Case Digest (G.R. No. L-7969)
Facts:
Broadway Centrum Condominium Corporation v. Tropical Hut Food Market, Inc., G.R. No. 79642, July 05, 1993, Supreme Court Third Division, Feliciano, J., writing for the Court. Petitioner Broadway Centrum Condominium Corporation (Broadway) and private respondent Tropical Hut Food Market, Inc. (Tropical) entered into a notarized Contract of Lease dated 28 November 1980 for 3,042.19 square meters for ten years (1 February 1981–1 February 1991) with a graduated rental schedule (P120,000 monthly for first three years, P140,000 for next three, P165,000 for last four) and standard contractual clauses including a non-waiver provision (clause 32) and a clause making written modification mandatory (clause 34).During 1982 Tropical experienced depressed sales—partly attributed to the temporary closure of an adjacent thoroughfare—and on 5 February 1982 it proposed a reduction of rental to P50,000 or 2% of sales (whichever higher) until the third year. Broadway replied (4 March 1982) offering a conditional temporary reduction of P20,000 per month for four months, to be repaid if certain sales targets were met; Broadway expressly called any reduction a temporary suspension and not an amendment of the lease. On 20 April 1982 Broadway formalized a "provisional and temporary agreement" reducing rent to P60,000 or 2% of gross receipts (whichever higher), conditioned on Tropical surrendering certain leased areas (466.56 sq.m.) and on Tropical's implementation of operational improvements; the letter expressly stated it should not be interpreted as an amendment to the lease.
After roadworks ended, Broadway by letter dated 15 December 1982 advised termination of the concession in its present form and set a phased increase (P80,000 effective Jan. 1983; P100,000 effective Apr. 1983). Tropical protested (Jan–Apr 1983); Broadway insisted that the temporary concession had caused substantial loss and that the matter was no longer negotiable. Broadway billed Tropical for accrued differentials; Tropical persistently sought continuation of the provisional rates while sales recovered. On 12 May 1983 Tropical sued in the Regional Trial Court (Quezon City) seeking a restraining order/preliminary injunction to prevent Broadway from invoking Section 5 of the Lease and asking that the 20 April 1982 rates subsist while its sales remained low; an ex parte restraining order issued on 13 May and a preliminary injunction was granted on 2 June 1983 upon bond.
While trial was pending, Broadway notified Tropical (6 January 1984) that the contractual rental step-up to P140,000 effective 1 February 1984 would be implemented; Tropical then filed a supplemental complaint alleging that the 20 April 1982 letter-agreement had novated (partially) the original lease, such that reduced rates should subsist until Tropical achieved its projected sales. The trial court (decision 14 March 1985) declared the lease partially novated, made the preliminary injunction permanent, fixed reduced rents while Tropical's sales were below its feasibility study projections, and dismissed Broadway's counterclaim. The Court of App...(Subscriber-Only)
Issues:
- Did the letter-agreement dated 20 April 1982 novate (partially or totally) the Contract of Lease dated 28 November 198...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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