Llamas vs orbos

Petitioner Rodolfo Llamas is the incumbent Vice-governor of Tarlac, and on march 1,

1991, he assumed office by virtue of a decision of the Office of the President, the
governorship. Private Respondent Mariano Ocampo III is the incumbent governor
and was suspended from office due to having been found guilty of having violated
the Anti-Graft and Corrupt Practices Act. Public respondent Oscar Orbos was the
Executive Secretary at the time of the petition, and is being impleaded herein in
that official capacity for having issued, by authority of the President, the assailed
Resolution granting executive clemency to respondent governor thus, putting him
back to his position as the governor of tarlac. Petitioner contends that executive
clemency could only be granted to criminal cases and not administrative cases; that
there has been no final judgement of the private respondent's motion for
reconsideration; and that his constitutional rights to due process were violated.
Issue: WON the president has the power to grant executive clemency in
administrative cases.
WON there has been a final judgement.
WON the petitioner's constitutional rights were violated
1. Yes. The president can grant executive clemency based in Art. VII sec. 19 of the
constitution. The petitioner's contention that the president may only grant
executive clemency to criminal cases based on said provision is untenable because
the Constitution does not distinguish between cases executive clemency may be
exercised by the President, with the sole exclusion of impeachment cases. Ubi lex
non distinguit, necnos distinguire debemos. If the law does not distinguish, we must
not distinguish. Also a number of laws impliedly or expressly recognize the exercise
of executive clemency in administrative cases. One example of which is Sec. 43 of
PD 807 which provides that in meritorious cases, the president may commute or
remove administrative penalties or disabilities issued upon officers and employees
in disciplinary cases. Moreover, the intent of the constitutional commission is to give
the president the power to grant executive clemency and is not be limited in terms
of coverage, except as already provided in the constitution.
2. Yes. There has been a final judgment because upon the acceptance of the
presidential pardon, the grantee is deemed to have waived any appeal which he
may have filed.
3. No. the petitioner's constitutional rights to due process was not violated because
his being not notified of the subject of pardon is based on the fact that pardon is the
private, though official, act of the executive magistrate, delivered to the individual
for whose benefit it is intended and not communicated officially to the court. Thus,
said notice is unnecessary.

G.R. No. 93625 November 8, 1993

VICENTE J. SANTI, petitioner,
vs.
HON. COURT OF APPEALS, HEIRS OF AUGUSTO A. REYES, JR., represented by
ALEXANDER REYES, respondents.

Manolo L. Lazaro for petitioner.

Mario R. Gomez for private respondents.

NOCON, J.:

The sole issue of the instant case is the interpretation specifically of paragraph 3 of the
Contract of Lease 1 executed between Esperanza Jose, predecessor-in-interest of
herein petitioner and Augusto Reyes, Jr.

The undisputed facts of the case as summarized by the trial court are as follows:

Esperanza Jose was in her lifetime the registered owner and in absolute possession of a
parcel of land known as Lot 3, Block 89, situated in Cavite City, more particularly
described in TCT. No. 5508 (RT-3159) with an area of 1,472 square meters; that
sometime on July 12, 1957 she leased a portion of the property unto spouses Eugenio
Vitan and Beatriz Francisco for a period of 20 years "automatically extended" for another
20 years but with a rental of P220.00 per month as per Lease Contract ratified before
Notary Public Abraham F. Aguilar (Exhibit "8") and on which the lessees constructed a
cinema house; that sometime in 1962, the lessees sold all their rights, interest and
participation over the cinema house together with the leasehold rights on the lessor's
property unto Augusto A. Reyes, Jr. and a new contract of lease was entered between
the new owner and Esperanza Jose (Exhibit "A") for a period of 20 years from and after
April 1, 1962 with a monthly rental of P180.00 payable in advance, said period of lease
being "extendable" for another period of 20 years with a monthly rental increased to
P220.00 also payable in advance on or about the first day of each month (Exhibit "2-B").
In the interim, Esperanza Jose sold all her rights and participation over the parcel of land
to Vicente J. Santi and TCT No. T-3968 of the Land Records of Cavite City was issued in
his favor, on February 23, 1982 the lease having expired, plaintiff wrote Alexander Reyes
as representative of Augusto Reyes, Jr., who had died, informing him of the termination
of the lease on March 31, 1982 and demanding peaceful turn-over of possession,
defendant refused on the ground that after consulting his lawyer, Atty. Gregorio R.
Familiar the latter informed him that the lease was automatically extended for another 20
years at the rate of P220.00 a month and which amount he tendered unto plaintiff who
refused and by virtue thereof, religiously deposited said amounts with the Clerk of Court
of the Municipal Trial Court of Cavite City (Exhibits "5" and "6"). In view of defendant's
refusal to vacate plaintiff filed a routine complaint against Alexander Reyes with the office
of Barangay Captain of Barangay 34, "Lapu-lapu" of the City of Cavite; and no settlement
having been reached the Barangay Captain issued a certification to file action (Exh. "B").

During the pre-trial, the parties agreed that the only question to be resolved in this case is
the interpretation of Par. 3 of the Contract of Lease, Exhibit "A", of the plaintiff and Exhibit
"2" for defendant which reads as follows:
 That this lease shall be for a period of twenty (20) years from and after the date of the
execution of this document with a monthly rental of ONE HUNDRED EIGHTY PESOS
(P180.00) payable in advance, said period of lease being extendable for another period
of twenty (20) years with a monthly rental of TWO HUNDRED TWENTY PESOS
(P220.00) also payable in advance on or before the 1st day of each month; (pp. 73-75,
orig. rec.), Emphasis supplied.

The trial court rendered judgment for the petitioner, the dispositive portion of which
reads:

WHEREFORE, in view of the foregoing, the Court finds for plaintiff and orders defendant
Alexander Reyes as representative of the heirs of Augusto Reyes, Jr., to turn over the
possession of the property, Lot 3, Block 89 on which the cine house is erected unto
plaintiff, to pay monthly rental of P1,000.00 commencing April 1, 1982 up to and until they
have vacated and turned over the possession of the premises unto plaintiff, to pay the
sum of P5,000.00 as attorney's fees, and to pay the costs.

SO ORDERED. 2

It is the contention of herein petitioner that to extend the lease contract for another 20
years requires a subsequent agreement between the parties as the phrase "being
extendable" meant "capable of being extended." 3

On the other hand, private respondents argue that the terms of the lease contract are
clear and that the same should be automatically extended upon the expiration of the
first 20 years.

The court a quo, however, gave merit to the contention of herein private respondents
and said:

To enter into new negotiations to extend the contract would, therefore, be superfluous
and unnecessary, an idle ceremony, for the lease contract already contains all that is
necessary for the extension thereof.

xxx xxx xxx

The suggestion to enter into new negotiations run counter to the lease contract for, as
already said, everything necessary for its renewal or extension has been agreed upon. All
that was left to abide by the lease contract. . . . 4

We disagree.

Inasmuch as both parties to the lease contract have already died, a resort to the terms
and conditions of the lease contract is inevitable in order to ascertain the true intent of
the parties.

In a wealth of cases and as provided for in Articles 1370 and 1372 of the Civil Code, 5
we have ruled that when terms and stipulations embodied in the contract are clear and
leave no room for doubt, such should be read in its literal sense and that there is
absolutely no reason to construe the same in another meaning. 6
Thus, the lease contract executed between Esperanza Jose and spouses Eugenio Vitan
and Beatriz Francisco on July 12, 1957, 7 being clear and unambiguous, providing fro an
automatic extension of twenty (20) years from the expiration of the first twenty (20)
years, there is no reason why said contract should not be interpreted in the way the
contracting parties meant it to be, that is the automatic extension of the lease for
another twenty (20) years. Thus, paragraph 3 of the contract reads:

3. That the period of TWENTY YEARS (20) herein above provided shall be automatically
extended for another TWENTY YEARS (20) but with the rental of TWO HUNDRED &
TWENTY PESOS (220.00) per month also payable in advance on or before the 1st day
of each corresponding month, at the residence of the Party of the First part. 8 (Emphasis
supplied).

The same could not be said in the case at bar. The phase "automatically extended" did
not appear and was not used in the lease contract subsequently entered into by
Esperanza Jose and Augusto Reyes, Jr. for the simple reason that the lessor does not
want to be bound by the stipulation of automatic extension as provided in the previous
lease contract.

To our mind, the stipulation "said period of lease being extendable for another period of
twenty (20) years . . ." is clear that the lessor's intention is not to automatically extend
the lease contract but to give her time to ponder and think whether to extend the lease.
If she decides to do so, then a new contract shall be entered into between the lessor
and lessee for a term of another twenty years and at a monthly rental of P220.00. This
must be so, for twenty (20) years is rather a long period of time and the lessor may have
other plans for the property.

If the intention of the parties were to provide for an automatic extension of the lease
contract, then they could have easily provided for a straight forty years contract instead
of twenty.

We find the trial court's decision more in accord with the true intention of the parties
except that portion wherein private respondents were ordered to pay a monthly rental of
P1,000.00 starting from April 1, 982 up to and until they shall have vacated and turned
over the possession of the premises unto herein petitioner. 9 This is in error.

The law in point is Article 1670 of the Civil Code, which reads:

If at the end of the contract the lessee should continue enjoying the thing leased for
fifteen days with the acquiescence of the lessor, and unless a notice to the contrary by
either party has previously been given, it is understood that there is an implied new lease,
not for the period of the original contract, but for the time established in Articles 1682 and
1687. The other terms of the original contract shall be revived.

Article 1687 provides as follows:

If the period for the lease has not been fixed, it is understood to be from year to year, if
the rent agreed upon is annual; from month to month, if it is monthly; from week to week,
 if the rent is weekly; and from day to day, if the rent is to be paid daily. However, even
though a monthly rent is paid, and no period for the lease has been set, the courts may
fix a longer term for the lease after the lessee has occupied the premises for over one
year. If the rent is weekly, the courts may likewise determine a longer period after the
lessee has been in possession for over six months. In case of daily rent, the courts may
also fix a longer period after the lessee has stayed in the place for over one month.

The law provides that if after the end of the lease contract, the parties continue to enjoy
the thing leased, an implied lease is created for the period mentioned in Article 1687,
hence herein private respondents may continue to occupy the leased premises provided
such is with the permission and consent of herein petitioner-lessor. Since the lease
contract provided for a monthly rental of P220 to be paid by the lessee upon the
expiration of the first twenty years, the latter shall be bound by such amount which shall
be paid by herein private respondents to petitioner-lessor.

ACCORDINGLY, herein private respondent is hereby ordered to turn over the

possession of the disputed property and to pay a monthly rental of P220 starting from
April 1, 1982 up to and until they shall have vacated and turned over the possession of
the premises to herein petitioner, and to pay the sum of P5,000 as attorney's fees.

WHEREFORE, the petition is hereby GRANTED, and the appealed decision

REVERSED and SET ASIDE. The decision of the trial court is hereby REINSTATED
and MODIFIED as provided for in the preceding paragraph. With costs.

SO ORDERED.

G.R. No. 171891 February 24, 2009

HERNANIA "LANI" LOPEZ, Petitioner,

vs.
GLORIA UMALE-COSME, Respondent.

DECISION

PUNO, C.J.:

Before us is a petition for review on certiorari under Rule 45 seeking a review of the Decision1
and Resolution2 of the Court of Appeals (CA) in CA G.R. SP No. 82808 reversing the decision3
of the Regional Trial Court (RTC), Branch 218, Quezon City.

Respondent Gloria Umale-Cosme is the owner of an apartment building at 15 Sibuyan Street,

Sta. Mesa Heights, Quezon City, while the petitioner is a lessee of one of the units therein. She
was paying a monthly rent of P1,340.00 as of 1999.

On April 19, 1999, respondent filed a complaint for unlawful detainer against petitioner before
Branch 43 of the Metropolitan Trial Court (MeTC) of Quezon City on the grounds of expiration
of contract of lease and nonpayment of rentals from December 1998. In her answer, petitioner
denied that she defaulted in the payment of her monthly rentals, claiming that respondent did not
collect the rentals as they fell due in order to make it appear that she was in arrears. Petitioner
also alleged that she had been depositing her monthly rentals in a bank in trust for respondent
since February 1999.

On March 19, 2003, the MeTC, Branch 43, rendered judgment in favor of respondent, the
dispositive portion of which reads:

WHEREFORE, premises considered, the Court finds for the plaintiff and the defendant Hernania
"Lani" B. Lopez and all persons claiming rights under her or instructions are hereby ordered:

1. to vacate the leased premises located at 15-1, Sibuyan Street, Sta. Mesa Heights,
Quezon City Quezon City (sic), Metro Manila;

2. to pay the plaintiff monthly rent in the amount of P1,340.00 starting December, 1998
up to the time that they shall have vacated and surrendered the leased premises to the
plaintiff;

3. to pay the plaintiff the amount of P20,000.00 as and be (sic) way of attorney’s fees;
and

4. costs of suit.4

On appeal, the RTC reversed the decision of the MeTC and ruled that the contract of lease
between respondent and petitioner lacked a definite period. According to the RTC, the lessee
may not be ejected on the ground of termination of the period until the judicial authorities have
fixed such period. It ratiocinated:

Under the law, there is a noticeable change on the grounds for judicial ejectment as to expiration
of the period. Paragraph (f) of Section 5, only speaks of expiration of the period of lease contract,
deleting the phrase "of a written lease contract." However, under its Sec. 6, it provides:

SECTION 6. Application of the Civil Code and Rules of Court of the Philippines. – Except when
the lease is for a definite period, the provisions of paragraph (1) of Article 1673 of the Civil
Code of the Philippines, insofar as they refer to residential units covered by this Act, shall be
suspended during the effectivity of this Act, but other provisions of the Civil Code and the Rules
of Court on lease contracts, insofar as they are not in conflict with the provisions of this Act shall
apply.

BP Blg. 877 was extended by RA No. 6643, RA No. 6828, RA No. 7644, and RA No. 8437
approved 22 December 1997 extending the law up to 31 December 2001, without changed (sic)
in the provision of the law except as to the period of maximum increase allowable.

The condition about the expiration of the period as provided for under Act 877 was never change
(sic) despite the several extensionary (sic) laws to it.
The law is so perspicuous to allow other (sic) interpretation. It suspends the provisions of the
first paragraph of Article 1673 of the Civil Code, except when the lease is for a definite period.
Thus, if the lease has no period but to be fixed yet by the judicial authorities, the lessee may not
be ejected on ground of termination of the period.lawphil.net

This particular provision compliments the very purpose of the law prohibiting increase in rentals
more than the rates provided therefor.

If they could be ejected with ease just the same by simply interpreting that if a lessee is paying
his rentals monthly, the lease is considered month to month, and month to month lease contract is
with a definite period, then what part of Article 1673 was suspended?

The amendatory provisions of the Rent Control Law, which the lawmakers had deemed proper to
extend everytime (sic) it is about to expire, is nothing but illusory!

In light of the above reasoning, plaintiff-appellee’s ground based on the expiration of the lease
contract must fail. BP Blg. 877 as amended suspends the ejectment of lessees based on the
expiration of lease contract where there was no agreement as to a definite lease period.

Finally, the plaintiff has, in effect, abandoned her other ground of non-payment of rental having
stipulated on the consignation by defendant of the back rental from December 1998 to September
2002 during the pre-trial.

WHEREFORE, premises considered, the assailed decision is REVERSED and SET ASIDE. The
case is DISMISSED.

SO ORDERED.5

Respondent’s motion for reconsideration was denied by the RTC in a Resolution dated February
2, 2004.

Aggrieved, respondent repaired to the CA, which found merit in her appeal, thus:

It is worthy to note that in her answer, respondent admitted the allegations in paragraph 5 of the
complaint that the apartment unit was leased to her by petitioner on a month to month basis.

Article 1673 (1) of the Civil Code provides that the lessor may judicially eject the lessee when
the period agreed upon, or that which is fixed for the duration of leases under articles 1682 and
1687, has expired. Article 1687 of the same Code provides that if the period for the lease has not
been fixed, it is understood to be from year to year, if the rent agreed upon is annual; from month
to month, if it is monthly; from week to week, if the rent is weekly; and from day to day, if the
rent is to be paid daily.

On the other hand, Section 6 of Batas Pambansa Bilang 877 reads:

Sec. 6: Application of the Civil Code and Rules of Court of the Philippines. – Except when the
lease is for a definite period, the provisions of paragraph (1) of Article 1673 of the Civil Code of
the Philippines, insofar as they refer to residential units covered by this Act, shall be suspended
during the effectivity of this Act, but other provisions of the Civil Code and the Rules of Court
on lease contracts, insofar as they are not in conflict with the provisions of the Act shall apply.

In Acab v. Court of Appeals, it was held that Section 6 of B.P. Blg. 877 does not suspend the
effects of Article 1687 of the Civil Code. Lease agreements with no specified period, but in
which rentals are paid monthly, are considered to be on a month-to-month basis. They are for a
definite period and expire after the last day of any given thirty-day period, upon proper demand
and notice by the lessor to vacate. In the case at bench, petitioner had shown that written notices
of termination of lease and to vacate were sent by her to respondent, but the latter refused to
acknowledge receipt thereof. In view thereof, he caused the posting of said notice on the leased
premises in the presence of the barangay security officers on March 1, 1999.6

The CA denied petitioner’s Motion for Reconsideration in a resolution dated March 13, 2006. As
a consequence, petitioner filed the instant petition for review, where she argues that the CA
gravely erred when it ruled that she may be ejected on the ground of termination of lease
contract.

The petition is utterly bereft of merit.

It is well settled that where a contract of lease is verbal and on a monthly basis, the lease is one
with a definite period which expires after the last day of any given thirty-day period.7 In the
recent case of Leo Wee v. De Castro where the lease contract between the parties did not
stipulate a fixed period,8 we ruled:

The rentals being paid monthly, the period of such lease is deemed terminated at the end of each
month. Thus, respondents have every right to demand the ejectment of petitioners at the end of
each month, the contract having expired by operation of law. Without a lease contract, petitioner
has no right of possession to the subject property and must vacate the same. Respondents, thus,
should be allowed to resort to an action for ejectment before the MTC to recover possession of
the subject property from petitioner.

Corollarily, petitioner’s ejectment, in this case, is only the reasonable consequence of his
unrelenting refusal to comply with the respondents’ demand for the payment of rental increase
agreed upon by both parties. Verily, the lessor’s right to rescind the contract of lease for non-
payment of the demanded increased rental was recognized by this Court in Chua v. Victorio:

The right of rescission is statutorily recognized in reciprocal obligations, such as contracts of

lease. x x x under Article 1659 of the Civil Code, the aggrieved party may, at his option, ask for
(1) the rescission of the contract; (2) rescission and indemnification for damages; or (3) only
indemnification for damages, allowing the contract to remain in force. Payment of the rent is one
of a lessee’s statutory obligations, and, upon non-payment by petitioners of the increased rental
in September 1994, the lessor acquired the right to avail of any of the three remedies outlined
above. (citations omitted)
In the case at bar, it has been sufficiently established that no written contract existed between the
parties and that rent was being paid by petitioner to respondent on a month-to-month basis. As
the CA noted, petitioner admitted the lack of such written contract in her complaint.9 Moreover,
in the instant petition for review, petitioner herself alleged that she has been occupying the leased
premises and paying the monthly rentals without fail since 1975.10 Hence, petitioner’s argument
that the contract of lease between her and respondent lacked a definite period–and that
corollarily, she may not be ejected on the ground of termination of period–does not hold water.
Petitioner was merely grasping at straws when she imputed grave error upon the CA’s decision
to eject her from the leased premises.

IN VIEW WHEREOF, the instant petition is DENIED. The decision of the Court of Appeals is
AFFIRMED.

SO ORDERED.

G.R. No. 70360 March 11, 1987

AREVALO GOMEZ CORPORATION, petitioner,

vs.
ANDERS LAO HIAN LIONG, doing business in the name and style of "TIONGSON
BAZAAR" and The Honorable SALVADOR J. VALDEZ, JR., respondents.

Feria , Feria, Lugtu & Lao for petitioner.

Deogracia Eufemio for respondents.

CRUZ, J.:

Some agreements deteriorate into misunderstandings, turning close friends into

irreconcilable adversaries and sweet harmony into bitter discord. This is one of them.

On December 1, 1964, the petitioner through its Vice-President, Renato Arevalo, and
respondent Andres Lao HIAN Liong, executed a "Contract of Lease" covering the
petitioner's property at Magsaysay Avenue, Baguio City, for a term of fifteen years,
effective September 1, 1964. The monthly rental was fixed at P2,450.00 but in addition
to this the respondent agreed to construct on the interior portion of the land leased a
three-story building of strong materials without right to reimbursement from the
petitioner. The cost of the building was to be not less than P150,000.00, of which the
sum of P45,000.00 would be contributed by petitioner. 1

Prior to the expiration of the lease on August 31, 1979, and for some time thereafter, the
parties entered into negotiations to fix a new rental but could not come to any
agreement. In the end, on October 2, 1979, the petitioner served on the respondent a
written notice to vacate the leased premises in view of the termination of their contract. 2
When the respondent refused to comply, the petitioner filed a complaint for ejectment
against him in the City Court of Baguio City.

Applying Article 1670 of Civil Code, the trial court held in favor of the defendant as
follows:

In the case on hand, it is admitted that the 15-year lease contract between the parties
expired on August 31, 1979. However, the defendant has continued occupying the leased
premises thereafter and even to this day. And it was only on October 2, 1979, or after
more than 15 days after the expiration of the original contract of lease, that he was given
the requisite notice to vacate. It is, therefore, abundantly clear that under the law, an
implied new lease had already set in when the plaintiff commenced its action for
ejectment on November 19, 1979. ... 3

The trial court also extended the period of the lease by five years from October 1, 1979,
pursuant to Article 1670 in relation to Article 1687 of the Civil Code, and fixed the new
rentals at P10,406.00 a month. 4

Both parties appealed. The petitioner contended that the original lease had not been
impliedly renewed but automatically expired on August 31, 1979. The respondent, for
his part, prayed for a longer extension of fifteen years, considering the nature of his
business (a bazaar) and his investment therein. He also claimed that, prior to the
execution of the contract, the petitioner had assured him he could stay indefinitely in the
disputed premises. 5

The Regional Trial Court of Baguio City affirmed the implied renewal of the lease but
modified the appealed judgment by extending the lease for ten years from September 1,
1979, or until August 31, 1989. The respondent judge also increased the new rentals to
P18,600.00 per month, effective September 1, 1979. 6 A motion for reconsideration and
for new trial was filed by petitioner but the same was denied. The petition then came to
us with the following assignment of errors:

1) Respondent Judge, as well as the trial judge, erred in deciding the case at bar in a way
not in accordance with law or with the applicable decisions of this Honorable Court,
particularly its decision in Roxas vs. Alcantara, 113 SCRA 21.

2) Respondent judge, as well as the trial judge, erred in holding that there was implied
renewal or tacita reconduccion despite the refusal of respondent Liong to agree to the
increased rental demanded by petitioner prior to the expiration of the contract of lease.

3) Respondent judge, as well as the trial judge, erred in holding that there was implied
renewal or tacita reconduccion despite the refusal of petitioner to accept payment of
rentals from respondent Liong after the expiration of the Contract of Lease.

4) Assuming for the sake of argument that Article 1687 of the New Civil Code is
applicable, the trial judge erred and gravely abused his discretion by extending the lease
for five (5) years and respondent judge erred and compounded the grave abuse of
discretion by extending the lease for ten (10) years.
 5) Respondent judge, as well as the trial judge, erred in admitting parol evidence with
respect to the term of the lease.

6) Respondent judge erred in not granting a new trial for the admission in evidence of the
building permit of the new building of respondent Liong which was issued after the
decision of the trial court.

7) Respondent judge erred in not admitting in evidence or taking judicial notice of the
Central Bank Certification dated August 21, 1984 showing the three successive
devaluations or depreciation of the Philippine peso after the decision of the trial court. 7

We address ourselves first to the submission of the respondent that the factual findings
of the court a quo cannot be reviewed in these proceedings which have been filed under
Rule 65 of the Rules of Court. That is not exactly correct. We note that, as the caption of
the petition indicates, it was filed not only under the said rule but also as an appeal by
certiorari under Rule 45, which, while generally limited to questions of law, nevertheless
allows review of the judgment a quo when it is based on a misapprehension of facts. 8
We shall apply this exception and treat this petition as solely filed under the latter rule. 9

It is not disputed that the original lease contract between the parties was only for fifteen
years expiring on August 31, 1979. The private respondent nonetheless continued
occupying the leased premises beyond that date and it was only on October 2, 1979,
that he was formally served with notice to vacate. What is in issue then is whether such
continued occupancy was with or without the implied acquiescence of the petitioner.

The applicable provisions of Civil Code are the following:

Article 1669. If the lease was made for a determinate time, it ceases upon the day fixed,
without the need of a demand.

Article 1670. If at the end of the contract the lessee should continue enjoying the thing
leased for fifteen days with the acquiescence of the lessor, and unless a notice to the
contrary by either party has previously been given, it is understood that there is an
implied new lease, not for the period of the original contract, but for the time established
in Article 1682 and 1687. The other terms of the original contract shall be revived.

Under the second article, an implied new lease or tacita reconduccion will set in if it is
shown that: (a) the term of the original contract of lease has expired; (b) the lessor has
not given the lessee a notice to vacate; and (c) the lessee continued enjoying the thing
leased for fifteen days with the acquiescence of the lessor. 10 This acquiescence may be
inferred from his failure to serve a notice to quit. 11

The petitioner contends that the service of an express notice to quit is not the only way
to prevent the implied renewal of the lease. Demanding a higher rental is also a
manifestation of non-acquiescence if the lessee does not accept the rate demanded. In
other words, failure of agreement on the new conditions of the lease results in an
automatic notice to vacate upon the expiration of the original lease.
In support of this position, the petitioner relies on the case of Roxas vs. Alcantara, 12
where this Court declared:

... Petitioner's letter of August 11, 1977 was a reminder to private respondent of the
impending expiration of the lease contract. Exh. "A", with a statement that was in effect
an offer or proposal to renew the contract on the terms and conditions, namely: (1) that
the rental would be P4,000.00 a month; (2) that three years advance rental should be
paid by private respondent; and (3) that a 15% yearly increase in rental would be
imposed. In other words, petitioner laid down the foregoing stipulations as conditions sine
qua non for any subsequent contract that might be negotiated with private respondent.
Thus clear from the letter, Exh. "C", is that if private respondent were not agreeable to
any or all of the new stipulations, there would be no renewal of the lease. Private
respondent was to communicate his reply within fifteen days from receipt of Exh. "C",
absent which petitioner would take it to mean that his conditions were acceptable to
private respondent and their contract renewed on the specified terms. However, private
respondent's letter, Exh. "F", evidently posted before the expiration of the period allowed
within which to decide, did not give a categorical affirmative or negative answer to
petitioner's proposition, and merely manifested the said lessee's desire to study the
matter until end of the following month of September, 1977, or up to the termination of the
then existing contract of lease, Exh. "A". Petitioner's failure to reply to the letter, Exh. "F",
can only be taken to mean that he acceded to the request for additional time. For the
obvious reason that the lease contract (Exh. "A") was expiring, it became more
imperative for private respondent to make a final decision within and not later than the
extended period which he asked for. Thus, when petitioner did not hear from private
respondent at the end of the aforesaid month of September, private respondent ceased
to have any legal right to possess and occupy the premises in question commencing the
first day of the following month of October.

As we see it, Article 1670 applies only where, before the expiration of the lease, no
negotiations are held between the lessor and the lessee resulting in its renewal. Where
no such talks take place and the lessee is not asked to vacate before the lapse of fifteen
days from the end of the lease, the implication is that the lessor is amenable to its
renewal.

Where the lessor is unwilling in any event to renew the lease for whatever reason, it will
be necessary for him to serve on the lessee a formal notice to vacate. As no talks have
been held between the lessor and the lessee concerning the renewal of the lease, there
can be no inference that the former, by his inaction, intends to discontinue it. In such a
case, no less than an express notice to vacate must be made within the statutory 15-
day period.

Applying these principles, the Court holds that the lease was not impliedly renewed in
the instant case.

It is a matter of record that weeks before the deadline for the notice to vacate, the
petitioner had already communicated to the respondent its intention to increase the
rental. This increase had to be accepted by the respondent if he wanted the lease to be
renewed. Significantly, in its letter to the respondent on September 18, 1979, 13 the
petitioner once again rejected the latter's counter-proposal and categorically declared
that the increased rental of P35,000.00 was "no longer negotiable." Since this was a
reply to the respondent's letter of September 14, 1979, 14 it is obvious that the increase
in rental was notified to the respondent on an earlier date, and before the expiration of
the original lease.

As of that date, the respondent was already being informed that he would have to
vacate the leased premises on August 31, 1979, unless he was willing to pay the
increased rental demanded by the lessor. Stated otherwise, the respondent was on that
date — which was clearly before the statutory deadline — being served a conditional
notice to vacate.

The formal notice to vacate sent by the petitioner to the respondent on October 2, 1984,
was thus merely a reiteration of the implied demand made to him in its previous
communications. The demand was that he vacate the leased premises if he could not
accept the non-negotiable increased rental of P35,000.00 a month. If the petitioner saw
fit to write that letter on the said date, which admitt edly was beyond the 15-day
statutory period, it was merely to repeat its insistence on the new rate as an
indispensable condition to the renewal of the lease. The legal consequence of its
rejection by the respondent was its obligation to vacate the leased premises because of
the expiration of the lease.

Even if, as urged by the respondent, we should disregard the petitioner's letter of
August 31, 1979, because it was not submitted at the trial, there nevertheless are the
other letters which were formally offered in evidence by the respondent himself. These
are Exhibit "5" and "Exhibit "6", dated September 5 and 14, 1979, respectively, in which
he rejected the petitioner's demand for the increased rental of P35,000.00. This could
mean only that the demand was made earlier as the said letters were merely a reaction
to such demand. These demands, as conditional notices to vacate if the petitioner's new
rental was rejected, satisfied the requirement of Article 1670.

It should be noted that, after August 1979, the petitioner refused to accept the
respondent's payments of the old rentals, demanding, as it had the right to do, the
increased rate of P35,000.00. Such a stance negates the conclusion that it was willing
to renew the lease under the original conditions and had, by its silence, impliedly agreed
to the retention of all its provisions. In fact, far from being silent, the petitioner
repeatedly insisted on the new rentals, and, to suit its actions to its words, flatly refused
the tender of the old rentals by the respondent. 15

No less worthy of attention is the circumstance that in its letter of September 18, 1979,
the respondent counter-proposed a monthly rental of P27,000.00, which the petitioner
rejected. 16 It could be illogical to suppose that, having done this, the petitioner would
later agree to the implied renewal of the lease for the original rental of only P2,450.00,
thereby forfeiting the amount of P24,550.00 every month

As the original lease contract expired on August 31, 1979, and was not legally renewed,
it follows that the respondent has since then been in illegal possession of the leased
premises. That unlawful detainer, which has lasted more than seven years now, during
which he has retained all the rights he originally enjoyed as if the lease had been validly
renewed, must be terminated immediately.

Coming finally to the monthly rentals to be paid by the respondent, it appears that
between the rate of P35,000.00 demanded by the petitioner and the respondent's
counter-proposal of P27,000.00, there is a difference of only P8,000.00. It is unfortunate
that the disagreement could not be ironed out in the spirit of friendship that used to
characterize the relations of the parties. 17 The respondent judge, for his part, using as
basis a fair monthly rental value of P50.00 for every square meter of the 372 square
meter floor area of the property leased, fixed the monthly rental at P18,600.00. 18

Considering all the above circumstances, and by way of effecting a reasonable

compromise between the parties, we hereby rule that the rentals to be paid for the use
and occupancy of the leased premises beginning September 1, 1979, and until it is
vacated by the respondent, shall be P30,000.00 per month, with interest at the legal
rate. From the total amount due shall be deducted the sums judicially deposited by the
respondent. We shall also fix the attorney's fee in the sum of P30,000.00, taking into
account the efforts exerted by counsel in prosecuting this case, from the city court of
Baguio and up to this Court. It is hoped that, being an experienced businessman, and
with this pending litigation and its possible consequences in mind, he has taken the
necessary measures to minimize the other expenses of his relocation if, as it is now,
ordered by this Court.

WHEREFORE, the decision of the respondent judge dated August 8, 1984, is set aside
and a new decision is hereby rendered ordering respondent Andres Lao Hian Liong to:
a) vacate the leased premises immediately; b) pay the petitioner monthly rentals in the
amount of P30,000.00 plus legal interest, from September 1, 1979, until the leased
premises are surrendered to the petitioner; and c) pay an attorney's fee in the sum of
P30,000.00 and the costs of this suit. The deposits made by the respondent in court
shall be deducted from the total amount due from him. This decision shall be
immediately executory and no motion for reconsideration shall stay its execution.

SO ORDERED.