G.R. No. 208845, February 3, 2020
ALLAN MAÑAS, JOINED BY WIFE LENA ISABELLE Y. MAÑAS, PETITIONERS, V. ROSALINA ROCA NICOLASORA, JANET NICOLASORA SALVA, ANTHONY NICOLASORA, AND MA. THERESE ROSELLE UY-CUA, RESPONDENTS.

FACTS

Petitioners Spouses Allan and Lena Isabelle Y. Mañas entered into a one-year Lease Contract dated April 18, 2005, with respondent Rosalina Roca Nicolasora over a property in Tacloban City. The contract contained a clause granting the lessee a right of first refusal should the lessor desire to sell the property. The lease term lapsed in 2006 without an express renewal. However, the Mañas Spouses continued occupying the premises and paying rentals monthly without objection from the lessor. On February 14, 2008, the owner, Chy Tong Sy Yu (Rosalina’s deceased husband), sold the property, along with others, to respondent Ma. Therese Roselle Uy-Cua, with the conformity of Rosalina and her children. The Mañas Spouses claimed they were not informed of the sale nor offered to purchase the property, learning of it only through a letter from the new owner’s representative dated June 2, 2008, requesting them to vacate. They filed a Complaint for Rescission of Contract of Sale and Cancellation of Certificates of Title and Enforcement of the Right of First Refusal. Respondent Roselle filed a Motion to Dismiss, arguing the Complaint stated no cause of action and that petitioners failed to comply with the condition precedent of barangay conciliation. She contended that the original lease had expired, and while it was impliedly renewed on a month-to-month basis, the right of first refusal was not revived as it is not germane to possession. The Regional Trial Court granted the Motion to Dismiss, a ruling affirmed by the Court of Appeals.

ISSUE

Whether the Court of Appeals erred in affirming the dismissal of the Complaint, specifically in ruling that the implied renewal of the lease contract did not revive the right of first refusal clause.

RULING

No. The Supreme Court denied the petition and affirmed the Court of Appeals Decision. The Court held that an implied renewal of a lease contract, which occurs when the lessee continues enjoying the thing leased for fifteen days with the acquiescence of the lessor, does not revive all the terms of the original contract. Following the doctrine in Dizon v. Court of Appeals, only the terms affecting the lessee’s continued use and enjoyment of the property are deemed part of the implied new lease. A right of first refusal is not germane to the lessee’s possession and enjoyment of the leased premises; it is a collateral stipulation that is “strange to the lease.” Therefore, when the original one-year lease expired and was only impliedly renewed on a month-to-month basis, the right of first refusal was not revived. Consequently, the sellers had no obligation to offer the property to the petitioners, and the petitioners’ Complaint correctly failed to state a cause of action for its enforcement. The Court also noted the petitioners’ failure to comply with the condition precedent of barangay conciliation as required under the Lease Contract and the Local Government Code, which provided an independent ground for dismissal.