G.R. No.

139137
March 31, 2000
ALFREDO ARQUELADA, et al. vs.PHILIPPINE VETERANS BANK
FACTS:
Petitioners Arquelada, et al. are the lessees of a fourteen-door apartment
located in Sta. Cruz, Manila. Previously, the said apartments were owned by
the spouses Ernesto Singson and Socorro Singson. The spouses Singson and
the petitioners entered into a verbal contract of lease wherein the latter
undertook to pay a monthly rent on the apartments. During the effectivity of
the lease contract, the spouses Singson executed a real estate mortgage
over the said apartments as security for the loan they obtained from
respondent Philippine Veterans Bank. In view of the failure of the spouses
Singson to pay their loan to the Bank, it instituted foreclosure proceedings on
the real estate mortgage. Title to the properties owned by the spouses
Singson were transferred to the name of the Bank. Despite the change in
ownership over the apartments, the Bank allowed the petitioners to continue
staying in the premises. Like the original arrangement with the spouses
Singson, lease on a month-to-month basis at a stipulated rent was agreed
upon. In the meantime, petitioners incurred arrearages in the payment of the
rentals.
The Bank sent to each petitioner a Statement of Account indicating their
respective outstanding back rentals. The Bank, likewise, made several
demands to petitioners, asking them to settle their debts. However, the
Bank's demands fell on deaf ears. Since nothing happened, the Bank gave to
each of the petitioners a Final Notice asking them to vacate the Bank's
property immediately and settle their arrearages, otherwise the Bank will be
constrained to proceed with the filing of the necessary legal actions to
protect the interest of the Bank.
For failure of petitioners to heed the final notice, the Bank filed a complaint
for Unlawful Detainer with the Metropolitan Trial Court, Manila. In their
answer, petitioners argued that the MTC did not acquire jurisdiction over the
unlawful detainer case since the complaint was filed before the lapse of the
five-day period from the time of demand or notice to vacate as required in
Section 2, Rule 70 of the 1997 Rules of Civil Procedure.
After trial, the MTC rendered judgment in favor of the Bank. The petitioners
appealed the adverse decision of the MTC to the RTC. The RTC handed down
a Decision, affirming in toto the decision of the MTC. Subsequently,
petitioners filed a motion for reconsideration of the RTC decision. The Bank,
in turn, filed a motion for execution of the RTC decision. In an Order, the RTC
denied petitioners' motion for reconsideration and granted the Bank's motion
for execution.

Petitioners brought their case before the CA by filing a special civil action on
certiorari under Rule 65 questioning the decision of the RTC. However, the CA
dismissed the petition for review of petitioners on the ground that their
recourse under Rule 65 was not the proper remedy in the course of law.
Petitioners filed anew a petition for review with the CA, this time under Rule
42, assailing the decision of the RTC. The Petition is DENIED. Hence, the
present recourse to this Court.
Issues:
1) Whether the MTC acquired jurisdiction over the case for unlawful
detainer; and,
2) Whether a valid ground exist for the ejectment of petitioners.
HELD:
1. Yes. Petitioners failed to see the import of Section 2, Rule 70, which
provides:
Sec. 2. Lessor to proceed against lessee only after demand. Unless
otherwise stipulated, such action by the lessor shall be commenced only
after demand to pay or comply with the conditions of the lease and to vacate
is made upon the lessee, or by serving written notice of such demand upon
the person found on the premises, or by posting such notice on the premises
if no person be found thereon, and the lessee fails to comply therewith after
fifteen (15) days in the case of land or five (5) days in the case of buildings.
As contemplated in Section 2, the demand required is the demand to pay or
comply with the conditions of the lease and not merely a demand to vacate.
Consequently, both demands either to pay rent or adhere to the terms of
the lease and vacate are necessary to make the lessee a deforciant in order
that an ejectment suit may be filed. It is the lessor's demand for the lessee
to vacate the premises and the tenant's refusal to do so which makes
unlawful the withholding of the possession. Such refusal violates the lessor's
right of possession giving rise to an action for unlawful detainer. However,
prior to the institution or such action, a demand from the lessor to pay or
comply with the conditions of the lease and to vacate the premises is
required under the aforequoted rule. Thus, mere failure to pay the rents due
or violation of the terms of the lease does not automatically render a
person's possession unlawful. Furthermore, the giving of such demands must
be alleged in the complaint, otherwise the MTC cannot acquire jurisdiction
over the case. Nonetheless, it is clear from the above rule that prior
demands to pay or comply with the conditions of the lease and vacate apply
only to cases where the grounds relied upon are non-payment of rentals or
violation of the conditions of the lease, as the case may be. Hence, a notice
to vacate is needed only when the action is due to the lessee's failure to pay
rent or to comply with the terms of the lease. Consequently, the waiting
period of five (5) days from the giving of the notice or demand to vacate,

necessarily, applies only if the alleged grounds in the complaint are the nonpayment of rents due or non-compliance with the conditions of the lease.
As found by the MTC, RTC and the CA, the case for unlawful detainer filed by
the Bank was anchored on the expiration of the contract of lease. Thus, if, as
the CA held, the action for unlawful detainer was based on the expiration of
the contract of lease, a demand to vacate was not necessary for judicial
action after the expiration of the terms of the lease. There being no need for
any demand or notice, there was likewise no necessity to wait for five (5)
days upon notice or demand before an action for unlawful detainer may be
filed. Moreover, when the ground asserted is the expiration of the term of
lease, any notice given merely serves to negate any inference that the lessor
has agreed to extend the period of the lease. In view of this, petitioners'
contention that the MTC did not acquire jurisdiction over the unlawful
detainer case must fail.
2. Yes. The prevailing law regulating the lease of residential units is B.P. Blg.
877, which replaced B.P. Blg. 25, the old rent control law.
Under B.P. 877 the grounds for judicial ejectment are as follows:
Sec. 5. Grounds for Judicial Ejectment. Ejectment shall be allowed on the
following grounds:
(a) Assignment of lease or subleasing of residential units in whole or in
part, including the acceptance of boarders or bedspacers, without the
written consent of the owner/lessor.
(b) Arrears in payment of rent for a total of three (3) months: Provided,
that in case of refusal by the lessor to accept payment of the rental
agreed upon, the lessee may either deposit, by way of consignation,
the amount in court, or with the city or municipal treasurer, as the case
may be, or in a bank in the name of and with notice to the lessor,
within one month after the refusal of the lessor to accept payment.
The lessee shall thereafter deposit the rental within ten days of every
current month. Failure to deposit rentals for three months shall
constitute a ground for ejectment. If an ejectment case is already
pending, the court upon proper motion may order the lessee or any
person or persons claiming under him to immediately vacate the
leased premises without prejudice to the continuation of the ejectment
proceedings. At any time, the lessor may, upon authority of the court,
withdraw the rentals deposited.
The lessor, upon authority of the court in case of consignation and
upon joint affidavit by him and the lessee to be submitted to the city or
municipal treasurer and to the bank where deposit was made, shall be
allowed to withdraw the deposits.
(c) Legitimate need of owner/lessor to repossess his property for his
own use or for the use of any immediate member of his family as a
residential unit, such owner or immediate member not being the owner
of any other available residential unit within the same city of

municipality: Provided, however, That the lease for a definite period

has expired: Provided, further, That the lessor has given the lessee
formal notice three (3) months in advance of the lessor's intention to
repossess the property: and Provided, finally, That the owner/lessor is
prohibited from leasing the residential unit or allowing its use by a third
party for at least one year.
(d) Absolute ownership by the lessee of another dwelling unit in the
same city or municipality which he may lawfully use as his residence:
Provided, That the lessee shall have been formally notified by the
lessor of the intended ejectment three months in advance.
(e) Need of the lessor to make necessary repairs of the leased
premises which is the subject of an existing order of condemnation by
appropriate authorities concerned in order to make the said premises
safe and habitable: Provided, That after said repair, the lessee ejected
shall have the first preference to lease the same premises: Provided,
however, That the new rental shall be reasonably commensurate with
the expenses incurred for the repair of the said residential unit: and
Provided, finally, That if the residential is condemned or completely
demolished, the lease of the new building will no longer be subject to
the provisions of this Act.
(f) Expiration of the period of the lease contract. No lessor or his
successor-in-interest shall be entitled to eject the lessee upon the
ground that the leased premises has been sold or mortgaged to a third
person regardless of whether the lease or mortgage is registered or
not.
It is noteworthy that the expiration of the period of the contract of lease is
one of the grounds for judicial ejectment under Section 5(f) of B.P. Blg. 877.
The ground of expiration of the lease contract does not apply merely to
contracts with specific duration such as written contracts of lease.
Petitioners' reliance on Section 5(f) of the original rental law, B.P. Blg. 25, is
misplaced. Section 5(f) of B.P. Blg. 877, the prevailing rent control law, now
says "expiration of the period of lease contract," thus removing any
distinction between a written and oral contract of lease. As such, regardless
of the nature of the lease, whether it is verbal or written, the termination of
contract based on the expiration of the same may be availed of by the lessor
in ejecting the lessee. It is admitted that no specific period for the duration of
the lease was agreed upon between the parties. Nonetheless, payment of
the stipulated rents were made on a monthly basis and, as such, the period
of lease is considered to be from month to month in accordance with Article
1687of the Civil Code. Moreover, a lease from month-to-month is considered
to be one with a definite period which expires at the end of each month upon
a demand to vacate by the lessor.
The Bank already demanded from petitioners that they vacate the
apartments and settle their accounts for it is terminating the contract of

lease Since a demand or notice had already been given to petitioners, at the
end of that month the contract is deemed to have expired already. When
petitioners opted to stay after the expiration of the lease contract they had
become unlawful occupants of the place.
Moreover, the month-to-month contract has also expired by virtue of
petitioners' failure to pay the monthly rentals. A lease on a month-to-month
basis provides for a definite period and may be terminated at the end of any
month, hence, by the failure of the lessees to pay the rents due for a
particular month the lease contract is deemed terminated as of the end of
that month. Applying this principle, the lease contract in the instant case
was deemed terminated at the end of the month when the petitioners, as
lessees, failed to pay the rents due.