Case Digest: PAUL T. IRAO v. BY THE BAY, INC.

PAUL T. IRAO v. BY THE BAY, INC.

558 SCRA 315 (2008)

A notice or demand to vacate does not have to expressly use the word “vacate”, as it suffices that the demand letter puts the lessee or occupant on notice that if he does not pay the rentals demanded or comply with the terms of the lease contract, it should move out of the leased premises.

Ruby Roxas (Ruby) the representative of the Estate of Doña Trinidad de Leon Roxas and Ronald Magbitang (Ronald) representative of By the Bay, Inc. forged a contract of lease of a 3-storey building located in Pasay City for 5 years.

By the Bay‘s restaurant was closed by the City Government and they started defaulting in the payment of the rent. Ruby executed another contract of lease in favor of Paul T. Irao (Paul), herein petitioner. Paul, together with the Barangay Kagawad and Security Guards, entered and took possession of the leased premises.

By the Bay, Inc. filed a case of Forcible Entry to the Metropolitan Trial Court of Pasay City (MeTC) with Prayer for Preliminary Injunction and Damages. The MeTC dismissed the complaint of By the Bay Inc. holding that the failure of By the Bay Inc. to pay monthly rentals renders them with unclean hands. By the Bay Inc. contends that the letter sent to them by Ruby Roxas was the demand to pay the rental arrears and not a notice to terminate the contract of lease.

The Regional Trial Court affirmed the decision of the MeTC. It was reversed by the Court of Appeals holding that Paul Irao should turn over the possession to By the Bay, Inc.

ISSUE:

Whether or not the lessor‘s demand letter to respondent sufficiently contained a notice of termination of the lease contract and a demand to vacate the leased premises to justify the taking over the possession

HELD:

The language and intent x x x of the demand letter are unambiguous. The lessor demanded from By the Bay Inc. the full payment of its unpaid rentals of P2,517,333.36 within five days from notice. The phrase ―otherwise we shall be constrained, much to our regret‖ in the letter sends a clear warning that failure to settle the amount within the stated period would constrain the lessor to ―terminate [the] Contract of Lease‖ and ―take the necessary legal measures against [respondent] to protect [its] interest without further notice.‖

The letter made it clear to respondent that the therein stated adverse consequences would ensue ―without further notice,‖ an unmistakable warning to respondent that upon its default, the lease contract would be deemed terminated and that its continued possession of the leased premises would no longer be permitted.

The notice of impending termination was not something strange to respondent since it merely implemented the stipulation in Section 31 of their contract that ―if default or breach be made of any of such covenants and conditions, then this lease, at the discretion of the LESSOR, may be terminated and cancelled forthwith.‖

To ―warn‖ means ―to give notice to somebody beforehand, especially of danger;‖ and a ―warning‖ may be ―a notice of termination of an agreement, employment, etc.‖ Its purpose is ―to apprise a party of the existence of danger of which he is not aware to enable him to protect himself against it.‖

―[W]here,‖ as here, ―the party is aware of the danger, the warning will serve no useful purpose and is unnecessary, and there is no duty to warn against risks which are open and obvious.‖

The appellate court‘s ruling that the lessor‘s letter did not demand respondent to vacate is flawed. A notice or demand to vacate does not have to expressly use the word ―vacate,‖ as it suffices that the demand letter puts the lessee or occupant on notice that if he does not pay the rentals demanded or comply with the terms of the lease contract, it should move out of the leased premises.

Contractual stipulations empowering the lessor and/or his representative to repossess the leased property extrajudicially from a deforciant lessee, as in the present case, have been held to be valid. Being the law between the parties, they must be respected. By the Nay, Inc. cannot thus feign ignorance that the repossession of the leased property by the lessor and/or its representative-herein Paul was the appropriate legal measure it (respondent) itself authorized under their contract.