Francisco Lao Lim v. Court of Appeals

Summary

This Supreme Court case involved a landlord-tenant dispute over lease renewal terms. After the original 1976-1979 lease expired, parties entered a compromise agreement allowing renewal every three years 'for as long as defendant needed the premises and can meet and pay increases.' When the lessor refused to renew in 1985, the lessee remained on the premises claiming a perpetual lease right. The Supreme Court reversed lower court decisions, ruling that the renewal clause constituted an invalid potestative condition under Article 1308 of the Civil Code, as it left the lease's continuation solely to the lessee's will. The Court emphasized that perpetual leases are disfavored and require clear unambiguous language. It also found no res judicata between the two ejectment cases due to different subject matters and causes of action. The decision ordered the tenant's immediate vacation of the premises.