Facts:

The case is titled Asian Transmission Corporation vs. Canlubang Sugar Estates, under G.R. No. 142383, decided on August 29, 2003. The petitioner, Asian Transmission Corporation (ATC), sought the nullification of the Court of Appeals' decision from August 19, 1999, which dismissed ATC's petition for review in CA-G.R. SP No. 40757, and its subsequent resolution denying reconsideration on March 14, 2000.

The respondent, Canlubang Sugar Estates (CSE), is a domestic corporation owned by the Yulo family and held title to a 50,000 square meter parcel of land in Canlubang, Laguna. CSE initially entered into a lease agreement with Nisho-Iwai Co., Ltd., Mitsubishi Motors Corporation, and Chrysler Philippines in 1972 for a period of 25 years, which was renewable at their discretion. Subsequently, those companies formed ATC. In 1978, ATC entered into a new lease, which reiterated the options for renewal and included provisions for rental adjustments every five years.

In 1991, the p

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Facts:

Parties and Background

• The dispute involves Asian Transmission Corporation (ATC), a corporation formed by the merger of Nisho-Iwai Co., Ltd., Mitsubishi Motors Corporation, and Chrysler Philippines, and Canlubang Sugar Estates (CSE), a domestic corporation controlled by the Yulo family owning a parcel of land in Canlubang Industrial Park, Laguna.
• The underlying transaction began in 1972 with a lease agreement executed by the parties for a 25-year term (renewable) over a fifty-thousand-square-meter property.
• Subsequent to the original lease, in 1978 ATC and CSE executed an Adoption of Lease Agreement (with amendments) that redefined terms such as the duration and rental adjustments, including a clause for a five-yearly review of the rent.

Modification of Lease Terms and Negotiations

• In 1991, ATC and CSE adjusted the annual rental through a Memorandum of Agreement (MOA), fixing the rent for the periods July 1, 1991–June 30, 1992 and July 1, 1992–June 30, 1993 at P3,373,552.80 and an increased figure by 8% respectively.
• No agreement was reached regarding the rental after June 30, 1993.
• CSE later proposed modifications which involved reducing the leased area by approximately 14.4% and increasing the annual rental to P15,000,000.
• ATC objected, notably via its October 11, 1993 letter, arguing that:
• The proposed reduction would interfere with its storage and expansion plans.
• The requested 500% increase in rent was excessive compared to the previous rental amount.
• The review of rental under the MOA was contractually scheduled only every five years beginning in 1996, not immediately.

Procedural History and Litigation

• In response to the impasse:
• On November 11, 1993, ATC filed a complaint for specific performance seeking to compel CSE to abide by the original lease terms and to continue ATC’s peaceful possession, along with a claim for damages.
• Concurrently, CSE filed a civil complaint for unlawful detainer alleging that ATC breached the lease by refusing to adhere to the contractual review of rent.
• The case was bifurcated into separate actions in the Municipal Trial Court (MTC) and the Regional Trial Court (RTC), with the MTC and RTC eventually favoring CSE by:
• Ordering ATC to vacate the property.
• Awarding an annual rental amount of P15,000,000, effective from July 1, 1993.
• Further appeals and motions ensued before the Court of Appeals (CA).
• The CA reversed a trial court ruling in one docket on grounds that ATC’s October 11 letter should be construed as a proposal rather than a refusal to negotiate.
• However, on a separate petition, the CA ultimately affirmed that the lease provisions had been breached by ATC and that ATC had failed to adduce sufficient evidence to contest the P15,000,000 rental award.
• Allegations of forum shopping were raised by CSE as ATC advanced multiple petitions and motions in different forums.
• The Supreme Court reviewed the entire record, noting that ATC had already surrendered possession of the property on June 30, 1998 and that the lease (and accompanying MOA) was effectively a “fait accompli.”

Post-Termination and Determination of Rental Value

• With the lease effectively terminated and ATC having vacated the property, the principal remaining issue was the determination of whether ATC was liable to pay the demanded annual rental of P15,000,000 from July 1, 1993 until vacancy.
• The dispute centered on whether the fair rental value, which was to be proven by CSE, could be fixed at P15,000,000 when the contract’s last agreed rental for the preceding period was substantially lower.
• Proceedings in both trial and appellate courts resulted in orders for ATC to compensate CSE at the higher rate, subject to proof of fair rental value.

Evidentiary and Appraisal Issues

• ATC engaged appraisal firms (e.g., the General Appraisal Company and Asian Appraisal Co., Inc.) to determine the property’s fair rental value.
• However, the appraisal reports were challenged on the grounds of being hearsay and not mutually agreed upon, limiting their evidentiary weight in proving that the increased rental was unreasonable.

Resolution and Final Disposition

• Despite the tribunal’s orders for payment and eviction, the Supreme Court ultimately found that:
• The issue of the lease termination had become moot given ATC’s surrender of possession.
• The only remaining controversy was the quantum of reasonable compensation for the use and occupation of the property post-July 1, 1993.
• The petition was granted and the case remanded to the RTC to determine, based on the evidence on record, the fair rental value or reasonable compensation due from ATC.

Issue:

Validity of Lease Termination and Breach of Contract

• Whether CSE validly terminated the lease contract when it unilaterally demanded an increased rental of P15,000,000 and reduced the leased area.
• Whether ATC breached its lease agreement and MOA by refusing to enter into a review of the rental as mandated by the contract provisions.

Determination of Appropriate Rental Value

• Whether the trial court and the CA had the authority to fix the annual rental at P15,000,000 for the period after July 1, 1993, which was a substantial increase from the previously adjusted amounts.
• Whether the rental stipulated in the contract should continue as the measure for reasonable compensation after the lease termination.

Evidentiary Basis for Rental Valuation

• Whether ATC failed in its burden to adduce sufficient evidence to dispute the P15,000,000 figure.
• The weight and admissibility of the appraiser’s reports submitted by ATC in contesting the rental adjustment.

Procedural Concerns and Forum Shopping

• Whether ATC’s multiple petitions and motions in various forums constitute forum shopping, rendering its appeals and petitions dilatory.
• The impact of forum shopping allegations on the jurisdiction and merits of the case.

Scope of Relief in the Complaint

• Whether the relief prayed in the respondent’s complaint (which included an eviction order and the demand for rental) should be interpreted as creating a separate cause of action for additional sums not originally claimed.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)