#27 LEASE

G.R. No.  140886. April 19,  2001

EULOGIO “EUGUI” LO CHUA, Petittioner, vs.
COURT OF APPEALS, ERIC CHUA and MAGIC AIRE INDUSTRIES, INC., Respondents.

FACTS:

A complaint for Unlawful Detainer and Damages was filed by respondent Eric Chua  (later amended
joining respondent Magic Aire) against petitioner Eulogio “Eugui” Lo Chua before the Metropolitan
Trial Court (MeTC) of  Manila.

Respondent Eric decided to sell a parcel of land with a 4-storey commercial building. Through a
letter, he offered petitioner a right of first refusal to be exercised within 5 days from receipt thereof. 
Petitioner failed to manifest his intention within the period. Thus, respondent Eric sold the property
to Magic Aire for P25 million subject condition stated in the Deed of Conditional Sale that P5 million
would be paid after the building was completely vacated by the tenants.

Respondent Eric informed petitioner through letter the sale transaction, the termination of the lease
agreement and demanded to vacate the premises, eased by petitioner Eugui on a month-to-month
basis at the same time waiving the rentals for 3 months.

Petitioner tendered payment of the rental for the month but declined by respondent Eric. Petitioner
filed a Petition for Consignation before the MeTC. Respondent Eric made a final demand to petitioner
to vacate the property but was refused.  Petitioner contended that he ignored the demand  letters 
because he learned that there is a new owner; allowed the Petition for Consignation to be dismissed;
and made a counter offer to purchase the property. But respondent Eric proceeded the sale with
respondent Magic Aire.

ISSUE:

Whether or not the petitioner was entitled to an extension of the lease period conformably with
Article   1687 of the Civil Code for having occupied the property for more than 30 years.

Ruling:

YES.  The power of the courts to establish a grace period pursuant to Article 1687 is potestative or
discretionary, to be exercised or not depending on the particular circumstances of the case but with
due deference to the parties’  freedom to contract.
The Court has the discretion to fix a longer term for the lease and found in the case at bar that the
petitioner’s continuing possession as lessee of more than  5  years suffices as an extension of the
period from 31 March  1996 to the date of the decision. There is no longer need to extend it any
further.