MERCY’S INCORPORATED, PLAINTIFF AND APPELLEE, VS. HERMINIA VERDE AND ERLINDA VERDE, DEFENDANT AND APPELLANTS.

On January 24, 1958, Mercy’s Inc., as lessor of the store space at
No. 1763 Azcarraga, Manila, filed a complaint for unlawful detainer in
the Municipal Court of Manila, against the lessees Herminia Verde and
Erlinda Verde, which alleges:

“x x x;

“2. That the defendants leased
from the plaintiff which then represented by Mercy Z. Almonedovar, the
premises at No. 1763 Azcarraga Street, Manila, at a monthly rental of
P300.00, which lease has expired on November 2, 1952;

“3.
That notwithstanding the expiration of the period of lease the
plaintiff allowed the defendants to remain in the premises on a monthly
basis at the same rental of P300.00;

“4. That on December 19,
1957, the plaintiff notified the defendants, in writing, to vacate the
premises of No. 1763 Azcarraga Street, Manila now occupied by them
within thirty days from said date of December 19, 1957, in view of the
need for the use of the premises by the plaintiff;

“5. That notwithstanding said demand to vacate premises the defendants refused and still refuse to vacate;

x x x.”

Plaintiff prayed that defendants be ordered to vacate the premises,
to pay attorneys’ fees, and for such other relief as the court may deem
just and equitable.

Judgment was rendered for the plaintiff, and defendants were ordered
to vacate the premises and to pay the monthly rental therefor, starting
June, 1958, until they actually leave the said place.

Defendants appealed to the Court of First Instance, and filed
therein an answer, setting up the following special and affirmative
defenses:

“SPECIAL AND AFFIRMATIVE DEFENSES

“5. That the contract of lease between defendants
and plaintiff, which is referred to in paragraph 2 of the latter’s
complaint and which was executed on November 1, 1951, contains the
stipulation:

‘That the duration of the lease agreement shall
be one (1) year renewable at the option the lessees (defendants
herein), said period to commence from the execution of this contract.’

“6.
That defendants have exercised and been exercising their right to renew
the contract of lease and have possessed and occupied and have been
possessing and occupying the leased premises by virtue of the original
and renewed contracts of lease with plaintiff;

“7. That
plaintiff in turn has recognized and honored, and has been recognizing
and honoring defendants’ lawful and peaceful possession and occupancy
under the aforementioned original and renewed agreements of lease;

“8. That the said renewed contract of lease has not yet expired;

“9.
That plaintiff’s action of ejectment is premature because the period of
the renewed lease being indefinite, plaintiff should have first
instituted an action to fix the duration of the same and should have
awaited for the term so fixed to expire, before commencing the instant
proceeding;

x x x.”

Upon plaintiff’s motion, the court rendered judgment on the
pleadings, holding that as there was tacit renewal of the lease, it was
considered from month-to-month, the rent being payable monthly.
Therefore, the lessor had the right to terminate the lease and require
the lessees to return possession of the premises. Defendants,
consequently, were ordered to vacate the premises in 6 months from the
finality of the judgment, pursuant to Article 1687 of the Civil Code,
and to pay to the plaintiff the monthly rental of P300.00, until they
actually vacate the same. Defendants lessees filed the present appeal,
claiming that the lower court erred –

1. in not holding that plaintiff-appellee’s motion for
   judgment on the pleadings admits the truth of defendants-appellants’
   special and affirmative defenses; and
2. in not holding that
   plaintiff-appellee’s complaint states no cause of action because the
   contract sued upon plainly authorized defendants-appellants’ unilateral
   authority to renew the lease which the latter actually exercised.

The controversy in the present case was brought about by the
stipulation in the lease-contract, entered into by the parties on
November 1, 1951, which reads:

“That the duration of the lease agreement shall be
one (1) year renewable at the option of the lessees, said period to
commence from the execution of this contract.”

Appellants herein contend that it was error for the trial court to
apply the legal period prescribed in Article 1687 of the Civil Code and
consider the lease to have been tacitly renewed from month-to-month,
because the said Article 1687, in relation to Article 1670 of the same
Code, is applicable only where there is no period of the lease fixed or
agreed upon by the parties. Differently, in this case, according to
appellants, when the lessees were given the option to renew the
contract, the parties in reality provided for a conventional term or
duration thereof, which is an indefinite period depending on the will
of the lessees. And, this period allegedly is to continue unless and
until one of the parties shall give notice to the other of the
termination of the contract. Thus, it is claimed that the legal
provision applicable to the dispute is Article 1197, ^[1] not Articles 1670 and 1687 ^[2]
of the Civil Code, and the court should have fixed the period, instead
of declaring that the lease has been validly terminated by the lessor.

The argument cannot be sustained. Note that the stipulation provides
that “the duration of the lease agreement shall be one year”,
commencing from the execution of the contract, and which period is
“renewable at the option of the lessees.” There is no question that
thereunder, the lessees were given the privilege to renew the contract
for another period. However, it may be pointed out that for the
contract to be renewed, the option must first be exercised. The lessees
should ask for the execution of a new agreement, otherwise, the
contract of November 1, 1951, would lapse one year from the execution
thereof, as it actually happened. For, the stipulation involved here is
actually just another way of saying that the lease was for a period of
one year, unless renewed by the lessees. And, as the lessees failed to
exercise the option or to express their choice whether the contract
would be renewed or not, the contract expired on November 1, 1952.
Their occupancy of the premises thereafter, therefore, was only upon
the acquiescence of the lessor, and this produced, under Article 1670
of the new Civil Code, merely an implied new lease, not for the period
of the original contract, but from month-to-month, the rent being paid
monthly. (Art. 1697, new Civil Code). Consequently, the court a quo
acted correctly in holding that the new lease, which was from month-to
month, was validly terminated when the lessor notified the lessees to
vacate the premises.

Appellants, however, allege that the lessor, when it moved the court
for judgment on the pleadings, admitted the allegations contained in
their answer, such as the statements that they have “exercised and have
been exercising their right to renew the contract of lease”; that
plaintiff has recognized and has been recognizing defendants’ occupancy
of the premises under the original and renewed contracts of lease; and
that the “renewed contract of lease has not yet expired.” It may be
stated, in this connection, that while it is true that a motion for
judgment on the pleadings is understood to be an admission by the
movant of the truth of all the material and relevant allegations of the
party, and that he (movant) rests his motion for judgment on those
allegations taken together with such of his own as are admitted in the
pleadings, ^[3] the admission
refers only to allegations of fact and cannot be made to include
conclusions of law. In this case, the statements constituting
defendants-appellants’ special and affirmative defenses are not just
factual declarations, but conclusions of law premised on the assumption
^[4] that under the
stipulation of the contract, the lease provided for a conventional term
of indefinite duration terminable only upon the will of the lessee.

In view of the foregoing considerations, the decision appealed from is hereby affirmed, with costs against the appellants.

SO ORDERED.

Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, and Ruiz Castro, JJ., concur.

 

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^[1] ART. 1197. If the
obligation does not fix a period, but from its nature and the
circumstances it can be inferred that a period was intended, the courts
may fix the duration thereof.

The courts shall also fix the duration of the period when it depends upon the will of the debtor.

x x x x. (New Civil Code)

^[2] ART. 1670. If at the
end of the contract the lessee should continue enjoying the thing
leased for fifteen days with the acquiescence of the lessor, and unless
a notice to the contrary by either party has previously been given, it
is understood that there is an implied new lease, not for the period of
the original contract, but for the time established in articles 1682
and 1687. The other terms of the original contract shall be revived.

ART. 1687. If the period for the lease has not been fixed, it is
understood to be from year to year, if the rent agreed upon is annual;
from month to month, if it is monthly; from week to week, if the rent
is weekly; and from day to day, if the rent is to be paid daily.
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. x x x. (Ibid)

^[3] Bauermann v. Casas, 10 Phil. 386; Evangelista v. De la Rosa, 76 Phil. 115.

^[4] Which is wrong, because the original contract specifically provided that the lease was for a term of one year.