G.R. No. 136913 May 12, 2000
ANITA C. BUCE, petitioner, vs. THE HONORABLE COURT OF APPEALS, SPS. BERNARDO C. TIONGCO and ARACELI TIONGCO, SPS. DIONISIO TIONGCO and LUCILA TIONGCO, and JOSE M. TIONGCO, respondents.

FACTS

Petitioner Anita Buce leased a parcel of land from private respondents under a contract effective June 1, 1979, for fifteen years “subject to renewal for another ten (10) years, under the same terms and conditions.” Buce constructed a building on the property. Over time, the monthly rental was increased from the original P200, reaching P1,000 by 1991. In December 1991, respondents demanded a further increase to P1,576.58 pursuant to the Rent Control Law. Buce, however, tendered checks for only P400, which respondents refused. Buce filed a complaint for specific performance, praying that respondents be ordered to accept rentals and respect the lease, which she claimed was renewable for another ten years at P200 per month.
The Regional Trial Court ruled in favor of Buce, declaring the lease automatically renewed for ten years and fixing graduated rental rates. The Court of Appeals reversed this decision, holding that the renewal clause required mutual agreement, which was absent, and that the lease expired on June 1, 1994. The appellate court also ordered Buce to vacate the premises and pay rental arrearages at P1,000 monthly. Buce filed this petition, arguing that the Court of Appeals exceeded its authority by ordering her to vacate in a specific performance case and that the contract provided for automatic renewal.

ISSUE

The primary issue is whether the lease contract, stating it is “subject to renewal for another ten (10) years,” provides for an automatic renewal or requires mutual agreement for its extension.

RULING

The Supreme Court held that the lease contract did not provide for automatic renewal. The phrase “subject to renewal” is ambiguous and does not clearly grant an exclusive option to the lessee. Applying Article 1370 of the Civil Code, ambiguous contract terms are interpreted according to the mutual intention of the parties at the time of execution. The Court cited Fernandez v. Court of Appeals, which ruled that absent a clear stipulation that the option to renew is solely for the benefit of the lessee, any renewal must be based on mutual consent. The stipulation allowing the lessee to construct improvements and the filing of the complaint before the lease’s expiration are not conclusive indicators of an intent for automatic renewal. Since the respondents were not agreeable to an extension, the lease expired on June 1, 1994.
However, the Supreme Court agreed with Buce that the Court of Appeals exceeded its jurisdiction by ordering her to vacate. The complaint filed was for specific performance, not unlawful detainer, and the issue of possession was not among the issues agreed upon by the parties or threshed out in the trial court. A court cannot grant relief not prayed for in the pleadings. Consequently, the decision of the Court of Appeals was reversed insofar as it ordered Buce to vacate, without prejudice to the respondents filing a proper action for recovery of possession.