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ARANETA [1949]
Issues & Ratio:
1. WON the renewal of the lease contract was automatic. – NO.
PONCE DE LEON vs. SYJUCO [1951]  Generally, the literal meaning of the stipulations shall control. But if it’s ambiguous,
consider the true intention of the parties w/c can be determined from their
subsequent/contemporaneous actions.
 Stipulation in this case is unclear on whether renewal was automatic or merely an
BUCE vs. COURT OF APPEALS [2000] option and who may exercise such or for whose benefit it was stipulated.
Petitioner: Anita C. Buce  Renewal vs. Extension:
Respondents: Court of Appeals, Sps. Bernardo & Araceli Tiongco, Sps. Dionisio & a. Renewal: connotes death of the old contract & emergence of a new one.
Lucila Tiongco and Jose Tiongco Creates an obligation to execute a new lease contract for the additional term.
b. Extension: operates of its own force to create an additional term.
Facts:  Nothing in the stipulations in the contract & the parties’ actuation shows that they
 Buce leased respondents’ 56-sq.meter land in Pandacan, Manila. Contract was for intended to automatically renew/extend the term of the contract. Improvements on
15 yrs (from Jun 1, 1979 – June 1, 1994) subject to renewal for another 10yrs. under the property, filing of the complaint a year before the expiration of the original
the same terms & conditions. contract, and the respondents’ acceptance of the increased rentals are not indicative
 Buce constructed a building & paid required monthly rental of P200. of the intention of the parties regarding renewal.
 Respondents gradually increased rent reaching P400 in 1985. In July & Aug., 1991,
Buce paid P1,000.00 as monthly rent.  Although the factual scenario in Fernandez v. CA was different, such may still be
 Dec. 6, 1991: Respondents’ counsel wrote Buce informing her that effective Jan. applied: In a reciprocal contract like a lease, period must be deemed to have been
1992 rent will be P1,576.58 as per the Rent Control Law. However, Buce continued agreed upon for the benefit of both parties, absent language showing that the term
issuing checks for only P400 as monthly rental. Respondents refused to accept these was deliberately set for the benefit of only one party. Very specific language is
checks. necessary to show an intent to grant a unilateral faculty to extend/renew a contract.
 Aug. 9, 1993: Buce filed complaint for specific performance w/prayer for  Fernandez v. CA & CC Art. 1196: when it’s not indicated in the contract as to who
consignation. She prayed that respondents be ordered to accept her payments & for may exercise the option to renew & as to who will benefit from such, it’s deemed to
them to respect the contract w/c was renewable for another 10 years at the rate of be for the benefit of both parties. Thus, renewal may only take place upon the mutual
P200/month. agreement of the parties. Since respondents were not amenable to a renewal, they
can’t be compelled to execute a new contract when the old contract expired. Such
 Respondents’ contentions:
decision can’t depend exclusively on free & uncontrolled choice of lessee.
1. Buce already paid P1,000 monthly rent in July & Aug. 1991.
2. RA 877 (Rent Control Law): rental payments should already be
2. WON ejectment was proper. – NO.
P1,576.58/month, thus their refusal to accept Buce’s checks were justified.
3. Subject to renewal clause did not mean automatic renewal. There must be a  After contract expired w/o agreement for renewal, Buce became subject to ejectment.
mutual agreement between the parties. However, respondents didn’t include a prayer for the restoration of possession in
their complaint nor did they file an unlawful detainer suit. Ejectment was not an issue
 Respondents’ counsel wrote Buce reminding her that the contract has expired &
agreed upon by the parties, either since they limited the issue to the correct
demanding payment of rentals in arrears amounting to P33,000.00.
interpretation of the contract. Nor was it raised on appeal. Thus, CA went beyond its
 RTC:
authority in this aspect.
1. lease contract was automatically renewed as proven by the stipulations in the
contract allowing Buce to construct a building & by Buce’s filing of the complaint
Holding: Petition partly granted. CA ruling w/c ordered Buce to vacate premises reversed
almost one year before the expiration of the initial term of 15yrs.
w/o prejudice to filing of proper action.
2. P400 monthly rent from June 1, 1990-June 1, 1994; P1,000.00 from June 1,
1994-June 1, 1999 and P1,500.00 for the rest of the period from June 1, 2000-
June 1, 2004. Continuous increase caused an inevitable novation of the
 CA: MFR denied. Ordered Buce to vacate premises. CPU vs. CA
1. Renewal clause unclear as to who may exercise the option.
2. Construction of building & other improvements & fact of filing of complaint are
not proof of automatic renewal.
3. Fernandez v. CA: w/o stipulation that option to renew the lease is solely for the
benefit of one party, renewal must be upon the agreement of all parties. And
since respondents were not agreeable to an extension, lease ended on June 1,
4. Refusal to accept checks was justified. In paying P1,000 rent in July & Aug.
1991, Buce was estopped from claiming that monthly rental is otherwise.