Case Digest (G.R. No. 136913)
Facts:
Petitioner ANITA C. BUCE leased a 56-square meter lot at 2068 Quirino Avenue, Pandacan, Manila under a lease contract dated June 1, 1979 for fifteen years "subject to renewal for another ten (10) years, under the same terms and conditions." Private respondents SPS. BERNARDO C. TIONGCO AND ARACELI TIONGCO, SPS. DIONISIO TIONGCO AND LUCILA TIONGCO, AND JOSE M. TIONGCO sought increased rent over the years and refused petitioner’s tenders of P400 monthly; petitioner sued for specific performance and consignation in the RTC, which declared an automatic ten-year renewal and fixed rents, but the Court of Appeals reversed and ordered petitioner to vacate, prompting this petition.Issues:
- Did the stipulation "subject to renewal for another ten (10) years" create an automatic renewal or only an option requiring mutual agreement?
- Did the Court of Appeals exceed its authority in ordering petitioner to vacate when possession and ejectment were not pleaded or adjudicated?
Ruling:
The Co Case Digest (G.R. No. 136913)
Facts:
- Parties and lease agreement
- Petitioner leased a 56-square meter parcel of land at 2068 Quirino Avenue, Pandacan, Manila under a written lease (Exhibit "A") for a period of fifteen years from June 1, 1979 to June 1, 1994 "subject to renewal for another ten (10) years, under the same terms and conditions."
- Petitioner constructed a building on the premises and paid monthly rent originally fixed at P200.
- Private respondents, through their administrator Jose Tiongco, later demanded gradual increases in rent reaching P400 in 1985; Petitioner paid P1,000 for July and August 1991.
- Rent increases, tenders, and refusal
- On December 6, 1991 counsel for Private respondents notified Petitioner of an increase in rent to P1,576.58 effective January 1992 pursuant to Republic Act No. 877, as amended (Exhibit "1").
- Petitioner tendered checks dated October 5, 1991; November 5, 1991; December 5, 1991; January 5, 1992; May 31, 1992; and January 2, 1993 (Exhibits "F", "C", "D", "E", "B", "G") for only P400 each payable to Jose Tiongco as administrator.
- Private respondents refused to accept the P400 checks.
- Commencement of litigation
- On August 9, 1993 Petitioner filed in the Regional Trial Court, Manila a complaint for specific performance with prayer for consignation, docketed Civil Case No. 93-67135, praying that Private respondents be ordered to accept rentals under the lease and to respect the fifteen-year term renewable for ten years at P200 per month.
- In their Answer Private respondents countered that (a) Petitioner had paid P1,000 for July–August 1991, (b) rentals were governed by the Rent Control Law and should be P1,576.58 per month, and (c) the renewal clause did not effect automatic renewal but contemplated mutual agreement.
- Pretrial correspondence and alleged arrears
- During the action Private respondents' counsel reminded Petitioner that the contract would expire on June 1, 1994 and demanded payment of rental arrears totaling P33,000.
- Trial court disposition
- On August 29, 1995 the RTC declared the lease contract automatically renewed for ten years.
- The RTC considered as evidence of automatic renewal (a) the lease stipulation allowing the lessee to construct buildings and improvements and (b) Petitioner filing the complaint almost one year before the expiration of the initial term.
- The RTC fixed monthly rents as follows: P400 from June 1, 1990 to June 1, 1994; P1,000 from June 1, 1994 until June 1, 1999; and P1,500 for the rest of the period or from June 1, 2000 to June 1, 2004, reasoning that the continuous increase in rent caused "an inevitable novation of their contract." (Per Judge Eudoxia T. Gualberto.)
- Court of Appeals disposition
- The Court of Appeals reversed the RTC, held that the contract expired on June 1, 1994 without renewal, ordered Petitioner to immediately vacate the...(Subscriber-Only)
Issues:
- Interpretation of the renewal clause
- Whether the clause "subject to renewal for another ten (10) years, under the same terms and conditions" effected an automatic renewal/extension of the lease or merely an option to renew requiring agreement of the parties.
- If the clause created an option, whether the option was unilateral (for the benefit of one party) or mutual.
- Probative value of parties' contemporaneous and subsequent acts
- Whether (a) allowance to construct improvements, (b) acceptance of increased rentals, and (c) filing of the complaint before expiration evinced an intent for automatic renewal.
- Novation by tender and acceptance of increased rent
- Whether tender and acceptance of increased rentals (P1,000) novated the original lease and estopped Petitioner from claiming the original rental r...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)