Arevalo Gomez Corporation v. Andres Lao Hian Liong

Summary

This case involved a lease contract dispute where Arevalo Gomez Corporation leased property to Andres Lao Hian Liong for 15 years ending August 31, 1979. When the lease expired, the lessee continued occupying the premises while parties negotiated new rental rates. The lessor demanded P35,000 monthly while lessee offered P27,000. Lower courts found an implied lease renewal under Article 1670 of the Civil Code since formal notice to vacate was served beyond the 15-day statutory period. However, the Supreme Court reversed, ruling that pre-expiration negotiations and conditional demands for increased rental constituted sufficient notice, preventing implied renewal. The Court ordered immediate vacation and established a compromise rental rate of P30,000 monthly until vacation. This decision clarified that Article 1670's tacita reconduccion requires true acquiescence, which is negated when parties engage in unsuccessful lease renewal negotiations before expiration.