FIRST DIVISION

[G.R. No. 87415. January 23, 1992.]

YEK SENG CO. , petitioner, vs. THE HONORABLE COURT OF APPEALS,

DEWEY VELOSO YAP, and DAVID T. VELOSO YAP , respondents.

Ismael M. Estella for petitioner.

Jose S. Santos, Jr. & Associates for private respondents.

SYLLABUS

1. CIVIL LAW; SPECIAL CONTRACTS; LEASE; EXTENSION OF THE LEASE CONTRACT;

MATTERS TO BE CONSIDERED IN ALLOWING THEREOF; DIVINO v. MARCOS (4 SCRA 186)
CITED. — In extending the lease contract it was considered important in the case of Divino
v. Marcos (4 SCRA 186) that: 1) the plaintiff had been occupying the leased premises for
more than twenty years; 2) he was assured by the defendants that he could remain in the
house as long as he continued paying the rentals; and 3) he made improvements on the
house costing P20,000.00 with the consent of the defendants.
2. ID.; ID.; ID.; ID.; ID.; NOT SUFFICIENTLY ESTABLISHED IN CASE AT BAR. — The
petitioner in the case at bar has not pointed to similar circumstances other than the claim
that it has been occupying the subject premises for more than twenty years. On this point,
Judge Roberto M. Lagman of the Regional Trial Court correctly held: On the second issue,
the Court noted that the parties did not submit any evidence on the basis of the stipulation
of the facts earlier narrated. Thus, there is nothing in the record which would show any fact
or circumstance which justifies the extension of the lease. The mere occupancy of the
premises for a number of years, by itself is not sufficient. The circumstance that the
petitioner has paid its rentals religiously during the past twenty years is also not sufficient
to justify the extension it demands. Neither are the substantial improvements it allegedly
made on the leased premises nor the difficulty of finding another place of business, on
which it has not submitted any evidence at all.
3. ID.; ID.; ID.; RULE WHEN RENTAL WAS PAID MONTHLY AND THE TERM HAD NOT
BEEN EXPRESSLY AGREED UPON; CASE AT BAR. — We hold that as the rental in the case
at bar was paid monthly and the term had not been expressly agreed upon, the lease was
understood under Article 1687 to be terminable from month to month. At the time the
petitioner was asked to vacate the leased premises, the lease contract had already expired
and therefore, could no longer be extended.
4. ID.; ID.; ID.; POWER OF THE COURT TO EXTEND THEREOF; MERELY A MINISTERIAL
DUTY. — If the contract of lease had not yet expired, its extension would still be subject to
the sound discretion of the court and was by no means obligatory upon it as a merely
ministerial duty. To quote again from the decision of the Regional Trial Court: As correctly
cited by the plaintiffs, "The power of the Courts to fix a longer term for lease is protestative
or discretionary, 'may' is the word — to be exercised or not in accordance with the
particular circumstances of the case; a longer term to be granted where equities come
into play demanding extension, to be denied where none appears, always with due
deference to the parties freedom to contract." (Divino v. Marcos, January 31, 1962, 4 SCRA
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
 186.) Moreover, the lease had already expired when the extension was sought. In the case
of Prieto v. Laperal, 22 SCRA 934, it was held that "an extension of the lease may be sought
by the tenant before, not after the termination of the lease." At any rate, whatever extension
the defendant may be entitled to has already been dissipated by the length of time — 2
years — that this case has been pending.
5. CONSTITUTIONAL LAW; BILL OF RIGHTS; RIGHT OF A PERSON TO A DAY IN COURT;
NOT DENIED IN CASE AT BAR. — The petitioner also contends that it was denied its day in
court when judgment was rendered against it without the benefit of a trial on the merits.
This posture is likewise unacceptable. Contrary to its submission, the case was not
decided by Summary Procedure but in accordance with Rule 20, Section 3, and Rule 30,
Section 2, of the Rules of Court. There was no trial on the merits because, as the records
will show, the petitioner's counsel agreed to submit the case for decision on the basis of
the stipulations of the parties at the pre-trial conference. Judgment was rendered on that
basis. It must be added that even if there was indeed no trial before the Municipal Trial
Court, the petitioner was heard nonetheless when it appealed to the Regional Trial Court;
when it filed its motion for reconsideration of the decision; and when it appealed to the
respondent court. The petitioner cannot pretend that it was unable to fully argue its case
before that court, for the fact is that it did so, not only in its brief but also when it filed a
motion for reconsideration of its decision and also a motion for a hearing on that motion.

DECISION

CRUZ , J : p

The simple question raised in the case at bar could have been definitely resolved on the
lowest level of the judiciary and did not have to reach the highest tribunal. If we have given
the petition due course, it was only for the purpose of settling it once and for all and
avoiding future needless impositions on the time of this Court.
The subject of the petition is a verbal contract of lease over a portion of a building
belonging to the private respondents and occupied by the petitioner as lessee. It is
situated on Ylaya Street in Manila. The leased premises have been used by the petitioner
for its general merchandise business for more than twenty years. The agreed monthly
rental was P3,000.00.
On December 12, 1985, the lessors notified the petitioner that they were terminating the
lease as they intended to renovate the building and thereafter use it themselves. The
petitioner refused to vacate. The private respondents then filed a complaint for ejectment
against the petitioner in the Municipal Trial Court of Manila on January 22, 1986. For its
part, the petitioner filed a petition for consignation of the monthly rentals which it claimed
had been refused by the lessors.
In his decision dated July 2, 1987, 1 Judge Tirso C. Briones disposed thus:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against
the defendant, ordering the latter and all persons claiming rights under it, to
vacate the premises specifically described in the amended complaint; to pay
plaintiffs the sum of P3,000.00 as rental for the reasonable we and occupancy of
the premises commencing January, 1986 and monthly thereafter, until the same
shall have been finally surrendered to the plaintiffs, less whatever payments that
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
 may have been made during the pendency of the case; the sum of P10,000.00 as
and for attorney's fees plus costs of suit.
The petition for consignation is hereby denied for lack of merit.

This decision was affirmed by the Regional Trial Court of Manila, 2 which was in turn
sustained by the Court of Appeals. 3 In this petition for review on certiorari, the principal
submission is that the courts below erred in not giving the petitioner an extension of its
lease in accordance with Article 1687 of the Civil Code.
This article provides as follows:
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.

In support of its position, the petitioner cites the cases of Araneta v. De Mesa, 35 SCRA
137, and Divino v. Marcos, 4 SCRA 186.
The Court can only wonder why the petitioner has invoked the first case at all as it is clearly
inapplicable. A little study would have readily revealed this. The appeal was dismissed in
that case simply because the question raised had already become moot and academic; no
ruling was made on the merits.
In the second case, the Court upheld the extension of the lease because of the peculiar
circumstances involved, as related thus by the trial court:
When the plaintiffs petition was called for hearing, the parties agreed that
judgment be rendered on the pleadings in connection with such petition.
According to the pleadings, there is no controversy that plaintiff has been
occupying the lot in question since May 7, 1936, when he purchased from one
Antonio Castro the house constructed thereon. It also appears that plaintiff was
assured by the defendants that the house bought would remain thereon as long
as plaintiff continues paying his rents. It further appears that on March 19, 1947,
plaintiff constructed an addition to the house with the knowledge and consent of
the defendants. Said addition cost the plaintiff the amount of P20,000.00.
There is no written agreement as to the duration of the lease between plaintiff
and defendants. The fact remains that plaintiff entered the premises with the
knowledge and consent of the defendants and with the assurance of the latter
that the plaintiff could remain occupying the lot as long as he pays the
corresponding rents.

Sustaining this finding, this Court made the following additional observations:
The lot in question has been rented to the petitioner for about 20 years and his
predecessor in interest for more. Even though rentals had been paid monthly, still
no period for the duration of the lease had been set. The lease had been
consistently and tacitly renewed ("tacita reconduccion") until the ejectment case
was filed (Co Tiam v. Diaz, 75 Phil. 672; Villanueva v. Canlas, 77 Phil. 381; Art.
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
 1670, N.C.C.; Art. 1566, Old Civil Code). Having made substantial or additional
improvements on the lot, and considering the difficulty of looking for another
place to which petitioner could transfer such improvements, and the length of his
occupancy of the lot (since 1936), and the impression acquired by him that he
could stay on the premises, as long as he could pay the rentals, it would seem
that there exists just grounds for granting the extension of lease and that the
extension of two years granted by the trial court, is both fair and equitable.

It was considered important in that case that: 1) the plaintiff had been occupying the
leased premises for more than twenty years; 2) he was assured by the defendants that he
could remain in the house as long as he continued paying the rentals; and 3) he made
improvements on the house costing P20,000.00 with the consent of the defendants. The
petitioner in the case at bar has not pointed to similar circumstances other than the claim
that it has been occupying the subject premises for more than twenty years. On this point,
Judge Roberto M. Lagman of the Regional Trial Court correctly held:
On the second issue, the Court noted that the parties did not submit any evidence
on the basic of the stipulation of the facts earlier narrated. Thus, there is nothing
in the record which would show any fact or circumstance which justifies the
extension of the lease. The mere occupancy of the premises for a number of
years, by itself is not sufficient.

The circumstance that the petitioner has paid its rentals religiously during the past twenty
years is also not sufficient to justify the extension it demands. Neither are the substantial
improvements it allegedly made on the leased premises nor the difficulty of finding
another place of business, on which it has not submitted any evidence at all. The Court
makes the wry observation that the petitioner has only itself to blame if, being engaged in
business, it did not take the necessary precautions against its possible and even abrupt
displacement because of the termination of the month-to-month lease. As for the
argument that the private respondents had not yet secured a building permit for the
alleged intended renovation, it is obviously no argument at all and deserves no further
comment.
In the view of the Court, the applicable case is Cruz v. Intermediate Appellate Court, 4
where it was held:
Ricardo Cruz further maintains that the lease contract with Roman Legarda So is
one with an indefinite period, no specific term having been agreed upon by the
parties, hence the court can legally fix a longer term. He invokes the second
sentence of Article 1687 of the Civil Code which states that even though a
monthly rental 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.

We reject such proposition.

As earlier stated, the contract of Ricardo Cruz, being on a month-to-month basis,
is a lease with a definite period. Since the contract of lease is for a definite term,
the lessee cannot avail of the benefits under Article 1687 which applies only if
there is no definite term. And, even assuming arguendo that Article 1687 applies,
Ricardo Cruz would still not be entitled to have the term fixed for a longer period
since his action was filed only after the contract had expired.

CD Technologies Asia, Inc. © 2016 cdasiaonline.com

 As held in Vda. de Prieto vs. Santos, et al. (88 Phil. 509 [1956]):
"Under this provision, if the period of a lease contract has not been
specified by the parties therein, it is understood to be from month to
month, if the rent agreed upon is monthly, as in the cases at bar.
Consequently, the contract expires at the end of such month, unless, prior
thereto, the extension of said term has been sought by appropriate action
and judgment is, eventually, rendered therein granting said relief.

"Defendants herein maintain that their lease contracts did not, and could
not, come to an end until after the court has fixed its lifetime and the term
thus fixed has expired. This view, is, to our mind, untenable. To begin with,
defendants assume that their contracts are without term, prior to the
judicial action authorized in said Article 1687, whereas the same provides
that the duration of lease contracts shall be yearly, monthly, weekly, or
daily depending upon whether the rental agreed upon is annual, monthly,
weekly, or daily. In other words, said contracts have a term fixed by law,
and are not indefinite in duration, before said judicial intervention.
Secondly, said Article 1687 merely gives the court discretion to extend the
period of the lease. The court is not bound to extend said term. It may
legally refuse to do so, if the circumstances surrounding the case warrants
such action . . . " (Emphasis reproduced).

Conformably, we hold that as the rental in the case at bar was paid monthly and the term
had not been expressly agreed upon, the lease was understood under Article 1687 to be
terminable from month to month. At the time the petitioner was asked to vacate the
leased premises, the lease contract had already expired and therefore, following the
above-quoted decisions, could no longer be extended. In fact, even if such contract had not
yet expired, its extension would still be subject to the sound discretion of the court and
was by no means obligatory upon it as a merely ministerial duty.
To quote again from the decision of the Regional Trial Court:
As correctly cited by the plaintiffs, "The power of the Courts to fix a longer term
for lease is protestative or discretionary, 'may' is the word — to be exercised or not
in accordance with the particular circumstances of the case; a longer term to be
granted where equities come into play demanding extension, to be denied where
none appears, always with due deference to the parties freedom to contract."
(Divino v. Marcos, January 31, 1962, 5 SCRA 186.) Moreover, the lease had
already expired when the extension was sought. In the case of Prieto v. Santos, 98
Phil. 509 cited in Alegre v. Laperal, 22 SCRA 934, it was held that "an extension of
the lease may be sought by the tenant before, not after the termination of the
lease." At any rate, whatever extension the defendant may be entitled to has
already been dissipated by the length of time — 2 years — that this case has been
pending.

The petitioner also contends that it was denied its day in court when judgment was
rendered against it without the benefit of a trial on the merits. This posture is likewise
unacceptable. Contrary to its submission, the case was not decided by Summary
Procedure but in accordance with Rule 20, Section 3, and Rule 30, Section 2, of the Rules of
Court. There was no trial on the merits because, as the record will show, the petitioner's
counsel agreed to submit the case for decision on the basis of the stipulations of the
parties at the pre-trial conference. Judgment was rendered on that basis.
It must be added that even if there was indeed no trial before the Municipal Trial Court, the
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
 petitioner was heard nonetheless when it appealed to the Regional Trial Court, when it filed
its motion for reconsideration of the decision, and when it appealed to the respondent
court. The petitioner cannot pretend that it was unable to fully argue its case before that
court, for the fact is that it did so, not only in its brief but also when it filed a motion for
reconsideration of its decision and also a motion for a hearing or that motion.
The respondent court did not err in sustaining the award of attorney's fees in the sum of
P10,000.00, taking into account the fact that the petitioner unreasonably resisted the
private respondent's demand to vacate the property following the termination of their
lease contract. The petitioner's intransigence made it necessary for the latter to litigate for
the enforcement of their just and valid claim and thus incur the expenses that must now be
justly charged to it.
Judge Lagman acutely observed that the petitioner had already enjoyed a de facto
extension of two years during the period the ejectment case was pending, first before the
Municipal Trial Court and then before his court. We note with disapproval that by appealing
to the Court of Appeals and later to this Court, the petitioner gained another extension of
more than three years, for a total of almost six years from the time the amended complaint
was filed on June 17, 1986.
It is an economic fact that construction costs rose considerably during that period, thus
increasing the expenses of the renovation intended by the private respondents. Such
increase could have been also awarded against the petitioner as part of the actual
damages of the private respondents except that no evidence of this has been presented.
Many lessees are able to defer their deserved ejectment through the simple expedient of
appealing their lost cause all the way up to even this Court. This transparent gambit is all-
too-familiar, The delay entailed in deciding these appeals is usually unavoidable because
the courts of justice are saddled by a heavy load of cases and cannot dispose of them as
fast as might be desired. It is common knowledge of this difficulty that has encouraged
the filing of groundless appeals by "clever" lawyers who know from the start that they are
doomed to fail.
Counsel are admonished against abusing the judicial process by lodging appeals intended
merely to unduly prolong a case and so "buy time" for their clients. In the future, this Court
will take a sterner view of such tactics and impose severe sanctions upon lawyers who, for
money or malice, would cynically frustrate the ends of the law and the speedy
administration of justice by deliberately delaying the final disposition of their hopeless
cases. Atty. Ismael M. Estella, the petitioner's counsel, is particularly enjoined to take
serious heed of this warning.
WHEREFORE, the petition is DENIED and the appealed decision AFFIRMED in toto, with
triple costs against the petitioner.
SO ORDERED.
Narvasa, C .J ., Griño-Aquino and Medialdea, JJ ., concur.
Footnotes

1. Rollo, p. 43.
2. Through Judge Roberto M. Lagman.
3. Penned by Justice Emeterio C. Cui, with Javellana and Elbinias, JJ., concurring.
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
 4. 180 SCRA 702.

CD Technologies Asia, Inc. © 2016 cdasiaonline.com