G.R. No. L-60129. July 29, 1983.
LEONOR J. VDA. DE JAVELLANA, petitioner, vs. COURT OF APPEALS and MOBIL OIL PHILIPPINES, INC., respondents.

FACTS

Petitioner Leonor J. Vda. de Javellana owned three contiguous parcels of land in Makati. On December 20, 1969, she granted private respondent Mobil Oil Philippines, Inc. a 60-day option to lease the property, expiring on February 18, 1970. The option agreement stipulated that if not exercised within the period, the consideration paid would be forfeited. On July 31, 1970, after the option period had lapsed, Javellana executed a 20-year lease contract over the same property with Shell Refining Company (Phil.), Inc., receiving an advance rental and demolition expenses.
Mobil filed an action in the Court of First Instance against Javellana and Shell, claiming it had exercised the option. It sought to annul the Shell lease, compel Javellana to execute a lease with Mobil, and recover damages. The trial court issued a preliminary injunction restraining Javellana and Shell from implementing their lease or constructing on the property. After trial, the court ruled in favor of Mobil, declaring the Shell lease null and void, ordering Javellana to execute a lease with Mobil, and making the injunction permanent. Javellana’s counterclaim for damages was denied. The Court of Appeals affirmed the trial court’s decision, including the denial of Javellana’s claim for damages.

ISSUE

Whether the Court of Appeals erred in denying petitioner Javellana’s claim for damages arising from the preliminary injunction that deprived her of the use and rental income of her property.

RULING

Yes, the Supreme Court modified the decision and awarded damages to Javellana. The Court held that while the appellate court correctly affirmed the trial court’s finding that Mobil validly exercised its option, it erred in not awarding damages to Javellana for the losses she suffered due to the preliminary injunction. The injunction, issued at Mobil’s instance, effectively deprived Javellana of the possession and beneficial use of her property from the time it was issued. As a result, she was unable to receive the substantial rental income stipulated in her valid lease contract with Shell for the duration of the injunction’s effect.
The Court emphasized that its authority to review is not strictly limited to assigned errors, especially when necessary to achieve a just result. It found it unfair and unjust to deprive Javellana of her property’s rentals due to a mere technicality. The Court computed the accrued rental income Javellana lost from the execution of the Shell lease up to the time of its decision, deducting the advance rental she had received. Consequently, Mobil was ordered to pay Javellana the amount of P792,000.00 as accrued rentals with legal interest, plus continuing monthly payments until possession is restored, and P20,000.00 for attorney’s fees and litigation expenses. The rest of the appealed judgment was affirmed.