GR 115968; (June, 1997) (Digest)
G.R. No. 115968 June 19, 1997
SPOUSES RUBIN FERRER and AMPARO FERRER, petitioners, vs. THE HONORABLE COURT OF APPEALS and LUIS TINSAY, respondents.
FACTS
Private respondent Luis Tinsay is the owner of a 300-square meter lot in Iloilo City. The lot was leased to petitioner-spouses Rubin and Amparo Ferrer sometime in 1974 under a verbal lease agreement with no fixed period. The monthly rental started at P10.00 and increased to P540.00 by the time of the complaint. On July 3, 1991, private respondent advised petitioners via letter that he was terminating the lease effective the end of July 1991. Petitioners failed to vacate, prompting private respondent to file a complaint for illegal detainer and damages. The Municipal Trial Court (MTC) ruled in favor of private respondent, ordering petitioners to vacate, pay unpaid rentals, and giving private respondent the option to reimburse one-half the value of improvements or allow their removal. On appeal, the Regional Trial Court (RTC) reversed the MTC, extending the lease for a fixed period of one year from receipt of its decision and ordering petitioners to pay a monthly rental of P5,000.00 for that period. The Court of Appeals affirmed the RTC decision. Petitioners now seek a longer lease extension (seven to eight years) and reimbursement for improvements, invoking Article 1687 of the Civil Code and claiming coverage under B.P. 877 (Rent Control Law), arguing the building they constructed is residential.
ISSUE
1. Whether the Court of Appeals erred in affirming the RTC’s decision to fix a one-year extended lease period instead of a longer term.
2. Whether petitioners are covered by the provisions of B.P. 877 (Rent Control Law).
RULING
The Supreme Court DENIED the petition and AFFIRMED the decision of the Court of Appeals.
1. On the lease extension: The Court held that the power of the court under Article 1687 of the Civil Code to fix a longer term for a lease is discretionary (“may”). The RTC’s grant of a one-year extension, affirmed by the Court of Appeals, was based on just and equitable considerations. The MTC’s findings, which the Supreme Court accepted, showed that petitioners’ initial necessity for the premises (as a makeshift dwelling for their son’s education) no longer existed, as they had become financially capable, constructed commercial buildings, operated businesses, and no longer resided there. Thus, a longer extension of seven to eight years would be unreasonable and unduly burdensome to the lessor, who needed the premises.
2. On the applicability of B.P. 877: The Court held petitioners are not covered. First, the lease agreement, being verbal with monthly rentals and no fixed period, is considered a month-to-month lease, which is a definite period terminable at the end of each month upon the lessor’s proper demand and notice. Second, petitioners are estopped from claiming the building is residential because, during the pre-trial conference, both parties stipulated that the nature of the subject lot is commercial. Therefore, B.P. 877, which applies to residential units, does not apply.