LACHICA vs.

ARANETA [1949]
PONCE DE LEON vs. SYJUCO [1951]
BUCE vs. COURT OF APPEALS [2000]
Petitioner: Anita C. Buce
Respondents: Court of Appeals, Sps. Bernardo & Araceli Tiongco, Sps. Dionisio &
Lucila Tiongco and Jose Tiongco
Facts:
 Buce leased respondents’ 56-sq.meter land in Pandacan, Manila. Contract was for
15 yrs (from Jun 1, 1979 – June 1, 1994) subject to renewal for another 10yrs. under
the same terms & conditions.
 Buce constructed a building & paid required monthly rental of P200.
 Respondents gradually increased rent reaching P400 in 1985. In July & Aug., 1991,
Buce paid P1,000.00 as monthly rent.
 Dec. 6, 1991: Respondents’ counsel wrote Buce informing her that effective Jan.
1992 rent will be P1,576.58 as per the Rent Control Law. However, Buce continued
issuing checks for only P400 as monthly rental. Respondents refused to accept these
checks.
 Aug. 9, 1993: Buce filed complaint for specific performance w/prayer for
consignation. She prayed that respondents be ordered to accept her payments & for
them to respect the contract w/c was renewable for another 10 years at the rate of
P200/month.
 Respondents’ contentions:
1. Buce already paid P1,000 monthly rent in July & Aug. 1991.
2. RA 877 (Rent Control Law): rental payments should already be
P1,576.58/month, thus their refusal to accept Buce’s checks were justified.
3. Subject to renewal clause did not mean automatic renewal. There must be a
mutual agreement between the parties.
 Respondents’ counsel wrote Buce reminding her that the contract has expired &
demanding payment of rentals in arrears amounting to P33,000.00.
 RTC:
1. lease contract was automatically renewed as proven by the stipulations in the
contract allowing Buce to construct a building & by Buce’s filing of the complaint
almost one year before the expiration of the initial term of 15yrs.
2. P400 monthly rent from June 1, 1990-June 1, 1994; P1,000.00 from June 1,
1994-June 1, 1999 and P1,500.00 for the rest of the period from June 1, 2000-
June 1, 2004. Continuous increase caused an inevitable novation of the
contract.
 CA: MFR denied. Ordered Buce to vacate premises.
1. Renewal clause unclear as to who may exercise the option.
2. Construction of building & other improvements & fact of filing of complaint are
not proof of automatic renewal.
3. Fernandez v. CA: w/o stipulation that option to renew the lease is solely for the
benefit of one party, renewal must be upon the agreement of all parties. And
since respondents were not agreeable to an extension, lease ended on June 1,
1994.
4. Refusal to accept checks was justified. In paying P1,000 rent in July & Aug.
1991, Buce was estopped from claiming that monthly rental is otherwise.
Issues & Ratio:
1. WON the renewal of the lease contract was automatic. – NO.
 Generally, the literal meaning of the stipulations shall control. But if it’s ambiguous,
consider the true intention of the parties w/c can be determined from their
subsequent/contemporaneous actions.
 Stipulation in this case is unclear on whether renewal was automatic or merely an
option and who may exercise such or for whose benefit it was stipulated.
 Renewal vs. Extension:
a. Renewal: connotes death of the old contract & emergence of a new one.
Creates an obligation to execute a new lease contract for the additional term.
b. Extension: operates of its own force to create an additional term.
 Nothing in the stipulations in the contract & the parties’ actuation shows that they
intended to automatically renew/extend the term of the contract. Improvements on
the property, filing of the complaint a year before the expiration of the original
contract, and the respondents’ acceptance of the increased rentals are not indicative
of the intention of the parties regarding renewal.
 Although the factual scenario in Fernandez v. CA was different, such may still be
applied: In a reciprocal contract like a lease, period must be deemed to have been
agreed upon for the benefit of both parties, absent language showing that the term
was deliberately set for the benefit of only one party. Very specific language is
necessary to show an intent to grant a unilateral faculty to extend/renew a contract.
 Fernandez v. CA & CC Art. 1196: when it’s not indicated in the contract as to who
may exercise the option to renew & as to who will benefit from such, it’s deemed to
be for the benefit of both parties. Thus, renewal may only take place upon the mutual
agreement of the parties. Since respondents were not amenable to a renewal, they
can’t be compelled to execute a new contract when the old contract expired. Such
decision can’t depend exclusively on free & uncontrolled choice of lessee.
2. WON ejectment was proper. – NO.
 After contract expired w/o agreement for renewal, Buce became subject to ejectment.
However, respondents didn’t include a prayer for the restoration of possession in
their complaint nor did they file an unlawful detainer suit. Ejectment was not an issue
agreed upon by the parties, either since they limited the issue to the correct
interpretation of the contract. Nor was it raised on appeal. Thus, CA went beyond its
authority in this aspect.
Holding: Petition partly granted. CA ruling w/c ordered Buce to vacate premises reversed
w/o prejudice to filing of proper action.
ARANETA vs. PHILIPPINE SUGAR ESTATE DEVELOPMENT [1967]
CPU vs. CA