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. Upon its expiration, 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 terminate his occupancy by the end of that month and demanded payment of alleged back rentals. Due to Kuan’s refusal to vacate, the petitioner filed an unlawful detainer case.
The Metropolitan Trial Court (MTC) ruled in favor of the petitioner, ordering Kuan to vacate and pay specified back rentals. The Regional Trial Court (RTC) affirmed the MTC decision but modified it by absolving Kuan from paying the 1984 back rentals, as these had been deposited with the court in a prior case. The Court of Appeals (CA) subsequently reversed the RTC, applying the Rent Control Law (B.P. 877) to hold that judicial ejectment on the ground of expiration of the lease period was suspended, as it considered the month-to-month lease to be for an indefinite period. The CA, however, upheld the lessor’s right to collect back rentals.

ISSUE

Whether a month-to-month lease, established by tacit reconduction under Article 1687 of the Civil Code after the expiration of a fixed-term contract, is 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 under Article 1673(1) of the Civil Code.

RULING

The Supreme Court granted the petition, reversing the Court of Appeals. It held that a month-to-month lease under Article 1687 is a lease for a definite period. The legal logic is anchored on the interpretation of the Rent Control Law in relation to the Civil Code. Section 6 of B.P. 877 suspends the application of Article 1673(1) of the Civil Code (which allows ejectment upon expiration of the lease period) “except when the lease is for a definite period.” The Court ruled that a lease on a month-to-month basis, established by the parties’ implied consent after the original term, has a definite period—one month—which expires at the end of each month.
This interpretation is consistent with the Court’s jurisprudence, notably Miranda v. Court of Appeals, which held that in a month-to-month lease, a lessor’s notice to vacate effectively terminates the contract at the end of the current month. To rule otherwise—that such a lease is for an indefinite period—would render the law illusory, as a lessor could never eject a tenant during the effectivity of the rent control law simply because the period would never expire. The amendment of the ejectment grounds in the law from “expiration of the period of a written lease contract” to “expiration of the period of the lease contract” further supports the inclusion of implied periodic leases. Consequently, the petitioner validly terminated the lease and was entitled to judicial ejectment. The decision of the RTC was reinstated.