GR 85184; (June, 1991) (Digest)
G.R. No. 85184; June 3, 1991
SPOUSES RAMON AND REBECCA NIEVES, petitioners, vs. HONORABLE COURT OF APPEALS, HON. TOMAS V. TADEO AND LEO YADAO, respondents.
FACTS
Spouses Ramon and Rebecca Nieves were lessees of an apartment owned by Leo Yadao under a four-year contract ending June 1, 1984. After its expiration, the lease continued on a month-to-month basis. On July 15, 1985, Yadao informed the spouses of a rental increase to P1,300.00 effective August 1, 1985. The spouses refused to pay the new rate, offering only the previous rental. Yadao subsequently filed an ejectment case. The Metropolitan Trial Court dismissed the complaint, citing non-compliance with the three-month notice under the Rent Control Law (B.P. 877) and finding a renewed contract. The Regional Trial Court (RTC) reversed this, ruling the lease was terminable monthly and not covered by B.P. 877, ordering the spouses to vacate and pay the increased rent. The Court of Appeals affirmed the RTC decision.
ISSUE
The primary issues were: (1) whether a compromise agreement in a separate consignation case novated the lease and barred the ejectment; (2) whether the premises were within a protected urban land reform zone under P.D. 1517, invoking a “no eviction” rule; and (3) whether the ejectment was valid under the Civil Code and rent control laws.
RULING
The Supreme Court denied the petition and affirmed the Court of Appeals with a modification on the start date for the increased rental. The compromise agreement in the consignation case, which set rentals for a specific past period, was not a true compromise that novated the lease contract or constituted res judicata in the ejectment case; it did not settle the core dispute over the new rental demand and right to eject. On the applicability of rent control, the Court found B.P. 877 inapplicable as the agreed rental at the law’s effectivity (P584.61) exceeded its coverage limit of P480.00. Regarding P.D. 1517 (Urban Land Reform Act), while the apartment was located within a declared Area for Priority Development, the “no eviction” rule under Section 6 protects only legitimate land tenants who have resided and built their homes on the land for ten years or more. This protection does not extend to apartment lessees like the Nieves spouses. The lease, being on a month-to-month basis after the fixed term, was rightly terminated under Articles 1673 and 1687 of the Civil Code upon the lessee’s refusal to accept the new rental rate validly demanded by the lessor.