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361

INMA ROHDE SHOTWELL vs. MANILA MOTOR CO., INC. and CHARTERED BANK
OF INDIA, AUSTRALIA AND CHINA
G.R. No. L-7637
December 29, 1956

FACTS:

On September 1, 1937, William H. Rhode, now deceased, father of the plaintiff Inma Rohde Shotwell, and
the Manila Motor Co., Inc., entered into a contract of lease for 14 years, covering three parcels of land
together with all buildings and improvements thereon, situated on Ongpin, Manila. On November 6, 1937,
the Manila Motor Co., Inc. assigned, with the express consent of William H. Rohde said lease to the
defendant Chartered Bank of India, Australia and China.

The main portion of the leased premises was sealed by the Japanese military forces, such that the defendant
Manila Motor Co., Inc., was not able to continue engaging in automobile business during the Japanese
occupation, and that the said main portion of the ground floor was occupied by the Central Garage which
belong to the then puppet government. A small portion of the ground floor was occupied by the Manila
Food Industry which was owned and operated by the defendant Manila Motor Co., Inc. It is part of the
history of said occupation days that the rentals of all buildings in general were reduced at least to half, and
the amount must have been accepted by the lessor in full payment of said rentals, not only because the
reduction thereof was in consonance with the general policy on rentals then prevailing, but because the
lessor was unable to maintain the lessee in its right to occupy without hindrance the whole premises leased
to the latter. Anyway, the plaintiffs have not proved that defendant Manila Motor Co., Inc. and plaintiff's
predecessor in interest, or Isabel Salgado de Rohde, agreed that the reduced monthly rental that said
defendant continued paying during the Japanese occupation was only in partial satisfaction of the monthly
rental stipulated in the contract.

The buildings on the property leased were totally destroyed in the battle for the liberation of Manila in
February of 1945.

ISSUE:

Whether or not the destruction of the building of the leased property caused the termination of the lease.

HELD:

The destruction of the buildings during the battle for liberation in February 1945 terminated the lease
contract. Article 1568 of the Civil Code provides: If the thing leased should be lost or either of the
contracting
parties fails to comply with his undertaking, the provisions of Articles 1182 and 1183 and of Articles
1101 and 1124 respectively shall be observed.

Article 1182 of the same Code provides: An obligation which consists in the delivery of a determinate thing
shall be extinguished if such thing should be lost or destroyed without fault on the part of the debtor and
before he is in default (mora).

ERMINDA F. FLORENTINO vs. SUPERVALUE, INC.,

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NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
362

G.R. No. 172384


September 12, 2007

FACTS:

On 8 March 1999, petitioner and respondent executed three Contracts of Lease containing similar terms and
conditions over the cart-type stalls at SM North Edsa and SM Southmall and a store space at SM Megamall.
The term of each contract is for a period of four months and may be renewed upon agreement of the parties.
Upon the expiration of the original Contracts of Lease, the parties agreed to renew the same by extending
their terms until 31 March 2000.

Before the expiration of said Contracts of Lease, petitioner received two letters from the respondent,
charging him with violations on the Contracts of Lease.

Respondent informed the petitioner that it will no longer renew the Contracts of Lease for the three outlets,
upon their expiration.

Even though the petitioner explained some these violations, Respondent still refused to renew its Contracts
of Lease with the petitioner. Respondent took possession of the store space in SM Megamall and confiscated
the equipment and personal belongings of the petitioner found therein after the expiration of the lease
contract.

Petitioner demanded that the respondent release the equipment and personal belongings it seized from the
SM Megamall store space and return the security deposits. Petitioner sent respondent another letter
reiterating her previous demands, but the latter failed to comply therewith.

ISSUE:

1. Whether or not the respondent is liable to return the security deposits to the petitions.
2. Whether or not the respondent is liable to reimburse the petitioner for the sum of the improvements she
introduced in the leased premises.

HELD:

1. As a general rule, courts are not at liberty to ignore the freedoms of the parties to agree on such
terms and conditions as they see fit as long as they are not contrary to law, morals, good customs, public
order or public policy. Nevertheless, courts may equitably reduce a stipulated penalty in the contracts in
two instances: (1) if the principal obligation has been partly or irregularly complied with; and (2) even if
there has been no compliance if the penalty is iniquitous or unconscionable in accordance with Article 1229
of the Civil Code which clearly provides: “The judge shall equitably reduce the penalty when the principal
obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance,
the penalty may also be reduced by the courts if it is iniquitous or unconscionable.”
It is in the exercise of its sound discretion that this court tempered the penalty for the breaches committed
by the petitioner to 50% of the amount of the security deposits. The forfeiture of the entire sum \ is clearly
a usurious and iniquitous penalty for the transgressions committed by the petitioner. The respondent is
therefore under the obligation to return the 50% to the petitioner.

2. Useful expenses shall be refunded only to the possessor in good faith with the same right of
retention, the person who has defeated him in the possession having the option of refunding the amount of
the expenses or of paying the increase in value which the thing may have acquired by reason thereof.

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ABONG, ABRIO, ACOSTA, ALIH, ARGOSO, BELLO, BERNALES, BRINGAS, CHING, CULAJARA, DADAYAN, DELGADO, DIZON, ENDAYA, FAJA-
NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
363

Thus, to be entitled to reimbursement for improvements introduced on the property, the petitioner must be
considered a builder in good faith. Further, Articles 448 and 546 of the Civil Code, which allow full reim
bursement of useful improvements and retention of the premises until reimbursement is made, apply only
to a possessor in good faith, i.e., one who builds on land with the belief that he is the owner thereof.

A builder in good faith is one who is unaware of any flaw in his title to the land at the time he builds on it.
In this case, the petitioner cannot claim that she was not aware of any flaw in her title or was under the belief
that she is the owner of the subject premises for it is a settled fact that she is merely a lessee thereof.

Since petitioners interest in the store space is merely that of the lessee under the lease contract, she cannot
therefore be considered a builder in good faith. Consequently, respondent may appropriate the
improvements introduced on the leased premises without any obligation to reimburse the petitioner for the
sum expended.

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NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
364

BONIFACIO NAKPIL vs. MANILA TOWERS DEVELOPMENT CORPORATION,


G.R. No. 160867 and G.R. No. 160886
September 20, 2006

FACTS:

A 14-storey high rise building was constructed at 777 Ongpin St., Sta. Cruz, Manila. Sometime in 1964, its
owner, Cheong KiaoAng, leased the building to about 200 Filipino Chinese tenants who used the same for
either residential or commercial purposes. One of these tenants was Atty. BonifacioNakpil who leased
Room 204 which he used as his law office.The tenants of the building later formed the House International
Building Tenants Association, Inc. (HIBTAI).

The property was mortgaged to Government Service Insurance System (GSIS) as security for a loan that
Ang obtained. Ang failed to pay the loan, so the real estate mortgage was foreclosed and sold at public
auction where GSIS was the winning bidder. GSIS sold the property to Centertown Marketing Corporation
(CMC).

CMC assigned all its rights to sister-corporation Manila Tower Development Corporation (MTDC).
HIBTAI protested the auction, claiming that they had priority to buy the property
Tenants refused to pay their rentals and instead remitted them to HIBTAI. City Engineer wrote to MTDC
requesting that the defects of the building be corrected. City Engineer warned that the defects were serious
and would endanger the lives of the tenants

Before MTDC could make the necessary repairs, HIBTAI filed a complaint v. GSIS for injunction and
damages but was dismissed. They filed another complaint for annulment of contract and damages but was
also dismissed. HIBTAI appealed the decision which was dismissed by the CA and SC.
8 years later, new request was made for an immediate ocular inspection of the building. City Building
Official granted the request and scheduled an ocular inspection. Tenants were illegally occupying the
building. Tenants were ordered to vacate and for the building to be repaired.
Group of men entered the building and commenced the repairs and tore down some of the structure. At the
time Atty. Nakpil was overseas. Upon his return, he discovered his room was destroyed, the walls were
hammered down, and his electricity was cut off. He then filed a complaint against MTDC.

He had been a lessee of Room 204 for 30 years. He was unaware of the demolition and was only informed
through phon. Because of the demolition, He lost valuable items and could not resume his practice.

ISSUE:

Whether or not the MTDC is liable for actual, moral and exemplary damages to Nakpil

HELD:

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NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
365

No. When the act of trespass is done by third persons, it must be distinguished whether it is trespass in fact
or in law because the lessor is not liable for a trespass in fact or a mere act of trespass by a third person. In
the Goldstein case, trespass in fact was distinguished from legal trespass, thus: if the act of trespass is not
accompanied or preceded by anything which reveals a juridic intention on the part of the trespasser, in such
wise that the lessee can only distinguish the material fact, stripped of all legal form or reasons, we understand
it to be trespass in fact only (de merohecho). Further, the obligation under Article 1654(3) arises only when
acts, termed as legal trespass (perturbacion de derecho), disturb, dispute, object to, or place difficulties in
the way of the lessee’s peaceful enjoyment of the premises that in some manner cast doubt upon the right
of the lessor by virtue of which the lessor himself executed the lease.

What is evident in the present case is that the disturbance on the leased premises on July 19, 1996 was
actually done by the employees under the City Engineer of Manila and the City Building Official on orders
of the City Mayor without the participation of the MTDC. It bears stressing that the City Building Official
is authorized and mandated under Section 214 of the National Building Code to order the repair,
maintenance or demolition of the building found or declared to be dangerous or ruinous, depending upon
the degree of danger to life, health, safety and/or well-being of the general public and its occupants as
provided in Section 215 thereof.

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NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
366

LUZ J. HENSON vs. THE INTERMEDIATE APPELLATE COURT


G.R. No. 72456
February 19, 1987

FACTS:

The petitioner leases out office spaces in her building at #494 Soldado Street, Ermita, Manila. The lessee in
the disputed lease contract was designated as Sto. Niño Travel and Tour Agency represented by private
respondent Ely Fuderanan.

The petitioner received the reservation deposit for Apartment No. 116 at Luz J. Henson Building for which
she issued a receipt to private respondent Fuderanan. On the same day, the petitioner and private respondent
Fuderanan entered into a lease contract.

Pursuant to the lease contract between the petitioner and private respondent Fuderanan, the latter issued a
postdated check. This postdated check was later replaced by another postdated check of private respondent
Luisa Commendador which was dishonored due to insufficiency of funds.
The Chief of the Licensing and Inspection Division of the Bureau of Tourism Services disapproved the
request of the private respondents to transfer their office to the premises. The private respondents informed
the petitioner in writing that they had to vacate the leased premises. The petitioner notified the private
respondents in writing of the dishonor of the postdated check. Petitioner wrote the private respondents
demanding that they make good their dishonored check in compliance with the terms and conditions of their
lease contract. Private respondents replied by stating that they had to rescind the lease contract and requested
the refund of the amounts they paid by way of advance and deposit rentals less the amount of rental due.
Their request was not granted by the petitioner. Petitioner filed an action to recover the value of the
dishonored check and rental fees corresponding to the unexpired portion of the term of the lease contract
between them but was later ruled in favor of the private respondents.

ISSUE:

Whether or not private respondents are liable.

HELD:

Yes. The predicament in which Sto. Niño Travel and Tour Agency found itself is entirely of its own making.
It should have ascertained all the rules and requirements for the operation of a travel agency before it even
started to look for premises to house its office. The petitioner had absolutely nothing to do with the private
respondents' violating the requirements. Moreover, the record shows that the petitioner-lessor offered the
occupancy of the bigger rooms in her apartments for lease to the private respondents in order that they could
meet the minimum space requirement of 50 square meters ordered by the Ministry of Tourism. The private
respondents declined the offer because they were not willing to pay for the corresponding increase in the
rental fees.

The private respondents argue that their failure to comply with their obligations under the lease contract
may be justified by Stipulation No. 9 in the lease contract which provides that:
Compliance With Law. — The LESSEE shall promptly obey, execute and fulfill any and all laws,
ordinances, rules, regulations and orders of the national or city government or of any bureau, board or
commission for the sanitation and safety of the leased premises.

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NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
367

The aforequoted stipulation in the lease contract must be read in the context of the petitioner's business of
leasing office spaces, not in that of the private respondents' travel agency business. The laws, ordinances,
rules, regulations, and orders which the lessee ought to obey, execute, and fulfill pertain to those relating to
the business of the petitioner such as the payment of expenses for the deed of lease, the settlement of electric,
water and phone bills or the installation of safety measures in cases of fire and other similar emergencies.

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NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
368

CERTIFIED CLUBS, INC. vs. COURT OF APPEALS


G.R. No. L-47695
May 7, 1987

FACTS:

Petitioner, Certified Clubs, Inc., is the lessee of the building known as the VIP Building, located at the comer
of Plaza Ferguson and Roxas Boulevard, Manila. Private respondent, Institutional Food Services, Inc., runs
a restaurant business known as the "Alta Vista Restaurant and Supper Club."

Two sub-lease agreements were entered into between petitioner and private respondent for the sixth floor
of the VIP Building.

Private respondent terminated the lease and filed the complaint for violation of the lease contract. Petitioner
denied liability invoking the provisions of the Lease Agreements. Private respondent denied liability on the
Counterclaim.

ISSUE:

Whether or not Court of Appeals erred in upholding the right of private respondent to damages and in
denying to the petitioner the value of leasehold improvements and erred in upholding the right of private
respondent to damages and in denying to the petitioner the value of leasehold improvements.

HELD:

It is true that paragraph 5 of the Sub-lease Agreement on repairs (supra), one of the provisions on which
petitioner relies, specifically provides that the sub-lessee assumes all obligations for maintenance and
operation as if the sub-lessee is owner. One of the exceptions to the assumption of duties and obligations,
however, is where the thing "required to be done" arises from "faulty construction." It was apparent that the
central air. conditioning was faultily constructed, hence the frequent breakdowns that private respondent
experienced, something that it could ill afford considering the nature of its restaurant business. It was,
therefore, incumbent on petitioner to have made the necessary repairs and to have maintained the
airconditioning unit in running and satisfactory condition. it must not be lost sight of either that under the
Agreements, it was petitioner which was obliged to provide the leased premises with complete
airconditioning facilities. In fact, the acceptance of the leased premises by private respondent was pre-
conditioned on "the airconditioning with compressor is running sufficient to cool the entire 7th floor."

The cost of acquisition and installation of the package-type airconditioners, therefore, should be for
petitioner's account and it should reimburse said cost to respondent. To make private respondent shoulder
the repairs of the entire centralized airconditioning system from the ground floor and all other storeys
occupied by others is neither equitable nor just.

Nor can petitioner be held to be entitled to rentals for the unexpired period of the lease. Said rentals are
governed by Article 1659 of the Civil Code, reading:

ART. 1659. If the lessor or the lessee should not comply with the obligations set forth in articles 1654 and
1657, the aggrieved party may ask for the rescission of the contract and indemnification for damages, or
only the latter, allowing the contract to remain in force.

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NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
369

By its act of terminating the contract, private respondent had chosen rescission of the contract and
indemnification for damages. The early termination of the sub-lease by private respondent was for a valid
and legal cause particularly, the breach of petitioner of its contract with private respondent. In fact, the
evidence discloses that private respondent, on September 2, 1969, was already compelled to "hold in
abeyance the payment of its rentals until its legitimate complaints shag have been acted upon, to insure the
continuity of its operations." Private respondent had also complied with the required 2-month written notice
of termination provided for in paragraph 1 of the Sub-lease Agreements.

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LASCO, VERCELES, VILLANUEVA, VITORILLO
370

IMELDA, LEONARDO, FIDELINO, JOSEFINA, ANITA, AZUCENA, and SISA, all


surnamed SYJUCO vs. COURT OF APPEALS and FILIPINAS BANK
G.R. No. L-80800
April 12, 1989

FACTS:

The petitioner Pilipinas Bank, formerly Filipinas Manufacturers Bank and Trust Company, leased from the
plaintiffs (now private respondents) 1,387 (should be, 1,384) square meters of .
The petitioner sub-leased to Eugenio Trinidad, President of Kalayaan Development and Industrial
Corporation, a portion of 965 square meters with a term that is coterminous with the original lease contract.
Sections 3 and 6 of the Contract of Sub-lease prohibited the sublessee Eugenio Trinidad from further
subleasing the property subleased to him by the petitioner.

Inspite of the prohibition to sublease and in violation thereof, Eugenio Trinidad "constructed stalls/stores
thereon and leased the same to 12 persons who conducted their individual business."
After the expiration of the, private respondents filed an action for unlawful detainer, against the petitioner,
Six months after the expiration of the lease and five months after the filing of the complaint, defendant bank'
surrendered the premises it occupied by surrendering to the court the key to the bank structure. Meanwhile,
Pilipinas Bank filed an ejectment case against Eugenio Trinidad and Kalayaan Industrial Development
Corporation and was dismissed.

ISSUE:

Whether or not CA erred in applying Articles 1665, 1651, 1652 and 1266 of the Civil Code

HELD:

No. At the outset, there is no doubt that the lessee in a contract of lease is obliged to return the thing subject
of said contract upon the expiration of the period agreed upon. Article 1665 of the Civil Code expressly
requires that the thing leased be returned. And it stands to reason and the spirit of the law that, as a general
rule, not only a portion of the thing leased be returned but the whole of it. Additionally the law mandates
that the thing leased be returned in the same condition.
It must be borne in mind that from the start, the contract of sub-lease between the sub-lessee and the present
occupants is null and void.

In connection with the question on the applicability of Articles 1266 and 1651 of the Civil Code in relation
to Article 1665, It may not be invoked in exempting Pilipinas Bank (as lessee) from returning the whole
property to the owners thereof for such obligation to return is in the nature of an obligation to give (or a real
obligation), in which case Article 1262, not Article 1266, applies. Nevertheless, for reasons already
discussed above, Pilipinas is deemed to have fully satisfied its obligation to return the whole property leased.

Similarly, Article 1651 cannot be correctly read with Article 1665 in the latter's application to the case at
bar concerning the propriety of requiring the sub-lessees to pay rents directly to the lessors, Syjucos. Article
1651 clearly and expressly refers to the use and preservation of the thing leased and not to the matter of
payment of rents. This is so precisely because it is Article 1652 which outlines the sub-lessee's liability for
rents.

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LASCO, VERCELES, VILLANUEVA, VITORILLO
371

As regard the application of either Article 1651 or 1652 of the Civil Code, the SC rule that neither can be
properly invoked under the circumstances. As correctly noted by the Syjucos, and as the SC have mentioned
earlier, Article 1651 refers to the sublessee's liability to the lessor for acts relating to the use and preservation
of the property leased. It may not be resorted to in determining the sub-lessee's liability for rent since Article
1652 specifically governs that aspect. However, Article 1652 cannot also be applied in determining Pilipinas
Bank's liability for rents from July 1984 onwards precisely because no contract of lease existed from that
time. The original contract of lease expired on December 31, 1983. From then on, as correctly pointed out
by Pilipinas Bank on pages 17 to 18 of its Motion to Dismiss, the lease was renewed from month to month
pursuant to Articles 1670 and 1687 of the Civil Code until it was finally terminated on July 6, 1984 when
said Bank left the place. Ergo, the respondent CA did not commit any error in requiring Pilipinas Bank to
pay rents only for the time the latter occupied the premises. Obviously then, it should be Mr. Trinidad and
Kalayaan and all persons claiming rights under them who should be liable to pay rents to the Syjucos from
the time Pilipinas Bank abandoned the premises.

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LASCO, VERCELES, VILLANUEVA, VITORILLO
372

WHEELERS CLUB INTERNATIONAL, INC. vs. JOVITO BONIFACIO, JR G.R.


No. 139540.
June 29, 2005

FACTS:

Rosario, Romeo, Virgilio, Generoso, Andres, Jovito, Jose (all surnamed Bonifacio), Zenaida B. Lafiguera,
Corazon B. Calub, and Ma. Cristina B. De Guzman are the registered co-owners of a parcel of land with
improvement situated at No. 83 EDSA, Mandaluyong. The co-owners comprised the Board of Directors of
J & R Bonifacio Development Corporation (JRBDC).

Bonifacio Development Associates, Inc. (BDAI), represented by Jaime C. Bonifacio, Sr. (Jaime) as
President and Chairman of its Board of Directors, entered into a Contract of Lease with Wheelers JRBDC,
represented by the co-owners as members of the Board of Directors and lessors of the Property, entered into
a Lease Development Agreement with BDAI. Under the Lease Development Agreement, BDAI was
authorized to renovate, manage, develop, and sublease the Property. The co-owners executed a General
Power of Attorney in favor of Jaime granting him the authority to administer the Property, renovate the
building, introduce improvements and lease the Property to any person.

The co-owners demanded that BDAI submit accounting records of all income from the Property. BDAI, in
turn, demanded that the co-owners furnish it with receipts and records of cash and check advances made by
BDAI to the co-owners. The co-owners, as directors of JRBDC, approved a Resolution terminating the
authority of Jaime C. Bonifacio to manage and administer the Property for BDAIs.
Rosario Bonifacio (Rosario), as President and Chairman of the Board of JRBDC, wrote Jaime, as President
and Chairman of BDAI, a letter terminating the agreement with JRBDC for non-payment of whatever was
due to JRBDC under the agreement.

The co-owners as members of the Board of Directors of JRBDC approved a Resolution appointing Jovito
as the new administrator of the Property. Rosario wrote a letter informing Wheelers about the appointment
of Jovito as the new administrator of the Property and the termination of Jaimes authority to manage the
Property. Jovito wrote to Wheelers claiming that the co-owners did not authorize the Contract of Lease
between BDAI and Wheelers. Jovito gave Wheelers ten days to vacate the Property.
Jovito and the other co-owners, through counsel, sent a letter to Wheelers demanding payment of rentals in
arrears from February to October 1997. The letter also demanded that Wheelers vacate the Property within
five days from receipt of the letter. Jovito, as a co-owner of the Property, filed a complaint for unlawful
detainer against Wheelers.

ISSUE:

WHETHER OR NOT THE CO-OWNERS HAVE A CAUSE OF ACTION FOR UNLAWFUL


DETAINER AGAINST WHEELERS FOR NON-PAYMENT OF RENTALS AND EXPIRATION OF
THE TERM OF THE LEASE AGREEMENT.

HELD:

Yes. In unlawful detainer, the possession of the defendant is inceptively lawful but it becomes illegal
because of the termination of his right to possess the property under his contract with the plaintiff. Hence,
by instituting the unlawful detainer action, Jovito and the other co-owners admit that Wheelers possession

SALES AND LEASE under ATTY. CASINO - CASE DIGESTS - CONCEPT OF SALE - CLASS 2K A.Y. 2016-2017
ABONG, ABRIO, ACOSTA, ALIH, ARGOSO, BELLO, BERNALES, BRINGAS, CHING, CULAJARA, DADAYAN, DELGADO, DIZON, ENDAYA, FAJA-
NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
373

of the Property was lawful at the beginning. In other words, Jovito and the other co-owners recognize the
legality of Wheelers occupation of the Property beginning 1 June 1994 by virtue of the Contract of Lease it
had with BDAI.

BDAI is the sub-lessor of the Property. BDAIs sub-lease agreement with Wheelers is within the five-year
term of BDAIs principal lease with the co-owners. Until the expiration of the five-year term of BDAIs
principal lease, the sub-lease agreement between BDAI and Wheeler remains valid, unless the sub-lease
agreement is judicially annulled in the proper case, or unless there is a judgment cancelling BDAIs principal
lease with the co-owners or ousting BDAI from the Property. Moreover, no lease agreement exists between
the co-owners and Wheelers. Therefore, Jovitos claim that the term of the alleged lease agreement between
the co-owners and Wheelers has expired has no legal basis.

SALES AND LEASE under ATTY. CASINO - CASE DIGESTS - CONCEPT OF SALE - CLASS 2K A.Y. 2016-2017
ABONG, ABRIO, ACOSTA, ALIH, ARGOSO, BELLO, BERNALES, BRINGAS, CHING, CULAJARA, DADAYAN, DELGADO, DIZON, ENDAYA, FAJA-
NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
374

JOSIE GO TAMIO vs. ENCARNACION TICSON G.R.


No. 154895.
November 18, 2004
FACTS:

The Roman Catholic Archbishop of Manila (RCAM) is the owner of an apartment unit originally leased to
Mr. Fernando Lopez Lim. After the demise of Mr. Fernando Lim, his children became the occupants thereof.
One of them, Valentine Lim requested respondent EncarnacionTicson, for financial assistance in order to
purchase the apartment unit from RCAM. In exchange, Valentine Lim executed a waiver in favor of
respondent.

Respondent executed a contract of lease in favor of petitioner] on the basis of the waiver from Valentine
Lim respecting the apartment unit. After signing the contract and paying the rentals, petitioner discovered
that the apartment was actually owned by RCAM.
After the expiration of the lease, respondent demanded petitioner to vacate the premises for the use of the
former's family members. Petitioner filed a case for unlawful detainer.

ISSUE:

Whether or not petitioner should be held liable to pay respondent the alleged rental arrearages

HELD:

To allow respondent to receive from petitioner rental arrearages for the period September 1996 to December
1997, notwithstanding the latter's agreement with the owner to pay rent for her occupancy of the property,
would constitute unjust enrichment at the expense of petitioner. Under Article 22 of the Civil Code, there is
unjust enrichment when (1) a person is unjustly benefited, and (2) such benefit is derived at the expense of
or with damages to another.

Having assumed to pay the rentals to RCAM, petitioner should no longer be required to pay rental arrearages
to respondent. To do so would be to sanction unjust enrichment in favor of respondent and to cause unjust
poverty to the petitioner. A double burden would be imposed upon the latter, because she would be paying
twice for her use of the same premises for the same period of time.

Indeed, the relation of lessor and lessee does not depend on the former's title but on the agreement between
the parties, followed by the possession of the premises by the lessee under such agreement. As long as the
latter remains in undisturbed possession, it is immaterial whether the lessor has a valid title -- or any title at
all -- at the time the relationship was entered into. Between the present parties, the lease -- which was
actually a sublease -- was effective. And respondent had a colorable right to lease the premises by virtue of
the assignment even if, as against the owner, both the assignment and the sublease were ineffectual.

COCA-COLA BOTTLERS PHILIPPINES, INC vs. THE COURT OF APPEALS


G.R. No. 100957
January 27, 1994

FACTS:

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ABONG, ABRIO, ACOSTA, ALIH, ARGOSO, BELLO, BERNALES, BRINGAS, CHING, CULAJARA, DADAYAN, DELGADO, DIZON, ENDAYA, FAJA-
NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
375

Petitioner Coca-Cola Bottlers Philippines, Inc. (Coca-Cola for brevity), through its Sales Supervisor in
Malabon, metro Manila, approached private respondent Cesar B. Bautista to inform him that the company
was interested in leasing a parcel of land belonging to him and his brother, the late Paciano Bautista. A
certain Manaloto, Coca-Cola Sales Supervisor, negotiated the lease of the premises with respondent
Bautista, who wanted the term of the lease to be limited to five (5) years. However, Coca-Cola insisted on
a ten-year period as it planned to put up a warehouse & sales office in the said place.

Since the land leased was partially under water, Coca-Cola filled it up the with ten trucks of filling materials
before constructing a warehouse and sales office. In addition, it installed a water tank and a gasoline tank.
The Malabon Sales Office had 14 route trucks, 7 haulers, and 10 private vehicles to deliver their goods to
its customers. It also had a forklift in handling their products at the warehouse.

Jesus Solis Calderon, Operations Manger of Coca-Cola, received a report from the supervisor of the
Malabon branch that the sales office and the warehouse were sinking, mud was coming up from the ground
and that asphalt pavement was being wiped out. As a result, their trucks were stuck to the ground. To remedy
the situation, Coca-Cola filled up the place with escombro but to no avail because the silt still continued to
seep out of the ground. Calderon then prepared a memorandum addressed to their General Manager
recommending corrective measures to solve the problem. Coca-Cola engaged the services of San Agustin
Construction Corp. to arrest the rapid deterioration of the premises. Despite the steps taken, the site
continued to sink. Coca-Cola then consulted another firm, Industrial Inspection (International), Inc. (IIII)
which conducted a test of the soil in the land area.

Private respondents received a letter from Coca-Cola informing of the company's intention to terminate the
lease agreement. After he met with the managers of Coca-Cola and with the heirs of Paciano Bautista, Cesar
Bautista wrote Coca-Cola that its proposal of terminating the contract was not acceptable. This was also
reiterated in a subsequent letter sent by private respondents' counsel.

Coca-Cola, however, insisted on turning over the leased premises to private respondents. For failure of
Coca-Cola to pay the rentals on the leased property, the Bautistas filed a complaint against it with the lower
court for specific performance and damages.

ISSUE:

Whether or not that as lessee, it had been denied its rights to the enjoyment or use of the thing leased and
unjustly exempting respondents from their obligation to render the same fit for the use intended.

HELD:

No. Article 1654, par. 1, of the Civil Code provides that the lessor has the obligation to deliver the leased
premises "in such a condition to render it fit for the use intended." The facts as found by the Court of Appeals
in the present case reveal that petitioner initiated the negotiation to lease the subject land for its Malabon
office.

It was clearly the intention of the parties, upon entering into the contract of lease, for petitioner to simply
obtain a site, "a flat surface," for the establishment of a Malabon sales office. This was understood and

SALES AND LEASE under ATTY. CASINO - CASE DIGESTS - CONCEPT OF SALE - CLASS 2K A.Y. 2016-2017
ABONG, ABRIO, ACOSTA, ALIH, ARGOSO, BELLO, BERNALES, BRINGAS, CHING, CULAJARA, DADAYAN, DELGADO, DIZON, ENDAYA, FAJA-
NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
376

agreed upon by private respondents. Thus, in accordance with the said contract, petitioner constructed on
the subject land its sales office, warehouse, water tank and gasoline tank. Under these circumstances, private
respondents were under no obligation to make the necessary repairs in order to keep the land suitable for
the purpose for which it had been intended.
Accordingly, private respondents cannot be held liable for the alleged warranty against hidden defects under
Art. 1561 of the Civil Code.

Under the circumstances, the refusal of respondents to accede to petitioner's request for the pretermination
of the lease being justified, they are entitled to demand from the latter compliance with the terms and
conditions of the contract of lease. Although sound business practice dictates the necessity of abandoning
the Malabon sales office, rather than continuing with the contract of lease which would entail more losses,
such is not a valid ground to justify breach of the lease contract, private respondents not having committed
any actionable wrong.

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ABONG, ABRIO, ACOSTA, ALIH, ARGOSO, BELLO, BERNALES, BRINGAS, CHING, CULAJARA, DADAYAN, DELGADO, DIZON, ENDAYA, FAJA-
NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
377

PEDRO T. BERCERO vs. CAPITOL DEVELOPMENT CORPORATION


G.R. No. 154765
March 29, 2007
FACTS:

On January 31, 1983, Capitol Development Corporation (respondent) leased its commercial building and
lot located at 1194 EDSA, Quezon City to R.C. Nicolas Merchandising, Inc., (R.C. Nicolas) for a 10-year
period or until January 31, 1993 with the option for the latter to make additional improvements in the
property to suit its business and to sublease portions thereof to third parties.
R.C. Nicolas converted the space into a bowling and billiards center and subleased separate portions thereof
to Midland Commercial Corporation, Jerry Yu, Romeo Tolentino, Julio Acuin, Nicanor Bas, and Pedro T.
Bercero (petitioner).

For failure to pay rent, respondent filed an ejectment case against R.C. Nicolas. In the compromise
settlement, the sub-lessees recognized respondent as the lawful and absolute owner of the property and that
the contract between respondent and R.C. Nicolas had been lawfully terminated because of the latter’s non-
payment of rent; and that the sub-lessees voluntarily surrendered possession of the premises to respondent;
that the sub-lessees directly executed lease contracts with respondent considering the termination of
leasehold rights of R.C. Nicolas. Petitioner entered into a lease contract with respondent.
Respondent and petitioner, as well as several other sub-lessees of R.C. Nicolas, filed a Joint Manifestation
and Motion which will move that the names of the sub-lessees as parties-defendants be dropped and
excluded.

R.C. Nicolas filed a complaint for ejectment and collection of unpaid rentals against petitioner.

ISSUE:

Whether or not respondent is liable for damages.

HELD:

Under Article 1654 (3) of the New Civil Code, to wit: (3) to maintain the lessee in the peaceful and adequate
enjoyment of the lease for the entire duration of the contract.

It is the duty of the lessor to place the lessee in the legal possession of the premises and to maintain the
peaceful possession thereof during the entire term of the lease.

The lessor must see that the enjoyment is not interrupted or disturbed, either by others acts x xx or by his
own. By his own acts, because, being the person principally obligated by the contract, he would openly
violate it if, in going back on his agreement, he should attempt to render ineffective in practice the right in
the thing he had granted to the lessee; and by others acts, because he must guarantee the right he created,
for he is obligated to give warranty in the manner we have set forth in our commentary on article 1553, and,
in this sense, it is incumbent upon him to protect the lessee in the latter’s peaceful enjoyment. It is well-
settled that parties to a void agreement cannot expect the aid of the law; the courts leave them as they are,

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NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
378

because they are deemed in pari delicto or in equal fault. No suit can be maintained for its specific
performance, or to recover the property agreed to be sold or delivered, or the money agreed to be paid, or
damages for its violation, and no affirmative relief of any kind will be given to one against the other. Each
must bear the consequences of his own acts. They will be left where they have placed themselves since they
did not come into court with clean hands.

JOSE L. MADAMBA vs. SALVADOR ARANETA, ETC., ET AL.


G.R. No. L-12017
August 28, 1959
FACTS:

On August 17, 1926, Madamba filed with the Bureau of Lands Application No. 2788, for a lease contract
on an agricultural public land, situated in the barrio of Patanad, municipality of Echague, province of
Isabela. The contract of lease was awarded to Madamba. However, owing to delinquency in the payment of
the stipulated rentals said contract was cancelled by respondent Salvador Araneta, as Secretary of
Agriculture and Natural Resources. Three motions for reconsideration, filed by Madamba were denied.

ISSUE:

Whether or not the cancelation of the lease was valid.

HELD:

In the case at bar, the disturbance in plaintiff's possession, with respect to small portions of the leased
property, was admittedly caused by mere intruders, who acted without any color of title. What is more, it is
not disputed that said property is part of the public domain. Indeed, its status as such had been settled by a
final judgment, rendered way back on December 9, 1930, in Cadastral Case No. 16 of the Court of First
Instance of Isabela, G.L.R.O. No. 1055, entitled "The Director of Lands vs. Arsenio E. Abad, et al."
It is apparent, therefore, that the disturbance in the possession of petitioner herein was the product of an "act
of mere trespass," or "perturbacion de merohecho", for which, "the lessor shall not be liable" or "shall not
be obliged to answer", in the language of the Civil Codes of Spain (Article 1560) and the Philippines (Article
1664), respectively.

It may not be amiss to note that Article 1658 of our Civil Code merely implements the obligation of the
lessor under the Article 1654 thereof, to make "all the necessary repairs" and "to maintain the lessee in the
peaceful and adequate enjoyment of the lease," which he had under Article 1554 of the Spanish Civil Code.
Hence, the "peaceful enjoyment" mentioned in Article 1658 of the Civil Code of the Philippines, is nothing
but the one referred to in Article 1654 thereof, which, in turn, is identical to that alluded to in Article 1554
of the Civil Code of Spain, and the "act of mere trespass" — disturbing said "peaceful enjoyment" —
contemplated in Article 1664 of the former, is the same "perturbacion de merohecho" for which "the lessor
shall not be liable", pursuant to Article 1560 of the latter.

The action taken by the Secretary of Agriculture and Natural Resources is further supported by the Public
Lands act (Commonwealth Act No. 141), and the lease contract in question, pursuant to the provisions of
which, plaintiff, the Government "may elect to declare" the contract "rescinded and void" and "enter and
take possession" of the property leased.

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ABONG, ABRIO, ACOSTA, ALIH, ARGOSO, BELLO, BERNALES, BRINGAS, CHING, CULAJARA, DADAYAN, DELGADO, DIZON, ENDAYA, FAJA-
NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
379

LL AND COMPANY DEVELOPMENT AND AGRO-INDUSTRIAL CORPORATION vs.


HUANG CHAO CHUN AND YANG TUNG FA
G.R. No. 142378.
March 7, 2002

FACTS:

Petitioner alleged that respondents Huang Chao Chun and Yang Tung Fa violated their amended lease
contract over a lot it owns when they did not pay the monthly rentals. It also alleged that the amended lease
contract already expired on September 16, 1996 but respondents refused to surrender possession thereof
plus the improvements made thereon, and pay the rental arrearages despite repeated demands. Respondents
and the Tsai Chun International Resources Inc. denied petitioner's allegations, claiming instead that the
amended lease contract did not reflect the true intention of the parties because it did not contemplate an
obsolete building that can no longer be renovated; that their failure to pay the monthly rentals on the property
was due to petitioner's fault when it attempted to increase the amount of rent in violation of their contract;
and that they are entitled to a renewal of their contract in view of the provision therein providing for
automatic renewal, and also in view of the P24,000,000.00 worth of improvements they introduced on the
leased premises.

ISSUE:

1. Whether or not the court could still extend the term of the lease, after its expiration. Whether or not
the expiration of the lease is a proper ground in a case of unlawful detainer.
2. Whether non-payment of rentals is a ground to eject, in an unlawful detainer. Whether or not the
refusal of the lessor to accept or collect rentals is a valid reason for non-payment of rentals.

HELD:

1. In general, the power of the courts to fix a longer term for a lease is discretionary. Such power is to
be exercised only in accordance with the particular circumstances of a case: a longer term to be granted
where equities demanding extension come into play; to be denied where none appear -- always with due
deference to the parties' freedom to contract. Thus, courts are not bound to extend the lease.
Article 1675 of the Civil Code excludes cases falling under Article 1673 from those under Article 1687.
Article 1673 provides among others, that the lessor may judicially eject the lessee upon the expiration of
"the period agreed upon or that which is fixed for the duration of the leases." Where no period has been
fixed by the parties, the courts, pursuant to Article 1687, have the potestative authority to set a longer period
of lease.

Parties are free to enter into any contractual stipulation, provided it is not illegal or contrary to public morals.
When such agreement, freely and voluntarily entered into, turns out to be disadvantageous to a party, the
courts cannot rescue it without crossing the constitutional right to contract. They are not authorized to
extricate parties from the necessary consequences of their acts, and the fact that the contractual stipulations
may turn out to be financially disadvantageous will not relieve the latter of their obligations.

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NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
380

2. Respondents should have deposited in a bank or with judicial authorities the rent based on the
previous rate. In the instant case, respondents failed to pay the rent from October 1993 to March 1998 or
for four years and three months. They should remember that Article 1658 of the Civil Code provides only
two instances in which the lessee may suspend payment of rent; namely, in case the lessor fails to make the
necessary repairs or to maintain the lessee in peaceful and adequate enjoyment of the property leased.

None of these is present in the case at bar.

Moreover, the mere subsequent payment of rentals by the lessee and the receipt thereof by the lessor does
not, absent any other circumstance that may dictate a contrary conclusion, legitimize the unlawful character
of the possession. The lessor may still pursue the demand for ejectment.

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ABONG, ABRIO, ACOSTA, ALIH, ARGOSO, BELLO, BERNALES, BRINGAS, CHING, CULAJARA, DADAYAN, DELGADO, DIZON, ENDAYA, FAJA-
NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
381

AREVALO GOMEZ CORPORATION VS ANDERS LAO HIAN LIONG, doing business in the
name and style of "TIONGSON BAZAAR" and The Honorable SALVADOR J. VALDEZ, JR.,
G.R. No. 70360
March 11, 1987

FACTS:

On December 1, 1964, the petitioner through its Vice-President, Renato Arevalo, and respondent Andres
Lao HIAN Liong, executed a "Contract of Lease" covering the petitioner's property a term of fifteen years,
effective September 1, 1964. The monthly rental was fixed at P2, 450.00. Prior to the expiration of the lease
on August 31, 1979, and for some time thereafter, the parties entered into negotiations to fix a new rental
but could not come to any agreement. In the end, on October 2, 1979, the petitioner served on the respondent
a written notice to vacate the leased premises in view of the termination of their contract. When the
respondent refused to comply, the petitioner filed a complaint for ejectment against him in the trial court.
Applying Article 1670 of Civil Code, the trial court held in favor of the defendant. The trial court also
extended the period of the lease by five years from October 1, 1979, pursuant to Article 1670 in relation to
Article 1687 of the Civil Code, and fixed the new rentals at P10, 406.00 a month. Both parties appealed.
The petitioner contended that the original lease had not been impliedly renewed but automatically expired
on August 31, 1979. The respondent, for his part, prayed for a longer extension of fifteen years, considering
the nature of his business (a bazaar) and his investment therein. The Regional Trial Court affirmed the
implied renewal of the lease but modified the appealed judgment by extending the lease for ten years from
September 1, 1979, or until August 31, 1989. The respondent judge also increased the new rentals to P18,
600.00 per month, effective September 1, 1979. A motion for reconsideration and for new trial was filed by
petitioner but the same was denied.

ISSUE:

Whether or not Article 1670 of the Civil Code applies?

HELD:

No. Article 1670 applies only where, before the expiration of the lease, no negotiations are held between
the lessor and the lessee resulting in its renewal. Where no such talks take place and the lessee is not asked

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LASCO, VERCELES, VILLANUEVA, VITORILLO
382

to vacate before the lapse of fifteen days from the end of the lease, the implication is that the lessor is
amenable to its renewal.

Applying these principles, the Court holds that the lease was not impliedly renewed in the instant case.

It is a matter of record that weeks before the deadline for the notice to vacate, the petitioner had already
communicated to the respondent its intention to increase the rental. This increase had to be accepted by the
respondent if he wanted the lease to be renewed. Significantly, in its letter to the respondent on September
18, 1979, the petitioner once again rejected the latter's counter-proposal and categorically declared that the
increased rental of P35, 000.00 was "no longer negotiable." Since this was a reply to the respondent's letter
of September 14, 1979, it is obvious that the increase in rental was notified to the respondent on an earlier
date, and before the expiration of the original lease.

As of that date, the respondent was already being informed that he would have to vacate the leased premises
on August 31, 1979, unless he was willing to pay the increased rental demanded by the lessor. Stated
otherwise, the respondent was on that date which was clearly before the statutory deadline being served a
conditional notice to vacate.

The formal notice to vacate sent by the petitioner to the respondent on October 2, 1984, was thus merely a
reiteration of the implied demand made to him in its previous communications. The demand was that he
vacate the leased premises if he could not accept the non-negotiable increased rental of P35, 000.00 a month.
If the petitioner saw fit to write that letter on the said date, which was admittedly beyond the 15day statutory
period, it was merely to repeat its insistence on the new rate as an indispensable condition to the renewal of
the lease. The legal consequence of its rejection by the respondent was its obligation to vacate the leased
premises because of the expiration of the lease.

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NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
383

ANIANO TORRES and JOSEFINA TORRES


vs.
THE HON. COURT OF APPEALS, HON. REGIONAL TRIAL COURT OF NEGROS
ORIENTAL, BRANCH 34, and ADELA B. FLORES
G.R. No. 92540
December 11, 1992

FACTS:

These contracts related to ten parcels of land belonging to Adela B. Flores, the herein private respondent,
which she leased to the spouses Aniano and Josefina Torres, for a specified term of four agricultural years
commencing from 1985 and at stipulated rentals payable in piculs of sugar. It is not disputed that before the
expiration of these contracts, the parties agreed on their renewal under the original terms, subject to the
condition that the lessees would deliver to Flores the amount of P50, 000.00 not later than February 15,
1989. Flores said she would need the money for her projected trip abroad. Flores claims that the petitioner
failed to comply with this condition and that consequently she informed them on February 17, 1989, that
she was taking over her property upon the expiration of the contracts. She reiterated this notice one month
later and advised them not to undertake any new cultivation on the lands. When her subsequent demands
for the surrender of her property were disregarded, she sued the petitioners for illegal detainer. In their
answer to the complaint, the petitioners submitted that the contracts had been validly renewed because they
had complied with the above-mentioned condition. As affirmative defense, they contended that the lease
had been continued under the rule of tacitareconduccion and that the complainant was estopped from
denying that she had granted them an option to renew the contracts.

The petitioners failed in the Municipal Circuit Court of Pamplona, Negros Oriental, the Regional Trial Court
of Dumaguete City, and the Court of Appeals. They are now before this Court for a fourth opinion.

ISSUE:

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NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
384

Whether or not the original contracts of lease entered into between the petitioners and the private respondent
have been validly renewed.

HELD:

No. We begin by reiterating the familiar rule that the findings of fact of the lower courts are binding on this
Court unless they come within the specified exceptions, which are also well-known. None of such
exceptions has been established in the case at bar. We therefore accept that there was an oral agreement
between the parties to extend the original contracts of lease provided that the petitioners could deliver to the
private respondent the sum of P50, 000.00 in cash not later than February 15, 1989. This was a suspensive
condition that was not met.

It is clear from the documentary evidence submitted by both parties that the two checks paid to Flores by
the spouses Torres were in the separate amounts of only P1, 686.15 and P9, 729.74. They were undisputedly
far short of the required payment of the P50, 000.00 rentals on the land by the petitioners as a condition for
the renewal of the lease. Hence, Flores as lessor was not obliged to extend the contracts.

As correctly held by the Court of Appeals:

“…Under the foregoing factual backdrop, the condition set up by private respondent that petitioner Josefina
Torres produce and give her cash in the amount of P50,000.00 on or before February 15, 1989 is a suspensive
condition for said respondent to consider the renewal, not that actual renewal yet of the contract of lease.
Definitely, what transpired between private respondent and petitioners Josefina Torres, as found by the
lower courts and which We find to be correct, is not an option given to the petitioners to re

new the lease agreement. Given the fact that private respondent served notice to the petitioners that she was
terminating the contract of lease as per their agreement, after the harvest of the canes from each parcel of
land during the crop year 1988-1989, there can arise no implied renewal of lease (tacitareconduccion), but
that the continued possession and cultivation of the subject lands therefore by the petitioners constitutes
illegal detainer.”

The petitioner's argument that they complied with the condition because the private respondent had
withdrawn from the quedans with a money value of more than P50, 000.00 is not acceptable. The value of
the quedans withdrawn as of February 15, 1989, amounted to only P11, 415.89. Her acceptance of the two
check vouchers representing the quedans might indeed have estopped her from arguing that the payments
should have been in cash, especially so since she had encashed the checks without objection. The obstinate
fact, however, is that the cash value of the checks was undeniably below the stipulated P50, 000.00 that was
to be paid before the deadline.

The invocation of tacitareconduccion is futile. The facts of this case as found by the lower courts clearly
show that there was no implied renewal but instead an express termination of the contracts of lease. This is
evident from the letters of Flores to the petitioners advising them on February 17, 1989, that she would take
over her property upon the end of agricultural year 1989 and on March 8, 1989, that they should not
undertake any new cultivation of the leased lands and demanding again that they vacate the same. This
demand had earlier been made by Flores's counsel on February 20, 1989.

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LASCO, VERCELES, VILLANUEVA, VITORILLO
385

JOVEN YUKI, JR vs WELLINGTON CO


G.R. No. 178527
November 27, 2009

FACTS:

The lessee-petitioners attempt to hold on to the property subject of the instant unlawful detainer case, by
resorting to fraudulent machinations such as refusing to receive the notices to vacate, must not be
countenanced. His stubborn refusal to receive the notices to vacate should not prejudice the right of the
lessorrespondent, to use and enjoy the fruits of his property.

This Petition for Review on Certiorari assails the November 23, 2008 Decision of the Court of Appeals
(CA) in CA-G.R. SP No. 89228 granting respondents Petition for Review and setting aside the March 7,
2005 Decision of the Regional Trial Court (RTC), Branch 14, Manila. The RTC reversed and set aside the
Decision dated September 21, 2004 of the Metropolitan Trial Court (MeTC), Branch 15, Manila, granting
respondents Complaint for unlawful detainer and ordering petitioner to vacate the premises subject matter
of this case.

Mr. Joseph Chua was the registered owner of a parcel of land, together with a commercial building erected
thereon, situated at the corner of Espaa and InstruccionSts., Sampaloc, Manila. In 1981, he leased a portion
of the building to petitioner Joven Yuki, Jr., who put up a business therein under the name and style
Supersale Auto Supply. The contract of lease between Mr. Chua and petitioner had a term of five years but
was not reduced into writing. Thereafter, the lease was renewed through a series of verbal and written
agreements, the last of which was a written Contract of Lease covering the period of January 1, 2003 to
December 31, 2003 at a monthly rental of P7,000.00.

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LASCO, VERCELES, VILLANUEVA, VITORILLO
386

In November 2003, Mr. Chua informed petitioner that he sold the property to respondent Wellington Co
and instructed petitioner to thenceforth pay the rent to the new owner.

ISSUE:

Whether or not there was a valid demand to vacate the premises

HELD:

Yes. Petitioner likewise claims that the RTC correctly held that there was no sufficient evidence on record
that he received the alleged notice to vacate. While he admits that a notice to vacate is no longer necessary
when the ground for unlawful detainer is the expiration of the lease, proof that he actually received said
notice is still important in this case in view of his allegation of implied new lease. Citing Article 1670 of
the Civil Code, petitioner contends that if at the expiration of the contract of lease the lessee continued to
enjoy the leased property for 15 days with the acquiescence of the lessor, there is an implied new lease. In
this case, the determination of whether or not his continued stay in the leased premises is with the
acquiescence of the lessor hinges on whether or not he received the notice to vacate. And, as correctly found
by the RTC, he did not receive any notice to vacate.

Under Article 1670, an implied new lease will set in if it is shown that: (a) the term of the original contract
of lease has expired (b) the lessor has not given the lessee a notice to vacate; and (c) the lessee continued
enjoying the thing leased for 15 days with the acquiescence of the lessor. This acquiescence may be inferred
from the failure of the lessor to serve notice to vacate upon the lessee.

In the instant case, however, the MeTC and the CA correctly found that there was a valid demand to vacate.
Thus, prior to the sale of the property by previous owner Joseph Chua to herein plaintiff, defendant was
formally notified by the previous owner in a letter dated September 1, 2003 of his intention to sell the
property but herein defendant failed to exercise his pre-emptive right to purchase the property.

Thus, the subject premises was sold to plaintiff who became the registered owner thereof as evidenced by
TCT No. 261682. Plaintiff, as new owner/vendee, informed defendant through a letter dated November 3,
2003 even prior to the expiration of the contract that he will be needing the premises thus the contract will
not be renewed or no contract will be executed, and directed defendant to vacate the premises by January 1,
2004. The said notice was sent by registered mail and by personal service. The notice sent by registered
mail was returned to sender for failure of the defendant to claim the same at the post office. The unclaimed
letter is attached to the plaintiff’s position paper as Annex F. Despite notice given to him, defendant failed
to vacate and a formal demand letter dated January 13, 2004 was served to him personally on January 21,
2004 which he refused to acknowledge that he received the same. A copy of that same letter was sent by
registered mail but defendant refused to claim the same for which it was returned to sender. The unclaimed
letter which was returned to sender is attached to the plaintiff’s position paper as Annex G-1 and the
certification from the post office attesting to the fact that defendant failed to claim the same is attached to
the plaintiff’s position paper as Annex G. The demand letter dated January 13, 2004 pertains to the premises
presently occupied by defendant. The Contract of Lease which expired on December 31, 2003 speaks of
only one unit which is the subject matter of this case. Defendant failed to show that the portion being
occupied by him which is the subject matter of this case is covered by another lease contract.

The Court therefore finds that there was a valid demand to vacate.

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LASCO, VERCELES, VILLANUEVA, VITORILLO
387

YOLANDA ROSELLO-BENTIR, SAMUEL PORMIDA and CHARITO PORMIDA


vs
HONORABLE MATEO M. LEANDAand LEYTE GULF TRADERS, INC.
G.R. No. 128991
April 12, 2000

FACTS:

On May 15, 1992, respondent Leyte Gulf Traders, Inc. (herein referred to as respondent corporation) filed
a complaint for reformation of instrument, specific performance, annulment of conditional sale and damages
with prayer for writ of injunction against petitioners Yolanda Rosello-Bentir and the spouses Samuel and
CharitoPormida.

Respondent corporation alleged that it entered into a contract of lease of a parcel of land with petitioner
Bentir for a period of twenty (20) years starting May 5, 1968. According to respondent corporation, the
lease was extended for another four (4) years or until May 31, 1992. On May 5, 1989, petitioner Bentir sold
the leased premises to petitioner spouses Samuel Pormada and CharitoPormada. Respondent corporation
questioned the sale alleging that it had a right of first refusal. Rebuffed, it filed Civil Case No. 92-0588
seeking the reformation of the expired contract of lease on the ground that its lawyer inadvertently omitted
to incorporate in the contract of lease executed in 1968, the verbal agreement or understanding between the

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LASCO, VERCELES, VILLANUEVA, VITORILLO
388

parties that in the event petitioner Bentir leases or sells the lot after the expiration of the lease, respondent
corporation has the right to equal the highest offer.

ISSUE:

Whether the complaint for reformation of instrument has prescribed.

HELD:

Yes. A suit for reformation of an instrument may be barred by lapse of time. The prescriptive period for
actions based upon a written contract and for reformation of an instrument is ten (10) years under Article
1144 of the Civil Code. Prescription is intended to suppress stale and fraudulent claims arising from
transactions like the one at bar which facts had become so obscure from the lapse of time or defective
memory. In the case at bar, respondent corporation had ten (10) years from 1968, the time when the contract
of lease was executed, to file an action for reformation. Sadly, it did so only on May 15, 1992 or twenty-
four (24) years after the cause of action accrued, hence, its cause of action has become stale, hence,
timebarred.
Sdaamiso
In holding that the action for reformation has not prescribed, the Court of Appeals upheld the ruling of the
Regional Trial Court that the 10-year prescriptive period should be reckoned not from the execution of the
contract of lease in 1968, but from the date of the alleged 4-year extension of the lease contract after it
expired in 1988. Consequently, when the action for reformation of instrument was filed in 1992 it was
within ten (10) years from the extended period of the lease. Private respondent theorized, and the Court of
Appeals agreed, that the extended period of lease was an "implied new lease" within the contemplation of
Article 1670 of the Civil Code, under which provision, the other terms of the original contract were deemed
revived in the implied new lease.

We do not agree. First, if, according to respondent corporation, there was an agreement between the parties
to extend the lease contract for four (4) years after the original contract expired in 1988, then Art. 1670
would not apply as this provision speaks of an implied new lease (tacitareconduccion) where at the end of
the contract, the lessee continues to enjoy the thing leased "with the acquiescence of the lessor", so that the
duration of the lease is "not for the period of the original contract, but for the time established in Article
1682 and 1687." In other words, if the extended period of lease was expressly agreed upon by the parties,
then the term should be exactly what the parties stipulated, not more, not less. Second, even if the supposed
4-year extended lease be considered as an implied new lease under Art. 1670, "the other terms of the original
contract" contemplated in said provision are only those terms which are germane to the lessees right of
continued enjoyment of the property leased. The prescriptive period of ten (10) years provided for in Art.
1144 applies by operation of law, not by the will of the parties. Therefore, the right of action for reformation
accrued from the date of execution of the contract of lease in 1968.

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LASCO, VERCELES, VILLANUEVA, VITORILLO
389

BERNARDO DIZON, substituted by his heirs, DOMININA ALVENDIA VDA. DE DI-


ZON, BUENAVENTURANZA DIZON-AMIO, Sister MARIA FLORENCIA (MARIA DI-
ZON), MARIANO DIZON, VICTOR DIZON, ARACELI DIZON-GOMEZ, ESTELA DI-
ZON-LACSAMANA, MARITA DIZON, JOSEFA DIZON-ASIDO, EUGENIA DIZON-DEL
BARRIO and GLORIA DIZON, VS.
AMBROSIO MAGSAYSAY and NICANOR PADILLA
G.R. No. L-23399
May 31, 1974

FACTS:

On April 1, 1949 Ambrosio Magsaysay, registered owner of a 1,171.70 sq. m. of land located in Sampaloc,
Manila, and the late Bernardo M. Dizon executed a written contract of lease over a portion of the above-
mentioned parcel of land which the latter had been occupying as lessee since 1937 and on which he had

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NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
390

constructed a residential house as well as a six-lane bowling alley. The two-year term of the lease contract
expired on April 1, 1951 without the parties' having expressly renewed their agreement. Bernardo Dizon,
however, continued to occupy the leased premises, paying the same monthly rental of P100.00, which
Ambrosio Magsaysay accepted. Two years later, on March 3, 1953, the counsel of Ambrosio Magsaysay
formally advised Bernardo Dizon of the termination of the existing lease at the end of that month. On March
24 Dizon learned that as early as February 19, 1953 there were negotiations for the sale of the entire 1,171.70
sq. m. lot to Nicanor Padilla, which negotiations were concluded on March 7, 1953 with the execution of
an absolute deed of sale in his favor by Ambrosio Magsaysay and of a supplementary agreement embodying
the seller's acceptance of the condition that should he fail to completely eject all the tenants on the land
within, a stated period, so much of the agreed purchase price of P48,000.00 would be forfeited. On March
11, 1953 a new certificate of title was issued to Nicanor Padilla pursuant to the sale. When Dizon learned
of the sale he communicated with Magsaysay and Padilla, inviting their attention to paragraph 9 of the
original written lease contract which gave him the preferential right to purchase the land under the same
conditions as those offered by other buyers. On March 25, 1953 he actually commenced suit against
Magsaysay and Padilla in the Court of First Instance of Manila.

The trial court dismissed the complaint as well as defendant Nicanor Padilla's counterclaim. On appeal to
the Court of Appeals, the decision was affirmed on June 8, 1964. Hence this petition for review.

ISSUE:

Whether or not the extension of implied lease includes the right to purchase

HELD:

No. For the reason that Dizon continued to occupy the leased premises with Magsaysay's acquiescence even
after the two-year term of the private written lease contract between them expired on April 1, 1951,
petitioners contend that the implied new lease created, although admittedly not for the period of the original
contract, revived the other terms thereof, including the lessee's preferential right of purchase, according to
Article 1670 of the new Civil Code, if at the end of the contract the lessee should continue enjoying the
thing leased for fifteen days with the acquiescence of the lessor and unless a notice to the contrary by either
party has previously been given, it is understood that there is an implied new lease, not for the period of the
original contract, but for the time established in articles 1682 and 1687. The other terms of the original
contract shall be revived.

The Court of Appeals held that "the 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 lessee's right of continued
enjoyment of the property leased. This is a reasonable construction of the provision, 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. Necessarily, 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, such as the amount of rental,
the date when it must be paid, the care of the property, the responsibility for repairs, etc. But no such
presumption may be indulged in with respect to special agreements which by nature are foreign to the right
of occupancy or enjoyment inherent in a contract of lease.

But whatever doubt there may be on this point is dispelled by paragraph (2) of the contract of lease, which
states that it was renewable for the same period of two years (upon its expiration on April 1, 1951), "con
condicionesexpresas y specificadasqueseranconvenidas entre laspartes." This stipulation embodied the

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LASCO, VERCELES, VILLANUEVA, VITORILLO
391

agreement of the parties with respect to renewal of the original contract, and while there was nothing in it
which was incompatible with the existence of an implied new lease from month to month under the
conditions laid down in Article 1670 of the Civil Code, such incompatibility existed with respect to any
implied revival of the lessee's preferential right to purchase, which expired with the termination of the
original contract. On this point the express agreement of the parties should govern, not the legal provision
relied upon by the petitioner.

VICENTE J. SANTIvs.HON. COURT OF APPEALS, HEIRS OF AUGUSTO A. REYES,


JR., represented by ALEXANDER REYES
G.R. No. 93625
November 8, 1993

FACTS:

Esperanza Jose was in her lifetime the registered owner and in absolute possession of a parcel of land known
as Lot 3, Block 89, situated in Cavite City, more particularly described in TCT. No. 5508 (RT3159) with
an area of 1,472 square meters; that sometime on July 12, 1957 she leased a portion of the property unto
spouses Eugenio Vitan and Beatriz Francisco for a period of 20 years "automatically extended" for another

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NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
392

20 years but with a rental of P220.00 per month as per Lease Contract ratified before Notary Public Abraham
F. Aguilar (Exhibit "8") and on which the lessees constructed a cinema house; that sometime in 1962, the
lessees sold all their rights, interest and participation over the cinema house together with the leasehold
rights on the lessor's property unto Augusto A. Reyes, Jr. and a new contract of lease was entered between
the new owner and Esperanza Jose (Exhibit "A") for a period of 20 years from and after April 1, 1962 with
a monthly rental of P180.00 payable in advance, said period of lease being "extendable" for another period
of 20 years with a monthly rental increased to P220.00 also payable in advance on or about the first day of
each month (Exhibit "2-B"). In the interim, Esperanza Jose sold all her rights and participation over the
parcel of land to Vicente J. Santi and TCT No. T-3968 of the Land Records of Cavite City was issued in his
favor, on February 23, 1982 the lease having expired, plaintiff wrote Alexander Reyes as representative of
Augusto Reyes, Jr., who had died, informing him of the termination of the lease on March 31, 1982 and
demanding peaceful turn-over of possession, defendant refused on the ground that after consulting his
lawyer, Atty. Gregorio R. Familiar the latter informed him that the lease was automatically extended for
another 20 years at the rate of P220.00 a month and which amount he tendered unto plaintiff who refused
and by virtue thereof, religiously deposited said amounts with the Clerk of Court of the Municipal Trial
Court of Cavite City (Exhibits "5" and "6"). In view of defendant's refusal to vacate plaintiff filed a routine
complaint against Alexander Reyes with the office of Barangay Captain of Barangay 34, "Lapu-lapu" of the
City of Cavite; and no settlement having been reached the Barangay Captain issued a certification to file
action (Exh. "B"). That this lease shall be for a period of twenty (20) years from and after the date of the
execution of this document with a monthly rental of ONE HUNDRED EIGHTY PESOS (P180.00) payable
in advance, said period of lease being extendable for another period of twenty (20) years with a monthly
rental of TWO HUNDRED TWENTY PESOS (P220.00) also payable in advance on or before the 1st day
of each month; (pp. 73-75, orig. rec.), Emphasis supplied.

The trial court rendered judgment for the petitioner. It is the contention of herein petitioner that to extend
the lease contract for another 20 years requires a subsequent agreement between the parties as the phrase
"being extendable" meant "capable of being extended." On the other hand, private respondents argue that
the terms of the lease contract are clear and that the same should be automatically extended upon the
expiration of the first 20 years. The court a quo, however, gave merit to the contention of herein private
respondents.

ISSUE:

Whether or not there is an automatic extension of the lease for another twenty (20) years

HELD:

No. Inasmuch as both parties to the lease contract have already died, a resort to the terms and conditions of
the lease contract is inevitable in order to ascertain the true intent of the parties.

In a wealth of cases and as provided for in Articles 1370 and 1372 of the Civil Code, we have ruled that
when terms and stipulations embodied in the contract are clear and leave no room for doubt, such should be
read in its literal sense and that there is absolutely no reason to construe the same in another meaning.

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LASCO, VERCELES, VILLANUEVA, VITORILLO
393

Thus, the lease contract executed between Esperanza Jose and spouses Eugenio Vitan and Beatriz Francisco
on July 12, 1957, being clear and unambiguous, providing for an automatic extension of twenty (20) years
from the expiration of the first twenty (20) years, there is no reason why said contract should not be
interpreted in the way the contracting parties meant it to be, that is the automatic extension of the lease for
another twenty (20) years. Thus, paragraph 3 of the contract reads:

3. That the period of TWENTY YEARS (20) herein above provided shall be automatically extended for
another TWENTY YEARS (20) but with the rental of TWO HUNDRED & TWENTY PESOS (220.00) per
month also payable in advance on or before the 1st day of each corresponding month, at the residence of
the Party of the First part. (Emphasis supplied).

The same could not be said in the case at bar. The phase "automatically extended" did not appear and was
not used in the lease contract subsequently entered into by Esperanza Jose and Augusto Reyes, Jr. for the
simple reason that the lessor does not want to be bound by the stipulation of automatic extension as provided
in the previous lease contract.

To our mind, the stipulation "said period of lease being extendable for another period of twenty (20) years
. . ." is clear that the lessor's intention is not to automatically extend the lease contract but to give her time
to ponder and think whether to extend the lease. If she decides to do so, then a new contract shall be entered
into between the lessor and lessee for a term of another twenty years and at a monthly rental of P220.00.
This must be so, for twenty (20) years is rather a long period of time and the lessor may have other plans
for the property.

JOSE ITURRALDE vs. ANTONIO GARDUÑO


G.R. No. L-2997

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LASCO, VERCELES, VILLANUEVA, VITORILLO
394

January 16, 1908

FACTS:

The question in connection with the non-payment of rentals for the years 1902 and 1903, set up in this
action, is identical with that resolved by us in case No. 2625, Iturralde vs. Magcauas (6 Off. Gaz., 542),
which was decided in favor of the plaintiff. For the reasons set forth in said decision, we also find in favor
of the plaintiff in the present case, holding that the defendant failed to fulfill his obligation to pay a just and
reasonable rent for the occupation of the land in question during the year 1903, and that we consider as a
just and reasonable rental the sum of 9 pesos per annum as claimed in the complaint, from and including
the year 1903. This being without prejudice to the obligation he was under, as expressly recognized by him,
and still outstanding, to pay the rental of 1 pesos and 50 cents, agreed to in the original lease, for the year
1902.

The court below held that in accordance therewith the duration of the lease was left to the will of the
defendant, applied in this case the provisions of article 1128 of the Civil Code and the doctrine established
by this court in case No. 967, Dario and GaudencioEleizegui vs. The Manila Lawn Tennis Club, and in
consequence thereof the complaint was dismissed, reserving to the plaintiff the right to commence another
action to obtain the designation of the period for the termination of the lease.

ISSUE:

Whether or not the defense alleged by the defendant has been proven, to the effect that the rental of 1 peso
and 50 cents per annum is not susceptible of being either increased or decreased

HELD:

No. In our opinion the evidence dies not to support the said conclusion of the judgment appealed from.
When testifying with regard to his contract the defendant stated that "my obligation is the same which I
have set out in my answer to the complaint, and which I acquired by inheritance from my ancestors, and
therefore I respect this obligation." Further on he adds that he did not pay more than 1 peso and 50 cents
"because it is the only obligation which his ancestors had contracted with respect to the owner of the socalled
hacienda." According to this, the defendant did not personally enter into any contract with the owner or
owners of the land in litigation, and simply stood by the contract which he says had been entered into by his
ancestors. The fact is that he does not specify what were the conditions stipulated in the contract, at any rate
his testimony was solely hearsay, inasmuch as, from his own declarations, it is to be deduced that he was
not a witness present at the making of said contract, nor could he have witnessed it in view of the fact that
it is more than fifty years old, as stated by the defendant when referring to, said contract in his answer to
the complaint. Neither does the testimony of the only other witness offered by the defendant prove anything
further, because the questions put to this witness, who is also a tenant on the plaintiff's hacienda, and
consequently his answers, had to do solely and exclusively with his own tenancy, without referring to all to
that of the defendant.

The fact that the defendant or his ancestors had built a house valued at 550 pesos, and planted fruit trees on
the land in question, which, according to the judgment appealed from, impresses upon the contract the
character of an indefinite term and implies long duration, does not prove the claims of the defendant, for the
reason that the duration of lease contracts depends on what may have been stipulated by the parties at the
time when the same were entered into, and not on the more or less importance of the improvements
introduced or effected by the tenant on the leased property. Nor has the circumstance alleged by the
defendant in his answer, that the fruit trees above alluded to require from eight to eleven years to yield the

SALES AND LEASE under ATTY. CASINO - CASE DIGESTS - CONCEPT OF SALE - CLASS 2K A.Y. 2016-2017
ABONG, ABRIO, ACOSTA, ALIH, ARGOSO, BELLO, BERNALES, BRINGAS, CHING, CULAJARA, DADAYAN, DELGADO, DIZON, ENDAYA, FAJA-
NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
395

first crop, any importance in this case for the effects of article 1577 of the Civil Code, not only because no
evidence has been adduced in the premises but also because the contract, according to the statement of the
defendant himself, is more than fifty years old.

Therefore, there being no proof, not even by implication from the nature and circumstances of the contract,
that the duration thereof was left in any way to the will of the defendant, it is not proper to apply to this case
the legal provision and the settled rule of this court, quoted in the judgment appealed from.

SALES AND LEASE under ATTY. CASINO - CASE DIGESTS - CONCEPT OF SALE - CLASS 2K A.Y. 2016-2017
ABONG, ABRIO, ACOSTA, ALIH, ARGOSO, BELLO, BERNALES, BRINGAS, CHING, CULAJARA, DADAYAN, DELGADO, DIZON, ENDAYA, FAJA-
NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
396

HERNANIA LANI LOPEZvsGLORIA UMALE-COSME


GR. No. 171891
February 24, 2009

FACTS:

Respondent Gloria Umale-Cosme is the owner of an apartment building at 15 Sibuyan Street, Sta. Mesa
Heights, Quezon City, while the petitioner is a lessee of one of the units therein. She was paying a monthly
rent of P1, 340.00 as of 1999. On April 19, 1999, respondent filed a complaint for unlawful detainer against
petitioner before Branch 43 of the Metropolitan Trial Court (MeTC) of Quezon City on the grounds of
expiration of contract of lease and nonpayment of rentals from December 1998. In her answer, petitioner
denied that she defaulted in the payment of her monthly rentals, claiming that respondent did not collect the
rentals as they fell due in order to make it appear that she was in arrears. Petitioner also alleged that she had
been depositing her monthly rentals in a bank in trust for respondent since February 1999. On March 19,
2003, the MeTC, Branch 43, rendered judgment in favor of respondent.

On appeal, the RTC reversed the decision of the MeTC and ruled that the contract of lease between
respondent and petitioner lacked a definite period. According to the RTC, the lessee may not be ejected on
the ground of termination of the period until the judicial authorities have fixed such period. Respondents’
motion for reconsideration was denied by the RTC. Aggrieved, respondent repaired to the CA, which found
merit in her appeal. The CA denied petitioners Motion for Reconsideration in a resolution dated March 13,
2006. As a consequence, petitioner filed the instant petition for review, where she argues that the CA gravely
erred when it ruled that she may be ejected on the ground of termination of lease contract.

ISSUE:

Whether or not petitioner may not be ejected on the ground of termination of period

HELD:

No. The petition is utterly bereft of merit.It is well settled that where a contract of lease is verbal and on a
monthly basis, the lease is one with a definite period which expires after the last day of any given thirtyday
period.

In the case at bar, it has been sufficiently established that no written contract existed between the parties
and that rent was being paid by petitioner to respondent on a month-to-month basis. As the CA noted,
petitioner admitted the lack of such written contract in her complaint. Moreover, in the instant petition for
review, petitioner herself alleged that she has been occupying the leased premises and paying the monthly
rentals without fail since 1975. Hence, petitioners argument that the contract of lease between her and
respondent lacked a definite period and that corollarily, she may not be ejected on the ground of termination
of period and that corollarily, she may not be ejected on the ground of termination of period does not hold

SALES AND LEASE under ATTY. CASINO - CASE DIGESTS - CONCEPT OF SALE - CLASS 2K A.Y. 2016-2017
ABONG, ABRIO, ACOSTA, ALIH, ARGOSO, BELLO, BERNALES, BRINGAS, CHING, CULAJARA, DADAYAN, DELGADO, DIZON, ENDAYA, FAJA-
NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
397

water. Petitioner was merely grasping at straws when she imputed grave error upon the CAs decision to
eject her from the leased premises.

THE PEOPLE OF THE PHILIPPINES vs. FELIPE MAPOY and R. M. MAIPID


G.R. No. L-48336
September 21, 1942

CRIMINAL LAW AND PROCEDURE; VIOLATION OF BULK SALES LAW (Act No. 3952);
WHEN PAYMENT OF INDEMNITY TO OFFENDED PARTY DOES NOT LIE. — Defen-
dants were charged with violation of the Bulk Sales Law in that they mortgaged all of their stock
of goods, etc., without any notice to Daido Boeki Kaisha, Ltd., one of the offended parties, to which
they were indebted in the sum of P2,568.85. They pleaded guilty and its sentenced by the Court of
First Instance of Manila to pay a fine of P100, and the costs, and to indemnify Daido Boeki Kaisha,
Ltd., jointly and severally in the sum of P2,568.85, with subsidiary imprisonment in case of
insolvency. Held: That it was error for the trial court to consider said indebtedness as a liability
arising from the crime charged, and to order defendants to indemnify Daido Boeki Kaisha, Ltd., in
the sum of P2,568.85, with subsidiary imprisonment in case of insolvency.

ID; ID; ID; — Inasmuch as under section 4 of the Bulk Sales Law, the mortgaged in question was
fraudulent and void, and there being no proof that the mortgaged goods have disappeared, the same
are still subject to attachment for the satisfaction of creditors' lawful claims against the defendants.
Daido Boeki Kaisha, Ltd., may still bring a separate civil action against defendants herein for the
collection of any indebtedness that may be due from defendants, and if the latter will not pay the
judgment in such civil case, the goods involved in the instant case may be seized and sold.
Therefore, the obligations of defendants to pay Daido Boeki Kaisha , Ltd., the sum of P2,568.85,
which was already existing when the mortgage was signed, was not the result of the violation of
the Bulk Sales Law, nor was it affected by said violation.

SALES AND LEASE under ATTY. CASINO - CASE DIGESTS - CONCEPT OF SALE - CLASS 2K A.Y. 2016-2017
ABONG, ABRIO, ACOSTA, ALIH, ARGOSO, BELLO, BERNALES, BRINGAS, CHING, CULAJARA, DADAYAN, DELGADO, DIZON, ENDAYA, FAJA-
NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
398

INVOLUNTARY INSOLVENCY OF PAUL STROCHECKER, VS


ILDEFONSO RAMIREZ, creditor and appellant.
WILLIAM EDMONDS, assignee.
G.R. No. 18520
September 26, 1922

FACTS:

In the lower court there were three mortgages each of whom claimed preference. They were the
two above mentioned and Concepcion Ayala. The latter’s claim was rejected by the trial court, and
that ruling she did not appeal.

There is no question as to the priority in time of the mortgage in favor of the Fidelity & Surety Co.
which was executed on March 10, 1919, and registered in due time in the registry of the property,
that in favor of the appellant being dated September 22, 1919, and registered also in the registry.

The appellant claims preference on these grounds: (a) That the first mortgage above-mentioned is
not valid because the property which is the subject-matter thereof is not capable of being
mortgaged, and the description of said property is not sufficient; and (b) that the amount due the
appellant is a purchase price, citing article 1922 of the Civil Code in support thereof, and that his
mortgage is but a modification of the security given by the debtor on February 15, 1919, that is,
prior to the mortgage executed in favor of the Fidelity & Surety Co.

ISSUE:

Which of the two mortgages here in question must be given preference? Is it the one in favor of the
Fidelity & Surety Co., or that in favor of Ildefonso Ramirez?

HELD:

SALES AND LEASE under ATTY. CASINO - CASE DIGESTS - CONCEPT OF SALE - CLASS 2K A.Y. 2016-2017
ABONG, ABRIO, ACOSTA, ALIH, ARGOSO, BELLO, BERNALES, BRINGAS, CHING, CULAJARA, DADAYAN, DELGADO, DIZON, ENDAYA, FAJA-
NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
399

As the first ground, the thing that was mortgaged to this corporation is described in the document
as follows:

". . . his half interest in the drug business known as Antigua Botica Ramirez (owned by Srta.
Dolores del Rosario and the mortgagor herein referred to as the partnership), located at Calle Real
Nos. 123 and 125, District of Intramuros, Manila Philippine Islands."cralvirtua1aw library

With regard to the nature of the property thus mortgaged which is one-half interest in the business
above described, such interest is a personal property capable of appropriation and not included in
the enumeration of real properties in articles 335 of the Civil Code, and may be the subject of
mortgage. All personal property may be mortgage. (Sec. 7, Act No. 1508.)

The description contained in the document is sufficient. The law (sec. 7, Act No. 1508) requires
only a description of the following nature: "The description of the mortgaged property shall be
such as to enable the parties to the mortgage, or any other person, after reasonable inquiry and
investigation, to identify the same."

Turning to the second error assigned, numbers 1, 2, and 3 of the article 1922 of the Civil Code
invoked by the appellant are not applicable. Neither the debtor, nor himself, is in possession of the
property mortgaged, which is, and since the registration of the mortgage has been, legally in
possession of the Fidelity Surety Co. (Sec. 4, Act. No. 1508; Meyers v. Thein, 15 Phil., 303)

In no way can the mortgage executed in the favor of the appellant on September 22, 1919, be given
effect as of February 15, 1919, the date of the sale of the drug store in question. On the 15th of
February of that year, there was a stipulation about personal security, but not a mortgage upon
property, and much less upon the property in question.

Moreover, the appellant cannot deny the preferential character of the mortgage in favor of the
Fidelity & Surety Co. because in his mortgage was second mortgage, subordinate to the one made
in favor of the Fidelity Surety Co.

The judgment appealed from is affirmed with costs against the appellant.

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NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
400

HPS SOFTWARE AND COMMUNICATION CORPORATION and HYMAN YAP


VS.PHILIPPINE LONG DISTANCE TELEPHONE COMPANY (PLDT), ET AL.
G.R. No. 170217
December 10, 2012

FACTS:

The case is a consolidation of 2 petitions for review on certiorari each seeking to annul a ruling of
the CA setting aside an RTC ruling which directed the immediate return of seized items to HPS
and another CA ruling which affirmed an RTC order to release the seized equipment. The
controversy originated from 2 search warrants for violation of RPC Art. 308 for Theft of Telephone
Services and for Violation of PD 401 for unauthorized installation of telephone communication
equipment following the complaint of PLDT accusing HPS of conducting ISR or unauthorized sale
of international long distance calls. The warrants were issued by the TC to seize instruments of the
crime after being satisfied with the affidavits and sworn testimony of the complainant’s witnesses
that they saw telephone equipment inside the respondents’ compound being used for the purpose
of conducting ISR. After the implementation of the warrants, the motions to quash the warrants
and return the things seized were filed which were granted by the RTC.

ISSUES:

Whether PLDT possessed the legal personality to file the petition in light of respondents’ claim
that, in criminal appeals

Whether PLDT’s petition for certiorari should have been dismissed outright by the CA since no
MR was filed before the RTC order

Whether PLDT was engaged in forum shopping when it filed a petition for certiorari despite the
fact that it had previously filed an appeal from the RTC order

SALES AND LEASE under ATTY. CASINO - CASE DIGESTS - CONCEPT OF SALE - CLASS 2K A.Y. 2016-2017
ABONG, ABRIO, ACOSTA, ALIH, ARGOSO, BELLO, BERNALES, BRINGAS, CHING, CULAJARA, DADAYAN, DELGADO, DIZON, ENDAYA, FAJA-
NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
401

Whether the 2 search warrants were improperly quashed

Whether the release of the items seized was proper

HELD:

In the first issue, it is the Solicitor General which has the exclusive and sole power to file appeals
in behalf of People, SC held that PLDT did because the petition filed did not involve an ordinary
criminal action, nor a civil action, but a special criminal processes.

In the second issue, SC held that despite the non-fulfilment of the requirement of MR filing, the
peculiar circumstances surrounding the case offered exceptions to the rule, that is, PLDT’s
deprivation of due process when the RTC expeditiously released the items seized by virtue of the
subject search warrants without waiting for PLDT to file its memorandum and despite the fact that
no motion for execution was filed by the respondents which was required.

In the third issue, SC held that no, PLDT did not because the 2 motions posed different causes of
action, i.e., the appeal that PLDT elevated to the CA was an examination of the validity of the trial
court’s action of quashing the search warrants that it initially issued while, on the other hand, the
petition for certiorari was an inquiry on whether the TC judge committed grave abuse of discretion
when he ordered the release of the seized items subject of the search warrants despite the fact that
the RTC order had not yet become final and executory.
In the fourth issue, SC held that yes, they were because: (1) evidence presented were sufficient to
show probable cause to issue subject warrants; and (2) subject warrants weren’t general warrants
because the items to be seized were sufficiently identified physically and their relation to the
offenses charged were also specifically identified.

In the fifth issue, SC held that no, it wasn’t therefore agreeing with one of the CA ruling that there
was indeed grave abuse of discretion

DOCTRINES:
An international Simple Resale (ISR) activity is an act of subtraction covered by the provisions on
Theft, and that the business of providing telecommunication or telephone service is personal
property, which can be the object of Theft under Art. 308 of the RPC.
A search warrant proceeding is not a criminal action, much less a civil action, but a special criminal
process.
Probable cause, as a condition for the issuance of a search warrant, is such reasons supported by
the facts and circumstances as will warrant a cautious man to believe that his action and the means
taken in prosecuting it are legally just and proper.

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NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO
402

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NILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA, VE-
LASCO, VERCELES, VILLANUEVA, VITORILLO