Inter-Asia Services Corp. vs. Court of Appeals

A preliminary injunction cannot issue to protect a right that no longer exists; where a lease contract for a determinate period has expired and no valid renewal was executed, mere extensions of time to vacate do not create a new contractual relationship or revive the expired lease, and verbal assurances of renewal are inadmissible to vary the terms of a written contract under the parole evidence rule and Statute of Frauds.

The case arises from a lease agreement executed on June 2, 1986, allowing Inter-Asia to operate and maintain parking lots fronting the main airport building at the Manila International Airport. The contract was set to expire on July 14, 1990, renewable only at the option of the lessor (NAIAA). As the expiration date approached, NAIAA informed Inter-Asia of its intention not to renew and to reclaim the premises for airport improvements, granting successive extensions until March 31, 1991, to allow Inter-Asia to wind up its business operations.

• Petitioner Inter-Asia Services Corp. and private respondent Manila International Airport Authority (now Ninoy Aquino International Airport Authority) entered into a contract of lease on June 2, 1986, allowing petitioner to operate and maintain parking lots 1 and 2 fronting the main airport building.
• The lease period was for four (4) years from July 14, 1986 to July 14, 1990, renewable thereafter at the option of NAIAA.
• On February 26, 1990, and again on May 8, 1990, NAIAA informed petitioner of its plan to improve the passenger arrival area by constructing a multi-level parking facility in the leased premises.
• In May 1990, NAIAA segregated and occupied a 9,000 square-meter portion of the subject parking area without prior notice, explaining that it intended to construct a multi-deck edifice for arriving passengers.
• On June 7, 1990, one month before the expiration of the contract, NAIAA informed Inter-Asia of its intention not to renew the contract and to take over the area effective July 15, 1990, advising petitioner to wind up its business.
• Inter-Asia responded by submitting a proposal to upgrade its facilities and requested that "the status quo" be maintained while its proposal was being considered.
• NAIAA granted extensions allowing Inter-Asia to operate up to January 31, 1991, and subsequently up to March 31, 1991, but consistently maintained its position that it was not renewing the contract.
• On December 26, 1990, NAIAA reminded Inter-Asia of its intention to take over the premises.
• NAIAA informed Inter-Asia that it was definitely taking over the parking lots on April 1, 1991.
• On March 27, 1991, petitioner filed a complaint for specific performance and damages with prayer for a writ of preliminary injunction, alleging that NAIAA threatened to eject it despite an alleged provision allowing operation of a restaurant and food kiosk.
• On April 1, 1991, petitioner refused to leave the leased premises.
• The lease contract provided that it was "renewable thereafter at the option of the MIAA" and that upon termination or expiration, the concessionaire shall peaceably vacate the parking area.

• The Court of Appeals exceeded its jurisdiction when it decided the issue of possession independently, as the matter of possession has been granted exclusively and originally to the Metropolitan Trial Court in accordance with Rule 70 of the Rules of Court.
• The Court of Appeals gravely abused its discretion and violated the constitutional guarantee of due process by acting without benefit of trial and presentation of evidence.
• The Court of Appeals should not have entertained private respondent's petition as the trial court still had to resolve the matter on the merits of the case.
• The Court of Appeals condoned the misuse of its temporary restraining order when private respondent forcibly recovered possession of the leased premises.
• Petitioner had a right to be maintained in the premises based on informal and verbal assurances by NAIAA officials that the contract would be renewed, and based on substantial financial investments made in improvements relying on these assurances.

• The contract of lease indubitably expired on July 14, 1990, by its own terms.
• The extensions granted to petitioner cannot be considered as valid renewals of the lease agreement; a distinction must be made between "renewal" and "extension" of a contract.
• Renewal connotes the cessation of the old contract and the birth of a new one, requiring the execution of a new contract, whereas extension merely prolongs the existing term.
• In the absence of an existing contract, petitioner has no legal right which the trial court could protect by the writ of preliminary injunction.
• Verbal assurances of renewal are inadmissible to qualify the terms of a written lease agreement under the parole evidence rule and are unenforceable under the Statute of Frauds.
• The renewal clause expressly stated that renewal was at the option of NAIAA, which option was never exercised.

• Procedural: Whether the Court of Appeals exceeded its jurisdiction by deciding the issue of possession which allegedly falls within the exclusive and original jurisdiction of the Metropolitan Trial Court under Rule 70 of the Rules of Court.
• Substantive Issues:
  • Whether the Court of Appeals gravely abused its discretion in reversing the trial court's issuance of a writ of preliminary injunction.
  • Whether the extensions granted by NAIAA constituted a renewal of the lease contract or merely extensions of the period to vacate.
  • Whether petitioner had a right in esse entitling it to injunctive relief.

• Procedural: The Supreme Court held that the Court of Appeals did not exceed its jurisdiction. The CA was exercising its certiorari jurisdiction to review the trial court's issuance of injunctive relief. The resolution of whether the trial court abused its discretion in issuing the injunction necessarily required determining whether petitioner had a right to protect, which hinged on the status of the lease contract. This did not constitute an adjudication of the possession issue in the first instance.
• Substantive: The Court ruled that the lease contract expired on July 14, 1990, as it was made for a determinate time, and under Article 1669 of the Civil Code, such a lease ceases upon the day fixed without need of demand. The subsequent extensions granted until January 31, 1991, and March 31, 1991, were merely extensions of the period to vacate and did not constitute a renewal of the contract. A renewal requires the execution of a new contract, whereas an extension merely operates to prolong the existing term. Since the contract had expired and no new contract was executed, petitioner had no legal right in esse to protect, making the writ of preliminary injunction a patent nullity issued without jurisdiction. Furthermore, the Court held that alleged verbal assurances of renewal were inadmissible under the parole evidence rule and unenforceable under the Statute of Frauds (Article 1403[2], Civil Code), and petitioner had only itself to blame for making investments based on vague verbal assurances by personnel who had no authority to bind NAIAA.

• Renewal vs. Extension of Contract — Renewal connotes the cessation of the old contract and the birth of a new one, requiring the execution of a new contract, while an extension merely prolongs the existing term without creating a new contractual relationship. The Court applied this distinction to hold that the extensions granted did not revive the expired lease.
• Requisites for Preliminary Injunction — The issuance of a writ of preliminary injunction requires: (1) a right in esse or the existence of a right to be protected, and (2) the act against which the injunction is directed is a violation of such right. The Court found the first requisite absent as the lease had expired.
• Parole Evidence Rule — When the terms of a contract are clear and leave no doubt upon the intention of the parties, extrinsic evidence including verbal assurances are inadmissible to qualify the terms of a written agreement.
• Statute of Frauds — An agreement to renew a lease is unenforceable if not in writing, as it is an agreement that by its terms is not to be performed within one year from the making thereof (Article 1403[2], Civil Code).
• Interpretation of Contracts — If the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control (Article 1370, Civil Code).
• Termination of Lease for Determinate Time — A lease made for a determinate time ceases upon the day fixed without need of demand (Article 1669, Civil Code).

• "Injunction is a preservative remedy for the protection of substantive rights or interest. It is not a cause of action in itself but merely a provisional remedy, an adjunct to a main suit."
• "The renewal of a contract connotes the cessation of the old contract and the birth of another one. It means the passing away of the old one and the emergence of the new one."
• "A distinction between a stipulation to RENEW a lease and one to EXTEND it for an additional period beyond the original term usually requires the execution of a new lease, while the latter does not."
• "In the absence of an existing contract, Inter-Asia has no legal right to speak of which the respondent Judge could protect by the writ of preliminary injunction that he issued."
• "An alleged verbal assurance of renewal of a lease is inadmissible to qualify the terms of the written lease agreement under the parole evidence rule and unenforceable under the Statute of Frauds."
• "It is a cardinal rule in the interpretation of contracts that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control."

• Del Rosario v. Court of Appeals (G.R. No. 115106, March 15, 1996) — Cited for the principle that injunction is a preservative remedy for the protection of substantive rights, not a cause of action in itself.
• Government Service Insurance System v. Florendo (178 SCRA 76) — Cited for the rule that courts have discretion in issuing preliminary injunctions but must observe extreme caution, and that such discretion should not be interfered with except in cases of manifest abuse.
• Fernandez v. Court of Appeals (166 SCRA 577) — Cited for the rule that verbal assurances of renewal are inadmissible under the parole evidence rule and unenforceable under the Statute of Frauds.
• Herrera v. Buencamino — Cited for the definition that renewal connotes the cessation of the old contract and the birth of a new one.
• Gustilo v. Gustilo — Cited for the definition of renewal as the recreation and/or replacement of an old contract.
• Ong v. Ramolete (51 SCRA 18) — Cited for the distinction between renewal and extension, noting that renewal usually requires execution of a new lease while extension does not.
• Abella v. Court of Appeals — Cited for Article 1370 of the Civil Code regarding interpretation of contracts.
• Del Rosario v. Balagot (166 SCRA 429) — Cited for Article 1669 of the Civil Code regarding leases for determinate time.
• Syquia v. Court of Appeals (151 SCRA 351) — Cited in relation to the parole evidence rule.

• Article 1370, Civil Code of the Philippines — Provides that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control.
• Article 1669, Civil Code of the Philippines — Provides that a lease for a determinate time ceases upon the day fixed without need of demand.
• Article 1403(2), Civil Code of the Philippines — Statute of Frauds provision making unenforceable agreements that by their terms are not to be performed within one year from the making thereof.
• Rule 70, Rules of Court — Referenced by petitioner regarding jurisdiction over possession cases (forcible entry/unlawful detainer).