ANTONIO TUASON, JR., ETC., PLAINTIFF AND APPELLEE, VS. AUGUSTO DE ASIS, DEFENDANT AND APPELLANT. ANTONIO TUASON JR., ETC., PLAINTIFF AND APPELLANT, VS. DOLORES VDA. DE EARNSHAW,…

These five cases involve lots comprised in two large parcels of
land, one belonging to plaintiff Antonio Tuason, Jr., and the other to
plaintiff Nieves Tuason de Barreto, subdivided into a number of lots
and leased to the defendants and their predecessors-in-interest for a
period ranging from 25 to 33 years, the lease contracts all expiring on
December 31, 1953. For these reasons, in passing upon these five cases
now before us on appeal, we are consolidating them in one single
decision, specially since many and the most important facts and
questions of law involved in these five cases are similar, if not
identical.

Defendant Augusto de Asis is occupying Lot No. 15 with an area of
608.30 square meters, having an assessed value of P19,570″. Defendant
Dolores Vda. de Earnshaw occupies Lot No. 26, with an area of 2,284.10
square meters, assessed at P24,620. Defendant Dely Cacho is holding as
tenant Lot No. 16-B, with an area of 829.4 square meters, assessed at
P13,220. Defendant Emeterio Barcelon is occupying Lot No. 9-B-3-B, with
an area of 4,122.80 square meters, with an assessed value of P59,050.
And defendant Meliton Limlingan occupies Lot No. 7—B-3-S—3-B-9, with an
area of 1,419.2 square meters, assessed at 16,973. The first four lots
form part of the parcel situated in Sta. Mesa, Sampaloc, Manila,
belonging to Antonio Tuason, Jr., while the last Lot No. 7-B-3-E-3-B-9
is a part of the parcel located at Sta. Mesa Boulevard, Manila, owned
by plaintiff Nieves Tuason de Barreto.

Shortly before the expiration of the contracts of lease, the two
owners-lessors notified their lessees as follows: That they (lessees)
were to vacate the premises respectively occupied by them on or before
December 31, 1953, or if they wished, to either buy said lots or enter
into new contracts of lease at an increased rent; Augusto de Asis may
purchase his lot at P65.00 per square meter or lease the same for one
year at a rental of P1,957.00 plus the real estate tax which amounted
to P293.53 a year; Dolores A. Vda. de Earnshaw to either buy her lot at
P25.00 per square meter or lease the same for one year at a rental of
P2,462.00 per annum plus the realty tax of P369.30 per annum; Dely
Cacho to buy the lot at P35.00 per square meter or lease the same for a
year at a rental of P1,322.00 per annum plus the realty tax of P198.30;
Emeterio Barcelon to buy his lot at P35.00 per square meter, payable in
cash or 20% down and the balance to be paid in 60 consecutive months
with interest at 10% per annum, or lease the same for one year from
January 1, 1954, at an annual rental of P5,905.00, plus the realty tax
of P885.75, and that should Barcelon not buy the property or remove his
house therefrom by December 31, 1953, it was to be understood that he
was agreeable to the lease under the terms specified; and Meliton
Limlingan to buy the lot at P30.00 per square meter or lease the same
for one year from January 1, 1954, at an annual rental of P1,697.30,
plus the realty tax amounting to P254.60.

All the defendants failed or refused to vacate the lots occupied by
them; neither did they accede to the proposal to buy or lease the same,
they claiming that although they were willing to make the purchase or
enter into a new contract of lease, the amounts fixed for the sale or
lease were unreasonable and excessive. As a result, plaintiffs Antonio
Tuason, Jr. and Nieves Tuason de Barreto filed against them separate
actions of illegal detainer in the Municipal Court of Manila. In all
five cases, judgments were rendered in favor of plaintiffs.

On appeal to the Court of First Instance of Manila, the first three
cases were decided by Judge Bienvenido A. Tan, who ordered appellants
Augusto de Asis, Dolores Vda. de Earnshaw, and Dely Cacho to vacate the
premises respectively occupied by them and to remove their improvements
thereon. In the case of De Asis, the latter was ordered to pay the
plaintiff by way of damages for the use and occupation of the premises
the sum of P163.10 monthly, plus the yearly tax of P298.55, from
January 1, 1954 until he left the premises, plus costs. In the case of
Earnshaw, she was ordered to pay plaintiff a monthly rental of P205.17,
from January 1, 1954, until possession was restored to plaintiff, plus
the yearly realty tax of P369.30, and the further sum of P76.22 unpaid
balance of realty tax for the year 1953, plus costs. Dely Cacho and her
husband Antonio Castillejos were ordered to pay by way of damages for
the use and occupation of the premises the sum of P110.17 a month, plus
the yearly tax of P198.30, from January 1, 1954 until they vacated the
lot, plus costs.

In the case of Emeterio Barcelon, Judge Bonifacio Ysip before whose
sala the case was heard, rendered a decision, the dispositive part of
which reads as follows:

“En vista de las consideraciones arriba expuestas,
este Tribunal dicta sentencia alternativa del tenor siguiente: (1) que
el demandado pague el demandante si quisiese optar por la compra del
terreno arrendado por dicho demandado, al precio exigido por el
demandante a razon de P35.00 por metro cuadrado, segun los terminos y
condicionce del documento Exh. A; o (2) si el demandado no estuviere
dispuesto en la compra del terreno arrendado por el al precio arriba
mencionado, dicho demandado debe remover todas las mejoras introducidas
por el y vacar la propiedad entregando la posesion al demandante dentro
del plazo de ciento veinte (120) dias a contar desde que esta decision
quede firme y ejecutoria; condena ademas al demandado a pagar al
demandante la cantidad de P492.08 mensualmente por el uso y ocupacion
de la propiedad desde el mes de Enero de 1954 hasta la entrega de la
posesion al demandante, tal como ha sido fijada por el Juzgado
Inferior; y al pago de las costas del presente juicio.”

In the case of Meliton Limlingan, heard in the sala of Judge
Gregorio Narvasa, the latter rendered decision, the dispositive part of
which reads as follows:

“Wherefore, judgment is hereby rendered, sentencing
defendant to pay to plaintiff, beginning January 1, 1954, a yearly
rental of P207.58 plus an amount commensurate with the increase of the
assessment of the land, together with the annual tax thereon, payable
in advance; otherwise, he shall be ousted from the land, and shall be
liable, for the amount of the rents due. Defendant shall pay the costs.”

All the five cases were appealed to the Court of Appeals, the first
three by defendants Asis, Earnshaw, and Cacho; and the last two by
plaintiffs Antonio Tuason and Nieves Tuason and by defendant Barcelon.

In the first three cases, after the Court of Appeals had rendered
judgment in favor of the appellee, in the cases against Asis and
Earnshaw, but before the judgment became final) and before it could
decide the case against Dely Cacho, all three appellants filed
identical motions to suspend further proceedings, invoking the
provisions of Republic Act No. 1162, as amended by Republic Act No.
1599. Acting on said motions and the opposition of appellee who
vigorously raised the question of constitutionality of the law, the
Court of Appeals in separate resolutions certified the three cases to
this Tribunal. We, however, returned the cases to the Court of Appeals
by resolution of October 23, 1956, reading as follows:

“Considering that the number of houses in appellee’s
land is a question of fact; that, unless such number is ascertained,
the applicability of Republic Act 1599 to these cases cannot be
determined; and that if Republic Act No. 1599 is not applicable, there
is no call to pass upon its constitutionality; the Court resolved to
order that the records of these cases be returned to the Court of
Appeals for ascertainment of the facts that would determine whether
Republic Act No. 1599 is applicable.”

In pursuance of our resolution, the Court of Appeals appointed a
Commissioner to ascertain the facts indicated by us. After receiving
the Commissioner’s report, the Court of Appeals again elevated the said
three cases to this Tribunal by its resolution of December 26, 1956,
the pertinent portion of which reads:

“Considerando que estos hechos contenidos en el
informe del comisionado justifican la aplicacion de las leyes
mencionadas, por lo mismo que el Art. 1 de la No. 1599, que enmienda al
Art. 1 de la No. 1162, dispone expresamente que se autoriza la
expropriation no solamente las haciendas, sino que tambien los terrenos
que anteriormente formaban parte de las mismas, que se dieron en
arrendamiento por un period no menor de lo años siempre y cuando que
haya en dichos terrenos nu menos de 50 casas; y considerando ademas que
aparte de la inaplicabilidad se ataca tambien la constitucionalidad de
las leyes aqui disputadas;

“Por la presente se resuelve
devolver, como por la presente devuelven, los expedientes de estas
causa a la Hon. Corte Suprema para su final resolucion y adjudicacion.”

In the other two cases, Barcelon and Limlingan also asked the Court
of Appeals to suspend further proceedings, equally invoking the
provisions of Republic Act No. 1162 as amended by Republic Act No.
1599; so, both cases were elevated by the Court of Appeals to us.

On this question of suspension of court proceedings pursuant to the
provisions of Republic Act No. 1162, as amended by Republic Act No.
1599, we have already had occasion to rule on the same. In the case of
Teresa Realty, Inc. vs. State Construction and Supply Co., 105 Phil., 353, speaking through Mr. Justice Angelo Bautista, we said:

“One
of the issues raised refers to the denial by the trial court of the
motion filed by defendants to suspend the present ejectment case
invoking in their favor the provisions of Republic Act No. 1162,
particularly Section 5, which provides that ‘From the approval of this
Act, and until the expropriation herein provided, no ejectment
proceedings shall be instituted or prosecuted against any tenant or
occupant of any landed: estates or haciendas herein authorized to be
expropriated if he pays his current rentals.’ It is claimed that said
Act was approved on June 18, 1954 and since this action was instituted
on March 31, 1954, and remained pending when said Act was approved, it
was the duty of the court to suspend the case in order that the purpose
of said Act may be carried out which is to expropriate the land and
subdivide it into small lots for sale at cost to its bona fide tenants
or occupants.

“Appellee, on the other hand, contends that
said Act is inapplicable to the present case for the reason that there
is no evidence showing that the property in question forms part of a
landed estate within the meaning of said Act, and even if it were so,
still the act cannot apply because there is no showing that the
Government has ever taken any step relative to the expropriation of the
property.

“We are inclined to agree to appellee’s contention
for it cannot be supposed that Congress in approving Republic Act No.
1162 had intended to actually suspend the prosecution of an ejectment
proceeding even before any definite step or action is taken by the
Government relative to the expropriation of the property, for to hold
otherwise would be to deprive a landlord of his right to protect his
interest by merely claiming that the Government may someday act on the
matter thereby placing him at the mercy of an unscrupulous tenant.
While it is laudable and proper that a landed estate be expropriated in
order that it may be subdivided and sold to bona fide tenants or
occupants, the same should be undertaken in a manner not repugnant to
law or to the Constitution. In other words, the suspension of an
ejectment proceeding should only be made after the Government has taken
step or action relative to the expropriation of the property in
accordance with the procedure laid down, by law, otherwise the action
would place the interest of the landlord in jeopardy. Such cannot be
the intendment of the law. As aptly explained by the Court of Appeals
in several cases involving the applicability of Republic Act No. 1162,
to which we agree, ‘until, such a proceeding is actually commenced the
right of a landowner to prosecute an action for ejectment under
existing laws cannot be deemed suspended under section 5 of Republic
Act No. 1162. To hold otherwise, that is, to deprive a landlord of his
remedy because of the possibility that the Government may someday, in
the near or distant future, act to expropriate his property, would be
to place him at the mercy of a thoroughly uncertain contingency. * * *
We think that the prohibition against the institution or prosecution of
ejectment proceedings applies only when expropriation has actually
commenced.’ (Barcelon vs. Isip, CA-G.R. Nos. 13650-R, Oct. 14, 1954; see also Cacho vs. Tan, CA-G.R. Nos. 13888-R to 13891-R, Dec. 10, 1954; Antonio Tuason, Jr. vs. Narvasa, CA-G.R. No. 14479-R, July 30, 1955).

“In the case of Republic vs.
Cirilo P. Baylosis, 96 Phil., 461, this Court, speaking of the effect
of an attempt to expropriate certain property by the government on the
right of a landlord to protect his interest, made the following
pronouncement:

‘* * * We hold that mere
notice of the intention of the Government to expropriate lands in the
future does not and cannot bind the landowner and prevent him from
dealing with his property. To bind the land to be expropriated and the
owner thereof, the expropriation must be commenced in court and even
then we are not certain that the owner may not deal with his property,
thereafter, mortgage or even sell it if he can find persons who would
step into his shoes and deal with the Government, cither resist the
expropriation and remain with what, is left of the property if the
entire property is not needed by the Government.’

“It
is obvious from the foregoing that the trial court did not err in
holding that Republic Act No. 1162 is inapplicable to this case for
there is no showing that an expropriation proceeding has actually been
commenced by the Government which would give defendants the right to
demand the suspension of the ejectment case within the meaning of said
act.”

In all these five cases now before us on appeal, there is no showing
that expropriation proceedings by the Government have actually been
commenced. Consequently, the two laws invoked are not applicable and
there is or was no reason to suspend court proceedings.

In the case against Limlingan, Judge Narvasa, citing the case of Roman Catholic Archbishop of Manila vs.
Ver, 73 Phil. 363, did not order him to vacate the premises, but
allowed him to continue with the lease at a rental of P207.58, plus an
amount commensurate with the increase in the assessment value, plus the
annual tax. In other words, his Honor did not find Limlingan in
default, and in effect held that the contract of lease was extended. In
the other four cases, appellants Asis, Earnshaw, Cacho and Barcelon
claim that the trial court erred in not considering the contracts of
lease as extended as long as they were willing to pay a reasonable
rental.

This theory of extension we find untenable. In the case of Archbishop of Manila vs. Ver, supra,
the lease was from year to year and this Court said that in such a
case, the lessor may not terminate the lease because of the failure of
the lessee to pay an exorbitant rental demanded by the lessor, based on
alleged increase in the assessed value of the land. However, in the
later case of Co Tiamco vs. Diaz, 75 Phil., 672, this
Tribunal held that where the contract of lease fixes a term, upon the
expiration of the period, the lessor may consider the lease terminated
and eject the lessee, citing Articles 1565 of the Old Civil Code, which
finds its counterpart in Article 1669 of the New Civil Code. Inasmuch
as in these five cases, the contracts of lease provided for the
termination of the same on December 31, 1953, and before the said
termination, the lessors asked the lessees to vacate the premises,
although giving them the option to either buy their respective lots or
lease them for one year, at amounts fixed by said lessors, the lessors
Antonio Tuason and Nieves Tuason were authorized to eject the lessees,
for the reason that the latter failed or refused to either buy or lease
the lots occupied by them, on the terms specified by the owners.

In the case of Barcelon, G. R. No. L-13508, where the trial court
gave him the option to buy his lot at the rate of P35.00 per square
meter, appellant Antonio Tuason claims, and correctly, that his offer
to sell the lot at P35.00 per square meter was good up to December 31,
1953, which price was the prevailing market value of the properly at
the time, and that it would be unfair to compel him to sell the same
three or four years later at the same price. We find merit in that
contention. As we have already said, there was no extension of the
contract of lease beyond December 31, 1953, and the owner was
authorized to eject the lessee thereafter. The offer to sell the lot to
Barcelon at P35.00 per square meter was made provided he accepted the
offer on or before December 31, 1953, which Barcelon failed to accept.
Plaintiff’s letter, Exhibit A, to Barcelon contains this statement:
“Should you not buy the property nor remove the house by December 31,
1953, it is understood that you agree to lease the property.” Because
of this, and because of the failure of Barcelon to make the purchase or
remove his house by December 31, 1953, he was understood to have agreed
to lease the property for one year upon the terms set by the owner.

The trial court in its alternative judgment said that Barcelon,
should he refuse to buy the lot, should vacate the same and pay the sum
of P492.08 as monthly rental from January 1, 1954 until he left the
property. Appellant Antonio Tuason claims that the trial court erred in
not including therein the payment of realty tax. Again, we find this
contention to be correct, because adding this realty tax to the rental,
the total would still be within the 12 per cent allowed by the law.

With respect to the case case of Limlingan, G. R. No. L-13504, in
view of our holding that in neither of these five cases was there an
extension of the lease contract, the trial court erred in allowing
Limlingan to continue leasing the property by paying a yearly rental of
P207.58, plus an amount commensurate with the increase of the
assessment of the lot, together with the annual realty tax. He should
have been ordered to vacate the property and to pay a rental from
January 1, 1954 up to the time when he actually vacates the premises,
at the rate fixed by plaintiff Nieves Tuason, namely, P1,697.40 a year,
plus the realty tax amounting to P264.00, the total of which is still
within the 12 per cent of the assessed value allowed by law. In this
connection, reference may be made to our decision in the case of Teresa
Realty vs. State Construction and Supply Co., supra, where we said:

“It should be noted that defendants have occupied
the property under lease for thirty years or more until 1958 when
plaintiff, upon the expiration of the contract of lease, made a
re-appraisal of the rental and fixed a new rate on the basis of 12 per
cent of the current assessed value of the property. This rental can
hardly be considered excessive considering that Section 3 of Republic
Act 1162 expressly provides that ‘in the event of lease, the rentals
that may be charged by the Government shall not exceed twelve percent per annum
of the assessed valuation of the property lease.’ This is an express
recognition that a rental not exceeding 12 percent per annum of the
assessed value of the property is not excessive. Indeed, defendants
cannot pretend to pay the same or similar rentals to what they had paid
during the 30-year period covered by their contract of lease. It is a
matter of general knowledge that the values of real estate have
steadily gone up with the passing of the years and it is but fair that
their productivity be correspondingly increased. The error assigned has
therefore no merit.”

In all these five cases, the rentals fixed by the owners, including
the realty taxes, would, according to our computation, only amount to
about 11½ of the assessed value of the lots involved; consequently,
they are reasonable and proper.

In conclusion, we hold that in a contract of lease for a certain
period, when the term expires, the lessor may terminate the lease and
order the lessee to vacate the premises; that where the lessor makes an
offer to the lessee to purchase the property on or before the
termination of the lease, and the lessee fails to accept the offer or
make the purchase, on time, then the lessee loses his right to buy the
property later on the terms and conditions set in the offer; third,
that there may be an implied extension of a lease where the same is not
for a fixed period but from year to year, and if at the end of the
year, the owner demands a rental which is exorbitant, in that case, the
courts may determine what is a reasonable rental and allow the lessee
to continue with the lease. It would be different if at the end of the
year, the owner instead of demanding an increased and exorbitant
rental, insists that the lessee vacates the premises. Fourth, that
Republic Act No. 1162, as amended by Republic Act No. 1599, about the
suspension of proceedings for the ejectment of tenants has no
application to a case where expropriation proceedings by the Government
have not been commenced.

In view of the foregoing, the decision in the first three cases, G.
R. Nos. L-11319, L-11320, and L-13507 against Asis, Earnshaw and Cacho,
respectively, are hereby affirmed. In the fourth case, G. R. No.
L-13508, against Barcelon, the appealed decision is set aside in so far
as it allows defendant Barcelon to buy his lot at the rate of P35.00 a
square meter and modified as to the amount of rental that he has to pay
from January 1, 1954 until he vacates the premises; in addition to the
rental fixed by the trial court at P492.08, Barcelon will pay the
realty tax. In the fifth case against Limlingan, G. R. No. L-13504, the
appealed decision is hereby reversed in so far as it allows defendant
Limlingan to continue with the lease. The rental to be paid by him from
January 1, 1954 until he vacates the premises will be P1,697.30, plus
the annual realty tax amounting to P254.60. All five defendants will
pay the costs.

Paras, C. J., Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Endencia, Barrera and Gutierrez David, JJ., concur.