CASE 15

Francisco Lao Lim vs Court of Appeals and Benito Villavicencio Dy

G.R.No. 87047
31October1990
This case is with regard to Art 1182 of the NCC- Potestative Condition- Stipulation dependent
upon the sole will of the debtor
FACTS:
Records show that Francisco Lim, entered into a contract of lease with Benito Dy for a period
of 3 years, from 1976 to 1979. After the stipulated term expired the respondent refused to
leave the premises, so Francisco Lim filed an ejectment suit against Benito Dy. This case was
then taken over by a judicially approved compromise agreement, which provides an automatic
increase in rent of 20% every 3 years. On 1985 Dy, informed Lim of his intention to renew the
lease up to 1988, Lim did not agree to the renewal.
In 1987, another ejectment suit was filed by Lim after the failure of Dy to vacate the premises.
It was dismissed by the RTC and later affirmed by the CA for the following reasons:
(1) the stipulation in the compromise agreement which allows the lessee (Benito Dy) to stay on
the premises as long as he needs it and can pay rents is valid, being a resolutory condition, and
therefore beyond the ambit of art 1308 of the NCC; and (
2) the compromise agreement has the effect of res judicata.
ISSUE:
WON the stipulation in the compromise agreement which allows the lessee to stay on the
premises as long as he needs it and can pay rents is valid?
RULING:
No, since the stipulation for as long as the defendant needed the premises and can meet and
pay said increases is a purely potestative condition because it leaves the effectivity and
enjoyment of leasehold rights to the sole and exclusive will of the lessee.
The continuance, effectivity, and fulfillment of a contract of lease cannot be made to depend
exclusively upon the free and uncontrolled choice of the lessee between continuing payment of
the rentals or not, completely depriving the owner of any say in the matter. Mutuality does
not obtain in such a contract of lease and no equality exists between the lessor and the
lessee.
The decision of the Court of Appeals is REVERSED AND SET ASIDE. Benito Dy is ordered to
immediately vacate and return the possession of the premises and pay the monthly rentals due
thereon in accordance with the compromise agreement until he shall have actually vacated the
same. This Judgment is immediately executory.