Thursday, September 19, 2013

Virginia Ocampo Juarez v. CA, Cetus Development Corporation [1992]

·          Lot at 502 Quezon Boulevard, Manila 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 taken over by Angela Ocampo, who continued to stay in the house together with her children, including petitioner Virginia Ocampo Juarez.
·          In 1976, because of her age, Angela moved to Virginia's house in Pasay City. The house on Quezon Boulevard she leased to Roberto Capuchino, reserving only one room for her personal belongings.
·          Meantime, the lot had been sold by the Aranetas to Susanna Realty, Inc., which in turn sold it in 1985 to Cetus Development Corporation.
·          Cetus filed a complaint for ejectment on the ground that the lessee had subleased the property without its consent in violation of BP 877.
·          Trial Court: BP 877 inapplicable because the sublease was made prior to its effectivity.
·          RTC: Affirmed.
·          CA reversed.  BP 877 applicable. Original contract of lease did not specify a fixed term and payment of the rental was made on a monthly basis. The contract was deemed terminated from month to month. Hence, when it was renewed in July 1985, it became subject to BP 877, which had come into effect on June 12, 1985.
Issue: WON the application of BP 877 which requires the petitioner to seek a written consent from the owner is a violation of the impairment clause and prohibition against ex post facto laws. NO.
Ratio
·          NCC 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...
·          When the sublease was renewed in July 1985, it had become invalid under BP 877. The law was operating prospectively upon the renewed contract.
·          The impairment clause is no longer inviolate; there are many who now believe it is an anachronism in the present-day society. It was quite useful before in protecting the integrity of private agreements from government meddling, but that was when such agreements did not affect the community in general.
·          The interests of the public have become involved in what are supposed to be still private agreements, which have as a result been removed from the protection of the impairment clause. These agreements have come within the embrace of the police power… As long as the contract affects the public welfare so as to require the interference of the State, then police power must prevail over the impairment clause.
·          In Philippine Veterans Bank Employees Union vs. Philippine Veterans Bank: …The clause, according to Corwin, "is lately of negligible importance, and might well be stricken from the Constitution. For most practical purposes, in fact, it has been"…  The impact of the modern society has left the clause in a shambles, as it were, making practically every contract susceptible to change on behalf of the public. The contract may be altered validly if it involves the public interest, to which private interests must yield "as a postulate of the existing social order."
·          Housing is a serious social problem of the country. The regulation of rentals, has long been the continuing concern of the government.The laws intends prevent the lessor from imposing arbitrary conditions on the lessee while at the same time deterring the lessee from abusing the statutory benefits accorded to him.
·          The contention that BP 877 is an ex post facto law must also be rejected. It is not penal in nature. She is not being prosecuted under the said penal provisions. She was sued in the municipal court in a civil complaint to eject her from the lot on the ground that she had unlawfully subleased it.

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