Analita Inocencio v.

Hospicio de San Jose

Facts: Hospicio de San Jose (HDSJ) leased a parcel of land to German Inocencio (German). German then
constructed two buildings over the land which he subleased. Ramon, his son, was designated to
administer the properties. German died but Ramon did not inform HDSJ. Nonetheless, Ramon collected
rentals from the sublessees and paid rent to HDSJ. HDSJ acknowledged the existence of an implied lease
between Ramon and HDSJ, as the latter has been receiving rental payments from the former. HDSJ
informed Ramon that the contract shall expire on 31 March 2001 and it has no intention of renewing the
same since Ramon did not inform HDSJ of the sublease HDSJ then demanded Ramon to vacate the
property within 30 days. HDSJ also entered into lease agreements with other parties. HDSJ now filed a
complaint for unlawful detainer.

Issues: Whether the sublease is valid

Ruling: Despite the non-transferability of the contract without the consent of the lessor, HDSJ nonetheless
acknowledged that Ramon is its month-to-month lessee. Thus, German’s death did not terminate the
lease. (Validity of the lease to Ramon)

Ramon likewise had the right to sublease the property since the lease contract did not contain
any prohibitions on sublease, pursuant to Article 1650. Thus, the sublease contracts entered into by
Ramon were valid. (Validity of sublease)

Chua Tee Dee vs. CA

FACTS: On May 22, 1985, Agricom and Dee entered into a 15-year lease contract over the rubber
plantation owned by the former. Among the stipulations in the contract was the payment of deposit in
the amount of P135,000.00 and payment of back rentals in case of non-payment of rentals for three
months. The contract also stipulated that Agricom had the duty to maintain Dee in the quiet peaceful
possession and enjoyment of the leased premises. However, sometime in 1986, a labor case for illegal
dismissal and unfair labor practice was filed against Agricom. Agricom committed breach of contract for
its failure to maintain her in peaceful possession and enjoyment of the leased premises. The breach, in
turn, entitled her to suspend payment of rentals. The ordered Dee to pay Agricom back rentals and rentals
for the first three years of the lease already paid for. The CA affirmed the order.

ISSUE: Whether or not CA committed grave abuse of discretion in upholding the validity of the lease
contract and holding Dee liable for back rentals, including rentals already paid for.

HELD: The Supreme Court ruled partly in favor of Dee.

The duty “to maintain the lessee in the peaceful and adequate enjoyment of the lease for the duration of
the contract” is merely a warranty that the lessee shall not be disturbed in his legal, and not physical,
possession. In the present case, however, petitioner had not been disturbed in her legal possession of the
property. As to the claims of loss due to the labor dispute, the Supreme Court agreed with the CA that
Dee failed to prove this. During the period of pendency of the labor case, Dee regularly paid the monthly
rentals. It was only after the labor case has been resolved that she started to fail to pay her rentals,
strongly indicating that the labor case has not dampened her peaceful and adequate possession of the
leased premises.
PUP vs. GOLDEN

Facts: National Development Company (NDC) had in its disposal a 10 hectare property, commonly called
as NDC Compound. NDC entered into a Contract of Lease with Golden Horizon Realty Corporation (GHRC)
over a portion of the NDC Compound for a period of ten years, renewable for another ten years with
mutual consent of the parties. May 4, 1978: a second Contract of Lease was executed between NDC and
GHRC. In addition, GHRC as lessee was granted the “option to purchase the area leased, the price to be
negotiated and determined at the time the option to purchase is exercised.” Sometime after September
1988, GHRC discovered that NDC had decided to secretly dispose the property to a third party. In the
meantime, then President Corazon C. Aquino issued Memorandum Order No. 214 dated January 6, 1989,
ordering the transfer of the whole NDC Compound to the National Government, which in turn would
convey the said property in favor of PUP at acquisition cost. PUP demanded that GHRC vacate the
premises, insisting that the latter’s lease contract had already expired.

Issue: WON the option to purchase the portion leased to GHRC was violated by the sale of the NDC
Compound in favor of PUP pursuant to Memorandum Order No. 214. YES

Held: The contract between NDC and GHRC contained an option to purchase in favor to the lessee

The second lease contract contained the following provision: “It is mutually agreed by the parties
that this Contract of Lease shall be in full force and effect for a period of ten (10) years counted from the
effectivity of the payment of rental as provided under sub-paragraph (b) of Article I, with option to renew
for another ten (10) years with the mutual consent of both parties. In no case should the rentals be
increased by more than 100% of the original amount fixed.”

Lessee shall also have the option to purchase the area leased, the price to be negotiated and
determined at the time the option to purchase is exercised.

Chua vs. Victorio

Facts: The petition has its roots from several ejectment cases filed by respondent Mutya Victorio, the
owner of certain commercial units located on Panganiban Street Snatiago City, Isablea, against herein
petitioners. An earlier ejectment case ended in a compromise between the parties, approved by the trial
court. Thereafter, in September 1994, respondent, demanded a 25% rental increase from petitioners on
the basis of a rental survey of other commercial establishments along Panganiban Street, through her
attorney-in-fact. Petitioners refused to pay the increased rentals, compelling the respondent to filed
unlawful detainer cases against lessee.

Issue: WON the rescission made by respondent in relation to the Compromise Agreement is valid.

Held: Yes. The right of rescission is statutorily recognized in reciprocal obligations, such as contracts of
lease. Ordinarily, an obligee’s remedies upon breach of an obligation are judicial in nature. The mere
failure by the lessees to comply with the increased rental does not ipso jure produce the rescission of the
contract of lease. Rescission of lease contracts under Article 1659 of the Civil Code is not one that requires
an independent action, unlike resolution of reciprocal obligations under Article 1191.

EVANGELINE A. LEONIN and PEPITO A. LEONIN v. C.A. and GERMAINE P. LEONIN

FACTS: Prospero Leonin and his co-owners allowed his siblings, Evangelime and Pepito Leonil to occupy
Apartment C without paying any rentals. The owners of the property mortgaged it with the Government
Service Insurance System (GSIS) to secure a loan in the amount of Forty Eight Thousand Pesos
(P48,000.00). They however failed to settle the said loan. As a consequence thereof, GSIS foreclosed the
mortgage and the property was sold at public auction to GSIS. Prospero‘s brother, Teofilo Leonin (Teofilo),
redeemed the property, upon which GSIS executed a Release of Mortgage and turned over to him the
owner‘s duplicate title. Teofilo later sold the property by Deed of Absolute Sale to his daughter, herein
respondent Germaine Leonin, for Forty Eight Thousand Pesos (P48,000.00). After her father Teofilo‘s
death, Germaine sent a letter to her father‘s siblings-herein petitioners asking them to vacate Apartment
C as their occupation thereof was by mere tolerance and, at any rate, requiring them to execute a contract
of lease with her. This demand remained unheeded.

ISSUE: Whether respondent had the right to possess the property upon the execution of a deed of
absolute sale and the issuance of a transfer of certificate of title in her favor

HELD: Respecting the issue of whether germane has the right to possess the property upon the execution
of a deed of absolute sale and the issuance of a transfer of certificate of title in her favor, the same must
be resolved in the affirmative. It bears noting that Evangeline‘s and Pepito‘s occupation of the property
was on the mere tolerance of the former owners. Hence, when they failed to heed Germaine’s demand
to vacate, they had become deforciant occupants.

BUKIDNON DOCTORS HOSPITAL VS METROPOLITANT BANK TRUST & CO.

FACTS: Herein petitioner loaned a money amounting to P25 M from respondent as a security it mortgaged
6 parcels of land located in Bukidnon. Upon default in the payment of the loan, the said parcels of land
were extra-judicially foreclosed and put in a public auction and were sold to the respondent bank. In order
to continue its business the petitioner proposed that it would lease the land where its hospital is erected
in 3 years for 100,000 a month. Respondent bank agreed to the proposal however increasing the rental
to 200,000 a month with the contract subject to a review every 6 months. The parties were able to agree
with a monthly rental of 150,000 and that the contract shall take effect in November 2001. Approximately
1 year and 8 months, respondent ordered the petitioner to vacate the premises within 15 days. The latter
refused.

ISSUE: WON a writ of possession is the proper remedy for evicting a mortgagor who became a lessee of
the mortgaged properties after the mortgagee has consolidated ownership over the properties and was
issued new certificates of title.

HELD: NO. In the case at bar, it is not disputed that after the foreclosure of the property in question and
the issuance of new certificates of title in favor of the respondent, the petitioner and the respondent
entered into a contract of lease of the subject properties. This new contractual relation presupposed that
the petitioner recognized that possession of the properties had been legally placed in the hands of the
respondent, and that the latter had taken such possession but delivered it to the former as lessee of the
property. By paying the monthly rentals, the petitioner also recognized the superior right of the
respondent to the possession of the property as owner thereof. And by accepting the monthly rentals,
the respondent enjoyed the fruits of its possession over the subject property. Clearly, the respondent is
in material possession of the subject premises. Thus, the trial court’s issuance of a writ of possession is
not only superfluous, but improper under the law. Moreover, as a lessee, the petitioner was a legitimate
possessor of the subject properties under Article 525 of the Civil Code. Thus, it could not be deprived of
its lawful possession by a mere ex parte motion for a writ of possession.

CEBU BIONIC V. DBP

FACTS: Spouses Robles entered into a mortgage contract with the DBP to create the State Theatre Building
in Talisay, Cebu. Upon completion, Rudy Robles executed a contract of lease in favor of Cebu Bionic
Builders Supply. However, the spouses defaulted on their obligation to pay and DBP extra judicially
foreclosed the mortgage. DBP sent a letter to Cebu Bionic that if they were interested in leasing the
facilities, they would have to pay DBP. Initially, Cebu Bionic submitted their interest in bidding, but the
price that they gave was insufficient. DBP then awarded the auction to Respondents to Chip, Yap and
Balila. In response to several demand letters by the Respondents, Cebu Bionic filed a petition for
preliminary injunction, cancellation of deed of sale and specific performance against DBP. Petitioners then
related that, without their knowledge, DBP sold the subject properties to respondents To Chip, Yap and
Balila.

ISSUES: Was a contract of lease between petitioners and DBP?

HELD: Under Article 1305 of the Civil Code, "[a] contract is a meeting of minds between two persons
whereby one binds himself, with respect to the other, to give something or to render some service. “A
contract undergoes three distinct stages preparation or negotiation, its perfection, and finally, its
consummation. Negotiation begins from the time the prospective contracting parties manifest their
interest in the contract and ends at the moment of agreement of the parties. The perfection or birth of
the contract takes place when the parties agree upon the essential elements of the contract. The last
stage is the consummation of the contract wherein the parties fulfill or perform the terms agreed upon in
the contract, culminating in the extinguishment thereof. In the case at bar, there was no concurrence of
offer and acceptance vis-a-vis the terms of the proposed lease agreement.

La Campana Dev. Corp. vs. Ledesma

Facts: Petitioner filed an ejectment case with the Metropolitan Trial Court (MeTC) against private
respondent Ledesma, alleging that despite expiration of the contract of lease executed between them
and demands to vacate subject premises and pay rentals therefor, the latter failed to comply with such
demands. Private respondent countered in his Answer that he had paid the rentals over subject premises
and petitioner no longer had the right to possess the property as it had been foreclosed by the
Development Bank of the Philippines (DBP).

Issue: Whether the CA committed grave abuse of discretion amounting to lack or excess of jurisdiction
when it ordered the issuance of a writ of preliminary injunction to stay the immediate execution of the
RTC judgment.

Held: No. When exigencies in the case warrant it, the appellate court may stay the writ of execution issued
by the RTC in an action for ejectment if there are circumstances necessitating such action. Where
supervening events (occurring subsequent to the judgment) bring about a material change in the situation
of the parties which makes the execution inequitable, or where there is no compelling urgency for the
execution because it is not justified by the prevailing circumstances, the court may stay immediate
execution of the judgment.
Paul T. Irao vs. By the Bay, Inc.

FACTS: Ruby Roxas (Ruby) the representative of the Estate of Doña Trinidad de Leon Roxas and Ronald
Magbitang (Ronald) representative of By the Bay, Inc. forged a contract of lease of a 3-storey building
located in Pasay City for 5 years. By the Bay‘s restaurant was closed by the City Government and they
started defaulting in the payment of the rent. Ruby executed another contract of lease in favor of Paul T.
Irao (Paul), herein petitioner. Paul, together with the Barangay Kagawad and Security Guards, entered and
took possession of the leased premises.

ISSUE: Whether or not the lessor‘s demand letter to respondent sufficiently contained a notice of
termination of the lease contract and a demand to vacate the leased premises to justify the taking over
the possession

HELD: The language and intent x x x of the demand letter are unambiguous. The lessor demanded from
By the Bay Inc. the full payment of its unpaid rentals of P2,517,333.36 within five days from notice. The
phrase ―otherwise we shall be constrained, much to our regret‖ in the letter sends a clear warning that
failure to settle the amount within the stated period would constrain the lessor to ―terminate [the]
Contract of Lease‖ and ―take the necessary legal measures against [respondent] to protect [its] interest
without further notice.‖ The letter made it clear to respondent that the therein stated adverse
consequences would ensue ―without further notice,‖ an unmistakable warning to respondent that upon
its default, the lease contract would be deemed terminated and that its continued possession of the
leased premises would no longer be permitted.

Sulo sa Nayon Inc vs Nayong Pilipino Foundation

Facts: On 1975, Respondent leased to petitioner Sulo sa Nayon a portion of land for the construction and
operation of a hotel building for an initial period of 21 years until May 1996 and renewable for 25 years
upon due notice in writing to respondent at least 6 months prior of the expiration of the lease. On March
1995, petitioners sent respondent a letter notifying the latter’s intention to renew the contract for
another 25 years and that they executed a Voluntary Addendum to the lease agreement.
Beginning 2001, petitioners defaulted in the payment of their monthly rental so respondent demanded
petitioner to pay. On September 2001, respondent filed a complaint for unlawful detainer.
Petitioners insist that they should be considered builders in good faith who have the right of retention
until reimbursement by respondent is made

Issue: Is petitioners a builder in good faith?

Ruling: No. In the case at bar, petitioners have no adverse claim or title to the land. In fact, as lessees, they
recognize that the respondent is the owner of the land. What petitioners insist is that because of the
improvements, which are of substantial value that they have introduced on the leased premises with the
permission of respondent they should be considered builders in good faith who have the right to retain
possession of the property until reimbursement by respondent. We affirm the ruling of the CA that
introduction of valuable improvements on the leased premises does not give the petitioners the right
of retention and reimbursement which rightfully belongs to a builder in good faith. Otherwise, such a
situation would allow the lessee to easily “improve” the lessor out of its property. His right are governed
by Art 1678 of the Civil Code.