G.R. NO. 163763 - MALAYAN REALTY, INC. REPRESENTED BY ALBERTO C. DY., VS. UY HAN YONG. D E C I S I O N - Supreme Court E-Library

Ruling

accordingly dismissed [9] Malayan's complaint. Aggrieved, Malayan appealed to the Regional Trial Court (RTC) which, by Decision [10] dated November 22, 2002, set aside the judgment of the MeTC. On the basis of Article 1687 of the New Civil Code, [11] the RTC extended the lease contract for a period of five years, taking into consideration the fact that Uy was 75 years old and had lived in the leased property for more than half of his life. [12] And the RTC, finding that Malayan acted arbitrarily and with vindictiveness in instituting the complaint, ordered Malayan to pay P100,000 as moral damages, P100,000 as exemplary damages, and P30,000 as attorney's fees. [13] Malayan filed a motion for reconsideration, [14] arguing that since Uy did not appeal the MeTC decision, the RTC erred in granting him affirmative relief by extending the period of lease and awarding him damages and attorney's fees. Acting on Malayan's Motion for Reconsideration, the RTC deleted the award of damages to Uy but retained its ruling extending the lease period for five years. [15] Still dissatisfied, Malayan elevated the case to the Court of Appeals (CA), before which it contended that the RTC had no legal or factual basis for extending the lease contract as the same was not pleaded by Uy in his counterclaim nor sought it as a relief. By Decision [16] of February 19, 2004, the CA modified the RTC decision by shortening the extension of the lease contract to one year from the finality of the decision. And the CA increased the rental rate at 10% per annum starting September 6, 2002, viz: x x x [P]etitioner also prayed that respondent herein be ordered to pay a rental of P9,000.00 a month. The court had authority to fix the reasonable value for such use and occupancy from the expiration of the contract of lease because it is settled that the rental stipulated in the contract of lease that has expired or terminated may no longer be the reasonable value for the use and occupation of the premises as a result or by reason of change or rise in values (T & C Development Corp. vs. Court of Appeals, 317 SCRA 476). Taking into account that on September 18, 2001, the date when petitioner filed the complaint for ejectment, the applicable law are RA Nos. 7644 and 8437 , which extended the period of rent control from 1993 to 1997 and then from 1998 to 2001, respectively. x x x x As the maximum increase allowed is 15%, we hold to grant an increase of 10% per annum, under the circumstances of this case. Hence, the increase should be as follows: Sept. 6, 2001- Sept. 6, 2002 P5,138.82 Sept. 7, 2002 - Sept. 7, 2003 P5,652.70 Sept. 8, 2003 onwards P6,217.95 Thus, we hereby grant the same, but only to the amount herein-above stated considering that the original rate is P4,671.65. x x x (Underscoring in the original) Thus the dispositive portion of the CA decision read: WHEREFORE, premises considered, the Decision dated November 22, 2002 and the Order dated January 24, 2003 of the Regional Trial Co