Effectively extended

This is another case involving the lease of a property without any written contract. The usual question arising in cases of this nature is the period of the lease. This is the case of Mr. Wong.

Mr. Wong was occupying an apartment unit belonging to a realty company (MRI) since 1958 under a verbal lease contract at a monthly rental rate of P262. After more than 30 years or starting 1989 the monthly rental was increased yearly such that by 2001, the monthly rent became P4,671.65.

On July 17, 2001, MRI sent a written notice to Wong informing him that the lease contract would no longer be renewed or extended after August 31, 2001 so that he should vacate and turn over possession of the property within 5 days from said date or by September 5, 2001.

Despite Wong’s receipt of said notice on July 18, 2001, he refused to vacate the property. Thus on September 18, 2001, MRI filed a complaint for ejectment against Wong praying that Wong and all persons claiming under him to vacate the property, to pay P9,000 as fair and reasonable monthly compensation for its use from September 1, 2001 until its possession is turned over and attorney’s fees of P20,000 plus cost of suit.

The case lasted almost three years until it reached the Court of Appeals (CA) where one of the main issues pertains to the extension of the period of lease. By its decision on February 19, 2004 the CA modified the decision of the Regional Trial Court by shortening the extension of the lease from five years to one year from finality of the decision. Both courts applied Article 1687 of the Civil Code which provides that if the period of a lease contract has not been specified by the parties, it is understood to be from month to month if the rent agreed upon is monthly but if the lessee has occupied the leased premises for over a year, the court may fix a longer term for the lease depending on the particular circumstances of the case.

MRI thereupon questioned the CA decision still granting an extension of one year before the Supreme Court (SC). It asserts that an extension of the period of the lease may be sought by the tenant before, not after the termination of the lease and that Wong had sufficient time to request for such extension. So it maintains that no equitable reason justifies Wong’s continued possession of the property for more than four years from the time the ejectment suit was filed in court. Was MRI correct?

Yes. Under Article 1687 of the Civil Code, if the period has not been specified by the parties, it is understood to be from month to month, if the rent agreed upon is monthly. The lease contract thus expires at the end of each month, unless prior thereto the extension of said term has been sought by appropriate action and judgment is eventually rendered therein granting the relief.

The power of the courts to establish a grace period is potestative or discretionary depending on the particular circumstances of the case. Thus a long term may be granted where equities come into play, and may be denied where none appears, always with deference to the parties’ freedom to contract.

Where a property owner has been deprived of its possession over the leased premises for so long a time, and it is shown that, indeed, the occupant was the recipient of substantial benefits while the owner was unable to have the full enjoyment and use of a considerable portion of its property, such militates against further deprivation by fixing a period of extension.

In the present case, Wong remained in possession of the property from the time the complaint for ejectment was filed on September 18, 2001 up to the present time. Effectively, Wong’s lease has been extended for more than five years, which time is, under the circumstances, deemed sufficient as an extension and for him to find another place to stay (Malayan Realty Inc. etc. vs. Uy Han Yong, G.R. 163763, November 10, 2006).

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