G.R. No. 222785 , March 02, 2020
ANITA C. BUCE, PETITIONER, VS. SPOUSES GEORGE GALEON AND ERLINDA TIONGCO GALEON, SPOUSES HONESTO CABRERA, JR. AND GENEROSA TIONGCO CABRERA, SPOUSES LEO SANDS AND MARIA TERESA TIONGCO SANDS, JOSE M. TIONGCO, AND MARIA CORAZON M. TIONGCO, RESPONDENTS.

FACTS

The respondents, heirs of Bernardo and Dionisio Tiongco, owned a parcel of land in Pandacan, Manila. Their predecessors entered into a 15-year lease contract with the spouses Rogelio and Anita Buce, effective June 1, 1979, renewable for another 10 years under the same terms, with a monthly rental of P200.00 and permission for the lessees to construct improvements. The monthly rental increased over time. After the contract expired on June 1, 1994, the petitioner, Anita Buce, continued to occupy the land. In a prior case ( G.R. No. 136913 ), the Supreme Court ruled that the lease contract was not automatically renewed. Despite this, petitioner refused to vacate. Respondents sent a demand letter on July 13, 2002, for her to vacate and pay arrears. Petitioner made partial payments, but respondents refused them as insufficient. Respondents filed a complaint for recovery of possession. The Regional Trial Court (RTC) ordered petitioner to vacate, remove improvements if respondents refuse to pay half their value, pay rental arrearages, and pay attorney’s fees. The Court of Appeals (CA) affirmed with modification, deleting the order for removal of improvements and modifying the rental payments. Petitioner filed a Petition for Review before the Supreme Court.

ISSUE

1. Whether the petitioner has a right to retention over the subject land until reimbursed for the building she constructed.
2. Whether there was an implied new lease contract between the petitioner and respondents.
3. Whether the payment of attorney’s fees is proper.

RULING

1. On the right to retention: The petitioner, as a lessee, is not a builder in good faith. A lessee knows he/she has no claim of title over the leased property. Therefore, the petitioner has no right to retain possession of the land until reimbursed for the improvements. The provisions on builders in good faith under the Civil Code do not apply to a lessee.
2. On implied new lease: The Supreme Court, in the prior case ( G.R. No. 136913 ), already ruled that the original lease contract was not automatically renewed. However, the petitioner’s continued possession after the contract’s expiration, with the acquiescence of the respondents (by accepting partial payments), resulted in an implied new lease under Articles 1670 and 1687 of the Civil Code. This implied lease was terminated by the respondents’ express act of sending a demand letter to vacate on July 13, 2002.
3. On attorney’s fees: The award of attorney’s fees by the RTC was deleted. The Court found no sufficient basis to award attorney’s fees under Article 2208 of the Civil Code, as the petitioner’s act of continuing possession, while contrary to the Court’s prior ruling, did not necessarily constitute gross and evident bad faith.
DISPOSITIVE PORTION:
The petition was PARTLY GRANTED. The CA Decision and Resolution were AFFIRMED with MODIFICATION. Petitioner Anita C. Buce is ORDERED to PAY reasonable compensation for the use and occupation of the subject property in the amount of P5,000.00 from the expiration of the contract of lease (June 1, 1994) until she vacates the premises. The petitioner’s liability to pay rental arrearages was DELETED.