PNTC Colleges, Inc. vs. Time Realty, Inc

PNTC COLLEGES, INC., PETITIONER, VS. TIME REALTY, INC.
, RESPONDENT
G.R. No. 219698, September 27, 2021
Hernando, J. – Second Division
NATURE OF THE ACTION:
Petition for Review on Certiorari assailing the Decision and Resolution of the Court of
Appeals, which set aside the Decision of the Regional Trial Court of Manila.
FACTS:
PNTC Colleges, Inc. and Time Realty, Inc. entered into a Contract of Lease wherein
Time Realty leased to PNTC the Extremadura Streets, Sampaloc, Manila, from 2005 to 2007. the
contract was impliedly renewed on a monthly basis after its expiration in 2005. With the
acquiescence of Time Realty, PNTC continued to occupy the premises for an increased rental
rate.
In a letter dated April 4, 2007, PNTC informed Time Realty of its decision to terminate its lease
in the fourth floor which would take effect at the end of April 2007. Sometime in April 2007,
PNTC commenced the transfer of its operations to its new site in Intramuros, Manila. However,
Time Realty alleged that PNTC did so without settling its (PNTC's) outstanding rentals and
service (electricity and water) charges, plus interest/surcharges. Hence, Time Realty ordered
PNTC to cease its moving out operations, then retained the remaining properties of PNTC in the
premises. In August 2007, PNTC filed a Complaint for Delivery of Personal Properties with
Damages alleging that that it suffered serious losses due to Time Realty's unjustified withholding
of its properties valued at P561,360,00.
The RTC dismissed the Complaint and found that PNTC has no cause of action against
Time Realty. It noted that the lease contract's effectivity ceased a year after its execution without
need of demand. However, even without a subsequent lease contract, Time Realty allowed
PNTC to continue occupying the premises and collected monthly rentals therefrom, creating an
implied new lease (tacita reconduccion) in accordance with Article 1670 of the Civil Code. On
appeal, the CA set aside the Decision of the RTC. PNTC argues that the CA placed much
emphasis on its admission that it had unpaid accountabilities which would justify the
withholding of its properties.
ISSUE:
Whether or not Paragraph 23 of the Contract of Lease, which states that Time Realty can
retain PNTC's properties as security for unpaid rentals and other charges, is contrary to law,
morals, good customs, public order or public policy.
RULING:
The Petition is DENIED.
To start, an assessment of the records affirms the finding that PNTC is liable to Time
Realty for rental arrears and service charges. PNTC even acknowledged this, yet it justified its
non-payment by arguing that it had a previous agreement with Time Realty that fall payment will
be made after a complete transfer of its properties. Since PNTC failed to prove this allegation
with sufficient evidence, its obligations must be fulfilled in accordance with law and the lease
contract. Particularly, PNTC incurred liabilities because it violated the provisions of the Contract
of Lease which it willingly signed.
In view of this, "it is well to remember that a contract is the law between the parties. Obligations
arising from contracts have the force of law between the contracting parties and should be
complied with in good faith. The parties are allowed by law to enter into stipulations, clauses,
terms and conditions they may deem convenient which bind the parties as long as they are not
contrary to law, morals, good customs, public order or public policy."
Essentially, the stipulations in the Contract of Lease "are clear and show no
contravention, of law, morals, good customs, public order or public policy. As such, they are
valid, and the parties' rights shall be adjudicated according to them, being the primary law
between them. When the terms of the contract are clear and leave no doubt as to the intention of
the contracting parties, the rule is settled that the literal meaning of its stipulations should
control."
Relevantly, the lease contract provides that Time Really has the prerogative to take
control or possession of PNTC's properties in the event the latter violates a provision of the
contract, including non-payment of rent and other charges. Through its judicial admissions which
the CA already took note, there is no doubt that PNTC should settle the said obligations in
accordance with the Contract of Lease and applicable laws.
To expound, PNTC incurred the obligations mainly because of Paragraph 23 of the

Contract of Lease which states that Time Realty can retain PNTC's properties as security for
unpaid rentals and other charges.

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PNTC COLLEGES, INC., PETITIONER, VS. TIME REALTY, INC.

G.R. No. 219698, September 27, 2021

Hernando, J. – Second Division

NATURE OF THE ACTION:

The Petition is DENIED.

To expound, PNTC incurred the obligations mainly because of Paragraph 23 of the

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