Title
Uy Hoo and Sons Realty Development Corp. vs. Court of Appeals
Case
G.R. No. 83263
Decision Date
Jun 14, 1989
A lessor seeks to eject a lessee after a month-to-month lease expired; Supreme Court rules lease was definite, allowing eviction despite Rent Control Laws.
termination
demand to vacate
back rentals
A

Case Summary (G.R. No. 83263)

Factual Background

Kuan originally occupied the apartment under a written lease contract executed by him and petitioner’s predecessor-in-interest, Dy Siat. The lease was for one (1) year, commencing 1 July 1966 and ending 1 July 1967, covering the same premises. The contract expressly bound the parties, their heirs, successors, and assigns.

After the period expired on 1 July 1967, Kuan continued to occupy the premises. In 1974, Dy Siat died, yet Kuan remained in possession with petitioner’s acquiescence. As of January 1986, the monthly rental was still P187.00, the amount originally agreed.

On 11 July 1986, petitioner informed Kuan that his month-to-month occupancy would terminate effective 31 July 1986. In the same letter, petitioner demanded payment of back rentals from January 1982 to June 1986, totaling P10,098.00. Prior to that, Kuan had filed a case before the MTC of Manila, Branch V, docketed as Civil Case No. 031792-CV, and the MTC ordered him on 2 May 1979 to deposit in court the rentals for the premises. Kuan complied by depositing the rentals.

Unlawful Detainer and Trial Court Proceedings

Petitioner alleged that Kuan refused to vacate and failed to pay back rentals. Consequently, petitioner filed a complaint for unlawful detainer before the MTC of Manila on 22 October 1986. The MTC ruled for petitioner. It ordered Kuan to vacate and peacefully surrender possession. It further required Kuan to pay P2,244.00 as back rentals covering January to December 1984, to pay current monthly rentals at P187.00 onward until he vacated, and to pay attorney’s fees of P1,000.00, with costs. The MTC dismissed the counterclaim.

On appeal, the RTC affirmed the MTC’s disposition but modified it by deleting the obligation to pay P2,244.00 as back rentals for January to December 1984. The RTC decision dated 3 November 1987 thus sustained the ejectment aspects but eliminated that specific monetary award for that period.

Issues Raised Before the Court of Appeals

Kuan then filed a petition for review with the Court of Appeals, attributing two alleged errors to the RTC: first, that the RTC erred in ruling that the lease had a fixed or definite term; and second, that the RTC erred in not extending to Kuan the protections of the rent control laws.

The Court of Appeals, in a decision promulgated 9 May 1988, reversed and set aside the RTC decision for failure to apply the rent control law provisions. It ordered payment of back rentals, on the view that the lessor was entitled to them.

Petitioner thereafter sought review in the Supreme Court, arguing that the Court of Appeals committed an error of law in applying the general rule under Sec. 6 of BP Blg. 877 instead of the exception—namely, that the lease in dispute was for a definite period that expired at the end of every month.

The Parties’ Contentions in the Supreme Court

Petitioner maintained that, despite the absence of an express written lease between petitioner and Kuan for the period in issue, the parties’ arrangement should be treated as a lease for a definite term expiring at the end of each month. Petitioner relied on the exception in Sec. 6 of BP Blg. 877, which suspends the operation of paragraph (1) of Art. 1673 only except when the lease is for a definite period. Petitioner argued that if the lease was effectively month-to-month with termination at the end of each month, then expiration of the period could serve as a ground for judicial ejectment under Art. 1673(1), contrary to the Court of Appeals’ approach.

Petitioner also disputed the premise that the implied month-to-month nature of the lease could not constitute a ground for ejectment, provided that proper notice or demand to vacate had been made.

Kuan, on the other hand, contended that the month-to-month occupancy did not amount to a lease for a definite period, and therefore the general rule in Sec. 6 of BP Blg. 877 applied. Under Kuan’s theory, judicial ejectment on the basis of the expiration of the lease period was suspended when the lease was not for a definite period, as recognized by Sec. 6 and the suspension of Art. 1673(1).

Kuan further asserted that petitioner wrongly assumed the arrangement was a month-to-month lease simply because there was no formal written contract. Kuan argued that the dispute was governed by Art. 1670 on tacita reconduccion, and that the applicable period should be determined under Art. 1687. Under Art. 1687, if the period for the lease was not fixed and the rent was paid monthly, the lease was understood to be from month to month. Kuan argued that the expiration of such a period was nevertheless suspended by Sec. 6 of BP Blg. 877, thereby preventing ejectment on expiration.

Legal Framework: BP Blg. 877 and the Civil Code Provisions

The controversy centered on Sec. 6 of BP Blg. 877, which stated that, except when the lease was for a definite period, the provisions of paragraph (1) of Art. 1673—insofar as they referred to residential units covered by the Act—were suspended during the effectivity of the rent control law.

Art. 1673(1) allowed the lessor to judicially eject the lessee when “the period agreed upon, or that which is fixed for the duration of leases,” had expired.

Kuan’s position required the Court to accept that the lease was not for a definite period within the meaning of Sec. 6. Petitioner’s position required the Court to treat a lease that, by operation of Art. 1687, was “from month to month” as a lease for a definite period, such that expiration at the end of the month—upon prior notice—would fall within the exception to the suspension in Sec. 6.

The Supreme Court’s Reliance on Miranda v. Ortiz and Earlier Case Law

The Supreme Court noted that the issue had been resolved in Miranda v. Ortiz. In explaining the doctrine, the Court quoted Miranda v. Ortiz, which, in turn, cited Rivera v. Florendo and discussed the earlier holdings in Baen v. Court of Appeals, Crisostomo v. Court Appeals, and Zablan v. C.A., et al.

The thrust of the controlling discussion was that what was suspended under Sec. 6 of BP Blg. 877 was Art. 1673 (specifically paragraph (1) on expiration of the period), and not Art. 1687 itself. Thus, the determination of the lease’s period could still be made under Art. 1687, while the ground for ejectment based on expiration depended on whether the lease was for a definite period within the statutory exception.

The Court reiterated that no definite period was expressly agreed upon in the relevant cases, yet because rent was paid monthly, the period of lease was considered from month to month under Art. 1687. Upon proper notice to vacate, the contract of lease was deemed to expire at the end of the month. The Court further emphasized concerns that adopting the contrary construction would render ineffective certain statutory grounds for ejectment, such as those intended to protect lessors’ rights notwithstanding indefinite verbal arrangements.

The Supreme Court also observed that Zablan v. C.A. highlighted the reasoning that the law would be rendered illusory if rent control prevented the lessor from relying on the expiration of a month-to-month lease period altogether during the rent control period. The Court added that subsequent cases reduced the need to rely solely on earlier reasoning from Rantael v. Court of Appeals, but kept the key analytical point: the period may still be determined under Art. 1687, while Sec. 6 operates only to suspend Art. 1673(1) except in the definite-period situation.

Additional Observations Supporting Petitioner’s Position

The Supreme Court held that the doctrine did not require a factual limitation to leases where the lessor had a particular need for the premises. Instead, it found that the “thrust” of the cited decisions supported two propositions: first, that

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