G.R. No.

93474 October 7, 1992 The respondent court is now faulted in this petition for review
on certiorari. The petitioner again contends that BP 877 should not be
given retroactive application because it would violate the impairment
VIRGINIA OCAMPO JUAREZ, petitioner,
clause and the prohibition against ex post facto laws. She repeats that
vs.
she is not the proper party defendant but her mother Angela, who
THE HON. COURT OF APPEALS and CETUS DEVELOPMENT,
inherited the leasehold right from her brother Servillano, the original
INC., respondents.
lessee of the lot.

CRUZ, J.:
We rule for the respondents.

The subject of this controversy is a lot located at 502 Quezon

Article 1687 of the Civil Code provides:
Boulevard, Manila. It was leased in the early 1900's to Servillano
Ocampo, who built a house thereon where he lived with his parents
and his sister Angela. He died on March 17, 1956. The lease was If the period for the lease has not been fixed, it is understood to be
taken over by Angela Ocampo, who continued to stay in the house from year to year, if the rent agreed upon is annual; from month to
together with her children, including herein petitioner Virginia Ocampo month, if it is monthly; from week to week, if the rent is weekly; and
Juarez. In 1976, because of her advanced age, Angela moved to her from day to day, if the rent is to be paid daily. However, even though a
daughter Virginia's house in Pasay City. The house on Quezon monthly rent is paid, and no period for the lease has been set, the
Boulevard she leased to Roberto Capuchino, reserving only one room courts may fix a longer term for the lease after the lessee has occupied
for her personal belongings. 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
Meantime, the lot had been sold by the Aranetas to Susanna Realty,
also fix a longer period after the lessee has stayed in the place for over
Inc., which in turn sold it in 1985 to Cetus Development Corporation,
one month. (1581a)
the herein private respondent.

As the original contract of lease did not prescribe a fixed period and the
Immediately after acquiring the lot, Cetus filed a complaint for
rentals were paid monthly, the same should be considered renewable
ejectment against the petitioner with the Municipal Court of Manila on
from month to month, following the above-quoted provision. The same
the ground that the lessee had subleased the property without its
observations are made of the contract of sublease in favor of
consent in violation of BP 877. The case was dismissed. 1 The court
Capuchino, which began in 1976 and has continued to date. Like the
held that the state was inapplicable because the sublease was made
principal contract, the sublease was also terminable at the end of each
prior to its effectivity.
month because no specific period has been prescribed and the rentals
were also payable monthly.
The decision was affirmed on appeal to the Regional Trial Court of
Manila. That court added that the law was applicable only where the
The petitioner insists that the sublease was not prohibited when it was
lessor had constructed the building located on the lot and not where it
concluded in 1976 and suggests that since it was valid at that time, it
was constructed by the lessee himself. It also held that the real party in
should continue to be valid even now.
interest was not the petitioner but Angela Ocampo Juarez. 2

Thus, Article 1650 of the Civil Code provides as follows:

The Court of Appeals reversed. 3 It ruled that BP 877 was applicable
because the original contract of lease did not specify a fixed term and
payment of the rental was made on a monthly basis. The contract was When in the contract of lease of things there is no express prohibition,
deemed terminated from month to month. Hence, when it was renewed the lessee may sublet the thing leased, in whole or in part, without
in July 1985, it became subject to BP 877, which had come into effect prejudice to his responsibility for the performance of the contract
on June 12, 1985. toward the lessor.

The respondent court further held that the law covered the subject She forgets, however, that when the sublease was renewed in July
property under the definition of residential unit therein as referring to: 1985, it had become invalid under the provisions of BP 877, which had
already become effective. The law was operating prospectively upon
the new, or renewed, contract of sublease which now could no longer
Section 2. Definition of terms —
be considered valid without the written consent of the lessor.

(b) . . . an apartment, house and/or land on which another's dwelling is

But even if the sublease were not terminable when the statute became
located used for residential purposes and shall include not only
effective on June 12, 1985, and had a fixed period going beyond that
buildings, parts or units thereof used solely as dwelling places, except
date, that period could still be cut short by operation of BP 877. This
motels, motel rooms, hotels, hotel rooms, boarding houses,
time the law would operate retroactively, to affect existing contracts of
dormitories, rooms and bedspaces offered for rent by their owners, . . .
sub-lease concluded before the law came into effect.

Furthermore, the statute provided the following ground for the

Thus, BP 877 provides as follows:
ejectment of the tenant:

All residential units the total monthly rental of which does not exceed
Sec. 5. Grounds for Judicial Ejectment. — Ejectment shall be allowed
four hundred eighty pesos (P480.00) as of the effectivity of this
on the following grounds:
Act shall be covered by this Act.

(a) Assignment of lease or subleasing of residential units in whole or in

The petitioner complains that the retroactive application of the law
part, including the acceptance of boarders or bedspacers, without the
would violate the impairment clause. The argument does not impress.
written content of the owner/lessor.
The impairment clause is now no longer inviolate; in fact, there are
many who now believe it is an anachronism in the present-day society.
Finally, Virginia Ocampo Juarez was a proper party defendant in the It was quite useful before in protecting the integrity of private
ejectment case because she was the one actually paying the rentals to agreements from government meddling, but that was when such
the plaintiff at the time the complaint was filed. agreements did not affect the community in general. They were indeed
purely private agreements then. Any interference with them at that time
was really an unwarranted intrusion that could be properly struck down.
But things are different now. More and more, the interests of the public On the other hand, there are lessees who have taken undue
have become involved in what are supposed to be still private advantage of the rental laws by holding on to the leased premises
agreements, which have as a result been removed from the protection although they no longer need them for their own residence or
of the impairment clause. These agreements have come within the administering them to the prejudice of the landlord by partitioning the
embrace of the police power, that obstrusive protector of the public apartment or lot and subleasing them to separate families or
interest. It is a ubiquitous policeman indeed. As long as the contract individuals, or accepting bedspacers and boarders, each paying rentals
affects the public welfare one way or another so as to require the that in the aggregate are much more than the regulated rentals the
interference of the State, then must the police power be asserted, and original lessee is paying the landlord.
prevail, over the impairment clause.
The purpose of the law in interfering with such contracts is to protect
As we held in Philippine Veterans Bank Employees Union both the landlord and the tenant from their mutual impositions that can
vs. Philippine Veterans Bank: 4 only cause detriment to society as a whole. The practices above
discussed have to be the subject of government regulation and even
prohibition and cannot seek legitimate refuge in the impairment clause.
Even if it be conceded that the charter of the Bank constitutes a
contract between the Government and the stockholders of the Bank, it
would not follow that the relationship cannot be altered without violating The petitioner's contention that BP 877 is an ex post facto law must
the impairment clause. This is a too simplistic conclusion that loses also be rejected. It is not penal in nature and the mere fact that it
sight of the vulnerability of this "precious little clause," as it is called, to contains penal provisions does not make it so. At any rate, she is not
the inherent powers of the State when the public interest demands being prosecuted under the said penal provisions. She was sued in the
their exercise. The clause, according to Corwin, "is lately of negligible municipal court in a civil complaint to eject her from the lot on the
importance, and might well be stricken from the Constitution. For most ground that she had unlawfully subleased it.
practical purposes, in fact, it has been."
The petitioner's final contention is that she is not the proper party
The undeniable fact is that the notion of public interest has made such defendant in the ejectment case but her mother Angela, who inherited
considerable inroads into the constitutional guaranty that one could the leasehold right from Servillano Ocampo. That claim is also
validly say now that it has become the exception rather than the rule. unacceptable. It is obvious that the petitioner has been acting on behalf
The impact of the modern society upon hitherto private agreements of her mother, who is now 92 years of age and living in her care.
has left the clause in a shambles, as it were, making practically every Angela cannot administer the subleased lot and house, let alone
contract susceptible to change on behalf of the public. The modern appear in court to resist her ejectment. It is the petitioner who has been
understanding is that the contract is protected by the guaranty only if it receiving the rent from Capuchino and in turn paying the rent on the lot
does not affect public interest, but there is hardly any contract now that to the private respondent. For all intents and purposes, she has taken
does not somehow or other affect public interest as not to come under over the leasehold right inherited by Angela and it is only proper that
the powers of the State. Part of that understanding therefore is that, she be held responsible for the unauthorized sublease of the lot. In
conversely, the contract may be altered validly if it involves the public effect, it is the petitioner who is in legal possession of the leased lot
interest, to which private interests must yield "as a postulate of the and as such is the proper party defendant in a complaint for ejectment.
existing social order."
Thus, under Section 1, Rule 70, of the Rules of Court:
And so it must be in the case at bar. Housing is one of the most
serious social problems of the country. The regulation of rentals,
Who may institute proceedings, and when. — Subject to the provisions
especially in the urban areas, has long been the continuing concern of
of the next succeeding section, a person deprived of the possession of
the government, as manifested by the succession of laws on the
any land or building by force, intimidation, threat, strategy, or stealth, or
subject, beginning with Rep. Act No. 6359, the original House Rentals
a landlord, vendor, vendee, or other person against whom the
Law. This Court has consistently recognized the need for such
possession of any land or building is unlawfully withheld after the
legislation, to prevent the lessor from imposing arbitrary conditions on
expiration or termination of the right to hold possession, by virtue of
the lessee while at the same time deterring the lessee from abusing
any contract, express or implied, or the legal representatives or
the statutory benefits accorded to him.
assigns of any such landlord, vendor, vendee, or other person may, at
any time within one (1) year after such unlawful deprivation or
Thus, the lessor is prohibited from arbitrarily increasing the rentals and withholding of possession, bring an action in the proper inferior court
leaving the lessee no choice except to pay up or vacate the leased against the person or persons unlawfully withholding or depriving of
premises for the shelterless streets. On the other hand, the lessee is possession, or any person or persons claiming under them, for the
not permitted to insist on paying inordinately low rentals grown absurd restitution of such possession, together with damages and costs. The
and unrealistic in view of rising costs, including the expenses of complaint must be verified.
administering and maintaining the leased premises.
In any event, the non-joinder of Angela was not fatal to the complaint
In allowing the ejectment of the lessee who has subleased the leased for ejectment because it is provided in Section 11, Rule 3, that;
premises without the written consent of the lessor, the law has taken
note of one of the unconscionable practices of lessees that have
Misjoinder and non-joinder of parties. — Misjoinder of parties is not
caused much prejudice to the lessor. The subject lease is a case in
ground for dismissal of an action. Parties may be dropped or added by
point. It is not denied that the rental on the lot is only P69.70 per
order of the court on motion of any party or on its own initiative at any
month. On the other hand, the petitioner has declared that she charges
stage of the action and on such terms as are just. Any claim against a
Capuchino a monthly rental of P400.00 under the sublease contract, or
party may be severed and proceeded with separately.
almost ten times her own rental. While it is true that this covers both
the lot and the building, the point is that she is not paying the lessor
enough for the use of the lot in light of the total rental she is charging If the petitioner must still quibble about the non-inclusion of Angela,
Capuchino for the use of the house and lot. there is nothing to prevent this Court now from ordering her inclusion
as party defendant and from considering her duly heard in he defense,
through her daughter, the herein petitioner, who has been acting in her
The Court is not unaware of the many gambits employed by landlords
behalf throughout these proceedings. If that be the petitioner's
to eject their incumbent tenants whose rentals may not be increased
insistence, then the order to that effect is hereby made.
beyond the statutory maximum and who may even enjoy the right to
purchase the rented premises under certain conditions. Thus, lessors
may pretend to need the premises themselves or to have to undertake The circumstances of this case show that the petitioner can no longer
urgent repairs thereon or to not have received the rentals on time when retain the leased lot, not because she does not need it anymore but,
their real purpose is to lease the property to new tenants at higher worse, because she is making a profitable business of subleasing it
rentals not covered by the rental laws. without the written consent of the landlord, who is entitled to recover
the lot because of the violation of the lease. The petitioner cannot claim
a denial of social justice because she was not entitled to it in the first
place.

WHEREFORE, the petition is DENIED, with costs against the

petitioner. It is so ordered.