EMILIANO T. RAMIREZ, PLAINTIFF-APPELLEE, VS. JOSE SY CHIT, DEFENDANT-APPELLANT.

Ramirez versus Sy Chit

The Case

This is an appeal by Jose Sy Chit, the defendant, from the decision of the Court of First Instance of Manila affirming in full the judgment of the Municipal Court of Manila in an action for ejectment brought by Emiliano T. Ramirez, the owner of a parcel of land on Claro M. Recto Avenue in the City of Manila. The case matters because it settles two things every bar candidate must know: that the power of the court to extend the period of a lease under Article 1687 of the Civil Code is exercised as a mere incident of the ejectment action, not as a separate action; and that the damages recoverable in an unlawful detainer case are measured by the reasonable value of the use and occupation of the property, not by a penal sum fixed for each day of delay.

Procedural History

Ramirez commenced an action for ejectment in the Municipal Court of Manila. After trial, that court rendered judgment fixing June 30, 1963 as the date when the lease would terminate, ordering Sy Chit to pay the accruing rentals, to vacate the premises after that date, and to pay 200 pesos as attorney's fees plus the costs, and further holding him liable for 25 pesos a day for every day of delay as damages in addition to the agreed current rental. Sy Chit appealed to the Court of First Instance of Manila. During the pendency of that appeal, Ramirez moved for execution, alleging that Sy Chit had failed to pay the rents for April and May 1963. The trial court granted the motion on June 10, 1963. Sy Chit moved for reconsideration, and the parties submitted the case for decision on a stipulation of facts. On August 12, 1963 the trial court rendered judgment affirming the appealed decision in its entirety and ordering its immediate execution. Sy Chit then appealed to the Supreme Court.

Facts

Ramirez owned a parcel of land on Claro M. Recto Avenue in Manila. A portion of it, with an area of about 188.30 square meters, had been leased to Sy Chit since 1946 at a monthly rental of 230 pesos, payable in advance within the first five days of every month. The lease agreement was never reduced to writing. Sy Chit constructed a building on the premises with an assessed value of 6,000 pesos, and continued introducing other improvements although he was not personally occupying the property.

In two written notices, one dated June 15, 1962 and the other dated September 4, 1962, Ramirez informed Sy Chit of his intention to terminate the lease because he was going to construct a three-storey building on the land. Sy Chit did not heed the demand to vacate.

On September 28, 1962 Ramirez commenced the ejectment action in the Municipal Court of Manila. Sy Chit interposed Article 1687 of the Civil Code as a special defense and asked the court to fix the period of the lease. The municipal court fixed June 30, 1963 as the termination date, but conditioned the extension on payment of the current rentals. When Sy Chit failed to pay the rents for April and May 1963, the trial court ordered execution pending appeal, and later affirmed the municipal court's judgment in full.

Issues

• Whether or not the trial court erred in issuing the order of execution dated June 10, 1963, on the ground that it was premature.
• Whether or not the Municipal Court had jurisdiction over the subject matter of the action, considering that the special defense under Article 1687 of the Civil Code was allegedly a new matter transforming the action into one for the fixing of the duration of the lease.
• Whether or not Sy Chit was entitled to a longer duration of the lease.
• Whether or not the trial court erred in sentencing Sy Chit to pay damages of 25 pesos a day in addition to the monthly rents.
• Whether or not the trial court erred in awarding attorney's fees and costs to Ramirez instead of to Sy Chit.

Applicable Provisions

Article 1687 of the Civil Code provides:

If the period for the lease has not been fixed, it is understood to be from year to year, if the rent agreed upon is annual; from month to month, if it is monthly; from week to week, if the rent is weekly; and from day to day, if the rent is daily. Should the lessee continue in possession for more than one year, the court may fix a longer term for the lease, with the costs of the suit against the lessee.

This is the provision Sy Chit invoked as a special defense, and it is the source of the court's power to extend the lease as an incident of the ejectment action.

Section 1 of Rule 70 of the Rules of Court provides:

When a lessee or tenant, or any person claiming under him, unlawfully withholds possession of any land or building after the expiration or termination of his right under any contract, express or implied, the person entitled to such possession may bring an action in the proper inferior court against such lessee or tenant, or person claiming under him, to recover possession thereof, and to recover damages for the unlawful detention, together with the rent due and unpaid.

This is the provision under which the damages awarded to Ramirez were measured, and it limits those damages to the reasonable value of the use and occupation of the property.

Ruling

On the first issue, the Court held that the order of execution was not premature. The extended period granted to Sy Chit under Article 1687 was not absolute but carried the condition that he should pay the current rentals. The municipal court itself had fixed June 30, 1963 as the termination date, provided the defendant pays the current rental. In any event, the question had become moot, because execution was carried out not on June 10, 1963, nor even on June 30, 1963, but after the confirmatory decision of the Court of First Instance on August 12, 1963.

On the second issue, the Court held that the contention was untenable. The action was for ejectment, as made out by the allegations in the complaint. The exercise of the power given to the court in Article 1687 to extend the period of the lease when the defendant has been in occupancy for more than a year does not contemplate a separate action for that purpose. That power may be exercised as an incident in the action for ejectment itself and by the court having jurisdiction over it. Otherwise the summary character of the action would be defeated.

On the third issue, the Court held that the power of the court to fix the period is discretionary, and there was no evidence that the Municipal Court abused its discretion. Sy Chit did not need the premises for himself, since he was not personally occupying them but had subleased them to others from whom he was deriving no little income. The period given to him was quite reasonable, being more than a year from the time the first notice to vacate was served upon him.

On the fourth issue, the Court held that the trial court erred. The damages recoverable by the plaintiff under Section 1 of Rule 70 are those which correspond to the reasonable value of the use and occupation of the property, which in this case is the agreed monthly rental of 230 pesos. The award of 25 pesos as damages for every day of delay in addition to the agreed monthly rent is without basis in law.

On the fifth issue, the Court held that the lower court did not err in awarding 200 pesos as attorney's fees. Sy Chit continued the litigation unjustifiably, even up to the Supreme Court, after he had been granted a reasonable extension of the lease. Ramirez had been put to unnecessary expense and trouble to protect his interest, and under the circumstances the award finds sanction in Article 2208 of the Civil Code.

Doctrine

The power of the court under Article 1687 of the Civil Code to fix a longer term for the lease, where the lessee has continued in possession for more than one year, is not a separate action. It is exercised as an incident of the ejectment action itself, by the court having jurisdiction over that action, so as not to defeat its summary character.

The extension of the lease period under Article 1687 is discretionary on the court, and it is conditioned on the lessee's payment of the current rentals. The lessee cannot claim the extension as an absolute right.

The damages recoverable in an unlawful detainer case under Section 1 of Rule 70 are limited to the reasonable value of the use and occupation of the property, which is ordinarily the agreed monthly rental. A daily penalty in addition to the monthly rent is without basis in law.

Disposition

The decision appealed from was affirmed, with the modification that the award of damages of 25 pesos a day was set aside, with costs against the appellant.

Remember This

The one line to memorize: the fixing of a longer lease period under Article 1687 is a mere incident of the ejectment action, and the damages in unlawful detainer are measured by the reasonable value of the use and occupation of the property, not by a daily penalty. Examiners like to use this case on the jurisdiction of inferior courts over ejectment where the defendant invokes Article 1687, and on the correct measure of damages in unlawful detainer.