G.R. No. 83263 June 14, 1989
Uy Hoo and Sons Realty Development Corporation, petitioner, vs. Court of Appeals and Thomas Kuan, respondents.

FACTS

The private respondent, Thomas Kuan, was the lessee of a residential apartment owned by the petitioner corporation. The original written lease contract with the petitioner’s predecessor-in-interest was for a fixed one-year term from July 1, 1966, to July 1, 1967, and was binding on successors and assigns. After the contract expired, Kuan continued occupying the premises on a month-to-month basis with the acquiescence of the new owner, Uy Hoo and Sons. The monthly rental remained at the original rate of P187.00. In July 1986, the petitioner notified Kuan to vacate by the end of the month and demanded payment of alleged back rentals. An unlawful detainer case was subsequently filed.
The Metropolitan Trial Court ruled in favor of the petitioner-lessor, ordering ejectment and payment of back rentals. The Regional Trial Court affirmed the ejectment but modified the ruling on back rentals. The Court of Appeals, however, reversed the RTC, applying the Rent Control Law (B.P. 877) to protect the lessee. It held that the lease, being on a month-to-month basis after the original term, was not for a definite period; thus, the ground of expiration of lease under the Civil Code was suspended by the rent control statute, barring judicial ejectment on that basis.

ISSUE

Whether a month-to-month lease, established by tacit reconduction after the expiration of a fixed-term contract, constitutes a lease for a “definite period” under Section 6 of B.P. 877, thereby exempting it from the suspension of the lessor’s right to eject upon expiration of the term.

RULING

The Supreme Court granted the petition, reversing the Court of Appeals. It held that a month-to-month lease is for a definite period. The legal logic is anchored on the interpretation of Article 1687 of the Civil Code in relation to the Rent Control Law. Under Article 1687, when a lessee continues in possession after the expiration of a contract without the lessor’s objection, a new lease is implied, and its period is determined by the manner of rental payment. Here, rentals were paid monthly, thus creating a month-to-month lease.
Crucially, Section 6 of B.P. 877 suspends the application of Article 1673(1) of the Civil Code (which allows ejectment upon expiration of the period) “except when the lease is for a definite period.” The Court ruled that a lease whose term is fixed on a monthly basis, expiring at the end of each month, falls under this exception. It is a lease for a definite, albeit recurring, period. Therefore, the suspension under the Rent Control Law does not apply. The lessor can legally eject the tenant upon the expiration of any given month after a proper demand to vacate. This interpretation aligns with the legislative intent and jurisprudence, preventing an absurd situation where a lessor could never recover possession during the effectivity of the rent control law simply because the lease renews monthly. The decision of the Regional Trial Court ordering ejectment was reinstated.