G.R. No. L-63698 January 12, 1987
SPOUSES CRESENCIANO DIONIO AND JOSEFA DIONIO, petitioners, vs. HONORABLE INTERMEDIATE APPELLATE COURT AND IMELDA C. BARRIOS, respondents.

FACTS

The petitioners, spouses Cresenciano and Josefa Dionio, leased a building from private respondent Imelda C. Barrios under a five-year written contract from September 1969 at a monthly rental of P300. Upon its expiration in September 1974, the parties verbally agreed to continue the lease on a month-to-month basis, terminable by the lessor upon thirty days’ written notice, at an increased rental of P500, later modified to cover only a portion of the building at P300 monthly. In September 1976 and again in March 1977, Barrios served written notices to vacate, citing remodeling plans. The petitioners refused, prompting Barrios to file an ejectment complaint. The Municipal Court ordered the petitioners’ ejectment, a decision affirmed by the Court of First Instance and later by the Intermediate Appellate Court.

ISSUE

Whether the petitioners, as lessees under a month-to-month verbal lease agreement after the expiration of a fixed-term written contract, are protected from ejectment under Presidential Decree No. 20, which suspended the lessor’s right to eject upon expiration of the lease period under Article 1673(1) of the Civil Code for residential units.

RULING

The Supreme Court denied the petition and affirmed the lower courts’ decisions. The legal logic centers on the interpretation of Presidential Decree No. 20, Section 4, which suspended the application of Article 1673(1) of the Civil Code for judicial ejectment based on lease expiration, but explicitly excepted leases “for a definite period.” The Court held that the verbal month-to-month agreement, being terminable by either party upon thirty days’ notice, constituted a lease for a definite period. A definite period under the law includes not only calendar-based terms but also those determinable upon the occurrence of a stipulated event, such as the giving of notice. Consequently, the suspension under P.D. No. 20 did not apply. The Court further clarified that P.D. No. 20, as a social justice measure, could not constitutionally impair the obligation of contracts; it operated prospectively and regulated future agreements but did not invalidate the definite period mutually agreed upon by the parties. The petitioners’ reliance on the residential character of the premises and Article 1687 of the Civil Code, which allows courts to fix a longer term for leases without a fixed period, was unavailing because the agreement here contained a definite period via the month-to-month terminable-upon-notice arrangement. Thus, the lessor’s right to eject upon expiration of that agreed period remained valid and enforceable.