Arquelada v. Philippine Veterans Bank
REITERATIONFacts
The Antecedents: Petitioners were lessees of a fourteen-door apartment in Manila, initially owned by the spouses Singson. A verbal lease agreement was in place, with monthly rent payments. The Singsons mortgaged the property to Philippine Veterans Bank (the Bank) and subsequently defaulted, leading to the Bank foreclosing the mortgage and acquiring title to the apartments. The Bank allowed the petitioners to continue their month-to-month lease arrangements. Procedural History: The Bank initiated an unlawful detainer case against the petitioners before the Metropolitan Trial Court (MTC) for non-payment of rentals and expiration of the lease. The MTC ruled in favor of the Bank, ordering the ejectment of the petitioners and payment of arrearages. The Regional Trial Court (RTC) affirmed the MTC's decision. Petitioners then filed a petition for certiorari with the Court of Appeals (CA), which was dismissed for being the wrong remedy. They subsequently filed a petition for review under Rule 42, which the CA also dismissed, upholding the RTC's decision and finding the petitioners guilty of forum shopping. This led to the present petition before the Supreme Court. The Petition: Petitioners seek a reversal of the CA's decision through a petition for review on certiorari under Rule 45. They argue that the MTC lacked jurisdiction because the unlawful detainer complaint was filed before the lapse of the five-day period required after demand to vacate, and that the ground of lease expiration is not applicable to their verbal, month-to-month lease agreement. They also alternatively ask the Court to fix a longer term for their lease.
Issue(s)
Whether the Metropolitan Trial Court acquired jurisdiction over the unlawful detainer case. Whether the expiration of the lease contract is a valid ground for ejectment under the prevailing law. Whether the Court may fix a longer term for the lease under Article 1687 of the Civil Code.
Ruling
The Supreme Court ruled in the affirmative on the first two issues and partially in the affirmative on the third issue. The Court affirmed the CA decision, ordering the extension of the lease for another six months from the finality of the decision, after which petitioners must vacate. Petitioners are also ordered to settle their accrued and future rentals.
Ratio Decidendi
On the jurisdiction of the MTC: The Court held that the MTC acquired jurisdiction over the unlawful detainer case. Petitioners' argument that a demand to vacate and a five-day waiting period were jurisdictional requisites was found to be misplaced. The Court clarified that the demand to pay or comply with lease conditions and to vacate is only required when the grounds for ejectment are non-payment of rentals or violation of lease conditions. Since the Bank's action was anchored on the expiration of the month-to-month lease, a prior demand to vacate was not a jurisdictional necessity. The filing of the complaint, even before the lapse of five days from the final notice, was therefore not premature and did not divest the MTC of jurisdiction. The Court emphasized that the notice to vacate in such cases merely serves to negate any inference of lease extension. On the validity of expiration of lease as a ground for ejectment: The Court disagreed with petitioners' contention that the expiration of the lease was not a valid ground, particularly their reliance on BP 25. The Court pointed out that BP 25 had long been repealed and the prevailing law was BP 877. Under Section 5(f) of BP 877, the expiration of the lease contract is an explicit ground for judicial ejectment, removing any distinction between written and oral contracts of lease. The Court found that the month-to-month lease, by its nature and under Article 1687 of the Civil Code, has a definite period that expires at the end of each month. The Bank's notice to vacate on October 9, 1997, and the subsequent final notice on February 8, 1998, effectively terminated the lease. Furthermore, the Court noted that the petitioners' failure to pay rentals also constituted a ground for termination of the month-to-month lease, as they failed to avail themselves of the remedy of consignation when the Bank allegedly failed to collect payments. On the Court's power to fix a longer term for the lease: The Court acknowledged its discretionary power under the second sentence of Article 1687 of the Civil Code to fix a longer term for the lease, especially when equities come into play. While the petitioners had occupied the premises for a considerable time and had incurred rental arrearages, the Court, in the interest of justice and to allow them time to find new accommodations, exercised this prerogative. The Court granted an extension of the lease for another six months from the finality of its decision, during which period the petitioners were ordered to settle their outstanding accounts and continue paying the stipulated rent. This extension was deemed sufficient to enable them to vacate the premises.
Main Doctrine
A month-to-month lease is considered a lease with a definite period that expires at the end of each month, and the expiration of the lease contract is a valid ground for ejectment under BP 877, even without a prior demand to vacate. Failure to pay rent also terminates a month-to-month lease.