OPTIMA REALTY CORPORATION vs. HERTZ PHIL.EXCLUSIVE CARS, INC.

G.R. No. 183035

January 9, 2013
SERENO, CJ.:
FACTS:
On 12 December 2002, Optima entered into a Contract of Lease with Hertz Phil over a
131-square-meter office unit and a parking slot in the Optima Building for a period of
three years commencing on 1 March 2003 and ending on 28 February 2006. On 9
March 2004, the parties amended their lease agreement by shortening the lease period
to two years and five months, commencing on 1 October 2003 and ending on 28
February 2006.
Renovations in the Optima Building commenced in January and ended in November
2005. As a result, Hertz alleged that it experienced a 50% drop in monthly sales and a
significant decrease in its personnels productivity. It then requested a 50% discount on
its rent for the months of May, June, July and August 2005. Optima granted the request
of Hertz. However, the latter still failed to pay its rental for seven months and utility bills
for four months.
On 8 December 2005, Optima wrote another letter to Hertz, reminding the latter that the
Contract of Lease could be renewed only by a new negotiation between the parties and
upon written notice by the lessee to the lessor at least 90 days prior to the termination of
the lease period. As no letter was received from Hertz regarding its intention to seek
negotiation and extension of the lease contract within the 90-day period, Optima
informed it that the lease would expire on 28 February 2006 and would not be renewed.
On 21 December 2005, Hertz wrote a letter belatedly advising Optima of the formers
desire to negotiate and extend the lease. However, as the Contract of Lease provided
that the notice to negotiate its renewal must be given by the lessee at least 90 days
prior to the expiration of the contract, petitioner no longer entertained respondents
notice.
On 1 March 2006, Optima, through counsel, wrote Hertz a letter requiring the latter to
surrender and vacate the leased premises in view of the expiration of the Contract of
Lease on 28 February 2006. It likewise demanded payment of the sum of 420,967.28
in rental arrearages, unpaid utility bills and other charges. Hertz, however, refused to
vacate the leased premises. As a result, Optima were constrained to file before the
MeTC a Complaint for Unlawful Detainer and Damages with Prayer for the Issuance of
a TRO and/or Preliminary Mandatory Injunction (Unlawful Detainer Complaint) against
Hertz.
The MeTC ruled that petitioner Optima had established its right to evict Hertz from the
subject premises due to nonpayment of rentals and the expiration of the period of lease.
Hertz appealed the MeTCs Decision to the RTC, and finding no compelling reason to
warrant the reversal of the MeTCs Decision, the RTC affirmed it by dismissing the
appeal. On appeal to the CA, it ruled that, due to the improper service of summons, the
MeTC failed to acquire jurisdiction over the person of respondent Hertz.
Aggrieved by the ruling of the appellate court, petitioner then filed the instant petition.

ISSUE:
Whether or not the expiry of the period agreed upon by the parties is a ground for
judicial ejectment
HELD:
The pertinent provision of the Contract of Lease reads:
x x x. The lease can be renewed only by a new negotiation between the parties upon
written notice by the LESSEE to be given to the LESSOR at least 90 days prior to
termination of the above lease period.
As the lease was set to expire on 28 February 2006, Hertz had until 30 November 2005
within which to express its interest in negotiating an extension of the lease with Optima.
However, Hertz failed to communicate its intention to negotiate for an extension of the
lease within the time agreed upon by the parties. Thus, by its own provisions, the
Contract of Lease expired on 28 February 2006.
Under the Civil Code, the expiry of the period agreed upon by the parties is likewise a
ground for judicial ejectment.