OBLICON CASE DIGEST

Gertrude

DIFFERENT KINDS OF OBLIGATIONS WITH A PERIOD ISSUE:

CHAVES V. GONZALES
CHAVES (CUSTOMER) GONZALES (TYPEWRITER
REPAIRER)
July 1963: Chaves delivered to Gonzales who is a typewriter repairer a
portable type writer for routine cleaning and servicing
 Gonzales was not able to finish the job after some time despite repeated
reminders
 Gonzales merely gave an assurance but failed to comply with the same.
 October 1963: Gonzales asked from Chaves the sum of P6.00 for
purchase of spare parts
 October 23,1963: after long delay, Chaves went to house of defendant and
asked return of typewriter
 Typewriter was returned in shambles, with interior cover and some parts
and screw missing.
 Chaves formally demanded the return of missing parts , interior cover and
sum of P6.00
 August 1964: typewriter was repaired by Freixas Business Machines,
costing P89.85
 August 1965: Chaves commenced this action before City Court of Manila
demanding for damages. (Actual, Compensatory, Temperate, Moral
Damages and Attys Fees)
City Court of Manila
 Total cost of repair which is P89.85 should not be fully chargeable against
Gonzales . Repair invoice shows that missing parts had a total value of
only P31.10
Chaves claims:
 Art 1167: If a person is obliged to do something fails to do it, the same
shall be executed at his cost
 This same rule shall be observed if he does it n a contravention of a tenor
of the obligation. Furthermore, it may be decreed that what has been
poorly done be undone
Gonzales claims:
 He is not liable at all, not even for the sum of P31.10 because his contract
with plaintiff-appellant did not contain a period
 Chaves should have first filed a petition for court to fix the period under Art
1197 of the CC
WON GONZALES CAN INVOKE ART 1197
HELD:No
 There was a perfected contract of cleaning and servicing of type writer.
 They intended that defendant was to finish it at some future time although
such time was not specified;
 such time had passed without the work having been accomplished for the
defendant returned the type writer cannibalized and unrepaired --- in itself
a breach of his obligation, without demanding that he should be given
more time to finish the job/compensation for work he have already done.
 Time for compliance has evidently expired and there being a breach of
contract , it was academic for plaintiff to first petition for court to fix a period
of performance
 Defendant cannot invoke Art 1197 of CC1 for he has virtually admitted non-
performance by returning typewriter that he was obliged to repair in a non-
working condition with essential parts missing.
 Gonzales contravened the tenor of his obligation (1) Did not repair type
writer (2) Returned it in shambles
 He is liable under Art 1167 of the CC for the cost of executing obligation in
a proper manner. The cost for execution: P58.75
 In addition he is liable under Art 1170 for the cost of missing parts in the
amount of P31.10 for his obligation to repair the typewriter he was bound
but failed or neglected to return it in the same condition as he received it
 Art. 1170. Those who in the performance of their obligations are guilty of
fraud, negligence, or delay, and those who in any manner contravene the
tenor thereof, are liable for damages.
 Liable to pay P89.85
1 Art. 1197. If the obligation does not fix a period, but from its nature and the
circumstances it can be inferred that a period was intended, the courts may fix the
duration thereof.
The courts shall also fix the duration of the period when it depends upon the will of
the debtor.
In every case, the courts shall determine such period as may under the circumstances
have been probably contemplated by the parties. Once fixed by the courts, the period
cannot be changed by them. (1128a)

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 OBLICON CASE DIGEST
ENCARNACION V. BALDOMAR
Vicente Encarnacion (House owner, Baldomar (Lessee)
lessor)
Lease of house on a month to month basis
 P35/month
 After Manila was liberated in the last war, on March 1945 and April,
Encarnacion notified defendants mother and son to vacate the house on or
before April 15,1945 because plaintiff needed it for his offices as a result of
destruction of the building where his previous office was located
 Despite demands, defendants insisted on continuing occupancy
 Original action was lodged with the MTC
MTC
 Restitution and payment of rentals at a rate of P35/month from May 1 until
defendants completely vacated premises
CFI
Claim of defendants:
 According to defendant Lefrado Fernando contract which they had
celebrated with plaintiff since the beginning authorized them to continue
occupying house indefinitely and while they should faithfully fulfill their
obligation as respect the payment of rentals and that this agreement had
been ratified when another ejectment case between parties filed during
Japanese regime
 CFI ruled in favor of plaintiff’s witness Encarnacion Jr who testified that
lease had alws and since the beginning been upon a month-to-month
basis.
ISSUE:
Whether the contract authorized the defendants to continue occupying
the house indefinitely
HELD: NO
 Defense set up by Lefrado would leave to the sole and exclusive will of
one of the contracting parties (defendants) the validity and fulfillment of
contract of lease within the meaning of Art 1256
 Since the continuance and fulfillment of contract would depend solely and
exclusively upon their free and uncontrolled choce between continuing
paying the rentals or not, completely depriving the owner of all say in the
matter.
 So long as defendants elected to continue the leas by continuing payment,
owner would never be able to discontinue it.
 This course is prohibited by the aforesaid Article of the Civil Code.
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ELEIZEGUI V. THE MANILA LAWN TENNIS CLUB
Eleizegui (Lessor) The Manila Lawn Tennis Club, an English association
(represented by Mr. Williamson) (Lessee)
By the contract of lease
 Lessee is expressly authorized to make improvements upon land, by
erecting buildings of both permanent and temporary character, by making
fills, laying pipes and making such other improvements considered
desirable for the comfort and amusement of the members
1st: Dependent upon will of the debtor
 Upon 1 months’ notice given to lessee, may terminate the lease so
stipulated
2nd Dependent upon the will of lessee
3rd: In accordance with which the right is reserved to the courts to fix the
duration of terms
 Courts is of the opinion that contrat of lease was terminated by notice
given by plaintiffs on August of last year
 Such theory, as maintained by plaintiffs rests upon Art 1581 of the CC (law
in force when contract was entered into (1890) “When term has not been
fixed for lease, it is understood to be for years when an annual rental has
been fixed, for months when rent is monthly.
 2nd clause of contract provides as follows “The rent of sad land is fixed at
P25/month.
 Lessor says that Art 1569 of CC may judicially dispossess the lessee upon
expiration of conventional term or of the legal term; conventional term (one
agreed upon by parties) ; legal term (defect of conventional , fixed by law)
ISSUE: Whether or not the parties have agreed upon the duration of the
lease
HELD: YES, the parties have agreed upon a term hence Art. 1581 is
inapplicable.
 If there is, he cannot apply the legal term fixed in Art 1581
 In this case, the law interprets the presumptive intention of parties, they
having said “nothing in the contract with respect to duration”
 Features of contract
 Lease of land to Mr. Williamson who takes lease for all the time members
of the said club may desire to use it
 OBLICON CASE DIGEST
 The wners of the land undertake to maintain the club as tenant as long as
the latter shall see fit, without altering in the slightest degree the conditions
of this contract even though the estate be sold
 In view of the clauses however, it cannot be said that there is no stipulation
with respect to the duration of the lease, or that notwithstanding Art 1581 in
connection with Art 1569 can be applied.
 If this were so, it would be necessary to hold that the lessor spoke in vain.
ISSUE: Whether or not the lease depends upon the will of the lessee
HELD: The duration of the lease does not depend solely upon the will of the
Lessee (defendant).
 Having demonstrated that legal term can not be applied, there being a
conventional term, this destroy the assumption that the contract of lease
was wholly terminated by the notice given by the plaintiffs
 Notice: necessary :: only when it becomes necessary to have recourse of
the legal term.
 No intention that they reserve right to give such notice.
 Clause 3 begins as follows: "Mr. Williamson, or whoever may succeed him
as secretary of said club, may terminate this lease whenever desired
without other formality than that of giving a month's notice. The owners of
the land undertake to maintain the club as tenant as long as the latter shall
see fit."
 . It is evident that the lessors did not intend to reserve to themselves the
right to rescind that which they expressly conferred upon the lessee by
establishing it exclusively in favor of the latter.
 It would be the greatest absurdity to conclude that in a contract by which
the lessor has left the termination of the lease to the will of the lessee,
such a lease can or should be terminated at the will of the lessor.
 If such is the force of the agreement, there can be no other mode of
terminating the lease than by the will of the lessee, as stipulated in this
case.
 In fine, the law of the contract, superior to all other law, provided that there
be no agreement against any prohibitive statute, morals, or public policy.
 The terms of the contract express nothing to this effect. They do, however,
imply this idea.
 If the lease could last during such time as the lessee might see fit,
because it has been so stipulated by the lessor, it would last, (1) as long as
the will of the lessee that is, all his life; (2) during all the time that he may
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Gertrude
have succession, inasmuch as he who contracts does so for himself and
his heirs. (Art. 1257 of the Civil Code.)
 The lease in question does not ,fall within any of the cases in which the
rights and obligations arising from a contract cannot be transmitted to
heirs, either by its nature, by agreement, or by provision of law.
 Furthermore, the lessee is an English association.
 Usufruct is a right of superior degree to that which arises from a lease. It is
a real right
 Nevertheless, the utmost period for which a usufruct can endure, if
constituted in favor of a natural person, is the lifetime of the usufructuary
(art, 513, sec. 1); and if in favor of a juridical person, it can not be created
for more than thirty years. (Art. 515.)
 The only action which can be maintained under the terms of the contract is
that by which it is sought to obtain from the judge the determination of this
period, and not the unlawful detainer action which has been brought-- an
action which presupposes the expiration of the term and makes it the duty
of the judge to simply decree an eviction
 . To maintain the latter action it is sufficient to show the expiration of the
term of the contract, whether conventional or legal; in order to decree the
relief to be granted in the former action it is necessary for the judge to look
into the character and conditions of the mutual undertakings with a view to
supplying the lacking element of a time at which the lease is to expire.
 The plaintiffs, with respect to this conclusion on the part of their opponents,
only say that article 1128 "expressly refers to obligations in contracts in
general, and that it is well known that a lease is included among special
contracts
 In no part of Title VI of Book IV, which treats of the contract of lease, are
there any special rules concerning pure or conditional obligations which
may be stipulated in a lease, because, with respect to these matters, the
provisions of section 1, chapter 3, Title I, on the subject of obligations, are
wholly sufficient.
 With equal reason should we refer to section 2, which deals with
obligations with a term, in the same chapter and title, if a question
concerning the term arises out of a contract of lease, as in the present
case, and within this section we find article 1128, which decides the
question.
 The judgment was entered below upon the theory of the expiration of a
legal term which does not exist, as the case requires that a term be fixed
 OBLICON CASE DIGEST
Gertrude

by the courts under the provisions of article 1128 with respect to  The option, written in Tagalog, imposed on him the obligation to pay for the
obligations which, as is the present, are terminable at the will of the food of the dogs and the salaries of the maids in her household, the
obligee. charge not to exceed P1,800 a month.
 The option was conditioned on his obtaining Philippine citizenship.. It
(Willard Concurring) appears, however, that this application for naturalization was withdrawn
 Art 1581 has no application to the case and that action cannot be when it was discovered that he was not a resident of Rizal.
maintained  On October 28, 1958 she filed a petition to adopt him and his children on
 Application of Art 1128 I do not concur. the erroneous belief that adoption would confer on them Philippine
 If article 1581 is applicable to this case, the law fixes the duration of the citizenship. The error was discovered and the proceedings were
term and the courts have no power to change it. If article 1128 is applied to abandoned.
it, the courts fix the duration of the lease without reference to article 1581.  On November 18, 1958 she executed two other contracts, one extending
It will, I think, be agreed by everyone that article 1581 is the law applicable the term of the lease to 99 years, and another fixing the term of the option
to the case, and that article 1128 has nothing to do with it. of 50 years
 Even if the defendant has perpetual succession, the lease would not  But in a codicil of a later date (November 4, 1959) she appears to have a
necessarily last forever. A breach of any one of the obligations imposed change of heart. Claiming that the various contracts were made by her
upon the lessee by article 1555 of the Civil Code would give the landlord because of machinations and inducements practiced by him, she now
the right to terminate it. directed her executor to secure the annulment of the contracts.
Complaint alleged Wong Defense
PHILIPPINE BANKING CORP V. LUI SHE contracts were obtained by Wong denied having taken advantage of her
"through fraud, misrepresentation, trust in order to secure the execution
Justina Santos y Canon Faustino and Wong Heng (Lessee of portion of inequitable conduct, undue influence of the contracts in question. As
Lorenza Faustino (owner) property) P2,620/month and abuse of confidence and trust of counterclaim he sought the recovery
and (by) taking advantage of the of P9,210.49 which he said she owed
 Justina became the owner of the entire property when her sister diesd with
helplessness of the plaintiff and were him for advances.
no other heir made to circumvent the constitutional
 90 years old, blind and crippled, left with no relaive. Her only companions provision prohibiting aliens from
were 17 dogs and 8 maids acquiring lands in the Philippines and
 Wong himself was the trusted man to whom she delivered various also of the Philippine Naturalization
amounts for safekeeping, including rentals from her property at the corner Laws
Wong's admission of the receipt of Wong insisted that the various
of Ongpin and Salazar streets and the rentals.Wong also took care of the
P22,000 and P3,000 was the cue for contracts were freely and voluntarily
payment; in her behalf, of taxes, lawyers' fees, funeral expenses, masses, the filing of an amended complaint. entered into by the parties. He
salaries of maids and security guard, and her household expenses. Aside from the nullity of the contracts, likewise disclaimed knowledge of the
 In grateful acknowledgement of personal services of the lessee to her, the collection of various amounts sum of P33,724.27, admitted receipt
Justina Santos executed contract of lease, 3 allegedly delivered on different of P7,344.42 and P10,000, but
 3rd amendment was : occasions was sought. contended that these amounts had
been spent in accordance with the
 On December 21 she executed another contract giving Wong the option to
instructions of Justina Santo
buy the leased premises for P120,000, payable within ten years at a LC
monthly installment of P1,000.  [A]ll the documents mentioned in the first cause of action, with the
exception of the first which is the lease contract of 15 November 1957, are
declared null and void; Wong Heng is condemned to pay unto plaintiff thru

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 OBLICON CASE DIGEST
guardian of her property the sum of P55,554.25 with legal interest from the
date of the filing of the amended complaint;
 From this judgment both parties appealed directly to this Court. After the
case was submitted for decision, both parties died, Wong was substituted
by his wife, Lui She, the other defendant in this case, while Justina Santos
was substituted by the Philippine Banking Corporation.
 Justina Santos maintained — now reiterated by the Philippine Banking
Corporation —the contract was obtained in violation of the fiduciary
relations of the parties; because her consent was obtained through undue
influence, fraud and misrepresentation; and because the lease contract,
like the rest of the contracts, is absolutely simulated.
 Paragraph 5 of the lease contract states that "The lessee may at any time
withdraw from this agreement." It is claimed that this stipulation offends
article 1308 of the Civil Code which provides that "the contract must bind
both contracting parties; its validity or compliance cannot be left to the will
of one of them."
(Taylor v. Uy Tieng Piao.)
 Article 1256 [now art. 1308] of the Civil Code in our opinion creates no impediment
to the insertion in a contract for personal service of a resolutory condition permitting
the cancellation of the contract by one of the parties for where the contracting
parties have agreed that such option shall exist, the exercise of the option is as
much in the fulfillment of the contract as any other act which may have been the
subject of agreement.
 Indeed, the cancellation of a contract in accordance with conditions agreed upon
beforehand is fulfillment.
(Melencio v. Dy Tiao Lay)
 "provision in a lease contract that the lessee, at any time before he erected any
building on the land, might rescind the lease, can hardly be regarded as a violation
of article 1256 [now art. 1308] of the Civil Code."
 Here, in contrast, the right of the lessee to continue the lease or to terminate it is so
circumscribed by the term of the contract that it cannot be said that the continuance
of the lease depends upon his will.
 This case would at most justify the fixing of a period but not the annulment of the
contract.
 Justina Santos became the owner of the entire property upon the death of her sister
Lorenzo on September 22, 1957 by force of article 777 of the Civil Code. Hence,
when she leased the property on November 15, she did so already as owner
thereof. As this Court explained in upholding the sale made by an heir of a property
under judicial administration:
ISSUE:
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Gertrude
WON lease contract was obtained by Wong in violation of his fiduciary
relationship with Justina Santos, contrary to article 1646, in relation to
article 1941 of the Civil Code, which disqualifies "agents (from leasing)
the property whose administration or sale may have been entrusted to
them."
 The relationship of the parties, although admittedly close and confidential,
did not amount to an agency so as to bring the case within the prohibition
of the law.
 Wong might indeed have supplied the data which Atty. Yumol embodied in
the lease contract, but to say this is not to detract from the binding force of
the contract.
 For the contract was fully explained to Justina Santos by her own lawyer.
 One incident, related by the same witness, makes clear that she voluntarily
consented to the lease contract.
 This witness said that the original term fixed for the lease was 99 years but
that as he doubted the validity of a lease to an alien for that length of time,
he tried to persuade her to enter instead into a lease on a month-to-month
basis. She was, however, firm and unyielding
 Indeed, the charge of undue influence in this case rests on a mere
inference drawn from the fact that Justina Santos could not read (as she
was blind) and did not understand the English language in which the
contract is written, but that inference has been overcome by her own
evidence.
 Nor is there merit in the claim that her consent to the lease contract, as
well as to the rest of the contracts in question, was given out of a mistaken
sense of gratitude to Wong who, she was made to believe, had saved her
and her sister from a fire that destroyed their house during the liberation of
Manila.
 consent of Justina Santos was given freely and voluntarily.
 But the lower court set aside all the contracts, with the exception of the
lease contract of November 15, 1957, on the ground that they are contrary
to the expressed wish of Justina Santos and that their considerations are
fictitious.
 This is not to say, however, that the contracts are valid.
 For the testimony just quoted, while dispelling doubt as to the intention of
Justina Santos, at the same time gives the clue to a scheme to circumvent
the Constitutional prohibition against the transfer of lands to aliens. "The
illicit purpose then becomes the illegal causa" rendering the contracts void.
 OBLICON CASE DIGEST
 . To be sure, a lease to an alien for a reasonable period is valid. So is an
option giving an alien the right to buy real property on condition that he is
granted Philippine citizenship.
 But if an alien is given not only a lease of, but also an option to buy, a
piece of land, by virtue of which the Filipino owner cannot sell or otherwise
dispose of his property,21 this to last for 50 years, then it becomes clear
that the arrangement is a virtual transfer of ownership whereby the owner
divests himself in stages not only of the right to enjoy the land ( jus
possidendi, jus utendi, jus fruendi and jus abutendi) but also of the right to
dispose of it ( jus disponendi) — rights the sum total of which make up
ownership.
 . If this can be done, then the Constitutional ban against alien landholding
in the Philippines, as announced in Krivenko v. Register of Deeds,22 is
indeed in grave peril.
 it does not follow from what has been said, however, that because the
parties are in pari delicto they will be left where they are, without relief.
 For one thing, the original parties who were guilty of a violation of the
fundamental charter have died and have since been substituted by their
administrators to whom it would be unjust to impute their guilt.
 For another thing, and this is not only cogent but also important, article
1416 of the Civil Code provides, as an exception to the rule on pari delicto,
that "When the agreement is not illegal per se but is merely prohibited, and
the prohibition by law is designed for the protection of the plaintiff, he may,
if public policy is thereby enhanced, recover what he has paid or
delivered."
 Both parties on appeal reiterate their respective claims but we agree with
the lower court that both claims should be denied. Aside from the reasons
given by the court, we think that the claim of Justina Santos totalling
P37,235, as rentals due to her after deducting various expenses, should
be rejected as the evidence is none too clear about the amounts spent by
Wong for food masses and salaries of her maids
 His claim for P9,210.49 must likewise be rejected as his averment of
liquidation is belied by his own admission that even as late as 1960 he still
had P22,000 in the bank and P3,000 in his possession.
ACCORDINGLY, the contracts in question are annulled and set aside; the land
subject-matter of the contracts is ordered returned to the estate of Justina
Santos as represented by the Philippine Banking Corporation; Wong Heng (as
substituted by the defendant-appellant Lui She) is ordered to pay the Philippine
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Banking Corporation the sum of P56,564.35, with legal interest from the date of
the filing of the amended complaint; and the amounts consigned in court by
Wong Heng shall be applied to the payment of rental from November 15, 1959
until the premises shall have been vacated by his heirs. Costs against the
defendant-appellant.
LIM V. PEOPLE
Lim (Seller) Maria Aryoso (buyer)
1966 Proposal to sell Aryoso’s tobacco consisting of 615 kilos at P1.30 a kilo
 Lim was to receive the overprice for which she could sell the tobacco
 A document was drawn and signed.
 The appealant at that time was bringing a jeep, and the tobacco was
loaded in jeep and brought by Lim
 Of total value of P799.50, Lim had paid to Ayroso only P240.00 and this
was paid on 3 different times.
 Demands for payment of balance of value of her tobacco was maid
 After some time, 1967: she made payment of P240.00
 As no further amount was paid, the complainant filed a complaint against
appellant for estafa
Document :
 This is to certify that I have received from Mrs. Maria de Guzman Vda. de Ayroso. of
Gapan, Nueva Ecija, six hundred fifteen kilos of leaf tobacco to be sold at Pl.30 per
kilo. The proceed in the amount of Seven Hundred Ninety Nine Pesos and 50/100
(P 799.50) will be given to her as soon as it was sold.
ISSUE: WON CA WAS RIGHT IN HOLDING THAT THE FOREGOING
DOCUMENT FIXED A PERIOD AND THE OBLIGATION WAS THEREFORE
IMMEDIATELY DEMANDABLE AS SOON AS THE TOBACCO WERE SOLD
WON CA WAS RIGHT IN HOLDING THAT ART 1197 DOES NOT APPLY
HELD:
 It is clear that the agreement exhibit A that the proceeds of sale of tobacco
should be turned over as soon as the same was sold or that the obligation
was immediately demandable as soon as the tobacco was disposed of.
 Hence Art 1197 of NCC which provides that the courts may fix the duration
of obligaton if it does not fix a period does not apply.
 The fact that Lim received the tobacco to be sold at P1.30/kilo and that the
proceeds was given to the complaiant as soon as it was sold, strongly
negates transfer of ownership of the goods to the petitioner.
 OBLICON CASE DIGEST
 The agreement constituted her as an agent with the obligation to return the
tobacco if the same was not sold ‘
GREGORIO ARANETA INC V. PHIL SUGAR ESTATES DEVELOPMENT CO
LTD
J.M Tuson & Co (seller) through Philippine Sugar Estates Dev. Co Ltd.
Gregorio Araneta Inc (seller) (buyer)
Sold a portion of land for P430,514.00
 Buyer will build on the Sto.Domingo Church and Convent
 Seller will construct streets on NE and NW and SW sides of the land so
that block will be surrounded by streets on 4 sides.
 Buyer Phil. Sugar Estate finished construction of Sto. Domingo Church and
Convent but seller Gregorio Araneta Inc iss unable to finish the
consturcction of the street on the North East side because certain 3rd party,
Abundo, has been physically occupying middle part thereof, refused to
vacate the same
 Hence, Phil sugar estate filed a complaint against J. M. Tuason & Co., Inc.,
and instance, seeking to compel the latter to comply with their obligation,
as stipulated in the above-mentioned deed of sale, and/or to pay damages
in the event they failed or refused to perform said obligation.
Gregorio Araneta Defense:
 principal defense that the action was premature since its obligation to
construct the streets in question was without a definite period which needs
to he fixed first by the court in a proper suit for that purpose before a
complaint for specific performance will prosper.
Lower Court
 dismissed plaintiff's complaint (in a decision dated May 31, 1960),
upholding the defenses interposed by defendant Gregorio Araneta, Inc.
- "the proven facts precisely warrants the fixing of such a period,"
issued an order granting plaintiff's motion for reconsideration and
amending the dispositive portion
- giving defendant Gregorio Araneta, Inc., a period of two (2) years
from notice hereof, within which to comply with its obligation
CA
par7. Under the Deed of Sale with Mortgage of July 28, 1950, herein defendant
has a reasonable time within which to comply with its obligations to construct
and complete the streets on the NE, NW and SW sides of the lot in question;
that under the circumstances, said reasonable time has not elapsed;
- Judgment affirmed and modified; as a consequence, defendant is
given two (2) years from the date of finality of this decision to comply
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Gertrude
with the obligation
 We agree with the petitioner that the decision of the Court of Appeals,
affirming that of the Court of First Instance is legally untenable.
 fixing of a period by the courts under Article 1197 of the Civil Code of the
Philippines is sought to be justified on the basis that petitioner (defendant
below) placed the absence of a period in issue by pleading in its answer
that the contract with respondent Philippine Sugar Estates Development
Co., Ltd. gave petitioner Gregorio Araneta, Inc. "reasonable time within
which to comply with its obligation to construct and complete the streets."
ISSUE:
WON parties agreed that the petitioner should have reasonable time to perform
its part of the bargain.
 If the contract so provided, then there was a period fixed, a "reasonable
time;"
 and all that the court should have done was to determine if that reasonable
time had already elapsed when suit was filed if it had passed, then the
court should declare that petitioner had breached the contract, as averred
in the complaint, and fix the resulting damages.
 On the other hand, if the reasonable time had not yet elapsed, the court
perforce was bound to dismiss the action for being premature.
 But in no case can it be logically held that under the plea above quoted,
the intervention of the court to fix the period for performance was
warranted, for Article 1197 is precisely predicated on the absence of any
period fixed by the parties.
 still the amended decision is defective in that no basis is stated to support
the conclusion that the period should be set at two years after finality of the
judgment.
 The last paragraph of Article 1197 is clear that the period cannot be set
arbitrarily.
 Court shall determine such period as may under the circumstances been
probably contemplated by the parties.
 Article 1197 of the Civil Code involves a two-step process. The Court must
first determine that "the obligation does not fix a period" (or that the period
is made to depend upon the will of the debtor)," but from the nature and
the circumstances it can be inferred that a period was intended" (Art. 1197,
pars. 1 and 2). This preliminary point settled, the Court must then proceed
to the second step, and decide what period was "probably contemplated
by the parties"
 OBLICON CASE DIGEST
 So that, ultimately, the Court cannot fix a period merely because in its
opinion it is or should be reasonable, but must set the time that the parties
are shown to have intended
 . As the record stands, the trial Court appears to have pulled the two-year
period set in its decision out of thin air, since no circumstances are
mentioned to support it.
 Plainly, this is not warranted by the Civil Code.
 The contract shows that the parties were fully aware that the land
described therein was occupied by squatters, because the fact is expressly
mentioned
 . As the parties must have known that they could not take the law into their
own hands, but must resort to legal processes in evicting the squatters,
they must have realized that the duration of the suits to be brought would
not be under their control nor could the same be determined in advance.
 The conclusion is thus forced that the parties must have intended to defer
the performance of the obligations under the contract until the squatters
were duly evicted, as contended by the petitioner Gregorio Araneta, Inc.
 It follows that there is no justification in law for the setting the date of
performance at any other time than that of the eviction of the squatters
occupying the land in question; and in not so holding, both the trial Court
and the Court of Appeals committed reversible error.
 It is not denied that the case against one of the squatters, Abundo, was
still pending in the Court of Appeals when its decision in this case was
rendered.
In view of the foregoing, the decision appealed from is reversed,
 time for the performance of the obligations of petitioner Gregorio Araneta,
Inc. is hereby fixed at the date that all the squatters on affected areas are
finally evicted therefrom.
MILLARE V. HERNANDO
Pacifica Millare (lessor) private respondent Elsa Co, married
to Antonio Co (lessee)
5 year Contract of Lease
- rent out to the lessee at a monthly rate of P350.00 the "People's
Restaurant", a commercial establishment located at the corner of
McKinley and Pratt Streets in Bangued, Abra.
 Acc to Co spouses, sometime during the last week of May 1980, the
lessor informed them that they could continue leasing the People's
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Restaurant so long as they were amenable to paying creased rentals of
P1,200.00 a month.
 In response, they made a counteroffer of P700.00 a month
 At this point, the lessor allegedly stated that the amount of monthly rentals
could be resolved at a later time since "the matter is simple among us",
 Taken by the spouses Co to mean that the Contract of Lease had been
renewed, prompting them to continue occupying the subject premises and
to forego their search for a substitute place to rent.
 On 22 July 1980, Mrs. Millare wrote the Co spouses requesting them to
vacate the leased premises as she had no intention of renewing the
Contract of Lease
 In reply, the Co spouses reiterated their unwillingness to pay the Pl,200.00
monthly rentals supposedly sought bv Mrs. Millare which they considered
"highly excessive, oppressive and contrary to existing laws".
 Another letter of demand from Mrs. Millare was received on 28 July 1980
by the Co spouses, who responded by depositing the rentals for June and
July (at 700.00 a month) in court.
 On 30 August 1980, , the Co spouses filed a Complaint 5 with the then
Court of First Instance of Abra against Mrs. Millare and seeking judgment
(a) ordering the renewal of the Contract of Lease at a rental rate of
P700.00 a nionth and for a period of ten years, (b) ordering the defendant
to collect the sum of P1,400.00 deposited by plaintiffs with the court, and
(c) ordering the defendant to pay damages in the amount of P50,000.00.
 The following Monday, on 1 September 1980, Mrs. Millare filed an
ejectment case against the Co spouses in the Municipal Court of Bangued,
CFI
- judge denied the motion to dismiss and ordered the renewal of the
Contract of Lease
- plaintiffs were allowed to deposit all accruing monthly rentals in court,
while defendant Millare was directed to submit her answer to the
complaint.
 Hence, on 13 November 1980, Mrs. Millare filed the instant Petition for
Certiorari, Prohibition and Mandamus, seeking injunctive relief from the
abovementioned orders.
Two issues are presented for resolution: (1) whether or not the trial court
acquired jurisdiction over Civil Case No. 1434; and (2) whether or not private
respondents have a valid cause of action against petitioner.
Held:
 OBLICON CASE DIGEST
FIRST ISSUE
 Petitioner's attack on the jurisdiction of the trial court must fail, though for
reasons different from those cited by the respondent judge
 We would note firstly that the conciliation procedure required under P.D.
1508 is not a jurisdictional requirement in the sense that failure to have
prior recourse to such procedure would not deprive a court of its
jurisdiction either over the subject matter or over the person of the
defendant.
 Secondly, the record shows that two complaints were submitted to the
barangay authorities for conciliation — one by petitioner for ejectment and
the other by private respondents for renewal of the Contract of Lease
 After attempts at conciliation had proven fruitless, Certifications to File
Action authorizing the parties to pursue their respective claims in court
were then issued at 5:20 p.m. of that same aftemoon, as attested to by the
Barangay Captain in a Certification presented in evidence by petitioner
herself.
 The defect in procedure admittedly initially present at that particular
moment when private respondents first filed the complaint in the trial court,
was cured by the subsequent issuance of the Certifications to File Action
by the barangay Lupong Tagapayapa
 Such certifications in any event constituted substantial comphance with the
requirement of P.D. 1508.
SECOND ISSUE:
. Paragraph 13 of the Contract of Lease reads as follows:
13. This contract of lease is subject to the laws and regulations ofthe goverrunent;
and that this contract of lease may be renewed after a period of five (5) years under the
terms and conditions as will be mutually agreed upon by the parties at the time of
renewal; ...
 In short, the lease contract has never expired because paragraph 13
thereof had expressly mandated that it is renewable.
 It is the defendant-lessor's assertion and position that she can at the mere
click of her fingers, just throw-out the plaintiffs-lessees from the leased
premises and any time after the original term of the lease contract had
already expired
 Court cannot sanction lot owner's business and commercial speculations
by allowing them with "unbridled discretion" to raise rentals even to the
extent of "extraordinary gargantuan proportions, and calculated to
unreasonably and unjustly eject the helpless lessee because he cannot
afford said inflated monthly rental and thereby said lessee is placed
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without any alternative, except to surrender and vacate the premises
mediately
 , to the mind of this Court, is "fly-by night unjust enrichment" at the
expense of said lessees;
 but, no Man should unjustly enrich himself at the expense of another;
under these facts and circumstances surrounding this case, the action
therefore to renew the lease contract! is "tenable" because it falls squarely
within the coverage and command of Articles 1197 and 1670 of the New
Civil Code, to wit:
 The term "to be renewed" as expressly stipulated by the herein parties in
the original contract of lease means that the lease may be renewed for
another term of five (5) years;
 In other words, the lessor is guilty of breach of contract: Since the original
lease was fixed for five (5) years, it follows, therefore, that the lease
contract is renewable for another five (5) years and the lessee is not
required before hand to give express notice of this fact to the lessor
because it was expressly stipulated in the original lease contract to be
renewed;
 Wherefore, the bare refusal of the lessor to renew the lease contract
unless the monthly rental is P1,200.00 is contrary to law, morals, good
customs, public policy, justice and equity because no one should unjustly
enrich herself at the expense of another.
 Article 1197 and 1670 of the New Civil Code must therefore govern the
case at bar and whereby this Court is authorized to fix the period thereof
by ordering the renewal of the lease contract to another fixed term of five
(5) years.
 Paragraph 13 of the Contract of Lease can only mean that the lessor and
lessee may agree to renew the contract upon their reaching agreement on
the terms and conditions to be embodied in such renewal contract.
 Failure to reach agreement on the terms and conditions of the renewal
contract will of course prevent the contract from being renewed at all.
 In the instant case, the lessor and the lessee conspicuously failed to reach
agreement both on the amount of the rental to be payable during the
renewal term, and on the term of the renewed contract.
 The respondent judge cited Articles 1197 and 1670 of the Civil Code to
sustain the "Judgment by Default" by which he ordered the renewal of the
lease for another term of five years and fixed monthly rentals thereunder at
P700.00 a month.
Article 1197 of the Civil Code provides as follows:
 OBLICON CASE DIGEST
 If the obligation does not fix a period, but from its nature and the circumstances it
can be inferred that a period was intended, the courts may fix the duration thereof.
The courts shall also fix the duration of the period when it depends upon the
will of the debtor.
In every case, the courts shall determine such period as may, under the
circumstances, have been probably contemplated by the parties. Once fixed by
the courts, the period cannot be changed by them. (Emphasis supplied.)
 The first paragraph of Article 1197 is clearly inapplicable, since the
Contract of Lease did in fact fix an original period of five years, which had
expired.
 It is also clear from paragraph 13 of the Contract of Lease that the parties
reserved to themselves the faculty of agreeing upon the period of the
renewal contract.
 The second paragraph of Article 1197 is equally clearly inapplicable since
the duration of the renewal period was not left to the will of the lessee
alone, but rather to the will of both the lessor and the lessee.
 Most importantly, Article 1197 applies only where a contract of lease
clearly exists. Here, the contract was not renewed at all, there was in fact
no contract at all the period of which could have been fixed.
Article 1670 of the Civil Code reads thus:
 If at the end of the contract the lessee should continue enjoying the thing
left for 15 days with the acquiescence of the lessor and unless a notice to
the contrary by either party has previously been given. It is understood that
there is an implied new lease, not for the period of the original contract but
for the time established in Articles 1682 and 1687. The ther terms of the
original contract shall be revived.
 Even if it be assumed that tacite reconduccion had occurred, the implied
new lease could not possibly have a period of five years, but rather would
have been a month-to-month lease since the rentals (under the original
contract) were payable on a monthly basis.
 At the latest, an implied new lease (had one arisen) would have expired as
of the end of July 1980 in view of the written demands served by the
petitioner upon the private respondents to vacate the previously leased
premises.
 Save in the limited and exceptional situations envisaged inArticles ll97 and
1670 of the Civil Code, which do not obtain here, courts have no authority
to prescribe the terms and conditions of a contract for the parties.
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 As pointed out by Mr. Justice J.B.L. Reyes in Republic vs. Philippine Long
Distance Telephone,Co.,[[18
 [P]arties cannot be coerced to enter into a contract where no agreement is
had between them as to the principal terms and conditions of the contract.
Freedom to stipulate such terms and conditions is of the essence of our
contractual system, and by express provision of the statute, a contract may
be annulled if tainted by violence, intimidation or undue influence (Article
1306, 1336, 1337, Civil Code of the Philippines).
 That volition cannot be supplied by a judge and a judge who pretends to
do so, acts tyrannically, arbitrarily and in excess of his jurisdiction.
CHUA V. CA
Chua (Lessees of Commercial Unit) Ibarra (lessor)
Lessees of a commercial unit at Baclaran, Paraaque, Metro Manila
- for a period of five (5) years
- contract expressly provided for the renewal of the lease at the option
of the lessees in accordance with the terms of agreement and
conditions set by the lessor
- Prior to the expiration of the lease, the parties discussed the
possibility of renewing it. They exchanged proposal and
counterproposal, but they failed to reach agreeme
 On July 24, 1990, private respondent filed a complaint for unlawful detainer
against petitioners in the MTC
MTC
- petitioners are hereby given a period of two (2) years extension of
occupancy of the subject premises starting the date of the filing of the
instant complaint;
- pay the plaintiff (herein private respondent) the sum of P188,806.00
representing back rentals as of the year 1991 and a monthly rental of
P10,000.00 thereafter until the expiration of the aforesaid extension of
their occupancy or until the subject premises is actually vacated.
RTC
- lease was for a fixed period of five (5) years and that, upon its
expiration on January 1, 1990, petitioners continued stay in the
premises became illegal
- As provided in Art. 1687 of the Civil Code, the power of the courts to
fix the period of lease is limited only to cases where the period has not
been fixed by the parties themselves.
ISSUE:
whether plaintiff had a valid cause of action for ejectment against them as he is
not the sole owner of the leased premises, and then averred that based on this
 OBLICON CASE DIGEST
premise, the other issues raised by plaintiff could be dependent on the
resolution of the stated
 plaintiff Ramon Ibarra testified that although his lease contract with
petitioners stipulated an annual ten percent (10%) additional rental starting
in 1986
 petitioners continued to pay only the original monthly rental of P5,000
stipulated in their contract so that petitioners had incurred total rental
arrearages at the end of 1989 of P42,306.00
 As correctly ruled by the respondent court, to absolve the defendants from
paying rentals in arrears while they continue occupying and enjoying the
premises would be allowing the defendants to enrich themselves at the
expense of the plaintiff.
 Second. Petitioners claim that they are entitled to an extension of time to
occupy the premises in question. This, too, is without merit.
 After the lease terminated on January 1, 1990 and without the parties
thereafter reaching any agreement for its renewal, petitioners became
deforciants subject to ejectment from the premises.
 Neither did the Court of Appeals err in ruling that petitioners are not entitled
to a reasonable extension of time to occupy the premises on account of
the fact that the lease contract between the parties has already expired.
 The potestative authority of the courts to fix a longer term for a lease under
Art. 1687 of the Civil Code applies only to cases where there is no period
fixed by the parties.
 To the contrary, in this case, the contract of lease provided for a fixed
period of five (5) years from January 1, 1985 to December 31, 1989.
 It is not the province of the court to alter a contract by construction or to
make a new contract for the parties; its duty is confined to the
interpretation of the one which they have made for themselves, without
regard to its wisdom or folly, as the court cannot supply material
stipulations or read into contract words which it does not contain.
 Indeed, Art. 1675 of the Civil Code excludes cases falling under Art. 1673
(which provides among others, that the lessor may judicially eject the
lessee when the period agreed upon or that which is fixed has expired)
from the cases wherein, pursuant to Art. 1687, courts may fix a longer
period of lease.
 For these reasons, we hold that the Court of Appeals did not err in ruling
that petitioners were not entitled to an extension of the lease upon its
expiration
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 The fact that petitioners allegedly made repairs on the premises in
question is not a reason for them to retain the possession of the premises.
 There is no provision of law which grants the lessee a right of retention
over the leased premises on that ground.
 Art. 448 of the Civil Code, in relation to Art. 546, which provides for full
reimbursement of useful improvements and retention of the premises until
reimbursement is made, applies only to a possessor in good faith, i.e., one
who builds on a land in the belief that he is the owner thereof.
 In a number of cases, the Court has held that this right does not apply to a
mere lessee
 Art. 1678 merely grants to such a lessee making in good faith useful
improvements the right to be reimbursed one-half of the value of the
improvements upon the termination of the lease, or, in the alternative, to
remove the improvements if the lessor refuses to make reimbursement.
 Petitioners were thus correctly ordered to pay attorneys fees considering
that private respondent had to go to court to protect his interest.[
 As the Court of Appeals said, petitioners never complained before about
the sidewalk vendors occupying a portion of the leased property. It was
only after negotiations for renewal of the lease had failed and private
respondent had filed a complaint for unlawful detainer against them did
they complain about the vendors.
LO CHUA V. CA
GIVEN THESE FACTS: the lease period was not agreed upon by the parties,
rental was paid monthly, and the lessee has been occupying the premises for a
couple of years, will the law step in to fix the period, or authorize the court to fix
a longer period?
CHUA (Lessor) LO CHUA (Lessee)
- Leased in the 4 storey building (NBC)
- Month to month basis for P12,938.20
 Subsequently, respondent Eric Chua decided to sell the property. Through
a letter of 6 November 1995 he offered petitioner a right of first refusal to
be exercised within five (5) days from receipt thereof,
 Petitioner failed to manifest his intention within the period.
 Chua sold the property to respondent MAGICAIRE for P25,000,000.00
subject to the condition stated in the Deed of Conditional Sale that
 OBLICON CASE DIGEST
P5,000,000.00 would be paid after the building was completely vacated by
the tenants.
 On 4 December 1995 respondent Chua through a letter informed petitioner
about the sale transaction, the termination of their lease agreement
effective 31 March 1996 and demanded that petitioner vacate the premises
after the end of the period, at the same time waiving the rentals for
January to March 1996 in consideration of petitioners understanding and
cooperation
 . On 28 March 1996 respondent Chua made a final demand on petitioner
to vacate the property but was refused.
 Petitioner contended that he ignored the demand letters of respondent
Chua because upon verification from the Register of Deeds of Manila
petitioner learned that respondent Chua was no longer the owner of the
property; that petitioner allowed the Petition for Consignation to be
dismissed on 25 September 1996 because respondent Chua was not the
real party-in-interest; and, that petitioner made a counter offer to purchase
the property on 11 November 1995 but respondent Chua nonetheless
proceeded with the sale to respondent MAGICAIRE.
 During the preliminary conference, the parties stipulated on certain facts,
among which insofar as pertinent were: (a) payment of rental was on a
monthly basis; (b) receipt by petitioner of the 6 November 1995 letter from
respondent Chua offering petitioner a right of first refusal; (c) validity of
TCT No. 167283 in the name of respondent Chua; (d) receipt by petitioner
of the 4 December 1995 letter of respondent Chua terminating the lease
and ejecting petitioner from the premises; (e) filing by petitioner of a
Petition for Consignation before the MTC of Manila; (f) existence of the 28
March 1996 letter of respondent Chua containing the final demand to
vacate; (g) receipt by respondent Chua of the Reply of petitioner of 11
November 1995 to his letter of 6 November 1995; (h) existence of the
Deed of Absolute Sale over the property executed by respondent Chua in
favor of respondent MAGICAIRE on 16 November 1995 aside from the
Deed of Conditional Sale executed on the same day; and, (i) issuance on
27 November 1995 of TCT No. 225102 in the name of respondent
MAGICAIRE cancelling the title of respondent Chua.
 The parties also stipulated on the following issues: (a) whether petitioner
may be validly ejected from the premises on the ground of termination of
monthly lease contract and non-payment of rentals; (b) whether petitioner
was entitled to exercise his right of first refusal; (c) whether petitioner was
entitled to an extension of the lease period conformably with Art. 1687 of
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the Civil Code for having occupied the property for more than thirty (30)
years; (d) whether respondent Chua had the right to demand that
petitioner vacate the premises and to file the present case after he ceased
to be the owner thereof; and, (e) whether the amendment of the Complaint
joining respondent MAGICAIRE as plaintiff validated the demand letter of
28 March 1996 for the purpose of filing the ejectment suit.
MTC
- petitioner could be ejected from the premises for non-payment of
rentals and termination of the lease contract, and for the period that
petitioner unlawfully withheld possession thereof, he was liable to pay
accrued rentals as reasonable compensation for its use and
occupation until final surrender to respondents.
- petitioner was not entitled to exercise his right of first refusal since the
property was not located within the Priority Development Zone
decreed pursuant to Sec. 4, PD 151 , right pertained only to tenants
who built their homes on a parcel of land.
- under Sec. 1, Rule 70, of the Rules of Court, a landlord, vendor or
vendee may rightfully file an ejectment case against the person
unlawfully withholding possession of a specific property as well as the
legal representatives or assigns of such persons.
- ordered petitioner and all persons claiming under him to immediately
vacate and surrender possession of Rm. No. 308 and Stall No. 561 of
the NBC, and to pay the current monthly rental of P12,938.20 as
reasonable compensation for the continued use and occupancy
thereof from April 1996 until he finally vacated and surrendered
possession to private respondents as well as to pay attorneys fees of
P5,000.00 and the costs.
RTC: AFFIRMED
- fifth issue, it elaborated that the demand sent by respondent Chua on
4 December 1995 was sufficient compliance with the rules for filing an
ejectment suit. It cited Garcia v. Court of Appeals
CA Affirmed
 Petitioner argues that his lease contract with the owners of the property
previous to respondent Chua, referring to Vic-Mar Industries and Mariano
Chua, was in writing and on a yearly basis which was thereafter assumed
by respondent Chua also on a yearly basis, except that the new lease
agreement was not reduced to writing.
 We agree with the finding of all the three (3) lower courts that the lease
contract between petitioner and respondent Chua was on a monthly basis.
 It is settled that if the rent is paid monthly, the lease is on a month-to-
month basis and may be terminated at the end of each month.
 OBLICON CASE DIGEST
 Article 1687 of the Civil 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.
 Petitioner also claims that respondent Chua ceased to be the owner-lessor
of the property effective 16 November 1995 when he executed his Deed of
Absolute Sale in favor of MAGICAIRE on 27 November 1995 and a new
title was issued in favor of respondent MAGICAIRE, such that respondent
Chua had no more right to serve upon petitioner the notice of termination
of the lease and to vacate on 4 December 1995 nor to file the Complaint
for ejectment on 19 April 1996.
 On the strength of this provision of Rule 70, respondent Chua as vendor
was without doubt authorized to institute the action for ejectment.
Moreover, inasmuch as the rule recognizes such right of the vendor,
respondent Chua also had the right to send the notices of termination of
the lease agreement and to vacate on 4 December 1995 and 28 March
1996.
 The right to send the notices is rooted in the right to file the court action. At
any rate, petitioner need not have harped on the alleged absence of the
right of respondent Chua to send the notices.
 The notice or demand to vacate is not necessary when the unlawful
detainer is based on expiration of the contract of leaseas what obtains
here.
 Clearly, petitioner was not entitled to the right of first refusal under PD
1517 since he was using the premises not for residential but for business
purpose. Even granting that the right was available to him, the Court of
Appeals correctly noted that his reply to the 6 November 1995 letter of
respondent Chua was not timely exercised. The reply of 11 November
1995 was received by respondent Chua only on 21 November 1995 or
beyond the period that ended on 12 November 1995.
 Petitioner invokes Sec. 5, BP 877 which provides that no lessor or his
successor-in-interest shall be entitled to eject the lessee upon the ground
that the leased premises have been sold or mortgaged to a third person
regardless of whether the lease or mortgage is registered or not.
 Petitioner cannot seek refuge in the above provision as the ground for his
ejectment was not the sale of the property to respondent MAGICAIRE but
the expiration of the term of the lease.
 Finally, petitioner contradicts himself by arguing that since he has been
occupying the premises for more than thirty (30) years, his lease contract
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should be understood as one for an indefinite period entitling him to an
extension thereof pursuant to Art. 1687 of the Civil Code.
 Although (Art. 1687) grants the courts the auhority to extend the period of
lease, the same provision should be appreciated only if the duration of the
lease is not fixed (Jueco vs. Court of Appeals, 224 SCRA 390) and not
where the lease is for a fixed period, especially if said period has expired
(Gindoy vs. Tapucar, 75 SCRA 81).
 Considering that the lease in the case at bench is for a definite period
which has expired at the time respondent Chua demanded petitioner to
vacate the subject premises, petitioner can no longer ask for an extension
of the term of lease.
 Simply put, in the appellate courts view, Art. 1687 was not available to
petitioner because, first, the lease was for a definite period; and second,
the period expired when the demand to vacate was made by respondent
Chua.
 Art. 1687. 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 the rent 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 also fix a longer period after the
lessee has stayed in the place for over one month
 Article 1687, to the extent pertinent to the present case, is explicit that if
the period for the lease has not been fixed, it is understood to be from
month to month if the rent agreed upon is monthly. 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 a year.
 Thus, the provision contemplates two (2) situations. One, where the period
for the lease has not been fixed but the rent agreed upon is monthly, in
which event the period is understood to be from month to month. In other
words, the law itself fixes the period. Two, where no period for the lease
has been set, a monthly rent is paid and the lessee has occupied the
premises for over a year authorizing the courts to fix a longer period of
lease. In this second situation, both circumstances mentioned in the first
situation also exist and coupled with another circumstance, i.e., the lessee
 OBLICON CASE DIGEST
Gertrude

has occupied the premises for over a year. The law treats the matter grant a longer period or refuses to grant an extended term that the lessee
differently in the second situation because the length of stay of the lessee should and can be expected to seek court relief.
in the premises may justify the courts to fix a longer period of lease. The  Considering that the authority of the court is potestative and predicated
second situation is understood thus: where no period for the lease has not only on the presumed intention of the parties but on equity as well, the
been set and and a monthly rent is paid the law itself fixes the period as application and interpretation of the provision must not be too restrictive
monthly; yet, the circumstance that the lessee has occupied the premises and limitative to the point of rendering the remedy of seeking for extension
for over a year warrants the fixing of a longer period by the courts. It is meaningless and useless such as by the simple and expedient process of
precisely the second situation that is involved in the present case, not the the lessor promptly giving notice of termination and making the lessor,
first situation, as all three (3) lower courts erroneously appreciated. rather than the Court, the final arbiter on the presumptive period of the
Apparently, to them since the first sentence of Art. 1687 already fixed the lease.
period of lease, recourse to the second sentence is no longer relevant.  petitioner earned a score in his last argument, the power of the courts to
 Inasmuch as the existence in the present case of the circumstances that establish a grace period pursuant to Art. 1687 is potestative or
no period for the lease has been set, rent was being paid monthly, and discretionary, to be exercised or not depending on the particular
petitioner has been occupying the premises for more than thirty (30) years circumstances of the case: a longer term to be granted where equities
justify extending the period by the courts, it cannot be said that the period come into play demanding extension, to be denied where none appears,
expired on 31 March 1996 when respondent Chua stated this date as the always with due deference to the parties freedom to contract.
effectivity of the termination of their lease agreement in his 4 December  Here, even as this Court has the discretion to fix a longer term for the
1995 letter. lease, we find that petitioners continuing possession as lessee of the
 The unilateral act of the lessor in terminating the lease should not be premises from the supposed expiration of the lease on 31 March 1996 up
recognized as writing finis to the agreement when the second situation in to the present, or for a period now of more than five (5) years, suffices as
Art. 1687 is involved. A contrary view would result in barring recourse to an extension of the period. There is no longer need to extend it any
judicial lengthening of the period and in allowing the utilization as further.[
subterfuge of the concept that once a period had expired, nothing is left to
extend. The opinion expressed by Mr. Justice Jose C. Vitug in his
Compendium of Civil Law and Jurisprudence[19] may be invoked -
 There are rulings to the effect that an extension of time may be sought by
the lessee before, but not after, the termination or expiration of the lease =
 But where the term of the lease in understood to be that which is provided
for in Article 1687 because the contract itself has failed to state the period
thereof, the mere notice by the lessor, without concurrence by the lessee,
to terminate the lease is not enough to consider the lease as having
expired that would thereby render powerless the courts to fix a term
longer than the periods stated in the law.
 The periods set by Article 1687 are presumptive in nature and are clearly
held subject to the potestative authority of the court in the event that the
parties are unable to reach an agreement on a definitive term.
 If it were otherwise, then the power of the courts to grant an extended
period becomes illusory since it is only when the lessor decides not to

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“ U t I n O m n i b u s G l o r i fi c e t u r D e u s ”