G.R. No. 116896 - Philippine National Construction Corp. vs. Court of Appeals

On November 18, 1985, Philippine National Construction Corporation (PNCC) and Ma. Teresa S. Raymundo-Abarra et al. executed a five-year lease of an undivided 30,000 sqm parcel for a rock-crushing plant.
Key terms:

Term begins “on the date of issuance of the industrial clearance by the Ministry of Human Settlements,” renewable for a like period.
Rent starts at ₱20,000/month, increasing 5% annually (to ₱24,000 by year 5).
Payment is in advance, yearly (first installment of ₱240,000 due upon execution).
Lessee may erect necessary structures; termination only by mutual agreement or at lease expiration.

On January 7, 1986, PNCC obtained a Temporary Use Permit (valid two years) from the Ministry.
On January 16, 1986, lessors demanded ₱240,000 first annual rent; PNCC replied that rent would commence only upon industrial clearance and sought to terminate the lease due to financial and technical difficulties.
Lessors refused pre-termination, insisted on performance; PNCC offered to pay only ₱20,000 for one month (January 7–February 7, 1986).

May 19, 1986: Lessors filed Civil Case No. 53444 (RTC Pasig) for specific performance with damages.
Plaintiffs rested September 7, 1987; PNCC repeatedly moved for postponements (August–October 1988), then waived presentation of evidence on September 26, 1988.
PNCC filed no memorandum; its motions for reconsideration were denied.
April 12, 1989: RTC ordered PNCC to pay ₱492,000 (two-year rent), legal interest from January 7, 1986, attorney’s fees (₱20,000), and costs.

PNCC appealed to the Court of Appeals, alleging error in the rent award and denial of right to be heard.
CA affirmed the RTC decision and denied PNCC’s motion for reconsideration.
PNCC filed a petition for review on certiorari with the Supreme Court.

Whether the Temporary Use Permit qualifies as the “industrial clearance” triggering rental obligations.
Whether PNCC may be released from lease obligations under Article 1266 (impossibility) or the principle of rebus sic stantibus.
Whether the RTC’s award of ₱492,000 for two years’ rent is excessive, given PNCC’s lack of use of the property and revocation of the permit.
Whether PNCC was deprived of due process when the trial court deemed its evidence waived.