals for six consecutive months was such a serious breach as to being a failure on the part of petitioners to comply with their obligations as lessee and "automatically annul this contract. raised stipulated monthly rental constituted a violation of the obligation imposed upon him by and decided adversely against petitioner by respondent Court of Appeals thus: "Another Article 1657. J. the principle of res adjudicata would apply.. An independent and separate cause of action had. had the right to ask for rescission. to judicially eject the lessee for "lack of payment of the price stipulated. to the Civil Code to bring. different situations. Article 1659 of the same Code expressly provides. among others. the parties obviously intended and contracted that non- claim. Under the special stipulation. Civil Code. allowing the contract to remain TEEHANKEE. 'the aggrieved party may ask for the rescission of the Separate Opinions contract and indemnification for damages. C. JJ.. is relevant. Consequently. as he did. Makalintal. Zaldivar. Article 1659 speaks in categorical language. Court of Appeals did. Civil Code.L. 1958. "ask for the rescission of the contract and indemnification for damages" and under Article and the trial court correctly declared the rescission thereof. Civil Code. although in reality the lessee may in bad faith refuse to honor and comply what the lower court presided by the Honorable Judge Conrado Vasquez. as no period of grace as may be granted by the ejectment court." not defaulted in the payment of said rental as no demand to make payment was made on The special stipulation between the parties "that failure on the part of the [lessee] to pay the her by appellee. to contention of defendants that the consignation and ejectment cases elsewhere referred to "ask for the rescission of the contract and indemnification for damages" and under Article constitute res adjudicata or are a bar to the present action is also without merit because the 1673." They may have even intended such automatic sublessee respectively. no court can validly stand in the way of the enforcement thereof. Villamor and Makasiar. the parties obviously intended and contracted that non- Private respondents. This is a question of fact which can not be raised here and the finding of rentals for six (6) consecutive months shall automatically annul this contract" is not the lower court to this effect is binding on us. concurring: monthly a well as another decision dismissing an ejectment suit by private respondents I concur.B. With the lessors having decided to avail themselves of such a right annulment literally from a layman's viewpoint.. or only the latter. Civil Code. each enforceable as the cause should arise — in consonance with the An excerpt from an opinion in Malicsi v. concur. appellee had the right under said provision of Article 1657. to judicially eject the lessee for "lack of payment of the price stipulated. It did not suffice to preclude the operation of rentals for six (6) consecutive months shall automatically annul this contract" is not Article 1659.00 TEEHANKEE. annulment literally from a layman's viewpoint. J. Failure on the part of the lessee to pay promptly at the end of every month the of the property subject matter of the aforementioned lease contract for the months of stipulated monthly rental constituted a violation of the obligation imposed upon him by January and February. That was not be necessary. Civil Code. the present action for rescission of said Contract of Lease. concurring: in force'. as the aggrieved parties. Failure on the part of the lessee to pay promptly at the end of every month the against such petitioner. already come into being. It would thus appear clear that the first error assigned to the effect that the contract of period of grace as may be granted by the ejectment court. To impute what was done by them as error would be to disregard what The appellate court therefore correctly ruled that the contractual stipulations covered the law so plainly commands. subject to such Court of Appeals complained of. Under the special stipulation. the decision of respondent Court of October 30. This point was.. and Barredo. concur in the result.'"9 incompatible with the lessor's above right to rescind the lease or to judicially eject the lessee That is all that need be said as to this petition for the review of the decision of respondent for nonpayment of the stipulated monthly rental at the and of the month. in the sense that resort to court action would under the law.

(Murdock et al.. 290. 1947 and last until May 31. chan roblesvirtualawlibrary51 C. el arrendador y el The terms of the sublease Exhibit “5”. The transfer is deemed a mere sublease. 1967 (“tatagal pa hanggang sa Mayo 31. the present appeal. expiration of the sublease in as good a condition as when he took possession of it. January 31. last lease was signed in 1931 and was to last “until June 1.: lease. involves only the sublease to 569. The appeal has been certified to this court on the ground The same test is applied. 1967. argument. Actually. Esperanza Guillen. 555. S. Bernardo Enriquez. The fishpond in question formerly belonged to three roblesvirtualawlibrarywhereas. chan The material facts are not in dispute. Plaintiff Eduardo Manlapat. pero sin que el subarrendador se desligue por completo del arrendamiento Government. 36 NY action with costs. 1967”). also furnish further proof that the lessee. vs. que se convierte en arrendatario. her personality has not disappeared.) inconsistent with the idea that she had entirely given up her interest in the estate. at common law. Fishel et al. where the transfer of a leasehold by the lessee is that it involves only questions of law. p. the transaction is a subletting.R. Hence. su personalidad owner. 1956. the Appellant contending that the lower court erred in declaring the same valid premises on the last day of the term prevents the transfer from being an assignment. contracts of lease and sublease. A. their sole heir. as Exhibit “5” — that the said document is one of sublease. the sublessor has not The essential difference between an assignment of lease and a mere sublease is given by transferred her interest for the entire period of the original lease. Morris. so that.. and from though entered into without the consent of the lessors since there was no prohibition against this Appellant argues that in fixing the term of the sublease so that it would expire on May it in the contract of lease — but a veritable assignment of lease. No. a reversionary interest in the term. Defendant. is 510. thus dissociating himself from the original contract of REYES. J. it seems obvious from an examination of the terms of the sublease to the latter to commence from May 31. would be valid even would last up to May 31. the lessor and the assignee. however. (51 C. in which the sublessor binds herself to pay “El subarriendo supone un nuevo arrendamiento. document executed by Esperanza Guillen in favor of the Appellee — identified in evidence with the co-owners of the fishpond already dead. Plaintiff-Appellant.) It is The Appellant impugns the validity of the sublease to the Appellee on the theory that it is not true that the sublessor states in Exhibit “5” that her possession under the original lease really a sublease. 3.J. alleging that the sublease to last only until May 31 of that year. desaparece. if the lessee underlets for a period less than the entire term or reserves for himself Bernardo Enriquez. the test is whether the lessee has by said contract made an absolute DECISION transfer of his interest as such lessee. as Manresa would say.J. — which. is void for want of such consent. the With the above distinction in mind.J. chan roblesvirtualawlibraryDavis vs. quedan solamente en la relacion juridica dos personas. has not dissociated herself from the original lease and that. Tratado de Derecho Civil Español. the juridical relation two persons.. En el subarriendo no desaparece personalidad sublessor. which. was lease. the sublessor must have intended to transfer her entire interest in the lease. and this may well be due to Manresa thus:chanroblesvirtuallawlibrary a desire to repossess the fishpond earlier so that she could prepare it for delivery to the “ cralaw En la cesion. to last “until June 1. SIMEON SALAZAR.” After the death of 553. But the court decided that those contracts were valid and dismissed Plaintiff’s the transfer a sublease. Tomo 3. 474. y el segundo a la venta. condition No. now cesionario. as already stated. first. under both the old and the new Civil Code. chan roblesvirtualawlibrarymientras que en la cesion del arrendamiento.” On the other hand. al arrendatario transmite en absoluto su derecho. chan roblesvirtualawlibrary35 C. who is converted into a dismissing Plaintiff’s action for the recovery of a fishpond through annulment of certain lessee. deemed an assignment of lease only if he cedes his entire interest in the estate. The opinion. Estos dos contratos se regard to the condition last named. EDUARDO MANLAPAT. [G.) Appellee. chan roblesvirtualawlibraryhay dos arriendos y dos relaciones juridicas diferentes. pag. (35 C. The sublease is thus for a shorter period than the original the Defendant. L-8221. which requires the sublessee to return the fishpond upon the condiciones y quedando el arrendatario. (32 Am. the co-owners who had taken turns in leasing it to the same person. subleased the fishpond. however.” and binding. however small. say. to Dr. 121 NYS 624. chan roblesvirtualawlibrarycondition No. convirtiendo al arrendatario en the land taxes on the fishpond and such other taxes as may be exacted by the arrendador.” (10 Manresa 1950 ed. Condition No. 1967. continuando el arrendamiento en las mismas lastly.J.) Indeed. sublease and to pay damages should she again sublease the fishpond to another person.] parecen:chanroblesvirtuallawlibrary el primero al arrendamiento. 4. his widow. it is held that “the mere fact that the lessor is to receive a surrender of the the Appellee. To determine then whether a given contract constitutes an assignment of lease and not a mere sublease. 1967. his personality disappears and there remain only in This is an appeal from a judgment of the Court of First Instance of Bulacan. Appellantobserves that it does not specify that it is to the . in Appellant’s 31. S. which binds her to respect the aunque intimamente ligadas y relacionadas la una con la otra. chan roblesvirtualawlibraryand cesionario se coloca en luger del cedente. 2. Equally To the same effect is the following from Valverde:chanroblesvirtuallawlibrary inconsistent with this idea are condition No. el tree in the fishpond without the sublessor’s written consent. A reservation of even so short a period as the last day of the term is enough to make null and void. 989. vs. is based upon mere conjecture. In 1952. With completamente desligado de responsabilidad con el arrendador. 5. which. the original brought the present action in the Court of First Instance of Bulacan against the subleasee lease is. as Manresa would alguna. (Valverde.) Macario Cuerpo Cruz and thereafter to the present Defendant Simeon Salazar. 1967. the sublease is to Simeon Salazar to recover possession of the fishpond. Jur. which forbids the cutting of any primitivo.) So. 990. en virtud de la cesion de su derecho. In the first place. if he retains a reversionary interest. as well as the leases executed by Plaintiff’s predecessors in interest.

the return of the property object of the contract would naturally. ililipat at pabubuwisan ang aking posicion at pamumuwisan sa nabanguit na palaisdaan cralaw “ This clause clearly means that the lessee is transferring possession of the fishpond under lease to her and renting it (i.sublessor that the fishpond is to be returned by the sublessee. subleasing it) to the transferee. She says:chanroblesvirtuallawlibrary “ cralaw aking isasalin. as the contract is between sublessor and sublessee. there being nothing against it in the original contract of lease. have to be made to the sublessor. in her contract with the sublessee. Notice may also be taken of the fact that the sublessor has. Wherefore. used the Tagalog word pabubuwisan (will lease). . But how could the sublessor determine the condition of the fishpond if the same were not to be returned to her ? Moreover. we deem it unnecessary to go into the question of whether the contract embodied in Exhibit “5” would be void or not if considered as an assignment of lease. It being clear that the contract Exhibit “5” is a sublease. in the absence of a different stipulation. the judgment appealed from is affirmed. with costs against Appellant. the trial court did not err in considering it as such and in declaring it valid.e. Having arrived at this conclusion.

P. That there has never been a contract of lease. Rollo. 1983 The defendants Laurecios cannot be considered as the lawful successor- MARIETTA E. FRANCISCO ANG SINGCO. JR. applicants elevated the same with the decision and entered a new one affirming in toto the appealed decision of the City Court. T-34254 of the Registry of Court of Davao City. 1. 1979. the CFI of Davao modified the abovementioned decision of the City embraced on transfer Certificate of Title No. 1649 Civil Code). The Court held Deeds of Davao City. the private respondents Med a motion for reconsideration of the seven months. Having In its order dated June 10.. JOSE R. decision of the CFI of Davao on the following grounds: Since the house is at present occupied by the Laurecios. plaintiffs-appellees for lack of merit.00. plaintiffs filed this suit. . When plaintiff Marietta Dakudao visited the premises in demanded of the Laurecios to pay rental over the parcel of land as question. When defendant Francisco Ang Singco who had a verbal lease contract with herein Ang Singco sold his house to his co-defendants without the consent and plaintiffs. . 1980. she was told of the transaction that transpired between Ang compensation for the occupation thereof hence an unlawful detainer case Singco and the Laurecios. the City Court of Davao City. L-54753 June 24. xxx xxx xxx between the plaintiff and the defendant Laurecios as regards that portion The petitioners moved for the reconsideration of the amended ruling. ELSA E. The fact back rentals since he was no longer in possession of the land leased to him.. after a thorough consideration of the pleadings filed. denied the motion for reconsideration of the Francisco Ang Singco. PELAYO. Rollo. the case. use of said premises. Annex "C". This is the contention and theory of the plaintiffs. On this land stands the house of defendant This Court does not agree with the foregoing findings. expressed or implied. According to the amended decision: In its decision dated July 18. an implied contract of lease was created when plaintiffs Laurecios. without the knowledge and consent of plaintiffs. p. respondents. 58) detainer case. (Art. agreement for the rental of the premises. 1980. knowledge of herein plaintiffs. Branch II. Annex "C". 69) Plaintiffs are co-owners of a parcel of land Identified as Lot 202-F-13 On January 15. the CFI of of land occupied by the house sold to them by the original lessee Davao. The petitioners have come to this Court on pure questions of law. vs. between the plaintiff orders of the respondent Court of First Instance of Davao dated June 10. either express or As regards the respondents Federico and Carmen Laurecio. the City Court held: implied. JUDGE FRANCISCO Z. and payment of the use and occupation of the same at P100. 1980. in. in its order dated July 18.interest of the original lessee of the land occupied by the house sold. FEDERICO vacate the premises occupied by the house they purchased from the LAURECIO and CARMEN LAURECIO. 2. QUINTOS.. (Decision of the City Court of Davao. expressed or implied. With respect to defendant Ang Singco... allegation is incorporated in the pleadings as well as in the trial of this defendant Ang Singco sold his house to his CO-defendants. p.00 a month and for failure to reach an JURISPRUDENCE. an action for unlawful detainer win not lie against the Laurecios. and LUCIA E. There is no dispute over the basic facts of this case which are summarized by the Having received an adverse judgment. The monthly agreed rental is P25.. for petitioners.00 a month. J. CONSOLACION. However.: not believe so because the essence of the action for unlawful detainer is This is a petition for review on certiorari with pre mandatory injunction seeking to reverse the the existence of a contract. The II — THAT THE DECISION IS AGAINST THE LAW AND/OR Laurecios were willing to pay P50. (Decision of of lease and the expiration of its are the essential elements of an unlawful City Court. Jr.R. DAKUDAO. not back rentals. Branch II dismissed the xxx xxx xxx case for unlawful detainer against the Laurecios. (Annex "H". With the foregoing facts as background.G. and the defendant. there was stealth employed and this On July of 1977. However. No. the CFI of Davao City reconsidered and set aside its received an adverse judgment. defendant Ang Singco and to pay the reasonable compensation for the Jose R Ebro. JR. plaintiffs through I — THAT THE EVIDENCE IS INSUFFICIENT TO JUSTIFY THE Marietta Dakudao demanded that they vacate the premises and for the DECISION. petitioners. Rollo. EBRO. Ang Singco left the premises in July or August can be filed against the Laurecios. 57). finds that Court ruled that the action against him was converted into a simple one for collection of it committed an error in modifying the decision of the court a quo. Delante & Associates for respondents. 1980. the petitioners elevated the case to the Court of First respondent court as follows: Instance of Davao. That the demand of the plaintiffs upon the defendant Laurecios was to HON. are the plaintiffs entitled to the remedy of unlawful detainer as against the defendants? The Court does GUTIERREZ. ALMEDA. assignment of errors. ANTONIETTA E. 1980. Since no contract had been executed. of 1977 knowing that he was in arrears in his rentals for one year and On February 14. 1980 and July 18. the The Court.

et al vs. the latter's reliance on delays caused by heavy caseloads of courts of justice. Pascual (21 SCRA 146. without any contract between them are necessarily not an original defense. It was never intended to permit one who claims possession is merely tolerated. 797. The respondents Laurecios argue that the tolerance by the petitioners must be present right As a matter of fact. That even assuming for the sake of argument that an action for or ratified the sale of the house in question by the defendant Ang Singco unlawful detainer win not lie against respondents Laurecios. We fail to see what advantage to the administration of justice would be served if we petitioners agreed to maintain the P25. between plaintiffs unreasonable and malicious refusal to receive the payments. de Lara (6 SCRA 785). is The private respondents further claim that they cannot be considered privies or successors. because the plaintiffs failed to allege in the pleadings or If we view the failure of the petitioners to file an ejectment case from February. They would their cause of action did not fit within an unlawful detainer case. the same is due to plaintiffs' 1. Neither could it be a forcible have become the new lessees. the lot owners suddenly raised the rent to P50. eviction for more than four years through the improper use of procedural technicalities and Since there was no contract between the lot owners and the Laurecios. they become mere in the case of Yu v. rentals to the plaintiff except that which they deposited in Court during the This is a good example of how persons who have failed to adduce any legal grounds for pendency of this case on February 2. The unlawful detainer case was proper. That although there is no contract express or implied. 1978 when the strategy letter demanding that they vacate the lot was sent. the leased going to pay.98 SCRA 172) citing the case the right to hold possession by virtue of any contract because there never was any contract of Calubayan v. In such a case. perhaps. filed this instant petition for review on certiorari raising 1977 but a year later. 802. the unlawful deprivation or are occupying the land. unlawfully withholding possession from the petitioners after the expiration or termination of We held in the case of Vda. according to the judge. If they have no contract. not of forcible entry. Article 1649 of the Civil Code is intended person who occupies the land of another. they should be prosecuted for forcible . an action for unlawful detainer will not lie against the Laurecios. It is established by the evidence that the plaintiffs have never consented 3. we ruled that the proper remedy against a usurpers or squatters through their own admission. petitioners to the Laurecios. desisted from buying the subject house. express or implied with the owners and withholding of possession is to be counted from the date of the demand to vacate. bound by an implied promise that they will vacate upon demand. In fact the Laurecios have not paid any amount by way of premises sufficient to make out an action for forcible entry against them. There has never been any definite agreement between have nevertheless alleged and proven strategy and stealth on the part of the plaintiff and the Laurecios as to the amount of rentals the latter were said respondents regarding their entry into. 1979 (Exhibit '3' and Exhibit '4'). as tolerance or permission by the The primary argument of the respondents Laurecio in this petition is that they are not owners. purchased the house from Ang Singco "otherwise the defendants Laurecio could have et al. is the summary no right to the premises to avoid ejectment by the dubious allegation that his occupation is action for ejectment. and occupation of. the respondents averred in their answer filed with the City Court of from the start of the possession sought to be recovered. to categorize a cause of action as Davao City that the plaintiffs. Francisco (." It was latter's tolerance. is analogous to that of a lessee or tenant whose term of lease has expired but whose unless there is a stipulation to the contrary. Hinigaran Sugar Plantation (63 Phil. 1979 decision. another at the latter's tolerance or permission. (22 SCRA 1257) and Monteblanco v.The plaintiffs-appellees.00 monthly rentals at the time of the sale in July. The facts are: against them. an action for unlawful detainer nevertheless respondents on the absence of any contract or agreement is due to their taking advantage lies against said respondents. either 2. failing which a in-interest of the former lessee. of the ruling of the respondent court that "since no contract had been executed. now petitioners. If Article 1649 had been followed and the consent of the owners to the right to recover possession of the land involved in the litigation but "unfortunately" for them sale secured. Likewise they have no claim as successors-in-interest of the former lessee. The status of the defendant Code provides that "the lessee cannot assign the lease without the consent of the lessor. de Cachuela v. not lawful as the Civil Code prohibits it. 1978 when prove with evidence the fact that the defendants occupied the land through stealth and they first learned of the respondents presence on their land up to June 1. the City Court of Davao City admitted that the plaintiffs had a house built on the lot. necessarily bound by an implied promise that he will vacate upon demand.00 for their continued stay on property "I to another have nonetheless managed to stave off the period from August. who has no contract with the owner. because Article 1649 of the Civil summary action for ejectment is the proper remedy against him. therefore. 1979 in the amount of P450. 1977 to January." The present claim of the and defendants Laurecios." The respondents fail to state by what right they occupancy continued by tolerance of the owner.00 monthly and that "if the following arguments: defendants Laurecio have failed to pay their rental. gave their consent when the Laurecios one of unlawful detainer. allow the private respondents to argue that. and whose to protect the owner of the leased property. the unlawful detainer case is still proper." The defendants averred that the Laurecios and the 803). failing The City Court found the averments of the private respondents in their answer as contrary to which a summary action for unlawful detainer is the proper remedy the evidence. Francisco Ang Singco. 148) that a person who occupies the land of express or implied between them and the petitioners. entry case. occupation of the land is only as successors of Ang Singco from whom they purchased the In its June 18. Villegas. without any contract between them. the Laurecios would be more than mere successors-in-interest. citing the cases of Sarona. That respondents Laurecios who occupy the land of petitioners at the express or implied. but who refuses to vacate despite demand.

there is no conflict between the cases abovementioned and the case of Cachuela v. . when they first discovered the respondents to be in possession of the premises. As far as the petitioners are concerned. even if valid which they are not. 1978. Considering the foregoing.00 in attorney's fees.entry and not unlawful detainer. The certification of the Acting Clerk of Court of the Court of First Instance of Davao shows that no deposits for rentals in this case are being made in that court. The portion of the decisions of the City Court and the respondent court as regards Francisco Ang Singco is affirmed. Respondents Laurecio are ordered to pay the amount of Fifty Pesos (P50. 1980 up to the date of the certification on March 9. the judgment of the respondent court is hereby set aside.00) a month as reasonable compensation for the use and occupation of the premises beginning August. Francisco. Equitable considerations also dictate that procedural technicalities. SO ORDERED. The private respondents are ordered to vacate the disputed premises. this was the start of the respondent Laurecios' occupation since the latter's actual entry into the premises in July or August. 1977 had been concealed from the petitioners. WHEREFORE. In their opposition dated July 9. This decision is immediately executory. the private respondents alleged as ground for the opposition: THAT PLAINTIFFS' ALLEGATIONS IN THEIR COMPLAINT AND THE EVIDENCE THEY ADDUCED DO NOT PROVE ANY CAUSE OF ACTION FOR FORCIBLE ENTRY AGAINST THE DEFENDANTS LAURECIOS. 1977 until they finally vacate the premises. 1979. it may rightly be said that any supposed tolerance of the occupation by the respondents Laurecios was from February. The certification from the Clerk of Court of the City Court of Davao shows that no deposits for rentals have been made from February. Moreover. we see no need to discuss the third "question of law" raised in the petition. 1982. To petitioners. minus whatever amounts may have been deposited as rentals with the court for delivery to the petitioners and to pay P500. should not be allowed to stand in the way of substantial justice.

unless he proves that it took place without his fault. 1937. Ernesto Gonzales sa kanyang sariling gugol na ang samahan ay thereof. Upon the stipulations of the contract in relation to the facts found by the Court of Appeals as above set forth. building broke down and was thereafter never used by the petitioner. The judgment appealed from. ET AL. He suffered by the thing leased. doing business as an unregistered partnership under the name and style to realize from the operation of the cockpit. No. 1942. ending December 31. was not due to any hidden defect but to the fact that thru petitioner's c. that he was not obligated to make repairs. solid. under a written contract entered into on January 5. and in the instant case it is vs. if not nominal. and sound magbabayad ng buwis. a cockfight was held in said cockpit with a large attendance. by which the lessee was ordered to reconstruct the cockpit or pay to the lessors its value in the sum of P3. — Kung makaraan na ang anim (6) na taong pagkakabuwis or pagkaupa. obligations." leased to the petitioner their cockpit situated in Malolos.R.000 plus the rentals for the last five years amounting to P500 and the costs. — Ang bahay-sabungan at and lupang kinatitirikan nito. considering the very moderate. obvious that the lessors were relieved of that duty and the lessee assumed it in their stead. 1937. on the building and that its collapse was due to hidden defects which the lessors had concealed from him. Gonzales ay maiiwan sa samahan na di The collapse of the building in question on the occasion of the heavily attended cockfight of pagbabayaran nito. being in accordance with law. at the agreed yearly rental of P100. petitioner.000 as damages in addition to the unpaid rentals. Not contended with that reduction. The shall be liable for any damage caused thereby. 1944 necessary in order to keep it in serviceable condition for the purpose for which it was MANUEL ERNESTO GONZALES. Of course. but only improvements. is hereby affirmed. upon the following but only improvements. and that was the reason why in condition (b) above quoted it was stated that all walang sinasagot. rent he was to pay.000. netting P30 to P40 a week and P800 on days "Samahang Sabungang Malaya. the parties were at liberty to stipulate the contrary. on the building. at his own expense. with the obligation on the OZAETA. J. — Ang lahat ng kailangan na gagawin sa bahay-sabungan ay ipagagawang work done by the lessee on the building for that purpose was necessarily an improvement lahat ni G. We cannot Bulacan. ang pay therefor upon the expiration of the lease. and the relatively big profits the lessee was Respondents. the defendant lessee appealed to this Court by certiorari. While it is true that under the law (paragraph 2 article 1554 of the Civil Code) it is the duty of the lessor to make on the building leased all repairs . L-49020 February 28. and insisting on complete absolution from any liability. September 12. we find no reason to disturb the conclusions of that court and reverse its judgment. alleging that under his contract he was not obligated to make repairs. for the period of six years accept the interpretation urged by the petitioner. "the lessee is liable for any deterioration or loss Before using said cockpit the petitioner as lessee made some improvements thereon. It is evident that petitioner accepted the cockpit in question from respondents in the condition in which it was found at the time under the express agreement that all that was necessary to put it in use had to be done by the petitioner at his own expense without any obligation on the part of the respondents to reimburse him or pay for the improvements thus made upon the expiration of the lease. Hence this suit was brought by the lessors against the lessee. respondents. on pintakasi (special holidays for cockfights). lahat ng mejora na nailagay ni G. or who in any manner whatsoever shall fail to comply with the terms thereof. Upon appeal to the Court of Appeals the latter modified that judgment by reducing the damages from P3. improvements shall be for the benefit of the lessors without any obligation on their part to b. intended.000 to P1. which was sustained by the Court of First Instance of Bulacan. any person guilty of negligence in the fulfillment of his brace them up in spite of respondent Isidro Bautista's advertence thereto. Petitioner refused to comply with such demand. any a. The respondent lessors demanded of the petitioner that he either reconstruct the cockpit or pay them the sum of P3. ay ang samahan ang negligence in making the repairs he failed to place the posts on firm. without cementing them and without using joint-pins to article 1101 of the same Code. at ang bayad ng arrendamiento ng lupa ang samahan din foundation in spite of one of the lessors' advertence to him on the matter. with costs." And under placed the posts on slabs of stone. VICENTE MATEO. ang magbabayad.G. On September 12.: part of the lessors to pay the real estate taxes.. 1937. He was clearly obligated to do all that was conditions: necessary to put the building in serviceable condition. Under article 1563 of the Civil Code. according to the Court of Appeals.

2002 of the Court of Appeals in CA-G. (Cebu Bionic). Robles.. T... The facts leading to the instant petition are as follows: 2. 1981 and shall terminate on the last day of every month a mortgage contract[7] with DBP in order to secure a loan from the said bank in the amount thereafter. Decision[5] dated February 14. provides: . and the fifteen (15) days from receipt of said notice. Philippine Currency.. The properties mortgaged were a parcel of land situated in Tabunoc. of legal age. married and resident of 173 x. together with all the existing improvements..000..... represented by LYDIA SIA.000.. automatically renewed on a month to month basis if no notice. Respondents. notwithstanding the fact that the same was filed more than six months beyond the The LESSOR agrees to lease unto the LESSEE and the LESSEE accepts reglementary period. On October 28. in Talisay. G. The LESSEE shall pay a monthly rental of One Thousand lack of merit. 1981. the spouses Rudy R.-x Maria Cristina Ext... 2010 RUDY ROBLES.: hereinafter known as the LESSEE.J. Cebu. hereinafter referred to as the LESSOR. 2002 and the Amended Decision[3] dated July 5... 1981. Branch 8. married and with address at 240 Magallanes St. 154366 INC. 57216... This Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court assails the WITNESSETH: Resolution[2] dated February 5... and Elizabeth R. 2001.. JJ.. 2001 and dismissed the petitioners complaint for 1. Robles entered into November 1.and - DECISION CEBU BIONIC BUILDER SUPPLY.47783 writing. Rudy Robles executed a contract of lease in favor of petitioner Cebu Petitioners. Cebu City LEONARDO DE CASTRO. is sent to the other party to terminate this agreement after of the Register of Deeds of Cebu...R. commercial building to be constructed thereon [8] (subject properties). 2002.. which affirmed the Decision [6] dated April 25... JR..... a domestic corporation engaged in the construction business. Upon completion. Filipino.versus . Development Bank of the Philippines (DBP). C. Present: Bionic Builders Supply.. by and between: November 17. JOSE TO CHIP. and LYDIA SIA.... as well as the sale of hardware materials. Cebu City. VELASCO... Jr..CEBU BIONIC BUILDERS SUPPLY. CV No.* and PHILIPPINES. CEB-10104 that ruled in conditions: favor of petitioners. (P1. provided however that this contract shall be of P500.. 2002. the The LESSOR is the owner of a commercial building along Tabunok. Chairperson... without need of demand. of legal age.00) Pesos... No. Patricio Yap and Roger Balila. The contract pertinently CORONA..R. Said motion prayed for the reversal of the Court of Appeals the lease from the LESSOR. in Civil Case No... The rental is payable in advance within the first five (5) days of the month. Jose To Chip. 1997 of consisting of one (1) unit/store space under the following terms and the Regional Trial Court (RTC) of Cebu. PATRICIO PEREZ. a portion of the ground floor thereof. In the Amended Decision of July 5... the Court of Appeals reversed its previous Decision dated February 14. known as the State Theatre Building. CONTRACT OF LEASE LEONARDO-DE CASTRO. Cebu..00... Court of Appeals admitted the Motion for Reconsideration [4] of herein respondents Talisay. DEVELOPMENT BANK OF THE PERALTA.... That the term of this agreement shall start on On June 2. Filipino. the commercial building was named the State Theatre Building. Promulgated: This Lease Contract made and entered into.. which was then covered by Transfer Certificate of Title (TCT) No. In the Resolution dated February 5. J. KNOW ALL MEN BY THESE PRESENTS: YAP and ROGER BALILA. .. xxxx . JR. Inc.

we request you to Dear Mr. Talisay. 1987 Please be guided accordingly. given an option of first refusal. Bionic Builders Inc. when we will fix the amount accordingly. the husband of petitioner If the contract of lease is not executed within thirty (30) days from Lydia Sia who was then President of Cebu Bionic. Revillas foreclosure on February 6. The lease will be on month to month basis. temporarily. Mr. Talisay. 2. until such time final Deed of Sale[12] was issued in favor of DBP. 3. 1987.) time deposit. the lessor is Cebu. come to the Bank for the execution of a Contract of Lease. prompted to effect extrajudicial foreclosure on the subject properties. Deposit equivalent to two (2) months rental and advance of 9. within the term. the counsel of Bonifacio Sia replied to the above letter.[10] On February 6. . the salient conditions of which are as follows: This has reference to your letter of 18 June 1987 which you sent to my client. to wit: This refers to the commercial space you are occupying in the acquired property of the Bank. we require you Branch Head to remit the rental due for June 1987. Mr. State Theatre Bldg.[11] On October 13. which we require you to submit. Bonifacio Sia Truly yours.) Sir: On July 7. located at Tabunok. Bonifacio Sia of Cebu Bionic Builders Supply the lessee of a 1.. for a maximum commercial space of the State Theatre Bldg. the spouses Robles failed to settle their loan obligation with notice. July 7. Lucilo S. Meanwhile. REVILLAS Tabunok. That in case there is a better offer or if the property will be The above contract was not registered by the parties thereto with the Registry of Deeds of subject of a purchase offer. DBP was the lone bidder in the foreclosure sale and We consider. formerly owned by Rudy Robles. Considering thereat. Should the LESSOR decide to sell the property during one (1) month rental. a six-month receipts. 1988. The latter was. June 18. the LESSEE shall have the first option to buy and shall secured by either surety bond. Jr. Said letter reads: premises and will vacate within the said period. period of one (1) year. 1987. DBP. otherwise he has to vacate the premises within thirty (30) days from date of Subsequently. 1987. (SGD)LUCILO S. the current monthly rental based on the thereby acquired ownership of the mortgaged subject properties. notifying the latter of DBPs acquisition of date hereof. DBP sent a letter to Bonifacio Sia. thus. on June 18. 1987 Please be informed that said property has been acquired through Mr.[9] (Emphases ours. 1987. it is construed that you are not interested in leasing the the State Theatre Building. Cebu. Revillas. and the remaining amount for one the term of this lease contract or immediately after the expiration of year period (equivalent to 9 months rental) shall be the lease. cash bond or assigned match offers from outside parties. Cebu Branch Head[13] (Emphases ours. Development Bank of the Philippines If you wish to continue on leasing the property.

situated in 2.) 12:00 oclock noon of DECEMBER 3. Thereafter. Cebu and covered by short.00 I sincerely hope that you will give due course to this request. as assigned time deposit. the last day for the acceptance of negotiated offers. 1989. The 30 days notice you mentioned in your letter. Cebu City OLARTE for the sale of its acquired assets mentioned hereinunder within the 15- Branch Head[20] (Emphases Day-Acceptance-Period starting from NOVEMBER 19. to purchase the subject properties for P1. Apolinar K. DBP publicized an Invitation on Negotiated Sale/Offer. the properties described above shall be sold to the relevant terms and conditions of which stated: first offeror who submits an acceptable proposal on a First-Come-First-Served basis.[14] Negotiated offers may be made in CASH or TERMS. A pre-numbered Acknowledgment Receipt duly signed by at least Truly yours. no written contract of lease was executed between DBP and Cebu Bionic. Sealed offers submitted shall be opened by the Committee on Negotiated Offers at exactly 2:00 In the morning of December 3. My client is amenable to the terms contained in your letter except the Item No.00. My client is requesting for at least 60 days notice. 1990. Interested negotiated offerors are requested to see Atty. 1989. Pursuant thereto.000.[18] and November 15. Lot No.000. 1989. Description/Location Starting Price following: xxxx 1.64 was either in the form of cash or cashiers/managers check to be issued in the name of Bonifacio Sia and the same was allegedly remitted to DBP as enclosed in the sealed offer. Philippines.) TIMOTEO P.838. subsequent to the acquisition of the subject properties. Cebu Branch. Attached to the letter-offer was a copy of the Negotiated Sale Rules and Procedures issued by DBP and a managers check for the . INVITATION ON NEGOTIATED SALE/OFFER City of Cebu. two (2) of the Committee members shall be issued to the offeror acknowledging receipt of such offer. m. November 16.[19] As no NOTE: If no offer is received during the above stated acceptance interested bidder came forward. on November 14. oclock in the afternoon of the last day of the acceptance period in order to petitioners submitted through their representative.[16] February 23.00. DBP Building. 2 thereof. T-65199 (DBP). JR. DBP copies of the Letter-Offer form and Negotiated Sale Rules and offered the same for sale along with its other assets. which were scheduled on January 19.840. 1990..[17] April 13.100. will receive SEALED NEGOTIATED OFFERS/PURCHASE PROPOSALS (SGD. MUNTUERTO. 1990 up to ours. TCT No. xxxx Thank you. P1. offering determine the highest and/or most advantageous offer. 9-63-25). II Commercial land. in order to secure In the meantime. Talisay.395. having an area of 396 sq. the period. Jr. In lieu of item no. a Certificate of Time Deposit [15] for P11. a letter-offer form. xxxx For reasons unclear. my client will deposit with your bank the amount of P10. 1989. 1990.. the former requiring a deposit of 10% and the latter 20% of the starting price. Acquired Asset in Charge (Tel. Osmea Boulevard. Judy Garces. DBP published a Procedures. No. 3681-C-3. (SGD) ANASTACIO T. however. advance rental deposit. including the commercial building thereon. 1990. (3). The DEVELOPMENT BANK OF THE PHILIPPINES. is too Tabunok. Panal. tendered at its Branch Office. series of invitations to bid on such properties.

19. on March 22. 1990. Yap and Balila sent a letter[23] addressed to the proprietor of Cebu Bionic. Petitioners claimed that. they duly submitted to Atty. the counsel of respondents To Chip. which was higher than the starting price of P1. while in the next. 1991. petitioners filed against respondents DBP. preliminary injunction. Cebu Bionic was ordered to vacate the premises within by plaintiff. This offer of petitioners was not accepted by DBP. Yap and Balila from registering the . returned. By acquiring the subject properties. for the price of P1. as DBP still received rentals from petitioners until March 1991. the counsel of respondents To Chip. informing the latter of the transfer of 6. duly signed ownership of the subject properties. 1991. Chip. Yap and Balila. The sale was claimed to be simulated and fictitious. namely: to P183.810. in favor of the Development Bank of the Philippines.1 Letter-offer form. Petitioners also prayed for the issuance of a writ of was docketed as Civil Case No.00 on cash basis. property advertised. Yap and Balila a complaint[29] for specific performance. as the corresponding deposit therefor was Petitioners alleged. inter alia.000.) subject properties since it had the preferential right to purchase the same. representing 10% of the offered purchase price. on December 3. 1991.[31] (Emphasis ours. On January 11. the submission of proposals was to be made from November On December 17. 1990. Yap and Balila. offering to purchase the purchase price and DBP issued a Deed of Sale[22] over the subject properties in their favor. Jr. which stated that: with damages will be filed against it. Apolinar Panal. 1991 until the end of the said 30-day period. Chief of the accompanied by a downpayment of 10% of the offered purchase price.000 representing 10% of the deposit dated December 3. the following documents.m. He stated that he has instructed Cebu Bionic to verify first the ownership of the x x x. however.[30] The complaint respondents To Chip. petitioners did Theatre Building and the commercial lot on which the same was situated. Yap and Balila. invitation to bid.. outside parties. Yap and petitioners contended that DBP was deemed to have assumed the contract of lease Balila sent its final demand letter[26] to Cebu Bionic. To Chip. He also reiterated their demand for Cebu Bionic to related that. On even date. Petitioners sought the rescission of the contract of sale between DBP and injunction with a prayer for the issuance of a writ of preliminary injunction. 1990 and issued by The counsel of Cebu Bionic replied[24] that his client received the above letter on January Allied Banking Corp. DBP advertised for sale the State After the lapse of the above-mentioned 15-day acceptance period. DBP sold the subject properties to respondents To vacate the premises. 1991.3 Managers check for the amount of P184.] [32] Petitioners then properties to pursue their business plans. Should the Lessor decide to sell the property during the term Despite the foregoing notice. on February 27.100. at about 10:00 offer[21] to purchase the subject properties on a cash basis for P1. warning the latter to vacate the subject executed between them and Rudy Robles.838. 1990 up to 12:00 noon of December 3. 1990. Shortly thereafter. without their knowledge. He likewise requested that he be furnished a copy of the deed of sale executed by DBP in favor of Petitioners asserted that the above documents were initially accepted but later respondents To Chip. the amount of P5.2 Negotiated Sale Rules and Procedures. 11. thirty (30) days from receipt of the letter and directed to pay the rentals from January 1. respondent To Chip wrote a letter [25] to the counsel of Cebu Bionic. In the prior not submit any other offer/proposal to purchase the subject properties. under the 15-day acceptance period. the bidding was scheduled on November 15. cancellation of deed of sale with damages. 1991. commercial space in the State Theatre Building from October 1981 up to the time of the filing of the complaint. the of this lease contract or immediately after the expiration of the lease. x x x. there was no other interested party and that [Cebu Bionic] was a preferred party being the insisting that he and his co-respondents Yap and Balila urgently needed the subject lessee and present occupant of the property subject of the lease[. Yap and Balila presented their letter.840. 6. On December 28.100. DBP was bound by the provision of the properties within seven (7) days from receipt of the letter. During the latter part of 1990.00 as monthly rentals on the unit of the State Theatre Building it was Lessee shall have the first option to buy and shall match offers from occupying for period of November 1990 to March 1991. 1990.838.[33] On April 10. respondents To Chip. DBP allegedly advised petitioners that there was no urgent need for the same x x x. Said offer was a. respondents To Chip. 1991. a case for ejectment lease contract. Cebu Bionic still paid [28] to DBP.00.[27] 9. that Cebu Bionic was the lessee and occupant of a allegedly insufficient. 1990. amounting Acquired Assets of DBP. x x x.000.00. CEB-10104 in the RTC. considering that the property will necessarily be sold to [Cebu Bionic] for the reasons that On February 15.00. otherwise.000. restraining respondents To Chip. As such.amount of P184. DBP acknowledged the receipt of and accepted their offer. Yap and Balila paid the balance of the 6.

The and Yap. such that the deposit of P184. It is also a fact on record that [respondent] DBP in its letter 10% deposit accompanying the petitioners letter-offer was declared insufficient. to wit: petitioners occupancy of the unit in the State Theatre Building was merely upon its acquiescence. xxxx Respondents To Chip. [Petitioners] in complying with the requirements. In addition.[35] These requirements. there was no urgency for the same and that [Cebu the issuance of a writ of preliminary injunction.[38] (Emphases was allegedly not the document shown to DBP. 1997. DBP. Balila their offer to purchase was on a term basis.00 It is a fact on record that [petitioners] complied with the requirements of was insufficient being only 10% of the offer. Panal to the effect that Cebu Bionic wanted to buy the property on installment terms.] x x x. he offer. asked that petitioners be ordered to with [the required documents. x x x. prayed for the noon of December 3. therefore. [respondent] DBP In its answer.000. more specifically [respondents] To Chip. 1987. DBP countered that the letter-offer of petitioners was actually not accepted as from outside parties. the RTC rendered judgment in Civil Case No. [respondents To Chip. On April 25. by way of counterclaim. DBP. 1991. 1990 in the amount between [respondent] DBP and the [petitioners]. issued a time purchase form under the 15-day acceptance period accomplished by deposit in the amount of P11. the Managers check issued the DBP. which indicated that the mode of payment was on a cash basis. pay damages and attorneys fees. 1987. finding meritorious the complaint of the petitioners. Exhibit K which is the application for Managers check terms thereon by accepting the requirements contained in paragraph in the amount of P184. in paragraph 9 thereof that the lessee shall have the first option to buy and shall match offers from outside parties. 1991.) assumption of the lease contract between Rudy Robles and petitioners since it acquired the subject properties through the involuntary mode of extrajudicial foreclosure and its request As regards the offer of petitioners to purchase the subject properties from DBP. Yap and Balila no longer filed a separate answer. adopting instead the answer of DBP.395.000. insisted that gave more credence to the petitioners version of the facts. it is provided sale covering the subject properties in their name and to pay damages and attorneys fees. in all events. the RTC granted the prayer of petitioners for of the said property. Likewise. which] ended at subject properties to respondents To Chip.64 and remitted faithfully its monthly [petitioners] which shows clearly the written word Cash after the printed rentals until April. [respondent] summoned back her representative who did not leave a copy of the letter-offer and the DBP never informed [petitioners] that there was an interested party attached documents.00 representing 10% of the offer showing the mode of DBP opted to continue the old and previous contract including the payment is for cash. Exhibit J. 1987 to [petitioners] wrote in paragraph 3 thereof. the lessee is given the option of first refusal.[34] DBP denied the existence of a contract of lease between itself and never gave [petitioners] the first option to buy or to match offers petitioners. however.Although there was no formal written contract executed by Allied Banking Corporation dated December 3. [Cebu Bionic] submitted its offer. And yet. DBP then informed petitioner Lydia Sia of the inadequacy of her within the term. Yap and Balila.000. DBP stated dated June 18. Lydia Sia allegedly has to vacate the premises within thirty (30) days. could not be given much deposit and advance rental as conditions for constitution of lease between credence as it is refuted by Exh. The letter-offer thus depriving [petitioners] of the opportunity of first refusal attached to the complaint. The petitioners payment of rentals on March 22. that in that the letter-offer form was not completely filled out as the Term and Mode of Payment case there is better offer or if a property will be subject of purchase offer.00 dated December 3. the RTC to petitioners to sign a new lease contract was simply ignored. After ascertaining that there was no other offeror as of that time. DBP maintained that petitioners documents did not show that the to buy the property. Explained the trial court: The declaration of Atty. DBP argued that there was no ours. it is very clear that of P184.Deed of Sale in the latters favor and from undertaking the ejectment of petitioners from the 2 of its letter dated June 18. is entitled to first option being the present lessee. fields were left blank. Yap and Balila]. petitioners entreated that DBP be ordered to execute a deed of the lease contract continued by the DBP on the [petitioners]. which therefore required a 20% deposit. H which is the negotiated offer to the parties. meaning. complete dismissal of the complaint and. 1990 showing the . CEB-10104. were unceremoniously returned by [respondent] bank with the assurance that since there was no other bidder In an Order[36] dated July 31. promised to them in its letter dated June 18. same were received and approved by any approving authority of the bank. Yet. It is also a fact on record that under subject properties. otherwise. 1991. 1991 was supposedly made It is also a fact on record that when [respondent] DBP offered the property in bad faith as they were made to a mere teller who had no knowledge of the sale of the for negotiated sale under the 15-day acceptance period[. thus.[37] Bionic] also. which monthly rental was no longer accepted by words Term and Mode of Payment.

) banks letter dated June 18. the RTC found that respondents To Chip. were given assurances by Atty. judgment and his partners. the lease contract having property will be subject of a purchase offer.[41] Sia] was a lessee. 1990 possessed by [petitioners] even before it was owned by the DBP. that she was a lessee of Rudy Robles. therefore. the lessee is been continued by [respondent] DBP when it received rental payments up given the option of first refusal. on the right of was willing to purchase the property. But he said.Thus: xxxx [Respondent] Jose To Chip lamely pretends ignorance that [petitioners] are lessees of the property. [Respondent] Roger Balila.00 which was insufficient for 20% before they bought the same from [respondent] bank. In answer to the Courts question. that he ask her if saying that there was no urgency for the same as there was no other she was a lessee. subject matter of this case upon payment by [petitioners] of xxxx the whole consideration involved and to complete all acts or documents necessary to have the title over said property Upon further questioning by the Court. between [respondent] Development Bank of the Philippines and [respondents] Roger Balila. Yap and Balila were aware of the lease Yap and Balila]. in occupying the property when he went to talk to her. it was but natural that he ask Lydia Sia what her status was through Atty.] said letter further From the foregoing facts on record. Likewise. Yap and behavior.[40] first option to buy being the present lessee. therefore. The provision. it would not have wasted effort in securing a Managers Balila] knew that [Cebu Bionic] was the present lessee of the property check in the amount of P184. Jose To Chip and Patricio xxxx Yap. then in the ordinary course of human of lease. otherwise. it is thus clear that [petitioner] Cebu states in paragraph 3 thereof that in case there is [a] better offer or if the Bionic is the present lessee of the property. 1987. Common deposit as required for installment payments. he admitted that [Lydia Sia] was transferred to the name of [petitioners]. however. although he knew that [petitioners] were presently occupying the property and that it was (1) Rescinding the Deed of Sale dated December 28. is hereby rendered: Panal of the DBP that [Lydia Sia] is not a lessee. x x x. x x x. within the term. If it is true that the offer of [petitioners] was for [Cebu Bionics] right of first priority to buy the property under the contract installment payments. in violation of [petitioners] right of first option to buy and the right of first refusal contained in [respondent] first refusal. likewise pretended ignorance (2) Ordering the [respondent] Development Bank of the that he knew that [Lydia Sia] was a lessee of the property.[39] (Emphasis ours. Atty. 1987. the former owner. Philippines to execute a Deed of Sale over the property. denying knowledge that [Lydia Sia] was paying rentals to [respondent] bank. concluded that: deposit and advance rental. His pretended ignorance x x x was a way of evading . all he asked her was whether she was bidder of [the said] property and that Cebu Bionic was entitled to a interested to buy the property. as condition for constitution of lease between the parties and which was complied by Cebu Bionic[. in the lease contract. Panal returned the documents submitted by her.000. x x x. are still subsisting and binding up to the present. he has to vacate the premises to March of 1991 as well as the advance rental for one year represented within thirty days. not only on [respondent] bank but also on [respondents To Chip. x x x. in his testimony. not possessing the building freely. but cleverly insisted in disowning knowledge that [Lydia (3) Costs against [respondents]. subject matter of this case. the other [respondents]. beneficiary as DBP. Panal by the assigned time deposit which is still in [respondent] banks admitted that he did not tell [petitioners] that there was another party who possession. THE FOREGOING PREMISES CONSIDERED. contract involving the subject properties before they purchased the same from DBP. In the letter also of [respondent] bank dated June 18. More credible is the observation. x x x The Court is convinced that [respondents To Chip. He states that he WHEREFORE. it is important to note that aside from requiring Cebu Bionic to comply with certain requirements of time The trial court. knowledge and experience dictates that as a prudent explanation [given by] witness Judy Garces when she said that DBP businessman.

[49] Atty. 1997. On October 1.] x x x there any petition for certiorari or appeal filed before the Supreme Court. explained that he sent copies of the motion for reconsideration to petitioners and DBP via personal delivery. Francis M. On the other hand. [respondents To Chip. x x filed a Motion for Reconsideration[43] of the above decision. and which if order. Sad to say for the [respondents]. This. respondents To Chip. petitioners discovered that respondents have not filed any motion in question on installment basis requiring a higher 20% deposit. The binding effect of the lease agreement upon the [respondents In response to the above motion.[46] pronouncing that: found and determined by the lower court. petitioners filed a Motion for Issuance of Entry of Judgment. is entitled to first option being the present lessee. who agreed to file the same personally the property before they bought the same from with the appellate court in Manila. The respondents contentions consist of crude attempts to question the assessment and evaluation of We find nothing erroneous with the judgment rendered by the testimonies and other evidence gathered by the trial court. upon evidence on record after a careful and should not be disturbed on appeal unless for [strong] and cogent evaluation of the witnesses and their testimonies during the trial that reasons. . Tan. We see no reason to depart from this well-settled xxxx legal principle. Perforce. Yap and Balila] must be sustained since from existing October 8. DBP accepted [the documents submitted by WHEREFORE. When Atty. 2001. Zosa in Quezon City. Atty. We sustain it and dismiss the [respondents] submission. the Court of Appeals promulgated its [respondents] in their respective briefs argue against questions of facts as Decision. Mr. so long as supported by evidence on indeed [petitioners] right of first option was violated and thus. when he went to talk to her. 2001 a Motion to Admit Motion for Reconsideration. It must be remembered that findings of fact as determined by the trial court are entitled to great weight and respect from appellate courts The RTC determined.[47] of the said property. These findings generally. all he asked her was . Zosa.. there was no urgency for the same and that [Cebu Bionic] also. nor was however.. Yap and Balila whether she was interested to buy the property. in Civil Case No. Apparently. But he said. returned all of it Regional Trial Court of Cebu City. that he ask her if she was a lessee. DBP forthwith filed a Notice of Appeal. it was determined during trial that: counsel for respondents To Chip. 10104 is to the [petitioners] with the assurance that since there was no other bidder hereby AFFIRMED in toto.[42] Respondents To Chip. Yap and Balila] the copies of the motion to be filed with the Court of Appeals were purportedly sent to Mr. Yap and Balila] are in which the trial court has misappreciated or overlooked. was correctly rejected by the trial court[. knowledge was accordingly filed. Atty.Common observation. Panal (of DBP). 2001. are not to be disturbed unless there are some facts or evidence the sale made by DBP to [respondents To Chip. Yap and Balila. However.[45] Moreover. businessman. 2001. Yap and Balila filed on To Chip. through Atty. in all events. an Order[44] dated July 4. but the RTC denied the same in x. Tan allegedly answered in the affirmative. respondents were [DBP] maintains that the return of the documents [submitted by served a copy of the Court of Appeals Decision dated February 14. it was but natural that he ask Lydia thus. To his surprise. for reconsideration of the said decision within the reglementary period therefor. trial court. rescission of record. considered would have altered the results of the entire case. knew that [Cebu Bionic] was the present lessee of Domingo Tan. a friend of Atty. Sia what her status was in occupying the property excusable negligence and/or fraud committed by Mr. Zosa inquired if the motion for reconsideration [respondent] bank. 2001 sometime on petitioners] was in order since the [petitioners] offered to buy the property March 7. Zosa.[48] Petitioners stressed that. the jurisprudence cited by the lower court. in view of the foregoing. attributed the failure of his clients to file a motion for reconsideration on the mistake. We find that the submissions presented by the On February 14. and experience dictates that as a prudent Zosa received a copy of petitioners Motion for Issuance of Entry of Judgment. Branch 8. based on the records of the case. Said respondents then filed their Notice of Appeal. the judgment of the petitioners] and thereafter.

That in case there is a better offer or if the property will be xxxx subject of a purchase offer. and the remaining amount for one year embodied in the 18 June 1987 letter. the Court of Appeals granted the motion of respondents To Chip. DBP had expressly notified [petitioners] that (I)f they wish to continue on leasing the property Here. which we require you to submit. The lease will be on a month to month basis for a [Petitioners] failed to enter into the contract of lease required by maximum period of one (1) year. DBP continued to accept the monthly rentals within thirty (30) days from date of notice. the lessor is given an option of first refusal. within the term. 2. not for the period of the original contract. cash bond or assigned time deposit. provided however. DBP for it to continue occupying the leased premises. 1. In the assailed Resolution dated February 5. Yap and Balila and admitted the motion for That the term of the agreement shall start reconsideration attached therewith in the higher interest of substantial justice. reasoning thus: a month to month basis if no notice in writing is sent to the other party to determine to terminate After a judicious review and reevaluation of the evidence and this agreement after fifteen (15) days from the facts on record. informing them x x x to come to the Bank for the execution of a Contract of Lease. the Court of Appeals reversed its original Decision dated February that this contract shall be automatically renewed on 14. thus: when we will fix the amount accordingly. [Petitioners] also did not put up a surety bond nor cash been given. other terms of the original contract shall be revived. 3. From its letter of June 18. On July 5. 1670. although the [petitioners] opened a time deposit but did not the time established in Articles 1682 and 1687. 2001. 1987. except for the remittance of the monthly rentals up to should continue enjoying the thing leased for fifteen March 1991. the that if they wish to continue on leasing the property. we are convinced that DBP had terminated the Robles receipt of said notice. The assign it to DBP. it is understood that there is an implied new bond nor assign a time deposit to secure the payment of rental for nine (9) lease. temporarily. and unless a with. the current monthly rental based on between the parties is now governed by Article 1670 of the New Civil the six-month receipts.Corollarily. we request you to salient conditions of which are as follows: come to the Bank for the execution of a Contract of Lease x x x. until such time Code. the conditions imposed by DBP have never been complied days with the acquiescence of the lessor. This is because the Robles contract mean that the terms of the Robles contract were revived.[50] on November 1. but for months. [Petitioners] did not go to the Bank to sign any new written contract notice to the contrary by either party has previously of lease with DBP. lease contract. 1981 and shall terminate on the last day of every month thereafter. 1987. the Supreme Court declared that: . 2002. a notice was sent to [petitioners] on June 18. Art. the relations We consider. it cannot be said that [petitioners] (equivalent to 9 months rental) shall be secured by either surety entered into a new contract with DBP where they were given the first bond. 2002. option to buy the leased property and to match offers from outside parties. Deposit equivalent to two (2) months rental and advance Because of [petitioners] failure to comply with the conditions of one (1) month rental. In the case provides: of Dizon vs. But even with the remittance and acceptance of the deposit xxxx made by [petitioners] equivalent to two (2) months rental and advance of one (1) month rental it does not necessarily follow that DBP opted to x x x [T]he acceptance by DBP of the monthly rentals does not continue with the Robles lease. based on the old Robles contract despite the fact that the [petitioners] failed to enter into a written lease contract with it. Court of Appeals. If at the end of contract the lessee Evidently. otherwise he has to vacate the premises Be that as it may.

In view of the foregoing. COURT OF APPEALS ERRED IN parties which is legally non-existent and which was not impliedly renewed DECLARING THAT PETITIONERS DID NOT ENTER INTO CONTRACT under Article 1670 of the Civil Code. B) MAIN AND PRINCIPAL ISSUES IN THE INSTANT PETITION: The other terms of the original contract of lease which are revived in the implied new lease under I Article 1670 of the New Civil Code are only those terms which are germane to the lessees right [of] continued WHETHER OR NOT THE HON. CEB-10104 and the complaint of WHETHER OR NOT THE HON. it is clear that [petitioners] had no right to file a case for rescission of the deed of sale executed by DBP in II favor of [respondents To Chip. Branch 8.[51] IT DECLARED THAT THE CONTINUATION BY RESPONDENT DBP OF Without seeking a reconsideration of the above decision. WITH RESPONDENT DBP CONTINUING THE TERMS OF THE ROBLES CONTRACT WHEREFORE. COURT OF APPEALS ERRED IN enjoyment of the property leased an implied new lease ADMITTING RESPONDENTS MOTION FOR RECONSIDERATION does not ipso facto carry with it any implied revival of DESPITE ITS BEING FILED OUT OF TIME any option to purchase the leased premises. VII . COURT OF APPEALS ERRED WHEN [petitioners] is DISMISSED for lack of merit. IV In petitioners Memorandum. Yap and Balila] because said deed of sale did not violate their alleged first option to buy or match offers from outside WHETHER OR NOT THE HON. petitioners filed the THE LEASE CONTRACT DID NOT CONTAIN THE RIGHT OF FIRST instant petition. PETITIONERS RIGHTS SUPREME COURT. Cebu City in Civil Case No. respondents opposed the petition on both procedural and REFUSAL substantive grounds. VI II WHETHER OR NOT THE HON. the 14 February 2001 Decision is hereby RECONSIDERED and another one is issued III REVERSING the 25 April 1997 Decision of the Regional Trial Court. COURT OF APPEALS ERRED WHEN NON-FORUM SHOPPING) IN THE INSTANT PETITION WAS PROPER IT FAILED TO RECOGNIZE PETITIONERS RIGHT OF FIRST REFUSAL AND VALID DESPITE ITS BEING SIGNED BY ONLY ONE OF THE TWO TO WHICH RESPONDENTS WERE BOUND PETITIONERS. COURT OF APPEALS ERRED WHEN WHETHER OR NOT ONLY QUESTIONS OF LAW AND NOT OF FACT IT FAILED TO DECLARE THAT RESPONDENT DBP HAD VIOLATED CAN BE RAISED IN THE INSTANT PETITION BEFORE THIS HON. In their Comment. A) PRELIMINARY ISSUES: 1670 OF THE NEW CIVIL CODE I V WHETHER OR NOT THE VERIFICATION (AND CERTIFICATION OF WHETHER OR NOT THE HON. they summarized the issues to be resolved in the present case as follows: WHETHER OR NOT THE HON. premises considered. COURT OF APPEALS ERRED WHEN IT DECLARED THAT THE LEASE CONTRACT IS GOVERNED BY ART.

(Petitioners. can be performed only by natural persons duly authorized for the purpose by corporate by-laws or by a specific act of the board of directors. Yap and Balila obviously overlooked the First off. to wit: Indeed. a final and executory judgment can no longer be attacked by any of the parties or be modified. COURT OF APPEALS ERRED IN REVERSING ITS OWN JUDGMENT AND DISMISSING PETITIONERS CLAIM FOR RESCISSION[52] Respondents To Chip. and LYDIA SIA. therefore. 2001. we had occasion to apply this liberality in the application of procedural rules PHILIPPINES. In this case. 2001 would have Whereas. like the signing of further. For a question to be one of law. of the evidence presented by the litigants or any of them. The motion Board of Directors of Cebu Bionic held a special meeting on July 26. [53] Physical acts. [57] and those that are implied by or are incidental to its existence. SIA to sign and file with the SUPREME COURT in connection to decision of the Court of Appeals as above mention. SIA to act and in behalf ordinarily attained finality for failure of respondents to seasonably file their Motion for of the corporation to file the CERTIORARI with the Supreme Court in Reconsideration thereon. It exercises its powers through its board of directors and/or its duly authorized The above rule. Unequivocally stated therein was the fact that the Chip. docketed CA-G. Yap and Balila argue that the instant petition should be dismissed thereunder shall raise only questions of law. this exception is attendant in the case at bar. the board appointed LYDIA I.[54] We now determine the principal issues put forward by petitioners. The resolution of the issue must rest solely on what the law provides on the given set of circumstances. Thus. we agree with the Court of Appeals that the higher relations to the decision of the Court of Appeals dated July 5. SIA to act carries with it the result that no court can exercise appellate jurisdiction to and sign all papers in connection of CA-G. Padilla[59] where we aptly declared that (Respondents. the same must not involve an examination of the probative value The Court is not persuaded. submit that the factual findings of the Court of Appeals are binding on this Court. We shall first resolve the preliminary issues. even by the highest court of the land. [56] . Such failure directors present hereby approved the appointment of LYDIA I.R. admits of certain exceptions. a corporation has no powers. NO. A question of outright as the verification and certification of non-forum shopping was executed only by law arises when there is doubt as to what the law is on a certain state of facts.Appelles). Section 1. 57216. entitled CEBU BIONIC BUILDERS SUPPLY. review the case. 2001 excused. 2002 which interest of substantial justice will be better served if respondents procedural lapse will be reversed its own judgment earlier promulgated on February 14. As will be discussed board of directors that exercises its corporate powers. 57216. NO. its power to sue and be sued in any court is lodged with the findings of the Court of Appeals are contrary to those of the trial court. on mass unanimously motion of all members of period fixed by law renders the decision final and executory. Yap and Balila more than six months after receipt of the said decision.R. approved a Resolution authorizing Lydia Sia to elevate the present case to this Court in ruling in favor of respondents. petitioners fault the Court of Appeals for admitting the Motion for Secretarys Certificate[55] attached to the instant petition. behalf of Cebu Bionic. WHETHER OR NOT THE HON. They. PATRICIO YAP and ROGER BALILA in Barnes v. Once it is clear that Except for the powers which are expressly conferred on it by the Corporation Code the issue invites a review of the evidence presented. Rule 45 of the Rules of Court categorically states that the petition filed Respondents To Chip. Yap and Balila next argue that the instant petition raises questions of fact. INC. the appellate courts Decision dated February 14. 2002 and they thereby was eventually granted and the Court of Appeals issued its assailed Amended Decision. documents. which was filed by respondents To Corporate Secretary of Cebu Bionic. the question posed is one of fact. which was executed by the Reconsideration of its Decision dated February 14.Appellants) versus THE DEVELOPMENT BANK OF THE Verily. which must be distinctly set forth. [58] one of which is when the officers and agents. Phrased elsewise. however. without the participation of Cebu Bionic. respondents To Chip. However. LYDIA I. while there is petitioner Lydia Sia in her personal capacity. a question of fact when the doubt arises as to the truth or falsity of the alleged facts. The failure of the petitioner to file his motion for reconsideration within the Whereas. directly or Resolved and it is hereby resolve to appoint and authorized indirectly. which are not allowed in a petition for review on certiorari. JOSE TO CHIP.

then President of Cebu Bionic. indeed. In short. the letter states that Cebu Bionic should vacate contract of lease between petitioners and DBP. the buyer at the prospective contracting parties manifest their interest in the contract and ends at the moment of agreement of the parties. Should Cebu Bionic fail to do so. Petitioners claim that DBP were aware of their lease on the subject property when The parties. the buyer at the foreclosure sale merely succeeds to the Under Article 1305 of the Civil Code. it would be deemed uninterested in In essence. (e) a lack of any showing not registered. In view of the continuation of the lease contract between petitioners and Rudy Robles. and (f) the other contract. In that eventuality. In the same letter. In view of the counter-offer of lease between petitioners and Rudy Robles by accepting the requirements set down by petitioners. asserting that no contract was signed because DBP did not prepare it for foreclosure did not terminate the lease. 1987. inasmuch as the contract did not have a lease. More importantly. to collect the ultimately. its perfection. In Metropolitan Manila Development Authority v. the counsel of Cebu Bionic sent a counter-offer to DBP dated July 7. 1987. the questions that must be resolved are: 1) whether or not there was a continuing with the lease. this Court has relaxed this rule in order to serve foreclosure sale. the fundamental issue to be determined is who among the petitioners and rental payments from the lessee. Negotiation begins from the time the or when the purchaser knows of the existence of the lease. DBP likewise gave Cebu Bionic a 30-day period within which to act on the said contract execution. outlining the provisions of the proposed properties. 2) if in the affirmative. however. existence of the lease. suggesting a different mode of Petitioners contend that there was a contract of lease between them and DBP. The perfection or birth of . However. save when there is a stipulation to the contrary in the contract of sale. on the other hand. June 1987. petitioners and DBP. no new contract of lease was ever perfected between that Article 1670 of the Civil Code on implied lease is not applicable on the instant case. counters that it was petitioners who did not positively act on even if there was no written contract of lease. its consummation. same. and finally. [a] contract is a meeting of rights and obligations of the pledgor-mortgagor subject to the provisions of Article 1676 of minds between two persons whereby one binds himself. may terminate an unregistered lease except when it knows of the substantial justice considering (a) matters of life. Land Bank of the Philippines. honor or property. DBP and respondents To Chip. Yap and Balila are likewise bound by such right of first refusal. JANCOM Environmental Corporation. the merits of the case sufficiently called for the suspension of contract and specifically instructing the latter to come to the bank for the execution of the the rules in order to settle conclusively the rights and obligations of the parties herein. definite term and none of the parties thereto terminated the same. Rudy Robles. the lease contract between petitioners and Rudy Robles was the party favored by the suspension of the rules. Instead of acceding to the terms of the aforementioned letter. whether or not this the premises within the said period. Petitioners put the latter foreclosed the same and the acquisition of the subject properties through the blame on DBP. We are not persuaded. contract contained a right of first refusal in favor of petitioners.[63] It asserted that the lease was merely presumed in view of the existence of party will not be unjustly prejudiced thereby. Petitioners likewise posit that the contract of lease of minds between DBP and petitioners. which was addressed to Bonifacio Sia. with respect to the Civil Code on its possible termination. which would have given rise to a new contract of between them and Rudy Robles never expired.[64] Nevertheless. DBP. 1987. petitioners submit The Court rules that. 1987 up to 1991 and DBP received their rental payments corresponding to the said period.[62] During trial. This article provides that [t]he purchaser of a the other. DBP extended an offer to Cebu Bionic respondents To Chip. DBP denied having any knowledge of the said lease that the review sought is merely frivolous and dilatory. as a rule. and 3) whether or not respondents To Chip. thereby exercising the right of the previous lessor. what are involved are the property rights of the parties given that. to give something or to render some service. payment for the rentals and requesting for a 60-day period within which time the parties will considering that they had been allowed to occupy the premises of the subject property from execute a new contract of lease.[65] we emphasized that: In Uy v. (d) a cause not entirely attributable to the fault or negligence of In the instant case. liberty. failed to execute a written contract of lease. (c) the merits of the case. (b) the existence of special or compelling circumstances. DBP even required Sia to pay the monthly rental for the month of In this case.[60] tenants in the subject property. Yap and Balila has the better right to purchase the subject to continue the lease on the subject property. Petitioners subscribe to the ruling of the RTC that them. DBP chose to continue the existing contract of the conditions for the execution of the lease contract. Yap and Balila argue that there was no meeting DBP on the letter dated June 18. DBP recognized and acknowledged this lease contract in its letter dated June 18. A contract piece of land which is under a lease that is not recorded in the Registry of Property may undergoes three distinct stages preparation or negotiation. terminate the lease.[61] the Court held that [i]n respect of the lease on the foreclosed property.

Also. the Thusly. the Certificate of Time Deposit in the amount of P11. 1987. the petitioners continued possession of the subject property could be deemed to be without the consent of DBP. and the remaining amount for one vacate the property. Article 1315 of the Civil Code. is manifested of the proposed contract of lease. Civil Code). cash bond or assigned 18. CA. provided Contrary to the ruling of the RTC. if no contract of lease was executed within 30 days from the date of the letter. for a maximum 1987. we request you to basis. The lease will be on month to month basis.) set forth in its letter dated June 18. the definite period and expires at the end of each month upon the demand to vacate by the salient conditions of which are as follows: lessor. there was no indication that the parties undertook any other action to pursue terminate the same. We reiterate that the letter explicitly directed the petitioners to come to the office of period of one (1) year. on the other hand. the directive to vacate. took effect. the Court is also not convinced that DBP opted however that this contract shall be automatically renewed on a month to continue the existing lease contract between petitioners and Rudy Robles. That the term of this agreement shall start on November 1. 3. agreement between petitioners and Rudy Robles. From then on. the third paragraph of the letter reads: Crystal clear from the above provision is that the lease is on a month-to-month If you wish to continue on leasing the property. The last stage is the consummation of the The so-called requirements enumerated in the above paragraph are not really contract wherein the parties fulfill or perform the terms agreed upon in the requirements to be complied with by the petitioners for the execution of the proposed lease contract. which the DBP and the petitioners were to execute if the by the meeting of the offer and the acceptance upon the thing and the latter were so willing. 1987 is not well taken. In fact. 343 contract. to month basis if no notice. given that it did not have a definite term and the parties thereto failed to July 7. but because the lease was terminated by DBP. Deposit equivalent to two (2) months rental and advance of to be considered uninterested in entering into a new contract and were thereby ordered to one (1) month rental. Petitioners even admitted that they merely terms and conditions of the contract of lease between petitioners and Rudy Robles reads: waited for DBP to present the contract to them. in writing. Relevantly. 1981 and shall terminate on the last day of every month thereafter. is not that the existing contract was has to vacate the premises within thirty (30) days from continued by DBP.64. the above- mentioned lease contract was duly terminated by DBP by virtue of its letter dated June 18.[70] As held by the Court of Appeals in the assailed Amended Decision.[69] (Emphases ours. which termination was date of notice. Otherwise.395. which was allegedly paid to DBP as advance rental deposit pursuant to the said x x x.[68] accompanied by a demand to petitioners to vacate the premises of the subject property. DBPs letter dated June secured by either surety bond. In the case at bar. petitioners assertion that Article 1670 of the Civil Code is not applicable to lessor is given an option of first refusal. deserves scant consideration. Consent. as apparently considered by the RTC and the petitioners. after the reply of petitioners counsel dated not expire. To recapitulate. thus. within the term.[67] 2.[66] requirements. petitioners were 2. there was no concurrence of offer and acceptance vis--vis the The contention that the lease contract between petitioners and Rudy Robles did terms of the proposed lease agreement. was not even clearly established as such since it was neither secured by a security bond or a cash bond. therefore. the second paragraph of the the execution of the intended lease contract. . cause which are to constitute the contract (See Article 1319. 1. A close reading of the SCRA 335 [2000]). To recall. That in case there is a better offer or if the property will be subject of a purchase offer. the contract takes place when the parties agree upon the essential elements of the contract. 1987. culminating in the extinguishment thereof (Bugatti vs. nor was it assigned to DBP. despite being instructed to come to the bank for the execution of the same. constituted the written notice that was required to terminate the lease time deposit. As no new contract was in fact executed between petitioners and DBP year period (equivalent to 9 months rental) shall be within the 30-day period. however. The reason. the DBP if they wished to enter into a new lease agreement with the said bank. provides that a contract letter reveals that the items enumerated therein were in fact the salient terms and conditions is perfected by mere consent. is sent to the other party to terminate this agreement after fifteen (15) days from receipt of said The findings of the RTC that DBP supposedly accepted the requirements the latter notice. the well-entrenched principle is that a lease from month-to-month is with a come to the Bank for the execution of a Contract of Lease. otherwise he the instant case is correct.

[72] which involved the issue of whether a provision regarding a preferential right to purchase is revived in an implied lease under Article 1670. legitimize the unlawful character of their possession. be accused of violating the rights of petitioners when it properties was without the acquiescence of DBP. if not controvert. therefore. and eventually sold the same to respondents To implied lease. Significantly. Necessarily. not for the period of the original contract. said payments were remitted only after petitioners were notified of the sale of the subject properties to respondents To Chip. implied lease between petitioners and DBP. etc. Neither were the said respondents bound by any right of first refusal in favor of petitioners. The other terms of the original contract shall be revived. which is based on the presumption that when the lessor allows the lessee to continue enjoying possession of the property for fifteen days after the expiration of the contract he is willing that such enjoyment shall be for the entire period corresponding to the rent which is customarily paid in this case up to the end of the month because the rent was paid monthly.[73] in Articles 1682 and 1687. it follows that petitioners claim of entitlement to a right of first refusal has no leg to stand on. the Petition for Review on Certiorari under Rule 45 of the Rules of lessor of rental payments does not.R. that an implied lease was constituted between petitioners and the DBP. the sale of the Contrary to the ruling of the RTC. without first notifying petitioners. to wit: [T]he other terms of the original contract which are revived in the implied new lease under Article 1670 are only those terms which are germane to the lessees right of continued enjoyment of the property leased. the responsibility for repairs. These facts substantially weaken. the petitioners continued possession of the subject DBP cannot. but for the time established contract of lease. petitioners were given a final demand to vacate the properties. even if we were to grant. and unless a presumption may be indulged in with respect to special agreements which notice to the contrary by either party has previously been given. This is in accordance with the ruling in Dizon v. the date when it must be paid. Chip. This is a reasonable construction of the provision. But no such enjoying the thing leased for fifteen days with the acquiescence of the lessor. Petitioners claim for rescission was properly of P5. the finding of the RTC and the argument of petitioners that the latter were faithfully remitting their rental payments to DBP until the year 1991. it is understood that there is by nature are foreign to the right of occupancy or enjoyment inherent in a an implied new lease. In view of the order to vacate embodied in the letter of DBP dated June 18. Yap and Balila and after the SO ORDERED. Yap and Balila.[71] we held that the subsequent acceptance by the WHEREFORE. for the sake of argument. Court of Appeals. the right of first refusal that was contained in the prior lease contract with Rudy Robles was not renewed therewith. such as the amount of rental. In Tagbilaran Integrated Settlers Association (TISA) Incorporated v. Thus. 1991. 2002 and the Amended Decision dated conclusion. the July 5. The Resolution dated February 5. Furthermore. thereby negating the constitution of an offered the subject properties for sale. In the present case.00 for the period of November 1990 to March 1991 did not likewise give rise to an dismissed. having determined that the petitioners and DBP neither executed a new lease agreement. Consequently. nor entered into an implied lease contract. CV No. if the presumed will of the parties refers to the enjoyment of possession the presumption covers the other terms of the contract related to such possession. 1987 in the event that no new lease contract is entered into. . 2002 of the Court of Appeals in CA-G. 57216 are hereby AFFIRMED. No petitioners rental payments to DBP were made in lump sum on March 22. Magsaysay. costs. absent any circumstance that may dictate a contrary Court is DENIED.000. Article 1670 states that [i]f at the end of the contract the lessee should continue the care of the property. DBPs acceptance of petitioners rental payments subject properties to respondents was valid.