G.R. No. 215922 - Muller vs. Philippine National Bank

The occupants are spouses Fritz and Thelma Muller (with additional family members represented by Hope C. Muller in substitution of the late Fritz D. Muller), who occupied two parcels of land with improvements located at Abeto Subdivision, Brgy. Sta. Rosa, Manduriao, Iloilo City.
The subject properties, with an aggregate area of 1,250 square meters, are owned by the Philippine National Bank (PNB).

The Mullers originally occupied the properties under a written lease agreement.
On May 26, 1987, PNB informed the Mullers that their lease would expire on June 1, 1987 and demanded payment for rental arrears amounting to PhP18,000.00 for two and a half years.
There was an attempt by Fritz Muller to propose a lease renewal or purchase of the subject properties, which was later denied by PNB.

June 1, 1987: The lease expired without renewal, triggering obligations under the lease.
July 13 and October 2, 1987: PNB communicated the denial of the lease renewal and the rejection of the purchase offer.
March 17, 1988: PNB demanded that the Mullers vacate the properties within fifteen days due to the expiration of the lease; however, the demand went unheeded.
July 17, 2006: A final demand letter was sent by PNB, reiterating the unpaid rental arrears covering an extended period.

October 19, 2007: The Municipal Trial Court in Iloilo City rendered a decision (Civil Case No. 07-105) ordering the Mullers to vacate the subject premises and pay rental arrears computed in distinct periods.
February 1, 2008: PNB filed an Urgent Motion for Execution of the judgment due to the Mullers’ failure to post a supersedeas bond.
June 2, 2008: The Regional Trial Court (RTC) issued a decision addressing the date from which rental claims should accrue, the issue of judicial notice on fair rental value, and the implications of prescription.
October 30, 2013: The Court of Appeals (CA) reversed the RTC’s ruling by ordering that reasonable rental compensation be reckoned from the date of the initial demand (May 26, 1987), not merely from the date of the last demand.
November 14, 2014: The CA, in a Resolution, declined to reconsider its ruling.

The dispute centers on whether the accumulation of rental arrears should begin from the initial demand or the latest demand, and whether the period for filing actions (prescription) applies.
The record evidences continuous occupation by the Mullers even after the expiration of their written lease, transitioning their occupancy to an oral or forced lease relationship.
Multiple demands by PNB, spanning from 1987 to 2006, underscore its consistent effort to collect unpaid rents before resorting to legal action.

Whether the award of rentals in an ejectment case may be reckoned from a date beyond the latest demand to vacate.

Whether the Court of Appeals correctly relied on precedents, notably Racaza v. Gozum, to justify reckoning rentals from the date of the first demand rather than the latest demand.

Whether the award of rentals beyond the last demand letter has prescribed, given that a significant amount of time had elapsed from the original demand in 1987.