G.R. No. L-68021 February 20, 1989
HEIRS OF FAUSTA DIMACULANGAN, petitioners, vs. THE HONORABLE INTERMEDIATE APPELLATE COURT and FELIMON UY, respondents.

FACTS

Petitioners, the heirs of Fausta Dimaculangan, have occupied an apartment in Pasay City since 1961 under a verbal lease at a monthly rental of P250.00. They operate a small sari-sari store and bakery on the premises. In 1978, private respondent Felimon Uy, the new owner, informed Dimaculangan of the sale and demanded she sign a new two-year lease at P1,500.00 monthly. Upon receiving no reply, Uy sent a second letter demanding payment for alleged unpaid rentals and subsequently filed an ejectment case. Dimaculangan countered that she was not in arrears, had attempted to pay via money orders which were returned, and that the suit was a scheme to force an unconscionable rental increase in violation of P.D. No. 20.
The City Court found the premises were partly residential and partly commercial, that the defendant was not in arrears, and that she had attempted to pay. Nonetheless, it rendered a decision ordering petitioners to pay increased rentals of P500.00 monthly from August 1978 to August 1980, and P750.00 monthly under a new two-year lease from August 1980 to August 1982. This decision was affirmed by the Regional Trial Court and subsequently by the Intermediate Appellate Court, prompting the heirs to elevate the case to the Supreme Court.

ISSUE

The primary issue is whether the lease contract, being verbal and with monthly payments but no fixed overall duration, is for a “definite period” under Presidential Decree No. 20, which would exempt it from the law’s suspension of ejectment grounds.

RULING

The Supreme Court dismissed the petition, ruling that the lease was for a definite period and thus not covered by the protective suspension of ejectment under P.D. No. 20. The legal logic is anchored on the interpretation of lease contracts where the rental is paid monthly. The Court, citing precedent, held that such an arrangement establishes a lease for a definite period—specifically, a period of one month—which expires at the end of each month and may be terminated thereafter. Since P.D. No. 20 only suspends ejectment under Article 1673 of the Civil Code for leases not for a definite period, a monthly lease is expressly exempted. Therefore, the lessor had a clear right to seek ejectment upon the expiration of each monthly term. This foundational finding rendered the petitioners’ other issues—regarding the trial court’s authority to increase rent and fix a new lease term—moot and academic. The Court also noted that the fixed two-year term ordered by the lower court had already expired by 1982. Furthermore, it clarified that a lease is not essentially personal and can be transmitted to heirs, but this point did not alter the outcome based on the definite period of the lease.