G.R. No. 78161 October 21, 1992
CRESENCIO LIMCAY, petitioner, vs. HONORABLE COURT OF APPEALS and MALAYAN REALTY INC., respondents.

FACTS

Petitioner Cresencio Limcay is the lessee of an apartment unit in Manila owned by private respondent Malayan Realty, Inc., under a lease contract executed on March 1, 1969. On March 18, 1985, private respondent filed an action for ejectment against petitioner on grounds of expiry of lease, the need for necessary repairs on the unit, and failure to pay rentals. The Metropolitan Trial Court (MTC) dismissed the complaint. On appeal, the Regional Trial Court (RTC) reversed the MTC, declaring the written lease contract expired, ordering petitioner to vacate, and to pay P353 per month from June 1, 1984, as reasonable compensation for use and occupancy until vacating. The Court of Appeals affirmed the RTC decision. The lease contract stipulated: “1. This lease takes effect beginning on the month of March 1, 1969 on a monthly basis;” and contained provisions for cancellation by the lessor if it decides to erect a permanent edifice or demolish the building, and for termination by the lessee upon notice. Private respondent sent a letter dated May 4, 1984, received by petitioner on May 7, 1984, opting to terminate the lease by May 31, 1984.

ISSUE

The primary issue is whether the lease contract is one with a definite period that has expired, justifying ejectment.

RULING

The Supreme Court DENIED the petition, affirming the decisions of the Court of Appeals and the RTC. The Court held that the lease contract, by its express terms, is a contract of lease on a month-to-month basis, and therefore for a definite period. The contract’s stipulation that it takes effect “on a monthly basis” means it is terminable after each month and renewable monthly absent a contrary expression by either party. The private respondent’s letter of May 4, 1984, effectively terminated the lease by May 31, 1984. The ejectment action was properly based on expiration of the lease period under Section 5(f) of Batas Pambansa Blg. 25, and not solely on the need for repairs. The Court rejected petitioner’s claim that the contract was one of adhesion requiring interpretation in his favor, as the provisions were clear and the issue was not raised as an affirmative defense in his answer. The Court also upheld the RTC’s order for petitioner to pay P353 per month as reasonable compensation for use and occupancy from June 1, 1984, noting this amount was consistent with allowable rental increases under the law and the court’s authority to fix reasonable value after lease expiration.