G.R. No. 94516 December 6, 1996
LUCIO SAN ANDRES, petitioner, vs. THE HONORABLE COURT OF APPEALS and HEIRS of GO CO, represented by ELIAS ANG, respondents.

FACTS

Petitioner Lucio San Andres leased a 5,000-square-meter portion of his land to Go Co for 30 years under a contract prohibiting sublease of “the land leased herein.” Go Co constructed a building on the land but, due to financial difficulties, his heirs later became indebted to Land Center. To settle this debt, the heirs, through Elias Ang, entered into a Memorandum of Agreement with Kookaburra Industrial Corporation, which then occupied the building. A separate contract of lease for the building itself was executed between Land Center and Kookaburra Industrial. Petitioner, alleging a violation of the no-sublease clause, sent a demand letter and subsequently filed an ejectment case against the heirs of Go Co.
The Metropolitan Trial Court ruled for petitioner, finding a violation of the lease contract. The Regional Trial Court affirmed with modification. However, the Court of Appeals reversed, dismissing the complaint. It held that the MeTC did not acquire jurisdiction due to a defective demand to vacate and, on the merits, that the prohibition against subleasing referred only to the land, not to the building constructed by the lessee.

ISSUE

The issues are: (1) whether a valid demand to vacate was made to confer jurisdiction on the MeTC over the ejectment suit; and (2) whether the heirs of Go Co violated the lease contract by allowing Kookaburra Industrial to occupy the building.

RULING

The Supreme Court affirmed the Court of Appeals. On jurisdiction, the demand letter was insufficient. It demanded the execution of a new lease contract and threatened ejectment only if this new contract was not forged. It did not constitute an unequivocal demand to vacate the premises, which is a jurisdictional prerequisite for an ejectment suit based on expiration of the right to occupy.
On the substantive issue, the Court held that the contractual prohibition against subleasing did not extend to the building constructed by the lessee. The lease was for 30 years, and its clear purpose was for the lessee to construct a building or factory. The contract stipulated that all structures would belong to the lessor at the end of the lease term. Interpreting the contract as a whole, the “no-sublease” clause logically referred only to the land itself. A contrary interpretation would unduly restrict the lessee’s rights of ownership over the building during the long lease term, which was evidently intended for commercial use and income generation. The lease of the building by the heirs, through arrangements with Land Center and Kookaburra, did not constitute a sublease of the land in violation of the contract.