2. Mariano v Petron (Billy) Groups prior consent, was in obvious breach of the Contract.

The continued
January 21, 2010 | Carpio | Prescription receipt of lease payments by the Aure Group (and later by Mariano) despite the
PETITIONER​​: Romeo D. Mariano contractual breach amounted to a waiver of their option to eject the lessee.
RESPONDENTS​​: Petron Corporation Mariano’s waiver of Petrons contractual breach was compounded by his long
SUMMARY​​: inaction to seek judicial redress. Petitioner filed his complaint nearly 22 yrs. after
(Aure Group), leased a 2,064 square meter parcel of land in Tagaytay City PNOC acquired the leasehold rights to the Property and almost 6 years after
(Property), to ESSO Standard Eastern, Inc., (ESSO Eastern), a foreign petitioner bought the Property from the Aure Group. More than 2 decades lapse
corporation doing business in the country through its subsidiary ESSO Standard puts this case within the 10 year prescriptive bar to suits based upon a written
Philippines, Inc. (ESSO Philippines). The lease contract (Contract) contained an contract under Article 1144 (1) of the Civil Code.
assignment veto clause barring the parties from assigning the lease without prior
consent of the other excluding certain corporations to whom ESSO Eastern may DOCTRINE:
unilaterally assign its leasehold right. ESSO Eastern sold ESSO Philippines to Art. 1144. The following actions must be brought within ten years from the time
the (PNOC). The Aure Group was not informed of the sale whose corporate the right of action accrues:
name was successively changed to Petrophil Corporation then to Petron Corp. (1) Upon a written contract;
(Petron), took possession of the Propert. Romeo D. Mariano then bought the (2) Upon an obligation created by law;
Property from the Aure Group and obtained title to the Property issued in his (3) Upon a judgment. (n)
name bearing an annotation of ESSO Easterns lease. Mariano sent Petron a
notice to vacate the Property and despite notice, Petron remained on the
Property. The trial court ruled that ESSO Easterns sale to PNOC of its interest in
FACTS:
ESSO Philippines included the assignment to PNOC of ESSO Easterns lease
1. Pacita V. Aure, Nicomedes Aure Bundac, and Zeny Abundo (Aure
over the Property, which, breached the Contract, resulting in its termination. The
Group), own a 2,064 square meter parcel of land in Tagaytay City
CA rejected the trial courts conclusion that PNOC acquired the leasehold right
(Property),
over the Property. They found the suit barred by the 4-year prescriptive period
2. They leased the Property to ESSO Standard Eastern, Inc., (ESSO
Eastern), a foreign corporation doing business in the country through its
The issue in this case is WoN the Suit is Barred by Prescrition- Yes subsidiary ESSO Standard Philippines, Inc. (ESSO Philippines).
3. The lease was 90 years with the rent payable monthly for the first 10
Since the breach gave rise to a cause of action for the Aure Group to seek the years, and annually for 80 Yrs.
lessees ejectment as provided under Article 1673, paragraph 3 of the Civil Code. 4. The lease contract (Contract) contained an assignment veto clause
Although the records don’t show that the Aure Group was formally notified of barring the parties from assigning the lease without prior consent of the
ESSO Philippines sale to PNOC, the successive changes in the lessees name other excluding certain corporations to whom ESSO Eastern may
(from ESSO Philippines to Petrophil Corporation to Petron) alerted the Aure unilaterally assign its leasehold right.
Group of a likely change in the personality of the lessee, for lack of the Aure
5. ESSO Eastern sold ESSO Philippines to the Philippine National Oil and Petron, creating an implied new lease terminating on 21 December
Corporation (PNOC) The Aure Group was not informed of the sale. 1998 upon Petrons receipt of petitioners notice to vacate.
6. ESSO Philippines, whose corporate name was changed to Petrophil 14. The CA set aside the trial courts ruling, declared the Contract until 13
Corporation then to Petron Corp. (Petron), took possession of the November 2058 and ordered Mariano to pay ​P​300,000 as attorneys fees.
Property. They found no reason to pierce the corporate veil, treating PNOCs
7. Petitioner Romeo D. Mariano bought the Property from the Aure Group buy-out of ESSO Philippines as mere change in ESSO Philippines
and obtained title to the Property issued in his name bearing an stockholding.
annotation of ESSO Easterns lease. 15. the Court of Appeals rejected the trial courts conclusion that PNOC
8. Mariano sent Petron a notice to vacate the Property, informing Petron acquired the leasehold right over the Property. They found petitioners
that P.D. No. 471 reduced the Contracts duration from 90 to 25 years, suit barred by the 4-year prescriptive period under Article 1389 and
which ends on 13 November 1993. Article 1146 (1) of the Civil Code, from PNOCs buy-out of ESSO
9. Despite receiving the notice to vacate, Petron remained on the Property. Philippines on 23 December 1977 (for Article 1389) or the execution of
10. On 18 March 1999, Mariano sued Petron in the RTC to rescind the the Contract on 13 November 1968 (for Article 1146
Contract and recover possession of the Property, theorizing that the ISSUES:
Contract was terminated on 23 December 1977 when ESSO Eastern sold 1. WoN ESSO Eastern Assigned to PNOC its Leasehold Right over the
ESSO Philippines to PNOC, without seeking the Aure Groups prior Property, Breaching the Contract – YES
consent. 2. WoN The Lessors Continued Acceptance of Lease Payments Despite
11. Petron countered that the Contract was not breached because PNOC Breach of Contract Amounted to Waiver
merely acquired ESSO Easterns shares in ESSO Philippines, a separate 3. Petitioners Suit Barred by Prescription(Main Issue) - YES
corporate entity. Petron argued that petitioners suit, filed on 18 March RATIO:
1999, was barred by prescription under of the Civil Code as petitioner 1. ESSO Eastern Assigned to PNOC its Leasehold Right over the
should have sought rescission within 4 years from PNOCs purchase of Property, Breaching the Contract
ESSO Philippines on 23 December 1977 or before 23 December 1981. a. PNOCs buy-out of ESSO Philippines was total and
12. On December 23, 1977, the Philippine National Oil Co. (PNOC), a unconditional, leaving no residual rights to ESSO Eastern.
corporation owned by the Philippine Government, acquired ownership of b. This change of ownership carried the transfer to PNOC any
ESSO Standard Philippines, Inc., including its leasehold right over the proprietary interest ESSO Eastern may hold through ESSO
land in question, through the acquisition of its shares of stocks Philippines, including ESSO Easterns lease over the Property.
13. The trial court ruled that ESSO Easterns sale to PNOC of its interest in This is the import of Petrons admission in the Joint Motion that
ESSO Philippines included the assignment to PNOC of ESSO Easterns by PNOCs buy-out of ESSO Philippines [PNOC], including its
lease over the Property, which, breached the Contract, resulting in its leasehold right over the land in question, through the acquisition
termination. However, because ESSO Philippines continued use of the of its shares of stocks.
Property was tolerated by receiving rental payments, the law on implied
new lease governs the relationship of the Aure Group (and later Mariano)
 c. As the Aure Group gave no prior consent to the transaction 3. Petitioners Suit Barred by Prescription(Main Issue)
between ESSO Eastern and PNOC, ESSO Eastern violated the a. Petitioners waiver of Petrons contractual breach was
Contracts assignment veto clause. compounded by his long inaction to seek judicial redress.
d. the facts conclude that ESSO Philippines was a mere branch of Petitioner filed his complaint nearly 22 yrs. after PNOC
ESSO Eastern in the execution and breach of the Contract. First, acquired the leasehold rights to the Property and almost 6 years
by ESSO Easterns admission in the Contract, it is a foreign after petitioner bought the Property from the Aure Group.
corporation organized under Delaware, U.S.A., duly licensed to b. The more than 2 decades lapse puts this case well within the
transact business in the Philippines, and doing business therein territory of the 10 year prescriptive bar to suits based upon a
under the business name and style of Esso Standard Philippines. written contract under Article 1144 (1) of the Civil Code.
In effect, ESSO Eastern ​was​​ ESSO Philippines for all of ESSO
Easterns Philippine business. SEPARATE OPINIONS:
e. 2​nd​, the Contract was executed by ESSO Eastern, not ESSO CONCURRING:
Philippines, as lessee, with the Aure Group as lessor. ESSO
Eastern leased the Property for the use of ESSO Philippines,
acting as ESSO Easterns Philippine branch. Consistent with
such status, ESSO Philippines took possession of the Property
after the execution of the Contract. For purposes of the Contract,
ESSO Philippines was a mere alter ego of ESSO Eastern.
2. The Lessors Continued Acceptance of Lease Payments Despite Breach
of Contract Amounted to Waiver
a. We hold that the Contract subsists. The breach gave rise to a
cause of action for the Aure Group to seek the lessees ejectment
as provided under Article 1673, paragraph 3 of the Civil Code.
b. Although the records don’t show that the Aure Group was
formally notified of ESSO Philippines sale to PNOC, the
successive changes in the lessees name (from ESSO Philippines
to Petrophil Corporation to Petron) alert the Aure Group of a
likely change in the personality of the lessee, for lack of the
Aure Groups prior consent, was in obvious breach of the
Contract.
c. The continued receipt of lease payments by the Aure Group
(and later by Mariano) despite the contractual breach amounted
to a waiver of their option to eject the lessee.