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FERMIN vs. COURT OF APPEALS G.R. No.

95146 May 6, 1991 FACTS: On March 15, 1976, herein petitioners and respondents entered into a contract of lease, as lessors and lessees respectively, covering a piece of land owned by spouses Fermin located at 157 Pinatubo St., Mandaluyong, Metro Manila. The lease contract stipulates that the rent is for P5,000 per annum which will be increase by 10% every 5yrs, and that the term of lease is 10yrs renewable by mutual agreement of the parties for another 10yrs. The petitioners hired AGRA Inc. to manage the property. Before the end of the 10yr term, Spouses Alpas (respondents) express intent to renew the contract and sent a signed lease contract to petitioners, this contract was never signed. On March 31, 1986, AGRA as agent of petitioners collected P1,800 from respondents as partial payments for March 15, 1986 to March 15, 1987. KEY MANAGEMENT started handling the property for respondents as attorney-in-fact from March 4, 1987. Respondents received a letter dated March 12, 1987 from KEY that they are terminating the lease as of March 15, 1987. Respondents then wrote a letter to KEY stating that the contract was already renewed for another 10yrs and attached a check for 2 year payment of rent plus interest. KEY informed respondents that the amount was received but will be applied to the rentals but for P2,000 a month. An ejectment case was filed by the petitioners for respondents refusal to agree to a monthly payment of P2,000. MTC ruled for respondents, RTC reversed, CA reinstated MTC decision. ISSUE: Whether the contract of lease has been renewed for 10 years? HELD: No. The contract was not renewed for 10 years. Although the lease was renewed, it was not for 10 years because there was no meeting of the minds between the parties as the contract made by the lessee was not signed by the lessor, and they failed to agree on the rental amount, the respondent wanting an annual rate, while the petitioners wanted a monthly rate. Under Article 1670, if at the end of the contract the lessee continues to enjoy the thing leased for 15 days with the acquiescence of the lessor, unless notice to the contrary was given, there is an implied new lease not for the original period but as provided under Article 1682 and 1687, other stipulations will remain the same.
Digest by: Jeff Martinez

MANTRUSTE SYSTEMS INC. (MSI) vs. COURT OF APPEALS G.R. Nos. 86540-41 November 6, 1989 FACTS: MSI entered into an Interim Lease Agreement with DBP in August 26, 1986 regarding the Bayview Hotel Properties for a minimum term of 3 months until the properties are sold by DBP. In December 1986 Proclamation 50 ordered disposition/privatization of some Government properties including the Bayview Hotel, the disposition of which is transferred from DBP to Asset Privatization Trust (APT). MSI was latter notified that the lease will be terminated to effect the disposition. MSI sent a letter notifying APT that the Property will be available after 30 days from September 18, 1987. October 7, 1987, APT sent a letter to MSI that they are given another 30 days from October 18, 1987 to wind up the affairs for a smooth transition. However, on October 22, 1987, MSI sent a letter to APT stating that in their opinion, having leased the property for more than 1 year the agreement is long term in character and MSI have acquired preference in buying the property, while emphasizing that MSI has a legal lien on the property because of its advances for the hotel operations and repairs which amounted to P12 Million. APT answered MSI saying that there was no agreement to that effect. The bidding took place on November 4, 1987, but MSI did not participate. Makati-Agro Trading and La Filipina Uy Gongco Corporation were awarded the property as the highest bidder for P85 Million. November 22, 1987 MSI filed a complaint with injunction on awarding and transfer of the property to the winning bidders. Trial court granted, but the CA reversed the trial court. ISSUE: Whether MSI as lessee has a right to retain the property pending reimbursement of its expenses? HELD: No, MSI as lessee has no right to retain the property pending reimbursement. MSI being a lessee know that the possession of the property was temporary thereby introducing improvements and repairs by its own risk. MSI cannot be considered a builder in good faith for that matter because he never possessed or occupied the said property as owner. While MSIs right to be reimbursed cannot be denied, it does not have any right of retention. The lease agreement also does not give any preferential right to purchase the property in question, unless it was clearly stipulated. In this case, no such stipulation was made and MSIs unjustified failure to bid in the public bidding for the Hotel may only be attributed or blamed to MSI.
Digest by: Jeff Martinez

ROMAN CATHOLIC ARCHBISHOP OF MANILA vs. CA G.R. No. 123321 March 3, 1997 FACTS: On January 18, 1962, Archbishop (lessor) and Manuel Uy and Sons Inc. (lessee) executed a contract of lease pertaining to the parcel of land in dispute. The lease agreement has the following stipulations: y Lease is for 8 years, renewable for two terms of 8 years (24yrs in total); y Lessee undertakes to eject the squatters occupying a portion of the property; y That all improvements to be constructed therein shall belong to the lessor upon termination of the lease, and shall pay taxes due on the property; y That no reimbursement is due to lessee for all the expenses as stipulated herein; y That lessee will grant the lessor a loan of P50,000 per year for 5 consecutive years (P250,000.00) with 8% interest, monthly rentals shall be considered as payments. The squatters were successfully ejected from the property in 1992, the time when full use of the property has been enjoyed by lessor. Although the lease agreement should have only been from 1962 to 1986, the lessor only demanded the lessee to vacate the property in November of 1991, and the last demand letter was on July 28, 1992, however, lessor has already accepted payment of rentals for the years 1986 to 1992, on May 25, 1992. An Ejectment case was filed by lessor after the first demand in November 1991. The MTC ruled in favor of herein petitioner. The lessee appealed to the RTC which reversed the decision and granted a 10 year extension of the lease starting from 1993 to 2003. RTC was affirmed by the CA. ISSUE: Whether the extension 10 year was proper? Whether there was implied renewal of the lease? HELD: No, the 10 year extension was not proper. However, extension of the lease agreement has its basis on equity due to the considerations that the lessor has received by contractual stipulation and will receive after termination of the lease. The lease agreement is hereby extended only up until 1998 as prayed for by the lessee. Yes, there was implied renewal. This is evident when after the 24 year term in 1986 demand to vacate was only made by the lessor in 1991. Also, when the last demand was made in July 1992, payment was already made in May 1992 for the years 1986 to 1992. To allow the lessee to recover the expenses, considering again that the squatters in the subject were only ejected in 1992, the extension until 1998 is proper as Article 1687 of the NCC allows the courts to fix the period when it is not stipulated, although monthly rent was agreed if the occupation of the premises exceeded 1 year.
Digest by: Jeff Martinez

MAURICIO AGAD vs. SEVERINO MABATO G.R. No. L-24193 June 28, 1968 FACTS: A public instrument dated August 29, 1952 between Mauricio Agad and Severino Mabato forming a partnership to operate a fishpond. Stated in the instrument is that P2,000.00 shall form part of the capital, P1,000.00 coming from each partner. A complaint was filed by Agad in June 9, 1964. It was alleged in the complaint that from 1952 up until 1956, Mabato who handled the funds render accounts to him, and that such accounts were refused to be given by Mabato, despite demands, from 1957 to 1963. Agad prayed for the payment of P14,000.00 as his just share (50%) in the earnings of the partnership, the partnership be dissolved, and a receiver be appointed for the winding up of its business. Mabato denies that such a partnership exist, alleging that Agad never gave his (P1,000) share after the public instrument was made, rendering the contract void ab initio. Magbato subsequently filed a motion to dismiss, alleging that the complaint states no cause of action and lack of jurisdiction as the case is principally to determine rights over public land (the fishpond). The court ruled to dismiss the complaint, stating that the instrument is null and void as Article 1773 of the Civil Code because inventory of the said fish pond was not made. It is not stated in the instrument who contributed the fishpond. Art. 1773. A contract of partnership is void, whenever immovable property is contributed thereto, if inventory of said property is not made, signed by the parties; and attached to the public instrument. ISSUE: Whether Article 1773 is applicable in the case at bar? HELD: No, it is not applicable. It is clear in the instrument that the partnership is to operate a fishpond by contributing P1,000.00 each, and not to engage in the fishpond business, hence, the purpose of the partnership was to operate the fishpond. Neither the fishpond or any real right thereto was contributed to the partnership (as only money was contributed as explicitly stated in the partnership instrument) or ever became part of the capital thereof. Therefore, Article 1773 is not applicable, case is remanded to lower court.
Digest by: Jeff Martinez

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