Title
Arquelada vs. Philippine Veterans Bank
Case
G.R. No. 139137
Decision Date
Mar 31, 2000
Lessees failed to pay rent under a month-to-month lease; Bank, as new owner, filed unlawful detainer. SC upheld ejectment, citing lease expiration and arrearages, granting six months to vacate.
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Case Digest (G.R. No. 139137)

Facts:

Background of the Lease Agreement

  • Petitioners (Arquelada, et al.) were lessees of a fourteen-door apartment located at No. 1708 M. Lazaro corner M. Hizon Streets, Sta. Cruz, Manila. The apartments were originally owned by spouses Ernesto and Socorro Singson.
  • The lease agreement between the spouses Singson and the petitioners was verbal, with the petitioners paying monthly rent.

Transfer of Ownership to the Bank

  • The spouses Singson mortgaged the apartments to the Philippine Veterans Bank (the "Bank") as security for a loan. Due to the spouses' failure to pay the loan, the Bank foreclosed the mortgage, and the properties were transferred to the Bank under TCT Nos. 225493 and 225494.
  • Despite the change in ownership, the Bank allowed the petitioners to continue occupying the premises under a month-to-month lease arrangement.

Accrued Rental Arrearages

  • Petitioners incurred significant rental arrearages, with each petitioner owing varying amounts as of January 1998. The Bank sent Statements of Account and made several demands for payment, but the petitioners failed to settle their debts.

Final Notice to Vacate

  • On 8 February 1998, the Bank issued a Final Notice to each petitioner, demanding that they vacate the premises and settle their outstanding rentals. The petitioners failed to comply, prompting the Bank to file an unlawful detainer case on 12 February 1998.

Procedural History

  • The Metropolitan Trial Court (MTC) ruled in favor of the Bank, ordering the petitioners to vacate the premises and pay their rental arrearages. The Regional Trial Court (RTC) and the Court of Appeals (CA) affirmed the MTC's decision.
  • Petitioners filed a petition for review with the Supreme Court, arguing that the MTC lacked jurisdiction and that the Bank's grounds for ejectment were invalid.

Issue:

  1. Jurisdiction of the MTC: Whether the MTC acquired jurisdiction over the unlawful detainer case despite the Bank filing the complaint before the lapse of the five-day period from the demand to vacate.
  2. Grounds for Ejectment: Whether the expiration of the month-to-month lease and the non-payment of rentals constituted valid grounds for the petitioners' ejectment.

Ruling:

The Supreme Court ruled in favor of the Bank, affirming the decisions of the lower courts. The Court held:

  1. Jurisdiction of the MTC: The MTC had jurisdiction over the unlawful detainer case. The five-day period under Section 2, Rule 70 of the Rules of Civil Procedure applies only when the action is based on non-payment of rent or violation of lease conditions. Since the Bank's action was based on the expiration of the lease, no prior demand or waiting period was required.
  2. Grounds for Ejectment: The expiration of the month-to-month lease and the petitioners' failure to pay rentals were valid grounds for ejectment. The Court also noted that the applicable law was B.P. Blg. 877 (not B.P. Blg. 25, as argued by petitioners), which allows ejectment upon the expiration of the lease contract.

The Court extended the lease for six months from the finality of the decision to allow petitioners to vacate the premises and settle their accounts.

Ratio:

  1. Demand to Vacate: A demand to vacate is only required in unlawful detainer cases based on non-payment of rent or violation of lease conditions. When the action is based on the expiration of the lease, no prior demand is necessary.
  2. Expiration of Lease: A month-to-month lease is considered a lease with a definite period, which expires at the end of each month upon a demand to vacate. The Bank's notice of termination on 9 October 1997 effectively ended the lease, and the petitioners' continued occupation became unlawful.
  3. Applicable Law: B.P. Blg. 877, not B.P. Blg. 25, governs the case. Under B.P. Blg. 877, the expiration of the lease contract is a valid ground for ejectment, regardless of whether the lease is written or verbal.
  4. Extension of Lease: The Court, exercising its discretion under Article 1687 of the Civil Code, extended the lease for six months to allow petitioners to vacate and settle their obligations.

Conclusion:

The Supreme Court denied the petition, affirming the lower courts' decisions. The petitioners were ordered to vacate the premises after the six-month extension and to pay their outstanding rentals.


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