DOJ Opinion No. 043, s. 1980

DOJ OPINION NO. 043 , s. 1980 March 19, 1980 The Executive Director National Tax Research Center First BF Condominium Building Aduana Street, Intramuros Manila Sir : This refers to your request for opinion "as to whether or not before the guidelines shall have been issued by the proper authorities a lessee [of a building with rental above P300.00 a month] within Metro Manila who is not remiss in its rental payments" can be ejected if he fails to readily agree to the proposal of the lessor to increase its rental rates, in the light of the provisions of Presidential Decree No. 1642 (entitled, "Freezing The Rates Of Rental, Above Three Hundred Pesos A Month, Of Residential And Commercial Buildings, Houses, Apartments And Dwelling Units In Metropolitan Manila At Current Levels"). Subject to the extended discussion herein below given, our view is that the refusal of the lessee to accede to the lessor's proposal to increase the rental is not a valid ground for ejectment of the lessee. Presidential Decree No. 1642 freezes rental rates of all buildings in Metro Manila renting at more than P300.00 a month effective September 21, 1979 and until appropriate guidelines shall have been issued pursuant to Presidential Decree No. 1517 (Decree proclaiming urban land reform in Manila). You state that the National Tax Research Center (NTRC). an agency under the NEDA, has leased from the Philippine Shares Corporation (PSCOR) a portion (about three-fourths of the fourth floor of the B.F. Condominium Building located at Intramuros, Manila; that its lease contract is from year with rentals payable monthly; that upon being notified by PSCOR that effective January 1, 1980, said rental would be increased from P35.00 per square meter to P38.00 per square meter, the NTRC suggested to PSCOR that such increase be held in abeyance until the prohibition in P.D. No. 1642 is lifted, whereupon PSCOR countered that it has decided to terminate subject lease contract, the same having expired on December 31, 1979, and to have PSCOR subsidiaries occupy said space instead; and that, nonetheless, PSCOR has the NTRC until March 30, 1980 "within which to secure permission from the proper authorities to agree to the proposed rental of P38.00 per square meter to avoid being ejected". Sections 1 and 2 of P.D. No. 1642 provides as follows: "SECTION 1. The rates of rental of residential and commercial buildings, houses, apartments and dwelling units in Metropolitan Manila, exceeding three hundred pesos (P300) a month, are hereby frozen at their current levels until further orders ." (Emphasis supplied.) "SECTION 2. Any person violating any provision of this Decree shall be punished by imprisonment of not less than three (3) months nor more than two (2) years and a fine of not less than one thousand pesos (P1,000) nor more than two thousand pesos (P2,000). Where the offender is a corporation or a juridical entity, the President or General Manager thereof shall suffer the penalty, without prejudice to the imposition of the fine on such corporation or juridical entity." The prohibition drawn from these provisions is that lessors may not, until further orders, increase the rates rentals of residential and commercial buildings exceeding P300.00 a month within Metro Manila above their current levels as of the effectivity of P.D. No. 1642 on September 21, 1979. If they should do so, they would be committing a violation of the decree for which they may be penalized with imprisonment and/or fine as provided in Section 2, supra . There being such a prohibition, the lessee affected may validly refuse to agree to any rental increase proposed by the lessor and his said refusal would not create a legal right on the part of the lessor to file an ejectment suit against the said lessee. Accordingly, in the present case, in the absence of any other ground for the lessee's judicial ejectment, PSCOR may not eject the NTRC from the leased premises upon the mere refusal of the latter to agree to the rental increase demanded by the former. Wherefore, we reiterate the conclusion herein above expressed. Very truly yours, (SGD.) RICARDO C. PUNO Minister of Justice