THIRD DIVISION

G.R. No. 157971. August 31, 2005

TRISTAN LOPEZ as Attorney-in-Fact of LETICIA and CECILIA LOPEZ, Petitioners,

vs.
LETICIA R. FAJARDO, Respondent.

DECISION

CARPIO-MORALES, J.:

Leonor Sobrepena and her kins (the Sobrepenas) were the owners of a 2-door apartment at
1326 and 1328 Tomas Mapua St., Sta. Cruz, Manila. The apartment at No. 1328 has for so
many years been occupied under a verbal contract of lease by respondent, Leticia Fajardo.

On April 30, 1999, the Sobrepenas sold their property to Leticia and Cecilia Lopez (the Lopez
sisters) who were thereafter issued Transfer Certificate of Title No. 2451201 in their names.

On March 31, 2000, the Lopez sisters’ attorney-in-fact, herein petitioner Tristan Lopez, filed
before the Metropolitan Trial Court of Manila (MeTC) a complaint2 for ejectment with
damages, docketed as Civil Case No. 166806-CV (first ejectment complaint), against
respondent on the ground of failure to pay her monthly rentals from May 1999 to February
2000.

The parties amicably settled the case after respondent paid ₱35,000.00 representing rental
in arrears and current rental for June 2000. The case was thus closed and terminated on
June 28, 2000 and petitioner allowed respondent to remain in the leased premises.3

The following month or in July 2000, petitioner got wind of the filing by respondent of a
complaint4 against him, his aunts and the Sobrepenas before the Regional Trial Court (RTC)
of Manila, docketed as Civil Case No. 00-97105, for the nullification of the deed of sale
between the Lopez sisters and the Sobrepenas and for the grant to respondent of the right
of first refusal over the leased premises. Respondent in fact again failed and refused to pay
her July and August 2000 rentals, drawing petitioner to send her a letter5 dated August 18,
2000 reading:

Please be informed that my aunts (Leticia and Cecilia Lopez) have already decided to
terminate our monthly lease contract effective midnight of August 31, 2000, the very time
our oral lease contract shall expire. Hence, there shall be no more renewal of our lease
contract on a month-to-month basis upon its expiration by said date. Thus, we expect you
to eventually vacate said leased premises by that time.

Considering however, time constraint, my aunts thought of giving you a grace period of one
(1) month, or until 30 September 2000 within which to vacate the premises conditioned of
course on your immediate payment of the July and August 2000 rentals of ₱2,500.00 each,
or a total sum of ₱5,000.00. Should this total unpaid rental of ₱5,000.00 be not paid
immediately, then the grace period of until September 30, 2000 shall no longer be offered in
which case you shall be considered (as) an interloper to the property by September 1, 2000.
In such an event, you should immediately vacate the same because of the expiration of the
lease contract and your non-payment of rentals for two (2) months.

Please be guided accordingly. (Emphasis supplied; underscoring in the original)

On September 21, 2000, respondent remitted to petitioner Security Bank Check No.
0121467 dated September 20, 2000 in the amount of ₱30,000.00 representing payment of
the rentals in arrears for July 2000, August 2000 and September 2000, and advance rentals
for October 2000 up to July 2001, without prejudice to the outcome of Civil Case No. 00-
97105.6

By letter7 dated September 21, 2000, petitioner thru counsel advised respondent that he
could not accept the above-said check as the rental payments due to his aunts were only
for July, August and September 2000, and that she was expected to vacate the leased
premises by October 1, 2000.

While the dispute between the parties was brought to the barangay, no settlement or
conciliation was reached,8drawing petitioner to file on October 25, 2000 before the MeTC
Manila a complaint9 for ejectment with damages against respondent, docketed as Civil Case
No. 168809-CV (second complaint), praying that judgment be rendered:

1. Ordering [respondent] Fajardo and all persons claiming rights under her to immediately
vacate the leased premises, and return possession thereof to herein [petitioner]; and

2. Ordering [respondent] Fajardo to pay herein [petitioner] the following:

a. ₱7,500.00 as her rental arrears/back rentals from July 2000 up to September 2000 plus
the present monthly rental of ₱2,500.00 from October 2000 (or the corresponding yearly
rental increase thereof, if any) until herein [respondent] shall have actually vacated the
leased premises;

b. ₱50,000.00 as moral damages;

c. ₱50,000.00 as exemplary damages;

d. ₱30,000.00 as attorney’s fees; and

e. Costs of suit.

xxx

Respondent, in her Answer with Counterclaim for damages,10 alleged that the complaint for
ejectment (second) stated no valid cause of action, she contending that petitioner’s claim of
expiration of the verbal monthly lease was misplaced as she never recognized the Lopez
sisters as her true lessors and that her payment of the amount of ₱35,000.00 in connection
with the first ejectment complaint was meant to be under protest and without prejudice to
the outcome of Civil Case No. 00-97105.

Respondent likewise alleged that even assuming that an implied verbal lease exists between
her and the Lopez sisters, petitioner’s claim of termination is baseless in fact and in law as
the latest payment she made to the Sobrepenas on April 16, 1999 was for a period covering
4 months or from January 1999 to April 1999 while the previous payment she made on
November 16, 1998 was for a period covering 11 months or from January 1998 to November
16, 1998, thus indicating that payment of the rent was not on a monthly basis.

Branch 11 of the Manila MeTC to which the second ejectment case was raffled issued a Pre-
trial Order11 defining the issues as follows:

1. Whether or not the [respondent] can be lawfully evicted from the subject premises.

2. Whether or not the [respondent] is entitled to the counterclaim she interposed.

After the parties had filed their respective position papers together with their documentary
evidence and their comments thereon, Branch 11 of the MeTC, by Decision12 dated April 9,
2001, finding that petitioner had sufficiently established his cause of action arising from
the expiration of the lease contract, the lease being terminable at the end of any month after
due notice, and failure of respondent to pay the stipulated rental ─ grounds for ejectment
under Article 1673 of the Civil Code, rendered judgment in favor of petitioner the dispositive
portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the [petitioner] and against the
[respondent] ordering the latter and all persons claiming rights under her:

1. To immediately vacate the subject premises describe[d] as No. 1328 Tomas Mapua St.,
Sta. Cruz, Manila and surrender its peaceful possession to the [petitioner];

2. To pay [petitioner] the amount of ₱7,500.00 as back rentals covering the period from July
2000 to September 2000; and to pay [petitioner] the amount of ₱2,500.00 monthly as
reasonable compensation for the use and occupation of the subject premises known as No.
1328 Tomas Mapua St., Sta. Cruz, Manila, beginning October 2000 and every month
thereafter until [respondent] shall have actually vacated the same;

3. To pay [petitioner] the sum of ₱5,000.00 as and by way of attorney’s fees, and to pay the
costs of the suit.

Respondent appealed the MeTC decision to the Regional Trial Court of Manila (RTC) which,
by Decision13 dated June 7, 2002, affirmed in toto that of the trial court, it holding as follows:

xxx

From the aforesaid facts, it is clear then that [petitioner] allowed [respondent] to continue
to occupy the subject premises on a month-to-month rental terminable at the end of each
month, until the [petitioner] sent [respondent] a notice to vacate the subject premises on
August 18, 2000. There is no dispute that there was a landlord-tenant relationship between
the [petitioner] and the [respondent] that ended on August 31, 2000, as evidenced by
[petitioner’s] letter dated August 18, 2000. As the rent was paid on a monthly basis, the
period of the lease was considered as on a month-to-month basis in accordance with Article
1687 of the New Civil Code.

It is a lease with a definite period. In the case at bar, since the [respondent] stopped
payment of her monthly rentals since July 2000 up to September 2000, then the lease on
said property immediately expired and terminated upon the letter of demand made by the
[petitioner] on the [respondent] to vacate the subject premises as of August 2000. Hence,
[respondent’s] right to stay in the premises came to an end as of August 2000.

x x x (Underscoring supplied).
Before the Court of Appeals (CA), respondent appealed via Petition for Review with Prayer
for the Issuance of Temporary Restraining Order, Writ of Preliminary Injunction and/or
Status Quo Ante Order,14 assigning to the RTC the following errors:

1. THE REGIONAL TRIAL COURT PALPABLY ERRED ON A MATTER OF LAW IN

FAILING, IF NOT REFUSING, TO CONSIDER THE FACT THAT: (1) AT THE TIME OF
DEMAND, APPELLANT ONLY HAD AN ALLEGED TOTAL RENTALS IN ARREARS OF
TWO MONTHS AND THAT (2) AT THE TIME OF THE FILING OF THE SUBJECT
COMPLAINT FOR EJECTMENT, APPELLANT HAD ALREADY CONSIGNED HER
RENTALS IN COURT. HENCE THE SUBJECT EJECTMENT SUIT SHOULD HAVE
BEEN DISMISSED OUTRIGHT PURSUANT TO SECTION 5 (b) OF BATAS PAMBANSA
BLG. 877.

2. IN THE SAME VEIN, THE REGIONAL TRIAL COURT LIKEWISE PALPABLY ERRED
ON A MATTER OF LAW IN FAILING, IF NOT REFUSING TO CONSIDER THE FACT
THAT THE REAL PURPOSE OF RESPONDENT IN FILING THE SUBJECT
EJECTMENT SUIT WAS FOR HIM TO TAKE OVER THE SUBJECT PREMISES, WHICH
HE SURREPTITIOUSLY BOUGHT FROM THE HEIRS OF PERLA SOBREPENA, IN
CIRCUMVENTION OF SECTION 5(f), BATAS PAMBANSA BLG. 877. (Emphasis and
italics omitted; underscoring supplied).

The CA, citing Batas Pambansa Blg. 877 which provides that a minimum of 3-month
arrearages is required to justify a lessor to eject a lessee, held that respondent had incurred
back rentals of only two (2) months when petitioner sent her the letter of demand dated
August 18, 1999, hence, "the filing of the ejectment case was premature." It accordingly
reversed the decision of the RTC and dismissed the complaint of petitioner.

In the present petition, petitioner attributes to the appellate court the following errors for
this Court’s consideration:

I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT GRANTED

THE PETITION OF HEREIN RESPONDENT BASED ON PREMATURITY OF THE
EJECTMENT CASE DUE TO THE FACT THAT THE LESSEE INCURRED
BACKRENTALS FOR ONLY TWO (2) MONTHS CONSIDERING THE FACT THAT THE
LETTERS ISSUED BY HEREIN PETITIONERS NOT ONLY RAISED THE
ARREARAGES OF THREE MONTHS AS THE SOLE GROUND FOR EJECTMENT BUT
AS WELL AS RAISED THE GROUND THAT THE LEASE WAS ALREADY
TERMINATED DUE TO THE EXPIRATION OF THE PERIOD OF THE LEASE.

II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT DENIED THE
MOTION FOR RECONSIDERATION FILED BY HEREIN PETITIONER.15 (Emphasis and
underscoring supplied)

As reflected in his above-quoted assigned errors, petitioner draws attention to the fact that
he raised two grounds-bases for respondent’s ejectment, failure to pay rentals for 3
months and expiration of the lease contract.

The issue then is whether petitioner has established a valid ground for the ejectment of
respondent.

This Court rules in the affirmative.

Section 516 of Batas Pambansa Blg. 877 otherwise known as the "Rent Control Law" provides
for the grounds for judicial ejectment, to wit:

SECTION 5. Grounds for Judicial Ejectment. – 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.

(b) Arrears in payment of rent for a total of three (3) months: Provided, That in case of
refusal by the lessor to accept payment of the rental agreed upon, the lessee may either
deposit, by way of consignation, the amount in court, or with the city or municipal treasurer,
as the case may be, or in a bank in the name of and with notice to the lessor, within one
month after the refusal of the lessor to accept payment.

The lessee shall thereafter deposit the rental within ten days of every current month.
Failure to deposit rentals for three months shall constitute a ground for ejectment. If an
ejectment case is already pending, the court upon proper motion may order the lessee or any
person or persons claiming under him to immediately vacate the leased premises without
prejudice to the continuation of ejectment proceedings. At any time, the lessor may upon
authority of the court, withdraw the rentals deposited.
The lessor, upon authority of the court in case of consignation and upon joint affidavit by
him and the lessee to be submitted to the city or municipal treasurer and to the bank where
deposit was made, shall be allowed to withdraw the deposits.

(c) Legitimate need of owner/lessor to repossess his property for his own use or for the use
of any immediate member of his family as a residential unit, such owner or immediate
member not being the owner of any available residential units within the same city or
municipality: Provided, however, That the lease for a definite period has expired: Provided
further that the lessor has given the lessee formal notice three (3) months in advance of the
lessor’s intention to repossess the property: and Provided, finally, That the owner/lessor is
prohibited from leasing the residential unit or allowing its use by a third party for at least
one year.

(d) Absolute ownership by the lessee of another dwelling unit in the same city or
municipality which he may lawfully use as his residence: Provided, That the lessee shall
have been formally notified by the lessor of the intended ejectment three months in advance.

(e) Need of the lessor to make necessary repairs of the leased premises which is the subject
of an existing order of condemnation by appropriate authorities concerned in order to make
the said premises safe and habitable: Provided, That after said repair, the lessee ejected
shall have the first preference to lease the same premises: Provided, however, That the new
rental shall be reasonable commensurate with the expenses incurred for the repair of the
said residential unit; and Provided, finally, That if the residential unit is condemned or
completely demolished, the lease of the new building will no longer subject to the provisions
of this Act.

(f) Expiration of the period of the lease contract.

No lessor or his successor-in-interest shall be entitled to eject the lessee upon the ground
that the leased premises has been sold or mortgaged to a third person regardless of whether
the lease or mortgage is registered or not. (Emphasis and underscoring supplied)

The first emphasized-underscored ground for judicial ejectment — failure to pay rental
arrearages for a total of three months — was established by petitioner.

For while respondent issued a check dated September 20, 2000 in the amount of ₱30,000.00
representing rentals for July, August and September 2000 and advance rentals for October
2000 up to July 2001, petitioner declined to accept the check as rentals due were only for
July, August and September 2000, which was communicated by petitioner’s counsel’s letter
of September 21, 2000 to respondent’s counsel whose office received it on even date.17By said
letter of September 21, 2000, petitioner was notifying respondent that aside from the rentals
for July and August 2000, she had not paid the rental for September 2000. Despite the
receipt by her counsel of the September 21, 2000 letter of petitioner’s counsel, there is no
showing that respondent did pay the rentals in arrears for July, August, September 2000 to
thus draw petitioner to file on October 25, 2000 the second ejectment complaint subject of
the present petition.

In point of fact, respondent never questioned, either before the MeTC or the RTC, the claim
that she failed to pay rentals for July, August and September before petitioner filed his
complaint on October 25, 2000.

At all events and this brings this Court to the other above-emphasized-underscored ground
for judicial ejectment, there being no fixed period agreed upon by the parties and as the rent
agreed upon was monthly, it is understood to be from month-to-month. So Article 1687 of
the Civil Code provides:

ARTICLE 1687. If the period of 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 form 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. (Emphasis and
underscoring supplied)

A month-to-month lease under Article 1687 is a lease with a definite period and expires
after the last day of any given thirty-day period, upon proper demand and notice by the
lessor to vacate.18

Under the Rent Control Law, the prohibition against the ejectment of a lessee by his lessor
is not absolute. There are exceptions expressly provided by law, which include the expiration
of a lease for a definite period. In the instant case, it was noted that the rentals were paid
on a month-to-month basis. Thus, the lease could be validly terminated at the end of any
given month upon prior notice to that effect on the lessee. After all, when the rentals are
paid monthly, the lease is deemed to be for a definite period, i.e., it expires at the end of
every month. (Emphasis and underscoring supplied)19

When petitioner then sent the August 18, 2000 letter to respondent informing her that the
lease would be terminated effective at the end of the same month, it was well within his
rights.

In fine, it was error for the appellate court to ignore the fact that by the earlier-quoted
August 18, 2000 letter of petitioner20 which was annexed as Annex "F" to the complaint,
petitioner had notified respondent of the expiration of the lease contract, another legal
ground for judicial ejectment.

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals dated
January 13, 2003 in CA-G.R. SP No. 72547 is hereby SET ASIDE and the decision of Branch
6 of the Manila MeTC, which was affirmed in toto by Branch 6 of the Manila RTC, is hereby
REINSTATED.

SO ORDERED.
 THIRD DIVISION

G.R. No. 163763 November 10, 2006

MALAYAN REALTY, INC. represented by ALBERTO C. DY., Petitioner,

vs.
UY HAN YONG, Respondent.

DECISION

CARPIO MORALES, J.:

Malayan Realty, Inc. (Malayan), is the owner of an apartment unit known as 3013 Interior
No. 90 (the property), located at Nagtahan Street, Sampaloc, Manila.

In 1958, Malayan entered into a verbal lease contract with Uy Han Yong (Uy) over the
property at a monthly rental of ₱262.00.1 The monthly rental was increased yearly2 starting
1989, and by 2001, the monthly rental was ₱4,671.65.3

On July 17, 2001, Malayan sent Uy a written notice4 informing him that the lease contract
would no longer be renewed or extended upon its expiration on August 31, 2001, and asking
him to vacate and turn over the possession of the property within five days from August 31,
2001, or on September 5, 2001.5

Despite Uy’s receipt of the notice on June 18, 2001, he refused to vacate the property,
prompting Malayan to file before the Metropolitan Trial Court (MeTC) of Manila a
complaint for ejectment, docketed as Civil Case No. 171256, and was raffled to Branch 3
thereof.

In its complaint, Malayan prayed for the court to order Uy and all other persons claiming
possession under him to vacate the property, to pay ₱9,000 as fair and reasonable monthly
compensation for its use from September 1, 2001 until its possession is turned over to it,
and to pay ₱20,000 as attorney’s fees as well as costs of suit.6

The trial court, noting that there was no showing that the lease contract was on a monthly
basis and that it was for a definite period, given that Uy has been occupying the leased
property continuously for more than 40 years,7 held that Uy could not be ejected on the
ground of termination of the contract.8 It accordingly dismissed9 Malayan’s complaint.
Aggrieved, Malayan appealed to the Regional Trial Court (RTC) which, by Decision10 dated
November 22, 2002, set aside the judgment of the MeTC. On the basis of Article 1687 of the
New Civil Code,11 the RTC extended the lease contract for a period of five years, taking into
consideration the fact that Uy was 75 years old and had lived in the leased property for more
than half of his life.12 And the RTC, finding that Malayan acted arbitrarily and with
vindictiveness in instituting the complaint, ordered Malayan to pay ₱100,000 as moral
damages, ₱100,000 as exemplary damages, and ₱30,000 as attorney’s fees.13

Malayan filed a motion for reconsideration,14 arguing that since Uy did not appeal the MeTC
decision, the RTC erred in granting him affirmative relief by extending the period of lease
and awarding him damages and attorney’s fees.

Acting on Malayan’s Motion for Reconsideration, the RTC deleted the award of damages to
Uy but retained its ruling extending the lease period for five years.15

Still dissatisfied, Malayan elevated the case to the Court of Appeals (CA), before which it
contended that the RTC had no legal or factual basis for extending the lease contract as the
same was not pleaded by Uy in his counterclaim nor sought it as a relief.

By Decision16 of February 19, 2004, the CA modified the RTC decision by shortening the
extension of the lease contract to one year from the finality of the decision. And the CA
increased the rental rate at 10% per annum starting September 6, 2002, viz:

x x x [P]etitioner also prayed that respondent herein be ordered to pay a rental of ₱9,000.00
a month. The court had authority to fix the reasonable value for such use and occupancy
from the expiration of the contract of lease because it is settled that the rental stipulated in
the contract of lease that has expired or terminated may no longer be the

reasonable value for the use and occupation of the premises as a result or by reason of
change or rise in values (T & C Development Corp. vs. Court of Appeals, 317 SCRA 476).
Taking into account that on September 18, 2001, the date when petitioner filed the
complaint for ejectment, the applicable law are RA Nos. 7644 and 8437, which extended the
period of rent control from 1993 to 1997 and then from 1998 to 2001, respectively.

xxxx

As the maximum increase allowed is 15%, we hold to grant an increase of 10% per annum,
under the circumstances of this case. Hence, the increase should be as follows:
Sept. 6, 2001- Sept. 6, 2002 ₱5,138.82

Sept. 7, 2002 – Sept. 7, 2003 ₱5,652.70

Sept. 8, 2003 onwards ₱6,217.95

Thus, we hereby grant the same, but only to the amount herein-above stated considering
that the original rate is ₱4,671.65. x x x (Underscoring in the original)

Thus the dispositive portion of the CA decision read:

WHEREFORE, premises considered, the Decision dated November 22, 2002 and the Order
dated January 24, 2003 of the Regional Trial Court of Manila, National Capital Judicial
Region, Branch 40, in Civil Case No. 02-103958, are hereby MODIFIED, by shortening the
extension of lease to a period of only one (1) year from finality of this decision and fixing the
rental to the rate as herein-above provided, from the date of expiration of lease (5 days after
August 31, 2001) on September 6, 2001. In all other respects, the petition is denied. No
pronouncement as to costs.

The parties’ respective motions for reconsideration were denied by the CA by Resolution17 of
May 28, 2004.

Malayan (hereafter petitioner) thereupon filed the present petition for review on certiorari,
arguing that the CA erred in granting a one year extension of the lease reckoned from the
finality of the decision.18

Petitioner asserts that an extension of the period of a lease may be sought by the tenant
before, and not after the termination of the lease; and that Uy (hereafter respondent) had
sufficient time to request for extension, given that the notice of termination of the lease was
served upon him more than 30 days before its effectivity, but that respondent did not so
request even after the complaint was filed in court.19

Petitioner thus maintains that no "equitable reason" justifies respondent’s continued

possession of the property for more than four years from the time the complaint for
ejectment was filed.20

Respondent, on the other hand, faults the CA to have erred in ruling that the lease was
considered to be on a month to month basis, and that even if Article 1687 of the New Civil
Code is applicable, the CA erred in shortening the extension of the lease to one year instead
of five years as adjudged by the RTC.21 And it faults the CA to have abused its discretion in
increasing the rental at 10% per annum.22

Under Article 1687 of the New Civil Code which reads:

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.
x x x,

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. 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.23

In the case at bar, the lease period was not agreed upon by the parties. Rental was paid
monthly, and respondent has been occupying the premises since 1958. As earlier stated, a
written notice was served upon respondent on January 17, 2001 terminating the lease
effective August 31, 2001. As respondent was notified of the expiration of the lease,
effectively his right to stay in the premises had come to an end on August 31, 2001.24

The 2nd paragraph of Article 1687 provides, however, that in the event that the lessee has
occupied the leased premises for over a year, the courts may fix a longer term for the lease.

The power of the courts to establish a grace period is potestative or discretionary, depending
on the particular circumstances of the case. Thus, a longer term may be granted where
equities come into play, and may be denied where none appears, always with due deference
to the parties’ freedom to contract.25

Where a petitioner has been deprived of its possession over the leased premises for so long
a time, and it is shown that, indeed, the respondent was the recipient of substantial benefits
while the petitioner was unable to have the full use and enjoyment of a considerable portion
of its property, such militates against further deprivation by fixing a period of extension.26
Thus, in De Vera v. Court of Appeals,27 this Court found that the lessee’s continued
possession of the property for more than five years from the supposed expiration of the lease
sufficed as an extension of the period.

In the present case, respondent has 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, respondent’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.1âwphi1

As for respondent’s assigned errors reflected above, his petition for review, which was
docketed as G.R. No. 163652, having been dismissed and the reconsideration of the
dismissal having been denied with finality by Resolution of November 8, 2004,28 the decision
of the Court of Appeals was, as to him, final and executory. At all events, his contention that
the CA erred in increasing the rental from September 6, 2001 onwards at 10% per annum
is bereft of merit.

In Limcay v. Court of Appeals,29 which incidentally was a complaint for ejectment filed by
herein petitioner against a lessee of one of its apartments located also in the same address
as that of the property subject of this case, the Court upheld the RTC’s authority to fix the
reasonable value for the use and occupation of the premises from the expiration of the
contract of lease.30

That the rental stipulated in the contract of lease that has expired or terminated may no
longer be the reasonable value for the use and occupation of the premises as a result or by
the reason of the changes or rise in values is settled.31

Respondent himself admitted in his Answer to the Complaint that the rental was increased
yearly since 1989.32 He admitted too in his position paper that while petitioner only collected
the amount of ₱4,671.65 as monthly rental, other tenants were constrained to pay ₱8,000 to
₱9,000 a month,33 which latter amount was the amount prayed for by petitioner in his
complaint against respondent before the MeTC.

Given the circumstances attendant to this case, this Court finds that the CA’s increase of
the rental at 10% per annum is fair and just, and is a reasonable valuation of the
compensation due petitioner for the use and occupation of its property from the expiration
of the contract of lease until the turn over by respondent of its possession.
As the lease contract expired on August 30, 2001, petitioner is entitled to the 10% per annum
increase in rentals since September 1, 2001, not on September 6, 2001 as held by the CA.
Hence, the monthly rental of the property in the succeeding years should be as follows:

September 2001 to August 2002 ₱5,138.82

September 2002 to August 2003 ₱5,652.70

September 2003 to August 2004 P6,217.97

September 2004 to August 2005 P6,839.77

September 2005 to August 2006 P7,523.74

September 2006 onwards P8,276.11

WHEREFORE, the petition is GRANTED. Respondent, Uy Han Yong, and all persons
claiming rights under him are ORDERED to immediately vacate and surrender possession
of 3013 Interior No. 90, Nagtahan, St., Sampaloc Manila, and to pay monthly rentals in the
amount of ₱5,138.82 from September 2001 to August 2002; ₱5,652.70 from September 2002
to August 2003; ₱6,217.97 from September 2003 to August 2004; ₱6,839.77 from September
2004 to August 2005; ₱7,523.74 from September 2005 to August 2006; and ₱8,276.11 from
September 2006 until respondent finally vacates and surrenders possession of the property
to petitioner, Malayan Realty, Inc.

Costs against respondent.

SO ORDERED.