MEMORANDUM

DEFENDANT - APPELLANT CENTURY MARINE PRODUCTS/JACKIE LOU B.

WANG by counsel and unto the Honorable Court respectfully states, thus:

BRIEF STATEMENT OF FACTS AND OF THE CASE

The Facts.

On 19 February 2007, plaintiff-appellee leased his certain house and portion of

lot located at 117 San Francisco St., Catbalogan City, to herein defendant-appellant,

thru its managing director for its office, meat processing business and storage plant for

a period of five (5) years from 20 February 2005, or until 20 February 2010 and with a

monthly rental of Eight Thousand Pesos (P8,000.00).

As an offshoot of defendant-appellant’s earlier filing of an ejectment suit against

Bio-Farm Resources Corporation (where plaintiff-appellee and attorney-in-fact-brother

serve as corporators) involving possession of a certain commercial building in Brgy.

Bunu-anan, Catbalogan City, plaintiff-appellee, reasoning that the lease contract was

entered personally by Dennis Tien and non-payment of rentals for the months of

September 2005 and October 2005, filed a case against herein defendant-appellant,

asserting the latter’s lack of personality in possessing the subject leased premises.

The Case.
 The Complaint filed on 22 August 2006 at the lower court principally alleged,

among others, that Dennis Tien, subleased the leased premises to herein defendant-

appellant and failed to pay the rentals for the moths of September 2005 and October

2005, in violation of the Contract of Lease executed on 19 February 2005.

On 07 September 2006, herein defendant-appellant received the summons.

On 15 September 2007, defendant-appellant filed Answer, asserting chiefly that

Dennis Tien entered such lease contract for and in behalf of Century Marine Products;

that necessary and useful improvements were introduced to the leased premises which

was chiefly and exclusively devoted for commercial purposes; and that rentals were

religiously paid thereon.

The requisite preliminary conference had been held and the lower court

subsequently issued an Order on 11 June 2007. Parties, as directed, filed their

respective Position Paper within the given period.

On 23 October 2007, defendants-appellants thru counsel received a copy of a

Decision, dated 20 August 2007, finding preponderance of evidence in plaintiff-

appellee’s favor on the ground that it utterly failed to effect tender of payment or

adopted the remedy of consignation with the court or judicial authorities when plaintiff-

appellee refused without just cause to accept payment of rental due, citing Article 1256
of the New Civil Code and Section 5 (b) of Batas Pambansa Blg. 877. specifically

entitled “An Act Providing for the Stabilization and Regulation of Rentals of Certain

Residential Units and for Other Purposes”. Nonetheless, the court a quo, confronted

with the prevailing main issue of whether or not defendant-appellant’s continued

possession or occupation in the leased premises is legal, ruled in the affirmative.

On 31 October 2007, herein defendant-appellant filed a Notice of Appeal.

Eventually, a Notice of Appealed Case was received on 26 December 2007. Hence, the

present compliance.

ISSUES

With the foregoing, the issues posed for resolution by the Honorable Court is

whether or not the court a quo erred in applying Section 5 (b) of Batas Pambansa Blg.

877 and whether or not consignation is proper in the instant case.

DEFENDANT-APPELLEE’S POSITION

With due respect, the issues has to be resolved in the affirmative.

ARGUMENT/DISCUSSION.

THE COURT A QUO GRAVELY

ERRED IN BOTH APPLYING
SECTION 5 (B) OF BATAS PAMBANSA
BLG. 877 AND CONSIGNATIONAS
PROVIDED IN THE NEW CIVIL CODE.

To a clearer understanding of this case, it is apt to determine defendant-

appellant’s actual use of the leased premises. In its Answer of 15 September 2006,

paragraph 9 thereof, it was averred that –

“they entered a contract of lease with complainant, through Mr. Dennis

Tien, their managing director, for the use of a portion of Lot-327-B
situated at San Francisco St., Catbalogan, Samar, and indeed used it,
after introducing necessary improvement therein, as office of their
business undertaking under Century Marine Products, a firm duly existing
under and by virtue of the laws of the Republic of the Philippines, for a
period of five years from 20 February 2005 to 20 February 2010.” (Italics
mine for emphasis).

In its Position Paper, defendant-appellant was again firm in its assertion that the

leased premises were used as office space for shell meat processing firm and export

service. Verily, after defendant-appellant introduced material improvements thereon, the

premises was devoted for commercial purposes. Hence-

“X x x. Being the sole proprietress and to represent her in her

multifarious business activities, she designated Dennis Tien, another
Taiwan national, as Managing Director of the firm, and more particularly,
to look for a suitable office and at the same time a storage plant in the
Poblacion, Catbalogan, Samar. X x x. (pp 1 and 2)

The foregoing finds support to the 9 March 200 affidavit of Dennis Tien,

defendant-appellant’s Managing Director, thus:

 “2. As such, pursuant to the legitimate desire of said proprietress to
expand business in Samar, among other places, particularly in buying
shell meat for export to Taiwan, she directed me as she was then in
Cebu City to look for an office space in Catbalogan, Samar, sometime
in the early part of 2005;

Even the court a quo, in its assailed Decision, (page 16, paragraph 2) finds the

following:

Furthermore, and curiously, two (2) of the receipts, Exhibits “6” and
“8” carried the entry ‘office rent’. This annotation in the two receipts
just goes to show that contrary to the assertion of plaintiff the leased
premises was not purely for residential purpose but for office space.”

With the factual backdrop, aside from being undisputed by plaintiff-appellee, the

leased premises is actually, directly and exclusively used and devoted by defendant-

appellant for commercial purposes.

Reverting now to the issue, is Batas Pambansa Blg. 877 applicable in this

case? Again, contrary to the court a quo’s conclusion, defendant-appellant answers in

the negative. Verily, the court a quo’s reliance on the provision of this law is not well

taken.

Section 7 of Batas Pambansa Blg. 877 provides that:

“All residential units the total monthly rental of which does not
exceed four hundred eighty pesos (P4780.00) as of the effectivity date of
this Act shall be covered by this Act and shall continue to be so covered
notwithstanding that the monthly rental shall have already exceeded the
four hundred eighty- peso limit as a result of the application of Section
 one hereof or by virtue of a contract or agreement of lease perfected
before July 1, 1985: Provided, however, That this Act shall not be
applicable to new residential units constructed or offered for rent for the
time during its effectivity.

Batas Pambansa Blg. 877 does not, therefore, cover commercial lands and/or

buildings for commercial purposes (Rosales vs. Court of Appeals, 200 SCRA 300,310

[1991]) as in this case, nor new residential units constructed during the effectivity of the

Act or during the period from June 12, 1985 to December 31, 1997. It does not also

cover residential units where the total monthly rental as of June 12, 1985 to December

31, 1997. It does not also cover residential units where the total monthly rental as of

June 12, 1985 exceeds P480.00. The act covers only residential units defined by it.

For accuracy, Section 2 (b) of this Act reads in full as follows:

“(b) A Residential Unit – refers to an apartment, house and/or land

on which another’s dwelling is located used for residential purposes and
shall include not only buildings, parts or units thereof used solely as
dwelling places, except motels, motel rooms, hotel, hotel rooms, boarding
houses, dormitories, rooms and bedspaces offered for rent by their
owners, but also those used for home industries, retail stores or other
business purposes if the owner thereof and his family actually live therein
and used it principally for dwelling purpose: Provided, That in the case of
a retail store, home industry or business, the initial capitalization thereof
shall not exceed five thousand pesos (5,000.00): and Provided, further,
That in the operation of the store, home industry or business, the owner
thereof shall not require the services of any person other than the
members of his household. ”

In this case, it is clear that the building constructed by defendant-appellant on the

private lot of plaintiff-appellee is devoted purely to commercial purposes. Defendant-

appellant operates its business therein. Not once has defendant-appellant claimed to

use the premises also as a place of residence. This has been the finding even of the

court a quo. Verily, said law cannot be valid ground for judicial ejectment of defendant-

appellant.

Additionally, the court a quo concluded that Article 1256 of the Civil Code applies

when defendant-appellant failed to effect the oft-quoted consignation. It provides that “if

the creditor to whom tender of payment has been made refuses without just cause to

accept it, the debtor shall be released from responsibility by the consignation of the

thing or sum due.” Consequently, defendant-appellant has to be ejected from the

premises.

Again, it is believed that provision is inapplicable in the instant case. Apropos

again is the assertion that the subject of lease is not a residential house and lot but a

commercial or office space chiefly and principally used in the furtherance of defendant-

appellant’s business activities. Besides, the non-payment of rentals or failure to

consign such in court is not one of the stated grounds for the litigation or not a ground

for ejectment originally invoked in the suit. It is another ground for ejectment under the

law.

There is no denying that the that defendant-appellant have made substantial or

additional improvements on the lot, and considering the difficulty of looking for another

place to which defendant-appellant could transfer such improvement and fixtures, it

would seem that there exists just, fair and equitable grounds for granting the

termination of the lease contract only as it expires.

With due respect, therefore, the court a quo apparently erred in ordering the

defendant-appellant to vacate the premises; instead, it should have ordered the

payment of back rental with legal interest. Elemental sense of justice and fairness

dictates that it must be so.

PRAYE R

WHEREFORE, premises considered, it is respectfully prayed that the Decision of

the Municipal Trial Court (now Municipal Trial Court in Cities), Catbalogan City, be

REVERSED and SET ASIDE. A new judgment be therefore entered in favor of

defendant-appellant to pay back rentals with legal interest within fifteen (15) days from

notice.