Case Summary (G.R. No. 93474)
Procedural History
Cetus Development filed an ejectment complaint in the Municipal Court of Manila alleging unlawful sublease in violation of BP 877; the Municipal Court dismissed the complaint. The Regional Trial Court of Manila affirmed dismissal and made additional findings. The Court of Appeals reversed, holding that BP 877 applied and that petitioner was a proper defendant. The matter proceeded to the Supreme Court on petition for review on certiorari, which denied the petition.
Facts
The original lease was taken by Servillano Ocampo; upon his death Angela continued occupancy and later moved in 1976, subleasing the house while reserving one room for her belongings. The sublease to Capuchino commenced in 1976 and continued. Ownership of the lot passed from the Aranetas to Susanna Realty, Inc., and in 1985 to Cetus Development. Rental payments from petitioner to the lessor totaled P69.70 per month; petitioner charged Capuchino P400.00 monthly under the sublease. BP 877 became effective June 12, 1985; the sublease was renewed in July 1985.
Issues Presented
- Whether BP 877 applied to the lease/sublease and thus rendered the sublease invalid without the lessor’s written consent.
- Whether application of BP 877 to the renewed sublease constituted impermissible retroactive application or violated the constitutional prohibition against impairment of contracts or ex post facto laws.
- Whether Virginia Ocampo Juarez was a proper party defendant in the ejectment proceeding, or whether her mother Angela was the appropriate defendant.
Applicable Law and Legal Standards
- 1987 Philippine Constitution (constitutional framework applicable to the decision).
- Article 1687, Civil Code: where no period is fixed and rent is monthly, lease is from month to month; courts may fix a longer term after specified periods of possession.
- Article 1650, Civil Code: lessee may sublet when contract contains no express prohibition (subject to responsibilities).
- BP 877: defines covered residential units (including houses and land used for residential purposes) and prescribes grounds for judicial ejectment, including assignment or subleasing without written consent of the owner/lessor; coverage limited to units whose total monthly rental did not exceed P480.00 as of the law’s effectivity.
- Rules of Court: Rule 70, Sec. 1 (who may institute ejectment proceedings) and Rule 3, Sec. 11 (misjoinder/non-joinder of parties not fatal to action).
- Constitutional doctrines: impairment clause and the reach of the State’s police power to regulate contracts that affect public interest (as discussed in cited precedents).
Court’s Analysis on Tenancy Status and Applicability of BP 877
The Court applied Article 1687 of the Civil Code to conclude that because the original lease and the sublease provided for monthly rental payments and no fixed term, both were month-to-month tenancies. The renewal of the sublease in July 1985 occurred after BP 877 became effective on June 12, 1985. Consequently, the renewed contractual arrangement was subject to BP 877’s requirements, including the prohibition on subleasing without the lessor’s written consent where applicable. The Court further held that even if a preexisting sublease had a fixed term extending beyond BP 877’s effectivity, the statute could still cut short that term so as to apply to the contractual relation (i.e., operate retroactively to affect existing subleases).
The Court also found that the property fell within BP 877’s definition of “residential unit” because it consisted of a house and land used for residential purposes, and thus the statute’s protection and restrictions were applicable.
Court’s Reasoning on Constitutional Challenges (Impairment Clause and Ex Post Facto)
The petitioner’s contention that retrospective application of BP 877 violated the constitutional impairment clause was rejected. The Court reasoned that the impairment clause is not absolute where public interest and the exercise of the police power justify regulation of private contracts. The Court emphasized that housing and rental regulation implicate serious public welfare concerns; because the contract affected public interest, the State’s police power could validly modify contractual relations in furtherance of social objectives.
On the ex post facto argument, the Court held BP 877 was not penal in nature in its application to ejectment proceedings; the existence of penal provisions in the statute does not render the entire law penal for purposes of the constitutional prohibition against ex post facto laws. The petitioner was subject to a civil action for ejectment, not prosecution under criminal provisions.
Court’s Reasoning on Proper Party Defendant and Joinder
The Court concluded that Virginia Ocampo Juarez was the proper party defendant because she actively managed the leased premises on behalf of her mother: she received rent from Capuchino and paid rent to the owner, and she had been administering the property while Angela, aged and infirm, could not. Under Rule 70, Sec. 1, actions for recovery of possession may be brought against persons unlawfully withholding possession or those claiming under the
...continue readingCase Syllabus (G.R. No. 93474)
Facts of the Case
- The subject property is a lot located at 502 Quezon Boulevard, Manila, originally leased in the early 1900's to Servillano Ocampo, who built a house thereon and lived there with his parents and his sister Angela.
- Servillano Ocampo died on March 17, 1956; the lease was thereafter taken over by Angela Ocampo, who continued to occupy the house with her children, including petitioner Virginia Ocampo Juarez.
- In 1976, due to advanced age, Angela moved to petitioner Virginia’s house in Pasay City and subleased the house on Quezon Boulevard to Roberto Capuchino, reserving only one room for her personal belongings.
- Ownership of the lot changed: the Aranetas sold it to Susanna Realty, Inc., which in turn sold it in 1985 to Cetus Development Corporation (private respondent).
- Immediately after acquiring the lot, Cetus filed a complaint for ejectment against petitioner in the Municipal Court of Manila, alleging that the lessee had subleased the property without the lessor’s consent in violation of BP 877.
- The municipal court dismissed the complaint; the dismissal was affirmed by the Regional Trial Court (RTC) of Manila; the Court of Appeals (CA) reversed the lower courts’ rulings.
- The sublease to Capuchino commenced in 1976 and continued; rentals under the lease were paid monthly; petitioner reportedly paid P69.70 per month to the lessor but charged Capuchino P400.00 per month under the sublease.
- BP 877 became effective on June 12, 1985; the sublease was renewed in July 1985 after BP 877’s effectivity.
- BP 877 covers “All residential units the total monthly rental of which does not exceed four hundred eighty pesos (P480.00) as of the effectivity of this Act” and contains definitions and grounds for judicial ejectment, including subleasing without written consent.
Procedural History
- Municipal Court of Manila: complaint for ejectment filed by Cetus Development Corporation; case dismissed by Judge Ernesto A. Reyes on ground that BP 877 was inapplicable because the sublease predated the statute’s effectivity.
- Regional Trial Court of Manila: affirmed the municipal court’s dismissal (opinion penned by Judge Maximo A. Savellano, Jr.); RTC added that BP 877 applied only where the lessor had constructed the building and that the real party in interest was Angela Ocampo Juarez, not petitioner.
- Court of Appeals: reversed the RTC ruling (opinion penned by Justice Ricardo L. Pronove, Jr., with Benipayo and Guingona, JJ., concurring); CA held BP 877 applicable because original lease was month-to-month and renewal in July 1985 rendered it subject to BP 877; CA held petitioner was a proper party defendant because she was paying rentals at the time the complaint was filed.
- Supreme Court: petition for review on certiorari filed by petitioner; decision authored by Cruz, J.; petition denied on October 7, 1992 (289 Phil. 81); costs assessed against petitioner; Grino-Aquino, Medialdea, and Bellosillo, JJ., concurred; Padilla, J., on leave.
Issues Presented
- Whether BP 877 applied to the sublease and lease renewed in July 1985.
- Whether application of BP 877 to the renewed sublease constituted an improper retroactive application affecting vested contractual rights.
- Whether retroactive application of BP 877 would violate the impairment clause of the Constitution or operate as an ex post facto law.
- Whether petitioner Virginia Ocampo Juarez was the proper party defendant in the ejectment action, or whether the real party in interest was Angela Ocampo.
- Whether the sublease remained valid by virtue of Article 1650 of the Civil Code when concluded in 1976.
- Whether the lease and sublease should be characterized as month-to-month under Article 1687 of the Civil Code.
Statutory and Code Provisions Invoked (as quoted in the decision)
- Article 1687, Civil Code:
- “If the period for the lease has not been fixed, it is understood to be from year to year, if the rent agreed upon is annual; from month to month, if the rent is monthly; from week to week, if the rent is weekly; and from day to day, if the rent is to be paid daily. However, even though a monthly rent is paid, and no period for the lease has been set, the courts may fix a longer term for the lease after the lessee has occupied the premises for over one year. If the rent is weekly, the courts may likewise determine a longer period after the lessee has been in possession for over six months. In case of daily rent, the courts may also fix a longer period after the lessee has stayed in the place for over one month.”
- Article 1650, Civil Code:
- “When in the contract of lease of things there is no express prohibition, the lessee may sublet the thing leased, in whole or in part, without prejudice to his responsibility for the performance of the contract toward the lessor.”
- BP 877 (provisions cited in the decision):
- Coverage: “All residential units the total monthly rental of which does not exceed four hundred eighty pesos (P480.00) as of the eff