G.R. No. L-61932, June 30, 1987
ENRIQUE P. SYQUIA, petitioner, vs. THE HONORABLE COURT OF APPEALS AND EDWARD LITTON, respondents.

FACTS

The case originated from an ejectment suit filed by respondent Edward Litton against petitioner Enrique Syquia. The subject was the Dutch Inn Building, originally owned by the Litton co-ownership, which leased it to Litton Finance and Investment Corporation. This corporation sublet the property to Syquia under a Contract of Lease with a definite period from February 1, 1970, to January 31, 1979. Upon the dissolution of the co-ownership in 1976, the building was adjudicated to Edward Litton, who notified Syquia to remit future rentals directly to him, to which Syquia agreed. As the lease’s expiration neared, Syquia expressed a desire to renew the contract. Litton, through counsel, consistently refused, invoking the clear terms of the contract which did not provide for renewal, and demanded that Syquia vacate upon the lease’s expiry on January 31, 1979.
Syquia refused to vacate, citing his substantial investments in the building and alleging a prior verbal assurance from Litton’s predecessors-in-interest granting him priority to renew the lease. Upon his failure to vacate after the expiry date, Litton filed the ejectment case. The City Court ruled in Litton’s favor, ordering Syquia to vacate and pay a reasonable monthly compensation for use and occupation. This decision was affirmed with slight modification by the Regional Trial Court and subsequently by the Court of Appeals via a split decision, prompting Syquia’s appeal to the Supreme Court.

ISSUE

The primary issue is whether Syquia is entitled to a renewal or extension of the lease contract based on alleged prior verbal assurances, and whether the awarded monthly compensation for his continued occupation after the lease expiry was proper.

RULING

The Supreme Court denied the petition and affirmed the appellate court’s decision, with modification for remand on a separate matter. The Court held that the Contract of Lease, being a public document with a clear and definite period ending on January 31, 1979, is the law between the parties. Syquia’s claim of a verbal assurance for renewal, intended to vary the written terms, is unenforceable under the Statute of Frauds (Article 1403, Civil Code) as it is a parole evidence rule issue. Such a verbal promise, concerning an agreement not to be performed within one year from its making, cannot be proved by oral testimony against the written instrument.
The Court further ruled that Article 1687 of the Civil Code, which allows courts to fix a longer lease term under certain conditions, is inapplicable as it pertains to leases with no fixed period. Here, the lease had a definitive expiry date. Consequently, upon the contract’s expiration and without Litton’s consent to renew, Syquia had no right to retain possession. His continued occupation rendered him liable to pay reasonable compensation. The Court found the determined monthly rate of P28,000.00 to be supported by evidence, specifically expert testimony. However, it rejected Litton’s plea for a further increase based on judicial notice of inflation due to lack of sufficient evidence of actual loss. The case was remanded to the trial court solely for the determination of rights under Article 1678 of the Civil Code regarding improvements introduced by the lessee.