Chung v. Ulanday Facts: In 1985, the petitioners contracted with respondent Ulanday Construction, Inc.

to construct, within a 150-day period, the concrete structural shell of the formers two-storey residential house in Urdaneta Village, Makati City at the contract price of P3,291,142.00. The Contract provided that: (a) the respondent shall supply all the necessary materials and labor indispensable for the completion of the project; (b) the petitioners shall pay down payment, with the balance to be paid in progress payments based on actual work completed; (c) the Construction Manager or Architect shall check the respondents request for progress payment (d) the petitioners shall pay the respondents within 7 days from receipt of the Construction Managers or Architects certificate; (e) the respondent cannot change or alter the plans, specifications, and works without the petitioners prior written approval; (f) a penalty shall be imposed for each day of delay in completion (g) the respondent shall correct, at its expense, defects appearing during the 12-month warranty period after the petitioners issuance of final acceptance of work. Subsequently, the parties agreed to exclude from the contract the roofing and flushing work, reducing the contract price. The petitioners paid the downpayment with the balance to be paid based on the progress billings. Actual construction started prior to the issuance of the permit. The respondent notified the petitioners that the delay in the payment of progress billings delays the accomplishment of the contract work and made similar follow-up letters. Subsequently, the respondent demanded full payment for progress billings and change orders. However, the petitioners denied liability, asserting that the respondent violated the contract provisions by, among others, failing to finish the contract within the 150-day stipulated period, failing to comply with the provisions on change orders, and overstating its billings. Issue: Whether or not the non-objection to the other change orders effected by the respondent cannot give rise to estoppel in pais that would render the petitioners liable for the payment of all change orders Held: In contractual relations, the law allows the parties leeway and considers their agreement as the law between them. Contract stipulations that are not contrary to law, morals, good customs, public order or public policy shall be bindingand should be complied with in good faith. No party is permitted to change his mind or disavow and go back upon his own acts, or to proceed contrary thereto, to the prejudice of the other party. In the present case, we find that both parties failed to comply strictly with their contractual stipulations on the progress billings and change orders that caused the delays in the completion of the project. Estoppel in pais, or equitable estoppel, arises when one, by his acts, representations or admissions or by his silence when he ought to speak out, intentionally or through culpable negligence, induces another to believe certain facts to exist and the other rightfully relies and acts on such beliefs so that he will be prejudiced if the former is

permitted to deny the existence of such facts. The real office of the equitable norm of estoppel is limited to supplying deficiency in the law, but it should not supplant positive law. In this case, the requirement for the petitioners written consent to any change or alteration in the specifications, plans and works is explicit in Article 1724 of the Civil Code and is deemed written in the contract between the parties.[50] The contract also expressly provides that a mere act of tolerance does not constitute approval. Thus, the petitioners did not, by accepting and paying for Change Orders, do away with the contractual term on change orders nor with the application of Article 1724. Cebu Bionic v. DBP Facts: Spouses Rudy R. Robles, Jr. and Elizabeth R. Robles entered into a mortgage contract with DBP in order to secure a loan from the said bank in the amount of P500,000.00. The properties mortgaged were a parcel of land situated in Tabunoc, Talisay, Cebu, together with all the existing improvements, and the commercial building to be constructed thereon. Upon completion, the commercial building was named the State Theatre Building. Subsequently, Rudy Robles executed a contract of lease in favor of petitioner Cebu Bionic Builders Supply, Inc. (Cebu Bionic), a domestic corporation engaged in the construction business, as well as the sale of hardware materials. On the last day for the acceptance of negotiated offers, petitioners submitted through their representative, Judy Garces, a letter-offer form, offering to purchase the subject properties. Attached thereof was a copy of the Negotiated Sale Rules and Procedures issued by DBP and a managers check for representing 10% of the offered purchase price. This offer of petitioners was not accepted by DBP, however, as the corresponding deposit therefor was allegedly insufficient. After the lapse of the acceptance period, petitioners did not submit any other offer/proposal to purchase the subject properties. Respondents offered to purchase the subject properties on a cash basis, said offer was accompanied by a down payment of 10% of the offered purchase price. DBP acknowledged the receipt of and accepted their offer. After payment of the balance of the purchase price and DBP issued a Deed of Sale over the subject properties in their favor. Petitioners alleged that Cebu Bionic was the lessee and occupant of a commercial space in the State Theatre Building from October 1981 up to the time of the filing of the complaint. They sought the rescission of the contract of sale between DBP and respondents. Issue: Whether or not there was a contract of lease between petitioners and DBP Held: The lease contract between petitioners and Rudy Robles was not registered. During trial, DBP denied having any knowledge of the said lease contract. It asserted that the lease was merely presumed in view of the existence of tenants in the subject property. Nevertheless, DBP recognized and acknowledged this

lease contract in its letter dated June 18, 1987. DBP even required Cebu Bionic to pay the monthly rental for the month of June 1987, thereby exercising the right of the previous lessor, Rudy Robles, to collect the rental payments from the lessee. The parties, however, failed to execute a written contract of lease. The Court rules that, indeed, no new contract of lease was ever perfected between petitioners and DBP. In the case at bar, there was no concurrence of offer and acceptance vis--vis the terms of the proposed lease agreement. In fact, after the reply of petitioners counsel dated July 7, 1987, there was no indication that the parties undertook any other action to pursue the execution of the intended lease contract. Petitioners even admitted that they merely waited for DBP to present the contract to them, despite being instructed to come to the bank for the execution of the same. Mores v. Yu-Go Facts: Appellants (Yu-Gos) alleged that they co-owned with appellees (Mores) a parcel of land located in Sto. Tomas, Magarao, Camarines Sur on which a building of strong materials ("subject property") was built. In March 1983, appellees pleaded to appellants that they be allowed to stay in the subject property in the meantime that they did not own a house yet. Since appellee Antonio Mores used to be an errand boy of appellants family, they agreed without asking for any rental but subject only to the condition that the said stay would last until anyone of appellants would need the subject property. In November 1997, appellants informed the appellees that they were already in need of the subject property. Appellees begged that they be given a 6-month extension to stay thereat. However, after the lapse of 6 months, appellees failed to comply and even asked for further extension. The appellants gave their final demand for appellees to vacate the subject property. However, instead of heeding such demand, appellees hired some laborers and started demolishing the improvements on the subject property. Consequently, appellants instituted the said action for injunction and prayed for the reimbursement of the value of the residential building illegally demolished as well as for the payment of moral damages, attorneys fees, litigation expenses and costs of suit. Issue: Whether or not the Moreses were builders in good faith Held: Tenants like the spouses Mores cannot be said to be builders in good faith as they have no pretension to be owners of the property. Indeed, full reimbursement of useful improvements and retention of the premises until reimbursement is made applies only to a possessor in good faith, one who builds on land with the belief that he is the owner thereof. It does not apply where ones only interest is that of a lessee under a rental contract; otherwise, it would always be in the power of the tenant to "improve" his landlord out of his property. As provided in Article 1678, If the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is intended, without altering the form or substance of the property leased, the lessor upon the termination of the lease shall

pay the lessee one-half of the value of the improvements at that time. Should the lessor refuse to reimburse said amount, the lessee may remove the improvements, even though the principal thing may suffer damage thereby. He shall not, however, cause any more impairment upon the property leased than is necessary. With regard to the ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove the ornamental objects, provided no damage is caused to the principal thing, and the lessor does not choose to retain them by paying their value at the time the lease is extinguished. The spouses Mores "removed only the improvements they introduced without destroying the principal building, after the [Yu siblings] refused to pay them the reasonable value of the improvements." When the spouses Mores demanded reimbursement, the Yu siblings should have offered to pay the spouses Mores one-half of the value of the improvements. Since the Yu siblings failed to make such offer, the spouses Mores had the right to remove the improvements. Dee v. CA, 176 SCRA 651 (1989) FACTS: Dee and his father went to the residence of Atty Mutuc to seek his advice regarding the problem of the alleged indebtedness of petitioners brother Dewey Dee, to Ceasars Palace. Petitioners father was apprehensive over the safety of his son, Dewey having heard of a link between the mafia and Ceasars Palace and his possibility that his son may be harmed at the instance of the latter. Atty Mutuc assured petitioner and his father that he would inquire into the matter, after which his services were reportedly contracted for P100,000. Further investigations revealed that the alleged debt of Dewey had actually been incurred by Ramon Sy, with Dewey merely signing for the chits. Atty. Mutuc talked with the president of Ceasars palace and advised the president that for the sake and in the interest of the casino it would be better to make Ramon Sy answer for the indebtedness. The president told him that if he could convince Ramon Sy to acknowledge the obligation, Dewey would be exculpated from liability. Ramon Sy acknowledged the obligation, thereafter, the account of Dewey was cleared. Atty Mutuc sent demand letters to petitioner demanding the balance of P50,000 as attorneys fees. Petitioner Dee ignored said letters. Atty Mutuc filed a complaint against petitioner Dee for the collection of attorneys fees. Petitioner denied the existence of any professional relationship of attorney and client between him and Atty Mutuc. Dee insists that the visits made to Atty Mutuc were merely informal and that Atty Mutuc had not been specifically contacted to handle the problem. The P50,000 given to Atty Mutuc was alleged to be given not in the nature of attorneys fees but merely pocket money ISSUE: Whether or not there is an lawyer-client relationship HELD: The absence of a written contract will not preclude the finding that there was a professional relationship which merits attorneys fees for professional services rendered. To establish the relationship, it is sufficient that the advice and assistance of an attorney is sought and received in any matter pertinent to his

profession. An acceptance of the relation is implied on the part of the attorney from his acting on behalf of his client in pursuance of a request from the latter. Therefore, Mutuc is entitled to receive a reasonable compensation. Atty Mutuc did not represent conflicting interests as claimed by Dee when Dee alleged that Mutuc was acting as agent of Ceasars Palace. Mutucs representations in behalf of petitioner Dee were not in resistance to the casinos claim but were actually geared toward proving the liability of true debtor, Ramon Sy. Gonzales v. Mateo, 74 Phil 573 FACTS: Vicente Mateo et al. (lessors) went into business as an unregistered partnership under the name "Samahang Sabungang Malaya." They leased to Gonzales their cockpit situated in Malolos, Bulacan, under a written contract for the period of six years at the agreed yearly rental of P100 with several conditions. Before using the cockpit, Gonzales made some improvements on the building to improve its structural support. A cockfight was held in said cockpit with a large attendance. The building broke down and collapsed during that event. Mateo et al demanded of Gonzales that he either reconstruct the cockpit or pay damages. But, Gonzales refused to comply, alleging that under his contract he was not obligated to make repairs, but only improvements, on the building and that its collapse was due to hidden defects which the lessors had concealed from him ISSUE: Whether or not Gonzales should be held liable for the collapse of the cockpit HELD: It is evident that Gonzales accepted the cockpit in question from the lessors in the condition in which it was found at the time under the express agreement that all that was necessary to put it in use had to be done by the petitioner at his own expense without any obligation on the part of the respondents to reimburse him or pay for the improvements thus made upon the expiration of the lease. While it is true that under the law (paragraph 2 article 1554 of the Civil Code) it is the duty of the lessor to make on the building leased all repairs necessary in order to keep it in serviceable condition for the purpose for which it was intended, the parties were at liberty to stipulate the contrary. The collapse of the building in question on the occasion of the heavily attended cockfight of September 12, 1937, was not due to any hidden defect but to the fact that thru petitioner's negligence in making the repairs he failed to place the posts on firm, solid, and sound foundation Under article 1563 of the Civil Code, "the lessee is liable for any deterioration or loss suffered by the thing leased, unless he proves that it took place without his fault." Dakudao v. Judge Consalacion, 122 SCRA 877 (1983) FACTS: Petitioners are co-owners of a parcel of land. On this land stands the house of defendant Ang Singco who had a verbal lease contract with herein petitioners. Without the knowledge and consent of petitioners, Ang Singco sold his house to the Laurecios. When Dakudao visited the premises in question, she was told of the transaction that transpired between Ang Singco and the Laurecios. Since the house is at present occupied by the Laurecios, Dakudao demanded that they vacate the premises and for the payment of the

use and occupation of the same at P100.00 a month. But, for failure to reach an agreement for the rental of the premises, no agreement took place. Hence, Petitioners filed this suit to eject the Laurecios. However, the court dismissed the case for unlawful detainer against the Laurecios because it believes that the essence of the action for unlawful detainer is the existence of a previous contract, expressed or implied, between the plaintiff and the defendant. Since no contract was entered into between Dakudao and the Laurecios, unlawful detainer is not a proper remedy ISSUE: Whether or not the Laurecios can be lawfully evicted from the property owned by Dakudao HELD: The primary argument of the respondents Laurecio in this petition is that they are not unlawfully withholding possession from the petitioners after the expiration or termination of the right to hold possession by virtue of any contract because there never was any contract express or implied between them and the petitioners. In its decision, the City Court of Davao City admitted that the petitioners had a right to recover possession of the land involved in the litigation but "unfortunately" for them their cause of action did not fit in an unlawful detainer case. Neither could it be a forcible entry case, according to the judge, because the plaintiffs failed to allege in the pleadings or prove with evidence the fact that the defendants occupied the land through stealth and strategy. Moreover, respondents further claim that they cannot be considered privies or successors-in-interest of the former lessee, Francisco Ang Singco, because Article 1649 of the Civil Code provides that "the lessee cannot assign the lease without the consent of the lessor, unless there is a stipulation to the contrary." But, the provision was never intended to permit one who claims no right to the premises to avoid ejectment by such a dubious allegation. Since there was no contract between the lot owners and the Laurecios, the latter's occupation of the land is only as successors of Ang Singco from whom they purchased the house built on the lot. If Article 1649 had been followed and the consent of the owners to the sale secured, the Laurecios would be more than mere successors-in-interest. They would have become the new lessees. Hence, the unlawful detainer case was proper Manlapat v. Salazar, 98 Phil 356 FACTS: A lease was entered into which would last until June 1, 1967. The lessee, however, entered into a contract with Salazar wherein she would lease the same property to Salazar until May 31, 1967 (a shorter period than the orginal lease, by one day). Inasmuch as the contract was entered into without the consent of the lessor, he alleged that the contract was void on the ground that the same was an assignment, not a sublease. ISSUE: Whether or not it is a contract of assignment or sublease HELD: This is a sublease, and therefore it could be effected even without the lessors consent there being no express prohibition on a sublease. The sublessor has not stepped out of the original contract; she remains a party to it. All the terms (given above) of the sublease clearly indicate that indeed a sublease, not an assignment, has been agreed upon. Moreover, the under letting for

a period less than the entire term in this case (indeed, the reservation of even so short a period as the last day of the term) makes the transfer a sublease, and not an assignment Pamintuan v. CA, 42 SCRA 344 FACTS: A lease contract was executed in favor of petitioners Tan and Pamintuan for two. It provided for an agreed monthly rental of P15.00 payable promptly at the end of every month for each lot or P30.00 for the two. The lease was entered into on October 10, 1951 to expire at the discretion of the lessee after twenty years. There was another provision that failure on the part of the lessee to pay the rental for six consecutive months would automatically annul the contract. The complaint for rescission filed by private respondents as plaintiffs against petitioners as defendants alleged that with respect to the first lot, Tan was in arrears for the period of twelve months and, with respect to the second lot, for a period of eight months. Lower Court granted the petition to rescind the contract. Appeal to the CA affirmed lower courts decision. Hence, this appeal ISSUE: Whether or not the petitioners had violated the provision in the contract of lease as to the monthly rental being promptly paid at the end of every month as claimed by plaintiffs HELD: While claiming to have committed no such violations, the petitioners nevertheless admitted that they in their pleadings nor at any time during the trial, never claimed to have offered to pay the rental at the end of each month. On the contrary, they impliedly admitted in their pleadings that no such monthly payments were ever made. With their above admission that 'no such monthly payments were ever made' by them, it stands clear that they violated the aforequoted provision of paragraph 2 of the contract of lease. Clearly, said violation of lessees' obligation to pay the price of the lease according to the terms stipulated entitles the respondents to rescind said contract of lease under Article 1659 of the Civil Code providing that 'If the lessor or the lessee should not comply with the obligations set forth in articles 1654 and 1657, the aggrieved party may ask for the rescission of the, contract and indemnification for damages or only the latter, allowing the contract to remain in force. Heirs of Dimaculangan v. IAC, 170 SCRA 393 (1989) FACTS: Dimaculangan and her children occupy by lease an apartment at a monthly rental of P250.00. Respondent Uy sent Dimaculangan a letter informing her that the property, which she has been occupying, has been sold to him and should she desire to continue occupying the same, she should sign a contract of lease for a period of two (2) years at a monthly rental of P1,500.00. Uy received no reply to this demand. Thus, he wrote another letter, demanding payment of P750.00 covering unpaid rentals. But still, there was no word from Dimaculangan such that Uy was forced to file a complaint for ejectment ISSUE: Whether or not the trial court may alter the agreement of the parties by shortening the period of the lease from an indefinite period within the purview of Presidential Decree No. 20, the law in

force at the time, and of the amendatory Batas Pambansa Blg. 25, to a fixed two (2) years HELD: Yes. It is exempt from the application of P.D. No. 20, it must be one with a definite period It has been established that petitioners have been occupying the leased premises on a verbal contract since 1961 at a monthly rent of P250.00, and that although no fixed period for the duration of the lease has been agreed upon the original lessor and lessee, the rentals were paid monthly. The SC had already ruled that leases are deemed on a "month-to-month basis", if rentals therefore are paid monthly. Fermin v. CA, 196 SCRA 723 FACTS: Spouses Fermin and spouses Alpas as lessors and lessees, respectively, entered into a contract of lease. Before the expiration of the ten (10) year period, defendants sent plaintiffs representative a document entitled 'Lease of Real Property' already signed by them. It was never signed by plaintiffs up to this day. AGRA & Co., Inc., as collection agent of the plaintiffs collected payment from the defendants for the annual rental. Key Management Corporation in a letter informed defendants that said company was appointed attorney-in-fact. In another letter, they advised Mr. Alpas that they were unilaterally terminating the lease effective 18 April 1987. Mr. Alpas responded that the lease was renewed. However, Key Mgt. reiterated its demand for him to vacate. ISSUE: Whether or not the spouses Alpas can be validly ejected from the property HELD: No, there was an implied renewal of the lease from year to year. From the foregoing set of facts, it cannot be said that the lease agreement had been effectively renewed for another 10 years. The stipulation of the parties is clear in that such a renewal is subject to the mutual agreement of the parties. While there is no question that private respondents expressed their desire to renew the lease by another 10 years at the rate of the rental stipulated in the lease agreement, apparently petitioners would be willing to renew said lease. Obviously, there was no meeting of the minds as to the rate of the rental. As there was no agreement reached, then the term of the lease may not be considered to have been renewed for another 10 years. However, since after the expiration of the lease agreement, the private respondents continued to occupy the premises for more than 15 days with the acquiescence of petitioners, then it is understood that there is an implied new lease, not for the period of the original contract, but from year to year. Article 1670 of the Civil Code so provides for this situation.