G.R. No. 177404 - Land Bank of the Philippines vs. Kumassie Plantation Co., Inc.

Teresa Realty, Inc., a Philippine corporation, leased a residential lot located at 80 Buenos Aires, Sta. Mesa, Manila, registered under Transfer Certificate of Title No. 30062.
Under the lease contract, the respondent, Maxima Blouse de Potenciano, took possession and constructed a house on the 865-square meter lot.
The contractual rental was fixed at an annual rental of P76.60 plus P213 for real estate taxes, with the lease expiring on December 31, 1953.

Prior to the lease expiration, Teresa Realty notified the respondent of the impending termination and offered two options:

The respondent refused both to vacate and to pay the increased rental, resulting in the filing of a detainer suit on July 20, 1954, at the Municipal Court of Manila.

The Municipal Court rendered judgment ordering the respondent and persons claiming under her to:

Vacate the premises, and
Pay the increased rental of P127.30 a month as a reasonable rental value starting January 1, 1954, until surrender of possession, plus costs.

On appeal, the Court of First Instance affirmed the Municipal Court’s decision, rejecting the respondent’s invocation of Republic Act 1162.
The respondent’s further appeal to the Court of Appeals was initially decided on July 10, 1960, affirming in toto the lower court rulings.
Subsequently, on a motion for reconsideration, the Third Division modified its decision by reducing the recoverable rental using the amended provision under Republic Act No. 1599, setting the rental ceiling at not more than 8% of the assessed value of the lot as of December 31, 1953.

Teresa Realty, Inc. challenged the amended decision on the ground that the new rental ceiling of 8% contradicted prior Supreme Court rulings in the Tuason cases and Teresa Realty, Inc. vs. State Construction & Supply Co., which had effectively allowed the collection of a rental amounting to 12% of the assessed value.
The petitioner argued that the Court of Appeals’ approach was inconsistent with the established doctrine regarding rentals and the applicability of Republic Act 1162 and its amendatory provisions under Republic Act 1599.

Republic Act 1162 originally provided for suspensions in ejectment suits and capped the rental at 12% of the assessed value for leased property subject to expropriation.
Republic Act 1599 amended RA 1162, particularly its section 5, which reduced the ceiling to 8% but was intended for landed estates or haciendas to be expropriated.
The issue arose because the property in dispute was not under any expropriation proceedings, raising questions on the propriety of applying the 8% limit.

Whether the provisions of Republic Act No. 1599, which lower the rental ceiling to 8% of the assessed value, apply to properties not subject to expropriation proceedings.

The Court of Appeals amended its decision on the basis that section 5 of RA 1599 was applicable, thereby reducing the recoverable rental from 12% to 8%.
Teresa Realty contended that since the lot was not within the purview of expropriation, the lower ceiling should not apply.

Whether the past Supreme Court rulings in the Tuason cases and in Teresa Realty, Inc. vs. State Construction & Supply Co., which allowed collection of a 12% rental, should control over the amended decision applying the 8% limit.

The petitioner's reliance on these precedents was to assert that the 12% ceiling remained the standard for reasonable rental in similar disputes.
The issue extended to the interpretation of legislative intent, particularly regarding the dual purposes of RA 1162 and its amendatory measure under RA 1599.

Whether the application of the 8% rental ceiling in the absence of any expropriation proceedings would violate constitutional provisions related to legislative appropriateness and singularity of subject matter.