Case Digest: NINOY AQUINO INTERNATIONAL AIRPORT AUTHORITY v. COURT OF APPEALS, et al.

NINOY AQUINO INTERNATIONAL AIRPORT AUTHORITY v. COURT OF APPEALS, et al.

398 SCRA 703 (2003)

Nothing appears objectionable in the lease contract between United Bus Lines and Ninoy Aquino International Airport such that the latter is no less bound by its terms and conditions like any other private person or entity that is party to a contract.

The Civil Aeronautics Administration (CAA), predecessor of Ninoy Aquino International Airport Authority (NAIAA), leased to United Bus Lines (UBL) a portion of a state-owned lot. The lease contract contained a provision that the terms shall be considered as extended for a period of time equal to that during which lessee was not in possession of the leased premises.

UBL was dispossessed of certain portions of the leased premises for an approximately ten-year period from 1980 to 1990 due to the presence of squatters in certain portions thereof as well as the adverse claims of ownership from some individuals and entities This led UBL to file an action to reform the lease agreement so as to have a new term of fifteen years, to start running after the premises are totally cleared by the NAIAA of any form of disturbance.

The Regional Trial Court rendered a decision in favor of UBL extending the lease contract for another ten years from the finality of the decision. This was affirmed by the Court of Appeals finding evidence supporting UBL‘s main averment that UBL was dispossessed of certain portions of the leased premises for ten (10) years; hence, it applied the stipulation on the contract providing for the extension of the lease for such period.

ISSUE:

Whether or not the Court of Appeals erred in sustaining the trial court‘s finding that United Bus Lines are entitled to a ten-year extension of their lease contract with the Ninoy Aquino International Airport Authority

HELD:

Regardless of the extent of dispossession, whether total or partial, the provision on extension of term applies since the UBL‘s failure to use a portion of the leased premises is equivalent to a dispossession from the entire area in question.

By the terms of the contract then, NAIAA‘s obligation to deliver to UBL the entire leased premises and maintain the latter in peaceful, uninterrupted possession was indivisible. When UBL could not occupy and use portions of the leased premises, it was in effect deprived of possession thereof for there was incomplete performance by the petitioner of its principal prestation, thereby calling for the application of the contractual provision on extension of term.

A contract is the law between the parties and courts have no choice but to enforce such contract so long as it is not contrary to law, morals, good customs or public policy. Nothing appears objectionable in the lease contract between respondents and petitioner such that the latter is no less bound by its terms and conditions like any other private person or entity that is party to a contract.

While the Court upholds the trial court‘s and appellate court‘s ruling that UBL is entitled to a ten-year extension of the period of lease, it does not uphold that which reckons the period from the date of finality of the decision of the trial court. If that were the case, respondent UBL would hold on to the leased premises for a period longer than it is entitled under the ten-year extension, thereby virtually rendering nugatory petitioner‘s right of ownership over the premises.

The extension must thus begin on the day following the termination of the amended lease contract or on May 8, 1990, to last for a 10-year period or up to May 8, 2000. Since UBL and Silva have in fact been in continuous and uninterrupted possession of the premises since the promulgation of the trial court‘s decision of May 31, 1990 and during the pendency of the case at bar, they have already occupied the premises in the exercise of their adjudged right to the extension for the full period of ten years.