G.R. No. 29292 - Vda. de Pamintuan vs. Tiglao

Case Summary (G.R. No. 29292)

Factual Background

Under the written lease, the annual rent consisted of three hundred cavans of palay and four hundred piculs of sugar, of defined quality, deliverable on or before the last day of March for each agricultural year covered. The lease fixed these payments for each of the two years, corresponding to the period from April 1925 through March 1926, and from April 1926 through March 1927.

The record showed that the rent for the first agricultural year was not paid by March 31, 1926, either at that time or thereafter. After proper demand, Tomasa C. Viuda de Pamintuan, as guardian, instituted the action on September 10, 1926. The complaint sought recovery of possession of the leased lands and demanded payment of rent for the relevant agricultural year, together with damages, an attorney’s fee, and costs.

Proceedings in the Justice of the Peace and the Court of First Instance

The justice of the peace of Mabalacat decided in favor of the plaintiff. The defendant appealed to the Court of First Instance. In that appellate court, the defendant challenged jurisdiction and pleaded counterclaims, which the Court of First Instance treated as not necessary to be specified for purposes of the ruling.

After trial, the Court of First Instance again ruled for the plaintiff on possession. It ordered the defendant to pay rent for the agricultural year 1925–1926 consisting of three hundred cavans of palay, or in default its money equivalent at the rate of P3.75 per cavan, plus four hundred piculs of sugar. For the agricultural year 1926–1927, it ordered payment of another three hundred cavans of palay or its equivalent at the same rate, with interest on all of these amounts from April 10, 1926. Both parties appealed: the plaintiff limited her appeal to the refusal to award the stipulated attorney’s fee of P1,000 and the stipulated interest at 15% per annum on unpaid rents; the defendant appealed from the refusal to dismiss for lack of jurisdiction, and from the failure to award the defendant his own attorney’s fee.

Jurisdictional Issue: Prematurity and Power of the Justice of the Peace

A threshold question arose from the lease’s fixed two-year duration. The Court framed the issue as whether a justice of the peace could entertain an action of detainer at the suit of the lessor due to the tenant’s failure to pay rent at the times stipulated, and whether the action filed prior to the termination of the full lease period could be considered premature.

The Court treated the matter as governed by fundamental lease principles. It held that under the Civil Code, it is the lessee’s duty to pay rent in the manner agreed (art. 1555) and that failure to do so supplies a ground for rescission and damages by the lessor (art. 1556). It further relied on section 80 of the Code of Civil Procedure, which provides that a landlord may recover restitution of the land, together with damages and costs, when possession is unlawfully withheld after the determination of the right to possess, provided the action is brought within one year from the commencement of the unlawful withholding. In that setting, the Court reasoned that upon non-payment of rent, the lessor may elect to treat the contract as rescinded and to enforce recovery of possession by unlawful detainer. The Court emphasized that an independent rescission action in the Court of First Instance was not required as a prerequisite.

The Court also invoked the proviso to section 80, which recognized expressly the landlord’s right to recover possession in an ordinary detainer action for non-payment of rent by the lessee, provided that non-payment continued for at least three days after demand duly made.

Effect of Voluntary Surrender of Possession

The defendant argued that after the action was instituted and before it was decided, he voluntarily surrendered possession, and thereby the court lost jurisdiction. The Court held the contention untenable. It reiterated the procedural rule that once jurisdiction attaches, it continues until the complete remedy is granted.

Effect of Counterclaims on Jurisdiction

The Court also rejected the defendant’s additional theory that jurisdiction failed because he set up a counterclaim for P6,000 in damages. The Court held the premise untenable, stating that the earlier reasoning resolved the material points raised in the defendant’s appeal.

Plaintiff’s Appeal: Usurious Interest Clause and Attorney’s Fee

The Court turned to the plaintiff’s appeal concerning two items: (1) the trial court’s refusal to give effect to a contractual stipulation for additional payment of 15% per annum (or 1.25% per month) calculated upon the highest quotation registered in the market for the commodity that should have been paid, and (2) the refusal to allow the stipulated P1,000 attorney’s fee.

Contractual 15% Additional Payment

The Court noted that the lease contained a clause providing that if stipulated rent was not paid at the times stated, the lessee would indemnify the lessor in an additional amount equivalent to 15% annually, or 1.25% per month of delay, calculated upon the highest market quotation for the relevant commodity, within sixty days following the due date.

The trial court had refused to implement the stipulation, reasoning that it was effectively a stipulation for usurious interest. The Court recalled that, at the time the contract was made, the highest lawful rate collectible for any unsecured loan or forbearance of money, goods, or credits was 14% per annum. The Court agreed that the trial court committed no error in refusing the interest thus stipulated.

At the same time, the Court clarified the analytical approach. It held that courts must look beyond the form to the substance. The Court determined that the stipulation contemplated interest as such, not liquidated damages as the plaintiff argued. Accordingly, the trial court properly declined to enforce it.

Stipulated Attorney’s Fee and Limits of the Justice of the Peace

The lease also contained a provision stating that in case litigation arose due to the lessee’s non-compliance with the lease, the lessee would pay the lessor P1,000 for attorney’s fees and other expenses. The justice of the peace refused to take cognizance of this item on the ground that it exceeded the amount over which it could exercise jurisdiction. On appeal, the Court of First Instance held that as it was exercising appellate jurisdiction, it could not consider matters beyond the justice of the peace’s jurisdiction.

The Supreme Court upheld the correctness of both lower courts’ views. It described the justice of the peace as having limited jurisdiction defined by statute. The Court characterized the case as one for forcible entry and detainer, and thus limited to “restitution of the land, building, and premises possession of which is unlawfully withheld, together with damages and costs” under section 80 of the Code of Civil Procedure. It held that damages do not include attorney’s fees, and it found any doubt resolved by section 84 of the same Code, which provided that costs and restitution are awarded as stated, and did not include attorney’s fees. The Court added that the costs referenced were fixed by section 491 and did not include attorney’s fees.

The Court further addressed the defendant’s separate submission that he was entitled to recover attorney’s fees under section 7 of the Usury Law (Act No. 2655) due to the supposed usurious character of the 15% interest. It rejected the suggestion, holding that the right to attorney’s fees under that provision attaches only when usurious interest has been in fact paid. The Court ruled that the mere circumstance that usurious interest was stipulated did not entitle the borrower to attorney’s fees in an action declaring the stipulation usurious.

Disposition

The Court affirmed the judgment appealed from. It held that the decision was in accordance with law and the facts and affirmed it without costs.

Separate Opinion: Dissent on Attorney’s Fee

Justice Street filed a dissenting opinion. He agreed with the main decision in substance but disagreed with so much of it as denied the plaintiff any reasonable allowance for attorney’s fees and other ex

Case Syllabus (G.R. No. 29292)

Parties and Procedural Posture

Tomasa C. Viuda de Pamintuan appeared as plaintiff and appellant as guardian of her five minor children bearing the surname Pamintuan y Centeno.
Juan Tiglao appeared as defendant and appellant.
The action was originally filed in the court of the justice of the peace of Mabalacat, Pampanga for recovery of possession, accrued rents, damages, attorney’s fee, and costs.
The justice of the peace rendered judgment in favor of the plaintiff, and the defendant appealed to the Court of First Instance.
The Court of First Instance again rendered judgment for the plaintiff for possession and for payment of rental obligations and interest.
Both parties appealed: the plaintiff contested the refusal to award the stipulated attorney’s fee and stipulated interest on unpaid rents, while the defendant contested jurisdictional issues and the denial of the defendant’s attorney’s fee.
The Court affirmed the judgment, and Street, J. dissented in part regarding attorney’s fees.
The disposition was “affirmed without costs,” with concurrence by Johnson, Malcolm, Johns, Romualdez, and Villa-Real, JJ..

Key Factual Allegations

On March 18, 1925, Jose V. Ramirez, as attorney-in-fact of Florentino Pamintuan, executed a written lease with Juan Tiglao over two parcels of land in barrio of Dolores, municipality of Mabalacat, Province of Pampanga.
The lease covered two agricultural years, beginning April 1925 and continuing through March 1927.
The annual rent was fixed in the lease at three hundred cavans of palay and four hundred piculs of sugar, with delivery due on the last day of March for each year.
The rent for the first year was not paid on or before March 31, 1926, nor thereafter.
After proper demand, the plaintiff instituted the action on September 10, 1926, seeking possession and rental recoveries as rent for the agricultural year 1925-1926 and part of the contract period.
The Court of First Instance ordered payment of rental for 1925-1926 and 1926-1927, each in three hundred cavans of palay in default of which money was payable at P3.75 per cavan, plus four hundred piculs of sugar, with interest on all sums from April 10, 1926.
After the action was begun and before decision, the record reflected that the defendant voluntarily surrendered possession to the plaintiff.
The lease contained stipulations on indemnity for late non-payment and on payment of an attorney’s fee and expenses upon litigation arising from the lessee’s breach.

Lease Provisions and Claims

The lease required the lessee, by its terms, to pay the stipulated annual rent in specified agricultural commodities by specified dates.
The lease included a penalty-like indemnity clause for non-payment at the times stated, requiring indemnification equivalent to fifteen per centum annually, or one point two five per cent for each month of delay, calculated upon the highest quotation registered in the market for the commodity due, to be paid within sixty days following the due date.
The plaintiff invoked this clause to support additional interest or indemnity for overdue rents.
The lease also contained paragraph 11, stipulating that in case of litigation for non-compliance with the lease, the lessee would pay P1,000 for attorney’s fee and other expenses.
The plaintiff sought enforcement of the stipulated attorney’s fee and interest on unpaid rents, and the defendant opposed on jurisdictional and fee-related grounds.

Statutory Framework

The Court relied on Art. 1555, Civil Code, to state that it was the duty of the lessee to pay the price of the lease in the manner agreed upon.
The Court relied on Art. 1556, Civil Code, to hold that failure to comply with the lessee’s obligation supplied a ground for rescission of the contract and for recovery of damages by the lessor.
The Court cited section 80 of the Code of Civil Procedure to recognize that a landlord could, within one year after unlawful withholding commenced, seek restitution of the land with damages and costs.
The Court treated the proviso to section 80, Code of Civil Procedure as expressly recognizing the landlord’s right to recover possession in an ordinary detainer action for non-payment of rent, provided that the non-payment continued for at least three days after demand duly made.
The Court characterized the justice of the peace as a court of limited jurisdiction, with limits “fully and clearly denned” in statutes.
The Court treated section 84 of the Code of Civil Procedure as delimiting recoverable incidents in unlawful detainer by describing judgment for restitution, costs, and all arrears of rent or a reasonable compensation for use and occupation, while indicating that costs were not attorney’s fees.
The Court referred to section 491 of the Code of Civil Procedure to support that costs were fixed and did not include attorney’s fees.
The Court discussed Act No. 2655 (Usury Law) in relation to the defendant’s theory of entitlement to attorney’s fees, while rejecting it on the required factual predicate for the right to attach.

Issues on Appeal

The defendant raised the threshold issue whether the justice of the peace had jurisdiction to entertain an action of detainer at the landlord’s instance for failure to pay rent, and whether filing before expiration of the lease term rendered the action premature.
The defendant also contended that the justice of the peace allegedly lost jurisdiction because the action was decided after voluntary surrender of possession, and because the defendant allegedly asserted a counterclaim for damages of P6,000, purportedly exceeding the jurisdictional limits.
The plaintiff’s appeal raised whether the trial court erred in refusing to award the stipulated additional payment clause of 15% annually / 1.25% per month as interest or indemnity for overdue rents.
The plaintiff’s appeal also raised whether the trial court erred in refusing the stipulated P1,000 attorney’s fee and other expenses under paragraph 11 of the lease.
The plaintiff further challenged the failure to award stipulated interest at 15% per annum on unpaid rents, arguing for effectuation of the lease stipulation.
The defendant’s appeal raised the additional issue whether the defendant was entitled to an attorney’s fee, anchored i