PHILIPPINE SUPREME COURT JURISPRUDENCE

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EN BANC

G.R. Nos. L-17858-9     July 18, 1962

MANUEL S. CAMUS, Petitioner, vs. PRICE, INC., Respondent.

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G.R. Nos. L-17865-6     July 18, 1962

PRICE, INC.,
vs.
HON. COURT OF APPEALS and MANUEL S. CAMUS, Respondents.

BARRERA, J.: chanrobles virtual law library

Antecedent: chanrobles virtual law library

On March 30, 1951, Manuel S. Camus and Price, Inc. entered into a contract of lease, the pertinent terms which read:

1. That the said party of the first part/Lessor (Manuel S. Camus) hereby grants, demise and let unto the said part of the second part/Lessee (Price, Inc.), for lawful business purposes, all that certain strong material building with the lot an 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 Nos. 15 and 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 fro April 1, 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 the residence 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; chanrobles virtual law library

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/Lesee, 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 not automatically become, without cost, the property of the first part/Lessor, immediately upon the termination of this contract;

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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 building or cause to erect the necessary concrete stone walls provided with barbed wires 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,

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14. Provided, always, that 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; chanrobles virtual law library

15. That it is still furthermore agreed that, in case of court litigation by virtue of non-payment of the agreed rents or any other breach of this contract on the part of the party of the second part/Lessee, the party of the first part/Lessor, shall be entitled to collect P1,000.00 as liquidated damages and P500.00 as attorney's fees, exclusive of costs legally taxable. (Emphasis supplied).

On January 19, 1954, the Lessee instituted Civil Case No. 2582 of the Court of First Instance of Rizal against the Lessor, for specific performance, damages and extension of the period of the lease, allegedly due to the latter's failure to comply with the aforequoted provisions of paragraph 6 of the contract. Three days later, or on January 22, 1954, the Lessor, in turn, filed in the Justice of the Peace Court of Malabon an action for unlawful detainer (ejectment) against the Lessee (Civil Case No. 1159), allegedly by reason of said defendant's non-payment of rentals since February 16, 1953.chanroblesvirtualawlibrary chanrobles virtual law library

On February 10, 1954, the Justice of the Peace Court rendered a decision in the ejectment case, in favor of the Lessor, ordering the Lessee to vacate the premises and pay the plaintiff Lessor rentals in arrears amounting to 4,600.00 and the sum of P400.00 a month until it finally delivers possession of the property to the Lessor; liquidated damages in the sum of P1,000.00; attorney's fees for P500.00, and costs.chanroblesvirtualawlibrary chanrobles virtual law library

The Lessee appealed to the Court of First Instance of Rizal, filing therein a cash bond to cover the amounts adjudged by the Justice of the Peace Court, as well as current rentals. The Lessor then filed a motion for execution of the decision appealed from, which was opposed by the Lessee. As the Court of First Instance grants said motion for execution, the Lessee instituted certiorari proceedings in this Court (G.R. No. L-8253).chanroblesvirtualawlibrary chanrobles virtual law library

In issuing the writ of certiorari prayed for therein,¹ the ground that the CFI Judge committed a grave abuse of discretion in issuing an order for the execution of the decision of the Justice of the Peace Court despite the "strong equities in favor of Price (Lessee) and the dubious legality or propriety of the decision of the justice of the peace court", this Court said:

In their answer, respondents (Camus, et al.) 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.chanroblesvirtualawlibrary chanrobles virtual law library

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 . . . with barbed wire." Furthermore, 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 filing and construction within said period. . . . .chanroblesvirtualawlibrary chanrobles virtual law library

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). . . . .

It was then held that the obligations of the parties in the contract being reciprocal, the Lessee did not incur in delay until the Lessor complies with what was incumbent upon him, applying Article 1169 of the Civil Code.chanroblesvirtualawlibrary chanrobles virtual law library

After the case was remanded to the lower court for further proceedings, the 2 cases - Civil Cases Nos. 2582 (for specific performance filed by Price, Inc.) and 2650 (for unlawful detainer, by Camus) were tried jointly, during which the parties adduced evidence in support of their respective allegations. Later, the trial court rendered judgement ordering (1) the cancellation and return of the bond to the Lessee (Price, Inc.); (2) said Lessee to insure the factory building and warehouse for P50,000.00 within 1 month; and (3) the Lessor Camus to fill up the low portion of the leased premises and enclose the part along the river with concrete stone walls topped by barbed wire, within 6 months, and pay the costs. The term of the lease was also fixed for 9 years, from compliance by the Lessor of his aforementioned obligation.chanroblesvirtualawlibrary chanrobles virtual law library

Only the Lessor, Manuel Camus, appealed to the Court of Appeals.

Endnotes:

¹Price, Inc. v. Camus, et al., G.R. No. L-8253, May 25, 1955.