G.R. No. L-44338. April 15, 1988.
ROSARIO C. BUCCAT, plaintiff-appellee, vs. LIBRADA ROSALES DISPO, Assisted by Her Husband PROCESO DISPO, defendants-appellants.

FACTS

In February 1953, Rosario Buccat leased her lot in La Union to Librada Dispo, who constructed the National Business Institute thereon. The initial lease was to expire on August 31, 1967. In 1958, the parties executed a second lease agreement over the same property. Its Paragraph 3 stipulated that the lease “shall remain in full force and effect as long as the land will serve the purpose for which it is intended as a school site,” with rentals reviewable every ten years. In May 1968, Buccat filed an unlawful detainer case, contending the first lease had expired and the 1958 agreement was simulated and void.
The Court of Appeals resolved the unlawful detainer case in favor of Dispo, upholding the validity of the 1958 contract. However, it interpreted Paragraph 3 as creating an indefinite lease period dependent on the will of the lessee. The appellate court thus affirmed the dismissal of the detainer case but without prejudice to Buccat filing an action to fix the lease term under Article 1197 of the Civil Code. Pursuant to this, Buccat filed the present action for fixing the period.

ISSUE

The core issues were: (1) whether the action to fix the period had prescribed; (2) whether the trial court erred in fixing the lease period at twenty years and in increasing the monthly rental from P50 to P150 without a full trial; and (3) the proper interpretation of the lease duration under the 1958 contract.

RULING

The Supreme Court dismissed the appeal and reinstated the trial court’s decision. On prescription, the Court held the cause of action to fix the period accrued only in November 1972 when the Court of Appeals promulgated its decision interpreting the 1958 contract as one with an indefinite period. Prior to that final interpretation, Buccat was contesting the contract’s very validity and could not have been expected to seek a judicial fixing of a term whose existence she was denying. The action, filed thereafter, was timely.
Regarding the fixing of the period and rental increase without a full trial, the Court found no error. The parties had submitted a stipulation of facts, which included material points such as the nature of the school building and its long-term use. Based on these stipulated facts, the trial court validly rendered a judgment on the pleadings. The twenty-year period fixed was deemed reasonable. The rental increase from P50 to P150, effective from 1974, was also justified as reasonable, considering the passage of over twenty years, the rise in the standard of living, and the property’s location in a provincial capital and regional center.
Finally, the Court affirmed that the interpretation of the 1958 contract as creating an indefinite period was already settled with finality by the Court of Appeals in the prior unlawful detainer case. That ruling constituted the law of the case. The Court also noted the appellants’ interest appeared motivated more by preventing the owner from using the land than by a genuine need for it as a school site, as they had not rebuilt after a 1974 fire and had left the land idle for years.