CRESENCIO VIRAY AND BENJAMIN D. DE ASIS, PETITIONERS, VS. HON. INTERMEDIATE APPELLATE COURT AND RUSTICO VICTOR, RESPONDENTS.

Viray versus Victor

The Case

This is a petition for review on certiorari brought by Cresencio Viray and Benjamin de Asis against Rustico Victor. The dispute turns on a written lease of a residential apartment at Sulu Street in Santa Cruz, Manila. The lessor, De Asis, terminated the lease by posting notices, then repossessed the apartment extrajudicially under a stipulation in the contract, and leased it to Viray. The lessee's family then sued for forcible entry and won in three lower courts. The case matters because the Supreme Court here validates a contractual stipulation allowing the lessor to repossess without court action, and holds that the lessor's affirmative right to eject judicially is a complete defense to the tenant's possessory suit.

Procedural History

Roldan Victor, in the name and behalf of his father Rustico, filed a complaint for forcible entry in the Metropolitan Trial Court of Manila against De Asis and Viray. The trial court rendered judgment ordering the defendants to restore the plaintiff to possession and enjoyment of the leased premises and to pay the costs. It ruled that Rustico could not be deemed to have abandoned the premises, and that even if he had, the apartment could not be repossessed without judicial action, the stipulation authorizing extrajudicial repossession being void as against public policy and existing precedents.

De Asis and Viray appealed to the Regional Trial Court, which affirmed the trial court's decision and even directed the court of origin to issue a writ of possession in favor of the plaintiff and to order the return of the personal belongings taken by De Asis. De Asis and Viray then appealed to the Court of Appeals, which dismissed their petition for review and affirmed the Regional Trial Court. Hence this petition for review on certiorari before the Supreme Court, which gave the petition due course.

Facts

On April 1, 1981, Benjamin de Asis, owner of Apartment A at 1836 Sulu Street, Santa Cruz, Manila, executed a written lease over the premises in favor of Rustico Victor. The contract fixed a term of three months, impliedly renewable from month to month, and contained a stipulation on the lessor's right of repossession upon the lessee's failure to comply with the terms of the lease.

In October 1983, Victor and his wife left for Ontario, Canada and did not return until February 1985, leaving the apartment in the care of their son Ramon. Believing the spouses had abandoned the apartment, De Asis sued in the Metropolitan Trial Court in December 1984 to evict Ramon. When the spouses returned in February 1985 and represented that they did not mean to give up the apartment, the case was dismissed on joint motion. Rustico did not re-occupy the apartment, however, and continued to leave it in Ramon's care. In the second week of October 1985, Ramon himself left for Canada and asked his brother Roldan to look after the place. Roldan did not move in; he merely installed a padlock at the main door, visited once a week, and slept there occasionally.

Learning of this in December 1985, De Asis went to the apartment, found nobody inside, and could not enter because it was locked. He caused the cutting off of the electrical and water connections and posted at the main door a notice of termination of the lease on the ground of abandonment and failure to pay rentals. He could not serve the notice directly on the lessee because he did not know where the latter was. In the first week of January 1986, he found the notice gone and posted another, announcing that he would repossess the place after five days. He also wrote the barangay captain requesting his presence. On January 5, 1986, in the presence of barangay authorities, De Asis had the door opened by a carpenter and hauled the things inside to his residence after making an inventory. He then made repairs costing 13,108 pesos and leased the apartment to Cresencio Viray.

Issues

• Whether or not the posting in the premises of the notice of termination of the lease had legally caused its cessation or extinguishment as of December 31, 1985.
• Whether or not De Asis had the legal and contractual right to repossess the premises without and independently of prior judicial authority.

Applicable Provisions

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

A demand by a landlord for payment of rent or to comply with the conditions of the lease and to vacate the premises may be made by posting such notice on the premises if no persons be found thereon.

This authorizes the manner by which De Asis gave notice of termination, validating the extrajudicial termination of the lease.

The lease contract itself, in its seventh paragraph, provides:

Upon failure of the Lessee to comply with any of the terms and conditions of this lease, as well as such other terms and conditions which may be imposed by the Lessor prior to and upon renewal of this lease agreement as provided in paragraph 2 above, then the Lessor shall have the right, upon five days written notice to the Lessee or in his absence, upon written notice posted at the entrance of the premises leased, to enter and take possession of the said premises holding in his trust and custody such possessions and belongings of the Lessee found therein after an inventory of the same in the presence of a witness, all these acts being hereby agreed to by the Lessee as tantamount to his voluntary vacation of the leased premises without the necessity of suit in court.

This is the stipulation the Court upholds as a valid resolutory condition allowing extrajudicial repossession.

Ruling

On the first issue, the Court held that the written agreement created a lease on a month-to-month basis, which by established doctrine provides a definite period and is terminable by notice at the end of any given month. The lessor had posted a notice of termination at the doorway of the apartment, and that notice was subsequently noted and removed by the lessee's representative. The Court held that giving notice in this manner is explicitly authorized by Section 2 of Rule 70 of the Rules of Court. The lease having thus been licitly terminated, the lessee and his sons became obliged to surrender the apartment, and they did not.

On the second issue, the Court upheld the validity of the stipulation authorizing extrajudicial repossession. It noted that in an earlier case, Consing versus Jamandre, it had sustained a substantially identical condition, ruling that such a stipulation is in the nature of a resolutory condition, for upon the exercise by the lessor of his right to take possession, the contract is deemed terminated, and that such a provision is not illegal, there being nothing in the law proscribing such an agreement. The Court also cited considerable American authority upholding stipulations of this nature.

More decisively, the Court held that since the lessor had licitly and efficaciously terminated the month-to-month lease by notice, he had acquired an affirmative right of action to judicially eject the lessee after giving notice to vacate. The existence of such an affirmative right of action constitutes a valid defense against, and is fatal to, any action by the tenant who has been ousted otherwise than judicially to recover possession. Quoting Apundar versus Andrin, the Court said:

The existence of an affirmative right of action on the part of the landlord to oust the tenant is fatal to the maintenance of any action by the tenant.

To hold otherwise would produce the absurd result of restoring the tenant to possession only to be immediately put out in a possessory action by the landlord, and would violate the principle that circuity of action must be avoided.

Doctrine

A month-to-month lease has a definite period and is terminable by notice at the end of any given month. Notice of termination may validly be given by posting it on the premises when no person is found thereon, as expressly authorized by Section 2 of Rule 70 of the Rules of Court.

A stipulation in a lease granting the lessor the right to repossess the premises extrajudicially upon the lessee's failure to comply with the terms of the lease is a valid resolutory condition; it is not illegal, there being nothing in the law proscribing such an agreement. Once the lessor has licitly terminated the lease and acquired an affirmative right to eject judicially, that right is a complete and efficacious defense to any possessory action by the tenant to recover possession.

Disposition

The Court granted the petition, reversed and set aside the judgment of the Court of Appeals, and rendered another judgment dismissing the forcible entry case, with costs against the private respondent.

Remember This

Memorize this line: a stipulation allowing the lessor to repossess extrajudicially is a valid resolutory condition, and the lessor's affirmative right to eject judicially is fatal to the tenant's possessory suit. Examiners use this case to test the validity of extrajudicial repossession clauses and the defense of circuity of action in ejectment.