MARCELO BONDOC, AS SUBSTITUTED BY ROMEO BONDOC, PETITIONER, VS. COURT OF APPEALS, HON. CESAR C. PERALEJO, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH LXVI OF THE REGIONAL TRIAL…

Bondoc versus Court of Appeals

The Case

This is a petition for review brought by Marcelo Bondoc, later substituted by Romeo Bondoc, against the Court of Appeals and the presiding judge of a branch of the Regional Trial Court, arising from an ejectment complaint filed by the private respondent, Lorenzo Quiambao. The dispute concerns a commercial apartment leased on a monthly basis and a residential lot occupied only by the owner's tolerance. The case matters because it draws the line between residential and commercial leases, clarifies when a month-to-month lease may be judicially terminated, and reminds us that a builder by tolerance is not a builder in good faith.

Procedural History

Quiambao filed a complaint for ejectment before the Municipal Circuit Court of Concepcion, which ruled in his favor and required Bondoc to vacate the premises. Bondoc appealed to the Regional Trial Court of Capas, Tarlac, which inferentially held that Bondoc could be ejected from the apartment but ordered Quiambao to execute a new contract with Bondoc for two years over the lot where Bondoc had built his house. Dissatisfied, Bondoc filed a petition for certiorari with the Court of Appeals, asking that the ejectment complaint be dismissed altogether. The Court of Appeals set aside the judgment of the regional trial court and virtually reinstated the decision of the municipal court, ordering Bondoc to vacate both the apartment and the lot, and authorizing the removal or demolition of his temporary dwelling should he fail to remove it within sixty days from finality of judgment. Bondoc then came to the Supreme Court by petition, which the Court gave due course, requiring simultaneous memoranda from the parties.

Facts

Since 1949, Marcelo Bondoc had occupied Apartment Number 3 of a four-door apartment building used for commercial purposes, paying a monthly rental of 200 pesos. He managed a tailoring business there, employing several tailors and seamstresses. In 1974, Lorenzo Quiambao, who was occupying the first two apartments, bought the entire building and asked Bondoc to transfer to Apartment Number 4 so that Quiambao could also occupy the third apartment. Bondoc agreed, allegedly on Quiambao's assurance that he and his wife could continue with their lease during the lessor's lifetime.

Sometime later, Quiambao allowed Bondoc, upon his request, to construct a temporary residential structure on the lot behind Apartment Number 4, also belonging to Quiambao, provided that Bondoc would leave the land any time he was required to do so. Bondoc admits that Quiambao did not charge any rentals for this lot.

In 1977, Quiambao asked Bondoc to vacate the apartment and the lot. Bondoc claims that Quiambao's reason was his need for the apartment, although Quiambao says this was only secondary, the principal ground being the expiration of the monthly lease. Bondoc refused, invoking Quiambao's promise. Written demand was then made, followed by a complaint for ejectment when Bondoc refused to leave.

Issues

• Whether or not there was a valid reason for the termination of Bondoc's lease over the apartment.
• Whether or not the expiration of the lease may be raised as a ground for ejectment even if the complaint first alleged the lessor's need for the premises.
• Whether or not the lease is governed by the rule on month-to-month leases under Article 1687 of the Civil Code, and whether or not Batas Pambansa Blg. 25, which protects residential tenants, applies to the premises.
• Whether or not Bondoc may be considered a builder in good faith over the lot, entitled to reimbursement or retention of the improvements.

Applicable Provisions

Article 1687 of the Civil Code provides:

Article 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. If the rent is weekly, the courts may likewise determine a longer period after the lessee has been in possession for over six months. In case of daily rent, the courts may also fix a longer period after the lessee has stayed in the place for over one month.

This provision fixes the period of the lease as month to month because the rent was paid monthly, making it terminable at the end of each month at the lessor's option.

Article 1673 of the Civil Code provides:

Article 1673. The lessor may judicially eject the lessee for any of the following causes: (1) When the period agreed upon, or that which is fixed for the duration of leases under articles 1682 and 1687, has expired; (2) Lack of payment of the price stipulated; (3) Violation of any of the conditions agreed upon in the contract; (4) When the lessee devotes the thing leased to any use or service not stipulated which causes the deterioration thereof; or if he does not observe the requirement in Number 2 of article 1657, as regards the use thereof. The ejectment of tenants of agricultural lands is governed by special laws.

This provision supplies the ground for ejectment, namely the expiration of the period fixed under Article 1687.

Ruling

On the first issue, the Court held that there was a valid reason for termination. There is no question that the lease of the disputed apartment is from month to month, considering the monthly payments, and hence it was terminable at the end of each month at the option of the lessor, conformably to Article 1673.

On the second issue, the Court rejected the procedural objection. The private respondent maintained that he pleaded both expiration of the term and the need for the premises, stressing that under the Rules of Court the complaint is limited only to the ultimate facts and should not contain all the legal arguments and conclusions of the pleader. The Court held for the private respondent.

On the third issue, the Court ruled that the premises were commercial in nature and that Batas Pambansa Blg. 25 does not cover commercial lands. The Salaria case was clearly not applicable because it dealt with residential land, unlike the property subject of this case which was admittedly commercial in nature, conformably to Morales versus Zamora, where it was held:

When a barber or tailor pursues his calling by serving customers in his dwelling, he is merely exercising a home industry; engaging other tailors or barbers to expand his business and increase his returns, his establishment becomes commercial and the incidental fact that his family lives therein does not include him in that class of tenants equally favored by recent emergency legislation on housing.

On the fourth issue, the Court held that the alleged promise of Quiambao that he would allow Bondoc to remain in the leased premises during the former's lifetime had not been clearly established. It was clear, though, that the lot on which Bondoc's house is located was never the subject of a lease and was occupied by him only on Quiambao's tolerance and subject to its return any time it was needed by the owner. Moreover, he was allowed to build thereon only a temporary shelter and not the permanent structure he erected at the alleged cost of 15,000 pesos. The petitioner never specifically denied these allegations in the complaint for ejectment and is therefore deemed to have admitted them. Bondoc can therefore not insist that he is a builder in good faith or demand payment for the improvements he has constructed, nor may he retain the same until reimbursement is made.

Doctrine

A lease with no fixed period and with monthly rental is understood to be from month to month under Article 1687 of the Civil Code, and is terminable at the end of each month at the option of the lessor. Under Article 1673, the lessor may judicially eject the lessee when the period fixed for the duration of leases under Article 1687 has expired.

Batas Pambansa Blg. 25, which prohibits ejectment for expiration of the term from residential buildings, does not apply to commercial premises. A tailor who expands his business by engaging other tailors converts his establishment into a commercial one, even if his family lives therein.

One who occupies a lot only on the owner's tolerance, and who is allowed to build only a temporary shelter, is not a builder in good faith and may not demand payment for improvements or retain the premises until reimbursement.

Disposition

The petition was denied and the decision of the Court of Appeals was affirmed in its entirety, with costs against the petitioner, and the decision was declared immediately executory.

Remember This

Memorize this line: a month-to-month lease of commercial premises is terminable at the end of each month at the lessor's option, and Batas Pambansa Blg. 25 protects only residential tenants. Examiners like to use this case to test the distinction between residential and commercial leases and the rule that a builder by mere tolerance is not a builder in good faith.