United Realty Corporation v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioner United Realty Corporation (URC) and private respondent Reverend Father Jose Torralba Sy entered into several lease agreements for apartments. Initially, in March and December 1964, two apartments were leased on a month-to-month basis with a provision for termination by either party upon five days' written notice. The monthly rent was P200.00 per apartment. The private respondent modified the premises to be used principally as a Buddhist chapel. In August 1970, a third apartment was leased for residential use at P300.00 per month, also with a termination clause. Procedural History: In September 1975, URC notified Father Sy of a proposed rental increase to P500.00 per door, effective November 1, 1975. Father Sy complained, leading to an opinion from the Presidential Complaint and Action Committee and later, Opinion No. 480, Series of 1975, which suggested the premises were not covered by Presidential Decree No. 20 as they were used as a chapel. However, Opinion No. 629, Series of 1976, clarified that while not necessarily commercial, the premises did not fall under the protective mantle of PD 20 or BP Blg. 25 as they were not exclusively for residential purposes. URC then demanded Father Sy vacate and pay increased rentals. When he failed to do so, URC filed an unlawful detainer case in March 1977. The City Court dismissed the complaint. Both parties appealed to the Court of First Instance, which affirmed the dismissal but awarded damages to Father Sy. URC then petitioned for review to the Court of Appeals, which dismissed the petition. This led to the present petition before the Supreme Court. The Petition: URC filed a petition for review with the Supreme Court, arguing that the lease contracts were for a definite period, not an indefinite one, as held by the appellate court. URC contended that the month-to-month lease with a five-day termination notice created a definite period, making the ejectment an exception to PD 20. Furthermore, URC asserted that the premises were not used as a dwelling unit but principally as a Buddhist Temple, thus falling outside the scope of PD 20 and BP Blg. 25. The petition also noted the death of the private respondent during the pendency of the appeal, which would have terminated the lease agreements.
Issue(s)
Whether the lease contracts are for a definite or indefinite period. Whether Presidential Decree No. 20 and Batas Pambansa Bilang 25 apply to the lease contracts. Whether petitioner is entitled to judicially eject the private respondent from the premises.
Ruling
The petition is GRANTED. The decision of the Court of Appeals is reversed and set aside. Private respondent and/or his heirs or successors-in-interest are ordered to immediately vacate the premises and pay unpaid rentals of P1,000.00 per month for the two apartments until they vacate, with costs against private respondent.
Ratio Decidendi
On whether the lease contracts are for a definite or indefinite period: The Court held that the stipulation in the lease contracts allowing either party to terminate the agreement upon five (5) days' written notice clearly demonstrates that the lease is for a definite period. This is analogous to the ruling in Rantael vs. CA, where a month-to-month lease with a similar termination clause was considered definite. The difference in the notice period (30 days in Rantael vs. 5 days here) is of no moment, as such agreements are binding and constitute the law between the parties. Therefore, the lease is not for an indefinite period as held by the appellate court. On the applicability of Presidential Decree No. 20 and Batas Pambansa Bilang 25: Since the lease agreement is for a definite period, the petitioner has a right to judicially eject the private respondent, which is an exception to the general rule under Section 4 of P.D. No. 20. Furthermore, Section 5(f) of B.P. Blg. 25 provides expiration of the period of a written lease contract as a ground for ejectment. In this case, the petitioner elected to terminate the contract due to the private respondent's failure to pay the increased rental, which is permissible if the increase is not exorbitant. Moreover, the Court emphasized that the leased apartments were used principally as a Buddhist Temple, not as a residence. P.D. No. 20 and B.P. Blg. 25 specifically cover dwelling units or lots used for residential purposes. The incidental fact that Father Sy and/or his family lived therein does not bring the premises within the protective mantle of these emergency laws on housing. Thus, the matter of regulating monthly rentals becomes conventional between the parties, subject to equitable and reasonable terms. On whether petitioner is entitled to judicially eject the private respondent from the premises: Based on the foregoing, the Court concluded that the lease agreement is for a definite period and does not fall under the protection of P.D. No. 20 and B.P. Blg. 25. The petitioner's election to terminate the contract due to the failure to pay the increased rental, which was deemed reasonable under the circumstances, grants the petitioner the right to eject the private respondent. The Court also noted that the death of the private respondent during the pendency of the appeal effectively terminated the lease agreements.
Main Doctrine
A lease agreement with a stipulation that either party may terminate the contract upon five (5) days' written notice is considered a lease for a definite period, thus falling outside the protective mantle of Presidential Decree No. 20 and Batas Pambansa Bilang 25, which are primarily intended for dwelling units used for residential purposes.