1. GUZMAN, BOCALING AND CO. v.

BONNEVIE

FACTS:
Africa Valdez de Reynoso leased a parcel of land to Raoul S. Bonnevie and Christopher
Bonnevie for a period of one year beginning August 8, 1976. Reynoso alleged that on
November 3, 1976 she notified respondents by registered mail that she was selling the
leased premises for P600,000 and that she was giving respondents 30 days from receipt
of the letter to exercise their right of first priority to purchase the subject property as
stipulated in their Contract of Lease. On January 20, 1977, Reynoso sent another letter to
the respondents informing them that the property had been sold. Respondents wrote
back to Reynoso that they did not receive her first letter and that they had already
signified their interest to purchase the property beforehand to Reynosos agent and thus
were constrained to refuse Reynosos request to terminate the lease. Reynoso went on
with the sale in favor of Guzman, Bocaling & Co. for a lesser price, and filed an ejectment
case against the Bonnevies. Respondents filed an action for annulment of the sale. The
Court of First Instance ruled in favor of the respondents, declaring the deed of sale
executed by Reynoso in favor of Guzman, Bocaling & Co. null and void. The Court of
Appeals affirmed the lower courts decision but held that the Contract of Sale was not
voidable but was instead rescissible.

ISSUE:
1.) Did the Court of Appeals err in holding that the Contract of Sale was not voidable but
was instead rescissible?

2.) Did the Court of Appeals err in considering the petitioner as a buyer in bad faith?

HELD:
1.) No. Under Article 1380 to 1381 (3) of the Civil Code, a contract otherwise valid may
nonetheless be subsequently rescinded by reason of injury to third persons, like creditors.
The status of creditors could be validly accorded the Bonnevies for they had substantial
interests that were prejudiced by the sale of the subject property to the petitioner
without recognizing their right of first priority under the Contract of Lease. Rescission is a
remedy granted by law to the contracting parties and even to third persons, to secure
reparation for damages caused to them by a contract, even if this should be valid, by
means of the restoration of things to their condition at the moment prior to the
celebration of said contract. It is a relief allowed for the protection of one of the
contracting parties and even third persons from all injury and damage the contract may
cause, or to protect some incompatible and preferent right created by the contract.
Recission implies a contract which, even if initially valid, produces a lesion or pecuniary
damage to someone that justifies its invalidation for reasons of equity.

2.) No. Petitioner cannot be deemed a purchaser in good faith for the record shows that
it categorically admitted it was aware of the lease in favor of the Bonnevies, who were
actually occupying the subject property at the time it was sold to petitioner. A purchaser
in good faith and for value is one who buys the property of another without notice that
some other person has a right to or interest in such property and pays a full and fair price
for the same at the time of such purchase or before he has notice of the claim or interest
of some other person in the property. Good faith connotes an honest intention to abstain
from taking unconscientious advantage of another. Tested by these principles, the
petitioner cannot tenably claim to be a buyer in good faith as it had notice of the lease of
the property by the Bonnevies and such knowledge should have cautioned it to look
deeper into the agreement to determine if it involved stipulations that would prejudice
its own interests.
2. TEK SENG CO. v. CA

FACTS:
The subject of the petition is a verbal contract of lease over a portion of a building
belonging to Dewey Veloso Yap and David T. Veloso Yap, and occupied by the Yek Seng
Co. as lessee.

The leased premises have been used by the petitioner for its general merchandise
business for more than twenty years.

The agreed monthly rental was P3,000.00. On December 12, 1985, the lessors notified
the petitioner that they were terminating the lease as they intended to renovate the
building and thereafter use it themselves. The petitioner refused to vacate.

The private respondents then filed a complaint for ejectment against the petitioner. The
petitioner filed a petition for consignation of the monthly rentals which it claimed had
been refused by the lessors.

ISSUE:
Whether or not Yek Seng Co. should be given an extension of its lease.

HELD:
No. The mere occupancy of the premises for

a number of years, by itself, is not sufficient. Petitioner, being engaged in business, did
not take the necessary precautions against its possible and even abrupt displacement
because of the termination of the month-to-month lease. The rental in the case at bar
was paid monthly and the term had not been expressly agreed upon, the lease was
understood under Article 1687 to be terminable from month to month.

At the time the petitioner was asked to vacate the leased premises, the lease contract
had already expired and therefore, following the above-quoted decisions, could no longer
be extended.

In fact, even if such contract had not yet expired, its extension would still be subject to
the sound discretion of the court and was by no means obligatory upon it as a merely
ministerial duty.
 3. CLUTARIO v. CA
ACCEPTANCE BY LESSOR OF BACK RENTALS DOES NOT CONSTITUTE ABANDONMENT OF THEIR
CAUSE OF ACTION.
Case law is to the effect that the acceptance by the lessor of the payment by the lessee of the
rentals in arrears does not constitute a waiver of the default in the payment of rentals as a valid
cause of action for ejectment.
The Court notes that when petitioners paid the back rentals on May 15, 1981, private
respondents had already filed the complaint for ejectment earlier, to be specific, on March 4,
1981. The conduct of private respondents subsequent to their acceptance of the back rentals
belies any intention to waive their right to eject petitioners as a result of the latter's failure to
pay the rent for more than three (3) months. They did not enter into an amicable settlement
with petitioners. Neither did they notify the trial court of their intention to have the complaint
dismissed. Instead, they participated actively in the proceedings before the MTC during all the
time that the case dragged on for almost three years. In light of the surrounding circumstances
of the case, as well as the prevailing jurisprudence, the Court rules that the acceptance by
private respondents of the petitioners-lessees' back rentals did not constitute a waiver or
abandonment of their cause of action for ejectment against the latter.

FACTS:
Private respondents, the Spouses Melquiades Gandia and Maria V. Gandia, are the owners of a
two-storey residential apartment located, Cubao, Quezon City. Since 1961, while private
respondents have been occupying the upper storey of the house, petitioners have been staying
on the ground floor by virtue of a verbal lease agreement for a monthly rental of P150.00.
In 1980, private respondents, through their counsel, wrote a letter to the petitioners giving them
ninety (90) days to vacate the premises. According to them, due to their advanced age and
failing health, they have decided to occupy the entire apartment, including the ground floor
leased to petitioners. Because petitioners did not heed the demand letter, private respondents
brought the matter to the Katarungan Pambarangay for settlement, but this did not meet with
success. Another demand letter was sent by private respondents to petitioners on January 20,
1981.
In the meantime, it appears that 1980, petitioners were in arrears in the payment of their
rentals. On March 4, 1981, private respondents filed a complaint for ejectment against
petitioner Araceli Clutario before the Metropolitan Trial Court (MTC) of Quezon City because of
: (1) their need for the premises; and (2) non-payment of rentals by petitioners from August
1980. Pending the proceedings before the MTC, petitioners paid the back rentals from August
1980 until May 1981.
After trial, the MTC rendered judgment dismissing the complaint on the ground that private
respondents "failed to support their causes of action with substantial evidence."
Private respondents then filed an appeal with the Regional Trial Court (RTC) of Quezon City
respondent Judge George C. Macli-ing rendered a well-written decision reversing the MTC
judgment that petitioners' non-payment of rentals for more than three months and private
respondents' genuine need for the leased premises are sufficient causes for petitioners'
ejectment.
Petitioners file a petition for review before the Court of Appeals and in its decision Court of
Appeals affirmed the RTC judgment but deleted the award of attorney's fees to private
respondents. Petitioners elevated the case before this Court, on a petition for review under Rule
45 of the Rules of Court, seeking the reversal of the Court of Appeals' decision affirming the RTC
ruling that they can be ejected by their lessors, the private respondents.
ISSSUE: WON CA erred in affirming RTCs ruling.
Ruling: Court ruled on the negative. In the case at bar, respondents invoked two of the six
grounds for ejectment provided under sec 5 of BP 25 (1979), namely: (1) arrears in payment of
rent for three (3) months at any one time; and (2) need of the lessors to repossess their property
for their own use or for the use of any immediate member of their family as residential unit.
Petitioners payment of the back rentals and acceptance of the respondent does not constitute
a waiver or abandonment of their cause of action for ejectment against the latter. Respondents
showed through their conduct, subsequent to the acceptance of the back rentals, that they have
no intention of to waive their right to eject the petitioners. Since they continued on with the
complaint and did not notify the trial court of their intention to have the said complaint
dismissed. Also, the action of ejectment started before their payment to respondent, not after
payment of ejectment. Hence it falls under the said grounds for ejectment under sec5 of BP 25.
In relation to the second ground raised by the respondent, the lessor is able to validly eject the
lessee on the ground of need for the leased property; however it must be shown that there is
no other available residential unit to satisfy that need. The non-availability must exist at the
time of the demand by the lessor on the lessee to vacate the property, which declared to be
occupied by the RTC.MTCs decision ruling in favor of petitioners, was because the petitioners
had already occupied the upper floor of the unit, discounting respondents age and failing health.
However, the SC finds that the decision of private respondents to occupy both the lower and
upper portions of the property sprang not only from mere convenience, but from necessity as
well, due to their advanced age and the poor health of respondent Melquiades Gandia.
 4. YAP v. CRUZ

5. UNITED REALTY CORP. v. CA

Facts:
United Realty Corporation, petitioner, entered into a separate lease contract over two
apartments located at 913-E and 913-F Josefina St., Sampaloc, Manila with private respondent,
Rev. Father Jose Torralba Sy with a monthly rent of two hundred pesos (P200.00), until
termination of lease. Private respondent then after converted the apartment units into a
Buddhist Chapel. Then on 1975, petitioner sent a letter to private respondent informing him of
the increase of his monthly rent from P200 to P500 or P1000 for the two units leased by the
private respondent, with a request that the reply be given if respondent agrees with the rent
increase. Respondent Sy however filed a complaint before the Department of Public Information
that the rental increase was in violation of PD no20, which the latter ruled that it was not, since
the place of worship is not protected by the said decree. Then after, petitioner demanded that
respondent leave the vacate the two premises, which the latter failed to do. Thus a complaint
for unlawful detainer was filed against Rev. Fr. Sy, the court however dismissed the petition,
which was later affirmed by the CA but with modification finding that respondent is entitled to
damages. Hence the petition.
Issue: Whether the contract of lease is for a definite or indefinite period of time
Ruling:
The court ruled that the lease agreement is for a definite period, per the stipulation that the
agreement would be terminated when either party gives a notice in five (5) days in writing. Since
the lease agreement in question is for a definite period it follows that petitioner has a right to
judicially eject private respondent from the premises as an exception to the general rule
provided for in Section 4 of P.D. No. 20 which provides as follows: 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 dwelling unit or land on which another's dwelling is located
shall be suspended until otherwise provided; but other provisions of the Civil Code and the Rules
of Court of the Philippines on lease contracts insofar as they are not in conflict with the
provisions of this Act, shall apply. Moreover, under Section of 5(f) of B.P. Blg. 25 one of the
grounds for ejectment is the expiration of the period of a written lease contract. In this case,
because of the failure of the private respondent to pay the increased rental demanded by
petitioner, petitioner elected to terminate the contract and asked the private respondent to
vacate the premises. A lease contract may be terminated at the end of any month, which shall
be deemed terminated upon the refusal to pay the increased monthly rental demanded by the
petitioner, provided the same is not exorbitant.
 6. LEGAR MONT AND REALTY CORP. v. CA

Facts:
Spouses Augusto and Celia Legasto entered into a written contract of lease of their building with
no definite period with private respondents Pascual and Ancheta. Sometime in 1987, the
Legasto spouses and their children organized Legar Management & Realty Corporation, and
transferred and assigned thereto all their rights, interests, and privileges over certain properties,
including the subject apartment building. Thereafter, petitioner allowed private respondents to
continue occupying their apartment unit by virtue of a verbal contract of lease which was
renewable on a month-to-month basis. Pursuant to their verbal lease agreement, private
respondents were to pay petitioner a monthly rental of One Thousand Five Hundred Forty-Five
Pesos (P1,545.00). On April 21, 1992, petitioner wrote private respondent Pascual a formal
notice of termination, requesting him to vacate unit 318-T by the end of May, 1992. A similar
formal notice was sent to private respondent Ancheta on June 4, 1992, demanding vacation of
the same unit by the end of June, 1992. Both refused to heed petitioner's demand and did not
vacate the subject premises. Thus an ejectment case was instituted against the private
respondents with the MTC that ruled that the verbal lease contract between the parties, being
on a month-to-month basis, is for a definite period, and may be terminated at the end of any
month. Upon appeal however, RTC reversed the said decision, holding that "the mere expiration
of the month-to-month lease period in accordance with Article 1687of the New Civil Code does
not automatically give rise to an ejectment in casesgoverned by the Rent Control Law, in view
of Section 6 of Batas Pambansa Blg. 877, as amended. Said decision was upheld by CA ruling that
under the said law, the owner/lessor cannot eject the tenant by reason of the expiration of the
period of lease as fixed or determined under Article 1687 of the Civil Code. Even if in the instant
case the month-to-month period is deemed to have expired at the end of the month after notice
of demand to vacate . . ., (private) respondents' eviction cannot be allowed without regard to
the grounds for ejectment enumerated in Section 5 of Batas Pambansa Blg. 877. Hence the
petition.

Issue:
Whether the lessee of a residential property covered by the Rent Control Law can be ejected on
the basis alone of the expiration of the verbal lease contract under which rentals are paid
monthly.
Ruling:
The court ruled in the affirmative. "Section 6 of Batas Pambansa Blg. 877 provides that
provisions of par. 1 of the A.1673 of the Civil Code of the Philippines referring to residential units
covered by the said act shall be suspended during the effectivity of the act, and the 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. Also, Art. 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 it 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 fix a longer period after the lessee has stayed
in the place for over one month. In the case at bench, it was found by all three lower courts
that the lease over the subject property was on a month-to-month basis, and that there was
proper notice of non-renewal of contract and demand for vacation of premises made by
petitioners on private respondent. Unquestionably, therefore, the verbal lease agreement
entered into by private respondent and petitioners' father and predecessor-in-interest has been
validly terminated.