Title
Lopez vs. Fajardo
Case
G.R. No. 157971
Decision Date
Aug 31, 2005
A tenant's failure to pay three months' rent and a valid lease termination led to a Supreme Court ruling favoring the landlord, overturning the CA's dismissal of the ejectment case.
landlord
ejectment complaint
tenant
A

Case Summary (G.R. No. 157971)

Factual Background

The Sobrepenas owned a two-door apartment building at 1326 and 1328 Tomas Mapua St. Before the sale to the Lopez sisters, respondent had long occupied apartment No. 1328 under a verbal contract of lease. After the property was sold on April 30, 1999, the Lopez sisters became the titled owners and assumed the landlord position.

Petitioner, as attorney-in-fact of the Lopez sisters, filed the first ejectment complaint before the MeTC on March 31, 2000, alleging failure to pay monthly rentals from May 1999 to February 2000. The parties settled when respondent paid P35,000.00 covering rental arrears and current rental for June 2000. With settlement, the MeTC case closed and petitioner allowed respondent to stay.

In July 2000, petitioner learned that respondent had filed Civil Case No. 00-97105 in the RTC, seeking nullification of the deed of sale between the Sobrepenas and the Lopez sisters and asking that respondent be granted a right of first refusal over the leased premises. After this development, respondent again stopped paying rentals. Petitioner sent a letter dated August 18, 2000 informing respondent that the monthly lease contract would be terminated effective midnight of August 31, 2000, and that there would be no renewal on a month-to-month basis. The letter granted a one-month grace period until September 30, 2000, but conditioned that respondent immediately pay the July and August 2000 rentals of P2,500.00 each (a total of P5,000.00). The letter warned that if the unpaid rental was not paid immediately, respondent would be treated as an interloper as of September 1, 2000 and must vacate due to lease expiration and nonpayment.

On September 21, 2000, respondent remitted a Security Bank Check No. 0121467, dated September 20, 2000, in the amount of P30,000.00. The remittance was said to cover rentals in arrears for July, August and September 2000, plus advance rentals for October 2000 up to July 2001, expressly without prejudice to the outcome of Civil Case No. 00-97105.

Petitioner, however, rejected the check. Through counsel, petitioner wrote on September 21, 2000 that he could not accept the payment as rentals due because the rentals due were only for July, August, and September 2000, and that respondent was expected to vacate by October 1, 2000.

Filing of the Second Ejectment Complaint and the Parties’ Positions

After barangay conciliation failed, petitioner filed the second ejectment complaint before the MeTC on October 25, 2000, docketed as Civil Case No. 168809-CV. He alleged that respondent’s failure to pay rentals and the termination of the lease warranted her eviction. Petitioner prayed that respondent and all persons claiming rights under her vacate the premises and surrender possession, and that respondent pay P7,500.00 as rental arrears from July 2000 to September 2000, plus P2,500.00 monthly as reasonable compensation beginning October 2000 until actual vacation. He also sought moral damages (P50,000.00), exemplary damages (P50,000.00), attorney’s fees (P30,000.00), and costs.

Respondent, in her Answer with Counterclaim, asserted that the complaint stated no valid cause of action. She contended that petitioner’s allegation of lease expiration was misplaced because she did not recognize the Lopez sisters as her true lessors, and she claimed that the P35,000.00 paid in connection with the first ejectment case was made under protest and without prejudice to the outcome of Civil Case No. 00-97105.

Respondent also argued that even assuming an implied verbal lease existed, petitioner’s termination was baseless. She maintained that her payments showed non-monthly patterns. She alleged that her latest payment to the Sobrepenas on April 16, 1999 covered four months (January 1999 to April 1999), and that a prior payment on November 16, 1998 covered eleven months (January 1998 to November 16, 1998), indicating that rent was not being paid on a monthly basis.

The MeTC issued a Pre-trial Order that framed the principal issues as whether respondent could be lawfully evicted and whether respondent was entitled to her counterclaim for damages.

MeTC and RTC Rulings

Branch 11 of the MeTC, after the parties submitted position papers and documentary evidence, rendered a decision on April 9, 2001. It found for petitioner, holding that petitioner sufficiently established a cause of action arising from the expiration of the lease contract. The MeTC characterized the lease as terminable at the end of any month after due notice and found that respondent failed to pay the stipulated rental, thus satisfying ejectment grounds under Article 1673 of the Civil Code.

The MeTC ordered respondent to vacate the premises and surrender possession to petitioner, to pay P7,500.00 as back rentals covering July to September 2000, and to pay P2,500.00 monthly as reasonable compensation beginning October 2000 until actual vacation. It further ordered P5,000.00 as attorney’s fees and payment of costs.

Respondent appealed to the RTC of Manila, which affirmed the MeTC in full through a decision dated June 7, 2002. The RTC held that petitioner allowed respondent to continue occupying the premises on a month-to-month rental terminable at the end of each month, until petitioner sent the August 18, 2000 notice to vacate. The RTC ruled that a landlord-tenant relationship existed and ended on August 31, 2000, as shown by the August 18 letter. It further explained that because rent was paid on a monthly basis, the lease was on a month-to-month basis under Article 1687 of the Civil Code. It treated the lease as terminated upon demand when respondent stopped paying rentals from July 2000 to September 2000, ending respondent’s right to stay as of August 2000.

Appellate Proceedings and the CA’s Ruling

Respondent then appealed to the Court of Appeals (CA) via a Petition for Review. Respondent argued that the RTC erred in failing to consider that, at the time of demand, petitioner allegedly had only two months of rentals in arrears, and that at the time of filing the ejectment suit, she had already consigned rentals in court. Respondent also contended that the real purpose of the ejectment suit was to circumvent Section 5(f) of Batas Pambansa Blg. 877 by taking over the premises after surreptitious purchase from the heirs of Perla Sobrepena.

The CA, citing Batas Pambansa Blg. 877, held that a minimum of three months arrearages was needed to justify ejectment. It determined that respondent had incurred back rentals for only two months when petitioner sent the August 18 demand letter, and thus considered the filing of the ejectment case premature. It reversed and dismissed petitioner’s complaint.

Issues Raised to the Supreme Court

In the petition before the Court, petitioner assigned errors to the CA. He asserted that the CA gravely erred when it dismissed the case based on prematurity even though petitioner’s demand and complaint raised two bases for ejectment: (1) failure to pay rentals for three months, and (2) expiration and termination of the lease due to the end of the lease period. Petitioner also challenged the CA’s denial of his motion for reconsideration.

Thus, the controlling issue before the Court was whether petitioner established a valid ground for ejectment.

Legal Basis and Reasoning

The Court held that petitioner established valid grounds for ejectment. It applied Section 5 of Batas Pambansa Blg. 877, which enumerates the grounds for judicial ejectment. Under Section 5(b), ejectment may be allowed for arrears in payment of rent for a total of three months, with a proviso addressing refusal by the lessor to accept payment and providing for consignation. Under Section 5(f), ejectment may also be allowed due to expiration of the period of the lease contract.

The Court first addressed arrears. It found that respondent did not establish payment sufficient to defeat the claim of arrears, because respondent issued a check dated September 20, 2000 for P30,000.00 representing rentals for July, August and September 2000 and advance rentals for later months. Petitioner declined acceptance because he asserted that the rentals due were only for July, August, and September 2000, a position conveyed by petitioner’s counsel in the September 21, 2000 letter to respondent’s counsel. The Court noted that, as of the filing of the second ejectment complaint on October 25, 2000, respondent had not shown that she had paid arrears for July, August, and September 2000 in a manner that would prevent the action. The Court further observed that respondent did not question the claim of failure to pay rentals for those months either in the MeTC or the RTC.

In any event, the Court emphasized that ejectment could be supported by an additional ground: the expiration of the lease period. It treated the lease as month-to-month under Article 1687 of the Civil Code, because no fixed period was shown and the rent was monthly. Article 1687 provides that when the period of a lease is not fixed, and the rent is monthly, the lease is understood to be from month to month. The Court explained that a month-to-month lease is a definite-period lease that expires after the last day of any thirty-day period upon proper demand and notice by the lessor.

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