G.R. No. 85108 - Mallarte vs. Court of Appeals

Case Summary (G.R. No. 85108)

Factual Background

The lease agreement between the parties included a limitation on the use and transfer of the leased premises. The stipulation declared that the leased premises could not be subleased, transferred, or used in any manner without the lessor’s written consent, and it further provided that breach of the stipulation would be a ground for ejectment of the lessee.

The respondents spouses, through their attorney-in-fact, conducted annual inspections of the apartment. In June 1979, they discovered that two rooms on the second floor and a portion of the living and dining rooms had been converted into bed spaces for boarders. They identified eight boarders by name: Adoracion Penalver, Josefina Penalver, Lourdes Sulaput, Gaudiosa Reyes, Evelyn Reyes, Adora Cruz, and Neptali and Cesar Penaranda. Petitioner explained that these occupants were his nephew, nieces, grandchildren, or other relatives, who were students at Far Eastern University.

One of the boarders, Adoracion Penalver, who was a NAWASA employee, occupied one of the second-floor rooms with her sister, Josephine. According to the record, they moved out on November 7, 1980, and petitioner’s daughter moved in on the same day.

After discovering the alleged conversion and use of parts of the apartment as bed spaces for boarders, the respondents demanded that petitioner vacate the premises. When petitioner did not comply, they filed a complaint for ejectment in the barangay court of Zone 45, 3rd district of Manila, which later reached the courts up to the Court of Appeals.

Petitioner denied that there was any lease violation. He asserted that the respondents filed the ejectment suit because they demanded an increase in rent from P300 to P600 per month, which he refused to pay.

Trial and Appellate Proceedings

The complaint proceeded to the courts, and the City Court, the Regional Trial Court, and the Court of Appeals agreed with the respondents. They found that petitioner violated the lease by accepting boarders in contravention of the lease covenant and ordered him to vacate the apartment. The Court of Appeals’ ruling was rendered in CA-G.R. SP No. 12091 (July 11, 1988).

Petitioner then filed a petition for review in the Supreme Court, challenging the finding of violation and the resultant ejectment order.

The Parties’ Contentions

Petitioner maintained that his acceptance of boarders did not constitute subleasing or a prohibited transfer of any portion of the leased premises. He claimed that the boarders were his relatives and that they occupied parts of the apartment as students. He further linked the ejectment action to the respondents’ alleged attempt to compel him to pay a higher rent, which he refused.

The respondents, on the other hand, alleged that petitioner violated the lease by converting portions of the apartment into bed spaces for boarders without the written consent required by the lease. They insisted that such conduct fell within the lease’s prohibition and justified ejectment.

Issue Presented

The core legal issue was whether the petitioner’s act of accepting boarders in the leased apartment—through providing lodging and meals for a price—constituted a violation of the lease covenant prohibiting subleasing or the assignment of portions of the leased premises without the lessor’s written consent, thereby providing a lawful ground for ejectment.

Legal Basis and Reasoning

The Supreme Court ruled for petitioner and held that the acceptance of boarders, made without the lessors’ written consent, did not violate the lease agreement. The Court reasoned that a prohibition against subleasing cannot be understood to embrace the mere taking in of boarders. It accepted that “accepting boarders is not equivalent to subleasing the premises.” The Court explained that petitioner, by accepting boarders and assigning rooms or bed spaces to them, did not relinquish or surrender his leasehold. Petitioner allegedly remained the actual occupant and possessor of the demised premises, and he did not surrender possession and control of the leased premises or any part thereof.

To delineate the distinction, the Court quoted that the word “sublet” has a clear and distinct meaning: it is the making of a sublease accompanied by a surrender of possession and control of the premises, at least a part thereof. It then relied on authorities and principles characterizing the arrangements of roomers and lodgers. The Court cited rulings that letting a room for personal occupation to a lodger does not constitute subletting, and that roomers or lodgers are not tenants in the strict legal sense. It acknowledged that there are circumstances where a covenant against subletting may be technically violated, but the Court did not find such a factual predicate in the case before it.

The Court further discussed general definitions of sublease and subtenant. It described a sublease as a grant by a tenant of an interest in the demised premises less than his own, while a subtenant rents all or a portion of leased premises from the lessee for a term less than the original one, leaving a reversionary interest in the first lessee. Applying these concepts, the Court concluded that permitting lodgers or boarders to occupy rooms in a demised building is not a subletting.

The Court also addressed the effect of covenants restricting subletting. It acknowledged that a lessee’s common-law right to sublet may be expressly restricted by a covenant, but it stated that courts construe such restraints “with the utmost jealousy,” while also indicating that courts are not disposed to interpret them to reach arrangements not truly amounting to subleases.

Finally, the Supreme Court held that neither BP Blg. 25, as amended, nor the lease contract as interpreted under the governing distinction, prohibited petitioner

Case Syllabus (G.R. No. 85108)

The case arose from an ejectment dispute rooted in an alleged lease violation concerning the acceptance of boarders in a rented apartment.
The petitioner was Vicente Mallarte, the lessee who had leased an apartment from the respondents, Spouses Nicolas Gopiao and Ramona Calma Gopiao, represented by their attorney-in-fact Nicolas Gopiao, Jr.
The respondent court was the Court of Appeals, which affirmed the finding that the lease had been violated and that ejectment should issue.
The controversy reached the Supreme Court through a petition for review, with the petitioner challenging the courts’ conclusions that he violated the lease agreement.

Parties and Procedural Posture

The respondents, as lessors, filed an ejectment complaint against the petitioner for alleged breach of lease.
The ejectment complaint was first filed in the barangay court of Zone 45, 3rd district of Manila, before the case proceeded through the regular judicial system.
The City Court found in favor of the respondents and ordered the petitioner to vacate.
The Regional Trial Court affirmed the adverse ruling.
The Court of Appeals likewise affirmed, in CA-G.R. SP No. 12091 (July 11, 1988).
The Supreme Court granted the petition for review, set aside the Court of Appeals decision, and dismissed the ejectment complaint.

Key Factual Allegations

On June 1, 1972, the respondents leased to the petitioner an apartment located at 840 Moret, Sampaloc, Manila, under a month-to-month arrangement.
The agreed rental was a monthly rental of P300, as stated in the lease contract.
The lease contract contained provisions that prohibited the lessee from subleasing or assigning any portion of the leased premises without the lessors’ written consent.
The respondents allegedly conducted annual inspections of the premises through their attorney-in-fact.
In June 1979, the respondents discovered that two rooms on the second floor and portions of the living and dining rooms had been converted into bed spaces for boarders.
The respondents identified eight boarders, namely Adoracion Penalver, Josefina Penalver, Lourdes Sulaput, Gaudiosa Reyes, Evelyn Reyes, Adora Cruz, Neptali Penaranda, and Cesar Penaranda.
The respondents alleged that the petitioner accepted these occupants without the written consent required by the lease.
The petitioner asserted that the boarders were his nephew, nieces, grandchildren or other relatives, who were students at the Far Eastern University.
The petitioner also claimed that the ejectment suit was motivated by the respondents’ demand to increase his rent from P300 to P600 per month, which he refused to pay.
The lessors demanded that the petitioner vacate, and when he did not comply, they pursued the ejectment action.

Contractual Provisions Invoked

Paragraphs 8 and 9 of the lease agreement restricted the lessee from subleasing or assigning any portion of the leased premises without the lessors’ written consent.
The lease agreement also provided that a violation of the prohibition would constitute a ground for ejectment of the lessee.
The respondents’ case theory in the lower courts was that the petitioner’s acceptance of boarders amounted to a prohibited sublease or a prohibited transfer of part of the premises.

Statutory and Conceptual Framework

The Supreme Court considered whether the conduct complained of fell within the legal meaning of subleasing, as distinguished from accepting roomers, lodgers, or boarders.
The Court noted that BP Blg. 25, as amended did not prohibit the petitioner from accepting roomers, bed spacers, or boarders in the leased apartment.
The Court also treated