FIRST DIVISION
[ G.R. No. 70360, March 11, 1987 ]
AREVALO GOMEZ CORPORATION, PETITIONER, VS. ANDRES LAO HIAN LIONG, DOING BUSINESS IN THE NAME AND STYLE OF "TIONGSON BAZAAR" AND THE HONORABLE SALVADOR J. VALDEZ, JR., RESPONDENTS.
D E C I S I O N
CRUZ, J.:
Some agreements deteriorate into misunderstandings, turning close friends into irreconcilable adversaries and sweet harmony into bitter discord. This is one of them.
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 at Magsaysay Avenue, Baguio City, for a term of fifteen years, effective September 1, 1964. The monthly rental was fixed at P2,450.00 but in addition to this the respondent agreed to construct on the interior portion of the land leased a three-storey building of strong materials without right to reimbursement from the petitioner. The cost of the building was to be not less than P150,000.00, of which the sum of P45,000.00 would be contributed by petitioner.[1]
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.[2] When the respondent refused to comply, the petitioner filed a complaint for ejectment against him in the City Court of Baguio City.
Applying Article 1670 of Civil Code, the trial court held in favor of the defendant as follows:
"In the case on hand, it is admitted that the 15-year lease contract between the parties expired on August 31, 1979. However, the defendant has continued occupying the leased premises thereafter and even to this day. And it was only on October 2, 1979, or after more than 15 days after the expiration of the original contract of lease, that he was given the requisite notice to vacate. It is, therefore, abundantly clear that under the law, an implied new lease had already set in when the plaintiff commenced its action for ejectment on November 19, 1979. x x x."[3]
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.[4]
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. He also claimed that, prior to the execution of the contract, the petitioner had assured him he could stay indefinitely in the disputed premises.[5]
The Regional Trial Court of Baguio City 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.[6] A motion for reconsideration and for new trial was filed by petitioner but the same was denied. The petition then came to us with the following assignment of errors:
"1) Respondent Judge, as well as the trial judge, erred in deciding the case at bar in a way not in accordance with law or with the applicable decisions of this Honorable Court, particularly its decision in Roxas vs. Alcantara, 113 SCRA 21.
2) Respondent judge, as well as the trial judge, erred in holding that there was implied renewal or tacita reconduccion despite the refusal of respondent Liong to agree to the increased rental demanded by petitioner prior to the expiration of the contract of lease.
3) Respondent judge, as well as the trial judge, erred in holding that there was implied renewal or tacita reconduccion despite the refusal of petitioner to accept payment of rentals from respondent Liong after the expiration of the Contract of Lease.
4) Assuming for the sake of argument that Article 1687 of the New Civil Code is applicable, the trial judge erred and gravely abused his discretion by extending the lease for five (5) years and respondent judge erred and compounded the grave abuse of discretion by extending the lease for ten (10) years.
5) Respondent judge, as well as the trial judge, erred in admitting parol evidence with respect to the term of the lease.
6) Respondent judge erred in not granting a new trial for the admission in evidence of the building permit of the new building of respondent Liong which was issued after the decision of the trial court.
7) Respondent judge erred in not admitting in evidence or taking judicial notice of the Central Bank Certification dated August 21, 1984 showing the three successive devaluations or depreciation of the Philippine peso after the decision of the trial court."[7]
We address ourselves first to the submission of the respondent that the factual findings of the court a quo cannot be reviewed in these proceedings which have been filed under Rule 65 of the Rules of Court. That is not exactly correct. We note that, as the caption of the petition indicates, it was filed not only under the said rule but also as an appeal by certiorari under Rule 45, which, while generally limited to questions of law, nevertheless allows review of the judgment a quo when it is based on a misapprehension of facts.[8] We shall apply this exception and treat this petition as solely filed under the latter rule.[9]
It is not disputed that the original lease contract between the parties was only for fifteen years expiring on August 31, 1979. The private respondent nonetheless continued occupying the leased premises beyond that date and it was only on October 2, 1979, that he was formally served with notice to vacate. What is in issue then is whether such continued occupancy was with or without the implied acquiescence of the petitioner.
The applicable provisions of Civil Code are the following:
"Article 1669. If the lease was made for a determinate time, it ceases upon the day fixed, without the need of a demand."
"Article 1670. 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 Article 1682 and 1687. The other terms of the original contract shall be revived."
Under the second article, an implied new lease or tacita reconduccion 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 fifteen days with the acquiescence of the lessor.[10] This acquiescence may be inferred from his failure to serve a notice to quit.[11]
The petitioner contends that the service of an express notice to quit is not the only way to prevent the implied renewal of the lease. Demanding a higher rental is also a manifestation of non-acquiescence if the lessee does not accept the rate demanded. In other words, failure of agreement on the new conditions of the lease results in an automatic notice to vacate upon the expiration of the original lease.
In support of this position, the petitioner relies on the case of Roxas vs. Alcantara,[12] where this Court declared:
"x x x. Petitioner's letter of August 11, 1977 was a reminder to private respondent of the impending expiration of the lease contract. Exh. 'A', with a statement that was in effect an offer or proposal to renew the contract on the terms and conditions, namely: (1) that the rental would be P4,000.00 a month; (2) that three years advance rental should be paid by private respondent; and (3) that a 15% yearly increase in rental would be imposed. In other words, petitioner laid down the foregoing stipulations as conditions sine qua non for any subsequent contract that might be negotiated with private respondent. Thus clear from the letter, Exh. ‘C’, is that if private respondent were not agreeable to any or all of the new stipulations, there would be no renewal of the lease. Private respondent was to communicate his reply within fifteen days from receipt of Exh. 'C', absent which petitioner would take it to mean that his conditions were acceptable to private respondent and their contract renewed on the specified terms. However, private respondent's letter, Exh. 'F', evidently posted before the expiration of the period allowed within which to decide, did not give a categorical affirmative or negative answer to petitioner's proposition, and merely manifested the said lessee's desire to study the matter until end of the following month of September, 1977, or up to the termination of the then existing contract of lease, Exh. 'A'. Petitioner's failure to reply to the letter, Exh. 'F', can only be taken to mean that he acceded to the request for additional time. For the obvious reason that the lease contract (Exh. 'A') was expiring, it became more imperative for private respondent to make a final decision within and not later than the extended period which he asked for. Thus, when petitioner did not hear from private respondent at the end of the aforesaid month of September, private respondent ceased to have any legal right to possess and occupy the premises in question commencing the first day of the following month of October."
As we see it, 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 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.
Where the lessor is unwilling in any event to renew the lease for whatever reason, it will be necessary for him to serve on the lessee a formal notice to vacate. As no talks have been held between the lessor and the lessee concerning the renewal of the lease, there can be no inference that the former, by his inaction, intends to discontinue it. In such a case, no less than an express notice to vacate must be made within the statutory 15-day period.
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,[13] 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,[14] 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 admittedly was beyond the 15-day 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.
Even if, as urged by the respondent, we should disregard the petitioner's letter of August 31, 1979, because it was not submitted at the trial, there nevertheless are the other letters which were formally offered in evidence by the respondent himself. These are Exhibit "5" and Exhibit "6", dated September 5 and 14, 1979, respectively, in which he rejected the petitioner's demand for the increased rental of P35,000.00. This could mean only that the demand was made earlier as the said letters were merely a reaction to such demand. These demands, as conditional notices to vacate if the petitioner's new rental was rejected, satisfied the requirement of Article 1670.
It should be noted that, after August 1979, the petitioner refused to accept the respondent's payments of the old rentals, demanding, as it had the right to do, the increased rate of P35,000.00. Such a stance negates the conclusion that it was willing to renew the lease under the original conditions and had, by its silence, impliedly agreed to the retention of all its provisions. In fact, far from being silent, the petitioner repeatedly insisted on the new rentals, and, to suit its actions to its words, flatly refused the tender of the old rentals by the respondent.[15]
No less worthy of attention is the circumstance that in its letter of September 18, 1979, the respondent counter-proposed a monthly rental of P27,000.00, which the petitioner rejected.[16] It could be illogical to suppose that, having done this, the petitioner would later agree to the implied renewal of the lease for the original rental of only P2,450.00, thereby forfeiting the amount of P24,550.00 every month.
As the original lease contract expired on August 31, 1979, and was not legally renewed, it follows that the respondent has since then been in illegal possession of the leased premises. That unlawful detainer, which has lasted more than seven years now, during which he has retained all the rights he originally enjoyed as if the lease had been validly renewed, must be terminated immediately.
Coming finally to the monthly rentals to be paid by the respondent, it appears that between the rate of P35,000.00 demanded by the petitioner and the respondent's counter-proposal of P27,000.00, there is a difference of only P8,000.00. It is unfortunate that the disagreement could not be ironed out in the spirit of friendship that used to characterize the relations of the parties.[17] The respondent judge, for his part, using as basis a fair monthly rental value of P50.00 for every square meter of the 372 square meter floor area of the property leased, fixed the monthly rental at P18,600.00.[18]
Considering all the above circumstances, and by way of effecting a reasonable compromise between the parties, we hereby rule that the rentals to be paid for the use and occupancy of the leased premises beginning September 1, 1979, and until it is vacated by the respondent, shall be P30,000.00 per month, with interest at the legal rate. From the total amount due shall be deducted the sums judicially deposited by the respondent. We shall also fix the attorney's fee in the sum of P30,000.00, taking into account the efforts exerted by counsel in prosecuting this case, from the city court of Baguio and up to this Court. It is hoped that, being an experienced businessman, and with this pending litigation and its possible consequences in mind, he has taken the necessary measures to minimize the other expenses of his relocation if, as it is now, ordered by this Court.
WHEREFORE, the decision of the respondent judge dated August 8, 1984, is set aside and a new decision is hereby rendered ordering respondent Andres Lao Hian Liong to: a) vacate the leased premises immediately; b) pay the petitioner monthly rentals in the amount of P30,000.00 plus legal interest, from September 1, 1979, until the leased premises are surrendered to the petitioner; and c) pay an attorney's fee in the sum of P30,000.00 and the costs of this suit. The deposits made by the respondent in court shall be deducted from the total amount due from him. This decision shall be immediately executory and no motion for reconsideration shall stay its execution.
SO ORDERED.
Yap, (Chairman), Narvasa, Feliciano, Gancayco, and Sarmiento, JJ., concur.
Melencio-Herrera, J., on official leave.
[1] Rollo, pp. 30-31.
[2] Ibid., p. 86.
[3] Id., pp. 43-44.
[4] id., p. 38.
[5] id., p. 47.
[6] id., p. 52.
[7] id., pp. 106-107.
[8] De la Cruz v. Sosing, 94 Phil. 26, cited in II Moran 475 (1979).
[9] Elks Club v. Rovira, 80 Phil. 272; Lianga Lumber Co. v. Lianga Timber Co., 76 SCRA 197.
[10] Civil Code Annotated, Vol. V, 1974 Ed., p. 711, Ambrocio Padilla.
[11] Go Tiamco v. Diaz, 75 Phil. 672.
[12] 113 SCRA 21.
[13] Rollo, p. 11.
[14] Ibid.
[15] Exhibit “B”.
[16] Id.
[17] Id., p. 22.
[18] Id.
Source: Supreme Court E-Library | Date created: January 18, 2010
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SECOND DIVISION
[ G.R. No. 178527, November 27, 2009 ]
JOVEN YUKI, JR., PETITIONER, VS. WELLINGTON CO, RESPONDENT.
D E C I S I O N
DEL CASTILLO, J.:
The lessee-petitioner's 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 lessor-respondent, to use and enjoy the fruits of his property.
This Petition for Review on Certiorari[1] assails the November 23, 2008 Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 89228 granting respondent's Petition for Review[3] and setting aside the March 7, 2005 Decision[4] of the Regional Trial Court (RTC), Branch 14, Manila. The RTC reversed and set aside the Decision[5] dated September 21, 2004 of the Metropolitan Trial Court (MeTC), Branch 15, Manila, granting respondent's Complaint for unlawful detainer[6] and ordering petitioner to vacate the premises subject matter of this case.
Factual Antecedents
Mr. Joseph Chua was the registered owner of a parcel of land, together with a commercial building erected thereon, situated at the corner of España and Instruccion Sts., 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,[7] the last of which was a written Contract of Lease[8] covering the period of January 1, 2003 to December 31, 2003 at a monthly rental of P7,000.00.
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.
Proceedings before the Metropolitan Trial Court
After the expiration of the lease contract, petitioner refused to vacate and surrender the leased premises. Thus, respondent filed a Complaint for unlawful detainer[9] before the MeTC of Manila. The material allegations of the complaint read as follows:
x x x x
3. Plaintiff [herein respondent] is the registered owner of that parcel of land together with the building existing thereon situated at 2051 España St. cor. Instruccion St., Sampaloc, Manila. Plaintiff's title to said property is evidenced by the Transfer Certificate of Title No. 261682 of the Registry of Deeds of Manila, photocopy of which is attached hereto as Annex "A" and the tax declarations for the lot and improvement are attached hereto as Annexes "B" and "B-1", respectively;
x x x x
5. Prior to the sale of the lot and building by the previous owner to herein plaintiff, Joseph Chua sent a notice to defendant [herein petitioner] informing him that the property is for sale giving the defendant the opportunity to exercise his pre-emptive right. Copy of said Notice is attached hereto as Annex "D";
6. Defendant waived his right to exercise his pre-emptive right and the real property was eventually sold to herein plaintiff;
7. Plaintiff, being the new owner of the lot and building, informed defendant that his Contract of Lease with the former lessor-owner Joseph Chua will no longer be renewed as per letter dated November 3, 2003, copy of which was left at defendant's store, for his refusal to acknowledge the receipt of the same. A copy of said Notice is attached hereto and made an integral part hereof as Annex "E";
8. For failure and refusal of the defendant to vacate and surrender the leased unit to plaintiff, plaintiff's counsel in turn sent a formal demand upon defendant to vacate the leased premises within ten (10) days from receipt of the formal demand in view of the expiration of the contract of lease. Copy of said letter dated January 13, 2004 is attached hereto as Annex "F". A copy was sent by registered mail but defendant failed to claim the same as evidenced by the Certification from the Central Post Office, copy of which is attached hereto as Annex "G". Another copy of the same demand letter was personally served at defendant's address as attested by the sworn statement of Wilberto Co who served the said formal demand as well as the notice earlier sent by plaintiff. Copy of the Affidavit of Wilberto Co is attached hereto as Annex "H";
x x x x
Respondent prayed that petitioner's possession of subject premises be declared unlawful and that petitioner be ordered to vacate it. He also sought reasonable compensation for the use of the property until such time that it is surrendered to him and for the petitioner to pay him moral damages and attorney's fees.
In his Answer with Counterclaim,[10] petitioner denied having been served with copies of the alleged notice of sale and notice to vacate. By way of affirmative defenses, he claimed that the complaint should be dismissed for being premature as there was no allegation therein of prior referral to the barangay. Petitioner also asserted that since he was not notified by the former owner of the sale, he was deprived of his preemptive rights. Moreover, respondent has no cause of action against him because respondent is not the true owner of the property but merely acts as a representative of persons whom respondent refused to disclose. Further, petitioner argued that there was an implied renewal of lease considering that a) he did not receive a notice to vacate, b) the two months deposit and one month advance payment he gave to Mr. Chua were never returned to him, and c) respondent accepted his payments for the months of January and February 2004.
Petitioner also asserted that his property rights would be violated if he is evicted because he has been operating his business in the premises for more than 20 years and has established goodwill in the area. He thus proposed that he be compensated the amount of not less than P1 million or be allowed to dispose of his stocks within a reasonable period of time, before he vacates the premises.
On September 21, 2004, the MeTC-Branch 15 rendered a Decision[11] in favor of the respondent, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant ordering the defendant and all persons claiming right under him:
1. to VACATE and surrender the subject property peacefully to plaintiff;
2. to PAY the plaintiff reasonable compensation for the use and occupancy of the subject premises in the amount of eight thousand (P8,000.00) pesos per month from January 1, 2004 until such time that he and all persons claiming rights under him have fully vacated the premises;
3. to PAY the plaintiff thirty thousand (P30,000.00) pesos as attorney's fees and litigation expenses.
SO ORDERED.[12]
Proceedings before the Regional Trial Court
In time, petitioner went on appeal to the RTC contending that -
- THE LOWER COURT ERRED WHEN IT RULED THAT THE PLAINTIFF-APPELLEE [herein respondent] HAD A CAUSE OF ACTION TO EVICT HEREIN DEFENDANT-APPELLANT [herein petitioner] FROM THE PREMISES.
- THE LOWER COURT ERRED WHEN IT RULED THAT THERE WAS NO IMPLIED NEW LEASE CREATED BY PLAINTIFF-APPELLEE'S ACCEPTANCE OF THE RENTALS MADE BY DEFENDANT-APPELLANT.
- THE LOWER COURT ERRED WHEN IT RULED THAT VALID NOTICE [TO] VACATE WAS SERVED UPON DEFENDANT-APPELLANT BY THE PLAINTIFF-APPELLEE.
- THE LOWER COURT GRAVELY ERRED WHEN IT RULED THAT DEFENDANT-APPELLANT WAS NOT DENIED HIS PREEMPTIVE RIGHT TO PURCHASE THE PROPERTY HE HAS BEEN OCCUPYING.
- THE LOWER COURT GRAVELY ERRED WHEN IT DENIED THE MOTION FOR CLARIFICATORY HEARING FILED BY DEFENDANT-APPELLANT AS WELL AS HAVING DENIED THE MOTION FOR VOLUNTARY INHIBITION.
- THE LOWER COURT ERRED WHEN IT AWARDED ATTORNEY'S FEES AMOUNTING TO THIRTY THOUSAND (P30,000.00) IN FAVOR OF PLAINTIFF-APPELLEE.
On March 7, 2005, the RTC-Branch 14 rendered a Decision[13] with the following disposition:
WHEREFORE, all premises considered, the Court finds and so holds preponderance of evidence on the part of the defendant-appellant. Accordingly, the Decision appealed from is hereby REVERSED, and the complaint for Unlawful Detainer is dismissed.
Finally, there is on record a defendant-appellant's Motion for Reconsideration as regards the amount of the supersedeas bond. By the dismissal of the case, the resolution thereof is thereby rendered moot and academic.
SO ORDERED.[14]
In reversing the ruling of the MeTC, the RTC found no proof on record that petitioner actually received the notice to vacate, thereby making the Complaint fatally defective. The RTC likewise opined that the resolution of the case hinges on the existence of implied new lease, a question which is incapable of pecuniary estimation and, therefore, beyond the MeTC's jurisdiction.
Proceedings before the Court of Appeals
Respondent filed with the CA a Petition for Review[15] under Rule 42 of the Rules of Court assailing the RTC Decision. On November 23, 2006, the CA promulgated the now assailed Decision[16] granting the petition. Its fallo reads:
WHEREFORE, the instant petition is hereby GRANTED. The Decision dated 7 March 2005 rendered by the Regional Trial Court (RTC) of Manila, Branch 14 is SET ASIDE and the Decision dated 21 September 2004 of the Metropolitan Trial Court (MeTC) of Manila, Branch 15 is REINSTATED.
SO ORDERED.[17]
Issues
Petitioner interposed the present recourse imputing upon the CA the following errors:
- x x x THE COURT OF APPEALS COMMITTED GRAVE ERROR WHEN IT RULED NOT TO DISMISS THE PETITION INTERPOSED BY RESPONDENT AND INSTEAD PROCEEDED TO REVERSE THE DECISION DATED MARCH 7, 2005 OF THE REGIONAL TRIAL COURT, BRANCH 14 DESPITE RESPONDENT (THEN PETITIONER) HAVING FAILED TO COMPLY WITH THE PROCEDURAL REQUIREMENTS UNDER RULE 42 OF THE 1997 RULES OF CIVIL PROCEDURE.[18]
- THE COURT OF APPEALS ERRED WHEN IT FOUND ERRORS COMMITTED BY THE RTC IN REVERSING THE DECISION OF THE MTC.[19]
Our Ruling
The petition lacks merit.
The allegations in respondent's petition are supported by material portions of the record.
Petitioner contends that the Petition for Review[20] filed by the respondent with the CA is procedurally infirmed and that the appellate court should have outrightly dismissed the same. Specifically, petitioner points out that while respondent attached to the petition the parties' respective position papers, he failed to attach to said position papers the annexes thereto. This, petitioner insists, warrants the dismissal of respondent's petition per Section 2, Rule 42 of the Rules of Court,[21] in relation to Section 3[22] of the same Rule.
We do not agree. Section 2 of Rule 42 does not require that all the pleadings and documents filed before the lower courts must be attached as annexes to the petition. Aside from clearly legible duplicate originals or true copies of the judgments or final orders of both lower courts, it merely requires that the petition be accompanied by copies of pleadings and other material portions of the record as would support the allegations of the petition. As to what these pleadings and material portions of the record are, the Rules grants the petitioner sufficient discretion to determine the same. This discretion is of course subject to CA's evaluation whether the supporting documents are sufficient to make out a prima facie case.[23] Thus, Section 3 empowers the CA to dismiss the petition where the allegations contained therein are utterly bereft of evidentiary foundation. Since in this case the CA gave due course to respondent's Petition for Review and proceeded to decide it on the merits, it can be fairly assumed that the appellate court is satisfied that respondent has sufficiently complied with Section 2 of Rule 42.
Besides, our own examination of the CA rollo reveals that the annexes to the position papers can be found somewhere else in the petition. The annexes to the parties' respective position papers are the same annexes attached to the Complaint and the Answer. In fact, Annexes "A" to "H" of the Complaint respectively pertain to the same documents marked as Annexes "A" to "H" of respondent's Position Paper. And while respondent's Position Paper as attached to the petition does not contain any annexes, said annexes are nonetheless appended to the Complaint which is also attached to the petition.
The same is true with Annexes "1" to "6" of petitioner's Position Paper. Annexes "1", "2", and "3" are attached to the Petition for Review as Annexes "3", "4", and "5", respectively, of the Answer. Annex "4" of petitioner's Position Paper is the Contract of Lease marked as Annex "C" of the Complaint, while Annexes "5" and "6" are marked and attached as Annexes "1" and "2", respectively, of the Answer. To our mind, these are more than substantial compliance with the requirements of the rules. Indeed, if we are to apply the rules of procedure in a very rigid and technical sense as what the petitioner suggests in this case, the ends of justice would be defeated. In Lanaria v. Planta,[24] we emphasized that courts should not be so strict about procedural lapses that do not really impair the proper administration of justice, for rules of procedure are intended to promote, and not to defeat, substantial justice.[25]
Allegations of implied new lease or tacita reconduccion cannot oust the MeTC of jurisdiction over unlawful detainer cases.
Petitioner also contends that the CA grievously erred in reversing the Decision of the RTC. He maintains that the RTC correctly held that the key issue to be resolved in this case is the existence of an implied new lease, a matter which is incapable of pecuniary estimation and, therefore, beyond the MeTC's jurisdiction.
The argument is bereft of merit. The allegation of existence of implied new lease or tacita reconduccion will not divest the MeTC of jurisdiction over the ejectment case. It is an elementary rule that the jurisdiction of the court in ejectment cases is determined by the allegations pleaded in the complaint[26] and cannot be made to depend upon the defenses set up in the answer or pleadings filed by the defendant.[27] This principle holds even if the facts proved during trial do not support the cause of action alleged in the complaint.[28] In connection with this, it is well to note that in unlawful detainer cases the elements to be proved and resolved are the facts of lease and expiration or violation of its terms.[29]
Here, no interpretative exercise is needed to conclude that respondent has complied with such requirement. In respondent's Complaint, he specifically alleged that (1) the former owner, Mr. Chua, and petitioner entered into a contract of lease; (2) subsequently, respondent purchased the leased premises from Mr. Chua and became the owner thereof; (3) thereafter, the lease contract between Mr. Chua and petitioner expired; and (4) petitioner refused to vacate the premises despite the expiration and non-renewal of the lease.
Besides, we do not agree with the RTC that the MeTC does not have jurisdiction to resolve the issue of existence of implied new lease in the unlawful detainer case. Tacita reconduccion refers to the right of the lessee to continue enjoying the material or de facto possession of the thing leased within a period of time fixed by law. During its existence, the lessee can prevent the lessor from evicting him from the disputed premises. On the other hand, it is too well-settled to require a citation that the question to be resolved in unlawful detainer cases is, who is entitled to de facto possession. Therefore, since tacita reconduccion is determinative of who between the parties is entitled to de facto possession, the MeTC has jurisdiction to resolve and pass upon the issue of implied new lease in unlawful detainer case. In Mid-Pasig Land Development Corporation v. Court of Appeals,[30] we ruled that the MeTC is clothed with exclusive original jurisdiction over an unlawful detainer case even if the same would entail compelling the plaintiff therein to recognize an implied lease agreement.
Respondent did not acquiesce to petitioner's continued possession of subject premises.
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,[31] 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.
We are not swayed. 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.[32]
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 (Annex "D" of Complaint, Records, p. 12) 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 (Annex "A," Complaint, Records, p. 7). Plaintiff, as new owner/vendee, informed defendant through a letter dated November 3, 2003 (Annex "E," Complaint, Records, p. 13), 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" (Records, p. 93). 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" (Records, p. 96) 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" (Records, p. 95). The demand letter dated January 13, 2004 pertains to the premises presently occupied by defendant. The Contract of Lease (Annex "C," of Complaint, Records, pp. 10-11) which expired on December 31, 2003 speaks of only one (1) 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.[33]
This finding of the MeTC, which was affirmed by the CA, is a factual matter that is not ordinarily reviewable in a petition for review on certiorari filed under Rule 45 of the Rules of Court. It is settled that in a petition for review on certiorari, only questions of law may be raised by the parties and passed upon by this court.
Besides, even if we do review the case, there is no cogent reason to disturb the finding of said courts. Under the rules, if the addressee refuses to accept delivery, service by registered mail is deemed complete if the addressee fails to claim the mail from the postal office after five days from the date of first notice of the postmaster.[34] Further, the absence of personal service of notice to vacate in this case could only be attributed to petitioner's unexplainable refusal to receive the same. In Co Keng Kian v. Intermediate Appellate Court,[35] we held that "[t]he Court cannot countenance an unfair situation where the plaintiff in an eviction case suffers further injustice by the unwarranted delay resulting from the obstinate refusal of the defendant to acknowledge the existence of a valid demand."
The formal demands to vacate sent to petitioner, coupled with the filing of an ejectment suit, are categorical acts on the part of respondent showing that he is not amenable to another renewal of the lease contract. Therefore, petitioner's contention that his stay in the subject premises is with the acquiescence of the respondent, has no leg to stand on.
Petitioner's alleged preferential right to buy subject premises has no basis.
In view of the above disquisition, petitioner's claim that he was deprived of his preemptive rights because he was not notified of the intended sale, likewise crumbles. Besides, the right of first refusal, also referred to as the preferential right to buy, is available to lessees only if there is a stipulation thereto in the contract of lease or where there is a law granting such right to them (i.e., Presidential Decree No. 1517 (1978),[36] which vests upon urban poor dwellers[37] who merely lease the house where they have been residing for at least ten years, preferential right to buy the property located within an area proclaimed as an urban land reform zone). Unlike co-owners and adjacent lot owners,[38] there is no provision in the Civil Code which grants to lessees preemptive rights. Nonetheless, the parties to a contract of lease may provide in their contract that the lessee has the right of first refusal.
In this case, there is nothing in the Contract of Lease which grants petitioner preferential right to buy the subject premises. We are likewise unaware of any applicable law which vests upon him priority right to buy the commercial building subject matter of this case. In fact, aside from the sweeping statement that his preferential right to buy was violated, petitioner failed to cite in his Petition,[39] Reply,[40] or Memorandum[41] any specific provision of a law granting him such right. In other words, petitioner failed to lay the basis for his claim that he enjoys a preferential right to buy.
And even assuming that he has, the same will not prevent the ejectment case filed by the respondent from taking its due course. A contract of sale entered into in violation of preemptive right is merely rescissible and the remedy of the aggrieved party whose right was violated is to file an appropriate action to rescind the sale and compel the owner to execute the necessary deed of sale in his favor. In Wilmon Auto Supply Corp. v. Court of Appeals,[42] we categorically held that an action for unlawful detainer cannot be abated or suspended by an action filed by the defendant-lesseee to judicially enforce his right of preemption.
WHEREFORE, the petition is DENIED.
SO ORDERED.
Carpio*, (Chairperson), Leonardo-De Castro**, Brion, and Abad, JJ., concur.
* Per Special Order No. 775 dated November 3, 2009.
** Additional member per Special Order No. 776 dated November 3, 2009.
[1] Rollo, pp. 11-27.
[2] Id. at 33-43; penned by Associate Justice Monina Arevalo-Zenarosa and concurred in by Associate Justices Martin S. Villarama, Jr. and Lucas P. Bersamin (both now members of this Court).
[3] CA rollo, pp. 2-32.
[4] Rollo, pp. 178-181; penned by Judge Cesar M. Solis.
[5] Id. at 131-138; penned by Judge Sarah Alma M. Lim.
[6] Id. at 44-49.
[7] A written contract of lease with a term of five years commencing in 1987 to 1992 (rollo, pp. 94-97), followed by verbal lease contract from 1993 to 1995. Then, petitioner and Mr. Chua entered into a one-year lease contract covering the period January 1996 to December 1996 (rollo, pp. 98-99) and another written contract of lease from January 1, 1997 to December 30, 1997 (rollo, pp. 100-103). The last verbal contract between them has a term of five years commencing in 1998 until 2002.
[8] CA rollo, pp. 55-56.
[9] Supra note 6; docketed as Civil Case No. 177321.
[10] Rollo, pp. 58-66.
[11] Supra note 5.
[12] Id. at 138.
[13] Supra note 4.
[14] Id. at 181.
[15] Supra note 3.
[16] CA rollo, pp. 288-298.
[17] Rollo, p. 297.
[18] Id. at 433.
[19] Id. at 435.
[20] Supra note 3.
[21] SEC. 2. Form and contents. - The petition shall be filed in seven (7) legible copies, with the original copy intended for the court being indicated as such by the petitioner, and shall (a) state the full names of the parties to the case, without impleading the lower courts or judges thereof either as petitioners or respondents; (b) indicate the specific material dates showing that it was filed on time; (c) set forth concisely a statement of the matters involved, the issues raised, the specification of errors of fact or law, or both, allegedly committed by the Regional Trial Court, and the reasons or arguments relied upon for the allowance of the appeal; (d) be accompanied by clearly legible duplicate originals or true copies of the judgments or final orders of both lower courts, certified correct by the clerk of court of the Regional Trial Court, the requisite number of plain copies thereof and of the pleadings and other material portions of the record as would support the allegations of the petition. x x x (Emphasis ours)
[22] SEC. 3. Effect of failure to comply with requirements. - The failure of the petitioner to comply with any of the foregoing requirements regarding the payment of the docket and other lawful fees, the deposit for costs, proof of service of the petition, and the contents of and the documents which should accompany the petition shall be sufficient ground for the dismissal thereof. (Emphasis ours)
[23] Atillo v. Bombay, 404 Phil. 179, 188 (2001).
[24] G.R. No. 172891, November 22, 2007, 538 SCRA 79, 97.
[25] Navalta v. Muli, G.R. No. 150642, October 23, 2006, 505 SCRA 66, 75.
[26] Cajayon v. Batuyong, G.R. No. 149118, February 16, 2006, 482 SCRA 461, 469.
[27] Santos v. Sps. Ayon, 497 Phil. 415, 420 (2005); Roxas v. Court of Appeals, 439 Phil. 966, 978-979 (2002).
[28] Habagat Grill v. DMC-Urban Property Developer, Inc., 494 Phil. 603, 611(2005).
[29] CIVIL CODE OF THE PHILIPPINES, Article 1673(1); Manuel v. Court of Appeals, G.R. No. 95469, July 25, 1991, 199 SCRA 603, 608.
[30] 459 Phil. 560, 573 (2003).
[31] Art. 1670. 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.
[32] Arevalo Gomez Corporation v. Lao Hian Liong, 232 Phil. 343, 348 (1987).
[33] Rollo, pp. 135-136.
[34] RULES OF COURT, Rule 13, Section 10.
[35] Co Keng Kian v. Intermediate Appellate Court, G.R. No. 75676, August 29, 1990, 189 SCRA 112, 116.
[36] URBAN LAND REFORM ACT. Section 6 thereof provides:
SECTION 6. Land Tenancy in Urban Land Reform Areas. Within the Urban Zones legitimate tenants who have resided on the land for ten years or more who have built their homes on the land and residents who have legally occupied the lands by contract, continuously for the last ten years shall not be dispossessed of the land and shall be allowed the right of first refusal to purchase the same within a reasonable time and at reasonable prices, under terms and conditions to be determined by the Urban Zone Expropriation and Land Management Committee created by Section 8 of this Decree.
[37] See Inducil v. Tops Taxi, Inc, 497 Phil. 362 (2005).
[38] See CIVIL CODE OF THE PHILIPPINES, Book IV, Title VI, Chapter 7, Section 2.
[39] Rollo, pp. 11-27.
[40] Id. at 315-324.
[41] Id. at 429-444.
[42] G.R. No. 97637, April 10, 1992, 208 SCRA 108, 115.
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FIRST DIVISION
[ G.R. No. 92540, December 11, 1992 ]
ANIANO TORRES AND JOSEFINA TORRES, PETITIONERS, VS. THE HON. COURT OF APPEALS, HON. REGIONAL TRIAL COURT OF NEGROS ORIENTAL, BRANCH 34, AND ADELA B. FLORES, RESPONDENTS.
D E C I S I O N
CRUZ, J.:
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.
The question before us is whether or not the original contracts of lease entered into between the petitioners and the private respondent have been validly renewed.
These contracts related to ten parcels of land belonging to Adela B. Flores, the herein private respondent, that 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 petitioners failed to comply with this condition and that consequently she informed them on February 17, 1989,[1] 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.[2] 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 tacita reconduccion and that the complainant was estopped from denying that she had granted them an option to renew the contracts.
After trial under the Rule on Summary Procedure, Judge Teopisto L. Calumpang held that the contracts had not been validly renewed because the Torreses had failed to deliver the amount of P50,000.00 in cash to Flores as promised. The total amount raised by the petitioners by February 15, 1989, was only P11,415.89.[3] This finding was affirmed on appeal to the Regional Trial Court of Dumaguete City by Judge Rosendo B. Bandal, Jr., who added that such non-compliance had been established by the admission of the petitioners themselves.[4]
In their appeal to the respondent court, the petitioners argued that (a) what was subject to the condition was the execution of the renewed written contract of lease; (b) granting that the condition was to be applied to the principal contract, this was complied with as evidenced by the subsequent acts of plaintiff in withdrawing P50,000.00 worth of piculs of sugar; and (c) the appellee was placed in estoppel and guilty of bad faith because of the previously referred withdrawal.
Again they failed. On January 25, 1990, in a perceptive decision penned by Justice Celso L. Magsino, the Court of Appeals sustained the findings of the lower courts that the contracts had not been validly renewed.[5] The petitioners’ motion for reconsideration was denied on February 19, 1990,[6] and they have now come to this Court as a last resort.
The present petition faults the Court of Appeals for not holding that the contracts of lease had been impliedly renewed, that the lessor was estopped from denying this, and that the contracts had been novated. The petitioners also complain that the supplement to their motion for reconsideration had not been taken into account.
The petitioners must fail again.
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.[7] 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 undisputably 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:
The evidence on record shows that when petitioner Josefina Torres came to see private respondent sometime in December, 1988, she requested that they renew their contract of lease which was to expire in crop year 1988-1989. Private respondent told her that she may consider petitioner's request if she could put up the amount of P50,000.00 cash to be applied to the rental of the leased sugar lands on or before February 15, 1989, which the respondent would need for her trip abroad, otherwise, they were going to abide by the subsisting contract of lease. When February 15, 1989 came, and petitioner Josefina Torres was not able to comply with the aforesaid condition, on February 17, 1989, respondent wrote petitioner Josefina that she would take over the cultivation of the subject lands. On February 20, 1989, private respondent caused her lawyer to write the petitioners not to make any further cultivation of the subject lands. 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 the actual renewal yet of the contract of lease. Definitely, what transpired between private respondent and petitioner Josefina Torres, as found by the lower courts and which We find to be correct, is not an option given to the petitioners to renew 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 (tacita reconduccion), but that the continued possession and cultivation of the subject lands therefore by the petitioners constitutes illegal detainer.
The petitioners' argument that they had complied with the condition because the private respondent had withdrawn from them 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 tacita reconduccion 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.[8]
The Civil Code provides:
Art. 1670. 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 Art. 1682 and 1687. The other terms of the original contract shall be revived.
There was no acquiescence on the part of the lessor to the petitioners' continued stay in her property. On the contrary, she expressly informed them that she was not renewing the lease and in fact later demanded that they vacate her property. The private respondent's acceptance of the rentals beyond the original term did not signify that she had agreed to the implied renewal of the lease. The simple reason is that the petitioners remained in possession of the subject lands and, regardless of the outcome of their case, had to pay rentals to the private respondent for the use of her property.
The issue of novation does not deserve consideration in this petition as it was raised for the first time only when the case was already in the Court of Appeals.
Finally, we must also reject the complaint that the petitioners were denied due process because the respondent court did not take into account the supplement to their motion for reconsideration. The presumption is that such supplement was considered but found to be undeserving of further comment. Courts are not required to expressly dispose of every single point or argument raised by litigants, even if off-tangent, repetitive or absurd. Courts must distinguish between the substantial and the irrelevant or trivial as a practical measure for the proper harnessing of their time.
WHEREFORE, the petition is DENIED, with costs against the petitioners. It is so ordered.
Padilla, Griño-Aquino, and Bellosillo, JJ., concur.
[1] Rollo, p. 128.
[2] Ibid., p. 129.
[3] Id., p. 46.
[4] id., pp. 50-54.
[5] id., pp. 18-25; concurred in by De Paño, Jr. and Sempio-Dy, JJ..
[6] id., pp. 28-29.
[7] Universal Motor Corporation v. Court of Appeals, 205 SCRA 448; Dichoso v. Court of Appeals, 192 SCRA 169.
[8] id., p. 45.
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First Division
[ G.R. No. 55377, October 18, 1988 ]
BENJAMIN DEL ROSARIO AND CONSTANCIA DEL ROSARIO, PETITIONERS, VS. HON. CECILIO F. BALAGOT, ETC., AND THE SPOUSES JUANITO MAGNO AND ROSITA GONZALES, RESPONDENTS.
D E C I S I O N
NARVASA, J.:
By this special civil action of certiorari and prohibition the Spouses Benjamin and Constancia del Rosario would have this Court nullify the Order of respondent Judge granting execution pending appeal as having been rendered without or in excess of jurisdiction.
The del Rosarios were sued in an action of unlawful detainer filed by the Spouses Juanito Magno and Rosita Gonzales in the Municipal Court of Solano, Nueva Vizcaya.[1] Despite summons having been duly served on them, the del Rosarios neither filed answer nor appeared before the Court when the case was called for preliminary hearing. They were consequently declared in default on motion of the Magnos, and the Court received the latter's evidence. Before judgment could be rendered, however, the del Rosarios filed a motion to set aside the order of default, accompanied by an answer to the complaint. In their answer, they asserted that while the term of their lease had indeed expired, there had been an implied renewal thereof by virtue of the lessors' continued acceptance of rentals. The Municipal Court lifted the order of default and set the case for trial. The trial was however several times postponed, mostly at the del Rosarios' instance. At the last setting, the del Rosarios made no appearance, for which reason they were again declared in default, and the case deemed submitted for decision. The Court thereafter rendered judgment, commanding the del Rosarios to vacate the premises, and pay actual damages, attorney's fees and costs.
The del Rosarios received notice of the judgment on October 6, 1978. Instead of taking an appeal1, they filed a special civil action of certiorari with the Court of First Instance of Nueva Vizcaya,2 praying for nullification of the inferior court's judgment principally on the ground they had been denied due process by reason of their having been wrongfully declared in default. Their petition was dismissed by Order dated July 18, 1979 upon the Court's finding that (1) they had in truth been properly declared in default, and (2) the extraordinary remedy of certiorari could not be availed of as a substitute for an appeal.
The del Rosarios sought to take an appeal from this order. They filed within the period of appeal a notice of appeal, an appeal bond and a record on appeal. While the appeal bond and record on appeal were pending approval by the Court, the Magno Spouses moved for immediate execution of the judgment, alleging as grounds therefor, (1) that the decision sought to be appealed, being against the defendants in an unlawful detainer action, is an exception to the rule that an appeal vacates the judgment of an inferior court and that execution may be had only after a judgment has become executory; (2) that the del Rosarios had not posted a supersedeas bond; and (3) that the house subject of the suit was in danger of deterioration. The del Rosarios opposed the motion, arguing that the perfection of their appeal, and the absence of good reason, precluded favorable action thereon. For reasons not quite clear on the record, the incident remained unresolved until July 7, 1980 when the Court, then already presided over by a new judge, respondent Judge Balagot, issued the Order now challenged in this certiorari action before this Court. The Order authorized execution of the judgment pending appeal on the following considerations: (1) the Court still had jurisdiction to act on the motion for immediate execution, it appearing that the record on appeal and appeal bond still awaited its approval (and consequently the appeal had not yet been perfected); (2) there was good reason for immediate execution, the house being in danger of deterioration since the del Rosarios had made no move to perserve and protect it; and (3) no supersedeas bond had been posted by the del Rosarios.3
Before this Court the del Rosarios postulate the invalidity of Judge Balagot's Order. They theorize that (1) the mere filing by them of their notice of appeal, appeal bond and record on appeal had the effect of perfecting their appeal, independently of court action thereon, thus causing the loss by respondent Court, as a consequence, of jurisdiction to order immediate execution; (2) there was no need for a supersedeas bond because the inferior court's decision did not order payment of back rentals as they had indeed been paying rentals regularly; and (3) there was in fact no good reason for execution pending appeal, the fact being that the house was up for sale and the Magnos were in a hurry to dispose of it.
The petition is devoid of merit and must be denied.
In the first place, it is not possible to ignore the palpable absence of right on the part of the del Rosarios to continue in occupancy of the premises. The record indubitably establishes that the del Rosarios' written lease of the Magnos' property prescribed a five-year term ending on September 30, 1976. Having been "made for a determinate time," the lease ceased "upon the day fixed, without need of a demand."1
The del Rosarios' claim of a tacita reconduccion (an implied new lease) is utterly without foundation. Such a tacita reconduccion can come into being only 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;" and even then, the new lease is "not for the period of the original contract, but for the time established in articles 1682 and 1687."2 But in this case, there was a notice formally served on the del Rosarios to vacate the premises forthwith upon the expiry of the lease. The Magnos subsequently agreed to grant the del Rosarios, at their request, a three-month option to purchase the property (and by implication, a three-month extension of occupancy). The option lapsed, however, without being exercised by the del Rosarios. So, a second demand was made on the del Rosarios to vacate the leased property, which they ignored. These circumstances, no less than the filing of an ejectment suit by the lessors, absolutely precluded the creation of an implied new lease which, in any event could have been authorized only on a month-to-month basis.3
Neither is it possible to overlook the fact that the judgment of the Municipal Court had become final and executory by reason of the del Rosarios' failure to appeal therefrom. Having been served on October 6, 1978 with notice of the judgment against them, they had until October 21, 1978 within which to perfect their appeal. They did not appeal. What they did was to file a petition for certiorari in the Court of First Instance for the invalidation of that adverse judgment. But it is elementary that the special civil action of certiorari is not and cannot be made a substitute for an appeal, where the latter remedy is available,1 as it was in this case. The filing by the del Rosarios of the certiorari suit did not therefore toll the period for appeal or prevent the judgment from becoming final.2
Since the judgment had thus become final and executory, execution thereof became a matter of right on the part of the Magnos, as prevailing parties,3 and consequently, the matter of whether or not there was ground to authorize discretionary execution pending appeal4 ceased to have any relevance.
There but remains to overrule one other erroneous argument of the petitioners, that relative to the perfection of an appeal. Contrary to their submittal, an appeal under Rule 41 of the Rules of Court of 1964 is not deemed perfected until approval by the Court of the record on appeal and the appeal bond;5 and the rule is settled that prior to such approval, the Court has power to order immediate execution pending appeal in accordance with Section 2 of Rule 39.6
WHEREFORE, the petition is DISMISSED, and the Order of respondent Judge subject thereof as well as the judgment of the inferior court are SUSTAINED. This decision is immediately executory. Costs against petitioners.
Cruz, Gancayco, Griño-Aquino, and Medialdea, JJ., concur.
[1] The suit was filed on May 26, 1977 and docketed as Case No. 965, Judge Isabelo Ordoñez, presiding.
1 SEE Sec. 2, Rule 18, in relation to Sec. 9, Rule 13 and Sec. 2, Rule 41, of the Rules of Court; Moran, Comments on the Rules, 1979 ed., Vol. 1, pp. 530-531
2 Docketed as Case No. 2606
3 Rollo, pp. 71-78
1 ART. 1669, Civil Code
2 ART. 1670, Civil Code; Arevalo Gomez Corporation v. Lao Hian Liong, G.R. No. 70360, March 11, 1987
3 ART. 1670 in relation to ART. 1687, Civil Code
1 Sec. 1, Rule 65, Rules of Court; Silvestre v. Torres, 57 Phil. 885, 890; Pachoco v. Tumungday, L-14500, May 25, 1960; Lopez et al. v. Alvendia, et al., L-20697, Dec. 24, 1964; Government v. Judge, 50 Phil. 975, 979, cited in Moran, op. cit., 1980 ed., Vol. 3, pp. 176-177
2 Palomares v. Jimenez, 90 Phil. 773; Yucuanseh Drug Co., Inc. v. National Labor Union, 101 Phil. 409; Bacabac v. Delfin, 1 SCRA 1194; Peza v. Hon. Alikpala, G.R. No. L-29749, April 15, 1988
3 Sec. 1, Rule 39, Rules of Court
4 Pursuant to Sec. 2, Rule 39
5 The rule has since been changed by Batas Pambansa Blg. 129. Now an appeal from the Regional Trial Court may be taken simply by filing a notice of appeal, within fifteen (15) days from notice of the judgment or final order, except in special proceedings or other cases where multiple appeals are allowed, in which case a record on appeal is still required and the appeal period is still thirty (30) days (Sec. 39). The rule as to perfection of the appeal has also been changed. Now, perfection is "upon the expiration of the last day to appeal by any party," although in cases where a record on appeal is still required, perfection takes place upon its approval by the Court, which should be done within 10 days (par. 23, Resolution of the Court en banc dated Jan. 11, 1983) (Interim - Transitional Rules Relative to the Implementation of BP 129).
6 SEE Borja v. de la Costa, G.R. No. 48310, cited in Moran, op. cit., Vol 2, p. 258; Universal Far East Corporation v. C.A., 131 SCRA 642, 646
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THIRD DIVISION
[ G.R. No. 148562, November 25, 2004 ]
TAGBILARAN INTEGRATED SETTLERS ASSOCIATION [TISA] INCORPORATED THRU ITS SECRETARY-TREASURER REPRESENTATIVE SIXTO MUMAR, SR. AS WELL AS ITS OTHER OFFICERS AND MEMBERS, NAMELY: AURELIO CIRUNAY, CIPRIANO GAMIL, ROBERTO MEDINA, BASILISA PUMARES, MARIETA LUMAYNO, CRISOSA A. TAPAY, JULIETA DURAN, RAMON RAMOS, JR., DELIO ERANA, EMETERIA ALE, PANFILO LAWAY, CRISPIN PENASO, HADJE MALIK, ALANGADI SULTAN, BERNARDA GULLEBAN, MANUEL CHATTO, KABSARAN MAMACAL, PEDRO ESTOQUE, AND EULALIO SARAMOSING, PETITIONERS, VS. HONORABLE COURT OF APPEALS, TAGBILARAN WOMAN’S CLUB REPRESENTED BY ITS PRESIDENT AND LAMBERT’S REPRESENTED BY ITS MANAGER, CRISPIN PENASO, SPS. ALEX AND ARLENE SANTOS, NECITA BOLATETE, CAROL CURIBA, MAMARI BUSAR, ANTONIO BULASA, SUSAN PANTOJA, LEONORA ESTALLO, DANIEL OMICTIN, BOBBY BANDIANON AND CARMEN CRISTALES, RESPONDENTS.
D E C I S I O N
CARPIO MORALES, J.:
On petition for review on certiorari is the appellate court’s Decision[1] of February 28, 2001 affirming that of Branch 2 of the Regional Trial Court of Tagbilaran City, Bohol.[2]
Petitioner Tagbilaran Integrated Settlers Association (TISA), is an organization founded in 1991 by individuals who have residential and business establishments in a commercial lot located at Torralba and Parras Streets in Tagbilaran City. The lot, which has an area of 2,726 square meters, is covered by TCT No. (142) 21047 in the name of respondent Tagbilaran Women’s Club (TWC).
In 1986-1987, the TWC entered into separate written lease contracts for a period of one year with individual petitioners herein, Aurelio Cirunay, Roberto Medina, Basilisa Pumares, Marietta Lumayno, Ramon Ramos Jr., Delio Erana, Elemeterio Ale, Alangadi Sultan, Manuel Chatto, and Cipriano Gamil.[3]
Pertinent provisions of each contract of lease included the following: (1) stall space rented shall be exclusively used for business; (2) converting the space into dwelling is strictly prohibited; (3) no subleasing is allowed without the knowledge and consent of TWC; (4) all ordinances as to sanitary and building permits shall be complied with; (5) rentals shall be paid monthly; (6) the period of lease is for one year only; and (7) any violation of the lease contract automatically rescinds the contract of lease.[4]
The other petitioners, namely Crisosa Tapay, Julieta Duran, Panfilo Laway, Crispin Penaso, Hadje Malik, Bernardo Gulleban, Kabsaran Mamacal, Pedro Estoque and Eulalio Saramosing are sublessees of stalls in the lot.[5]
In a letter to petitioners dated January 6, 1990, TWC demanded that they vacate the rented premises on the following grounds: expiration of lease contracts, non-payment of rentals, and violations of the conditions of lease including noncompliance with sanitary and building ordinances.[6] Another letter of demand, dated July 16, 1990, was sent to petitioners who refused to vacate the premises, however.
On February 25, 1993, TWC entered into a lease contract on the lot with one Lambert Lim who at once paid a total of P240,000.00 representing payment of rentals for the first twelve (12) months.[7] Petitioners nevertheless refused to vacate the lot, they contending that the contract of lease between TWC and Lambert Lim is null and void because TWC impliedly extended to them new contracts of lease when it continued collecting monthly rentals from them.
Petitioners soon filed on March 31, 1993 a petition against TWC and Lim for prohibition, annulment of contract of lease, and damages with prayer for the issuance of a writ of preliminary prohibitory injunction before the RTC of Tagbilaran City, Bohol.[8]
In the meantime, petitioners consigned the monthly rentals before Branch 2 of the RTC (the trial court).[9]
By decision[10] of January 24, 1997, the trial court dismissed petitioners’ petition, disposing as follows:
WHEREFORE, in the light of the foregoing, judgment is hereby rendered in favor of the defendants and against the plaintiffs and third-party defendants:
- Ordering the dismissal of plaintiff’s complaint/petition;
- Declaring the lease contract between the First Defendant TWC and Second defendant Lambert Lim to be valid and binding;
- Ordering the plaintiffs, the third-party defendant and the herein occupants acting for and in behalf of the plaintiffs and third-party defendants to vacate the premises of the defendant TWC’s lot under TCT No. (142) 21047, within three (3) months from the finality of the Decision;
- Declaring the rental deposits consigned by plaintiffs with the Clerk of Court in the total sum of P176,585.00, as payment for all rentals and damages owing to the defendants, by reason of the filing of the suit, in the equitable and proportionate amount of P56,585.00 to the First Defendant TWC, and P140,000 to Second Defendant Lambert Lim; and
- To pay the costs.[11] (Underscoring supplied)
Petitioners appealed the trial court’s decision before the Court of Appeals which, by decision[12] of February 28, 2001, affirmed that of the trial court.
Petitioner’s motion for reconsideration of the appellate court’s decision having been denied by Resolution[13] of June 11, 2001, they lodged the present petition which raises the same issues raised before the trial court and the appellate court, to wit: (1) granting that the contracts of lease between TWC and petitioners have expired, whether implied new lease contracts existed which justify petitioners’ continued occupation of the lot; (2) whether TWC violated its obligation under Article 1654 (c) of the Civil Code when it entered into a lease contract with Lim on February 25, 1993; and (3) whether the provisions of Presidential Decree No. 1517, Presidential Decree No. 20, Proclamation No. 1893, and Presidential Decree No. 1517 apply to the case at bar.[14]
The petition fails.
The lease contracts executed by TWC and petitioners in 1986/1987 were for a period of one year. Following Article 1669[15] of the Civil Code, the lease contracts having been executed for a determinate time, they ceased on the day fixed, that is, a year after their execution without need of further demand.
While no subsequent lease contracts extending the duration of the original lease were forged, it appears that TWC allowed petitioners to continue occupying the lot as in fact it continued to demand, collect and accept monthly rentals.[16] An implied new lease (tacita reconduccion) was thus created pursuant to Article 1670 of the New Civil Code which provides:
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.
Since the period for the tacita reconduccion was not fixed and the rentals were paid on a monthly basis, the contract was from month-to-month.[17]
A month-to-month lease under Article 1687[18] is a lease with a definite period, hence, it is terminable at the end of each month upon demand to vacate by the lessor.[19]
When notice to vacate dated January 6, 1990 was sent by TWC to petitioners, followed by another dated July 16, 1990, the tacita reconduccion was aborted. For a notice to vacate constitutes an express act on the part of the lessor that it no longer consents to the continued occupation by the lessees of its property.
The notice required [under Article 1670] is the one given after the expiration of the lease period for the purpose of aborting an implied renewal of the lease.[20] (Emphasis supplied)
As thus correctly found by the Court of Appeals,
[t]he implied lease of appellants expired upon demand made by the appellee TWC on January 1990. From then on appellee TWC had the right to terminate the lease at the end of the term of the impliedly renewed contracts whose expiration dates w[ere] at the end of the month of January 1990. Although appellants continued to pay rent[al]s after said date, it is clear that they no longer have the right to continue in the possession of the subject lot because their continued stay therein was without the consent of appellee TWC.[21]
Contrary to petitioners’ contention, the subsequent acceptance by the lessor of rental payments does not, absent any circumstance that may dictate a contrary conclusion, legitimize the unlawful character of their possession.[22]
As for petitioners’ contention that TWC violated Article 1654 (c) of the Civil Code when it entered into a lease contract with Lim on February 25, 1993 without their previous consent, the same does not lie. For after TWC notified petitioners, by letter of January 6, 1990, to vacate the occupied premises, the implied new lease had been aborted and they, therefore, had no right to continue occupying the lot. Their continued occupation of the premises had thus become unlawful.
While TWC as a lessor is obliged to, under Article 1654 of the Civil Code, maintain the lessee in the peaceful and adequate enjoyment of the lease, the obligation persist only for the duration of the contract.[23]
As to whether petitioners are covered by P.D. No. 1517, Proclamation No. 1893, RA 7279 and Presidential Decree No. 20, this Court holds in the negative.
Under P.D. 1517, only legitimate tenants who have resided on the land for ten years or more who have built their homes on the land and residents who have legally occupied the lands by contract, continuously for the last ten years, are given the right of first refusal to purchase the land within a reasonable time.[24] In the case at bar, petitioners entered into one year lease contracts with TWC for commercial use only and conversion of the rented premises to dwelling was strictly prohibited. On that score alone, petitioners’ case does not fall under P.D. No. 1517.
At all events, P.D. No. 1517 is indisputably applicable only in specific areas declared to be located within the so-called urban zones.[25] As found by the trial court, petitioners failed to show that there was a proclamation issued by the President declaring the lot to be within the urban land reform zone, a condition sine qua non under Section 4[26] of P.D. 1517.[27]
As for Proclamation No. 1893,[28] the same covers only the Metropolitan Manila Area.
With respect to Section 28 of R.A. 7279, it covers only lands in urban areas, including existing areas for priority development, zonal improvement sites, slum improvement, resettlement sites, and other areas that may be identified by the local government units as suitable for socialized housing.[29] Petitioners have not shown, nay alleged, however, that the lot falls within the coverage of said law.
Finally, with respect to Presidential Decree No. 20,[30] the same seeks to regulate rentals of properties used for housing purposes and not for commercial use, hence, its inapplication to petitioners’ case.
Finally, with respect to the disposition of the amount consigned in court by petitioners, there being no factual basis to conclusively determine whether a portion thereof represents rentals accruing before the execution on February 25, 1993 of the lease contract between Lim and TWC and whether said lease contract remains unabrogated, the matter of determining who between TWC and Lim has the right to the consigned amount and the accrued rentals rests with the trial court.
WHEREFORE, the challenged decision of the appellate court which affirmed that of the trial court is hereby AFFIRMED with MODIFICATION in that petitioners and any occupants of the lot acting for and in their behalf are ordered to PAY any unpaid and accrued monthly rentals plus legal interest until the leased premises have been surrendered to the TWC and/or Lambert Lim.
Let the records of the case be remanded to the court of origin, Branch 2 of the Regional Trial Court of Tagbilaran City, which is directed to determine who between respondents herein has a right to the consigned amount in the sum of P176,585.00 and to any accrued and unpaid rentals to due petitioners.
Costs against petitioners.
SO ORDERED.
Panganiban, (Chairman), Sandoval-Gutierrez, and Garcia, JJ., concur.
Corona, J., on leave.
[1] Rollo at 27-36.
[2] Id. at 20-26.
[3] Id. at 22.
[4] CA Rollo at 65-66.
[5] Rollo at 23.
[6] Id. at 23-24.
[7] Id. at 71.
[8] Id. at 4.
[9] Id. at 31.
[10] Id. at 20-26.
[11] Id. at 26.
[12] Id. at 27-36.
[13] Id. at 43-44.
[14] Id. at 7-9.
[15] Art. 1669. If the lease was made for a determinate time. It ceases upon the day fixed, without the need of a demand.
[16] Rollo at 8.
[17] Paterno v. Court of Appeals, 272 SCRA 770, 778 (1997).
[18] Civil Code, Art. 1687. If the period for the lease has not been fixed, it is understood to be from year to year, if the rent agreed upon is annual; from month to month, if it is monthly; from week to week, if the rent is weekly; and from day to day, if the rent is to be paid daily. However, even though a monthly rent is paid, and no period for the lease has been set, the courts may fix a longer term for the lease after the lessee has occupied the premises for over one year. If the rent is weekly, the courts may likewise determine a longer period after the lessee has been in possession for over six months. In case of daily rent, the courts may also fix a longer period after the lessee has stayed in the place for over one month.
[19] Chua v. Court of Appeals, 242 SCRA 744, 751 (1995).
[20] Ibid.
[21] Rollo at 33.
[22] LL and Company Development and Agro-Industrial Corporation v. Huang Chao-Chun, 378 SCRA 612, 627 (2002).
[23] Civil Code, Article 1654. The lessor is obliged:
xxx
(3) To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract.
[24] P.D. 1517, Section 6. Land Tenancy in Urban Land Reform Areas. – Within the Urban Zones legitimate tenants who have resided on the land for ten years or more who have built their homes on the land and residents who have legally occupied the lands by contract, continuously for the last ten years shall not be dispossessed of the land and shall be allowed the right of first refusal to purchase the same within a reasonable time and at reasonable prices, under terms and conditions to be determines by the Urban Zone Expropriation and Land Management Committee created by Section 8 of this Decree.
[25] Delos Santos v. Court of Appeals, 368 SCRA 226, 229 (2001).
[26] P.D. 1517, Section 4. Proclamation of Urban Land Redorm Zones. – The President shall proclaim specific parcels of urban and urbanizable lands as Urban Land Reform Zones, otherwise known as Urban Zones for purposes of this Decree xxx.
[27] Rollo at 25.
[28] Proclamation No. 1893, Declaring the Entire Metropolitan Manila Area as an Urban Land Reform Zone (September 11, 1979).
[29] Banson v. Court of Appeals, 246 SCRA 42, 46 (1995).
[30] Presidential Decree No. 20, Amending Certain Provisions of Republic Act No. 6359, entitled “An Act to Regulate Rentals for the Years of Dwelling Units or of Land on which Another’s Dwelling is Located and Penalizing Violations thereof, and for Other Purposes.”
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THIRD DIVISION
[ G.R. No. 123321, March 03, 1997 ]
ROMAN CATHOLIC ARCHBISHOP OF MANILA, PETITIONER, VS. COURT OF APPEALS AND MANUEL UY & SONS, INC., RESPONDENTS.
D E C I S I O N
MELO, J.:
Before us is a petition praying for the review and consequent reversal of the decision of the Court of Appeals dated December 21, 1995, in its CA-G.R. SP Case No. 32673 which affirmed in toto that of Branch 43 of the Regional Trial Court of the National Capital Judicial Region stationed in Manila, which in-turn reversed the decision of the Metropolitan Trial Court of Manila.
The decision of the regional trial court that was affirmed by the Court of Appeals in all respects was rendered on October 28, 1993 and decreed as follows:
WHEREFORE, the judgment appealed from is hereby reversed and set aside and considering the legal and equitable considerations discussed above which has as their main thrust substantial justice and fundamental principle that no one should be unjustly enriched at the expense of another, a ten-year period is hereby fixed as the remaining life of the lease, the same to start as of the date of this decision. Each party will shoulder its own costs and expenses.
SO ORDERED.
(pp. 119-120, Rollo.)
Petitioner Roman Catholic Archbishop is the absolute owner of a parcel of land, known as Lot 3, Block 829 of the Manila Cadastre. On January 18, 1962, petitioner, as lessor, and private respondent Manuel Uy & Sons, Inc., as lessee, executed a Lease Agreement (Annex C-1, pp. 58-61, Rollo) over a portion of said lot as described in said agreement.
Among the stipulations in said agreement are that the lease shall be for 8 years from the date of the execution of the lease agreement, renewable for 2 successive 8-year periods, at the option of the private respondent, the lessee; that in view of the expenses which private respondent may incur in the ejectment of the then occupants of the premises and the demolition of their tenements, it shall be granted the right to occupy the premises free of rent until June 30, 1962, but shall pay a monthly rental of P2,000.00, starting July 1962, said rental to be paid within the first 5 days of the month it is due; that the monthly rental shall be P2,300.00, as soon as that part of the premises west of Santiago Street is delivered to the private respondent.
The lessee (private respondent) also undertook to grant the lessor (petitioner) a yearly loan of P50,000.00 for 5 consecutive years, or a total loan of P250,000.00 with interest at the rate of 8% per annum. However, the monthly rentals are to be applied to discharge the loan.
A store and office building worth P200,000.00 was to be constructed by private respondent on the property.
It was also agreed that private respondent shall pay all taxes due on the leased premises, and that upon the termination of the lease, all improvements on the leased premises shall belong to petitioner without need of reimbursing private respondent the value of such improvements.
As part also of the consideration of the Lease Agreement, private respondent Manuel Uy & Sons executed in favor of petitioner a deed of donation whereby 3 parcels of land with a total area of 536.50 square meters located at Molave Street, Manuguit Subdivision, Tondo, Manila were conveyed for free to petitioner who wanted to build a chapel there for the residents in the subdivision (RTC Decision, p. 106, Rollo).
On January 19, 1962, the Lease Agreement was amended so as to reduce its area (Ibid.)
Petitioner, claiming that the period of lease, all of its 24 years, expired on January 18, 1986, and that this notwithstanding, private respondent refused to surrender possession of the premises or to pay the rentals due thereon despite demands, addressed a letter dated November 5, 1991 to respondent Manuel Uy & Sons, demanding, inter alia, that respondent vacate the leased premises and surrender possession thereof to petitioner within 10 days from receipt thereof.
Thereafter, an exchange of correspondence between the parties followed, but still private respondent refused to vacate the subject premises.
Petitioner then filed an ejectment suit with the Metropolitan Trial Court of Manila, praying that respondent Manuel Uy & Sons, Inc. be ordered to: (1) vacate the premises subject matter of the case and to surrender possession thereof to then plaintiff; (2) pay P 10,000.00 per month as the reasonable amount of rent from January 1986 to the date of actual turn-over of the premises; and (3) pay litigation expenses and attorney's fees in the amount of P20,000.00 or in such amount as the trial court may adjudge.
Respondent Manuel Uy & Sons, as defendant, in its Answer, denied liability for the alleged reasonable amount of rent from January 1986, alleging as defense that the lease period has not yet expired, and, that, therefore, the complaint is precipitate and premature. It thus prayed that the complaint be dismissed for lack of merit and that plaintiff be ordered to reimburse then defendant the sum of P20,000.00 as and for attorney's fees.
On June 16, 1993, the Metropolitan Trial Court of Manila (Branch X), rendered Judgment finding in favor of then plaintiff Roman Catholic Archbishop of Manila and against Manuel Uy & Sons, Inc., ordering:
1) the defendant and all other occupants claiming right under him to vacate the aforesaid premises;
2) the defendant to pay plaintiff the monthly rent of P 10,000.00 to commence in January 1986 until the above premises shall have been vacated and delivered possession to plaintiff. However, the rental payments made by defendant for the period January 1986 to May 1992 to the plaintiff shall be deducted from the aggregate amount of the monthly rental of P10,000.00;
3) the defendant to pay attorney's fees in the amount of P20,000.00; and the cost of the suit; and
4) the defendant's counterclaim is hereby dismissed.
(p. 102, Rollo.)
Manuel Uy & Sons thereupon appealed, and as earlier stated, the regional trial court rendered on October 28, 1993 its reversal judgment fixing a 10-year period from said date as the remaining term of the lease contract between the parties.
Thereafter, the Court of Appeals, acting upon a petition for review, affirmed in toto the decision of the regional trial court.
Hence, the instant petition which raises the main issue of whether the regional trial court and the Court of Appeals were justified in extending the term of the lease for 10 years.
Before resolving this central issue, it is necessary for us to determine whether or not there was constructive delivery of the leased premises to private respondent by the petitioner by virtue of the parties' execution of the Lease Agreement (Annex C-1 to Petition) on January 18, 1962.
The Court of Appeals in its decision under review, quoted with approval the regional trial court that there was no delivery of the premises in question to the private respondent, to wit:
"While paragraph 3 of the 'Lease Agreement' speaks of granting 'the appellant the right to occupy the premises free of rent until June 30, 1962' and paragraph 6 thereof states that 'upon delivery of the premises to the LESSEE, the LESSEE will commence the ejectment and removal of the tenants or squatters' there was in fact neither actual nor constructive delivery of the premises to the appellant. For appellee never actually placed appellant in possession and enjoyment of the property. It merely executed the 'Lease Agreement' which, even if embodied in a public instrument, did not effect a symbolic or constructive delivery because, in the premises being then in the possession and control of squatters, as the appellee very well knew, was not within the power of the appellee to deliver. As held by our Supreme Court, if, notwithstanding the execution of the public instrument, the one to whom possession is intended to be transferred cannot have the enjoyment and material tenancy of the thing and make use of it himself or through another in his name, because such tenancy and enjoyment is opposed by the interposition of another will, the fiction yields to the reality — the delivery has not been effected (Addison v. Felix, 38 Phil. 404; Masallo v. Cesar, 39 Phil. 134)."
(pp. 126- 127, Rollo.)
Petitioner argues that at the time the Lease Agreement was executed, respondent, as lessee, was fully aware that portions of the leased premises were actually occupied by squatters; that private respondent voluntarily took upon itself the burden of ejecting the squatters, hence, petitioner was relieved of the obligation to deliver the entire leased premises to private respondent free of squatters.
Further, it is said that during the entire 24-year duration of the lease, respondent never complained of "delay" or "non-delivery" of the leased property, so respondent Court of Appeals may not invoke the matter to justify its ruling extending the lease to the year 2003.
Petitioner argues that the issue of "delay" or "non-delivery" of the premises was never raised in the Answer filed by private respondent with the metropolitan trial court, the sole and only affirmative defense asserted therein being tacita reconduccion or implied renewal of lease. Petitioner thus concludes that the regional trial court as well as the Court of Appeals to have entertained and appreciated a defense that was never pleaded constitutes grave abuse of discretion.
The Court cannot give its full concurrence to the affirmance decision of the Court of Appeals.
In the first place, in the case of Addison `. Felix cited by the regional trial court and the Court of Appeals, there was no constructive delivery of the land by the vendor to the vendee because one Villafuerte claimed ownership of the parts of the land occupied by him.
In the instant case, the tenants and squatters occupying parts of the leased premises do not claim ownership of the portions occupied by them. Besides, private respondent agreed with petitioner that it (private respondent) would assume the burden of ejecting the tenants or squatters occupying portions of the leased premises.
By the execution of the Lease Agreement, there was constructive transfer of possession of the incorporeal rights of petitioner over the leased premises to private respondent, with or without squatters who do not have claims of ownership over the portions they occupy. This is so because "constructive delivery" is a general term comprehending all those acts which, although not conferring physical possession of the thing, have been held by construction of law equivalent to acts of real delivery, as for example, the giving of the key to the house, as constructive delivery of the house from the vendor to the vendee (Banawa vs. Mirano, 97 SCRA 517 [1980]).
Indeed, one of these incorporeal rights whose possession was transferred to private respondent by virtue of the execution of the lease contract was the right to eject and remove the tenants or squatters from the leased premises.
Secondly, a lease is not a contract imposed by law, with the terms thereof also fixed by law. It is a consensual, bilateral, onerous. and commutative contract by which the owner temporarily grants the use of his property to another who undertakes to pay the rent therefor (4 Sanchez Roman, 736; Lim Si vs. Lim, 98 Phil. 868 at 870 [1956]).
Paragraph 6 of the Lease Agreement which provides that "upon delivery of the premises to the LESSEE, the LESSEE will commence the ejectment and removal of the tenants or squatters now occupying the premises and will commence demolition work of all existing improvements thereon, all expenses for ejectment and demolition to be the exclusive account of the LESSEE," was made by the parties through their mutual and voluntary consent.
This provision cannot be considered as delaying the delivery of the leased premises by petitioner for the reason that by the very words of this provision, private respondent voluntarily assumed the burden of ousting the tenants or squatters of the leased premises. This cannot be considered too burdensome on the part of private respondent either because the lease was to run for a total of 24 years, a term devised precisely because of the burden of ejecting the squatters. The presumption is that private transactions have been fair and regular (Section 4 (p), Rule 131, Revised Rules of Court).
Hence, petitioner cannot be considered to have failed in his duties under Article 1654 of the Civil Code "to deliver the thing which is the subject of the contract in such a condition as to render it fit for the use intended" and "to maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract." (Pars. 1 & 3, Art. 1654, Civil Code)
And thirdly, private respondent, even in its Answer did not raise the issue of failure of petitioner to deliver the premises in question. As aptly argued by petitioner, private respondent's sole and only affirmative defense that was asserted was tacita reconduccion or implied renewal of the lease. Hence the issue of non-delivery or delay in delivery of the premises in question was not a litigated issue in the lower court.
This Court has laid the principle that points of law, theories, issues and arguments not adequately brought to the attention of the trial court need not be, and ordinarily will not be, considered by a reviewing court as they cannot be raised for the first time on appeal (Tay Chun Suy vs. Court of Appeals, 229 SCRA 151 [1994]; Santos vs. Intermediate Appellate Court, 145 SCRA 592 [1980]).
Indeed, it is settled jurisprudence that an issue which was neither averred in the complaint nor raised during the trial in the court below cannot be raised for the first time on appeal as it would be offensive to the basic rules of fair play, justice, and due process (Gevero vs. Intermediate Appellate Court, 189 SCRA 201; 208 [1990] citing Matienzo vs. Sarvidad, 107 SCRA 276 [1981]: De la Santa vs. C.A., 140 SCRA 44 [19851; Dihiansan v. CA, 157 SCRA 434 [1987] among others).
For the Court of Appeals to sustain the regional trial court in taking cognizance of the issue of non-delivery or delayed delivery of the premises in question to private respondent, notwithstanding that this was never raised nor pleaded by private respondent, is reversible error, violative as such act is of the above principles.
Was the Court of Appeals justified in upholding the 10-year extension of the lease?
Private respondent argues that its occupancy of the leased premises even beyond the final term of the lease contract is not disputed by petitioner for no less than the petition states that the contract lapsed on January 18, 1986 and that the first demand to vacate was made only on November 5, 1991 which is approximately 5 years from the expiration of the final term of the lease agreement. After the lease expired on January 18, 1986 without petitioner demanding that the premises be vacated and without a new lease agreement having been executed by the parties, an implied new lease was established, this time without a fixed period.
In its affirmative defense set up in its Answer, private respondent justified the extension of the lease up to May, 1998 by averring that although Paragraph 3 of the contract provides for a monthly payment of rent, this was never implemented since, per agreement of the parties, private respondent actually paid an advance rental for 17-½ years as its initial payment from January 18, 1962 to June 18, 1979, when the loan of P250,000.00 with an annual 8% interest was applied for said period. From June 19, 1976 to January 18, 1986, P155,220.15 was paid for said period of 6-½ years; and on May 25, 1992, private respondent paid rentals from January 1986 to May 1992, or for a period of 6 years. Private respondent concludes that in accordance with Article 1670, in relation to Article 1687 of the Civil Code, an implied new lease was created for 6 years from May 1992 to May 1998, there being no demand to vacate made before May 25, 1992, the date of the last payment of 6 years rentals.
Upon the other hand, petitioner argues that the parties have fixed the maximum lifetime of the lease at 24 years which commenced on January 18, 1962 and expired on January 18, 1986; that the proposition of respondent that an implied lease was created for 6 years, from May 1992 to May 1998 is flawed because petitioner, in fact, made a demand on respondent to vacate the premises and to pay overdue rentals of P10,000.00 per month starting July 1979, the first demand having been made on November 5, 1991, the second demand on February 5, 1992, and the third demand on July 28, 1992; that from the language of Article 1670 of the Civil Code, an implied new lease maybe created only where (1) the continued enjoyment of the thing by the lessee is with the acquiescence of the lessor and (2) no notice to the contrary has been given by the lessor; that in the case at bar, both requisites are wanting, and because respondent had already been served with demand letters before payments made by the former the lease terminated when the demand to vacate was made.
The view that the extension of the period of the lease is improper is not well taken.
In Divino vs. Marcos (4 SCRA 186 [1962]) this Court held:
(1)We are of the opinion that the trial court was correct in applying Article 1687, in connection with Article 1197 of the New Civil Code, in this case. Article 1687 states: —
"If the period for the lease has not been fixed, it is understood to be from year to year, if the rent agreed upon is annual, from month to month, if it is monthly; from week to week, if the rent is weekly; and from day to day. if the rent is paid daily. However, even though a monthly rent is paid, and no period for the lease has not been set, the courts may fix a longer term for the lease after the lessee has occupied the premises for over one year. If the rent is weekly, the court may likewise determine a longer period after the lessee has been in possession for over six months. In the case of daily rent, the court may also fix a longer period after the lessee has stayed in the place for over one month. "
Commenting on the quoted article this Court has said: —
". . . the power of the court to 'fix longer term for lease' is p[R]otestative or discretionary — 'may' is the word — to be exercised or not in accordance with the particular circumstances of the case; a longer term to be granted where equities come into play demanding extension, to be denied where none appear, always with due deference to the parties' freedom to contract. . . ." (Acasio v. Corp. de los PP Dominicas de Filipinas, G.R. No. L-9428, Dec. 21, 1956.)
This Court then concluded:
The lot in question has been rented to the petitioner for about 20 years and his predecessors in interest for more. Even though rentals had been paid monthly, still no period for the duration of the lease had been set. The lease had been consistently and tacitly renewed (tacita reconduccion) until the ejectment case was filed (Co Tiam vs. Diaz, 75 Phil. 672; Villanueva vs. Canlas, 77 Phil. 381; Art. 1670, N.C.C.; Art. 1566, old Civil Code). Having made substantial or additional improvements on the lot, and considering the difficulty of looking for another place to which petitioner could transfer such improvements, and the length of his occupancy of the lot (since 1936), and the impression acquired by him that he could stay on the premises, as long as he could pay the rentals, it would seem that there exists just grounds for granting the extension of lease and that the extension of two years granted by the trial court, is both fair and equitable."
(pp. 189-190.)
The above ruling applies to the case at bar. An extension of the term of the lease is justified but not to the extent granted by the regional trial court and the Court of Appeals.
After the lease agreement expired on January 18, 1986, petitioner did not make a demand on private respondent to vacate the leased premises and because no new lease agreement was executed by the parties, an implied lease was established without a fixed period. The demands were only made, first on November, 1991, the second in February, 1992, and the last in July 28, 1992. Before the last demand, private respondent had already paid on May 25, 1992 the rentals for January 1986 to May 1992.
In the case at bar also, the Court of Appeals and the Regional Trial Court found facts and circumstances to justify an extension of the lease on equitable grounds, such as:
. . . it [petitioner] received the P550,000.00 loan from the appellant; it enjoyed the use of the apartment in the premises far its Parish School in Paco; and it also enjoyed the right to collect the rentals from the lessees of portion of the property whose leases the appellant was required to respect under the lease agreement; it enjoyed the right to apply the interests and the principal of the P250,000.00 loan to the rentals due or supposed to be due from the appellant under the lease agreement; and it was freed from the burden of paying all the taxes and assessments on the leased premises, as well as the water, electricity, guard and garbage fees and the telephone and other expenses and services needed in the leased premises. It will also enjoy the benefit of coming, upon the termination of the lease, all improvements constructed or introduced by the appellant on the leased premises without any obligation to reimburse the appellant the value thereof.
(p. 130, Rollo.)
We may add that it was not until 1992 when private respondent finally recovered the whole area subject of the lease, and so it was only then that private respondent was able to enjoy possession and use of the whole area. This was after the lapse of more than 30 years, long after the stipulated expiration of the 24-year period.
However, this Court does not agree with the extension of the lease for another 10 years or until 2003 granted by the Court of Appeals and the Regional Trial Court. It is more in keeping with equity, fairness, and justice if the extension be only up to May 1998, as prayed for by private respondent. It is thus presumed that by this time, private respondent, having enjoyed the possession and use of the whole area leased to it for 6 years from 1992, it would have recoped whatever expenses it has incurred in regard the premises in question. This presumption is based on private respondent's own prayer that the extension be until May 1998.
WHEREFORE, as MODIFIED, in the sense that the lease period is extended only up to May 31, 1998, as prayed for by private respondent, the decision of the Court of Appeals under review is hereby AFFIRMED.
SO ORDERED.
Narvasa, C.J. (Chairman), Davide, Jr., and Panganiban, JJ., concur.
Francisco, J., dissents.
Dissenting Opinion
FRANCISCO, J.:
I concur with the ponencia of my esteemed colleague, Mr. Justice Melo, in so far as it affirmed the Court of Appeals decision to extend the lease contract between the parties on equitable grounds. I feel, however, that the 10-year lease period extended by both the Regional Trial Court and the Court of Appeals should not be reduced any further.
It is uncontroverted that private respondent lessee took at least 30 long years to evict the squatters spread over the lessor's subject property. This arduous task which the lessee undertook spared the lessor not only an immense amount of money, but also the long agonizing court battles. The lessee never enjoyed full possession of the leased property until 1992 or six (6) years after the expiration of the Lease Agreement. This, coupled with the substantial or additional improvements on the subject property which the lessor will acquire at the termination of the lease without any obligation on its part to reimburse the lessee of the value thereof, and the burden of paying all the taxes and assessments on the leased property which the lessee unselfishly shouldered, to my mind, are just grounds to extend the lease contract until 2003. The extension of 10 years granted by both the Regional Trial Court and the Court of Appeals, in my view, is more in accord with justice and equity as both parties are afforded the full benefits of the lease contract they executed.
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FIRST DIVISION
[ G.R. No. 143675, June 09, 2003 ]
SPOUSES ROMEO GUDA AND EMILY GUDA, PETITIONERS, VS. ALAN A. LEYNES AND SPOUSES MANUEL C. PERALTA AND HAYDEE L. PERALTA, RESPONDENTS.
D E C I S I O N
VITUG, J.:
Respondent-spouses Manuel and Haydee Peralta were the owners of a residential house and lot located at 626 Eduardo Quintos Street, Sampaloc, Manila. On 08 May 1987, they leased the property over to petitioners, the spouses Romeo and Emily Guda, for a monthly rental of two thousand pesos. The contract of lease stipulated a term of one year and that, thereafter, unless terminated by notice to that effect at least thirty days before the expiration date, the agreement would be deemed renewed on a month-to-month basis. Specifically, the agreement provided:
1. This lease agreement shall be for a period of one (1) year commencing on May 15, 1987 up to and until May 14, 1988, it may thereafter be renewed subject to LESSORS discretion, provided however, that if LESSORS do not exercise their right to terminate this lease at least thirty (30) days before the said expiration date, this agreement shall be deemed renewed on a monthly basis."[1]
And in —
"x x x the event the Lessors shall desire to sell the leased premises, the LESSEES shall be given the first option to buy the said premises, if they could meet the desired price of the LESSORS, otherwise, the LESSEES shall vacate the leased premises within thirty (30) days upon notice given to them by the new owner.[2]
Upon the expiration of the agreement on 14 May 1988, petitioners continued to occupy the premises and to pay rent. Close to three years later, or on 01 May 1991, the Peraltas sold the property to Alan A. Leynes, a brother of Haydee Peralta, herein spouses' co-respondent. Insisting on exercising their "option to buy" under the contract of lease and contending that the sale to Leynes was void, petitioners refused to vacate the premises. Respondent Alan C. Leynes was thereupon prompted to file a civil case for ejectment before the Municipal Trial Court of Manila. The trial court ruled in favor of Leynes. Aggrieved, the Guda spouses filed Civil Case No. 91-58154 before the Regional Trial Court of Manila, Branch 33, for the annulment of the sale to Leynes and for specific performance pursuant to the option to buy provision of the contract of lease with the Peralta spouses. The trial court ruled in favor of the plaintiffs, declaring the sale of the property to Alan A. Leynes void and ordering the conveyance of the premises to the plaintiffs.
On appeal to it, the Court of Appeals, in its judgment of 13 June 2000, reversed the decision of the trial court.
In their instant petition, the spouses Guda would contend that when the lessors did not give notice to terminate the contract of lease thirty days at least before its expiration date and instead allowed the lessees to occupy the premises, all the terms thereof, including the provision granting them the first option to buy the leased premises, were automatically revived and that, accordingly, the sale of the property to Leynes without giving them the opportunity to exercise the option made the sale void.
The Court of Appeals responded well to the above issue; speaking through Mr. Justice Martin S. Villarama, Jr., the appellate court expounded:
"It must be clarified that even if the Contract of Lease was renewed upon the failure of the defendants Manuel and Haydee Peralta to exercise their right to terminate the lease within the period of thirty (30) days prior to the expiration date, May 14, 1988, such renewal was clearly qualified to be on a `monthly basis.' This means that the lease was converted into a `month-to-month' lease, expiring at the end of each month and renewable also every month. Otherwise, there is no definite period for the contract of lease after such expiration date. Thus it has been ruled in a number of cases that a lease on a month-to-month basis is, under Art. 1687 of the Civil Code, a lease with a definite period, upon the expiration of which upon demand by the lessor on the lessee to vacate, the ejectment of the lessee may be ordered. (Labastida vs. Court of Appeals, 287 SCRA 662; De Vera vs. Court of Appeals, 260 SCRA 396.) Clearly, such lease is deemed to expire at the end of the month upon notice to vacate addressed by the lessor to the lessee. (Paterno vs. Court of Appeals, 272 SCRA 770.)"[3]
The contract of lease allowed the lessees to continue with their occupancy of the leased premises on a month-to-month basis after its termination on 14 May 1988 if no notice of such termination were given by the lessor at least thirty days before the expiry date. The renewal clause is valid but the contract itself is not deemed renewed until after notice or positive act is made to indicate its exercise by the parties. Meanwhile, the juridical relation between the parties, constrained by the continued enjoyment of the leased premises, is one of an implied lease based on the principle of tacita reconduccion. Article 1670 of the Civil Code is thus apropos; it provides:
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 terms of the original contract that are carried over to the implied new lease, as so aptly ruled in Dizon vs. Magsaysay,[4] cover only those terms that are germane to the lessees' enjoyment of the premises, such as the rent and terms of payment, a dictum that has been reiterated in Dizon vs. Court of Appeals[5] thusly:
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.[6]
Quite significantly, the option granted to petitioners would appear to have, in fact, been abrogated when the 1987 contract of lease was ultimately superseded by an agreement executed on 22 April 1991. The Court of Appeals found and elaborated:
"We cannot sustain plaintiffs-appellees' theory upon the evidence on record showing that the terms and conditions of the Contract of Lease dated May 8, 1987 were not even fully complied with and respected by the plaintiffs-appellees as lessees. The evidence tends to show that plaintiffs-appellees were not residing on the leased apartment but in another place which is their dress shop located at the same street which further gave credence to defendants-appellants' claim that the plaintiffs-appellees had converted the leased apartment into a boarding house, in violation of the provisions of the Contract of Lease. But what is significant is a subsequent written agreement signed by plaintiff-appellee Emily Guda on April 22, 1991 showing that the stipulated rental of P2,000.00 provided in the Contract of Lease was not complied with because as of May 1, 1991, the lessees were paying a monthly rental of only P1,500.00 for which reason they executed said new agreement providing for an increased rental of P1,800.00 starting June 1, 1991. Plaintiff-appellee Emily Guda likewise agreed therein that in case the property is sold, they will have to vacate the premises after a month's notice. (Exhibit `5-PI' for Defendant Leynes) Such is a clear indication that for all intents and purposes, the parties at that time no longer considered the Contract of Lease dated May 8, 1987 as still in force and subsisting. The fact that it was plaintiff-appellee Emily Guda who alone signed this agreement is of no moment because the latter and her husband, plaintiff-appellee Romeo Guda, had accepted benefits under this new lease agreement, in the form of a lower monthly rental than the P2,000.00 stipulated in the previous Contract of Lease. Besides, said new agreement merely reiterated the fact that the lease is on a month-to-month basis, after the expiration of the term provided under the Contract of Lease dated May 8, 1987.
"The written agreement dated April 22, 1991 is a new lease agreement and not a renewal of the original Contract of Lease between the parties. It is also a clear evidence of plaintiffs-appellees' knowledge about the expected sale of the property to a third party. Indeed, plaintiffs-appellees cannot close their eyes to the fact that their extended stay in the premises was allowed by the lessors with the understanding that they shall vacate the premises within a month's notice upon its sale to a third party. Plaintiff-appellee Emily Guda who was actually the one who always dealt with defendant-appellant Haydee Peralta, expressed her understanding and agreement to the lessors' desire to sell the property to Haydee Peralta's sibling in a letter written shortly after their agreement of April 22, 1991, as follows:
"`Nahihiya na akong ukupahin ko pa ang apartment ninyo isasauli ko na lang . . .
`Naintindihan ko naman ang paliwanag mo. Isa pa kapatid mo sila na gostong kumuha. Siguro kung ibang tao puwede pa ako magreklamo e kapatid mo sila yes na lang ako.
`Mare, papuntahin mo na lang ang kapatid mo para magkausap kami tungkol sa pagsauli ko sa apartment.
`x x x' (Exhibit `6-PI' for Defendant Leynes)
"When confronted in court by her declarations in the above-cited letter, plaintiff-appellee Emily Guda merely stated that her letter was meant to inform the defendant-appellant Haydee Peralta to send her sibling so they can talk about the sale of the property to plaintiffs-appellees. (TSN, August 14, 1991, pp. 63-65.) The clear and unmistakable terms of her letter, however, indicated the contrary as plaintiff-appellee Emily Guda therein acknowledged, understood and accepted the fact that the first option to buy, or rather, the right of first refusal granted to them under the Contract of Sale, is no longer subsisting or in force at the time when she and Haydee Peralta earlier agreed in writing for a new extended lease made subject to the condition that once the property is sold to another, they will have [to] vacate the premises within one (1) month's notice.
"With the Contract of Lease dated May 8, 1987 having been validly terminated and superseded by a new written agreement dated April 22, 1991 which also reiterated a month-to-month lease in force between the parties, the trial court thus erred in declaring that defendants-appellants Manuel and Haydee Peralta violated the provisions of the Contract of Lease in selling the leased property to defendant-appellant Alan A. Leynes."[7]
All considered, the Court finds no sufficient justification to reverse the holding of the appellate court.
WHEREFORE, the assailed decision of the Court of Appeals is AFFIRMED. No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.
[1] Rollo, p. 17.
[2] Rollo, p. 86.
[3] Rollo, pp. 17-18.
[4] 57 SCRA 250.
[5] 302 SCRA 288.
[6] At. p. 301.
[7] Rollo, pp. 18-19.
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FIRST DIVISION
[ G.R. No. 87415, January 23, 1992 ]
YEK SENG CO., PETITIONER, VS. THE HONORABLE COURT OF APPEALS, DEWEY VELOSO YAP, AND DAVID T. VELOSO YAP, RESPONDENTS.
D E C I S I O N
CRUZ, J.:
The simple question raised in the case at bar could have been definitely resolved on the lowest level of the judiciary and did not have to reach the highest tribunal. If we have given the petition due course, it was only for the purpose of settling it once and for all and avoiding future needless impositions on the time of this Court.
The subject of the petition is a verbal contract of lease over a portion of a building belonging to the private respondents and occupied by the petitioner as lessee. It is situated on Ylaya Street in Manila. The leased premises have been used by the petitioner for its general merchandise business for more than twenty years. The agreed monthly rental was P3,000.00.
On December 12, 1985, the lessors notified the petitioner that they were terminating the lease as they intended to renovate the building and thereafter use it themselves. The petitioner refused to vacate. The private respondents then filed a complaint for ejectment against the petitioner in the Municipal Trial Court of Manila on January 22, 1986. For its part, the petitioner filed a petition for consignation of the monthly rentals which it claimed had been refused by the lessors.
In his decision dated July 2, 1987,[1] Judge Tirso C. Briones disposed thus:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant, ordering the latter and all persons claiming rights under it, to vacate the premises specifically described in the amended complaint; to pay plaintiffs the sum of P3,000.00 as rental for the reasonable use and occupancy of the premises commencing January, 1986 and monthly thereafter, until the same shall have been finally surrendered to the plaintiffs, less whatever payments that may have been made during the pendency of the case; the sum of P10,000.00 as and for attorney's fees plus costs of suit.
The petition for consignation is hereby denied for lack of merit.
This decision was affirmed by the Regional Trial Court of Manila,[2] which was in turn sustained by the Court of Appeals.[3] In this petition for review on certiorari, the principal submission is that the courts below erred in not giving the petitioner an extension of its lease in accordance with Article 1687 of the Civil Code.
This article provides as follows:
Art. 1687. If the period for the lease has not been fixed, it is understood to be from year to year, if the rent agreed upon is annual; from month to month, if it is monthly; from week to week; if the rent is weekly; and from day to day, if the rent is to be paid daily. However, even though a monthly rent is paid, and no period for the lease has been set, the courts may fix a longer term for the lease after the lessee has occupied the premises for over one year. If the rent is weekly, the courts may likewise determine a longer period after the lessee has been in possession for over six months. In case of daily rent, the courts may also fix a longer period after the lessee has stayed in the place for over one month.
In support of its position, the petitioner cites the cases of Araneta v. De Mesa, 35 SCRA 137, and Divino v. Marcos, 4 SCRA 186.
The Court can only wonder why the petitioner has invoked the first case at all as it is clearly inapplicable. A little study would have readily revealed this. The appeal was dismissed in that case simply because the question raised had already become moot and academic; no ruling was made on the merits.
In the second case, the Court upheld the extension of the lease because of the peculiar circumstances involved, as related thus by the trial court:
When the plaintiff's petition was called for hearing, the parties agreed that judgment be rendered on the pleadings in connection with such petition. According to the pleadings, there is no controversy that plaintiff has been occupying the lot in question since May 7, 1936, when he purchased from one Antonio Castro the house constructed thereon. It also appears that plaintiff was assured by the defendants that the house bought would remain thereon as long as plaintiff continues paying his rents. It further appears that on March 19, 1947, plaintiff constructed an addition to the house with the knowledge and consent of the defendants. Said addition cost the plaintiff the amount of P20,000.00.
There is no written agreement as to the duration of the lease between plaintiff and defendants. The fact remains that plaintiff entered the premises with the knowledge and consent of the defendants and with the assurance of the latter that the plaintiff could remain occupying the lot as long as he pays the corresponding rents.
Sustaining this finding, this Court made the following additional observations:
The lot in question has been rented to the petitioner for about 20 years and his predecessor in interest for more. Even though rentals had been paid monthly, still no period for the duration of the lease had been set. The lease had been consistently and tacitly renewed ("tacita reconduccion") until the ejectment case was filed (Co Tiam v. Diaz, 75 Phil. 672; Villanueva v. Canlas, 77 Phil. 381; Art. 1670, N.C.C.; Art. 1566, Old Civil Code). Having made substantial or additional improvements on the lot, and considering the difficulty of looking for another place to which petitioner could transfer such improvements, and the length of his occupancy of the lot (since 1936), and the impression acquired by him that he could stay on the premises, as long as he could pay the rentals, it would seem that there exists just grounds for granting the extension of lease and that the extension of two years granted by the trial court, is both fair and equitable.
It was considered important in that case that: 1) the plaintiff had been occupying the leased premises for more than twenty years; 2) he was assured by the defendants that he could remain in the house as long as he continued paying the rentals; and 3) he made improvements on the house costing P20,000.00 with the consent of the defendants. The petitioner in the case at bar has not pointed to similar circumstances other than the claim that it has been occupying the subject premises for more than twenty years. On this point, Judge Roberto M. Lagman of the Regional Trial Court correctly held:
On the second issue, the Court noted that the parties did not submit any evidence on the basis of the stipulation of the facts earlier narrated. Thus, there is nothing in the record which would show any fact or circumstance which justifies the extension of the lease. The mere occupancy of the premises for a number of years, by itself is not sufficient.
The circumstance that the petitioner has paid its rentals religiously during the past twenty years is also not sufficient to justify the extension it demands. Neither are the substantial improvements it allegedly made on the leased premises nor the difficulty of finding another place of business, on which it has not submitted any evidence at all. The Court makes the wry observation that the petitioner has only itself to blame if, being engaged in business, it did not take the necessary precautions against its possible and even abrupt displacement because of the termination of the month-to-month lease. As for the argument that the private respondents had not yet secured a building permit for the alleged intended renovation, it is obviously no argument at all and deserves no further comment.
In the view of the Court, the applicable case is Cruz v. Intermediate Appellate Court,[4] where it was held:
Ricardo Cruz further maintains that the lease contract with Roman Legarda So is one with an indefinite period, no specific term having been agreed upon by the parties, hence the court can legally fix a longer term. He invokes the second sentence of Article 1687 of the Civil Code which states that even though a monthly rental is paid, and no period for the lease has been set, the courts may fix a longer term for the lease after the lessee has occupied the premises for over one year.
We reject such proposition.
As earlier stated, the contract of Ricardo Cruz, being on a month-to-month basis, is a lease with a definite period. Since the contract of lease is for a definite term, the lessee cannot avail of the benefits under Article 1687 which applies only if there is no definite term. And, even assuming arguendo that Article 1687 applies, Ricardo Cruz would still not be entitled to have the term fixed for a longer period since his action was filed only after the contract had expired.
As held in Vda. de Prieto vs. Santos, et al. (98 Phil. 509[1956]):
"Under this provision, if the period of a lease contract has not been specified by the parties therein, it is understood to be from month to month, if the rent agreed upon is monthly, as in the cases at bar. Consequently, the contract expires at the end of such month, unless, prior thereto, the extension of said term has been sought by appropriate action and judgment is, eventually, rendered therein granting said relief.
"Defendants herein maintain that their lease contracts did not, and could not, come to an end until after the court has fixed its lifetime and the term thus fixed has expired. This view, is, to our mind, untenable. To begin with, defendants assume that their contracts are without term, prior to the judicial action authorized in said Article 1687, whereas the same provides that the duration of lease contracts shall be yearly, monthly, weekly, or daily depending upon whether the rental agreed upon is annual, monthly, weekly, or daily. In other words, said contracts have a term fixed by law, and are not indefinite in duration, before said judicial intervention. Secondly, said Article 1687 merely gives the court discretion to extend the period of the lease. The court is not bound to extend said term. It may legally refuse to do so, if the circumstances surrounding the case warrants such action. x x x" (Emphasis reproduced)
Conformably, we hold that as the rental in the case at bar was paid monthly and the term had not been expressly agreed upon, the lease was understood under Article 1687 to be terminable from month to month. At the time the petitioner was asked to vacate the leased premises, the lease contract had already expired and therefore, following the above-quoted decisions, could no longer be extended. In fact, even if such contract had not yet expired, its extension would still be subject to the sound discretion of the court and was by no means obligatory upon it as a merely ministerial duty.
To quote again from the decision of the Regional Trial Court:
As correctly cited by the plaintiffs, "The power of the Courts to fix a longer term for lease is protestative or discretionary, ‘may’ is the word -- to be exercised or not in accordance with the particular circumstances of the case; a longer term to be granted where equities come into play demanding extension, to be denied where none appears, always with due deference to the parties freedom to contract." (Divino v. Marcos, January 31, 1962, 4 SCRA 186.) Moreover, the lease had already expired when the extension was sought. In the case of Prieto v. Santos, 98 Phil. 509 cited in Alegre v. Laperal, 22 SCRA 934, it was held that "an extension of the lease may be sought by the tenant before, not after the termination of the lease." At any rate, whatever extension the defendant may be entitled to has already been dissipated by the length of time -- 2 years -- that this case has been pending.
The petitioner also contends that it was denied its day in court when judgment was rendered against it without the benefit of a trial on the merits. This posture is likewise unacceptable. Contrary to its submission, the case was not decided by Summary Procedure but in accordance with Rule 20, Section 3, and Rule 30, Section 2, of the Rules of Court. There was no trial on the merits because, as the record will show, the petitioner's counsel agreed to submit the case for decision on the basis of the stipulations of the parties at the pre-trial conference. Judgment was rendered on that basis.
It must be added that even if there was indeed no trial before the Municipal Trial Court, the petitioner was heard nonetheless when it appealed to the Regional Trial Court; when it filed its motion for reconsideration of the decision; and when it appealed to the respondent court. The petitioner cannot pretend that it was unable to fully argue its case before that court, for the fact is that it did so, not only in its brief but also when it filed a motion for reconsideration of its decision and also a motion for a hearing on that motion.
The respondent court did not err in sustaining the award of attorney's fees in the sum of P10,000.00, taking into account the fact that the petitioner unreasonably resisted the private respondent's demand to vacate the property following the termination of their lease contract. The petitioner's intransigence made it necessary for the latter to litigate for the enforcement of their just and valid claim and thus incur the expenses that must now be justly charged to it.
Judge Lagman acutely observed that the petitioner had already enjoyed a de facto extension of two years during the period the ejectment case was pending, first before the Municipal Trial Court and then before his court. We note with disapproval that by appealing to the Court of Appeals and later to this Court, the petitioner gained another extension of more than three years, for a total of almost six years from the time the amended complaint was filed on June 17, 1986.
It is an economic fact that construction costs rose considerably during that period, thus increasing the expenses of the renovation intended by the private respondents. Such increase could have been also awarded against the petitioner as part of the actual damages of the private respondents except that no evidence of this has been presented.
Many lessees are able to defer their deserved ejectment through the simple expedient of appealing their lost cause all the way up to even this Court. This transparent gambit is all-too-familiar. The delay entailed in deciding these appeals is usually unavoidable because the courts of justice are saddled by a heavy load of cases and cannot dispose of them as fast as might be desired. It is common knowledge of this difficulty that has encouraged the filing of groundless appeals by "clever" lawyers who know from the start that they are doomed to fail.
Counsel are admonished against abusing the judicial process by lodging appeals intended merely to unduly prolong a case and so "buy time" for their clients. In the future, this Court will take a sterner view of such tactics and impose severe sanctions upon lawyers who, for money or malice, would cynically frustrate the ends of the law and the speedy administration of justice by deliberately delaying the final disposition of their hopeless cases. Atty. Ismael M. Estella, the petitioner's counsel, is particularly enjoined to take serious heed of this warning.
WHEREFORE, the petition is DENIED and the appealed decision AFFIRMED in toto, with triple costs against the petitioner.
SO ORDERED.
Narvasa, C.J., Griño-Aquino, and Medialdea, JJ., concur.
[1] Rollo, p. 43.
[2] Through Judge Roberto M. Lagman.
[3] Penned by Justice Emeterio C. Cui, with Javellana and Elbiñas, JJ., concurring.
[4] 180 SCRA 702.
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FIRST DIVISION
[ G.R. No. L-72870, February 23, 1988 ]
TEODORO R. PULIDO, PETITIONER, VS. THE HON. MANUEL M. LAZARO, IN HIS CAPACITY AS PRESIDENTIAL ASSISTANT FOR LEGAL AFFAIRS, OFFICE OF THE PRESIDENT, THE HON. GERONIMO Z. VELASCO, ETC., ET AL., RESPONDENTS.
D E C I S I O N
CRUZ, J.:
In 1967, respondent Pilipinas Shell Corporation (Shell) subleased to petitioner Teodoro Pulido a gasoline station in Quezon City which he was later issued a certificate to operate by respondent Bureau of Energy Utilization (BEU).[1]
In 1976, Pulido authorized private respondent Virgilio Rosal to operate and manage the station in consideration of the monthly amount of P2,000.00 he would pay to the former.[2] Later, Pulido sold to Rosal all his rights in the station and his equipment therein for the stipulated sum of P50,000.00. On that same day, Pulido executed a special power of attorney authorizing Rosal to administer and operate the said station.[3]
The petitioner thereafter revoked this authorization on the ground that Rosal was selling diluted gasoline.[4] He demanded the return to him of the station but Rosal ignored him. Pulido then sued Rosal for unlawful detainer. The city court dismissed the complaint, holding that there was no lease relationship between the parties and in effect affirming the deed of sale executed by them earlier.[5] This decision was not appealed.
On September 20, 1979, Shell filed with the BEU an application for authority to replace Pulido with Rosal as the authorized dealer of the station. In support of this application, Shell submitted inter alia a copy of the decision of the city court in the ejectment case.[6] After provisionally permitting Rosal to continue as dealer, BEU finally granted the application on April 7, 1980.[7]
Claiming that he was informed of the authorization in favor of Rosal only on May 28, 1980, Pulido challenged the same on the ground of due process.[8] Rosal and Shell were required by BEU to answer Pulido’s complaint.[9] Meanwhile, the petitioner manifested in writing that he was waiving all claims for damages against Shell in connection with the change of dealership.[10]
The BEU, after hearing, dismissed Pulido’s complaint on the ground, among others, of res judicata,[11] but its decision was on appeal reversed by the Minister of Energy.[12] The Minister was, however, himself reversed by the Office of the President, through respondent Manuel M. Lazaro,[13] Pulido then came to this Court to challenge the order of April 24, 1985, reinstating the BEU decision.
Our ruling shall be brief.
Pulido cannot claim to still be the authorized dealer because his dealership contract with Shell expired long ago, much earlier than the contract of Shell with Rosal. Rosal’s contract would itself have expired on April 6, 1985,[14] but it did not because the parties impliedly continued it under the original terms and conditions. There was tacita reconduccion under Article 1670 of the Civil Code. Pulido does not point to any provision in his own contract calling for its automatic renewal or extension.
Moreover, he had sold his rights thereunder to Rosal. And when this sale was affirmed by the city court in the ejectment suit, he did not appeal. Right or wrong, that judgment can no longer be impugned by Pulido at this late hour. He is bound by it regardless of whether or not res judicata is applicable.
Pulido's claim of denial of due process must also be rejected. It is not true that he was not given a chance to be heard. On the contrary, he had many opportunities to argue his case, as pointed out by the Solicitor General.
Thus, he filed with the BEU his letter-complaint[15] and then a motion for reconsideration.[16] He appealed to the Minister of Energy[17] and then filed his opposition to the motion for reconsideration.[18] In the Office of the President, he first moved to dismiss Rosal’s appeal[19] and then moved for reconsideration of Lazaro’s decision.[20] In all of these instances, he certainly was afforded adequate hearing.
The Court notes that after the exchange of arguments among the parties, the petitioner asked for an opportunity to file a reply but in the end manifested that he would no longer do so.[21] He did not state any reason. Perhaps he has been convinced by the respondent's comments and has decided finally to yield in good grace.
WHEREFORE, the petition is DISMISSED, with costs against the petitioner.
SO ORDERED.
Teehankee, C.J., Narvasa, Gancayco, and Grino-Aquino, JJ., concur.
[1] Rollo, p. 25.
[2] IbId.
[3] Id.
[4] Id.
[5] Id., p. 26.
[6] Id.
[7] Id.
[8] Id., pp. 63-65.
[9] Id., p. 27.
[10] Id., pp. 66-67.
[11] Id., pp. 42-48.
[12] Id., pp. 32-41.
[13] Id., pp. 25-29.
[14] Id., pp. 30, 228-230.
[15] Id., pp. 63-65.
[16] Id., pp. 69-79.
[17] Id., pp. 80-100.
[18] Id., pp. 111-115.
[19] Id., pp. 173-182.
[20] Id., pp. 194-206.
[21] Id., pp. 272 & 274.
Source: Supreme Court E-Library | Date created: January 20, 2010
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SECOND DIVISION
[ G.R. No. 140249, March 06, 2001 ]
DANILO S. YAP, PETITIONER, VS. COURT OF APPEALS, ALEJANDRO DY JUANCO, UNIVERSAL MILL SUPPLY CO. INC. AND BEE QUEEN RESTAURANT, INC., RESPONDENTS.
G.R. NO. 140363
MARTINEZ LEYBA, INC., PETITIONER, VS. COURT OF APPEALS, ALENJANDRO DY JUANCO, UNIVERSAL MILL SUPPLY CO. INC. AND BEE QUEEN RESTAURANT, INC., RESPONDENTS.
D E C I S I O N
BELLOSILLO, J.:
PETITIONER MARTINEZ LEYBA, INC. (MLI) in G.R. No. 140363 owns a two-storey commercial building in 727-729 Evangelista St., Quiapo, Manila. In 1960 MLI leased the building to private respondent Alejandro Dy Juanco, as owner of Universal Mill Supply, a single proprietorship. Rentals were subsequently paid on a monthly basis but no lease contract between lessor and lessee was reduced to writing. On 11 June 1969 Universal Mill Supply was incorporated and became the now respondent Universal Mill Supply Co. Inc. in both G.R. Nos. 140249 and 140363, with Alejandro Dy Juanco owning the majority of the stocks in the corporation. Payments for rentals on the property were made with checks issued by Universal Mill Supply Co. Inc. (UNIVERSAL MILL).
On 19 August 1978 private respondent Bee Queen Restaurant (BEE QUEEN) was incorporated with Alejandro Dy Juanco also as the majority stockholder. BEE QUEEN then occupied the leased premises and paid the monthly rentals.
On 3 November 1986 petitioner Danilo S. Yap and BEE QUEEN entered into a "Contract of Lease/Sublease" where BEE QUEEN subleased to petitioner Yap the first floor and the mezzanine of the building. The sublease was for five (5) years, from 1 January 1986 to 31 December 1990. The contract provided, "Should LESSOR (Bee Queen)'s agreement be terminated by the owner before the expiration of this lease agreement, the duration of this agreement shall be co-terminus with LESSOR's rights as a lessee." Yap then opened Kouros Restaurant on the property.
On 23 October 1990 MLI sent a letter to Dy Juanco terminating their lease contract effective 5 November 1990 because Dy Juanco and UNIVERSAL MILL were no longer occupying the premises and that they had subleased the same to Yap. Dy Juanco and UNIVERSAL MILL did not act on the letter, insisting that they still occupied the second floor of the building and that there was no prohibition against subleasing. On 16 November 1990 Yap informed Dy Juanco that he had deposited in court the monthly rentals for November and December 1990.
On 13 December 1990 BEE QUEEN sent a letter to Yap reminding him that the sublease contract was to expire on 31 December 1990, and demanding that Yap vacate the premises immediately after the close of business hours on that date, and to pay within five (5) days from receipt thereof all unpaid rentals totalling P29,000.00 and the stipulated additional charges for delay.
On 22 December 1990 Yap then entered into a Lease Contract directly with MLI over the same premises, and from then on paid the monthly rentals directly to MLI.
On 16 May 1991 BEE QUEEN filed with the Regional Trial Court of Manila[1] a Complaint against petitioners Danilo Yap and MLI praying for the court to fix a period of lease, to declare the lease contract between Yap and MLI null and void, and for damages. According to BEE QUEEN, Yap and MLI conspired to execute the lease contract without the knowledge of BEE QUEEN and to dispossess the latter of the subject property. Furthermore, it alleged that since the 1960 contract between Dy Juanco and MLI was one without a period, it could therefore invoke the power of the court to fix a period for the lease under Art. 1687 of the New Civil Code.
MLI, on the other hand, asserted that it had always as a matter of practice prohibited its lessees from subleasing its properties, and that the act of Dy Juanco in subleasing the property constituted abandonment which justified MLI in terminating their oral contract. It claimed that it did not consent to the sublease and, in fact, did not have any dealings with BEE QUEEN until the case was filed.
At the hearing, Alejandro Dy Juanco, plaintiff in the trial court, testifying in his own behalf, asserted that he entered into a verbal contract of lease over the subject property in 1960 and that it was impossible for MLI not to have known about the sublease since collectors were sent every month to collect rent.
Defendant Danilo S. Yap, testifying for himself, said that he entered into the sublease contract with plaintiff Alejandro Dy Juanco; that upon learning that Dy Juanco's lease contract with MLI had expired, he entered into a lease contract directly with MLI and deposited the rentals with the court and that, to his knowledge, neither BEE QUEEN nor Dy Juanco used the premises when Yap was subleasing it. Nestor Quesada, the Building Adminstrator of MLI, asserted that he did not know of any agreement with the BEE QUEEN and that, as far as the building management was concerned, the building was leased to UNIVERSAL MILL represented by Dy Juanco who never informed the management about the sublease to Yap.
On 28 November 1995 the trial court rendered a decision dismissing the case for lack of merit holding that -
x x x x The lease contract is not one with an indefinite period, there having been a specific term agreed upon by the parties, hence, the Court cannot legally fix a longer term under Article 1687 of the Civil Code. It expires after the last day and repeats the same cycle every 30th period until either party expresses his prerogative under their agreement to terminate the same. Since the lease is for a definite term, the lessee cannot avail of the benefits under Article 1687 which applies only if there is no definite term. In the instant case, the defendant Martinez Leyba has expressed his (sic) option to terminate the lease by sending a notice and since the same is on a month to month basis which is a lease with a definite period, the same could be terminated and Article 1687 does not apply.[2]
On appeal, the Court of Appeals set aside the lower court's decision and extended the lease contract between Alejandro Dy Juanco and MLI for a period of three (3) years from finality of the decision under such reasonable terms and conditions as might be agreed upon by the parties. Martinez Leyba, Inc., and Danilo S. Yap filed separate petitions for review under Rule 45 of the 1997 Revised Rules of Civil Procedure. The two (2) cases were consolidated since both arose from a common set of facts and raised similar issues.
Petitioner MLI assails the extension of the lease contract despite its assertion that there is no contractual relationship between MLI on one hand and BEE QUEEN and UNIVERSAL MILL on the other. Nestor Quesada denied knowing BEE QUEEN and UNIVERSAL MILL until they filed the complaint. Therefore, "it was error for the Appeals Court to grant extension of the lease contract because there is no such lease contract between petitioner MLI and the respondents to speak of in the first place."
MLI also maintains that it never assented to BEE QUEEN's taking over the lease from UNIVERSAL MILL. The only lessee MLI ever recognized was UNIVERSAL MILL, a single proprietorship and not a corporation, owned by Alejandro Dy Juanco. Therefore, MLI claims, Dy Juanco effectively abandoned the lease contract when it subleased the property to other person, and hence, private respondents have no legal personality to invoke the expired contract of Dy Juanco or UNIVERSAL MILL. Since the lessee, UNIVERSAL MILL, did not seek any extension of the lease before its termination, there is no lease contract to be extended.
Petitioner Danilo S. Yap, for his part, asserts that the extension of a contract of lease without a fixed period may only be sought before the termination of the lease and not after it had been terminated, following Prieto v. Santos,[3] and that such extension may only be availed of on equitable considerations, which are not present in the instant case.
On 27 December 2000, MLI manifested that its property has been expropriated by the government through the Light Rail Transit Authority (LRTA) to be utilized as a Terminal Station of LRT Line 2, and that possession thereof has already been transferred to the government as evidenced by a Protocol of Delivery signed by Nestor B. Quesada, vice president of MLI and Eric V. Gutierrez, representative of the LRTA.
Although this controversy has been rendered moot and academic by this manifestation, we nevertheless resolve to rule on the matter, if only to settle similar controversies once and for all and avoid future wasteful litigations, and more importantly, to secure for petitioners the justice, albeit symbolical, which they have been deprived of.
The crux of the controversy is the proper application of Art. 1687 of the Civil Code -
Art. 1687. If the period for the lease has not been fixed, it is understood to be from year to year, if the rent agreed upon is annual; from month to month, if it is monthly; from week to week, if the rent is weekly; and from day to day, if the rent is to be paid daily. However, even though a monthly rent is paid, and no period for the lease has been set, the courts may fix a longer term for the lease after the lessee has occupied the premises for over one year. If the rent is weekly, the courts may likewise determine a longer period after the lessee has been in possession for over six months. In case of daily rent, the courts may also fix a longer period after the lessee has stayed in the place for over one month.
Under this provision, if the period of a lease contract has not been specified by the parties therein, it is understood to be from month to month, if the rent agreed upon is monthly, as in the cases at bar. Consequently, the contract expires at the end of such month unless prior thereto, the extension of said term has been sought by appropriate action and judgment is, eventually, rendered therein granting the relief.[4]
The Court likewise held in Prieto[5] that any extension of a lease contract must be sought before the term of the contract expires, and not after. In this case, since payment of rentals is made monthly, the life of the lease contract expires at the end of every month and tacitly renewed (tacita reconduccion) every time the lessor accepts the monthly payment. At the end of October 1990, the lessor MLI opted, as is within its rights to do so, not to renew the lease nor accept payment. Thus, the lease was terminated ipso facto, and a demand to vacate was not even necessary for judicial action after the expiration of every month. The contract having expired, the lessee could not belatedly file a suit in equity to extend its term.
Private respondents rely on Ramirez v. Chit,[6] and F.S. Divinagracia Agro-Commercial, Inc. v. Court of Appeals,[7] in invoking the application of Art. 1687 to their case. Both cases held that the exercise of the power given to the courts in Art. 1687 to extend the period of the lease when the defendant has been in occupancy of the premises for more than a year does not contemplate a separate action for that purpose. That power may be exercised as an incident in the action for ejectment itself and by the court having jurisdiction over it.
However, we hold that Ramirez and F.S. Divinagracia Agro-Commercial, Inc., do not apply in the instant case. As petitioners correctly pointed out, both cases involved lessees who were in actual possession of the property leased when the lease contract was terminated. In the two (2) cases, the discretionary power of the courts to fix the period was invoked as a defense to ejectment cases filed against the lessees. In the instant case, it was the lessee Dy Juanco who filed the action in court to extend the period of the lease. But even assuming for the sake of argument that BEE QUEEN or Dy Juanco did file the suit seasonably, we find no equitable considerations that would merit the extension.
In Acasio v. Corp. de los PP. Dominicos de Filipinas[8] this Court ruled that the power of the courts to "fix a longer term for the lease" is potestative or discretionary, to be exercised or not in accordance with the particular circumstances of the case; a longer term to be granted where equities come into play demanding extension, to be denied where none appears, always with due deference to the parties' freedom to contract.
In Yek Seng Co.[9] we held: "The circumstance that the lessee has paid its rentals religiously during the past twenty (20) years is also not sufficient to justify the extension that it demands. Neither are the substantial improvements it allegedly made on the leased premises nor the difficulty of finding another place of business, on which it has not submitted any evidence at all." While private respondents are correct in saying that Art. 1687 rewards a lessee for its loyalty, the law is not so lopsided as to disregard altogether the lessor's right not to be deprived of possession for so many years. Basic common law principle of fairness and equity shuns property entailment that borders on perpetuity to the exclusion of the owner.[10]
The most glaring fact that militates against the extension of the term of the lease is that BEE QUEEN, Dy Juanco and UNIVERSAL MILL did not actually physically occupy or make use of the property, but in fact subleased the same to a third person. Private respondents admitted that at the time MLI terminated the contract, they were paying a monthly rental fee of P4,626.50. BEE QUEEN's sublease contract with petitioner Danilo Yap stipulated a monthly rent of P14,500.00 for the year 1990. BEE QUEEN accepted rent from a sublessee while paying a lower price to its lessor, in effect, making a profit with the slightest of efforts. This Court finds itself uncomfortable that private respondents, which did not even have the common decency to inform their lessor that they were subleasing the latter's property, now have the temerity to come to the courts and invoke equity. He who seeks equity must do equity.[11]
At any rate, we note with disapproval that private respondents have already enjoyed a de facto extension of more than ten (10) years from the time the first demand to vacate was made. Their continued occupancy of the subject property is repugnant to the basic ideas of equity and fair play, and should no longer be countenanced by the courts. Indeed, the appellate court was made to play a key role in perpetuating this inequity by extending the lease contract for another three (3) years when, clearly, such extension had no basis in law and equity. The simple question raised in the case at bar could have been definitively resolved in the lower court and did not have to reach the highest tribunal,[12] wasting time and effort in the process. If private respondents did not take the necessary precaution against their possible displacement because of the termination of their month-to-month unwritten lease, then they only have themselves to blame.
WHEREFORE, the petitions in G.R. Nos. 140249 and 140363 are GRANTED. The assailed Decision of the Court of Appeals dated 5 March 1998 and its Resolution dated 22 September 1999 in CA-G.R. 51765 are REVERSED and SET ASIDE and the Decision of the Regional Trial Court dated 28 November 1995 in Civil Case No. 91-57176 dismissing the Complaint of Alejandro Dy Juanco, Universal Mill Supply Co., Inc., and Bee Queen Restaurant, Inc., against petitioner Danilo S. Yap in G.R. No. 140249 and petitioner Martinez Leyba, Inc., in G.R. No. 140363 is AFFIRMED and REINSTATED, with costs against private respondents.
SO ORDERED.
Mendoza, Quisumbing, Buena, and De Leon, Jr., JJ., concur.
[1] Civil Case No. 91-57176, Br. 51, Judge Rustico Panganiban, presiding.
[2] Rollo, G.R. No. 140363, p. 32.
[3] 98 Phil 509 (1956).
[4] Ibid.
[5] See also Alegre v. Laperal, G.R. No. 24664, 29 May 1968, 23 SCRA 934; Yek Seng v. Court of Appeals, G.R. No. 87415, 23 January 1992, 205 SCRA 305.
[6] No. L-22022, 26 December 1967, 21 SCRA 1365.
[7] No. L-47350, 21 April 1981, 104 SCRA 180.
[8] 100 Phil 523 (1956).
[9] See Note 5.
[10] Heirs of Manuel Suico v. Court of Appeals, G.R. No. 120615, 21 January 1997, 266 SCRA 444.
[11] Joseph Story, Equity Jurisprudence, 1896.
[12] Yek Seng v. Court of Appeals, see Note 5.
Source: Supreme Court E-Library | Date created: 2009-11-24 14:09:50
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