PRICE, INC., PETITIONER, VS. HON. EMILIO RILLORAZA, JUDGE OF THE COURT OF FIRST INSTANCE OF RIZAL, PRESIDING THE BRANCH AT PASAY CITY, SEVERO ABELLERA, CLERK OF COURT AND SHERIF…

This is an original action for certiorari. Upon the filing of the
corresponding bond, a writ of preliminary injunction was issued by this Court,
soon after the institution of the case.

It appears that, on March 20, 1951, respondent Manuel S. Camus and petitioner
Price, Inc. – hereafter referred to as Camus and price, respectively – entered
into a contract, whereby the former leased to the latter, for a period of ten
(10) years, from April 1, 1951, the property described in the deed of lease,
Annes A, the pertinent parts of which provide:

“1. That the said party of the first part Lessor, hereby grants, demise and
let unto the said party of the second part Lessee, for lawful business purposes,
all that certain strong stone material building with the lot and parcel of land,
with an area of 1,700 square meters, situated, lying and being at No. 60 C.
Arellano Street, Malabon, Rizal, covered as Lots No. 15 and No. 16, Block No. 1,
Tambobong Estate, Psd. – 11759 of the Rural Progress Administration, to have and
to hold the same for the full term of ten (10) years from April 1st, 1951 to
March 31, 1960, inclusive, at the monthly rental of P300.00 Philippine Currency,
for the above-mentioned building, to be paid without the necessity of express
demand therefor on the.1st five (5) days of each ensuing month at the
residence of the party of the first part Lessor at Malabon, Rizal; and also at
the monthly rental of One Hundred Pesos (P100.00) Philippine Currency, for the
use of the leased premises, payable beginning when the construction of the
factory is already finished, and likewise payable at the time and place
aforementioned;

“2. That the party of the second part Lessee, shall have or cause to erect,
build or construct a Factory Building and Warehouse of strong materials
appropriate to or in furtherance of the business of the party of the second
part Lessee, on the said lot the plan as to the form and size and other
specifications thereof being subject to the joint approval of both parties
concerned, at the expense of the party of the second part lessee; and that the
buildings thereon constructed shall be insured with a competent Insurance
Company by the party of the second part Lessee, in an amount equal to the
insurable interest of the party of the first part Lessor, in the sum of at
least Fifty Thousand Pesos (P50,000.00) Philippine Currency, for himself, his
heirs and/or administrators as his , beneficiary; and that the insured
buildings (Factory Building and Warehouse) hereinbefore mentioned shall
authmatically become, without cost, the property of the party of the first part
Lessor, immediately upon the termination of this contract;

“3. That the party of the second part Lessee agrees and covenants that, in
case the aforementioned Factory Building and Warehouse are destroyed by fire
during the life-time of this lease, the proceeds or money to be paid by and to
be collected from the insurance company shall be utilized in erecting a new
set of Factory Building and Warehouse, exactly as those destroyed; and in
case the money to be paid by the insurance company will not be sufficient for
the purpose, the party of the second part Lessee shall put in additional
funds with which to build the said now set of Factory Building and Warehouse,
and no extension of the life-time of this lease as a consequence thereby is
contemplated;

X X X X

“5. That the party of the first part Lessor, likewise covenants and agrees to
cause or make the necessary filling, at his sole expense, within a
year from the signing of this contract, the vacant portion of the lot along
the river with an area of about 500 square meters to increase its elevation
and enable the party of the second part Lessee, to facilitate or make use of the
whole lot; as well as to construct, build or cause to erect the necessary
concrete stone walls provided with barbed wire on top thereof and all
expenses incurred or to be incurred incident to the filling as well as to the
construction, building and erection of the stone walls, one (1) meter high, with
barbed wire to be borne solely by the party of the first part Lessor.” (Annex A,
pp. 1-3) (Underscoring supplied.)

On January 19, 1954, Price instituted Civil Case No, 2582 of the Court of
First Instance of Rizal, against Camus, for specific performance, damages, and
extension of the period of said lease, upon the ground of non-compliance with
the provisions of the above-quoted paragraph 5 of Annex A. About three (3) days
later, or on or about January 22, l954, Camus, in turn, commenced Civil Case No.
1159 of the Justice of the Peace Court of Malabon, Rizal, against Price, for
forcible entry and detainer, upon the ground of non-payment of the rentals from
February 16, 1953. In his answer therein, Price denied the main allegations of
the complaint and averred, by way of special defenses, the aforesaid breach of
contract by Camus, and

“R. That as a result of all the foregoing facts, showing that plaintiff
refuses to comply with the obligations imposed upon him by the contract of
lease, herein defendant on January 20, 1954 filed a civil action in the Court of
First Instance of Rizal, where it is docketed as Civil Case No. 2582, against
the herein plaintiff for specific performance and damages. This case is now
pending in the said Court of First Instance.

“S. That actually the matter litigated in this present suit is included
among the issues raised in Civil Case No. 2582, CFI-Rizal, the essence of which
calls for an interpretation of a contract with reciprocal obligation.

“T. That this Honorable Court with limited jurisdiction is not competent to
decide on issue properly raised and included in a civil case already pending
in the Court of First Instance of Rizal, and which court is that of
competent jurisdiction.” (Annex D, p. 5) (Underscoring
supplied.)

In due course, the justice of the peace court rendered, in said case No.
1159, a decision – dated February 10, 1954, copy of which, according to Price,
was received on March 2, 1954 – in favor of Camus and against Price,

“x x x condemning the sail defendant to pay to the plaintiff the sum of FOUR
THOUSAND SIX HUNDRED (P4,600.00), with interest thereon at the legal rate from
the date of the filing of the complaint, for arrears in rentals from February
16, 1953, to January 31, 1954, and the sum of FOUR HUNDRED PESOS (P400.00) a
month thereafter until the premises are vacated; to pay to the plaintiff the sum
of ONE THOUSAND PESOS (P1,000.00) as liquidated damages acoording to the terms
of the contract Annex A’; to pay to the plaintiff the sum of FIVE HUNDRED PESOS
(P500.00) as attorney’s fees also according to the terms of the contract Annex
‘A’, and to pay the costs of the suit. Defendant is also hereby condemned to
vacate the premises mentioned in the complaint and to turn over the possession
thereof to the plaintiff.” (Annex E.)

Price duly appealed from this decision, seasonably paying the corresponding
docket fees and filing the requisite notice of appeal and cash bond, as well as
a surety bond for the agregate sum of P6,900, covering:

“a. P4,600.00 for alleged rentals from February 16, 1953 to January 31,
1954;

“b. P1,000.00 for alleged liquidated damages;

“c. P500.00 for allege 1 attorney’s fee;

“d, P400.00 for rental for February, 1954;

“e. P400.00 for rental for March, 1954.” (Annex G)

Instead of paying to Camus, or depositing in court, the amount of the rentals
for the succeeding months, at 400 each, Price filed, on or about April 8, 1954,
a bond for P1,200 “to answer for the rentals for the month (of April, May and
June, 1954, inclusive, in the event the plaintiff secures a final judgment in
his favor,” (Annex H.) Hence, on May 29, 1954, Camus filed, with the Court of
First Instance of Rizal – before which the ejectment case was then pending on
appeal, as Civil Case No. 2650 of said court – a petition for the execution of
the decision of the justice of the peace court. Price objected thereto upon the
ground

“First,that defendant’s bond posted since April 6, 1954 in the amount
of P1,200.00 covering rentals for April, May and June, 1954 is sufficient
compliance with the provisions of Rule 72, Section 8, of the Rules of Court;
second, that plaintiff has waived the right to an immediate execution
based on the claim that the rentals for April and May, 1954 have not been paid
or deposited, because he has not objected to the bond posted and offered to him
since April 8, 1954; and third, that even supposing, without admitting,
that the bond is not a compliance with the payment provided for in Rule 72,
Section 8, still the error, if any, is a case of innocent mistake and excusable
negligence, which, under the jurisprudence citied above, make the delay in
payment under the circumstances not a ground for immediate execution, and that
under such circumstances defendant should be afforded an opportunity to make the
payment or deposit in cash if the court so desires.” (Annex I, pp.
6-7.)

and prayed:

“That the plaintiff’s petition should be denied; and if this Honorable Court
should rule that the bond posted is not sufficient compliance with the law, the
defendant should be given a period of 3 days from notice within which to make
the deposit in cash in lieu of the posted bond.” (Annex I, p.
7.)

Acting upon said petition of May 29, 1954, the Court of first Instance,
presided over by Hon. Emilio Rilloraza, Judge, issued, said Case No, 2650, an
order (Annex J), dated July 24, 1954 – copy of which is said to have been
received by Price on September 10, 1954 – directing the execution of the
aforementioned decision of the justice of the peace court. On September 11,
1954, the Clerk of Court of Rizal issued the writ of execution (Annex K), which
said officer, as ex-officio Provincial Sheriff, threatened to enforce.
Hence, Price instituted the present action for certiorari, with the prayer.

“That the order of respondent judge, directing the immediate execution of the
judgment of the Justice of the Peace Court of Malabon, Rizal, be annulled, the
same having been rendered with grave abuse of discretion and without
jurisdiction and in wanton disregard of the facts and circumstances of the case,
and that ponding these proceedings, a writ of preliminary injunction be issued
against the respondents restraining them from carrying out the order of the
respondent judge, Annex ‘J’, as well as the writ of execution issued pursuant
thereto on September 11, 1954, Annex ‘K’, with costs against
respondents.”

As already adverted to, the writ of preliminary injunction prayed for was
issued upon the filing of a bond for P1,000.00.

In their answer, respondents admit some of the allegations of the petition
and deny other allegations thereof, Among other things, they, moreover, allege
that the obligations of Camus, under the contract of lease, are independent of
those of Price; that the filling and construction provided in said contract,
have “already been totally” completed; and that the order of July 24, 1954, and
the writ of execution were duly issued, for Price had failed, either to pay, or
to deposit, the amount of the rentals for April, May and June, 1954.

At the outset, it should be noted that the very pictures submitted by
respondents, as Annexes 9 and 10 to their answer, dated October 11, 1954, show
that the stone wall constructed by Camus is of “adobe“, and has no barbed
wire fence, whereas the contract of lease provides for “concrete stone
walls x x with barbed wire.” Furtheremore, although the portion of the
leased property reproduced in Annex 9 appears to have been filled, there is
evidence (which has not been contradicted) to the effect that the elevation of
said portion is lower by 40 centimeters than the average elevation of said
property (see Annex L) . Moreover, the pictures Annexes M, N and O, taken on
February 16, 1954, reveal that said portion was then unfilled and even under
water, Anyhow, it is not even claimed that said filling and construction had
been completed within the year, which expired on March 20, 1952, stipulated in
the contract of lease. In fact, the answer filed by respondents before this
Court impliedly admits the failure of Camus to make the filling and construction
within said period. This admission is even clearer in his answer in Case No.
2532, dated February 4, 1954, for he alleged in said pleading:

“3. That sometime in 1951, after signing the aforesaid Contract of
Lease, an agreement was entered into by and between plaintiff and defendant
that the filling up of the aforesaid portion of the said lot would be done as
soon as the dredger of the Bureau of Public Works would be taken to Malabon
River to fill up the market site of Malabon, Rizal, in which event the said
dredger would then be contracted and utilized by defendant to do the filling up
of the said portion, but the said dredger was not as yet been brought to Malabon
River up to the present;

“4. That defendant has begun filling up the said portion of the
promises in question with adobe stones since May, 1951, and as matter of
fact, the base of the stone wall along the Malabon River of the said lot has
already been erected and finished since October, 1951, in order to contain the
fillings to be made by the aforementioned dredger, and defendant has already
spent for this purpose more than P1,200, and for this reason, plaintiff could
not now complain, and is now in estoppel from demanding the completion of the
filling up of the portion of the said premises, and the construction of the
stone wall with barbed wire on top, in accordance with the said Contract of
Lease.” (annex 3, pars. 3 and 4) (underscoring supplied.)

Incidentally, this paragraph (4) tends to weaken, or, even, refute, the
allegations of paragraph (3), for, if, as therein stated, it had been agreed –
although, it would seem, orally – after the execution of the contract of
lease,

“that the filling x x x would be done as soon as the dredger of the Bureau of
Public Work would be taken to Malabon river to fill up the market site of
Malabon, Rizal, in which event the said dredger would then be contracted ana
utillized by the defendant (Camus) to do the filling xxx but the said dredger
has not as yet been brought to Malabon river up to tho present
time”

then there would seem to be no reason for Camus to begin the filling “since
May, 1951 ” as averred in paragraph 4 of his aforementioned answer in Case No.
2582,

At any rate, there is prima facie, if not strong, evidence that Camus
had not complied with some of his obligations under the contract of lease, and
that this breach of contract dates back to March 20, 1952, or about eleven (11)
months prior to the alleged default of Price in the payment of rentals
(or from February 16, 1953). In this connection, the last paragraph of Article
1169 of the Civil Code of the Philippines provides:

“In reciprocal obligation, neither party incurs in delay if the other does
not comply or is not ready to comply in a proper manner with what is incumbent
upon him. From the moment one of the parties fulfills his obligation, delay by
the other begins.”

It should be noted, also, that respondent Judge, as well as the Justice of
the Peace of Malabon, were aware of the pendency of Civil Case No. 2582 of the
Court of First Instance of Rizal, for specific performance of the contract of
lease. Said action was explicitly pleaded by Price, in the answer filed with the
justice of the peace court, which answer formed part of the record before
respondent Judge, when he issued the order complained, of. He knew, or must have
known, therefore, that Camus was charged with non-performance of his (Camus’)
obligations as lessor; that this was, and is, the basis of the action and the
main issue in Case No. 2582 of the court of first instance, for specific
performance of said obligations; that the court of first instance has
jurisdiction to decide said issue and action; that the jurisdiction of said
court of first instance is, either exclusive, or concurrent with the justice of
the peace court; that, if exclusive, the justice of the peace court would not be
competent to pass upon said issue; that, neither would the latter court have
authority to determine said issue, if it had concurrent jurisdiction with the
court of first instance, this being the court which first assumed authority over
said case, for Case No. 2582 was filed therein several days before the
ejectment case in the justice of the peace court; that the determination of said
issue in Case No. 2582 is essential to the settlement of the dispute in Case No.
1159; that.accordingly, the issue in Case No. 2582 constitutes a prejudicial
question, as regards the subject matter of the controversy in Case No. 1159; and
that, consequently, the justice of the peace court should have, at least,
deferred the hearing and determination of Case No. 1159, until after the
rendition of judgment in Case No. 2582.

Indeed, the situation confronting the court may be likened to that which
would obtain if a person instituted a detainer case to secure possession of a
land – to which he claims to be entitle as owner thereof – held, under claim of
title in fee simple, by another who has already sued the former in order to
quiet title. Since the right of possession asserted by the plaintiff in the
detainer case depends upon his alleged dominion, which is controverted in the
action to quiet title, the justice of the peace court must dismiss said detainer
case for want of jurisdiction to settle the question ownership, upon which
plaintiff’s claim is based. (Torres v. Peña, 44 O.G. 2699; Peñalosa v. Garcia,
44 O.G. 2709; Cruz v. Garcia, 45 O.G. 227; Canaynay v. Sarmiento, 45 O.G, 252).
Similarly, the forcible entry and detainer case instituted by Camus, is
predicated upon the alleged default of Price in the paynent of rentals. Pursuant
to Article 1169 of our Civil Code, Price would not be in default, even in case
of non-payment of the rentals, if Camus had not fulfilled his obligations as a
lessor, as intended by Price in the action for specific performance already
commenced by him. Price, therefore, cannot be guilty of unlawful detainer,
unless Camus is exonerated, in the action for specific performance, from the
charge of breach of the contract of lease. By analogy with the former
illustration, it could be argued, therefore, that the justice of the peace court
cannot pass upon the right of possession invoked by Camus in the ejectment case,
for the same depends upon whether Camus had complied or not with his part of the
contract of lease, which, in turn, is the issue in Case No, 2582, In other
words, respondent Judge had, before him sufficient facts to doubt the propriety,
if not the validity, of the decision of the justice of the peace court.

Again, Price has established and is operating on the leased premises a candy
factory, which would have to be closed, with the corresponding injury to the
business of Price, if said decision were executed. Moreover, Price would then be
divested of the possession of a building, which must be worth not less than
P50,000, it has constructed on the leased premises, in accordance with the
contract of lease. Pursuant thereto, Price is the owner of said building for the
duration of the lease, Hence, the deprivation of said possession would violate
the dominical rights of Price, which include the enjoyment, and consequently,
the possession and use of said building.

It is true that, pursuant to paragraph 14 of the contract of lease,

“x x x in case of a breach of any of the covenants on the part of the party
of the second part Lessee, herein contained, the party of the first part Lessor,
may, while the default shall continue, and notwithstanding any waiver of any
prior breach of conditions, without notice or demand, enter upon the premises
and thereby terminate this lease and may thereupon expel and remove the party of
the second part Lessee.” (Underscoring supplied.)

As a corollary thereof, title to said building would pass from Price to Camus
upon the termination of the lease. However, said right of Camus to terminate the
lease could be exercised only “while the default (of Price) shall continue,” and
Price is not in default as long as – in the words of Article 1169 of our Civil
Code – Camus “does not comply or is not ready to comply in a proper manner with
what is incumbent upon him” and there is prima facie proof of breach of contract
by Camus, Anyhow, this is, as above stated, the issue in Case No, 2582, wherein
it must be decided, together with all the issues incidental thereto, or
necessarily included therein, such as the termination of the lease, the
extinction of the title of Price over said building and its acquisition by Camus
(Rule 39, Section 45, Rules of Court), which are, clearly, beyond the
jurisdiction of the justice of the peace court. If these questions were
eventually decided, in Case No. 2582, in favor of Price, Case No, 1159 and the
decision of the justice of the peace court in favor of Camus, would become
untenable. Apart from this, Price might seek to recover damages for the injury
occasioned by his ejectment, and Camus might be unable to indemnify said
damages. In short, the execution of the decision of the jusitce of the peace
court would ruin the business of Price, deprive it of the possession of building
probably worth not less than P50,000, which is its property, until otherwise
declared in Case No. 2582 – and this has not been done as yet – and may cause
irreparable injury to Price,

Upon the other hand, although the rentals for April, May and June, 1954, have
not been paid or deposited in cash, a bond has been given to guarantee its
payment. Besides, Price has offered to make said cash deposit, if authorized by
the court to do so. It may not be a^iss to add that Price, is, to all
appearance, more than sufficiently solvent to pay the sum of P1,200 represented
by said rentals, and must have been paying or depositing the amount of the
rentals for the months following June, 1954. Hence, Camus would suffer no
possible damage if Price were now allowed to deposit in cash said sum of
P1,200.

In conclusion, in issuing the order complained of as well as the writ of
execution, despite the strong equities in favor of Price and the dubious
legality or prop of the decision of the justice of the peace court, respondent
Judge has committed a grave abuse of discretion. Wherefore, (1) the writ prayed
for is hereby granted, (2) the order of respondent Judge, dated July 24, 1954,
and said writ of execution, are set aside and annulled, (3) the writ of
preliminary injunction issued herein is hereby made permanent and (4) petitioner
Price, Inc. is given three (3) days, from entry of judgment in this case, within
which to deposit in court the amount of the rentals for April. May and June,
1954. Respondent Manuel S. Camus shall pay the costs.

IT IS SO ORDERED.

Pablo, Bengzon, Padilla, Montemayor, Reyes, Bautista Angelo,
Labrador, and Reyes, J.B.L., JJ., concur.