CETUS DEVELOPMENT, INC., PETITIONER, VS. COURT OF APPEALS AND EDERLINA NAVALTA, RESPONDENTS.

This is a petition for review on certiorari of the
decision dated January 30, 1987
of the Court of Appeals in CA-GR Nos. SP-07945-50 entitled, “Cetus Development, Inc., Petitioner vs. Hon. Conrado T. Limcaoco, Presiding
Judge, Regional Trial Court of Manila, Branch XI, Ederlina
Navalta, et. al., respondents.”

The following facts appear in the records:

The private respondents, Ederlina Navalta, Ong Teng,
Jose Liwanag, Leandro Canlas, Victoria
Sudario, and Flora Nagbuya
were the lessees of the premises located at No. 512 Quezon Boulevard, Quiapo, Manila,
originally owned by the Susana Realty. 
These individual verbal leases were on a month-to-month basis at the
following rates:  Ederlina
Navalta at the rate of P80.50; Ong
Teng at the rate of P96.10; Jose Liwanag
at the rate of P40.35; Leandro Canlas at the rate of
P80.55; Victoria Sudario at the rate of P50.45 and
Flora Nagbuya at the rate of P80.55.  The payments of the rentals were paid by the
lessees to a collector of the Susana Realty who went to the premises
monthly.

Sometime in March, 1984, the Susana Realty sold the leased
premises to the petitioner, Cetus Development, Inc.,
a corporation duly organized and existing under the laws of the Philippines.  From April to June, 1984, the private respondents continued to pay their monthly rentals to a
collector sent by the petitioner.  In the
succeeding months of July, August
and September 1984, the respondents
failed to pay their monthly individual rentals as no collector came.

On October
9, 1984, the
petitioner sent a letter to each of the private respondents
demanding that they vacate the subject premises and to pay the back rentals for
the months of July, August and September, 1984, within fifteen (15) days from
the receipt thereof.  Immediately upon
the receipt of the said demand letters on October 10, 1984, the private respondents paid their
respective arrearages in rent which were accepted by the petitioner subject to
the unilateral condition that the acceptance was without prejudice to the
filing of an ejectment suit.  Subsequent monthly rental payments were
likewise accepted by the petitioner under the same condition.

For failure of the private respondents to vacate the premises as demanded in the letter
dated October 9, 1984, the petitioner
filed with the Metropolitan Trial Court of Manila complaints for ejectment against the former, as follows:  (1) 105972-CV, against Ederlina
Navalta; (2) 105973-CV, against Jose Liwanag; (3) 105974-CV, against Flora Nagbuya;
(4) 105975-CV, against Leandro Canlas;
(5) 105976-CV, against Victoria Sudario and (6)
105977-CV, against Ong Teng.

In their respective answers, the six (6) private respondents
interposed a common defense.  They
claimed that since the occupancy of the premises they paid their monthly rental regularly through a collector of the lessor; that their non-payment of the rentals for the
months of July, August and September, 1984, was due to the failure of the
petitioner (as the new owner) to send its collector; that they were at a loss
as to where they should pay their rentals; that sometime later, one of the
respondents called the office of the petitioner to inquire as to where they
would make such payments and he was told that a collector would be sent to
receive the same; that no collector was ever sent by the petitioner; and that
instead they received a uniform demand letter dated October 9, 1984.

The private respondents, thru counsel, later filed a motion for
consolidation of the six cases and as
a result thereof, the said cases were
consolidated in the Metropolitan Trial Court of Manila, Branch XII, presided
over by Judge Eduardo S. Quintos, Jr.  On June 4, 1985, the trial court rendered its decision
dismissing the six cases, a pertinent portion of which reads, as follows:

“The records of this case show that at the time of the filing
of this complaint, the rentals had all been paid.  Hence, the plaintiff cannot eject the
defendants from the leased premises, because at the time these cases were
instituted, there are no rentals in
arrears.

“The acceptance of the back rental by the plaintiff before the
filing of the complaint, as in these case, the alleged
rental arrearages were paid immediately after receipt of the demand letter,
removes its cause of action in an unlawful detainer case,
even if the acceptance was without prejudice.

“x x x.

“Furthermore, the court has observed that the account involved
which constitutes the rentals of the tenants are relatively small to which the ejectment may not lie on grounds of equity and for humanitarian
reasons.

“Defendants’ counterclaim for litigation expenses has no legal
and factual basis for assessing the same against plaintiff.

“WHEREFORE, judgment is hereby rendered dismissing these
cases, without pronouncement as to costs.

“Defendants’ counterclaim is likewise dismissed.

“SO ORDERED.” (pp. 32-33, Rollo, G.R. No.
77647)

Not satisfied with the decision of the Metropolitan
Trial Court, the petitioner appealed to the Regional Trial
Court of Manila and the same was assigned to Branch IX thereof presided over by
Judge Conrado T. Limcaoco
(now Associate Justice of the Court of Appeals).  In its decision dated November
19, 1985, the
Regional Trial Court dismissed the appeal for lack of merit.

In due time, a petition
for review of the decision of the Regional Trial Court was filed by the
petitioner with the Court of Appeals. 
Said petition was dismissed on January 30, 1987, for lack of merit.

Aggrieved by the decision of the Court of Appeals, petitioner now comes to Us in this petition, assigning the following errors:

ASSIGNMENT OF ERRORS

“I

“RESPONDENT COURT OF APPEALS COMMITTED
A GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OF JURISDICTION, WHEN IT ERRED
IN HOLDING THAT THE CAUSE OF ACTION FOR UNLAWFUL DETAINER IN THESE CASES DID NOT EXIST WHEN THE COMPLAINTS
WERE FILED BECAUSE PRIVATE RESPONDENTS TENDERED, AND PETITIONER ACCEPTED, THE
PAYMENT OF THE THREE (3) MONTHS RENTAL IN ARREARS WITHIN
THE FIFTEEN (15) DAY PERIOD FROM
PRIVATE RESPONDENTS’ RECEIPT OF PETITIONER’S
DEMAND LETTERS TO VACATE THE SUBJECT PREMISES AND TO PAY THE RENTALS IN ARREARS.

“II

“RESPONDENT COURT OF APPEALS COMMITTED A
GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OF JURISDICTION, WHEN IT ERRED IN AFFIRMING THE DISMISSAL OF THE
COMPLAINTS IN THESE CASES NOTWITHSTANDING THE EXISTENCE OF VALID GROUNDS FOR
THE JUDICIAL EJECTMENT OF PRIVATE RESPONDENT.

“III

“RESPONDENT COURT OF APPEALS COMMITTED
A GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OF JURISDICTION, WHEN IT ERRED
IN HOLDING THAT THESE CASES ARE CLASSIC EXAMPLES
TO CIRCUMVENT THE RENT CONTROL
LAW.” (pp. 164-165, Rollo, G.R. No. 77647)

The Court of Appeals defined the basic issue in this case as
follows:  whether or not there exists a
cause of action when the
complaints for unlawful detainer were filed
considering the fact that upon demand by petitioner from private respondents for payment of their back rentals, the
latter immediately tendered payment which was accepted by petitioner.

In holding that there was no cause of action, the respondent
Court relied on Section 2, Rule
70 of the Rules of Court, which provides:

“Sec. 2 – Landlord to proceed against tenant only after demand. –
No landlord or his legal representative or assign, shall bring such action
against a tenant for failure to pay rent due or to comply with the
conditions of his lease, unless the tenant shall have failed to pay such rent or comply with such conditions for a
period of fifteen (15) days or five (5) days in case of building, after
demand therefor, made upon him personally, or by
serving written notice of such demand upon the person found on the premises, or
by posting such notice on the premises if no persons be found thereon.”

It interpreted the
said provision as follows:

“x x x the
right to bring an action of ejectment or unlawful detainer must be counted from the time the defendants
failed to pay rent after the demand therefor.  It is not the failure per se to pay rent as
agreed in the contract, but the failure to pay the rent after a demand therefor is made, that entitles the lessor
to bring an action for unlawful detainer.  In other words, the demand contemplated by
the above-quoted provision is not a demand to vacate, but a demand made by the landlord upon his tenant
for the latter to pay the rent due.  If
the tenant fails to comply with the said demand within the period provided, his
possession becomes unlawful and the landlord may then bring the action for ejectment.” (p. 28, Rollo,
G.R. No. 77647)

We hold that the demand
required and contemplated in Section 2, aforequoted, is a jurisdictional requirement for the purpose of
bringing an unlawful detainer suit for failure to pay rent or comply with the conditions of lease.  It partakes of an extrajudicial
remedy that must be pursued before resorting to judicial action so much so that when there is full compliance with the demand, there arises no
necessity for court action.

As to whether this demand
is merely a demand to pay rent or comply with the conditions of the lease or
also a demand to vacate, the answer can be gleaned from said Section 2.  This section presupposes the existence of a
cause of action for unlawful detainer as it speaks of
“failure to pay rent due or comply with the conditions of the lease.”
The existence of said cause of action gives the lessor
the right under Article 1659 of the New Civil Code to ask for the rescission of the contract of lease and indemnification for
damages, or only the latter, allowing the contract to remain in force. 
Accordingly, if the
option chosen is for specific performance, then the demand referred to is
obviously to pay rent or to comply with the conditions of the lease
violated.  However, if rescission is the
option chosen, the demand must be for the lessee to pay rents or to comply with
the conditions of the lease and to vacate. 
Accordingly, the rule that has been followed in our jurisprudence where
rescission is clearly the option taken, is that both demands to pay rent and to
vacate are necessary to make a lessee a deforciant in
order that an ejectment suit may be filed (Casilan, et al. vs. Tomassi,
L-16574, February 28, 1964, 10 SCRA 261; Rickards vs.
Gonzales, 109 Phil. 423; Dikit vs. Icasiano, 89 Phil. 44).

Thus, for the purpose of
bringing an ejectment suit, two requisites must
concur, namely:  (1) there must be
failure to pay rent or comply with the conditions of the lease and (2) there
must be demand both to pay or to comply and vacate within the periods specified in Section 2, Rule 70, namely 15 days in case of
lands and 5 days in case of buildings. 
The first requisite refers to the existence of the cause of action for
unlawful detainer while the second refers to the
jurisdictional requirement of demand in order that said cause of action may be
pursued.

It is very clear that in
the case at bar, no cause of action for ejectment has
accrued.  There was no failure yet on the
part of private respondents to pay rents for three consecutive months.  As the terms of the individual verbal leases
which were on a month-to-month basis were not alleged and proved, the
general rule on necessity of demand applies, to wit:  there is default in the fulfillment of an
obligation when the creditor demands payment at the maturity of the obligation
or at anytime thereafter.  This is explicit
in Article 1169, New Civil Code which provides that “(t)hose
obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially
demands from them the fulfillment of their obligation.” Petitioner has not
shown that its case falls on any of the following exceptions where demand is
not required:  (a) when the obligation or the law so
declares; (b) when from the nature and circumstances of the obligation it can
be inferred that time is of the essence of the contract; and (c) when demand
would be useless, as when the obligor has rendered it beyond his power to
perform.

The demand required in Article 1169 of the Civil Code may be in
any form, provided that it can be proved. 
The proof of this demand lies upon the creditor.  Without such demand, oral or written, the
effects of default do not arise.  This
demand is different from the demand required under Section 2, Rule 70, which is
merely a jurisdictional requirement before an existing cause of action may be
pursued.

The facts on record fail to show proof that petitioner demanded
the payment of the rentals when the
obligation matured.  Coupled with the
fact that no collector was sent as previously done in the past, the private
respondents cannot be held guilty of mora solvendi or delay in the payment of rentals.  Thus, when petitioner first demanded the
payment of the 3-month arrearages and private respondents lost no time in
making tender and payment, which petitioner accepted, no cause of action for ejectment accrued. 
Hence, its demand to vacate was premature as it was an exercise of a
non-existing right to rescind.

In contradistinction,
where the right of rescission exists, payment of the arrearages in rental after
the demand to pay and to vacate under Section 2, Rule 70 does not extinguish
the cause of action for ejectment as the lessor is not only entitled to recover the unpaid rents but
also to eject the lessee.

Petitioner correctly
argues that acceptance of tendered payment does not constitute a waiver
of the cause of action for ejectment especially when
accepted with the written condition that it was “without prejudice to the
filing of an ejectment suit”.  Indeed, it is illogical or ridiculous not to
accept the tender of payment of rentals merely to preserve the right to file an
action for unlawful detainer.  However, this line of argument presupposes
that a cause of action for ejectment has already
accrued, which is not true in the instant case.

Petitioner likewise claims that its failure to send a collector
to collect the rentals cannot be considered a valid defense for the reason that
sending a collector is not one of the obligations of the lessor
under Article 1654.  While it is true that a lessor
is not obligated to send a collector,
it has been duly established that it has been customary for private respondents to pay the rentals
through a collector.  Besides Article
1257, New Civil Code provides that where no agreement has been designated for
the payment of the rentals, the place of payment is at the domicile of the
defendants.  Hence, it could not be said
that they were in default in the payment of their rentals as the delay in
paying the same was not imputable to them. 
Rather, it was attributable to petitioner’s omission or neglect to collect.

Petitioner also argues that neither is its refusal to accept the
rentals a defense for non-payment as Article 1256 provides that “[i]f the creditor to whom the tender of payment has been
made refuses without just cause to accept it, the debtor shall be released from
responsibility by the consignation of the thing due.” It bears emphasis
that in this case there was no unjustified refusal on the part of petitioner or
non-acceptance without reason that would constitute mora
accipiendi and warrant
consignation.  There was simply
lack of demand for payment of the rentals.

In sum, We hold that respondent Court of
Appeals did not commit grave abuse of discretion amounting to lack of
jurisdiction in its conclusion affirming the trial court’s decision dismissing
petitioner’s complaint for lack of cause
of action.  We do not agree, however,
with the reasons relied upon.

ACCORDINGLY, the petition for review on certiorari
is hereby DENIED for lack of merit and the decision dated January 30, 1987 of respondent Court of Appeals
is hereby AFFIRMED.

SO ORDERED.

Narvasa, (Chairman) Cruz, Gancayco, and Griño-Aquino, JJ., concur.