PAZ DE JESUS MESINA AND PETER DE JESUS, PETITIONERS, VS. COURT OF APPEALS AND CETUS DEVELOPMENT, INC., RESPONDENTS.

Amid the bustling life in old Quiapo lies a parcel of land subject
of a verbal lease as far back as
the late 1800’s. Through the years the
lessees, who have been paying a measly rent, have been refusing to give up the
property as it can be rented out for more than ten times their rent. Judicial attempts to eject them from the
property were resisted successfully until, through an entirely new court
action, they were ordered to vacate the premises.

We could have consolidated this case with Juarez v. Court of
Appeals,^[1]
as both cases involve the same issue and a portion of the same parcel of
land. But because of certain incidental
matters raised herein, this case requires separate adjudication. Nevertheless, in resolving the main issue, we
defer to the insightful and discerning ponencia of Senior Associate Justice Isagani
A. Cruz in Juarez v. Court of Appeals.

The property is designated as No. 502 Quezon Boulevard, Quiapo,
Manila. It was originally owned by
Gregorio Araneta from whom Clemente de Jesus, petitioners’
predecessor-in-interest, leased it way back in the late 1800’s. In 1921, Clemente bought the two (2) houses
erected on the lot. He died in 1972
survived by petitioners who are his daughter Paz Mesina and his grandchild by
his deceased son, Peter de Jesus, both of whom have lived in the property since
birth. Paz has transferred residence to
Pasay City since then. Peter on the
other hand has been staying in one of the two (2) houses while the other house
is being leased to different tenants who are paying monthly rentals to
petitioners.

Meanwhile, Gregorio Araneta sold the land to Susana Realty, Inc.,
which in turn sold the same to Cetus Development Corporation (CETUS, for
brevity) sometime in 1984. Consequently, on 14 February 1986, CETUS filed a complaint for ejectment
against Paz Mesina on the ground that the property was assigned by the original
lessor to her who in turn sublet the premises to other persons without the
written consent of the lessor.

On 29 July 1986, the Metropolitan Trial Court of Manila, Br. 25,
dismissed the complaint on the ground that Paz Mesina “did not occupy the
lot in question as an assignee but by operation of law as the
successor-in-interest, being the daughter of the registered lessee.”^[2]
The inferior court also ruled that while B.P. 877 prohibits the assignment of
lease or subleasing of the property to third parties, the leasehold right in
the instant case was acquired prior to the effectivity of B.P. 877 which has no
retroactive application. On 12 January
1987, the Regional Trial Court of Manila, Br. 51, affirmed the dismissal of the
ejectment suit.^[3]
There being no appeal, the trial court’s affirmance became final.

Sometime in 1989, CETUS again initiated ejectment proceedings,
this time impleading both Paz Mesina and Peter de Jesus as defendants. On 18 June 1990, the Metropolitan Trial
Court of Manila, Br. 10, rendered judgment ordering Paz Mesina and Peter de
Jesus to vacate the leased premises.^[4] On
appeal, the Regional Trial Court of Manila, Br. 41, reversed the judgment of
the inferior court and ordered the dismissal of the complaint filed by CETUS.^[5]
On 31 May 1991, the Court of Appeals reversed the Decision of the Regional
Trial Court and reinstated the Decision of the Metropolitan Trial Court;^[6]
hence, this petition filed by Paz Mesina and Peter de Jesus.

Petitioners invoke res judicata as a
bar to the institution of the present action. They argue that the inclusion of an additional party defendant in the
person of Peter de Jesus would not substantially affect the identity of the
parties between the first and the present case since Peter de Jesus, like Paz
Mesina, is also a forced heir who succeeded into the leasehold rights of the
original lessor, Clemente de Jesus. They also contend that the cause of action in the former case, i.e.,
the subleasing of the property without the consent of the registered owner, is
the same cause of action in the instant case.

Petitioners likewise maintain that B.P. 877,^[7] which imposes penal sanctions for its
violation, cannot apply to the instant contract of lease and the consequent
subletting of the premises. The
contract has long been in effect. Since there is no express Provision in B.P. 877 that it shall have
retroactive effect, the statute should operate prospectively. To give B.P. 877 retroactive application
would operate as an impairment of an existing contract and an ex-post facto
law which are both proscribed by the Constitution.

For res judicata to bar the institution of a subsequent
action, the requisites are: the
judgment must be final; the judgment must have been rendered by a court having
jurisdiction over the subject matter and the parties; the judgment must be on
the merits; and, there must be between the first and second actions, identity
of parties, of subject matter, and of causes of action.^[8]

There is no dispute as to the presence of the first three
requisites. Hence, the bone of
contention is reduced to whether there is identity of parties and of causes of
action between the first case and the instant proceedings. For sure, there is identity of parties with respect to petitioner Paz Mesina who
was impleaded in the first action and again in the present case. With regard however to petitioner Peter de
Jesus, although he is a proper party in the first case, there is no identity of
parties between the two actions as he was never impleaded in the first court
proceedings. Consequently, he cannot be
bound by pronouncements of the court therein. But the question regarding the identity of parties is not the sole
issue. In ascertaining whether res
judicata applies, it also has to be determined whether there is identity of
causes of action in both.

There is none. The first
case was based on the demand letter to vacate dated 18 November 1985 for
subleasing the leased premises, in express violation of B.P. 877, whereas the
present case is based on the demand letter dated 12 July 1989 for subleasing
the premises after 18 November 1985 and before 12 July 1989. While the first action has already attained
finality, it merely refers to the principal lease contract and the act of
subleasing the property prior to 18 November 1985. Considering that the existing contract between petitioners and
private respondent CETUS is admittedly a verbal month-to-month lease contract
which expires at the end of every thirty-day period but which is automatically
renewed for the next thirty-day period, repeating the same cycle for the
succeeding thirty-day periods until the implied lease is expressly terminated,
each thirty-day lease contract is separate and distinct from the other
thirty-day leases. Hence, a cause of
action based on one thirty-day period is separate and distinct from a cause of
action based on another thirty-day period. Accordingly, there can be no identity in the causes of action between
the two cases.

The second ground raised by petitioners, as we said, has already
been resolved in Juarez v. Court of Appeals.^[9] There
we ruled that when the contract of lease was impliedly renewed after the
effectivity of B.P. 877, that renewed lease became subject to the provisions of
the statute and any act of subleasing the premises without the consent of the
lessor would be invalid under its provisions. In fact, we even went further and said –

The petitioner complains that the retroactive application of the
law would violate the impairment clause. The argument does not impress. The impairment clause is now no longer inviolate; in fact, there are
many who now believe it is an anachronism in the present-day society. It was quite useful before in protecting the
integrity of private agreements from government meddling, but that was when
such agreements did not affect the community in general. They were indeed purely private agreements
then. Any interference with them at
that time was really unwarranted intrusion that could be properly struck down.

But things are different now. More and more, the interests of the public have become involved in what
are supposed to be still private agreements, which have as a result been
removed from the protection of the impairment clause. These agreements have come within the embrace of police power,
that obtrusive protector of the public interest. It is an ubiquitous policeman indeed. As long as the contract affects the public welfare one way or
another so as to require the interference of the State, then must the police
power be asserted, and prevail, over the impairment clause.

Mr. Justice Cruz could not have said it any better in Juarez
v. Court of Appeals –

Thus, the lessor is prohibited from arbitrarily increasing the
rentals and leaving the lessee no choice except to pay up or vacate the leased
premises for the shelterless streets. On the other hand, the lessee is not permitted to insist on paying
inordinately low rentals grown absurd and unrealistic in view of rising costs,
including the expenses of administering and maintaining the leased premises.

In allowing the ejectment of the lessee who has subleased the
leased premises without the consent of the lessor, the law has taken note of
one of the unconscionable practices of lessees that have caused much prejudice
to the lessor x x x x

The Court is not unaware of the many gambits employed by landlords
to eject their incumbent tenants whose rentals may not be increased beyond the
statutory maximum and who may even enjoy the right to purchase the rented
premises under certain conditions. Thus, lessors may pretend to need the premises themselves or to have to
undertake urgent repairs thereon or not to have received rentals on time when
their real purpose is to lease the property to new tenants at higher rentals
not covered by the rental laws.

On the other hand, there are lessees who have taken undue advantage
of the rental laws by holding on to the leased premises although they no longer
need them for their own residence or administering them to the prejudice of the
landlord by partitioning the apartment or lot and subleasing them to separate
families or individuals, or accepting bedspacers and boarders, each paying
rentals that in the aggregate are much more than the regulated rentals the
original lessee is paying the landlord.

The purpose of the law in interfering with such contracts is to
protect both the landlord and the tenant from their mutual impositions that can
only cause detriment to society as a whole. The practices above discussed have to be the subject of government
regulation and even prohibition and cannot seek legitimate refuge in the
impairment clause.

The petitioner’s contention that BP 877 is an ex post facto law must also be rejected. It is not penal in nature and the mere fact
that it contains penal provisions does not make it so. At any rate, she is not being prosecuted
under the said penal provisions. She
was sued in the municipal court in a civil complaint to eject her from the lot
on the ground that she had unlawfully subleased it.

WHEREFORE, the instant petition for review on certiorari is DISMISSED for
lack of merit. The questioned Decision
of respondent Court of Appeals dated 31
May 1991 is AFFIRMED.

SO ORDERED.

Cruz, (Chairman), Davide, Jr., Quiason, and Kapunan, JJ., concur.

^[1]
G.R. No. 93474, 7 October 1992, 214 SCRA
475.

^[2]
Judge Tirso C. Briones, presiding.

^[3]
Judge Cesar S. Paguio, presiding.

^[4]
Judge Ed Vincent Albano, presiding.

^[5]
Judge Domingo D. Panis, presiding.

^[6]
Decision penned by Justice Serafin V.C. Guingona, concurred in by Justices
Antonio M. Martinez, Chairman, and Asaali S. Isnani of the Special Ninth
Division.

^[7]
Sec. 5, par. (a), B.P. 877, provides: “Ejectment shall be allowed on the following grounds: (a) Assignment of lease or subleasing of
residential units in whole or in part, including the acceptance of boarders or
bedspacers, without the written consent of the owner/lessor.” Sec. 8 on
the other hand mandates: “A fine
of not less than two thousand pesos nor more than five thousand pesos shall be
imposed on any person, natural or juridical, violating Section 1 or Section 4
of this Act.”

^[8]
Meliton v. Court of Appeals, G.R.
No. 101883, 11 December 1992, 216 SCRA 485; Baguioro v. Basa, Jr.,
G.R. No. 83369, 2 October 1992, 214 SCRA 437; De Ramos v. Court of Appeals,
G.R. No. 86844, 1 September 1992, 213 SCRA 207; De la
Rosa v. Mercado, G.R. No. 101703, 3 July 1992, 211 SCRA 236.

^[9]
See Note 1.