G.R. No. L-22683 May 31, 1971
SEBASTIAN PELIGRINO, plaintiff-appellee, vs. GENERAL BASE METALS, INC., defendant-appellant.

FACTS

Sebastian Peligrino filed an ejectment complaint against General Base Metals, Inc. before the Justice of the Peace Court of Guindulman, Bohol. The defendant corporation was occupying a parcel of land under a lease originally executed in 1948 between Peligrino and another party, whose leasehold rights were subsequently acquired by General Base Metals. The contract of lease was for an indefinite period with a monthly rental of P7.00, which the corporation had consistently paid.
On January 4, 1960, Peligrino demanded that the corporation either pay an increased monthly rental of P100.00 or vacate the property by the end of that month. The corporation refused both demands, contending the increase was excessive and that it had not defaulted on the agreed rent. Peligrino then initiated the unlawful detainer action. The lower courts ruled in favor of the lessor, with the Court of First Instance of Bohol granting the corporation a one-year grace period to vacate, subject to paying a higher rental fixed by the court at P15.00 per month during that period.

ISSUE

The primary issue is whether the lessor, Peligrino, had the legal right to terminate the lease and eject the lessee for its refusal to accede to a demand for an increased rental, given that the lease was on a month-to-month basis and the lessee was not in arrears.

RULING

The Supreme Court affirmed the decision of the Court of First Instance, upholding the lessor’s right to eject the lessee. The legal logic is anchored on the nature of the lease contract. Since the lease was for an indefinite period and rentals were payable monthly, it was a lease on a month-to-month basis. Under such contracts, either party may terminate the lease at the end of any month, provided timely notice is given to the other party.
Peligrino’s letter of January 4, 1960, served as a valid notice of termination effective at the end of January, coupled with an offer to continue the lease under new terms (increased rental). By refusing the new terms, the lessee effectively chose not to renew the lease beyond that month. Consequently, its right to possess the property ceased, and its subsequent occupation became unlawful, justifying the action for ejectment. The Court found the one-year grace period granted by the trial court for equitable reasons had long expired by the time of this decision. It also sustained the trial court’s adjustment of the reasonable rental to P15.00 per month during that grace period, deeming the lessor’s original demand of P100.00 excessive. The ruling reinforces that in a month-to-month lease, a lessor may rightfully terminate the lease upon proper notice, and a lessee’s refusal to accept a new rental rate does not confer a right to hold over.