Case Digest (G.R. No. 224552)
Facts:
In Bermon Marketing Communication Corporation v. Spouses Lilia M. Yaco and Nemesio Yaco (G.R. No. 224552, March 3, 2021), respondents Spouses Yaco owned a 393-sqm lot with an existing one-storey building and open space at No. 72 Apo St., Mandaluyong City. On January 2, 2001, they leased the property to petitioner Bermon Marketing for six years at ₱50,000 per month (with a 10% increase every two years), stipulating that the lessee would, at its expense, construct a second floor that would become the lessor’s property at lease termination. Bermon incurred approximately ₱800,000 for that second floor. In March 2001, it also constructed a new building on the open space—claiming respondents’ consent—spending over ₱2 million. When the initial term expired on January 12, 2007, the lease continued on a month-to-month basis. Respondents first demanded vacation and arrears payment in December 2007; unsuccessful rent-increase negotiations followed. On June 12, 2008, Bermon again was order
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Case Digest (G.R. No. 224552)
Facts:
- Contract of Lease
- On December 19, 2000, spouses Lilia M. Yaco and Nemesio Yaco (lessors) leased to Bermon Marketing Communication Corporation (lessee) a 393-sqm parcel at No. 72 Apo St., Mandaluyong City, for six years starting January 2, 2001, at ₱50,000.00 per month for the first two years with a 10% increase every two years.
- The contract required the lessee to construct, at its own expense, a second floor on the existing office, which, upon lease termination, would become the lessors’ property without right of reimbursement.
- Improvements Undertaken by Lessee
- Lessee incurred ₱800,000.00 to build the second floor as stipulated.
- In March 2001, lessee constructed a new building on the open space for its advertising business, allegedly with lessors’ knowledge and consent, spending ₱1,135,282.41 on materials and ₱1,049,219.00 on labor, in expectation of a four-year lease extension.
- Lease Expiry and Demand to Vacate
- Lease expired on January 12, 2007, then continued on a month-to-month basis. On December 14, 2007, lessors demanded lessee to vacate and pay arrears; during this demand, lessors purportedly proposed ₱90,000.00 monthly rent, countered by lessee at ₱70,000.00; no agreement ensued.
- On June 12, 2008, lessors sent another demand letter for unpaid rentals and to vacate; they then filed an ejectment complaint seeking:
- Lessee’s eviction;
- ₱242,000.00 unpaid rentals;
- ₱540,000.00 for use of improvements from January 12, 2007 to June 12, 2008;
- ₱100,000.00 per month from June 13, 2008 until vacated.
- Lessee’s Counterclaim and Lessor’s Reply
- Lessee counterclaimed that the lease was extended to ten years, consented to both constructions, and sought reimbursement of over ₱2,000,000.00 for improvements.
- Lessors answered that (a) the lease expressly precluded reimbursement for the second floor, and (b) the new building was erected without their consent.
- Procedural History
- Metropolitan Trial Court (Aug. 8, 2011): Ordered lessee to vacate; pay ₱130,000.00 per month from June 13, 2008 until vacated; ₱30,000.00 attorney’s fees; dismissed counterclaim.
- Regional Trial Court (Mar. 30, 2012): Affirmed MeTC decision in toto.
- Court of Appeals (Oct. 23, 2015): Held Article 448 (good-faith builder) inapplicable to lessees; applied Article 1678 (lessee’s improvements), but found no good faith or consent; reduced monthly compensation to ₱80,000.00, deducted ₱200,000.00 deposit, deleted attorney’s fees; affirmed with modification.
- Supreme Court (Mar. 3, 2021): Denied petition for review; affirmed CA decision in toto.
Issues:
- Whether Article 1678 of the Civil Code applies to the lessee’s improvements in this case.
- Whether spouses Yaco are liable to pay the lessee one-half of the value of the improvements.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)