G.R. No. L-55480 - Millare vs. Herdo

On 17 June 1975, petitioner Pacifica Millare (lessor) and private respondent Elsa Co (lessee) executed a five-year written Contract of Lease for the “People’s Restaurant” at a monthly rental of ₱350.00, expiring on 31 May 1980.
In late May 1980, the lessor allegedly offered to renew the lease at ₱1,200.00 per month; the lessee counter-offered ₱700.00 and continued in possession under the impression of a tacit renewal. The lessor denied any agreement to renew.

On 22 and 28 July 1980, Millare wrote demanding that the Cos vacate; the Cos refused the ₱1,200.00 rent and deposited ₱700.00 for June and July in court.
On 30 August 1980, the Cos filed Civil Case No. 1434 for renewal of the lease at ₱700.00 monthly for ten years, collection of the deposit, and damages. On 1 September 1980, Millare filed ejectment (Civil Case No. 661). Lis pendens was invoked; Millare moved to dismiss Case No. 1434 for lack of cause and absence of barangay certification under P.D. 1508.

On 15 October 1980, the Court of First Instance of Abra denied the motion to dismiss, ordered renewal at ₱700.00, and allowed further deposits; a motion for reconsideration was denied on 4 November 1980.
On 13 November 1980, Millare petitioned the Supreme Court for certiorari, prohibition and mandamus. A temporary restraining order was issued on 21 November 1980. On 26 November 1980, the trial court rendered a “Judgment by Default” renewing the lease for five years at ₱700.00. The Supreme Court gave due course to the petition on 18 March 1981.

Whether the trial court acquired jurisdiction over Civil Case No. 1434 despite the absence, at the time of filing, of a barangay certification under P.D. 1508.

Whether the Co spouses stated a valid cause of action for renewal of the lease where no agreement on the terms and conditions of renewal was reached.