G.R. No. 108222. May 5, 1997.
HENRY L. SIA, petitioner, vs. THE HON. COURT OF APPEALS, and TORRE DE ORO DEVELOPMENT CORPORATION, respondents.

FACTS

Petitioner Henry L. Sia, as successor-in-interest to his parents, leased a parcel of commercial land in Cagayan de Oro City from respondent Torre de Oro Development Corporation. The parties executed a one-year lease contract on March 22, 1988. The contract contained seemingly conflicting provisions: it stated the lease was “for a period of One (1) year counting from this date,” but also specified that the monthly rental was “effective January 1987” and that the lease period was “for one (1) year counted from January, 1988.” On December 22, 1988, the respondent notified the petitioner that it would not renew the lease upon its expiration, citing the petitioner’s unauthorized subleasing of the property. The respondent demanded a new rental rate of P8,500.00. The petitioner refused to vacate and offered only a P500.00 increase, leading the respondent to file an ejectment suit.
The Municipal Trial Court dismissed the complaint, ruling it was premature as the lease had not yet expired. On appeal, the Regional Trial Court reversed the MTC, ordering the petitioner’s ejectment and fixing a reasonable monthly rental of P5,000.00 for his continued occupancy. The Court of Appeals affirmed the RTC’s decision. The petitioner elevated the case to the Supreme Court, arguing that the lease term had not yet expired and that the imposed rental was excessive.

ISSUE

The primary issue is whether the lease contract had already expired when the ejectment complaint was filed, thereby justifying the petitioner’s ejectment. A secondary issue is whether the P5,000.00 monthly rental fixed by the RTC for the petitioner’s continued use of the property is reasonable.

RULING

The Supreme Court dismissed the petition and affirmed the decisions of the lower courts. On the first issue, the Court held that the lease contract had indeed expired. Applying the rule that a contract’s stipulations must be interpreted together to give effect to all, the Court reconciled the apparently conflicting provisions. The clause stating the period was “for one (1) year counted from January, 1988” was deemed controlling as it specifically fixed the starting point, thereby rendering the general phrase “counting from this date” (the signing date) ineffective. Thus, the one-year term commenced in January 1988 and expired in January 1989. The ejectment complaint filed in February 1989 was therefore timely, as the lease had already terminated, and the respondent had the right to possess the property.
On the second issue, the Court ruled that the RTC correctly fixed the reasonable compensation for the petitioner’s continued occupancy at P5,000.00 per month. Upon the expiration of a lease, the court is not bound by the old contractual rental and has the authority to determine a reasonable value based on current conditions. The Court found the amount reasonable, noting the property’s prime commercial location and increased value, and emphasized that the petitioner failed to discharge his burden of proving that the demanded rental was unconscionable. The RTC was also justified in taking judicial notice of the general increase in real estate rentals.