G.R. No. 81015 ; July 4, 1991
CRESENCIO VIRAY and BENJAMIN D. DE ASIS, petitioners, vs. HON. INTERMEDIATE APPELLATE COURT and RUSTICO VICTOR, respondents.

FACTS

Lessor Benjamin de Asis and lessee Rustico Victor executed a written lease for an apartment in Manila. The contract stipulated a three-month term, renewable monthly, and included a clause (Paragraph 7) granting the lessor the right to repossess the premises upon the lessee’s breach, after a five-day written notice, without judicial action. Victor left for Canada in October 1983, leaving the apartment in his son Ramon’s care. In December 1984, De Asis filed an ejectment suit, which was dismissed in March 1985 after Victor returned and asserted he had not abandoned the property. Victor, however, did not re-occupy the apartment, leaving it under the care of another son, Roldan, who only visited occasionally and padlocked the door.
In December 1985, finding the apartment locked and apparently unoccupied, De Asis cut off utility services and posted a notice of lease termination on the door, citing abandonment and non-payment of rent. In January 1986, after posting a second notice and notifying barangay officials, De Asis opened the apartment, inventoried the contents, and repossessed it. He then repaired and re-leased the property to Cresencio Viray. Rustico Victor, through his son Roldan, subsequently filed a forcible entry case against De Asis and Viray.

ISSUE

The core legal issues are: (1) Whether the posting of the termination notice validly extinguished the lease; and (2) Whether the contractual stipulation allowing extrajudicial repossession is valid and enforceable.

RULING

The Supreme Court reversed the lower courts and ruled in favor of the petitioners. The Court held that the lease was validly terminated. The lessee’s prolonged absence and failure to personally occupy the premises, leaving it under the sporadic care of a relative who did not reside there, constituted a violation of the lease’s fundamental purpose for residential use. This breach justified termination under the contract’s terms.
On the central question of extrajudicial repossession, the Court upheld the validity of Paragraph 7 of the contract. It rejected the lower courts’ finding that such a clause was void as against public policy. The legal logic is rooted in the principle of autonomy of contracts and the nature of reciprocal obligations. Parties are free to establish stipulations not contrary to law, morals, good customs, public order, or public policy. The clause was a lawful agreement that rescission and repossession could be effected by the lessor upon the lessee’s breach and after notice, without the necessity of a judicial suit. This private agreement did not oust the courts of jurisdiction, as the lessee retained the right to contest the propriety of the repossession in court if he believed it was wrongful—which he did by filing the forcible entry case. However, since the repossession was contractually justified due to the lessee’s breach, the lessor’s act was lawful. Consequently, the lessee lost his right of possession, and the action for forcible entry could not prosper.