G.R. No. 103883 - Vda. de Gabriel vs. Court of Appeals

On May 17, 1984, petitioner Maria Z. Kho and respondent Federico Biron, Sr. entered into a contract of lease.
The lease involved a 30-hectare portion of respondent’s land, identified as Lot No. 738-B-9, located in E.B. Magalona, Negros Occidental.
The contract provided that:

The leased area, primarily consisting of fishponds, was delineated on an attached plan (Annex "A").
The lease term was set for seven (7) years, from January 1, 1985 up to December 31, 1991.
The lessee was obliged to pay an annual rental fee of One Hundred Twenty Thousand Pesos (P120,000.00) with a specific schedule for installment payments during the first two years and fixed annual payments thereafter.

In May 1987, petitioner discovered through a geodetic survey that the area actually turned over by respondent amounted to approximately 23.26 hectares rather than the agreed 30 hectares.
Believing this to be a breach of the lease agreement, petitioner subsequently filed a complaint on June 26, 1989, before the Regional Trial Court (RTC) of Bacolod City.
The relief sought included:

Specific performance for the delivery of the remaining 6.74 hectares.
Refund of overpaid rentals amounting to P106,240.00, alleged to have been paid for the undelivered land.
Damages for the alleged breach of contract.

The parties had originally agreed on a lease for 30 hectares at an annual rental of P120,000.00, not based on a per-hectare computation.
After the original contract, subsequent terms were agreed upon which altered the original understanding.

That petitioner had, in fact, been allowed to occupy additional areas in adjoining lots (Lot No. 298-B and Lot No. 297-B) which were already developed as fishponds.
The effective date of the lease was modified from May 17, 1984 to January 1, 1986, following discussions between the parties.
Petitioner’s own actions, including entering into similar agreements for adjacent lots and modifications in the lease arrangements, were evidence of her acquiescence to alternative terms.

Petitioner’s complaint for specific performance, refund of overpayment of rentals, and damages was dismissed.
The judgment ordered:

The rescission of the lease contract.
Payment by the petitioner to the respondent for unpaid rentals, moral and exemplary damages, attorney’s fees, and other costs.

The Court of Appeals (CA) later affirmed the RTC’s decision in its October 16, 1998 decision, with a reiteration in its January 8, 1999 resolution.
Petitioner then elevated the case to the Supreme Court via a petition for review on certiorari, urging reversal of the CA’s affirmation.

Both lower courts had uniformly declared that the area actually occupied by petitioner was short of the nominal 30 hectares.
Petitioner made no effort to refute respondent’s assertion regarding the subsequent agreements modifying the lease terms.
Petitioner’s claim of breach was weakened by her own conduct in accepting modified arrangements and failing to meet the strict payment provisions of the original contract.

The Court underscored its deference to the factual determinations of the lower courts unless clear evidence of arbitrariness or palpable error existed.

Whether the Court of Appeals erred in affirming the RTC’s decision despite clear evidence that petitioner’s occupied area was less than the agreed 30 hectares.

The issue centers on whether the lower courts’ acceptance of subsequent modifications to the original lease, which petitioner did not contest, negates her claim for specific performance.

Whether petitioner sufficiently proved her claim for specific performance, refund of overpayment, and damages given her acceptance of alternative arrangements post-execution of the lease.
Whether petitioner’s conduct—specifically, her actions leading to renegotiated or modified terms—precluded her from insisting on strict compliance with the original lease provisions.