Case Digest (G.R. No. 87047)
Facts:
Francisco Lao Lim, as lessor, and Benito Villavicencio Dy, as lessee, entered into a three-year lease of commercial premises in Manila from 1976 to 1979. When Dy refused to vacate after the term’s expiration, Lim filed an ejectment suit in the City Court of Manila (Civil Case No. 051063-CV), which the parties terminated by a judicially approved compromise. Under that compromise, the lease was renewed retroactively from October 1979 to October 1982, and again from 1982 to 1985, with an automatic 20% rent increase every three years and a 60-day notice requirement for renewal. On April 17, 1985, Lim advised Dy that he would not renew beyond October 1985. Despite this, on August 5, 1985, Dy notified Lim of his intent to extend occupancy from November 1985 to October 1988. After Dy declined to vacate, Lim filed a new ejectment case in the Metropolitan Trial Court of Manila (Civil Case No. 114659-CV) on January 15, 1986. On September 24, 1987, the trial court dismissed Lim’s complaint...Case Digest (G.R. No. 87047)
Facts:
- Original Lease and First Ejectment
- In 1976, petitioner Francisco Lao Lim (lessor) leased premises to Benito V. Dy (lessee) for three years (1976–1979).
- Upon expiration in 1979, lessee refused to vacate; lessor filed ejectment in City Court of Manila (Civil Case No. 051063-CV).
- Compromise Agreement and Subsequent Lease Terms
- Parties entered a judicially approved compromise providing that the lease would be renewed every three years retroactively from October 1979 to October 1982, with a 20% rent increase every three years “for as long as defendant needed the premises and can meet and pay said increases,” and that the lessee must give 60 days’ notice before each renewal.
- Lease thus continued from 1979–1982 and from 1982–1985 under the same terms.
- Non-Renewal Notice and Second Ejectment
- On April 17, 1985, lessor advised lessee he would not renew the lease beyond October 1985.
- Lessee on August 5, 1985, insisted on renewing for November 1985–October 1988; lessor refused.
- On January 15, 1986, lessor filed a second ejectment suit in the Metropolitan Trial Court of Manila (Civil Case No. 114659-CV).
- Lower Court Decisions and Appeal
- The MTC dismissed the ejectment, ruling lease was continuous and the compromise was res judicata.
- The Regional Trial Court (Manila, Branch XLVI) affirmed on January 28, 1988.
- The Court of Appeals affirmed in toto on June 30, 1988, holding the renewal clause valid as a resolutory condition and the compromise as res judicata.
Issues:
- Is the clause allowing renewal “for as long as the defendant needed the premises and can meet and pay said increases” valid under the Civil Code?
- Does the judicially approved compromise agreement operate as res judicata to bar the second ejectment action?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)