LIMITLESS POTENTIALS, INC.
, Petitioners, Memorandum of Agreement (MOA) dated September 28, 1993,
vs.
THE HON. REINATO G. QUILALA, in his capacity as Presiding Judge
of the Regional Trial Court, Branch 57, City of Makati and The
ROMAN CATHOLIC ARCHBISHOP OF MANILA, Respondents
G.R. No. 157391. July 15, 2005
RCAM is the owner of advertising spaces located within the
compounds of the Our Lady of Guadalupe Minor Seminary and San
Carlos Seminary in Guadalupe, Makati City. RCAM, as lessor, and
LPI, as lessee, entered into the following agreements for the lease
of promotional areas:
(a) wherein RCAM leased to LPI certain advertising spaces for 4
years at a monthly rental of P11,000.00. The rentals were subject to
15% increase every two years; and
(b) an Amendment To An Agreement, pursuant to which RCAM and
LPI extended the lease period for five years, with a total duration of
seven years from February 1, 1990to March 1, 1997 and wherein
the monthly rental was increased to PI2,000.00, subject to a 10%
annual increase.
On January 18, 1990, a Sublease Agreement was entered into by LPI
and Astro Advertising, Inc. (Astro) in which the former sublet Lot 28-
B to the latter for five years. Under the agreement, the monthly
rentals were to be paid directly by Astro to the office of the RCAM.
To clarify and consolidate the various agreements previously
executed by RCAM and LPI, the parties entered into a
whereby they disregarded all prior contracts and considered them
of no further force and effect. In the MOA, RCAM leased to LPI
specific advertising spaces, including those earlier subleased to
Astro, for a period of four years, at a monthly rental of P60,783.96
and subject to a 10% annual increment. When the sublease to Astro
expired in February 1995, RCAM did not turn over to LPI the
possession of the sublet advertising areas. Instead, the said areas
were leased to Macgraphics Carranz International Corporation
(MCIC) which erected its own advertising signs thereon. In 1995,
RCAM, sent a letter to LPI its delinquency in settling the rental
obligations which included the rentals due from Astro. The MTC
rendered a Decision declaring LPI’s possession of the leased
premises as lawful, but ordered the same to pay the rentals due
from September 1995 until it ceased occupying the leased premises
and declaring LPI made an overpayment of P344,550.33. The court
further pronounced that the payments made directly to RCAM
during the first period should not be credited to LPI because the
latter had donated the amount to RCAM. The MTC maintained that
the stipulation contained in the sublease agreement was a
stipulation pour autrui under Article 1311 of the NCC. However, the
court also maintained that LPI should be credited for the payments
made by Astro during the second period, after the MOA took effect,
to March 1995. Finally, the MTC held that LPI was obliged to pay
rentals in the amount of P414,486.50 when the complaint was filed.
RCAM asserts that the Court's ruling, which directed it to deliver to
LPI the possession of the areas covered by the MOA for the
remaining period of the lease, is not in accord with the applicable
laws and prevailing jurisprudence. It further insists that the MOA
stipulated a fixed lease period which had long before expired, and
that the implementation of the court's ruling would in effect create
a lease relation between the parties that would commence beyond
the lapse of the lease period provided for in the MOA.
ISSUE:
Whether or not RCAM is still obliged to deliver the premise to LPI.
HELD:
on the said dale. It bears stressing that LPI had occupied the leased
properly from August 1, 1993 to October 6, 1996, or only three (3)
years, two months and two days. Thus, LPI is entitled to remain in
the property, as lessee, for the unused portion of the four-year
period provided for in the MOA. By so ruling, the Court would
thereby be merely enforcing the same. As covenanted, LPI must
remain in possession of the property, as lessee, for a period of four
(4) years - not a day less. For the Court to do otherwise would be to
enrich RCAM at the expense of LPI, allowing the former to profit by
its misdeeds.

Yes. A lessee unlawfully evicted by the lessor is entitled to be

restored to the possession of the property leased for the "unused
period" of the lease contract, counted from his eviction; such
"unexpired portion'' of the contract cannot be affected by the lapse
of the period pending the final resolution of the complaint for
ejectment filed by the lessor. It bears stressing that in a reciprocal
contract, like a lease, the period of the lease must be deemed to
have been agreed upon for the benefit of both parties, absent any
language therein showing that the term was deliberately fixed for
the benefit of either the lessor or the lessee alone. Its continuance,
effectivity or fulfillment cannot be made to depend exclusively upon
the free and uncontrolled choice of just one party to a lease
contract. In this case, RCAM unilaterally rescinded the contract; it
had the billboards of LPI on the spaces/areas leased by the latter
dismantled on October 5, 1996, without wailing for the final
outcome of the ejectment case. The MTC, RTC and the CA found
this unilateral recission of the MOA unlawful. Indisputably, RCAM
was obliged to deliver to LPI the premises which it forcibly took over