GR L 76294; (July, 1988) (Digest)
G.R. No. L-76294 July 14, 1988
MARLENE MADRIAGA, petitioner, vs. HON. COURT OF APPEALS and MILA HATANAKA, respondents.
FACTS
Petitioner Marlene Madriaga leased a commercial building for her pharmaceutical business. Due to her initially small operations, she subleased portions of the upper floor. In 1974, she sublet a portion to private respondent Mila Hatanaka under an agreement that the lease was temporary and terminable should Madriaga need the premises for her own business. In 1978, as her business prospered, Madriaga renewed her main lease and notified Hatanaka of the termination of the sublease to recover the space for business expansion. Hatanaka refused to vacate.
Madriaga filed an ejectment suit based on the termination of the lease agreement. The Metropolitan Trial Court dismissed the complaint, but the Regional Trial Court reversed it and ordered eviction. The Court of Appeals then reversed the RTC, applying Batas Pambansa Blg. 25 (the Rent Control Law). The appellate court held that since Hatanaka used the premises for residence, it constituted a residential unit protected by the law, and Madriaga’s need was for business, not personal/family use, which was not a valid ground for ejectment under the statute.
ISSUE
Whether the Court of Appeals erred in applying the Rent Control Law to dismiss the ejectment suit, thereby disregarding the ground of termination of the lease agreement as a valid basis for ejectment.
RULING
Yes, the Supreme Court reversed the Court of Appeals. The legal logic is twofold. First, the ejectment complaint was expressly predicated on the ground of termination of the lease agreement, not solely on the petitioner’s need for the premises. The agreement itself was temporary and expressly allowed termination if Madriaga needed the space for her business. Upon proper notification, the lease was terminated. Under Article 1673 of the Civil Code, termination of a lease is a valid ground for ejectment.
Second, the Court clarified that the Rent Control Law (BP Blg. 25, and subsequently BP Blg. 877) does not remove termination of lease as a ground for ejectment; it merely regulates it. Specifically, for leases on a month-to-month basis, such as in this case, the lease is terminable at the end of any month upon notice. The Court of Appeals incorrectly focused on the character of the premises as residential and the petitioner’s business need, overlooking the fundamental contractual ground of termination. Since the sublease was validly terminated pursuant to the parties’ agreement and applicable law, ejectment was proper. The Supreme Court granted the petition and ordered Hatanaka to vacate the premises.