G.R. No. L-24680. October 07, 1968
JESUSA VDA. DE MURGA, PLAINTIFF-APPELLEE, VS. JUANITO CHAN, DEFENDANT-APPELLANT.
ANGELES, J.:
In this appeal, two
issues involving questions of law are posed for resolution: First, whether or not the allegations in the
complaint constitute a cause of action for unlawful detainer,
and confer jurisdiction over the case to the municipal court (now city court)
of Zamboanga City, under the provisions of Rule 70 of the Rules of Court and decisions
interpreting the same, when particularly considered in the light of the
contexture of the pertinent letter of demand to vacate the leased premises (Annex J of the
Complaint), couched in the following wise:
“Please be advised further that we reiterate our demand made
to you in our registered letter dated February 4, 1959 (to vacate the leased
premises) which was received by you on the 10th instant, unless you pay the
amount of Six Hundred pesos, (P600.00) or Seven hundred pesos (P700.00) as new
rental per our letter of January 19,
1959, before the expiration of the 15-day period granted you for vacating the
same.”
and, Second,
whether or not the lessor and the lessee had agreed
upon an automatic renewal of the lease of the premises, under the
stipulation in clause “7” of the corresponding contract of lease,
containing the following agreement:
“7. – That upon the termination of the term of Ten (10) years
above expressed, the said Jesusa Vda.
de Murga shall have the
option to purchase the building or buildings belonging to and constructed by
the said Juanito Chan, and the price of said building
or buildings shall be determined by three commissioners, two of whom shall be
appointed by each of the parties, and the remainder commissioner shall be appointed
by both. However, in the event that the
said Jesusa Vda.
de Murga shall not exercise
the right granted her for any reason or cause, this contract of lease shall be automatically
renewed but the period for
said renewal shall, however, be fixed and adjusted again by the parties. It is agreed further that in case of said
renewal, the rental shall also be
adjusted by the parties depending on the business condition which shall then at that time prevail.” (Exhibit A)
Jesusa Vda. de Murga was the owner of two
parcels of land in the City of Zamboanga,
designated as lots 36 and 38 of the cadastral plan of the place, and covered by Transfer Certificate of Title Nos.
3237 and 3238, respectively.
On January
31, 1949, a contract
of lease over said two lots was entered into by and between Jesusa
Vda. de Murga as lessor, and Juanito Chan as lessee, the basic
terms of which pertinent to the present case are:
The period of the lease
was ten(10) years from January 31, 1949; the lessee to
pay a
monthly rent of P500.00 within
the first ten days of every month; with the consent of the lessor,
the lessee may introduce improvements on the land; and Clause ‘7’ quoted hereinabove. (Exhibit A.)
Upon taking possession of
the leased premises, with the consent of the lessor,
the lessee introduced improvements on the land consisting of buildings of the
total costs of P70,000.00. It is not disputed that the lessee paid in full the monthly rent during
the ten-year period of the lease.
As early as July 23, 1958, before the expiration of the ten-year
period of the lease, there had been intercourse of communications between the lessor and the lessee for the renewal of the lease, but the
parties failed to arrive at an Agreement; hence, this action by the lessor against the lessee.
Thus, on July 23, 1958,
the lessor informed the lessee of her willingness to
renew the lease for five years at a monthly rent of P700.00. (Exhibit B.) In his reply the lessee said:
“x
x x Much as I am
willing to consider the suggested increase of rental, however, I would like to
plead with you that due to very poor business at present, I may not be
able to consider your indicated increase.” (Exhibit C.)
On August 1, 1958,
the lessor advised the lessee that:
“Beginning February 1,
1959, x x x x
the rental of my lots x x x x will be P700.00.” (Exhibit.
D.)
On January
18, 1959, the lessee
advised the lessor that she (lessor)
should purchase the buildings constructed on the land in accordance with the
stipulation in the contract of lease, and –
“x
x x In case you do not agree with the
purchase of the aforesaid buildings, I am willing to continue occupying the
land and execute a new contract of lease, but
I am appealing to you to take consideration the prevailing business conditions
by reducing the monthly rental to P400.00, x x x.” (Exhibit
L.)
On January
19, 1959, the lessor replied that –
“x
x x she rejects the
option to purchase the buildings, x x x
and her present last offer is: (a) Six
hundred pesos (P600.00) rentals payable within the first fifteen days of every
month, without contract; or (b) Seven hundred pesos (P700.00) rentals payable
within the first fifteen days of every month,
one year advanced rental, with a five-year
contract.” (Exhibit F.)
On January 20, 1959,
the lessor informed the lessee that the conditions
stated in the latter’s letter of January
18, 1959, were not acceptable to her. (Exhibit G.)
On January
21, 1959, the lessee advised the lessor that he
(lessee) cannot accept the conditions stated in her (lessor’s)
letters of January 19 and 20, 1959 –
“x x x y, insisto
que Vd. compre mis casas enclavadas en los lotes objeto de arrendamiento. Y en caso de su negativa seguire
ocupando el solar bajo el pago de un alquiler
mensual de Quinientos pesos
(P500.00) debido al negocio
reinante en estos dias, tal como esta dispuesto en el contrato de arrendamiento firmado por Vd. y yo
el dia 31 de Enero de 1949.” (Exhibit
H.)
On February
4, 1959, the lessor made demand on the lessee to vacate the premises –
“x x x
for the reason that that the lease contract had expired on January 31, 1959, x x x and the lessor
had waived the right to exercise the option granted her under paragraph ‘7′ of said contract, x x
x.” (Exhibit I.)
On February
16, 1959, the lessee
sent his check for P500.00 to the lessor in payment
of the monthly rental corresponding to the month of February, 1959. (See Exhibit J.)
On February 19, 1959, the lessor
returned to the lessee the check which the latter had sent to the former,
stating further in the letter that she was demanding that the leased premises
be vacated, if he (lessor) would not agree to pay the
new rental of P600.00 or P700.00 a month beginning February 1, 1959, as
embodied in the letter, Exhibit J, hereinabove quoted.
Disregarding the written demand of the lessor,
dated February 19, 1959, Exhibit J, the lessee chose to remain in the
possession of the leased premises and insisted that the contract of lease
stipulated an automatic renewal of the lease, and conformably thereto, he has
a right to continue occupying the premises; and as token of his decision, he
sent to the lessor his check for P500.00 in payment
of the monthly rent corresponding to the month of February 1959. The lessor was
undoubtedly not satisfied with the tendered amount of P500.00, because she had
demanded P600.00 or P700.00, as new monthly rent as a condition for the renewal of the
lease. And without any further definite
demand on the lessee to vacate the premises filed, on March 10, 1959, a
complaint of unlawful detainer in the municipal court
of Zamboanga City against the lessee, Juanito Chan, to eject the latter from the leased
premises. The facts alleged in the
complaint as cause of action, consisted in reproducing and reiterating the
substance of the correspondence exchanged between lessor
and lessee, as narrated above, and claiming that the possession of the lessee
of the premises had become illegal by his failure and refusal to pay the
increased new rental. For relief, the
plaintiff prayed that the defendant be ordered to vacate the premises, and
“TO PAY THE NEW RENTS DEMANDED OF P600.00 or P700.00 FROM FEBRUARY 1, 1959 MONTHLY AS THE CASE
MAY BE.” Attached to the complaint, as annexes thereto,
were copies of the letters exchanged between the lessor
and the lessee, Exhibits B to J.
In his answer (as
amended), the defendant admitting the genuineness and authenticity of the
letters annexed to the complaint, but traversing some of the allegations
therein, raised the defenses of lack of jurisdiction of the court over the
case, and lack of cause of action for unlawful detainer.
After a trial, decision was rendered ordering the defendant to vacate
the premises, to pay the plaintiff the sum of P600.00 as monthly rent from February 1, 1959, and P500.00 as
attorney’s fees.
The defendant appealed from the decision to the Court of First
Instance of Zamboanga City. Before this Court, the defendant again raised
the special defenses of lack of jurisdiction of the municipal court and lack
of cause of action for unlawful detainer. Ruling on the issue of lack of jurisdiction,
the court said:
“With reference to the contention of defendant that the
municipal court had no jurisdiction to try this case because the interpretation,
application and enforcement of the terms of the Lease Agreement is within the competence of a court higher than that of the
municipal court, deserves hardly any discussion. Suffice it to say that the jurisdiction of
the municipal court is grounded on Section 88 of the Judiciary Act of
1948.”
After a trial, the Court of First Instance rendered judgment
ordering the defendant to vacate the premises,
to pay the plaintiff the sum of
P1,200.00 from February 1, 1959, as monthly rental of the land, and P2,000.00
as attorney’s fees.
From the foregoing
decision, the defendant interposed a direct appeal to this Court. Therefore, only questions of law may be
considered in this appeal.
Among the four errors assigned by the appellant in his brief, the
first two pose the issue of lack of jurisdiction of the municipal court and of
the lack of cause of action for
unlawful detainer; the remaining errors delving on
questions of fact which, by reason of the nature of the appeal are, therefore, denied admitted and may not be
reviewed in this appeal.
In relation to the issue of lack of jurisdiction of the municipal
court over the case, it is to be noted that, after the lessor
and the lessee had failed to agree on the renewal of the lease which terminated
on January 31, 1959, the lessor, on February
19, 1959, sent the demand letter hereinabove quoted, Exhibit
J. It was, then, as it is now, the
contention of the lessee that
such demand is not that kind of demand contemplated in the Rules of Court as
complying with the jurisdictional requirement – that demand to vacate is
indispensable in order to determine
whether the tenant’s possession has become illegal. On this matter, the
rulings in the following cases are pertinent and applicable:
“The notice giving lessee the alternative either to pay the
increased rental
or otherwise to vacate the land is not the demand contemplated by the Rules
of Court in unlawful detainer cases. When after such notice,
the lessee elects to stay, he thereby merely assumes the new rental and cannot
be ejected until he defaults in said obligation and necessary demand is first made.” (Manotok vs. Guinto, L-9540, April 30, 1957.)
“The lessor may, under Article 1569
of the Civil Code, judicially
dispossess the lessee for default in the payment of the price agreed upon. But where
such default is based on the fact that the rent sought to be collected is not
the agreed upon, an action for ejectment cannot lie.”
(Belmonte vs. Martin, 42 Of.
Gaz. No. 10,
2146.)
In the case at
bar, it clearly appears from the demand letter of February 19, 1959, that the obligation to vacate
the leased premises would be dependent on the failure of the lessee to agree to
the new rent demanded by the lessor. As the lessee, however, was in the physical
possession of the land by virtue of a prior contract of lease, and the demand was in the alternative imposing a new
rental, even without taking into
account the efficacy of the stipulation for an automatic renewal of the
lease, which shall be discussed hereafter, in the light of the ruling in Belmonte vs. Martin, supra, without any subsequent definite
demand to vacate the premises, subject to no condition, the lessee did not
incur in default which would give rise to a right on the part of the lessor to bring an action of unlawful detainer.
Delving on the second special defense to wit, that the
allegations in the complaint do not constitute a cause of action of unlawful detainer, it is the
contention of the lessee-appellant that clause ‘7’ of the contract of lease,
quoted hereinabove, meant an express grant to the lessee to renew the lease at
his option, contrary to the claim of the lessor-appellee
that there must be a prior mutual agreement of the parties. As we read clause ‘7’, We find that it envisioned the happening
of two eventualities at the expiration
of the lease on January 31, 1959 – either the lessor
may purchase the improvements constructed by the lessee on the land, or in case
the lessor fails, for any cause or reason, to exercise
the option to buy, the lease shall be deemed automatically renewed. The evidence has established that the lessor had refused to buy the buildings on the land. The statement in said clause ‘7’ that in case of renewal the duration
of the lease and the new rental to be paid shall be adjusted by the parties, is of no moment in the solution of the
issue, whether or not the facts alleged in the complaint constitute a cause of
action of unlawful detainer. The pleadings of the parties,
and the annexes thereto, clearly show
that the jugular vein of the controversy hinges on the correct interpretation of clause ‘7’ of the contract of lease, a
matter outside the jurisdiction of the municipal court. The lessor-appellee
maintains that lease
had terminated on January 31, 1959, renewable only upon a new agreement
of the parties; on the other hand, the lessee-appellant contends that, inasmuch
as the controversy hinges on the interpretation of clause ‘7’ of the contract, that is, whether
or not said clause contemplated
an automatic renewal of the lease, the action was not for unlawful detainer but one not capable of pecuniary estimation and, therefore, beyond the competence of
the municipal court.
The contention of the lessee-appellant must be sustained.
In Cruz vs. Alberto, 39 Phil. 991, the contract of lease had the
following provision:
“That the term of this contract of lease shall be six years
from the date of the execution, and extendible for another six years agreed
upon by both parties.”
It was contended by the lessor that the lease cannot be extended
except upon mutual agreement. Ruling on
the contention, the Supreme Court said:
“We are of the
opinion that the trial judge was entirely correct in his interpretation of the
contracts in question; and though it must be admitted that this interpretation
renders the words ‘agreed upon by both parties’ superfluous, yet this does not
involve any strain upon the meaning of the entire passage. If the interpretation which the appellant
would have us adopt be true, the entire clause relative to the extension of the
term would he superfluous, for if the extension is only to be effective upon a new agreement of
the parties to be made at the expiration of the original term, why should
anything at all be said about an extension?
Parties who are free to make one contract of lease are certainly free to
make a new one when the old has expired without being reminded of their faculty
to do so by the insertion of a clause of this kind in the first lease. This
would not only be superfluous but nonsensical.
The clause relative to the extension of the lease should, if possible,
be so interpreted as to give it some force.
“As we interpret the contracts before us, the parties meant
to express the fact that they had already agreed that there might be an
extension of the lease and had agreed
upon its duration, thus giving the defendant the right of election to take for
a second term or to quit upon the expiration of the original term. The clause in question has the same meaning
as if the words “agreed upon by both parties” had been omitted and
the passage had closed with a period after the word ‘years’ in the first contract and after “extension” in the third
contract.
“It has been held by this court that the word ‘extendible’
standing without qualification in a contract of lease,
means that the term of the lease may be extended and is equivalent to a promise
to extend, made by the lessor to the lessee, and, as
unilateral stipulation, obliges the promisor to
fulfill his promise. (Legarda Koh vs. Ongsiako, 36 Phil. Rep.
185). Such a stipulation is supported by the
consideration which is at the basis of the contract of lease (16 R.C.L. pp.
883, 884) and obviously involves a mutuality of benefit, or reciprocity between the parties, notwithstanding the right
of election is conceded solely to the lessee.
As a general rule, in construing provisions of this character, the
tenant is favored, where there is any uncertainty, and not the landlord, upon
the principle that a grant should be taken most strongly against the grantor. (15 R.C.L. p. 884 24 Cyc. 915.)”
In the case of Legarda Koh vs. Ongsiaco, 36 Phil. 189-190, the contract of lease had this
provision:
“The term of the said contract shall be for one year, counting
from the 1st of December of the present year (1963) which term shall be
extendible at the will of both parties.”
Said the Supreme Court:
“According to Article 1091 of the Civil Code, obligations
arising from contracts have legal force between the contracting parties and
must be fulfilled in accordance with their stipulations. Therefore if the defendant bound himself to
lease his properties for the period of one year, which term should be
extendible, it is evident and strictly in accord with justice that the plaintiff-lessee has a right,
the termination of the first period of one year, to have the said contract of
lease renewed in fulfillment of the stipulated extension of the term of
the lease; otherwise, the clause contained in the document Exhibit 1, that the
lease at its termination would be extendible, would be worthless.”
“The defendant-appellant is wrong in his contention that the
renewal or extension of the contract depended solely upon himself,
notwithstanding the stipulations contained in said contract, inasmuch as the
renewal and continuation of the lease could not be left wholly to the
plaintiff’s free will, without counting on the defendant’s consent – a consent
expressly granted in the promise that the term would be extended, which term,
although its duration was not fixed, should be understood to be for another
year, a period equal to and not greater than the term of the lease.
“When a contract of lease provides that the term thereof is
extendible, the agreement is understood as being in favor of the lessee, and
the latter is authorized to renew the contract and to continue to occupy the
leased property, after notifying the lessor to that
effect. The lessor
can withdraw from the said contract only after having fulfilled his promise to
grant the extension of time stipulated therein, unless the lessee has failed to
comply with or has violated the conditions of the contract. It is not necessary that the extension be
expressly conceded by the lessor because he consented
thereto in the original contract.”
Upon the foregoing considerations, We
declare that the municipal court (now city court) of Zamboanga City
had no jurisdiction over the case; therefore, the appealed decision is set
aside and reversed, with costs against the plaintiff-appellee.
Concepcion, C.J., Reyes, J.B.L., Makalintal, Sanchez, Ruiz Castro, Fernando, and Capistrano, JJ., concur.
Dizon, J., did not take part.
Zaldivar,
J., on official leave of absence.