THE ESTATE OF VICTORIO VALLE, SUBSTITUTED BY ELEANOR R. VALLE-SIAPNO, BRENDA VALLE-CABANG, ALBERTO, MARIO, OCTAVIO AND OLIVER, ALL SURNAMED VALLE, PETITIONERS, VS. THE ESTATE OF…

Estate of Valle versus Estate of Corazon Rojo

The Case

This is a petition for review brought by the Estate of Victorio Valle, substituted by his heirs, against the Estate of Corazon Rojo. The respondent lessor filed a complaint for ejectment and damages before the Municipal Trial Court in Cities of Tagum City after the Valle heirs refused to vacate a commercial lot they had leased since the 1950s and refused to pay accumulated rentals. The case matters because it settles two questions every bar candidate must know cold: when a verbal lease with rent paid monthly is deemed a lease with a definite period, and when the courts may, under Article 1687 of the Civil Code, fix a longer term for the lease. It is a compact illustration of unlawful detainer, of judicial admission, and of the discretionary nature of the power to extend a lease.

Procedural History

The Estate of Corazon Rojo filed a complaint for ejectment and damages before the Municipal Trial Court in Cities of Tagum City. On 26 June 2007, the Municipal Trial Court rendered judgment in favor of the respondent, ordering the Valle heirs to vacate the premises, to surrender peaceful possession, to pay monthly rentals in arrears from December 2004 at 1,000 pesos per month until they vacated, and to pay attorney's fees of 5,000 pesos plus costs. The Valle heirs appealed to the Regional Trial Court, Branch 30 of Tagum City, which in its decision dated 23 April 2008 affirmed the Municipal Trial Court in toto. Dissatisfied, the Estate of Victorio Valle came before the Supreme Court through a petition for review under Rule 42 of the Rules of Court.

Facts

The late Corazon Rojo owned a parcel of commercial land in Magugpo, Tagum, Davao del Norte, consisting of 28,118 square meters. She leased it to Victorio Valle since the 1950s. Victorio and his wife Luisa built a residential and commercial building on the lot, made it their residence, and operated an eatery with a sari-sari store called Valle Lunch. Victorio died in 1974, but his heirs continued to lease the lot, with rent last fixed at 1,000 pesos per month.

Corazon eventually died, and her estate was administered by Evangeline Cuntapay. In a letter dated 15 December 2004, the Estate of Corazon Rojo informed the heirs that it no longer wished to continue the lease because it intended to use the premises. It demanded that they vacate and surrender possession and pay 161,000 pesos in accumulated unpaid rentals as of December 2004. The demands were reiterated in a letter dated 11 April 2005, which additionally asked the heirs to remove all structures and improvements they had introduced. The heirs failed and refused to comply.

On 11 August 2005, the respondent filed the ejectment complaint. The heirs denied being remiss, claiming that the respondent refused to receive payments, the last of which was delivered sometime in 2000 in the amount of 10,000 pesos. They insisted that rent, though computed at 1,000 pesos monthly, was paid intermittently, sometimes every three months or annually, and that this mode was tolerated by the lessor. They also claimed that after receiving the April 2005 demand letter, a new verbal agreement had been forged between one of the heirs and the administratrix, extending the lease and waiving back rentals in consideration of Luisa's bedridden condition.

Issues

• Whether or not the respondent had a valid cause of action for unlawful detainer against the petitioner.
• Whether or not Article 1687 of the Civil Code, allowing the courts to fix a longer term for the lease, applies to the case.

Applicable Provisions

Article 1687 of the Civil Code provides:

However, even though a monthly rent is paid, and no period for the lease has been set, the courts may fix a longer term for the lease after the lessee has occupied the premises for over one year.

This provision is the heart of the petitioner's defense, and the Court holds that it applies only where no period for the lease has been set.

Section 2 of Rule 70 of the Rules of Court provides:

Lessor to proceed against lessee only after demand. Unless otherwise stipulated, such action by the lessor shall be commenced only after a demand to pay or to comply with the conditions of the lease and to vacate is made upon the lessee, or after a written notice of that demand is served upon the person found on the premises, and the lessee fails to comply therewith within fifteen days in the case of land or five days in the case of buildings.

This provision supplies the demand requirement that the petitioner claims was not satisfied.

Ruling

On the first issue, the Court ruled that the respondent had a valid cause of action for unlawful detainer. The essential requisites are the fact of lease, the expiration or termination of the possessor's right to hold possession, withholding of possession after such expiration or termination, a letter of demand to pay and vacate, and the filing of the action within one year from the last demand. The Court found the lease, the demands of December 2004 and April 2005, and the filing on 11 August 2005 all established. The petitioner's irregular payments did not negate the parties' agreement that rent was monthly. A verbal lease with monthly rent is a lease with a definite period that expires at the end of each month. With the final demand received in April 2005, the lease expired in May 2005, and the petitioner's continued occupation became illegal. The petitioner's claim of a new verbal agreement was unsubstantiated and self-serving, for he who alleges must prove his allegations. Its admission that its last payment was in 2000 was a judicial admission, conclusive upon it.

On the second issue, the Court held that Article 1687 did not apply, because a period for the lease had in fact been set, it being on a month-to-month basis. Even if the provision applied, the circumstances did not warrant an extension. The power to fix a longer term is discretionary, to be granted where equities demand it and denied where none appears. The petitioner had occupied the premises without paying rent since 2000, and the respondent had already been deprived of income and beneficial use for years. Extending the lease would be highly unjust.

Doctrine

A verbal lease of real property with rent paid monthly is a lease with a definite period. It expires at the end of each thirty-day period, and upon demand by the lessor to vacate, ejectment may be ordered. The power of the courts under Article 1687 of the Civil Code to fix a longer term applies only when no period for the lease has been set; it is discretionary, not mandatory, and is denied where equity does not demand it. Unlawful detainer requires a valid lease, its expiration or termination, withholding of possession, a demand to pay and vacate, and filing within one year from the last demand. Judicial admissions in the pleadings are conclusive and need no further proof.

Disposition

The petition was denied for lack of merit, and the decision of the Regional Trial Court affirming the Municipal Trial Court's judgment of ejectment was affirmed.

Remember This

Memorize this line: a verbal lease with monthly rent is a month-to-month lease with a definite period, and Article 1687 applies only where no period has been set. Examiners use this case to test unlawful detainer requisites, the demand requirement, and the discretionary nature of the court's power to fix a longer lease term.