Case Digest (G.R. No. 79642) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Broadway Centrum Condominium Corporation v. Tropical Hut Food Market, Inc. (G.R. No. 79642, July 5, 1993), petitioner Broadway Centrum (“Broadway”) and Tropical Hut (“Tropical”) entered into a notarized contract of lease on November 28, 1980, under which Broadway leased to Tropical 3,042.19 square meters of commercial space at Broadway Centrum for ten years (February 1, 1981–February 1, 1991) with rental fixed at ₱120,000 per month for the first three years, ₱140,000 for the next three, and ₱165,000 for the last four. Clause 32 of the lease preserved Broadway’s right to enforce all covenants despite any temporary concessions. In early 1982, Tropical complained its actual sales were far below projections due to a road closure and proposed a rental reduction to ₱50,000 or 2% of gross receipts. Broadway replied on March 4, 1982, offering a conditional four-month ₱20,000 rent rebate, explicitly stating it was a temporary suspension and not an amendment of the lease. On April 20, ... Case Digest (G.R. No. 79642) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Execution of Lease Contract (November 28, 1980)
- Parties and leased premises
- Lessor: Broadway Centrum Condominium Corporation (“Broadway”)
- Lessee: Tropical Hut Food Market, Inc. (“Tropical”)
- Leased area: 3,042.19 m² in Broadway Centrum Commercial Complex
- Term and renewal
- Ten (10) years: February 1, 1981 – February 1, 1991
- Renewable for a like period upon mutual agreement
- Rental provisions
- P120,000/mo for first 3 years (Feb 1981–Feb 1984)
- P140,000/mo for next 3 years (Feb 1984–Feb 1987)
- P165,000/mo for last 4 years (Feb 1987–Feb 1991)
- Payment in advance, five-day grace for succeeding months
- Non-waiver clause
- Broadway’s failure to insist on strict performance does not waive rights or subsequent breaches
- Early Performance and Rent-Renegotiation Attempts
- Tropical’s proposal (February 5, 1982)
- Rentals = 7.31% of 1981 sales; gross profit only 10%
- Proposed reduction to P50,000/mo or 2% of sales, whichever higher, until end of third year
- Broadway’s counter-proposal (March 4, 1982)
- Six management suggestions to boost sales by at least 15% in four months
- Conditional rent reduction of P20,000/mo for four months
- Emphasis: “temporary suspension” of original rate, not amendment
- Provisional and Temporary Agreement (April 20, 1982)
- Key terms of letter-agreement
- Rent = 2% of gross receipts or P60,000/mo, whichever higher
- Conditioned on surrender of 466.56 m² (drug store, coffee shop, half hallway)
- Not an amendment of original lease; purely “provisional and temporary”
- Subsequent rent adjustments and correspondence
- Dec 15, 1982: Broadway ends concession; proposes P80,000 (Jan 1983) → P100,000 (Apr 1983)
- Jan 1983: Tropical appeals to maintain provisional rate until sales recover
- Jan–Apr 1983: Broadway refuses further concession; sends billing for accrued differential
- Apr 15 & 22, 1983: Tropical counter-offers; Broadway deems matter non-negotiable
- Litigation in the Regional Trial Court
- Complaint and injunctive relief (May–June 1983)
- Tropical files for injunction to prevent enforcement of Section 5 (rent acceleration)
- Ex parte TRO (May 1983) and preliminary injunction (June 2, 1983) granted
- Supplemental complaint (Jan 1984)
- Raises issue of novation: letter-agreement of April 20, 1982 as novating the original lease
- Trial court decision (March 14, 1985)
- Declares partial novation of principal conditions by the April 20, 1982 letter
- Makes injunction permanent, fixes reduced rental rates tied to sales performance
- Appeal and Supreme Court Review
- Court of Appeals ruling (January 30, 1987)
- Affirms trial court: letter-agreement novated principal conditions
- Adjusts rental figures for ministerial clerical error
- Grant of petition for review (G.R. No. 79642, July 5, 1993)
- Sole issue: whether the April 20, 1982 letter-agreement novated the November 28, 1980 lease contract
Issues:
- Whether the letter-agreement dated April 20, 1982 “provisionally and temporarily” reducing rentals constituted a novation—partial or total—of the original lease contract dated November 28, 1980.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)