Facts:

The case involves Tony Caudal as the petitioner and the Hon. Court of Appeals, Hon. Remegio E. Zari (Presiding Judge, Regional Trial Court, National Capital Judicial Region, Branch 98, Quezon City), and Dionisio O. Cu as the respondents. The events leading to this case began when Dionisio Cu, along with his wife and five children, initially rented an apartment at No. 269-A D. Tuason, Quezon City, but later moved to No. 38 Silencio St., Santol, Quezon City, due to the owner's need for the former apartment. The lease for the second apartment was from September 16, 1984, to March 16, 1986. In February 1984, Cu purchased a parcel of land at 157 E. Garcia, Quezon City, which included a six-door apartment building from Julieta Esguerra, intending to provide a permanent home for his family. On July 2, 1984, Cu notified Caudal, who was occupying one of the units, of the termination of the lease, giving him until October 1984 to vacate. However, Caudal refused to leave, prompting ...

Facts:

1. Background of the Parties

   • Private respondent Dionisio Cu, his wife, and five children initially rented an apartment at No. 269-A D. Tuason, Quezon City.
   • They later moved to No. 38 Silencio St., Santol, Quezon City, as the owner of the first apartment needed it for personal use.
   • The lease for the second apartment was from September 16, 1984, to March 16, 1986.

2. Acquisition of Property

   • In February 1984, Cu purchased a parcel of land at 157 E. Garcia, Quezon City, including a six-door apartment building, from Julieta Esguerra.
   • Petitioner Tony Caudal was occupying one of the units in the apartment building.

3. Termination of Lease

   • On July 2, 1984, Cu notified Caudal of the termination of the lease contract, giving him until October 1984 to vacate the premises.
   • Despite the notice, Caudal refused to leave, prompting Cu to seek assistance from the Barangay Captain, who issued a certification to file a complaint.

4. Ejectment Case

   • Cu filed an ejectment case (Civil Case No. 0047612) against Caudal before the Metropolitan Trial Court (MTC) of Quezon City.
   • Cu alleged that he and his family needed the apartment for their own use, as they were renting elsewhere and planned to merge two units into one for his son’s marital home and use the remaining units as their conjugal dwelling.

5. Defense of Caudal

   • Caudal claimed he had a verbal lease agreement with the previous owner, Julieta Esguerra, at a monthly rate of P150.00 since July 1967.
   • He also proposed that part of the land be used for Cu’s dwelling, but Cu rejected the proposal.

6. Lower Court Decisions

   • The MTC dismissed Cu’s complaint on March 26, 1986.
   • Cu appealed to the Regional Trial Court (RTC), which reversed the MTC’s decision on June 6, 1986, ruling in favor of Cu.
   • Caudal then filed a petition for review with the Court of Appeals (CA), which affirmed the RTC’s decision on January 29, 1988.
   • The CA denied Caudal’s motion for reconsideration on May 18, 1988.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. Interpretation of Section 5(c) of B.P. 877

   • The Court emphasized that the term "residential unit" under B.P. 877 is not strictly limited to habitation but includes auxiliary uses such as stockrooms, offices, and quarters for maids and drivers, provided the premises are principally used for dwelling purposes.
   • The law allows flexibility in the use of residential units for limited business or auxiliary purposes, as long as the primary use remains residential.

2. Right of the New Owner to Repossess

   • The Court ruled that a new owner who purchases property for personal use and that of their family has the right to eject a lessee under Section 5(c) of B.P. 877.
   • The prohibition against ejectment based solely on the sale of the property does not apply when the new owner establishes a legitimate need for the premises for residential purposes.

3. Termination of the Lease Agreement

   • The Court held that the verbal month-to-month lease agreement between Caudal and the previous owner was properly terminated with the three-month notice given by Cu.
   • The notice complied with the requirements of Section 5(c) of B.P. 877, which mandates a three-month advance notice for repossession.

4. Auxiliary Use as Part of Residential Purposes

   • The Court clarified that the use of the unit as a maid/driver’s quarters and stockroom is within the scope of residential purposes, as these are auxiliary to the main dwelling.
   • The conversion of the premises into a conjugal dwelling for Cu and his family, including the auxiliary uses, aligns with the legislative intent of B.P. 877.

5. Precedents and Legislative Intent

   • The Court cited precedents and the legislative intent behind B.P. 877, emphasizing that the law prioritizes the owner’s need for residential use over the tenant’s right to remain in the premises.
   • The Court rejected Caudal’s argument that the maids and drivers are not immediate family members, as the unit’s use is auxiliary to the main dwelling occupied by Cu and his family.

The Supreme Court affirmed the decision of the Court of Appeals, ruling that Cu had the right to eject Caudal under Section 5(c) of B.P. 877. The Court held that the use of the premises for residential purposes, including auxiliary uses such as maid/driver’s quarters and stockrooms, is legitimate and within the scope of the law. The verbal lease agreement was properly terminated, and Cu’s need for the premises as a residential unit justified the ejectment.
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