Vda de Chua v.

IAC
January 5, 1994 | Quiason J. | Lease
Digester: Alexis Bea
SUMMARY: Herminigilda leased in favor of Tian On 2 lots in Cebu
for ten years and renewable for five years. Tian On built a
residential house within the premises and he sold the building to
Chua Bok. Tian On assigned all his rights and privileges as a
lessee of the lot. When the Contract of Lease expired Chua Bok
and Herminigilda through her alleged attorney-in-fact Reynes,
executed another contract of lease and part of the condition is that
Chua Bok is given the Option to Buy should Herminigilda sell the
lots. Herminigilda sold it to spouses Go. Plaintiffs (heirs of Chua
Bok) filed the case seeking to annul the Deed of Sale citing the
contract of lease Chua Bok entered into. The Court held that
Reynes had no power of attorney, thus the Contract of lease is
void.
DOCTRINE: Article 1878 of the NCC provides that Special
Powers of Attorney are necessary in the following cases:
(8) to lease any real property to another person for more than one
year

FACTS:
Herminigilda Herrera executed a Contract of Lease in favor of
Tian On whereby the former leased to the latter 2 lots
containing an area of 151 meters (located in Cebu) for a term
of ten years and renewable for five years
Contract of lease contains a stipulation giving the lessee an
option to buy the leased property and that the lessor
guarantees to leave the possession of said property to the
lessee for a period of 10 years or as long as the lessee faithfully
fulfills the terms and conditions of their contract
In accordance with the lease, Tian on erected a residential
house on the leased premises
Within four years from the execution of said contract, Tian On
executed a Deed of Sale of the Building in favor of Chua Bok,
the predecessor-in-interest of the plaintiffs whereby the former
sold to the latter the aforesaid residential house for P8,000.00
A provision in this Deed of Sale read as follows:

That with the sale of said house and as a legal

consequence, I hereby assign all my rights and
privileges as a lessee of the lot on which the said
building is constructed together with its
corresponding obligations as contained and
expressly stipulated in the Contract of Lease
executed between myself and the lot owner,
Herminigilda Herrera, to the said vendee, Chua Bok
who hereby accepts the said assignment of the said
lease and hereby promises and bind himself to abide
by all the terms and conditions thereof
o That the present sale is made with knowledge
and express consent of the lot-owner and lessor,
Herminigilda Herrera who is represented herein by
her attorney-in-fact Vicenta de Reynes who hereby
also honors the annulment of the lease made by Sy
Tian On in favor of Chua Bok, and hereby promises
and binds herself to respect and abide by all the
terms and conditions of the lease contract which is
now assigned to the said Chua Bok.
After the transaction, Chua Bok and his family resided in
the said residential building and they paid the rentals
faithfully
When the Contract of Lease expired in 1960, Chua Bok and
Herminigilda, through her alleged attorney-in-fact executed
another contract of lease with the following conditions
o Contract shall be for a period of 5 years and a
monthly rental of P60.00
o The rental of P60.00 will be paid within the first 10
days of every month without express demand in
advance
o That Chua Bok is given an option to buy the leased
premises if he is qualified and when the
Herminigilda decides to sell the same and that Chua
Bok is also given the option to renew the Contract of
Lease upon the terms and conditions to be agreed
upon by both parties
o Should property leased be sold to another party, the
terms and conditions of the Contract shall be valid
and will continue for its duration and the buyer shall
be bound to respect the terms of this Contract of
Lease
o Herminigilda guarantees that she will leave the
property in the possession of Chua Bok for 5 years
o

or as long as Chua Bok faithfully fulfills his part in

the terms and conditions
After the expiration of the contract of lease in question, the
successors-in-interest (plaintiffs) of Chua Bok (who died)
continued possession of the premises up to April 1978 with
the adjusted rental rate of P1,000.00 later readjusted to
P2,000.00
Herminigilda, through her attorney-in-fact Mrs. Luz M.
Tormis, who was authorized with a special power of
attorney, sold the lots in question to defendant-spouses,
Vicente and Victoria. The latter were able to have aforesaid
sale registered with the Register of Deeds of the City of
Cebu and the titles to the 2 parcels of land were
transferred to their names
Plaintiffs then filed the instant case seeking the annulment
of said sale between Herminigilda and Vicente and Victoria
Go, alleging that it was in violation of their right of option
to buy and that the defendant-spouses acted in bad faith in
purchasing said lots knowing fully well that the plaintiffs
have the option to buy-those lots
RTC: dismissed complaint and ordered plaintiffs to vacate
the said lots
CA affirmed
Plaintiffs: relied on the contract of lease entered into
between Chua Bok and Vicenta R. de Reynes as on the tacit
renewal thereof by respondent Herminigilda.
CA declared the contract of lease void because Vicenta R.
de Reynes was not armed with a special power of attorney

RULING: Petition DENIED

Whether or not the contract of lease is voidYES
The lease contract involves the lease of real property for a
period of more than one year

The contract was entered into by the agent of the lessor and
not the lessor herself. In such a case, the law requires that the
agent be armed with a special power of attorney to lease the
premises
Article 1878 of the NCC provides that Special Powers of
Attorney are necessary in the following cases:
o (8) to lease any real property to another person for more
than one year
It is true that Herminigilda allowed petitioners to occupy the
premises after the expiration of the lease contract and under
Article 1670 of the Civil Code of the Philippines, a tacit
renewal of the lease is deemed to have taken place.
However, the Court cited Bernardo M. Dizon v. Ambrosio
Magsaysay which says that a tacit renewal is limited only to
the terms of the contract which are germane to the lessees
right of continued enjoyment of the property and does not
extend to alien matters, like the option to buy the leased
premises.
o There is reasonable construction of the provision, which is
based on the presumption that when the lessor allows the
lessee to continue enjoying possession of the property for
fifteen days after the expiration of the contract he is willing
that such enjoyment shall be for the entire period
corresponding to the rent which is customarily paidin this
case up to the end of the month because the rent was paid
monthly. Necessarily, if the presumed will of the parties
refers to the enjoyment of possession, the presumption
covers the other terms of the contract related to such
possession, such as the amount of rental, the date when it
must be paid, the care of the property, the responsibility for
repairs, etc. But no such presumption may be indulged in
with respect to special agreements which by nature are
foreign to the right of occupancy or enjoyment inherent in a
contract of lease.