Case Summary (G.R. No. 208845)
Trial Court Proceedings and Dismissal Grounds
The Maaas spouses filed for rescission of the sale, cancellation of title, and enforcement of their right of first refusal. Respondents moved to dismiss for failure to state a cause of action and lack of barangay conciliation. They argued that only terms germane to possession are revived in an implied renewal, excluding the right of first refusal. The Regional Trial Court granted dismissal, holding (1) the lease’s implied renewal under Civil Code Art. 1670 did not revive the purchase option, (2) the complaint was premature for failure to undergo barangay mediation, and (3) claims of sale invalidity due to Uy-Cua’s minority belong in an annulment action.
Court of Appeals’ Affirmation
On appeal, the Court of Appeals affirmed the trial court. It found that the spouses’ continued occupancy constituted an implied renewal from month to month under Arts. 1682 and 1687, reviving only terms related to use and enjoyment. The purchase option, being foreign to possession, expired with the original lease. The appellate court also upheld the dismissal for non-compliance with barangay conciliation and lack of cause of action.
Issues Before the Supreme Court
- Whether the implied renewal included the right of first refusal and thus stated a cause of action
- Whether the deed of sale must be rescinded due to Uy-Cua’s alleged minority at the time of sale
- Whether failure to comply with the barangay conciliation requirement warranted dismissal
Implied Renewal and Revival of Lease Terms
Under Civil Code Art. 1670, a lessee’s continued enjoyment beyond fifteen days with lessor’s acquiescence creates an implied new lease for the period stipulated in Arts. 1682 and 1687. Only terms germane to possession—rent, payment dates, care of the property—are revived. Drawing on Dizon v. Court of Appeals and Dizon v. Magsaysay, the Court held that special stipulations, such as a right of first refusal, are alien to occupancy and do not survive in an implied renewal absent express agreement. Consequently, petitioners lacked a contractual basis to demand pre-sale notice.
Capacity Challenge and Appropriate Remedy
The spouses’ allegation that Uy-Cua was a minor concerns contract annulment under Civil Code Art. 1390, not rescission. Moreover, Art. 1397 prohibits capable parties from disputing the incapacity of contracting parties. Petitioners lacked standing as they were neither obligors nor obligees under the deed of sale. The Court held that the proper remedy for incapacity is an annulment suit by the contracting parties or their representatives, which the Maaas spouses did not initiate.
Baranga
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Factual Background
- On April 18, 2005, spouses Allan and Lena Isabelle Y. MaAas (the MaAas Spouses) entered into a one‐year lease contract with option to renew and right of first refusal over a property in Tacloban City owned by Rosalina Roca Nicolasora’s late husband.
- The lease provided for monthly rentals of ₱6,000, payable by the 15th of the succeeding month, and included mediation and local venue clauses for disputes.
- Clauses expressly granted the lessee the option to renew for like periods and the right of first refusal should the lessor desire to sell, with thirty days’ notice to accept or counteroffer.
Continuation of Possession and Subsequent Sale
- Although the initial lease term expired in 2006 without express renewal, the MaAas Spouses continued to occupy the premises and pay rent with no objection from Rosalina or her children.
- On February 14, 2008, Chy Tong Sy Yu sold the leased property to Ma. Therese Roselle Uy-Cua with the “conformity” of Rosalina, Janet and Anthony Nicolasora.
- The MaAas Spouses claimed they were neither informed of nor offered the sale, learning of it only upon a June 2, 2008 letter from RMC Trading demanding their relocation within 30 days.
Lease Contract Provisions
- Duration: one year from execution, renewable at lessee’s option for like periods.
- Rent: ₱6,000 per month, due on or before the 15th of the succeeding month.
- Mediation: parties to refer disputes to Philippine Mediation Center before litigation.
- Right of first refusal: lessor to notify lessee of intent to sell, granting 30 days to accept or make counteroffer.
Procedural History – Trial Court
- The MaAas Spouses filed a complaint for rescission of the sale, cancellation of titles, and enforcement of their right of first refusal.
- Respondent Uy-Cua moved to dismiss, arguing failure to state a cause of action, lack