1|Sales & Lease HW#6 Part XVI to XVIII
(1) G.R. No. L-17772 June 9, 1922
FORTUNATO RODRIGUEZ, plaintiff-appellee,
vs. JOSE R. BORROMEO, defendant-appellant.
Araneta and Zaragoza for appellant.
Hilado and Hilado for appellee.
VILLAMOR, J.:
On August 30, 1919, the parties in this case entered into a contract of lease
of some rural properties known as Hacienda Felicidad in the municipality of
La Carlota, Occidental Negros, used for the cultivation of sugar cane. The
contract is made a part of the complaint and in it are described the parcels of
land so leased. According to the terms of the contract the lessor, the herein
plaintiff, leased to the defendant the lands in question for a period of five
years, subject to extension at the option of the lessee at the rate of P3,800
per year, which rent was payable at the end of the harvest which should be
not later than the month of May of each year.
At the time of entering into the contract by virtue of which the lessor
delivered the Hacienda Felicidad to the lessee, it was planted with sugar
cane and it was agreed between the parties that the lessee would take
charge of milling the cane and would pay the lessor the sum of P4.50 per
picul of sugar.
It appears from their records that of the five lots so leased one-half of three
of them (Nos. 846,848 and 965) belong to the estate of Julia Guillas,
deceased wife of the lessor, necessary authority approving the contract of
lease of these portions of land belonging to the deceased, of which property
he was the judicial administrator. Indeed, here requested the court to
approve the lease, but the court denied October 1919 the authority
requested.
In December, 1919 the defendant began to mill the sugar cane
of hacienda and on March 10, 1920, the plaintiff commenced this action for
the purpose of annulling the contract of lease on the ground that the object
thereof was impossible of performance.
After the demurrer of the defendant, based on the ground that the complaint
did not allege facts sufficient to constitute a cause of action, had been
overruled, with his exception, and the defendant had filed a general denial,
the court rendered decision, (a) holding that the contract of lease in question
is null and void, (b) sentencing the defendant to return to the plaintiff
the Hacienda Felicidad with all its improvements, (c) sentencing the plaintiff
to pay the defendant the expenses incurred buy the latter in the milling of the
sugar cane existing on the hacienda and to reimburse him with hi share of
the net earnings of the harvest in proportion to the time he was in
possession of the hacienda, unless the plaintiff permits him to harvest and
mill the entire crop of the season, and (d) sentencing the defendant to pay
the plaintiff the value of 2,431 piculs of sugar at the rate of P15.50 per picul,
with legal interest thereon at the rate of 6 per cent per annum from March 6,
1920, until full payment, without any finding as to costs.
Appellant assesing several errors which he himself condensed into one, —
"The court erred in declaring null and void the contract in question."
VILLAR
In deciding the question raised by the appellant, we must bear in mind the
fact that neither in the original complain nor in the amended complaint does
the plaintiff sue in his capacity as judicial administrator, and neither is there
any allegation to the effect that the conjugal partnership between him and
his deceased wife had been liquidated. This being so, the question raised
are the following: When a conjugal partnership is dissolved by the death of
the wife, who must administer the property of the conjugal partnership?
What are the powers of such administrator? Is it necessary for him to obtain
the permission of the court in order to lease, for a term of five years, one-half
of the property belonging to the partnership?
In the case of Enriquez vs. Victoria (10 Phil., 10), this court established the
method of administering the property of a conjugal partnership when it is
dissolved by the death of the wife. The method established is that when a
conjugal partnership is dissolved by the death of the wife the husband is the
administrator of the affairs of the partnership until they are liquidated. In the
event of a dissolution by the death of the husband or in case of the demise
of the husband after the dissolution by the death of the wife, his
administrator is also the administrator of the partnership affairs and is the
legal representative of the partnership.
In the case of Amancio vs. Pardo (13 Phil., 297), this court again affirmed its
former decision and held that: "When a conjugal partnership is dissolved by
the death of the wife, the surviving husband, and not the judicial
administrator appointed in the proceedings for the settlement of the estate, is
entitled to the possession of the property of the conjugal partnership until he
has liquidated its affairs. It is an error to settle the affairs of the conjugal
partnership, dissolved by the death of the wife, in the special proceedings for
the settlement of the wife's estate." (Rojas vs. Singson Tongson, 17. Phil.,
476)
In Molera vs. Molera (40 Phil., 566, 569), the court maintained the same
doctrine. Said the Court: "This court has repeatedly announced that when a
conjugal partnership is dissolved by the death of the wife, the surviving
husband and not the judicial administrator appointed in the proceedings for
the settlement of the estate, is entitled to the possession of the property of
the conjugal partnership until he has liquidated its affairs. As a resolutory
principle, it is an error to settle the affairs of the conjugal partnership,
dissolved by the death of the wife, in the special proceedings for the
settlement of the wife's estate."
These decision are, in our opinion, conclusive as to the question here
presented. Wherefore the plaintiff, as administrator of the conjugal
partnership, has the right to the possession of the conjugal property until the
liquidation thereof takes place, and he can exercise over such property the
same authority as article 1548 of the Civil Code vests in all administrators, to
wit:
No lease for a term of more than six years shall be made by then husband
with respect to the property of his wife, by the father with respect to that of
his children, by the guardian with respect to that of his ward, or by a
manager in default of special power with respect to the property intrusted to
him for management.
2|Sales & Lease HW#6 Part XVI to XVIII
This court interpreting said article 1548 in Tipton vs. Martinez (5 Phi., 477),
said: "This provision plainly shows that Aguirre could not, as administrator,
have validly executed a lease of the land in question for a period of ten years
in the absence of special authority to that effect. This, in our opinion, vitiated
the contract in its entirely, but only however, did not affect the contract in its
entirely, but only in so far as it exceeded the six-year limit fixed by law as the
maximum period for which an administrator can execute a lease without
special power. The contract in question was perfectly valid in so far as it did
not exceed that limit, it having been executed by the administrator, Aguirre,
within the scope of the legal authority he had under his general power to
lease. That general power carried with it, under the article above quoted, the
authority to lease the property for a period not exceeding six years. There
was no excess of authority and consequently no cause for nullification
arising therefrom, as to the first six years of the lease. As to the last four, the
contract was, however, void, the administrator having acted beyond the
scope of his powers.
The trial court construed article 1548 of the Civil Code as applying only to
administrators of estates of deceased person. This construction is manifestly
erroneous. The provisions of that article are general and apply as well to
administrators property as of deceased persons.
It seems that the court below considered that the conjugal partnership
between the plaintiff and his deceased wife was liquidated because of the
fact that when the husband requested his appointment as judicial
administrator of the intestate estate of his wife, he included in the inventory
one-half of three of five lots that were subsequently leased, as belonging to
her. We are of the opinion, and so hold, that this inclusion of the property in
the inventory, by itself, does not have the effect of a liquidation of the
conjugal partnership. The properties were still subject to the payment of the
partnership debts; it does not appear that the court had finally approved the
accounts of the administrator (liquidator) nor that it had adjudicated the
remaining portion to the partners, the deceased and the surviving spouse.
There is no practicable way to determine what was the one-half of the
conjugal property that belonged exclusively to the deceased spouse. Indeed,
although the plaintiff had been appointed judicial administrator of the
intestate estate of his wife, he was but a mere administrator and liquidator of
the conjugal partnership.
However, if by a fiction of law, we consider that the plaintiff is the judicial
administrator of one-half of the conjugal property (pending the liquidation of
the partnership), would it be necessary for him to secure judicial authority to
lease such property, for a period of five years?
Section 643 of the Code of Civil Procedure, provides:
Before an executor, or an administrator, enters upon the execution of his
trust, and letters testamentary or of administration are issued, the person to
whom they are issued shall give a bond in such reasonable sum as the court
directs, with one or more sufficient sureties, conditioned as follows:
1. . . .
2. To administer according to law, and, if an executor, according to the will of
the testator, all goods, chatters, rights credits, and estate, which shall at any
VILLAR
time come to his possession, or to the possession of any other person for
him and of the same pay and discharge all debts, legacies, and charges on
the same, or such dividends thereon as shall be decreed by the court:
3. . . .
4. . . .
According to this provision of the law and in harmony with the doctrine in the
case of Tipton vs. Martinez, supra, the plaintiff could validly enter into the
contract in question without judicial authority therefor. Reversing the
judgment appealed from the defendant is hereby absolved from the
complaint with costs against the plaintiff. So ordered.
Araullo, C.J., Malcolm, Ostrand, Johns and Romualdez, JJ., concur.
RESOLUTION
August 19, 1922
VILLAMOR, J.:
Were it not because the move filed two additional petitions and a
memorandum besides the motion twenty-nine pages long filed by him on
June 19th, we would not deem it necessary to write this opinion in order to
decide his motion for reconsideration, as ordinarily, resolutions of this kind
are made by memorandum orders spread upon the minutes of this Court.
The arguments ably presented by the mover refer to the personality of the
plaintiff, to the powers of a judicial administrator, and to nullity of the contract
in question. We think that we have expressed our opinion upon these points
sufficiently clear in the first decision, however, we desire to make it plain that
he decisions of this Court, including that of Tipton, decided on January, 2,
1906, which were cited in support of our first decision, were rendered after
the promulgation of the Code of Civil Procedure.
That the administration of the conjugal property the herein plaintiff, was after
the date of his wife also appointed administration of the property of the
deceased, does not affect the essence of the matter, in view of the principle
enunciated in Molera case, formerly quoted.
The fact that the certificates of title of parcels 846, 848, and 965, included in
the contract of lease under discussion, contain the declaration that such
lands belong in equal parts to Fortunato Rodriguez and to his deceased
spouse Julia Guillas, far from destroying the presumption that the said l
lands are conjugal property, it confirms and ratifies the character of such
lands as conjugal property; wherefore the administration thereof cannot be
taken from the surviving spouse while the final liquidation of such property is
going on.
Mover cited the case of Lizarraga Hermanos vs. Abada (40 Phil., 124), and
maintains that according to the doctrine in that decision, a judicial
administration cannot mortgage, even with judicial authority, the property
under administration. If this is the doctrine laid down in the case we hold that
same cannot be successfully cited in this case, for two reasons, Firstly,
because after the promulgation of this decision the Legislatures enacted Act
No. 2884, amending section 714 of the Code of Civil Procedure,
empowering the judges of first instance to grant authority to the executor o to
the executor or administrator to sell, mortgage or in any way encumber the
real property (under administration) when such sale, mortgage, or
3|Sales & Lease HW#6 Part XVI to XVIII
encumbrance would be of benefit to the parties in interest, and in no way
prejudice any legacies of reality; and secondly, because in the Lizarraga
case the property under administration was sought to be mortgaged to
answer for the payment of a debt, which juridicaly involves the idea of
disposing of the thing mortgaged, since such contract carries with it the right
to foreclose the mortgage in case of nonpayment of the debt and for this
reason the Civil Code, as well as the Code of Civil Procedure, as amended
by Act No. 2884, requires that judicial authority be first had. In other words, a
judicial administrator is without authority to sell the real property under his
administration nor to constitute any mortgage or lien thereon. In order to
execute these acts or contracts judicial authority is necessary.
On the other hand, a judicial administrator may lease the property under his
administration for any period of less than 6 years as this is a power tacitly
granted by article 1548 of the Civil Code. Specifically speaking, the
administrator, as an agent of the court, must comply with the terms of the
power conferred. Section 643 of the Code of Civil Procedure speaking of the
duties of executors and administrators, provides:
2. To administer according to law, and, if an executor, according to the will of
the testator, all goods, chattels, rights, credits, and estate which shall at any
other person to his possession, or to the possession of any other person for
him, and of the same pay and discharge all debts, legacies, and charges on
the same, or such dividends thereon as shall be decreed buy the court.;
This agency consists in the care in accordance with the law of the estate
under administration. It is an agency granted in general terms and an
agency of this nature embraces only acts of administration of the property.
(Art. 1713 of the Civil Code.) If, as we have said, the leasing of such
property for any period of less than 6 years, which is an act property
speaking of administration, is impliedly authorized by said article 1548 of the
Civil Code, the conclusion appears inescapable that the plaintiff Rodriguez,
even when considered as the judicial administrator of the lands in question,
could validly lease them for a period of less than 6 years.
It is alleged by the mover that the intestate of which plaintiff was
administrator did not have any debts and consequently he had no necessity
of leasing the lands aforesaid. This allegation untenable. The leasing of
property does not signify, and necessarily therefor, does not mean that the
lessor's object is to obtain funds with which to pay debts; what it signifies is
to the make the lands so leased productive. When the plaintiff gave in lease
the lands in question he did nothing more than to fulfill the duties under his
care, the fruits that by its nature it should produce.
It is alleged in the petition for new trial filed with this court that the record of
the intestate of Julia Guillas was terminated after this case had been
disposed of by the court a quo and that the records of this case should be
returned to the court of origin in order that the plaintiff-appellee might have
an opportunity to prove this fact.
It should be remembered that in our first decision we stated that there was
no evidence of the fact that the conjugal partnership between the surviving
spouse and the deceased had been completely liquidated at the time of the
rendition of judgment hereon, that is to say, on December 3, 1920. It is now
VILLAR
alleged that the partnership was definitely liquidated by virtue of the order
dated the 4th of the said month and years, rendered by the court below in
the said order, we are of the opinion that the new trial is unnecessary,
because the order, to our mind, does not affect the validity of the contract of
lease herein discussed. The order of the court approving the tentative
partition of the property of the deceased Julia Guillas is as follows:
The court finds that he tentative partition dated August 20th of this year is
correct, and the same is hereby approved in all its parts and to this effect
adjudicates in favor of Samson Rodriguez, Juanita Rodriguez, Inecerio
Rodriguez and Gregorio Rodriguez, as the sole heirs of the deceased Julia
Guillas the undivided half of lots 486-A, 848 and 965 of the Cadaster of La
Carlota, Province of Occidental Negros, subject to the usufruct of the
widower in favor of Fortunato Rodriguez. These intestate proceedings are
declared terminated, and whoever may be in duty bound is hereby ordered
to institute guardianship proceedings for the heirs of said deceased Julia
Guillas, as they are all of minor age, and when the said guardian for the said
minors has been appointed, he is ordered to take charge of the hereditary
portion adjudicated to the said minors, whereupon the bond of the
administrator Fortunato Rodriguez will be cancelled.
It results from this order that the former conjugal partnership between the
plaintiff and his deceased spouse was converted into an actual community of
property among the said plaintiff and his four children in accordance with
article 392 of the Civil Code and as to the administration and the better
enjoyment of the common thing, according to article 398 of the same Code,
the decision of the majority of the co-owners is binding. In the instant case
the plaintiff represents the majority portion of the common thing, as aside
from the undivided half, he has over the other the usufruct pertaining to the
widower which amounts to the portion corresponding to his child not bettered
(art. 834 of the Civil Code).
The supreme court of Spain in a decision of May 29, 1906, established the
following doctrines:
That the nature and particular conditions of the community property make it
necessary, for the management and better enjoyment of the thing owned in
common, that they follow the decision of the majority owners, to which all
others must submit as is established by article 398 of the Civil Code, which
provides further that the majority should be understood as the resolution of
the co-owners representing the majority interest in the community property,
and that if there be no majority or if the decision such majority should
seriously prejudicial to the common property, the judge, at the instance of
any of the co-owners, shall order what may be proper and even appoint an
administrator therefor.
Since according to article 1543 of the same Code the contract of lease is
defined as the giving or the concession of the enjoyment or use of a thing for
a specified time and fixed price, and since such contract is a form of
enjoyment of the property, it is evident that it must be regarded as one of the
means of enjoyment referred to in said article 398, inasmuch as the terms
enjoyment, use, and benefit involve the same and analogous meaning
4|Sales & Lease HW#6 Part XVI to XVIII
relative to the general utility of which a given thing is capable.
(104 Jurisprudencia Civil, 443.)
And by sentence of May 1, 1906, that same Tribunal held the following:
It is proper to compute, in any annuity existing over a given property owned
in common, the part corresponding to each coowner in order to establish
with all its legal consequences, the amount of his interest in the community
property with respect to the other coowners, because if this is not done
(since this evidently represents a real and positive interest in the property
equivalent to a compensation for the one owing it especially and for the
coowners in general, consisting in the value of the annuity over the thing), it
will contravene a positive element of greater interest and benefit and would
eliminate the interest, which would be contrary to the reality of things and to
the provisions of article 398 of the Civil Code which, in treating of the
majority interests, clearly refers to all those attached to the thing which is the
object of the community property whatever their origin may be.
(104 Jurisprudencia Civil, 272.)
In view of all the foregoing, the motion for reconsideration is denied, it being
understood, however, that the appellant is held responsible to the appellee
for the value of the 2,431 piculs of sugar which he harvested from the sugar
cane existing on the hacienda at the time of celebrating the contract at the
agreed price of P4.50 per picul, that is to say, the amount of P10,939.50 with
its legal interest from the date of filing of the complaint. So ordered.
Separate Opinions
OSTRAND, J., concurring:
I doubt if article 1548 of the Civil Code is applicable to judicial administrators
appointed under the Code of Civil Procedure, but upon other grounds, I
concur in the result reached by my colleagues.
A lease given by a judicial administrator upon property under his
administration and not extending beyond the term of the administration is a
mere administrative act and not an incumbrance. The lease in question is
therefore in force, at least, until the administration is terminated and is
voidable only as to the portion of its term which extends beyond that point. It
does not appear in this case that the estate has been turned over to the
heirs; on the contrary, it is shown, affirmatively, that no guardian has been
appointed for the minors and they they, consequently, cannot take delivery
of the property assigned to them. As far as we know the estate is, therefore,
still in the hands of the administrator notwithstanding the fact that the court
below in its order approving the scheme of distribution, declares the
administration terminated. As far as the cancellation of the lease is
concerned the action is, in my opinion, clearly premature.
VILLAR
(2) G.R. No. L-32047 November 1, 1930
MANUEL MELENCIO, MARIANO MELENCIO, PURA MELENCIO, and
CARIDAD MELENCIO, plaintiffs-appellants,
vs.
DY TIAO LAY, defendant-appellee.
Jose V. Valladolid, Jose P. Melencio and Camus and Delgado for
appellants.
Araneta and Zaragoza for appellee.
OSTRAND, J.:
On August 1,1927, the plaintiffs, Manuel, Mariano, Pura and Caridad
Melencio, brought the present action against the defendant-appellee, Dy
Tiao Lay for the recovery of the possession of a parcel of land situated in the
town of Cabanatuan, Nueva Ecija, and containing an area of 4,628.25
square meters. The plaintiffs further demand a monthly rental of P300 for the
use and occupation of the parcel from May, 1926, until the date of the
surrender to them of the possession thereof; and that if it is found that the
said appellee was occupying the said parcel of land by virtue of a contract of
lease, such contract should be declared null and void for lack of consent,
concurrence, and ratification by the owners thereof.
In his answer, the defendant pleaded the general issue, and as special
defenses, he alleged in substance that he was occupying the said tract of
land by virtue of a contract of lease executed on July 24,1905, in favor of his
predecessor in interest, by Ruperta Garcia, Pedro Melencio, Juliana
Melencio, and Ruperta Melencio under the terms specified therein, and
which contract is still in force; that Liberata Macapagal, the mother of the
plaintiffs, in her capacity as judicial administratrix of the estate of Ramon
Melencio, one of the original coowners of the parcel of land in question,
actually recognized and ratified the existence and validity of the contract
aforesaid by virtue of the execution of a public document by her on or about
November 27,1920, and by collecting from the assignees of the original
lessee the monthly rent for the premises until April 30, 1926; and that said
defendant deposits with the clerk of court the sum of P20.20 every month as
rent thereof and that as a counterclaim, he seeks the recovery of P272 for
goods and money delivered by him to the plaintiffs.
The plaintiffs filed a reply to the answer alleging, among other things, that
Ruperta Garcia was not one of the coowners of the land in question; that the
person who signed the alleged contract of lease never represented
themselves as being the sole and exclusive owners of the land subject to the
lease as alleged by the defendant in his answer; that the said contract of
lease of July 24,1905, is null and void for being executed without the
intervention and consent of two coowners, Ramon Melencio and Jose P.
Melencio, and without the marital consent of the husbands of Juliana and
5|Sales & Lease HW#6 Part XVI to XVIII
Ruperta Melencio; that the lessee has repeatedly violated the terms and
conditions of the said contract; and that Liberata Macapagal, in her capacity
as administratrix of the property of her deceased husband, could not lawfully
and legally execute a contract of lease with the conditions and terms similar
to that of the one under consideration, and that from this it follows that she
could not ratify the said lease as claimed by the defendant.
On January 21,1928, Liberata Macapagal Viuda de Melencio, duly appointed
and qualified as administratrix of the estate of her deceased husband,
Ramon Melencio, filed a petition praying to be allowed to join the plaintiffs as
party to the present case, which petition was granted in open court on
January 31,1928. Her amended complaint of intervention of February
14,1928, contains allegations similar to those alleged in the complaint of the
original plaintiffs, and she further alleges that the defendant-appellee has
occupied the land in question ever since November, 1920, under and by
virtue of a verbal contract of lease for a term from month to month. To this
complaint of intervention, the defendant-appellee filed an answer
reproducing the allegations contained in his answer reproducing the
allegations contained in his answer to the complaint of the original plaintiffs
and setting up prescription as a further special defense.
It appears from the evidence that the land in question was originally owned
by one Julian Melencio. He died prior to the year 1905 leaving his widow,
Ruperta Garcia, and his five children, Juliana, Ramon, Ruperta, Pedro R.,
and Emilio Melencio. Emilio Melencio also died before 1905, his son Jose P.
Melencio, then a minor, succeeding to his interest in the said parcel of land
by representation. A question has been raised as to whether the land was
community property of the marriage of Julian Melencio and Ruperta Garcia,
but the evidence is practically undisputed that Ruperta Garcia in reality held
nothing but a widow's usufruct in the land.
On July 24,1905, Ruperta Garcia, Pedro R. Melencio, Juliana Melencio, and
Ruperta Melencio executed a contract of lease of the land in favor of one
Yap Kui Chin, but neither Jose P. Melencio nor Ramon Melencio were
mentioned in the lease. The term of the lease was for twenty years,
extendible for a like period at the option of the lessee. The purpose of the
lessee was to establish a rice mill on the land, with the necessary buildings
for warehouses and for quarters for the employees, and it was further
stipulated that at the termination of the original period of the lease, or the
extension therof, the lessors might purchase all the buildings and
improvements on the land at a price to be fixed by experts appointed by the
parties, but that if the lessors should fail to take advantage of that privilege,
the lease would continue for another and further period of twenty years. The
document was duly acknowledged but was never recorded with the register
of deeds. The original rent agreed upon was P25 per month, but by reason
of the construction of a street through the land, the monthly rent was
reduced of P20.20.
Shortly after the execution of the lease, the lessee took possession of the
parcel in question and erected the mill as well as the necessary buildings,
and it appears that in matters pertaining to the lease, he dealt with Pedro R.
Melencio, who from 1905 until his death in 1920, acted as manager of the
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property held in common by the heirs of Julian Melencio and Ruperta
Garcia. The original lessee, Yap Kui Chin, died in 1912, and the lease, as
well as the other property, was transferred to Uy Eng Jui who again
transferred it to Uy Eng Jui & Co., an unregistered partnership. Finally the
lease came into the hands of Dy Tiao Lay, the herein defendant-appellee.
Ramon Melencio died in 1914, and his widow, Liberata Macapagal, was
appointed administratrix of his estate. In 1913 the land which includes the
parcel in question was registered under the Torrens system. The lease was
not mentioned in the certificate of title, but it was stated that one house and
three warehouses on the land were the property of Yap Kui Chin.
In 1920 the heirs of Julian Melencio made an extrajudicial partition of parts
of the inheritance, and among other things, the land here in question fell to
the share of the children of Ramon Melencio, who are the original plaintiffs in
the present case. Their mother, Liberata Macapagal, as administratrix of the
estate of her deceased husband, Ramon, collected the rent for the lease at
the rate of P20.20 per month until the month of May,1926, when she
demanded of the lessee that the rent should be increased to P300 per
month, and she was then informed by the defendant that a written lease
existed and that according to the terms thereof, the defendant was entitled to
an extension of the lease at the original rental. The plaintiffs insisted that
they never had any knowledge of the existence of such a contract of lease
and maintained that in such case the lease was executed without their
consent and was void. It may be noted that upon careful search, a copy of
the contract of lease was found among the papers of the deceased Pedro R,
Melencio. Thereafter the present action was brought to set aside the lease
and to recover possession of the land. Upon trial, the court below rendered
judgment in favor of the defendant declaring the lease valid and ordering the
plaintiffs to pay the P272 demanded by the defendant in his counterclaim.
From this judgment the plaintiffs appealed.
The contention of the appellants is that the aforesaid contract of lease
(Exhibit C) is null and void for the following reasons:
1. That Exhibit C calls for an alteration of the property in question and
therefore ought to have been signed by all the coowners as by law required
in the premises.
2. That the validity and fulfillment of the said agreement of lease were made
to depend upon the will of the lessee exclusively.
3. That the said contract of lease being for a term of over six years, the
same is null and void pursuant to the provision of article 1548 of the Civil
Code.
4. That the duration of the same is unreasonably long, thus being against
public policy.
5. That the defendant-appellee and his predecessors in interest repeatedly
violated the provisions of the agreement.
The first proposition is based on article 397 of the Civil Code which provides
that "none of the owners shall, without the consent of the others, make any
alterations in the common property even though such alterations might be
advantageous to all." We do not think that the alterations are of sufficient
importance to nullify the lease, especially so since none of the coowners
6|Sales & Lease HW#6 Part XVI to XVIII
objected to such alterations until over twenty years after the execution of the
contract of lease. The decision of this court in the case of Enriquez vs. A. S.
Watson and Co. (22 Phil., 623), contains a full discussion of the effect of
alterations of leased community property, and no further discussion upon the
point need here be considered.
The second proposition is likewise of little merit. Under the circumstances,
the provision in the contract that the lessee, at any time before he erected
any building on the land, might rescind the lease, can hardly be regarded as
a violation of article 1256 of the Civil Code.
The third and fourth proposition are, in our opinion, determinative of the
controversy. The court below based its decision principally on the case of
Enriquez vs. A.S. Watson & Co. (22 Phil., 623), and on the resolution of
the Direccion General de los Registros dated April 26,1907. (Jurisprudencia
Civil, vol.107, p. 222.) An examination of the Enriquez case will show that it
differs materially from the present. In that case all of the coowners of a lot
and building executed a contract of lease of the property for the term of
eighteen years in favor of A. S. Watson & Co.; one of the owners was minor,
but he was represented by his legally appointed guardian, and the action of
the latter in signing the lease on behalf of the minor was formally approved
by the Court of First Instance. In the present case only a small majority of
the coowners executed the lease here in question, and according to the
terms of the contract the lease might be given a duration of sixty years; that
is widely different from a lease granted by all of the coowners for a term of
only eighteen years.
The resolution of April 26,1907, is more in point. It relates to the inscription
or registration of a contract of lease of some pasture grounds. The majority
of the coowners of the property executed the lease for the term of twelve
years but when the lessees presented the lease for inscription in the registry
of property, the registrar denied the inscription on the ground that the term of
the lease exceeded six years and that therefore the majority of the coowners
lacked authority to grant the lease. The Direccion General de
los Registros held that the contract of lease for a period exceeding six years,
constitutes a real right subject to registry and that the lease in question was
valid.
The conclusions reached by the Direccion General led to considerable
criticism and have been overruled by a decision of the Supreme Court of
Spain dated June 1,1909. In that decision the court made the following
statement of the case (translation):
The joint owners of 511 out of 1,000 parts of the realty denominated El
Mortero, leased out the whole property for twelve years to Doña Josefa de la
Rosa; whereupon the Count and Countess Trespalacios together with other
coowners brought this suit to annul the lease and, in view of the fact that the
land was indivisible, prayed for its sale by public auction and the distribution
of the price so obtained; they alleged that they neither took part nor
consented to the lease; that the decision of the majority of part owners
referred to in article 398 of the Code, implies a common deliberation on the
step to be taken , for to do without it, would, even more than to do without
the minority, be nothing less than plunder; and that, even if this deliberation
VILLAR
were not absolutely necessary, the power of the majority would still be
confined to decisions touching the management and enjoyment of the
common property, and would not include acts of ownership, such as a lease
for twelve years, which according to the Mortgage Law gives rise to a real
right, which must be recorded, and which can be performed only by the
owners of the property leased.
The part owners who had executed the contract prayed in reconvention that
it held valid for all the owners in common, and if this could not be, then for all
those who had signed it, and for the rest, for the period of six years; and
the Audiencia of Caceres having rendered judgment holding the contract null
and void, and ordering the sale of the realty and the distribution of the price,
the defendants appealed alleging under the third and fourth assignments of
error, that the judgment was a violation of article 398 of the Civil Code, which
is absolute and sets no limit of time for the efficacy of the decisions arrived
at by the majority of the part owners for the enjoyment of the common
property, citing the decisions of June 30th, 1897, of July 8th,1902, and of
October 30th, 1907; under the fifth assignments of error the appellants
contended that in including joint owners among those referred to in said
article, which sets certain limits to the power of leasing, in the course of the
management of another's property, the court applied article 1548 unduly;
and by the seventh assignments of error, they maintained the judgment
appealed from also violated article 1727, providing that the principal is not
bound where his agent has acted beyond his authority; whence it may be
inferred that if in order to hold the contract null and void, the majority of the
part owners are looked upon as managers or agents exercising limited
powers, it must at least be conceded that in so far as the act in question lies
within the scope of their powers, it is valid; the contract cannot be
annulled in toto.
The Supreme Court held that the appeal from the decision of the Audiencia
of Caceres was not well taken and expressed the following consideranda:
Considering that, although as a rule the contract of lease constitutes an act
of management, as this court has several times held, cases may yet arise,
either owing to the nature of the subject matter, or to the period of duration,
which may render it imperative to record the contract in the registry of
property, in pursuance of the Mortgage Law, where the contract of lease
may give rise to a real right in favor of the lessee, and it would then
constitute such a sundering of the ownership as transcends mere
management; in such cases it must of necessity be recognized that the part
owners representing the greater portion of the property held in common
have no power to lease said property for a longer period than six years
without the consent of all the coowners, whose propriety rights, expressly
recognized by the law, would by contracts of long duration be restricted or
annulled; and as under article 1548 of the Civil Code such contracts cannot
be entered into by the husband with respect to his wife's property, by the
parent or guardian with respect to that of the child or ward, and by the
manager in default of special power, since the contract of lease only
produces personal obligations, and cannot without the consent of all persons
interested or express authority from the owner, be extended to include
7|Sales & Lease HW#6 Part XVI to XVIII
stipulations which may alter its character, changing it into a contract of
partial alienation of the property leased;
Considering that, applying this doctrine to the case before us, one of the
grounds upon which the judgment appealed from, denying the validity of the
lease made by the majority of the part owners of the pasture land El
Mortero is based, must be upheld; to wit, that the period of duration is twelve
years and the consent of all the coowners has not been obtained; hence, the
third, fourth. and fifth assignments of error are without merit; firstly, because
article 398 of the Civil Code, alleged to have been violated, refers to acts
decided upon by the majority of the part owners, touching the management
and enjoyment of the common property, and does not contradict what we
have stated in the foregoing paragraph; secondly because although the
cases cited were such as arose upon leases for more than six years, yet this
point was not raised on appeal, and could not therefore be passed upon;
and thirdly, because it cannot be denied that there is an analogy between a
manager without special authority, who is forbidden by article 1548 of the
Code to give a lease for a period of over six years, and the joint owners
constituting a legal majority, who may decide to lease out the indivisible
property, with respect to the shares of the other coowners; and having come
to the conclusion that the contract is null and void, there is no need to
discuss the first two assignments of error which refer to another of the bases
adopted, however erroneously, by the trial court;
Considering that the sixth assignment of error is without merit, inasmuch as
the joint ownership of property is not a sort of agency and cannot be
governed by the provisions relating to the latter contract; whence, article
1727 of the Code alleged to have been violated, can no more be applied,
than, the question of the validity or nullity of the lease being raise, upon the
contract as celebrated, it would be allowable to modify a posteriorisome one
or other of the main conditions stipulated, like that regarding the duration of
the lease, for this would amount to a novation; still less allowable would it be
to authorize diverse periods for the different persons unequally interested in
the fulfillment.
Taking into consideration articles 398,1548, and 1713 of the Civil Code and
following the aforesaid decision of June 1,1909, we hold that the contract of
lease here in question is null and void.
It has been suggested that by reason of prescription and by acceptance of
benefits under the lease, the plaintiffs are estopped to question the authority
for making the lease.To this we may answer that the burden of proof of
prescription devolved upon the defendant and that as far as we can find,
there is no proof that Ramon Melencio and his successors ever had
knowledge of the existence of the lease in question prior to 1926. We cannot
by mere suspicion conclude that they were informed of the existence of the
document and its terms; it must be remembered that under a strict
interpretation of the terms of the lease, the lessees could remain indefinitely
in their tenancy unless the lessors could purchase the mill and the buildings
on the land. In such circumstances, better evidence than that presented by
the defendant in regard to the plaintiff's knowledge of the lease must be
required.
VILLAR
The fact that Ramon during his lifetime received his share of the products of
land owned in common with his coheirs is not sufficient proof of knowledge
of the existence of the contract of lease when it is considered that the land in
question was only a small portion of a large tract which Pedro R. Melencio
was administering in connection with other community property.
The appealed judgment as to the validity of the lease is therefore reversed,
and it is ordered that the possession of the land in controversy be delivered
to the intervenor Liberata Macapagal in her capacity as administratrix of the
estate of the deceased Ramon Melencio. It is further ordered that the
defendant pay to said administratrix a monthly rent of P50 for the occupation
of the land from May 1st, 1926, until the land is delivered to the
administratrix. The sum of P272 demanded by the defendant in his
counterclaim may be deducted from the total amount of the rent due and
unpaid. The building erected on the land by the defendant and his
predecessors in interest may be removed by him, or otherwise disposed of,
within six months from the promulgation of this decision. Without costs. So
ordered.
Avanceña, C.J., , Malcolm, Johns, Romualdez, and Villa-Real, JJ., concur.
Jonhson, J., I reserve my vote.
Separate Opinions
STREET and VILLAMOR, JJ., dissenting:
Although the name of Ramon Melencio, father of the plaintiffs in this action,
was not in fact signed to the lease in question, and the lease did not even so
much as mentioned him as one of the coowners, the undersigned are
nevertheless of the opinion that Ramon Melencio, and his children after him,
are estopped from questioning said lease, for the reason that, from 1905 to
the time of his death in 1914, Ramon Melencio enjoyed the benefits of the
lease, as did his widow and children after him until May,1926, when the
widow repudiated the lease, as a preliminary to the bringing of this action by
the plaintiffs. By their acceptance of the benefits of the lease over so long a
period, the persons now questioning the lease and their father, their
predecessor in interest, are estopped to question the authority for making
the lease. This estopped cures the want of the special power contemplated
in article 1548 of the Civil Code.
In addition to the estopped arising from the acceptance of benefits under the
lease, an estoppel further arises from the fact that Ramon Melecio, during
the years following the execution of the lease, stood by and saw the lessees
place upon the property improvements of a value of more than P100,000, for
which reason, also, equity will not permit the lease to be disturbed to the
prejudice of the lessee.
To exhibit the foregoing proposition fully, it is necessary to understand the
facts relative to the controversy. These are substantially as follows:
8|Sales & Lease HW#6 Part XVI to XVIII
The land covered by the original lease, having an area of some 6,000
square meters, is located in the town of Cabanatuan and was formerly the
property of one Julian Melencio, married to Ruperta Garcia. After the death
of Julian Melencio, his widow, Ruperta Garcia, united in 1905, with three of
their children, namely, Pedro R., Juliana, and Ruperta, in executing, in favor
of Yap Kui Chin, as lessee, the lease which is the subject of this controversy.
The consideration mentioned in the lease was the sum P25 per month. On
August 2,1907, at the request of Pedro R. Melencio, another document was
drawn changing the superficial configuration of the leased land but
preserving its original extension of 6,000 square meters. This change was
made for the purpose of giving Pedro R. Melencio space upon which to
construct a house on the part segragated from the original mass. In 1915 a
new street, passing through the leased property, was opened in
Cabanatuan; and Pedro R. Melencio, acting for the lessors, reduced the
monthly rent from P25 to P20, to correspond with the reduction in the area of
the leased land resulting from the occupation of part of it by the
street.lawphil.net
At the time the lease was made there was living one Ramon Melencio, son
of Julian Melencio and Ruperta Garcia and brother of the heirs who signed
the lease. Also before this time there had been another brother named
Emilio Melencio. But Emilio was dead and his only surviving son, Jose P.
Melencio, was a small boy then under the tutelage of his uncle Pedro R.
Melencio. The lease referred to is not and never has been questioned by
any of the persons, or descendants of the persons, who signed the
instrument. Neither has it been questioned by Jose P. Melecio, son of
Emilio. Nor was the lease questioned in life by Ramon Melencio, who died in
1914; and the only persons raising a question as to its validity are four of the
five children of Ramon, the same being the plaintiffs in this case.
By series of changes, not, necessary to be here recounted, the rights of the
original lessee became vested in the defendant, Dy Tiao Lay. At the time of
the institution of the present action the defendant, Dy Tia lay, had a rice mill,
consisting of valuable buildings and improvements, constructed on the land,
and valued, it is alleged, at P160,000; but during the time of the pendency of
this action a fire occurred which seems to have destroyed the mill and
improvements with the exception of a camarin valued at some P15,000.
In November, 1920, the children of Julian Melencio and Ruperta Garcia
executed a partial extra-judicial partition of the properties belonging to their
father's estate; and the land covered by this lease was assigned to Liberata
Macapagal, widow of Ramon Melencio, in right of her deceased husband
Ramon and as representative of the children. It will be noted that the land
encumbered by the lease was thus assigned precisely to the family of the
deceased brother, Ramon Melencio, who at the same time was the sole
living brother whose name was not signed to the lease.
At the time the lease was executed, Pedro R. Melencio was in fact the
manager of the common ancestral estate belonging to himself and his
brothers and sisters; and he continued as such until 1920. After the partition,
or partial partition, of the fraternal estate in 1920, Liberata Macapagal Viuda
VILLAR
de Ramon Melencio succeeded to the office of manager, or guardian, of the
estate of her children, at least with respect to the parcel now in question.
It will be noted as an important fact that every dollar due as rent from the
leased land was paid by the lessee, from the time when rent first became
due, and these payments were made first to Pedro R. Melencio as manager
of the common estate pertaining to himself and his brothers and sisters, until
1920, when the rents began to be paid to Liberata Macapagal in the right to
herself and children. In April, 1926, Liberata ceased to collect the rent, and
in May, thereafter, she refused to accept payment of the monthly instalment
of rent then due. For this reason the defendant has been making a
consignation of the corresponding rent for the benefit of the lessors in the
office of the provincial treasurer. No question is made that during the life of
Ramon Melencio he received his share of the monthly rental from the
property in question; nor is there any question that thereafter his widow and
children received their share of the same until the property was assigned in
partition to Liberata Macapagal and her children, after which they received
all of the rent, until Liberata refused longer to accept it.
The undersigned concur in the proposition that the lease signed in 1905 was
not per se binding on Ramon Melencio, first, because he was not a party to
that lease; and, secondly, because the making of a lease for twenty years,
extendible under certain circumstances for a second and third period of
equal duration, was an act of rigorous alienation and not a mere act of
management and enjoyment such as is contemplated in article 398 of the
Civil Code. (Sentencia, June 1,1909; Ruiz, Cod. Civ., vol. 4. p. 502) Neither
do we pause to argue that the contract might have been considered valid
under the doctrine of this court stated in Eleizegui vs. Manila Lawn Tennis
Club (2 Phil., 309). At any rate the lease did not purport to bind Ramon, and
he was not even mentioned therein as one of the coowners.
But it is to be noted that none of the parties signatory to the lease have at
any time sought to abrogate the contract; and some of the children of
Ramon Melencio only are before the court as actors in this case seeking to
set the contract aside. Under these circumstances the undersigned are of
the opinion that Ramon Melencio was at the time of his death bound by the
lease, from his having participated for years in the benefits derived from the
contract, and that his children, who derive their rights from him, are likewise
bound.
It is well established that an estate in land may be virtually transferred from
one man to another without a writing, by the failure of the owner to give
notice of his title to the purchaser under circumstances where the omission
to do so would operate as a fraud (Kirk vs. Hamilton, 102 U. S., 68,77; 26
Law. ed., 79). This doctrine is so universally accepted that a bare reference
to general treatises on the subject of estopped is necessary (10 R.C. L.,
p.694; 21 C. J., pp.1154, 1160, 1206, 1207, 1209); and the estoppel is as
effective with respect to a lease as it is with respect to a deed of absolute
conveyance (21 C.J., 1213).
In the case before us Ramon Melencio lived in the town where the land
covered by this lease was located, and every time he went abroad he must
have seen the valuable improvements which the original lessee, or his
9|Sales & Lease HW#6 Part XVI to XVIII
successors in interest, were erecting and had erected upon part of the
common ancestral estate. But from the date the lease was executed until his
death Ramon Melencio did nothing except to receive such portion of the rent
as pertained to him. Under these circumstances, even if his brother Pedro R.
Melencio had conveyed the property away by deed of absolute alienation,
Ramon would have been legally bound. It is but natural that so long as he
lived after the lease was made, no complaint was ever registered by him
against its validity.
And if Ramon Melencio was estoppel, of course his children are estopped,
for their rights are of a purely derivative character. In the case before us a
period of more than twenty-one years elapsed between the time the lease
was made and the date when it was first called in question by the widow.
But Manuel Melencio, the oldest of the heirs who are suing in this case, says
that he did not know the terms of the lease until a short while before this
action was instituted, when he called upon the widow of his uncle Pedro and
found a copy of the lease after searching among his uncle's papers. It is not
surprising that this plaintiff, who was hardly more than a baby when the
lease was made, should not have known about the terms of the contract. But
it was all the time safely kept among the papers of his uncle Pedro, who, as
already stated, was manager of the common estate of the brothers and
sisters. Ramon Melencio is now dead and of course cannot speak as to
whether he knew the terms of the agreement. But he should be presumed to
have known its terms, because he was enjoying benefits from month to
month under it, and he had the means of knowledge immediately at hand,
namely by recourse to a trusted brother in whose custody the contract was
preserved. In addition to this, we note that when partition was effected about
the year 1920 the fact that the property in question was subject to a lease in
favor of the defendant was noted in the document by which the property was
assigned to Liberata Macapagal and her children. The suggestion that the
terms of the lease were unknown to the plaintiffs is of little weight and of no
legal merit. We note that the lease was never registered, but this fact makes
no difference in a lawsuit between the parties to the lease, or their
successors in interest.
We are of the opinion that the judgment should be affirmed.
(3) G.R. No. 2070 January 2, 1906
W.H. TIPTON, Chief of the Bureau of Lands and Administrator of the
Estate of the San Lazaro Hospital,plaintiff-appellant,
vs. ROMAN MARTINEZ Y ANDUEZA, defendant-appellee.
Office of the Solicitor-General Araneta for appellant.
Coudert Brothers for appellee.
MAPA, J.:
On the 30th day of October, 1899, Vicente Aguirre y Flores, as administrator
of the San Lazaro Hospital, leased to the defendant in this case a tract of
land belonging to the hospital. It was stipulated in the contract that the lease
should run for a period of ten years from the 1st day of January, 1899.
VILLAR
Aguirre, the administrator, was duly authorized to execute such contracts,
but his power was general in terms and contained no provision specially
authorizing him to make leases with respect to the hospital property for a
period of ten years or any other specific term.
The plaintiff, as the present administrator of the hospital property, claims that
the contract made by his predecessor, Aguirre, was null and void for want of
power on his part to make such contract, basing his contention upon the
provisions of article 1548 of the Civil Code. That article reads as follows:
The husband with respect to the property of his wife, the father and guardian
with regard to that of his children or minor, and the administrator of property
without a special power giving him such authority, can not execute a lease
for a period exceeding six years.
This provision plainly shows that Aguirre could not, as administrator, have
validly executed a lease of the land in question for a period of ten years in
the absence of special authority to that effect. This, in our opinion, vitiated
the contract. This defect, however, did not affect the contract in its entirety,
but only in so far as it exceeded the six-year limit fixed by law as the
maximum period for which an administrator can execute a lease without
special power. The contract in question was perfectly valid in so far as it did
not exceed that limit, it having been executed by the administrator, Aguirre,
within the scope of the legal authority he had under his general power to
lease. That general power carried with it, under the article above quoted, the
authority to lease the property for a period not exceeding six years. There
was no excess of authority and consequently no cause for nullification
arising therefrom, as to the first six years of the lease. As to the last four, the
contract was, however, void, the administrator having acted beyond the
scope of his powers.
The trial court construed article 1548 of the Civil Code as applying only to
administrators of estates of deceased persons. This construction is
manifestly erroneous. The provisions of that article are general and apply as
well to administrators of property of living as of deceased persons.
It is contended, on the other hand, by the defendant, that article 1548 is not
applicable to public lands such as the property in question, nor to public
officials as was Vicente Aguirre, the administrator of the San Lazaro
Hospital.
As to the first contention, it is not stated in defendant's brief in what sense
the words "public lands" are used. It seems, however, that the defendant
refers to lands of the public domain. He testified at the trial that the lands of
the San Lazaro Hospital belonged to the Government of the United States. If
such were the case his interpretation of these words would be erroneous.
That property belongs to the public domain which is destined to public use or
which belongs exclusively to the State without being devoted to common use
or which is destined to some public service or to the development of the
national resources and of mines until transferred to private persons. (Art.
339 of the Civil Code.) The land in question does not pertain to any of these
classes. The best proof of it is that the defendant himself had been using it
for his own personal and exclusive benefit. So that, assuming without
deciding that the land in question belonged to the Government of the United
10 | S a l e s & L e a s e H W # 6 P a r t X V I t o X V I I I
States, it would be nevertheless private property under the provisions of
articles 340 and 345 of the Civil Code, and as such unless provided for by
special legislation, is subject to the provisions of those articles. The
defendant has not called our attention to any special law providing a method
different from that contained in the Civil Code for the leasing of the lands
belonging to the San Lazaro Hospital, and we do not know of the existence
of any such law.
As to public officials, the only reason given by defendant in support of his
contention that article 1548 does not apply to them is that it would be
impossible for the Government to make a lease for a period exceeding six
years, because it has no legal capacity and must necessarily transact all its
business through the medium of officials. This contention can not be
sustained. It is a manifest error to say that the Government has no legal
capacity or that is has no power to grant special authority to one of its
officials for the leasing of Government property for a period exceeding six
years, if deemed advisable. This is so apparent that it certainly requires no
argument.
It is claimed, however, that Government officials do not act by virtue of any
special power but under the law creating their respective offices, and that for
this reason they are not affected by the provisions of article 1548, which
refer to administrators whose acts may be governed by the limitations of a
power of attorney. We think that this is a mere question of words. Power,
according to text writers, means the authority granted by one person to
another to do in his behalf the same thing which he would do himself in the
premises. This is the sense in which the word power is used in that article
and it refers to the private individual who administers property belonging to
another as well as to the public official who administers patrimonial property
or the private property belonging to the State. Such property, whether owned
by the State or by a private citizen, is covered by the provisions of the Civil
Code. In either case the administrator, in so far as he has the management
of the property of another, is a mere agent whose acts must be governed by
the limitations of the power which his principal may have conferred upon
him. In neither case can he exceed these limitations, but must discharge his
trust in accordance with his instructions. A public official is not, as such,
exempt from the operation of this rule. He can not assume that he has the
power to lease to others the patrimonial property belonging to the State for
such time as he may see fit, say, for eighty or ninety years. He can not do so
unless expressly authorized. Whether the administrator derives his powers
from a legislative enactment, as in the case of a public official, or from the
terms of a public instrument where private parties only are concerned, is
immaterial. It is a mere question of form which does not affect the provision
of the code above cited. What the law requires in order that the administrator
may lease the property for a period exceeding six years is special power
giving him such authority. The grant must be contained in a public
document. (Art. 1280 of the Civil Code.) A public document may be either a
public instrument or a legislative enactment, for legislative acts are also
public documents under our code.
VILLAR
Furthermore it is very doubtful whether Aguirre was in fact a public official as
the administrator of the San Lazaro estate. This question, however, was not
raised in the court below, no evidence bearing on the subject having been
introduced. We have merely assumed that he was such for the sake of
argument.
It is further contended by the defendant that the complaint does not state a
cause of action. This is not true. A mere perusal of the complaint will show
the contrary. We hold that the facts therein set forth constitute a sufficient
cause of action.
It is also contended that there is no allegation with respect to the interest of
the plaintiff in this action. Without passing upon the correctness of this
allegation which refers to the legal capacity of the plaintiff, it may be said that
as no question was raised as to this point in the court below it can not be
urged on appeal.
The court below expressly found that the Government had collected rent for
four years and held that it had thereby ratified the contract. This question
was not discussed in the court below and, legally speaking, the court should
not and could not have made any such finding. We hold that this was error
on the part of the trial court.
The judgment of the court below is hereby modified so as to declare that the
lease in question was valid only for six years from the 1st day of January,
1899, to the 31st of December, 1904, and void as to the last four years of
the contract term — that is to say, the effects of its nullity should date from
the 1st day of January, 1905. The defendant shall return the land in the form
and manner provided for in the lease together with the proceeds derived
from its possession since the last-mentioned date. The plaintiff will return to
the defendant the rent received during the same period, provided the rent
has in fact been paid to him, with legal interest thereon at the rate of 6 per
cent per annum. No costs will be allowed to either party in either instance.
After the expiration of twenty days let judgment be entered in accordance
herewith and let the case be remanded to the court below for action in
conformity herewith. So ordered.
Arellano, C.J., and Carson, J., concur.
Willard, J., dissents.
Separate Opinions
JOHNSON, J., dissenting:
I can not conform with the doctrine contained in this decision.
Article 1548 of the Civil Code does not permit an administrator to make a
contract such as was made in this case for a period exceeding six years.
When the defendant here made a contract for more than six years it was
void, and, being void, can not be valid in part. However, inasmuch as more
than six years have elapsed since the making of such contract and by virtue
of this decision he may now be dispossessed, and for the purpose of arriving
at a conclusion, I hereby conform with that part of the decision which in its
effects gives the Government the right to dispossess the defendant of the
lands in question.
11 | S a l e s & L e a s e H W # 6 P a r t X V I t o X V I I I VILLAR

right interest, and participation, including the the rights of lease of the "Cine
Collegian", to Angel Garchitorena and Benigno del Rio, copy of which is
attached to this stipulation and made a part thereof as Exhibit I, reserving
(4) G.R. No. L-41768 December 17, 1935
plaintiff's right to establish that it neither has knowledge of, nor consented to,
VIUDA E HIJOS DE PIO BARRETTO Y CIA., plaintiff-appellee,
said sale;
vs. ALBO & SEVILLA, INC., VlCENTE ALBO, EUGENIO SEVILLA and
9. That on August 15, 1931, Angel Garchitorena and Benigno del Rio
ANGEL GARCHITORENA, defendants-appellants.
executed in favor of Viuda e Hijos de Pio Barretto & Co., Inc., another chattel
Teofilo Mendoza and Vicente Bautista for appellants.
mortgage of the same fixtures and chattels of the "Cine Collegian" described
Laurel, Del Rosario and Sabido for appellee.
therein, which deed is duly registered in the office of the register of deeds of
the City of Manila pursuant to Act No. 1508, copy of which, duly certified by
said registry office, is attached to this stipulation as Exhibit C;1awphil.net
IMPERIAL, J.:
10. That the defendants have been required by the attorneys for the plaintiff
The plaintiff brought suit to require the defendants to pay a certain rent
to pay the rent, as evidenced by the letters of February 6, 1933, and March 1
stipulated in a contract of lease. The defendant appealed from the judgment
of the same year, copies of which are attached hereto as Exhibits D and D-
ordering them to pay, jointly and severally, the plaintiff the sum of P11,400
1, respectively; and the defendants have orally alleged that they are no
as unpaid rents from April 1, 1932 to October 31, 1933, inclusive, the sum of
longer connected with the "Cine Collegian" in virtue of the aforesaid sale to
P600 a month from November 1, 1933 until the termination of the contract of
Benigno del Rio and Angel Garchitorena.
lease, plus P1,000 as penalty and attorney's fees, and the costs.
In the chattel mortgage deed of August 15, 1931, mentioned in paragraph 9
The pertinent facts requisite to resolve the appeal are condensed in the
of the stipulation of facts, are found the following important clauses:
following stipulation of the parties:
First: That we are the owners in fee simple, free from all lien, incumbrence,
1. That the plaintiff is a corporation duly organized and existing under the
and charge, undivided and share and share alike, of the following property
laws of the Philippine Islands, with its main office at No. 720, Echague
found in the building known as "Cine Collegian", belonging to the corporation
Street, Manila;
Viuda e Hijos de Pio Barretto & Co., Inc., situated on the corner of Mercedes
2. That the defendant Albo & Sevilla, Inc., is likewise a corporation organized
and Trinidad Ayala Streets, Ermita, Manila.
and existing under the laws of the Philippine Islands, with its office at No.
xxx xxx xxx
670, Dasmariñas Street, City of Manila; and the other defendants, Vicente
Third: That to secure the payment of the monthly rental of Six hundred
Albo, Eugenio Sevilla and Angel de Garchitorena, are all of age with legal
pesos (P600), Philippine currency, for the occupancy of the "Cine Collegian",
capacity to be parties in this suit;
payable within the first five (5) days of every month, in advance, until
3. That on July 15, 1930, the plaintiff and the defendants entered into a
December 31, 1936, as well as the faithful compliance with the terms of the
contract of lease, the original of which is attached hereto and made an
existing contract on said "Cine Collegian", we, the undersigned, do
integral part of this stipulation as Exhibit A;
constitute a first, special, and voluntary mortgage upon the property
4. That by force of said contract of lease the defendants occupied the "Cine
described in the first paragraph hereof, and upon all our right, interest,
Collegian" and regularly paid the rent therefor until February 28, 1931;
action, or participation in the properties described in the second paragraph
5. That thereafter the rents for said cinema have been paid by Angel
hereof, in favor of the corporation Viuda e Hijos de Pio Barrette & Co., Inc.,
Garchitorena either by check of Benigno del Rio or in cash;
its heirs and assigns. . . .
6. That the receipts for rent paid from March, 1931, were issued in the name
We, Angel de Garchitorena and Benigno del Rio, mortgagors, and Jose G.
of Albo & Sevilla, Inc., without prejudice to the right of the defendants Albo &
Barrette, manager of the corporation Viuda e Hijos de Pio Barretto & Co.,
Sevilla, Inc., Eugenio Sevilla, and Vicente Albo to adduce evidence that the
Inc., mortgagee, do swear individually that the foregoing mortgage has been
said issuance has not come to their knowledge from March 1, 1931;
constituted to secure the obligation therein specified, that the said obligation
7. That on January 19, 1931, the defendants Eugenio Sevilla, Vicente Albo
is just and valid, and that the said mortgage has not been fraudulently
and Angel Garchitorena executed a chattel mortgage of the fixtures and of
constituted.
the "Cine Collegian" in favor of Vda. e Hijos de Pio Barretto and Co., Inc.,
Under the facts, the only question perhaps which we must resolve is whether
which was presented for registration on February 6, 1931, but said
the contract of lease was novated by the substitution of lessees, and, if so,
document was not registered; and that said mortgage was executed under
whether the, substitution was consented to by the plaintiff lessor.
the stipulation in subsection (h) of the second paragraph of the contract of
Articles 1203 and 1205 of the Civil Code provide:
lease, Exhibit A. The original of said deed is attached hereto and made an
ART. 1203. Obligations may be modified:
integral part of this stipulation marked as Exhibit B;
1. By the change of their object or principal conditions;
8. That by a deed of February 28,1931, Vicente Albo and Eugenio Sevilla, in
2. By substituting another in place of the debtor;
their own behalf and in that of the corporation Albo & Sevilla, Inc., sold their
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3. By subrogating a third person to the rights of the creditor.
ART. 1205. Novation which consists in the substitution of the of a new
debtor in the place of the original one may be made without the knowledge
of the latter, but not without the consent of the creditor.
Responsive to the said provisions, the substitution of the debtor or in an
obligation with the creditor's consent, produces novation by bringing into
being a new obligation in place of the old. Applied to the case under
consideration, the result is, that if the plaintiff consented to the substitution of
Angel Garchitorena and Benigno del Rio in lieu of the original lessees, it has
exhausted all its right of action against the latter and can only enforce the
same against the new lessees. Our inquiry, therefore, will bear on the
existence of such consent.
Exhibit 1 undoubtedly evidences that Vicente Albo and Eugenio Sevilia
conveyed all their rights, interest and participation in the "Cine Collegian",
whose business was styled Albo & Sevilla, Inc., in favor of Angel
Garchitorena and Benigno del Rio, including all their rights, interest, and
obligations under the contract of lease entered into on July 15, 1930. This
appears in the aforesaid deed, and so also in paragraph 8 of the stipulated
facts. True, the plaintiff had no hand in this document Exhibit 1, for which
sole reason it may be alleged that it neither knew nor consented to the
transaction. However, in the quoted clauses from the duly registered chattel
mortgage Exhibit C, executed on August 15, 1931, by Angel Garchitorena
and Benigno del Rio, wherein the plaintiff directly intervened and took part
through the manager Jose G. Barretto, who signed in its name, appear
statements of the contracting parties clearly and logically compelling the
deduction that, under its terms, the plaintiff knew of the conveyance made by
Vicente Albo and Eugenio Sevilla in favor of Angel Garchitorena and
Benigno del Rio, and virtually approved of and consented to the substitution
of the new lessees. It is first to be noted that the document states that
Garchitorena and Del Rio mortgaged the same chattels which Albo, Sevilla,
Garchitorena and Albo & Sevilla, Inc., had already previously mortgaged to
the said plaintiff to secure the obligations which they assumed under the
contract of lease Paragraph 1 next states that Angel Garchitorena and
Benigno del Rio became the owners of the same chattels. Paragraph 3
likewise states that the period of the contract of lease is extended to
December 31, 1936, and that the security is for the faithful compliance with
the other conditions stipulated in the original contract of lease. The
concluding clause of the deed is a reiteration that the security takes in all the
condition; and obligations arising from the contract of lease. In the face of
such circumstances, we believe the only logical and reasonable deduction is
that in view of the second mortgage, the plaintiff was apprized of and
acquiesced in the change of lessees.
The plaintiff argues that Vicente Albo and Eugenio Sevilla undertook to be
joint and several sureties for the payment of rents under the third paragraph
of the contract of lease which says: "Third: Messrs. Vicente Albo, Eugenio
Sevilla and Angel Garchitorena, jointly and severally under take with Albo &
Sevilla, Inc., to comply with all the obligations of the lessees in this contract."
We understand and so hold that by the terms, clear to be sure, of said
VILLAR
clause, Albo and Sevilla did not execute a special and separate bond, but
only intended to state that the obligations assumed by them with
Garchitorena and the corporation Albo & Sevilla, Inc., relative to the
conditions of the contract of lease, were joint and several in nature. It would
be repugnant to the nature of the contract of guaranty and to the provisions
of article 1922 of the Civil Code to construe that the intention of said alleged
sureties was to become guarantors of their own obligations. Granting,
however, That it were a bond, which seems to us absurd, their obligations as
sureties were extinguished at the same time as their obligations as debtors
or lessees, under the express provisions of article 1847 of the same Code.
After the promulgation of the decision rendered in this case, which is
practically that above-quoted, the co-defendant Albo & Sevilla, Inc., filed a
motion entitled "Motion to clarify the dispositive part of the judgment" praying
that the judgment be modified by absolving it likewise from the complaint. In
support of the petition the point is made that the corporation Albo & Sevilla,
Inc., was likewise released from its obligation as lessee in view of our
holding that there had a novation by the substitution of lessees. And the
whole argument rests on the stipulation in paragraph 8 of the agreed
statement of facts that the corporation had likewise conveyed its interest,
rights, and obligations in the contract of lease Exhibit A to Angel
Garchitorena and Benigno del Rio. The contention, although it was not
discussed at length in the original decision because it was not raised then in
the briefs,, is clearly untenable and without merit. It should be borne in mind
that while such fact has really been stipulated, however, the said paragraph
8 has likewise stated that Exhibit 1, which is the deed of conveyance
furnishing one of the grounds of novation, forms an integral part of said
stipulation, hence, its content cannot and should not be overlooked in
ascertaining who transferred their obligations to the new lessees under the
contract of lease. Viewing the fact stipulated in paragraph 8 in connection
with the contents of Exhibit 1, and interpreting them together pursuant to the
provisions of article 1285 of the Civil Code, it will plainly be seen that the
corporation Albo & Sevilla, Inc., neither intervened in Exhibit 1 nor conveyed
its rights and obligations in the lease from which it follows that the plaintiff
could not have consented expressly or impliedly to non-existing contract. We
said that there was a novation the original contract of lease in view of certain
statements appearing in the second chattel mortgage deed, Exhibit C, from
which the plaintiff necessarily obtained knowledge of the existence of the
deed of conveyance Exihibit 1, and in yielding assent to the second
mortgage, the logical and inescapable deduction is that it consented
impliedly to the substitution of lessees. If these were the grounds of the
novation, and if the corporation Albo & Sevilla, Inc., neither took part nor
intervened either in the deed of conveyance Exhibit 1 or in the second
chattel mortgage Exhibit C, it is evident that the novation was not extended
to it, nor can it successfully allege that it was substituted by the new lessees.
We, therefore, conclude that the petition is absolutely groundless and
untenable.
In its reply to the motion of Albo & Sevilla, Inc., the plaintiff likewise
petitioned that we affirm the appealed judgment on the ground that, although
13 | S a l e s & L e a s e H W # 6 P a r t X V I t o X V I I I
Vicente Albo and Eugenio Sevilla were relieved from their obligations as
lessees in view of the substitution, nevertheless they continue to be bound
by all the consequences of the original contract of lease as sureties. In other
words, the plaintiff reaffirms that under paragraph 3 of the deed of lease,
said two defendants also acted as sureties of the other lessees. The
language of paragraph 3 does not lend itself to such interpretation. Manifest
is the parties' intention that Vicente Albo and Eugenio Sevilla did not bind
themselves as sureties of the other co-lessees, their only intention being to
make known that the obligations assumed by all the lessees were joint and
several in nature. This same conclusion was already stated in the original
decision when the same point was considered and discussed. We, therefore,
hold that the Plaintiff's petition is likewise groundless and untenable.
Wherefore, the appealed judgment is modified, absolving the defendants
Vicente Albo and Eugenio Sevilla from the complaint, and the same is
affirmed in all other respects, without special pronouncement as to the costs
in this instance. So ordered.
Hull, Butte, and Diaz, JJ., concur.
Separate Opinions
VILLA-REAL, J., concurring and dissenting:
I am in accord with the majority opinion in so far as it modifies the appealed
judgment the defendants Vicente Albo and Eugenio Sevilla from the
complaint, and I dissent in so far as it affirms the rest of the aforesaid
judgment ordering Albo & Sevilla, Inc., to pay, jointly and severally with
Vicente Albo, Eugenio Sevilla and Angel Garchitorena, the plaintiff the sum
of P11,400 as unpaid rents from April 1. 1982 to October 31, 1933, inclusive,
the sum of P600 a month from November 1, 1993, until the termination of
the contract of lease, plus P1,000 as penalty and attorney's fees, and the
costs.
In paragraph 8 of the stipulation of facts, the following appears:
8. That by a deed of February 28, 1931, Vicente Albo and Eugenio Sevilla, in
their own behalf and in that of the corporation Albo & Sevlla, Inc., sold their
right, interest, and participation, including the rights of lease of the "Cine
Collegian", to Angel Garchitorena and Benigno del Rio, copy of which is
attached to this stipulation and made a part thereof as Exhibit I, reserving
plaintiff's right to establish that it neither has knowledge of, nor consented to,
said sale.
While the deed of sale Exhibit 1 does not state that Vicente Albo and
Eugenio Sevilla likewise sold the rights and interest of Albo & Sevilla, Inc., in
the latter's behalf, nevertheless, in reciting in said paragraph 8 of the
stipulation of facts that the said deed of sale included the rights and interest
of said corporation, the omission in the said deed of sale Exhibit 1 was
remedied. If by virtue of said sale, to which implied consent was later given
by the plaintiff-appellee Viuda e Hijos de Pio Barrette & Co., Inc., in
informing to the execution of the chattel mortgage Exhibit C, the defendants
Vicente Albo and Eugenio Sevilla were released from their obligation as
VILLAR
lessees of the "Cine Collegian", it follows that Albo & Sevilla, Inc., was
likewise discharged under the said paragraph 8 of the stipulation of facts.
Moreover, and this is the most fundamental, the contract of lease having
been novated, all the joint and several lessees, including Albo and Sevilla,
Inc., were released from its effects under the provisions of article 1143 of the
Civil Code, reading:
ART. 1143. The novation, compensation, merger, or remission of the debt,
made by any one of the solidarity creditors, or with any of the solidary
debtors, extinguishes the obligation, without prejudice to the provisions of
article 1146.
Any creditor by whom any of these acts may have been done, as well as he
who may collect the debt, shall be liable to the others for their proportional
share of the obligation.
The juridical relation existing between a joint and several creditor and the
joint and several debtors is the same in its effect as that existing between a
simple creditor and the joint and several debtors. If the novation made by a
joint and several creditor with any of the debtors of the same class
extinguishes the obligation, there is no juridical reason why the novation
made by a simple creditor with some of the joint and several debtors should
not produce the same effect of extinguishing the obligation. Under the same
principle, the implied novation made by the lessor, the herein plaintiff-
appellee Viuda e Hijos de Pio Barretto & Co., Inc., with two of the joint and
several lessees, the herein defendants-appellants Vicente Albo and Eugenio
Sevilla, of the contract of lease of the "Cine Collegian", extinguished the
obligation with respect to the joint and several lessee Albo & Sevilla, Inc.
(See decision of the Supreme Court of Spain of February 21, 1912.)
Article 1281 of the French Civil Code sanctions this result in providing that all
the co-debtors are discharged by the novation that had taken place between
the creditor and one of the joint and several debtors.
Ruggiero, in his work entitled, Institutes of Civil Law, volume II, page 92,
speaking of passive solidarity, or that which permits a creditor to whom
several debtor have the same indebtedness to claim the total thereof from
any of them, concludes as follows: .
If, therefore, the interruption of the prescription, default, the novation, the
remission of the debt, the oath are acts affecting the debt in its objective
unity, it follows: That . . . (3) the novation between the creditor and one of the
debtors the others, unless the creditor should have required the inclusion of
the other co-debtors, because the latter's refusal to adhere to the new
agreement would keep alive the old indebtedness (article 1277, Italian Civil
Code). . . ..
I am, therefore, of the opinion, that the corporation Albo & Sevilla, Inc.,
should also be absolved from the complaint.
Malcolm, and Goddard, JJ., concur.
AVANCEÑA, C.J., dissenting:
This is a suit brought to require compliance with an obligation arising from a
contract of lease.
The contract was entered into on July 15, 1930, between the plaintiff, as
lessor, and the four defendants Albo & Sevilla, Inc., Vicente Albo, Eugenio
14 | S a l e s & L e a s e H W # 6 P a r t X V I t o X V I I I
Sevilla and Angel Garchitorena, as lessees, who bound themselves jointly
and severally to comply therewith. On January 19, 1931, three of the
defendants, namely, Eugenio Sevilla, Vicente Albo and Angel Garchitorena,
secured compliance with the contract by a mortgage of certain chattels. On
February 28, 1931, two of the defendants, Vicente Albo and Eugenio Sevilla,
conveyed their interest, participation and rights in the lease to the other
lessee Angel Garchitorena and to Benigno del Rio. On August 15, 1931,
Angel Garchitorena and Benigno del Rio, to secure compliance with the
same contract of lease, mortgaged the chattels which had already been
mortgaged for the same purpose on January 19, 1931, as well as other
properties described in the mortgaged deed.
From these facts the majority infers that the contract of lease was novated
by the substitution for the lessees Eugenio Sevilla and Vicente Albo of Angel
Garchitorena and Benigno del Rio. In view of this conclusion, the majority
absolves Eugenio Sevilla and Vicente Albo from the complaint and renders
judgment against the defendant Angel Garchitorena and Albo & Sevilla, Inc.
If, as the majority decides, the contract of lease in question was novated by
the substitution of some of the lessees, all of them being joint and several
lessees, the obligation created by said contract was extinguished under
article 1146 of the Civil Code, and, consequently, Albo & Sevilla, Inc., should
be discharged as the contract of lease the action against it is no longer in
existence.
In my opinion, however, the contract of lease was not novated, and the
appealed judgment against all the defendants should be affirmed.
The novation which consists in the substitution of a new debtor for the old
one cannot be made without the creditor's consent. The conveyance by
Vicente Albo and Eugenio Sevilla of their interest, participation and rights in
the lease to Angel Garchitorena and Benigno del Rio was without plaintiff's
consent. But, the prevailing opinion states, this consent was impliedly given
by the plaintiff when it entered into the mortgage contract of August 15,
1931, with Angel Garchitorena and Benigno del Rio. The ground of the
conclusion is, that by virtue of said contract the plaintiff learned that Vicente
Albo and Eugenio Sevilla had conveyed their rights in the lease to
Garchitorena and del Rio, and having accepted the mortgage executed by
the latter by reason of that conveyance, the plaintiff thereby consented to
said conveyance.
There is nothing, however, in the mortgage contract of August 15, 1931,
partly quoted in the majority opinion, supporting this conclusion. There is
absolutely no mention therein of such conveyance of the rights of lease. The
only deduction from that contract is that Albo and Sevilla sold to
Garchitorena and Del Rio the chattels which were mortgaged on January 19,
1931. But this does not perforce imply that Albo and Sevilla also conveyed
their rights of lease. The contract of lease was different from that of
mortgage, and in the latter only three of the lessees intervened and it was
entered into long after the contract of lease was executed. It was
unnecessary for the lease that the mortgage be constituted, as the former
was entered into without the latter, which was executed months afterwards.
Thus viewed, whatever plaintiff knew of the conveyance of the mortgaged
VILLAR
properties, did not serve to apprize her of the fact that the lease rights
likewise changed hands. The most that can be said is that the plaintiff
consented to the conveyance of the mortgaged properties to Garchitorena
and Del Rio, but it can not be said that thereby it likewise consented to the
transfer of the lease rights of which it does not appear that it had knowledge.
Neither is the majority's theory helped by the fact that Garchitorena and Del
Rio secured compliance with the conditions of the lease by a mortgage, as a
third person may secure another's obligation by a mortgage without bringing
about thereby a substitution of the debtor. Nor the fact that the plaintiff
accepted the extension of the lease, since, aside from the fact that an
extension is not a novation, even if it were, it would be a novation of the
conditions of the contract but not by the substitution of a debtor by another.
My opinion is that there has been no substitution of debtors by others, and
that the defendants continue to be the lessees of the "Cine Collegian" and
should all be ordered to pay to the plaintiff the latter's claim in this case, thus
affirming the appealed judgment.
Vickers, J., concurs.
(5) G.R. No. L-8697 March 30, 1916
M. GOLDSTEIN, plaintiff-appellee,
vs. ALEJANDRO ROCES, ET AL., defendants-appellants.
Escaler and Salas for appellants.
Wolfson and Wolfson for appellee.
ARELLANO, C. J.:
Defendants leased to plaintiff the first floor of a building belonging to them.
They leased the rest of the premises to the proprietor of the Hotel de
Francia. The proprietor of this hotel requested permission of defendants to
add another story to the building. Defendants gave him permission to do so.
The proprietor of the hotel covenanted with a contractor for the construction
of the new upper story. The contractor having taken charge of the work, it
was found necessary to open holes in the roof for the insertion of uprights.
When it rained, the water leaked through these holes. Plaintiff conducted a
saloon business, known as the "Luzon Cafe," in the premises leased by him
and the water stained the walls and furniture, making his place unattractive
to his customers. As a consequence, it became necessary to make certain
repairs and his receipts fell of during the progress of this work. The trial
court, basing his action on the provisions of article 1554 of the Civil Code,
rendered judgment in plaintiff's behalf.
Articles 1554 provides that the lessor is obliged to maintain the lessee in the
peaceful enjoyment of the lease during all the time covered by the contract.
Nobody has in any manner disputed, objected to, or placed any difficulties in
the way of plaintiff's peaceful enjoyment, or his quiet and peaceable
possession of the floor he occupies. The lessors, therefore, have not failed
to maintain him in the peaceful enjoyment of the floor leased to him and he
15 | S a l e s & L e a s e H W # 6 P a r t X V I t o X V I I I
continues to enjoy this status without the slightest change, without the least
opposition on the part of any one. That there was a disturbance of the peace
or order in which he maintained his things in the leased story does not mean
that he lost the peaceful enjoyment of the thing rented. The peace would
likewise have been disturbed or lost had some tenant of the Hotel de
Francia, living above the floor leased by plaintiff, continually poured water on
the latter's bar and sprinkled his bar-tender and his customers and tarnished
his furniture; or had some gay patrons of the hotel gone down into his saloon
and broken his crockery or glassware, or stunned him with deafening noises.
Numerous examples could be given to show how the lessee might fail
peacefully to enjoy the floor leased by him, in all of which cases he would, of
course, have a right of action for the recovery of damages from those who
disturbed his peace, but he would have no action against the lessor to
compel the latter to maintain him in his peaceful enjoyment of the thing
rented. The lessor can do nothing, nor it is incumbent upon him to do
anything, in the examples or cases mentioned, to restore his lessee's peace.
Manresa, in commenting on the aforementioned article 1554, very clearly
says:
The lessor must see that the enjoyment is not interrupted or disturbed, either
by others' acts (save in the case provided for in the article 1560), or by his
own. By his own acts, because, being the person principally obligated by the
contract, he would openly violate it if, in going back on his agreement, he
should attempt to render ineffective in practice the right in the thing he had
granted to the lessee; and by others' acts, because he must guarantee the
right he created, for he is obliged to give warranty in the manner we have set
forth in our commentary on article 1553, and, in this sense, it is incumbent
upon him to protect the lessee in the latters' peaceful enjoyment.
It is unquestionable that, if plaintiff has suffered damages, a right of action
for their recovery should lie in his behalf. Such an action should always be
brought against the tort feasor. A person who by an act or omission causes
damage to another, when there concurs fault or negligence, shall be obliged
to repair the damage done (Civil Code, 1902). Who should bring this action,
the lessor or the lessee? In some cases, the lessor; in others, the lessee
himself; but not the lessee against the lessor to the exclusion of the person
who caused the damage. If it should be brought by the lessor, the lessee
should get him to protect the latter in his peaceful enjoyment of the property
as against the third person who disturbed such enjoyment; if the right of
action pertains to the lessee himself, then the lessor can not even do this,
because he can not take the lessee's defense upon himself in violation of the
positive mandates of the law, for the reason that the law denies him
personality for that purpose.
Account has not been taken of the provisions of article 1560, mentioned as
an exception in the preceding quotation. This article prescribes as follows:
The lessor shall not be obliged to answer for the mere fact of a trespass
(perturbacion de mero hecho) made by a third person in the use of the
estate leased, but the lessee shall have a direct action against the
trespassser.
VILLAR
Here below we quote Manresa's commentary on said article, with which we
entirely agree:
Reasons for the provision contained in article 1560. — We already know
what is understood by legal trespass and trespass in fact only. We likewise
know that, according to the article we are now dealing with, the lessor is not
liable for trespasses of this latter kind, although he is liable for trespasses in
law (de derecho), pursuant to No. 3 of article 1554, the force of which has
suffered no change by any subsequent article; and we now inquire into the
reason for this distinction or, better stated, the reason for the nonliability of
the lessor in trespasses in fact only.
A necessary condition of the enjoyment of the lessee, the chief feature of the
lease, is the possession he must have of the thing; without that, there can be
no enjoyment. True it is that the lessee does not hold such possession in the
capacity of owner and that, therefore, he cannot and should not derive from
it the effects which, under other circumstances, would ensure; but, after all,
he is a possessor. If we carefully examine that relation of possession, we
shall see that it is double; on the one hand, he possesses the thing as a
condition of enjoying it while, on the other, he possesses his right to the
enjoyment of the thing. In certain respects he holds possession of the thing
in the name of its owner, in so far as this latter has not ceased to hold it for
the purpose of prescription, for example, because he leases the property;
but the possession of his right of use pertains to him in his own name, as
acquired by virtue of a just title, that is, the contract of lease. If then, the
trespass in fact only refers to the use of the thing, who but the lessee can
have the personality to oppose it? It must be carefully noted that article 1560
speaks of trespass in fact only in the use of the property leased, and that if
such trespass is translated into anything material which affects the property
itself, then only in so far as it is a disturbance of the use of the property is it
incumbent upon the lessee to repel it.
True it is that, pursuant to paragraph 3, of article 1554, the lessor must
maintain the lessee in the peaceful enjoyment of the lease during all of the
time covered by the contract, and that, in consequence thereof, he is obliged
to remove such obstacles as impede said enjoyment; but, as in warranty in a
case of eviction (to which doctrine the one we are now examining is very
similar, since it is necessary, as we have explained, that the cause of
eviction be in a certain manner imputable to the vendor, which must be
understood as saying that it must be prior to the sale), the obstacles to
enjoyment which the lessor must remove are those that in some manner or
other cast doubt upon the right by virtue of which the lessor himself executed
the lease and, strictly speaking, it is this right that the lessor should
guarantee to the lessee.
Briefly, if the act of trespass is not accompanied or preceded by anything
which reveals a really juridic intention on the part of the trespasser, in such
wise that the lessee can only distinguish the material fact, stripped of all
legal form or reasons, we understand it to be trespass in fact only (de mero
derecho). The judgment appealed from is reversed, and it is hereby ordered
that the complaint against the defendant lessors be dismissed, with the costs
against the plaintiff and without special finding in this instance. To plaintiff is
16 | S a l e s & L e a s e H W # 6 P a r t X V I t o X V I I I
reserved the right allowed him by subsection 4 of section 127 of the Code of
Civil Procedure. So ordered.
Torres, Moreland, and Araullo, JJ., concur.
Separate Opinions
TRENT, J., dissenting:
Plaintiff seeks to recover from his lessors for damages to his furniture and
fixtures and for interference with his business, suffered while alterations
were being made in the building of which he was a tenant. Plaintiff occupied
a portion of the first floor and the damages were occasioned by construction
work on an additional floor, which necessitated cutting holes in the roof for
vertical supports, through which rain entered the demised premises. Plaintiff
conducted a saloon business therein, and the water stained the walls and
furniture and gathered on the floor, making his place uninviting to his
customers. As a consequence, certain repairs were necessary and his
receipts fell off during the continuance of the alleged nuisance. There can be
no question as to these facts, although the amount of the damages found by
the trial court is excepted to.
The defendant lessors seek to avoid responsibility for these damages by
reason of a contract at least of other portions of the same building to the
proprietors of a hotel, one of the conditions of which was that the hotel
company should erect an additional story to the building, which should revert
to the lessors at the expiration of the lease; and a contract made by the hotel
company with a building contractor for the performance of the work agreed
upon in the contract of lease.
The lease of the hotel company is subsequent in point of time to the
plaintiff's lease by approximately two and a half months, and plaintiff testified
that, although he was notified of the contemplated alterations, he did not see
the plans for the work nor approve of them in any particular. Plaintiff's lease
contains a covenant guaranteeing him the quiet and peaceful possession of
the demised premises. He promptly notified his lessors of the interference
with and damage to his business and notified them several times during the
continuance of the nuisance which lasted about two months, but nothing was
done to abate the same.
Article 1558 of the Civil Code provides that a tenant must permit the lessor
to make urgent repairs. The alterations and additions to the building in
question were not within the class of repairs contemplated by third article.
Article 1560 provides that the lessor shall not be liable for the trespass of a
third person, while article 1554, paragraph 3, obligates the lessor to maintain
the lessee in the peaceful enjoyment of the demised premises during the life
of the lease. The question presented by the facts of this case appears to be
whether the acts complained of were a mere trespass of a third person or an
infraction of the lessor's covenant of peaceful possession. Manresa, edition
1911 (Vol. 10, p. 525), states that there is but little jurisprudence on the
covenant for peaceful possession, which article 1554 makes a part of every
contract of lease of real property. He does say, however, that the renting of
an upper floor for the establishment of an industry which renders
VILLAR
inconvenient or makes impossible the use which a prior tenant makes of the
first floor constitutes a violation of this covenant on the part of the landlord.
Scaevola (Vol. 24, p. 521) says of this covenant:
An alteration in the peaceful enjoyment would be that occasioned by the
lessor in undertaking to make in the thing leased repairs not excepted by
article, 1558, provided that he did it against the will of the lessee.
The covenant for peaceful enjoyment is as common in America as it is under
the Spanish law.
The principal covenant on the part of a landlord is that his tenant shall have
the quiet and peaceful possession of the premises during the continuance of
the lease. The law supposes that when a man makes a lease, he has a good
title to the land, and, consequently, power to lease it; and an engagement to
this effect on the part of the lessor is therefore always implied. (1 Taylor's
Landlord and Tenant, sec. 304.)
The cases are numerous and we shall only cite a few late and well-
considered ones.
In Miller vs. Fitz Dry Goods Co. (62 Neb., 270) plaintiffs were lessees of
office rooms on the second floor, and the defendant was the tenant of the
ground floor. The latter erected show cases and signs about and in front of
portions of the stairway leading to the upper floors, partially obstructing the
same. An injunction perpetually restraining the defendant from maintaining
these obstructions was approved by the appellate court, which said:
It can make no different that in this case the landlord attempted to give the
defendant authority to maintain the obstructions. He had no right to interfere
with the plaintiff's easement (of access to their premises), and could give
none to others.
Sherman vs. Williams (113 Mass., 481; 18 A. R., 522) was an action to
recover damages for breach of the lessor's covenant for quiet enjoyment in a
lease of a building situated in Boston. Parties named Dutton acquired an
adjoining estate, and, with the consent of the lessors, built a brick wall
encroaching on the demised premises. The court said:
Upon the facts stated in the report, it appears that the party wall between the
demised premises and the adjoining estate, belonging to the Duttons, was
built in part upon the land under the eaves in the rear of the brick building
included in the lease to the plaintiffs. This wall was built by the Duttons
under an agreement with the defendants, and by their authority, and for their
benefit. This authority was given under an assumption of right, and by a
formal agreement to which the plaintiffs were not parties. The act of the
Duttons in building the wall under these circumstances must, therefore, be
taken as an act of the defendants done under an assumption of title, and is a
breach of the covenant for quiet enjoyment. The defendants covenanted
against their own acts, and the Duttons built the wall on the demised
premises by their authority. It was not the act, therefore, of a stranger, but of
the lessors.
In Patley vs. Egan (200 N. Y., 83) the defendant was the owner of two
buildings in the City of New York, which, on their adjacent sides, were
supported by a common wall. After leasing the third floor of one of these
buildings to the plaintiff, the defendant undertook to remove the other
17 | S a l e s & L e a s e H W # 6 P a r t X V I t o X V I I I
building and erect a new one in place thereof, entering into a contract with a
contractor for the work. An excavation for the foundation of the new building
was made along the wall of the demised premises and, at first, this wall was
shored up; but the shores were later all taken down, as a result of which the
wall and a large portion of the building occupied by the plaintiffs collapsed
and injured the plaintiffs' goods.
Unquestionably the respondent owed the duty not to disturb the appellants in
their possession and enjoyment of the premises which he had leased to
them by any such operations as he undertook on the adjoining lot, and for
his violation of this obligation he might have been held liable independent of
any negligence. . . .Ordinarily the respondent might reply, as he does
attempt to, that he discharged his obligations by securing a competent
independent contractor and that thereby he has been relieved from
responsibility for any negligence except of himself which is not shown to
have existed. That defense, however, is not available in this case. The
respondent's duty to protect his tenants from disturbance in the course of his
building operations was of a personal character and he could not discharge
it by delegating those operations even to a competent independent
contractor.
In Northern Trust Company vs. Palmer (171 Ill., 383) the lessor entered into
a contract with certain parties to rebuild the south wall of a building occupied
by the plaintiff as his tenant. The contract required the contractors to take
precautions not to unnecessarily injure the inside of the building, and to
provide the necessary supports for it during the reconstruction of the wall.
Nothing was said in the contract about protecting the tenant, and no
provision was made with the contractors to secure her consent. The court
said:
Parsons, in his work on contracts (Vol. 1, p. 531), says: 'There is an implied
covenant on the part of the lessor to put the lessee into possession, and that
he shall quietly enjoy.' Hawley could not, by contract, authorize the
Florsheims, without the consent of his tenant, Fenton, to take down and
erect a new wall to the building, the necessary or probable effect of which
would be t injure the tenant in her rightful and quiet possession, without
being liable, jointly or severally with the Floresheims, the other wrongdoers,
for damages.
In Wertheimer vs. Saunders (95 Wis., 673) a landlord, although not required
under the lease to make repairs, gratuitously undertook to put a new roof
upon the leased building, at the request of his tenant. The contract was let to
an independent contractor, who took off during one day a large section of
the old roof, notwithstanding that the weather looked threatening. It
commenced to rain before the section in question was recovered, thereby
causing damage to the tenant's goods. The court said:
In Bower vs. Peate (1 Q. B. Div., 321-326) it was laid down that `A man who
orders work to be executed, from which, in the natural course of things,
injurious consequences must be expected to arise unless means are
adopted by which they may be prevented, is bound to see to the doing of
that which is necessary to prevent the mischief, and cannot relieve himself of
his responsibility by employing some one else — whether it be the contractor
VILLAR
employed to do the work from which the danger arises, or some independent
person — to do what is necessary to prevent the act he has ordered to be
done from becoming wrongful. There is an obvious difference between
committing work to a contractor to be executed, from which, if properly done,
no injurious consequences can arise, and handing over to him work to be
done, from which mischievous consequences will arise, unless preventive
measures are adopted. While it may be just to hold the party authorizing the
work, in the former case, exempt from liability for injury resulting from
negligence which he had no reason to anticipate, there is, on the other hand,
good ground for holding him liable for an injury caused by an act certain to
be attended with injurious consequences, if such consequences are not in
fact prevented, no matter through whose fault the omission to take the
necessary measures for prevention may arise.' Here the removal of the roof
was by the direction and authority of the defendants, and at the request of
the plaintiff, and the injury resulted from what the defendants procured their
contractors, under them, to do, and the alleged negligent manner of their
doing it. It is manifest that the removal of the old roof, in order to put on a
new one, necessarily exposed the property of the tenant, the plaintiff, to
injury from the elements; and the duty, as already stated, was cast on the
defendants to see that reasonable care was taken to avert such result. The
argument of counsel for the defendants wholly ignores the existence of such
duty on the part of the defendants, and its bearing, and erroneously
assumes, as we think, that the action is to charge the defendants solely on
the ground of the collateral negligence of the contractors.
The plaintiff's lease in the case at bar did not call for the alterations and
additions which were the means of producing the damages complained of.
Has such been their character, then the liability of the lessors might be
placed in a different light. They were not necessary as repairs caused by
ordinary wear and tear of the leased premises, for these were, under the
lease, to be made by the lessee. Nor, as I have said, can they be classed as
urgent repairs, under the provisions of article 1558, necessary for the
preservation of the building. They were entirely outside the plaintiff's lease,
were undertaken at defendants' express request, and were ultimately to
inure to their benefit as a permanent improvement to the property. It seems
clear, therefore, that in undertaking these alterations, or in authorizing others
to undertake them, the lessors should have taken precautions to see that
their covenant for the peaceful and quiet possession of the plaintiff should
not be violated. The record shows that no mention was made of the plaintiff
in the contract with the hotel people, nor in the contract with the contractor
who actually performed the work, and further, that he was not consulted as
to the manner in which the work should be performed. More than this, on
being informed of the damages being sustained by the plaintiff during the
progress of the work, the defendants made no attempt to prevent a
continuance of the disturbance. The defendants could not thus disregard
their agreement to maintain the plaintiff in the undisturbed possession of the
demised premises, and shift their responsibility to those who were
undertaking the alterations to the building for their ultimate benefit. A number
of cases are cited by the appellants, but I agree with the trial court that they
18 | S a l e s & L e a s e H W # 6 P a r t X V I t o X V I I I
are not in point. I am, therefore, of the opinion that the defendants are liable
under the provisions of paragraph 3 of article 1554 for the damages caused
the plaintiff. Under the provisions of article 1556 of the Civil Code, the
plaintiff was at liberty to rescind the contract or demand indemnity for losses
and damages, leaving the contract of lease in force. He has elected the
latter course.
As to the amount of damages allowed by the trial court, I think the evidence
fully justifies the amounts allowed for the various items. The judgment
should, in my opinion, be affirmed.
(6) G.R. No. L-57091 November 23, 1983
PAZ S. BAENS, petitioner,
vs. THE COURT OF APPEALS and CHUA SENG, respondents.
Flores, Ocampo, Dizon & Domingo Law Office for petitioner.
Jose Santos for private respondent.
GUTIERREZ, J.:ñé+.£ªwph!1
This is a petition for certiorari seeking to review that portion of the decision of
respondent Court of Appeals which merely reduced the award of damages in
favor of private respondent Chua Seng instead of eliminating them entirely
as well as that portion affirming the decision of the Court of First Instance of
Manila dismissing petitioner's complaint for unlawful detainer.
The Court of Appeals' resolution dated May 26, 1981 denying the motion for
reconsideration is likewise sought to be reviewed.
The uncontroverted facts of the case are summarized by the respondent
Court of Appeals as follows: têñ.£îhqwâ£
Chua Seng and Dra. Paz Baens are lessee and lessor, respectively, bound
by oral contract of lease over the premises subject of the controversy. Chua
began his tenure as lessee since 1952. On October 5, 1975 Chua left the
premises to be treated by a hilot in Valenzuela, Bulacan. He brought with
him his clothes and other belongings but left in the premises the
paraphernalia of his store, his appliances, furnitures, kitchen utensils, tools,
and memorabilia like picture frames, diplomas and certificate of merit and his
credentials as guerilla veteran. Before he left, he padlocked the steel door of
the premises. Next day, October 6, 1975, Chua Seng and his brother-in-law,
Ong Hai returned to the premises. They found that in addition to the padlock
of Chua placed, other padlocks were placed at the door of the premises at
the instance of Dra. Baens. Chua Seng learned that Dra. Baens caused the
padlocking of the premises because when he inquired from his neighbor
Mrs. Asuncion asking the latter gave him a note (Exhibit "E") sent by Dra.
Baens to Mrs. Asuncion Lim, asking the latter to padlock the premises to
prevent loss or damage to the things inside the premises. Chua Seng, Ong
Hai and their spouses sought the audience of Dra. Baens at St. Paul
Hospital; in that meeting, Dra. Baens refused to remove the padlocks on the
VILLAR
premises. They also went to Dra. Baens' lawyer; but still the premises were
not opened. Subsequently, Chua Seng thru Atty. Mariano, wrote a letter
dated November 17, 1975 to Dra. Baens (Exhibit "A"), tendering the rentals
for October and November, 1975 by means of a check and requesting the
removal of the Dra. Baens' padlocks from the premises. To this letter, Atty.
Guillermo Ilagan, the lawyer of Dra. Baens, replied on November 20, 1975
(Exhibit "B"). In such reply, the check tendered by Chua Seng was returned
with the following request: têñ.£îhqwâ£
We would appreciate if you could advise your client to remove whatever
belonging he has on the premises in question within ten (10) days from
receipt of this letter; otherwise, we shall be constrained to have it opened
because he has absolutely no right to deprive my client of the use of the
property.
Atty. Mariano in turn, replied on November 25, 1975 (Exhibit "C"), requesting
that the padlock placed by Dra. Baens be removed; otherwise, legal
measures shall be taken. Since nothing happened after this exchange of
communications, the controversy was brought to Court. (Annex H, pp. 5-7).
Chua Seng filed Civil Case No. 007466-CV for forcible entry with the City
Court of Manila against Dra. Baens. Chua Seng alleged that Dra. Baens'
refusal to remove the padlocks was a breach of the contract of lease
consisting in the deprivation of plaintiff's right to occupy and use the leased
premises.
On February 10, 1976, lessor Dra. Baens (herein petitioner) expressed her
assent to restore Chua Seng to the possession of the disputed premises.
On February 12, 1976, petitioner Baens filed her answer to the complaint for
forcible entry alleging inter alia that Chua Seng right to occupy said premises
had long expired and that the respondent failed to pay the rentals due and
had voluntarily vacated the premises.
On February 18, 1976, the petitioner filed with the City Court of Manila her
own complaint for unlawful detainer against lessee Chua Seng, alleging the
same facts raised in her answer to Chua Seng's complaint for forcible entry.
On March 10, 1976, private respondent Chua Seng filed his answer to the
petitioner's complaint for unlawful detainer setting forth the same allegations
averred in his own complaint for forcible entry. The two cases were assigned
to the same branch of the City Court of Manila which conducted a joint trial
and rendered a consolidated decision, the dispositive portion of which
reads: têñ.£îhqwâ£
WHEREFORE, judgment is hereby rendered in favor of Chua Seng, ordering
Dra. Baens to restore him to the possession and enjoyment of the leased
premises at No. 2441 Oroquieta Street, Manila, and to pay him attorney's
fees in the sum of P1,000.00.
For lack of merit, the complaint in Civil Case No. 008378-CV is hereby
DISMISSED, along with all other claims and counterclaims between the
parties in both cases.
Both parties appealed to the Court of First Instance of Manila with the
petitioner assailing in toto the decision while the private respondent
questioned only that portion which denied his claim for damages against
petitioner. On November 5, 1979, the Court of First Instance of Manila
19 | S a l e s & L e a s e H W # 6 P a r t X V I t o X V I I I
rendered a decision affirming the City Court's decision relative to the
restoration of Chua Seng to possession of the premises and dismissing
petitioner's complaint for unlawful detainer, but reversing the decision insofar
as it only awarded said private respondent the sum of P1,000.00 for
attorney's fees and dismissed his other claim for damages. The dispositive
portion of the decision reads: têñ.£îhqwâ£
WHEREFORE, judgment is hereby rendered:
1. Affirming the decision of the City Court dated October 19, 1978 insofar as
it restores Chua Seng to the possession and enjoyment of the leased
premises at No. 2441 Oroquieta Street, Manila and insofar as it dismisses
the complaint for ejectment (Civil Case No. 008378-CV) filed by Dra. Paz
Baens;
2. Reversing said decision insofar as it awards attorney's fees in the sum of
P1,000.00 and dismisses all other claims, valid counterclaims between the
parties in both cases. Instead, judgment is rendered ordering Dra. Paz
Baens to pay Chua Seng the following: têñ.£îhqwâ£
a. The sum of P1,000.00 as actual damages per month from October 6,
1975 up to the time Chua Seng is restored to the possession of the
premises;
b. The sum of P l00,000.00 as moral damages;
c. The sum of P100,000.00 as exemplary damages;
d. The sum of P20,000.00 as and for attorney's fees and
e. The costs of suit.
On November 20, 1979, the private respondent filed a motion for immediate
execution pending appeal which was granted in an order dated December
10, 1979.
The petitioner appealed the above-mentioned decision of the Court of First
Instance of Manila as well as the order granting the issuance of a writ for
immediate execution to the Court of Appeals.
On March 31, 1981, the respondent Court of Appeals rendered its decision
annulling the order of the Court of First Instance granting immediate
execution and modifying the appealed decision as follows: têñ.£îhqwâ£
WHEREFORE, with the only modification above set forth, reducing the
award of moral damages to P3,000, exemplary damages to P2,000, and the
attorney's fees to P3,000, the judgment under review is hereby affirmed in all
other respects. The order granting execution pending appeal (Annex M) is
hereby annulled and set aside. No pronouncement as to costs.
A motion for reconsideration was denied for lack of merit in a resedution
dated May 26, 1981.
Not satisfied with the decision of the Court of Appeals, the petitioner now
comes to this Court through this petition for review on certiorari raising the
following grounds: têñ.£îhqwâ£
I year after such unlawful deprivation or withholding of possession, bring an
Respondent Court of Appeals commited a grave error of law in merely
reducing, instead of eliminating the award for alleged moral and exemplary
damages to private respondent Chua Seng and in not applying to petitioner,
the decision of this Honorable Court in the case of Reyes vs. Court of
Appeals, 38 SCRA 138, which limited the kind of damages recoverable in
VILLAR
actions for forcible entry and detainer to such damages caused by the loss
of the use and occupation of the property.
II
Respondent Court of Appeals committed a grave error of law in affirming the
decision of the Court of First Instance awarding private respondent Chua
Seng the sum of P1,000.00 as actual damages from October 5, 1975 up to
the time said private respondent is restored in possession and in not
applying the decision of this Honorable Court in the case of Torres vs,
Ocampo, 80 Phil. 36, in resolving the propriety of said award.
III
Respondent Court of Appeals committed a grave error of law when it
affirmed the decision of the Court of First Instance dismissing petitioner's
complaint for unlawful detainer on a misapplication of Presidential Decree
No. 20.
The petitioner submits that damages which the plaintiff may claim in an
action for forcible entry and detainer are only those which he may have
sustained as a mere possessor and are limited only to such damages as are
caused by his loss of the use and occupation of the property, but not those
which he may suffer having no direct relation to such use and occupation.
On the other hand, private respondent Chua Seng anchors his claim for
moral and exemplary damages on Art. 32 of the Civil Code of the Philippines
which provides: têñ.£îhqwâ£
Art. 32. Any public officer or employee, or any private individual, who directly
or in directing obstructs, defeats, violates or in any manner impedes or
impairs any of the following rights and liberties of another person shall be
liable to the latter for damages:
xxx xxx xxx
(10) The liberty of abode and changing the same;
xxx xxx xxx
The indemnity shall include moral damages. Exemplary damages may also
be adjudicated.
xxx xxx xxx
We agree with the petitioner.
Sec. 1 of Rule 70 of the Rules of Court provides: têñ.£îhqwâ£
SECTION 1. Who may institute proceedings, and when. - Subject to the
provisions of the next succeeding section, a person deprived of the
possession of any land or building by force, intimidation, threat, strategy, or
stealth, or a landlord, vendor, vendee, or other person against who, the
possession of any land or building is unlawfully withheld after the expiration
or termination of the right to hold possession, by virtue of and contract,
express or implied, or the legal representatives or assigns of avail such
landlord, vendor, vendee, or other person, may, at any time within one (1)
action in the proper inferior court against the person or persons unlawfully
withholding or depriving of possession, or any person or persons claiming
under them, for the restitution to such possession, together with damages
and costs. The complaint must be verified. (Emphasis supplied)
20 | S a l e s & L e a s e H W # 6 P a r t X V I t o X V I I I
Reyes v. Court of Appeals (38 SCRA 138), interprets the scope of damages
that may be recovered in an action for forcible entry. It states: têñ.£îhqwâ£
On the last issue of whether temperate damages may be awarded in favor of
respondent landlord, it has been held that while damages may be adjudged
in forcible entry and detainer cases, these "damages" mean "rents" or "the
reasonable compensation for the use and occupation of the premises."
( Mitschiener v. Barrios, 76 Phil. 55. cited in Garcia v. Peña 77 Phil. 1011) or
"fair rental value of the property." (Sparrevohn v. Fisher, 2 Phil. 676:
Nlitschiener vs.. Barrios, supra; Castueras v. Bayona, 106 Phil. 340). profits
which the plaintiff might have received were it not for the forcible entry or
detainer do not represent a fair rental value, Sparrevhon v. Fisher, 2 Phil,
676; supra; Igama v. Soria, 42 Phil. 11)
Although Section I of Rule 70 uses the word "damages," the authors of the
Rules of Court, in drafting Section 6 of Rule 70 on the judgment to be
pronounced, eliminated the word "damages", placing in lieu thereof, the
words "reasonable compensation for the use and occupation of the
premises."
We also had occasion to explain the meaning of damages in Ramirez vs. Sy
Chit, (21 SCRA 1364) where we held: têñ.£îhqwâ£
The trial court held defendant liable "to pay plaintiff the sum of P25.00 a day
for every day of delay as damages until he finally vacates the premises, in
addition to the agreed current rental that may accrue." This is an error. The
damages recoverable by the plaintiff under section 1, Rule 70 (formerly Rule
72) are those which correspond to the reasonable alter of the use and
occupation of the property which in this case is the agreed monthly rental of
P230.00. The award, therefore, of P25.00 as damages for every day of delay
in addition to the agreed monthly rentals is without basis in law.
The damages which a plaintiff expects to obtain from his business to be
located in the premises, or for material injury caused to the premises cannot
also be claimed in connection with or as incidental to an action of illegal
detainer or force entry (Torres v. Ocampo, 80 Phil. 36)
Since moral, exemplary and actual damages are another "rents" nor
"reasonable compensation for the use and occupation of the premises", nor
"fair rental value" as abovestated, we are constrained to deny the P3,000,00
moral damages and P2,000.00 exemplary damages awarded by the
respondent Court of Appeals and the P1,000.00 actual damages awarded by
the City Court of Manila.
The private respondent's reliance on Art. 32 of the Civil Code is
inappropriate. The personal freedoms protected by that provision refer to the
right to transfer from one place to another and to choose one's residence. It
is a recognition of the freedom of a person to have his home in a place
chosen by him and, thereafter, to change it without interference from
Government except upon lawful orders of the court, or when necessary in
the interest of national security, public safety, or public health.
The other issue raised by the petitioner is predicated on her contention that
the lease contract between her and Chua Seng had expired. The contract of
lease was verbal, It had no fixed terms and rentals were paid every month.
Applying Article 1687 of the Civil Code, petitioner Baens states that since the
VILLAR
rentals agreed upon were paid monthly, then the term of the lease should be
understood to be on a month to month basis. The petitioner contends that
Presidential Decree No. 20 covers only leases of dwelling units where the
rental is P300.00 or less a month and, therefore, does not apply to this case
where the rental is P390.00 a month,
Presidential Decree No. 20 basically covers two distinct matters. First is the
prohibition against the increase of the monthly rental agreed upon between
the lessor and the lessee when said rental does not exceed P300.00 a
month and second is the suspension of Paragraph 1, Article 1673 of the Civil
Code insofar as it refers to dwelling units or land on which another's dwelling
is located. Paragraph I of Article 1673 of the Civil Code governs the
termination of contracts of lease which are on a year to year, month to
month, week to week, or day to day basis.
In Rantael v. Court of Appeals, et al. (97 SCRA 453), although the lease was
on a month to month basis, we ordered the surrender of the premises to the
lessor because the duration of the lease was fixed in a written agreement
between the parties. However, even if the month to month arrangement is on
a verbal basis, if it is shown that the lessor needs the property for his own
use or for the use of an immediate member of the family or for any of the
other statutory grounds to eject under Section 5 of Batas Pambansa Blg. 25,
which happens to be applicable, then the lease is considered terminated as
of the end of the month, after proper notice or demand to vacate has been
given. (See Crisostomo v. Court of Appeals, 116 SCRA 199).
The provision of law suspending the application of Paragraph I, Article 1673
of the Civil Code is now Section 6 of Batas Pambansa Blg. 25 which
provides: têñ.£îhqwâ£
Sec. 6. Application of the Civil Code and Rules of Court of the Philippines.—
Except when the lease is for a definite period, the provisions of paragraph
(1) of Article 1673 of the Civil Code of the Philippines insofar as they refer to
residential units covered by this Act shall be suspended during the effectivity
of this Act but other provisions of the Civil Code and the Rules of Court on
lease contracts, insofar as they are not in conflict with the provisions of this
Act, shall apply.
As to whether or not the leased premises with a monthly rental of P390.00
are covered by Section 6 of Batas Pambansa Blg. 25, we note that the
abovecited section is applicable to "residential units - covered by this Act."
"Residential unit" is defined under Section 2 as: têñ.£îhqwâ£
SEC. 2. Definition of Terms. —Unless otherwise indicated wherever in this
Act, the following terms shall have the following meaning:
xxx xxx xxx
b. A residential unit—refers to an apartment, house and/or land on which
another's dwelling is located used for residential purposes and shall include
not only buildings, parts or units thereof used solely as dwelling places,
except motels, motel rooms, hotels, hotel rooms, boarding houses,
dormitories, rooms and bedspaces for rent, but also those used for home
industries, retail stores or other business purposes if the owner thereof and
his family actually live therein and use it principally for dwelling
purposes: Provided ,That in the case of a retail store, home industry or
21 | S a l e s & L e a s e H W # 6 P a r t X V I t o X V I I I
business, the capitalization thereof shall not exceed five thousand pesos
(P5,000.00): and Provided, further, That in the operation of the store,
industry or business, the owner thereof shall not, require the services of any
person other than the immediate members of his family.
xxx xxx xxx
The definition does not provide a rental ceiling beyond which the law no
longer applies, Are all residential units as defined above covered by the
suspension of Paragraph I, Article 1673 of the Civil Code irregardless of how
much are the monthly rentals of the units?
We answer this question in the negative. The title of Batas Pambansa Blg.
25 —An Act Regulating Rentals Of Dwelling Units Or Of Land On which
Another's Dwelling Is Located And For Other purposes shows that the
subject matter of the law is the regulation of rentals. The definition must,
therefore, be related to the subject matter as stated in the title.
Moreover, Sections 1 and 7 of Batas Pambansa Blg. 25
provide: têñ.£îhqwâ£
SECTION 1. Authority to Increase Rentals. - Upon the effectivity of this Act
and for a duration of five years thereafter the monthly rentals of all
residential units not exceeding three hundred pesos shall not be increased,
for any one year period, by more than the percent (10%) of the monthly
rentals existing at the time of the approval of this Act.
xxx xxx xxx
SECTION 7. Coverage of the Act. - All residential units the total monthly
rental of which does not exceed three hundred pesos (P300.00) as of the
effective date of this Act shall be covered by this Act and shall continue to be
so, covered notwithstanding that the monthly rental shall have already
exceeded the three hundred peso limit as a result of the application of
section one hereof: Provided, however, That this Act shall not be applicable
to new residential units constructed during its effectivity.
xxx xxx xxx
which, again, clearly show that the law is intended only for dwelling units
with specified monthly rentals and constructed before the law became
effective.
The suspension under Section 6 of the law shall last for five years from and
after the effectivity of Batas Pambansa Blg. 25. The statute became effective
April 10, 1979.
WHEREFORE, the judgment of the Court of First Instance is hereby
modified by deleting therefrom the award of moral damages, exemplary
damages, and actual damages. The decision is affirmed insofar as it
restores respondent Chua Seng to the possession and enjoyment of the
leased premises and set aside the order allowing execution pending appeal.
civil Case No. 008378-CV, the complaint for unlawful detainer filed by
petitioner Paz S. Baens, shall be given due course and the case is
remanded to the court a quo for further proceedings in said Civil Case No.
008378-CV.
SO ORDERED.1äwphï1.ñët
VILLAR
(7) [G.R. No. L-23399. May 31, 1974.]
BERNARDO DIZON, substituted by his heirs, DOMININA ALVENDIA
VDA. DE DIZON, BUENAVENTURANZA DIZON-AMIO, Sister MARIA
FLORENCIA (MARIA DIZON), MARIANO DIZON, VICTOR DIZON,
ARACELI DIZON-GOMEZ, ESTELA DIZON-LACSAMANA, MARITA
DIZON, JOSEFA DIZON-ASIDO, EUGENIA DIZON-DEL BARRIO and
GLORIA DIZON, Petitioners, v. AMBROSIO MAGSAYSAY and NICANOR
PADILLA, Respondents.
Pompeyo Diaz, for Petitioners.
Oben & Oben for Respondents.
DECISION
MAKALINTAL, C.J.:
On April 1, 1949 Ambrosio Magsaysay, registered owner of a 1,171.70 sq.
m. of land located in Sampaloc, Manila, and the late Bernardo M. Dizon 1
executed a written contract of lease over a portion of the above-mentioned
parcel of land which the latter had been occupying as lessee since 1937 and
on which he had constructed a residential house as well as a six-lane
bowling alley. The pertinent provisions of the lease contract 2
read:jgc:chanrobles.com.ph
"x x x
Que el DUENO cede en arrendamiento al INQUILINO una puerta comercial
No. 143 Maria Clara, Manila una porcion del terreno adjacente a dicha
puerta, y en cuyo esta levantada una edificacion No. 137 Bowling Alley.
Y se conviene mutualmente por y entre las partes siguiente:chanrob1es
virtual 1aw library
1. EL INQUILINO se compromete a pagar al DUEÑO un alquiler mensual de
cien pesos (P100.00), moneda filipina, y que se pagar por anticipado en o
antes del dia 15 de cada mes, an la direccion del DUEÑO.
2. Este arrendamiento ser por dos (2) años desde Abril 1, 1949 y renovable
por igual periodo en condiciones expresas y specificadas que seran
convenidas entre las partes.
x x x
9. En el caso de que el DUEÑO vendiera el terreno, se le dara preferencia
de comprar el INQUILINO sobre cualquier otro comprador en igualdad de
precio y condiciones.
x x x"
The two-year term of the lease contract expired on April 1, 1951 without the
parties’ having expressly renewed their agreement. Bernardo Dizon,
however, continued to occupy the leased premises, paying the same
monthly rental of P100.00, which Ambrosio Magsaysay accepted.
Two years later, on March 3, 1953, the counsel of Ambrosio Magsaysay
formally advised Bernardo Dizon of the termination of the existing lease at
the end of that month. On March 24 Dizon learned that as early as February
19, 1953 there were negotiations for the sale of the entire 1,171.70 sq. m. lot
to Nicanor Padilla, which negotiations were concluded on March 7, 1953
with the execution of an absolute deed of sale in his favor by Ambrosio
Magsaysay and of a supplementary agreement embodying the seller’s
22 | S a l e s & L e a s e H W # 6 P a r t X V I t o X V I I I
acceptance of the condition that should he fail to completely eject all the
tenants on the land within a stated period, so much of the agreed purchase
price of P48,000.00 would be forfeited. On March 11, 1953 a new certificate
of title was issued to Nicanor Padilla pursuant to the sale.
When Dizon learned of the sale he communicated with Magsaysay and
Padilla, inviting their attention to paragraph 9 of the original written lease
contract which gave him the preferential right to purchase the land under the
same conditions as those offered by other buyers. On March 25, 1953 he
actually commenced suit against Magsaysay and Padilla in the Court of First
Instance of Manila (Civil Case No. 19172), praying that the deed of sale
between them be declared null and void; that they be ordered to sell the land
to him and to pay him damages and attorney’s fees; or in the alternative, that
defendant Magsaysay be sentenced to pay the plaintiff the sum of
P20,000.00 as actual damages, P10,000.00 for alleged losses in his
business, reasonable moral damages, and attorney’s fees.
The new buyer, Nicanor Padilla, was included as party-defendant in this
case on the allegation that he "7. . . . knew the plaintiff had his residential
building and bowling alleys on this land, and before he purchased the land,
he saw said building and alleys and under the circumstances, he was aware
and/or should be aware of the consideration value thereof as well as of the
preferred right of said plaintiff to buy the land."cralaw virtua1aw library
The trial court rendered judgment on August 18, 1955, dismissing the
complaint as well as defendant Nicanor Padilla’s counterclaim. On appeal to
the Court of Appeals (CA-G.R. No. 16174) the decision was affirmed on
June 8, 1964. Hence this petition for review, presenting the crucial issue, as
the Court of Appeals put it, as to "whether or not at the time of the sale of the
disputed property to Nicanor Padilla on March 7, 1953 appellant Dizon had a
preferential right to purchase it at the same price and terms."cralaw
virtua1aw library
Because Dizon continued to occupy the leased premises with Magsaysay’s
acquiescence even after the two-year term of the private written lease
contract between them expired on April 1, 1951, petitioners contend that the
implied new lease created, although admittedly not for the period of the
original contract, revived the other terms thereof, including the lessee’s
preferential right of purchase, citing Article 1670 of the new Civil Code,
which provides:jgc:chanrobles.com.ph
"Art. 1670. If at the end of the contract the lessee should continue enjoying
the thing leased for fifteen days with the acquiescence of the lessor, and
unless a notice to the contrary by either party has previously been given, it is
understood that there is an implied new lease, not for the period of the
original contract, but for the time established in articles 1682 and 1687. The
other terms of the original contract shall be revived." (Emphasis supplied)
VILLAR
The Court of Appeals held that "the other terms of the original contract"
which are revived in the implied new lease under Article 1670 are only those
terms which are germane to the lessee’s right of continued enjoyment of the
property leased. This is a reasonable construction of the provision, which is
based on the presumption that when the lessor allows the lessee to continue
enjoying possession of the property for fifteen days after the expiration of the
contract he is willing that such enjoyment shall be for the entire period
corresponding to the rent which is customarily paid — in this case up to the
end of the month because the rent was paid monthly. Necessarily, if the
presumed will of the parties refers to the enjoyment of possession the
presumption covers the other terms of the contract related to such
possession, such as the amount of rental, the date when it must be paid, the
care of the property, the responsibility for repairs, etc. But no such
presumption may be indulged in with respect to special agreements which
by nature are foreign to the right of occupancy or enjoyment inherent in a
contract of lease.
But whatever doubt there may be on this point is dispelled by paragraph (2)
of the contract of lease, which states that it was renewable for the same
period of two years (upon its expiration on April 1, 1951), "con condiciones
expresas y specificadas que seran convenidas entre las partes." This
stipulation embodied the agreement of the parties with respect to renewal of
the original contract, and while there was nothing in it which was
incompatible with the existence of an implied new lease from month to
month under the conditions laid down in Article 1670 of the Civil Code, such
incompatibility existed with respect to any implied revival of the lessee’s
preferential right to purchase, which expired with the termination of the
original contract. On this point the express agreement of the parties should
govern, not the legal provision relied upon by the petitioner.
The judgment of the Court of Appeals is affirmed, with costs.
Castro, Teehankee, Makasiar, Esguerra and Muñoz Palma, JJ., concur.
23 | S a l e s & L e a s e H W # 6 P a r t X V I t o X V I I I
(8) [G.R. No. 113626. September 27, 2002]
JESPAJO REALTY CORPORATION, petitioner, vs. HON. COURT OF
APPEALS, TAN TE GUTIERREZ and CO TONG, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking to review and set aside the decision of the Court of Appeals
promulgated on January 26, 1994 in CA-G.R. SP No. 27312[1] which
reversed the decision of the Regional Trial Court in Civil Case No. 91-
57757[2] and reinstated the Metropolitan Trial Court rulings in Civil Case No.
134022-CV, entitled, Jespajo Realty Corp., Plaintiff, vs. Tan Te Gutierrez
and Co Tong, Defendants.[3]
The uncontroverted facts of the case as found by the Court of Appeals are
as follows:
The subject of this controversy is an apartment building located at 619
Asuncion Street, Binondo, Manila and owned by Jespajo Realty
Corporation. On February 1, 1985, said corporation, represented by its
President, Jesus L. Uy, entered into separate contracts of lease with Tan Te
Gutierrez and Co Tong.xxx Pursuant to the contract, Tan Te occupied room
No. 217 of the subject building at a monthly rent of P847.00 while Co Teng
occupied the Penthouse at a monthly rent of P910.00xxx The terms of the
contract among others are the following:
PERIOD OF LEASE- The lease period shall be effective as of February 1,
1985 and shall continue for an indefinite period provided the lessee is up-to-
date in the payment of his monthly rentals. The LESSEE may, at his option,
terminate this contract any time by giving sixty (60) days prior written notice
of termination to the LESSOR.
However, violation of any of the terms and conditions of this contract shall be
a sufficient ground for termination thereof by the LESSOR.
xxx xxx xxx
RENT INCREASE - For the duration of this contract, the LESSEE agrees to
an automatic 20% yearly increase in the monthly rentals.
Since the effectivity of the lease agreement on February 1985, the lessees
religiously paid their respective monthly rentals together with the 20% yearly
increased (sic) in the monthly rentals as stipulated in the contract. On
January 2, 1990, the lessor corporation sent a written notice to the lessees
informing them of the formers intention to increase the monthly rentals on
the occupied premises to P3,500.00 monthly effective February 1, 1990. The
lessees through its counsel in a letter dated March 10, 1990 xxx manifested
their opposition alleging that the same is in contravention of the terms of the
contract of lease as agreed upon. Due to the opposition and the failure of the
lessees to pay the increased monthly rentals in the amount of P3,500.00, the
lessor through its counsel in a letter dated April 10,1990 xxx demanded that
the lessees vacate the premises and pay the amount of P7,000.00
corresponding to the months of February and March, 1990.
The lessees exerted effort to pay the rentals due for the months of February
and March 1990 at the monthly rate stipulated in the contract but was
VILLAR
refused by the lessor so that on May 2, 1990, they instituted before the
Metropolitan Trial Court of Manila, Branch 16 a case for consignation xxx
In the said complaint, plaintiffs alleged that the amount of P2,107.60 and
P2,264.40 are the monthly rental obligations of Tan Te and Co Tong
respectively. They sought to consign with the court their monthly rental
obligations at the rate above mentioned for the months of February up to
April 1990. Additionally, they prayed that the court issue an order directing
the defendant to honor the terms and conditions of the lease.
It is to be noted that on February 6, 1991, the trial judge in the consignation
case issued an order allowing the plaintiffs therein to deposit with the City
Treasurer of Manila the amount of P33,480.28 for Co Tong and the amount
of P32,710.32 for Tan Te Gutierrez representing their respective rentals for
thirteen (13) months from February, 1990 to January, 1991. This order
however is without prejudice to the final outcome of the case. Plaintiffs duly
complied with the order as evidenced by an official receipts (sic) xxx in the
name of Tan Te Gutierrez and Co Tong, respectively, issued by the City
Treasurer on February 11, 1991.
On November 15, 1990, or more than six (6) months from the filing of the
case for consignation, the lessor instituted an ejectment suit against the
lessees before the Metropolitan Trial Court of Manila Branch 20 xxx. The
court in its decision dated May 10, 1991 rendered a decision dismissing the
ejectment suit for lack of merit. xxx[4]
Portions of the MTC decision read:
Furthermore, it appears that the plaintiff realizing that it had virtually
surrendered certain aspects of its rights of ownership over the subject
premises in stipulating that the lease shall continue for an indefinite period
provided the LESSEE is up-to-date in the payment of his monthly rentals,
has raised the monthly rental to P3,500.00 which is much higher than the
correct rental in accordance with their stipulated 20% automatic increase
annually. This was done by the plaintiff apparently in order to create an
artificial cause of action, as when the LESSEES would refuse, as in fact they
refused, to pay the monthly rentals at the increase rate. This pretext of the
plaintiff cannot be countenanced by law.
Anent the final issue as to whether or not the defendants are already in
arrears in the payment of rentals on the premises, it is noteworthy that
the instant case for Unlawful Detainer was filed by the plaintiff-LESSOR
herein only on November 15, 1990, while the LESSEES consignation case
against the LESSOR-plaintiff herein based on the latters refusal to accept
the rentals have been pending with Branch XVI of this Court since May 2,
1990. And, in accordance with the consignation case, the LESSEES, upon
proper motion approved by the Court, deposited the amounts of P33,480.28
covered by O.R. No. B-578503 (for CO TONG) and P32,710.32 covered by
O.R. B-578502 (for TAN TE GUTIERREZ) both receipts dated February 11,
1991.
IN VIEW OF THE FOREGOING, and after careful scrutiny of the entire
record including all documentary evidence adduced by both parties, this
Court is of the opinion and so holds that the plaintiff (Jespajo Realty
Corporation) has failed to establish its claims by preponderance of evidence.
24 | S a l e s & L e a s e H W # 6 P a r t X V I t o X V I I I
WHEREFORE, this case is hereby dismissed for utter lack of merit. The
counterclaim is likewise dismissed for lack of evidence to support the
same. No pronouncement as to costs.
SO ORDERED.[5]
Jespajo Realty Corporation then appealed to the Regional Trial Court which
ruled in its favor, thus:
The Court is fully convinced that the sum demanded by appellant as
increase in appellees monthly rentals to the premises which they are renting
from appellant is very reasonable considering that the leased premises are
located in the commercial and business section of Manila in Binondo. It is
also undisputed that appellant has a 24-hour security unit over the property
as well as parking spaces and provisions for electricity, water and telephone
services.
In the light of the foregoing, the Court is constrained to reverse the appealed
decision and hereby orders another judgment to be entered in favor of
appellant.
WHEREFORE, PREMISES CONSIDERED, judgment is rendered as
follows:
1. Reversing the decision of the court a quo insofar as it dismissed
appellants complaint;
2. Declaring the termination or revocation [of the] lease contracts Annexes A
and A-1, Complaint executed between appellant and appellees;
3. Ordering appellees, their heirs and all other persons acting for and in their
behalf to vacate and surrender immediately the lease premises to appellant;
4. Adjudging appellees to pay unto appellant their rental arrearages of
P57,426.45 for appellee (Tan Te Gutierrez) and P56,153.75 for appellee (Co
Tong) as of April 30, 1991 and thereafter each appellee is ordered to pay
also appellant the sum of P3,500.00 every month starting May 1, 1991 until
they shall have fully vacated and surrendered the leased premises;
5. Appellees are likewise adjudged to pay the sum of P10,000.00 as and for
attorneys fees, and
6. The costs of suit.
SO ORDERED.[6]
However, said RTC decision was reversed by the Court of Appeals in the
herein assailed decision, portions of which read:
Be that as it may, We find that it was the private respondent who, in fact,
violated the lease agreement by charging petitioners a monthly rental of
P3,500.00, well in excess of the rental stipulated in the lease contract. We
see in the refusal of private respondent to accept the rental being offered by
petitioners, a scheme to place petitioners in default of their rental
payments. However, said scheme was waylaid by petitioners consignation of
the rentals due from them.
In view of the foregoing discussion, We find no more necessity in discussing
the last two (2) errors raised in the petition. We likewise find that the
respondent court committed an error of fact and law in reversing the decision
of the Metropolitan Trial Court of Manila and in arriving at the decision under
review.
VILLAR
WHEREFORE, the decision under review is hereby REVERSED and SET
ASIDE. The decision dated May 10, 1991 of the Metropolitan Trial Court of
Manila, Branch XX which dismissed Civil Case No. 134022 CV for lack of
merit is hereby REINSTATED. No pronouncement as to costs.
SO ORDERED.[7]
Petitioner comes before this Court with the following questions:
I
WHEN THE PARTIES TO A CONTRACT OF LEASE STIPULATED FOR
AN INDEFINITE PERIOD AND SHALL CONTINUE FOR AS LONG AS THE
LESSEE IS PAYING THE RENT, IS THE SAID CONTRACT
INTERMINABLE EVEN BY THE LESSOR?
II
WHEN THERE IS A DISAGREEMENT ON THE RENTALS TO BE PAID,
SHOULD IT BE RESOLVED IN A CONSIGNATION CASE OR IN AN
EJECTMENT CASE?[8]
Petitioner claims that the contracts of lease entered into between the
petitioner and private respondents did not provide for a definite period,
hence, Art. 1687 of the New Civil Code applies. Said Article reads:
Art. 1687. 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 to be paid daily. However, even though a monthly rent is paid, and
no period for the lease has been set, the courts may fix a longer term for the
lease after the lessee has occupied the premises for over one year. If the
rent is weekly, the courts may likewise determine a longer period after the
lessee has been in possession for over six months. In case of daily rent, the
courts may also fix a longer period after the lessee has stayed in the place
for over one month.
Petitioner cited Yek Seng Co. vs. Court of Appeals,[9] where this Court held
that: [c]onformably, we hold that as the rental in the case at bar was paid
monthly and the term was not expressly agreed upon, the lease was
understood under Article 1687 of the Civil Code to be terminable from month
to month.[10]
On the premise that the lease contract was effective on a monthly basis,
petitioner claims that the contract of lease with respondent has been
terminated, without being renewed, after respondents refused to comply with
the increased monthly rate of P3,500.00 and that this refusal even after
receiving a notice of termination and a final demand letter is a valid cause of
action for unlawful detainer.[11]
As to the second issue, petitioner argues that the Court of Appeals erred in
ruling that their allegation of respondents non-payment of rentals in the
complaint for ejectment was false.Petitioner insists that when it filed the case
of ejectment, private respondents had failed and refused to pay the
demanded P3,500.00 monthly rentals. Thus, petitioner correctly alleged non-
payment of this rental as another ground for ejectment aside from the basic
allegation of termination of the lease contract. Petitioner also contends that
the issue of whether or not the P3,500.00 monthly rental should be the
correct rental to be paid by the private respondents cannot properly be
25 | S a l e s & L e a s e H W # 6 P a r t X V I t o X V I I I
determined in the consignation case earlier filed by private respondents
since the issue can be resolved only in the ejectment case. [12]
Crucial in the resolution of this case is the construction of the lease
agreement, particularly the portion on the period of lease, which reads:
PERIOD OF LEASE- The lease period shall be effective as of February 1,
1985 and shall continue for an indefinite period provided the lessee is up-to-
date in the payment of his monthly rentals. xxx
Petitioner insists that the subject contract of lease did not provide for a
definite period hence it falls under the ambit of Art. 1687 of the NCC, making
the agreement effective on a month-to-month basis since rental payments
are made monthly.
The Court of Appeals opined otherwise. It reasoned that the application of
Art. 1687 in this case is misplaced because when there is a fixed period for
the lease, whether the period be definite or indefinite or when the period of
the lease is expressly left to the will of the lessee, Art. 1687 will not apply [13],
citing Eleizagui vs. Manila Lawn Tennis Club, 2 Phil 309.
We agree with the ruling of the Court of Appeals. Art. 1687 finds no
application in the case at bar.
The lease contract between petitioner and respondents is with a period
subject to a resolutory condition. The wording of the agreement is
unequivocal: The lease period xxx shall continue for an indefinite period
provided the lessee is up-to-date in the payment of his monthly rentals. The
condition imposed in order that the contract shall remain effective is that the
lessee is up-to-date in his monthly payments. It is undisputed that the
lessees Gutierrez and Co Tong religiously paid their rent at the increasing
rate of 20% annually. The agreement between the lessor and the lessees
are therefore still subsisting, with the original terms and conditions agreed
upon, when the petitioner unilaterally increased the rental payment to more
than 20% or P3,500.00 a month.
Petitioner cites Puahay Lao vs. Suarez[14] where it said that the Court in the
earlier case of Singson v. Baldomar,[15] rejected the theory that a lease could
continue for an indefinite term so long as the lessee paid the rent, because
then its continuance and fulfillment would depend solely on the free and
uncontrolled choice of the tenant between continuing to pay rentals or not,
thereby depriving the lessors of all say in the matter as it would be contrary
to the spirit of Article 1256 of the Old Civil Code, now Article 1308 of the
New Civil Code of the Philippines which provides that validity or compliance
of contracts can not be left to the will of one of the parties.[16]
A review of the Puahay and Singson cases shows that the factual
backgrounds therein are not the same as in the case at bar. In those cases,
the lessees were actually in arrears with their rental payments. The Court, in
the Puahay case, ruled that the lessor had the right to terminate the lease
under par. 3, Art. 1673 of the Civil Code, declaring that the lessor may
judicially eject the lessee for violation of any of the conditions agreed upon in
the contract.[17] In the case of Singson, the lease contract was expressly on
a month-to-month basis.
The contention of the petitioner that a provision in a contract that the lease
period shall subsist for an indefinite period provided the lessee is up-to-date
VILLAR
in the payment of his monthly rentals is contrary to Art. 1308 of the Civil
Code is not plausible. As expounded by the Court in the case of Philippine
Banking Corporation vs. Lui She:[18]
We have had occasion to delineate the scope and application of article 1308
in the early case of Taylor v. Uy Tieng Piao.[19] We said in that case:
Article 1256 [now art. 1308] of the Civil Code in our opinion creates no
impediment to the insertion in a contract for personal service of a resolutory
condition permitting the cancellation of the contract by one of the
parties. Such a stipulation, as can be readily seen, does not make either the
validity or the fulfillment of the contract dependent upon the will of the party
to whom is conceded the privilege of cancellation; for where the contracting
parties have agreed that such option shall exist, the exercise of the option is
as much in the fulfillment of the contract as any other act which may have
been the subject of agreement. xxx.[20]
Also held in the recent case of Allied Banking Corp. vs. CA[21] where this
Court upheld the validity of a contract provision in favor of the lessee:
xxx Article 1308 of the Civil Code expresses what is known in law as
the principle of mutuality of contracts. xxx This binding effect of a contract on
both parties is based on the principle that the obligations arising from
contracts have the force of law between the contracting parties, and there
must be mutuality between them based essentially on their equality under
which it is repugnant to have one party bound by the contract while leaving
the other free therefrom. The ultimate purpose is to render void a contract
containing a condition which makes its fulfillment dependent solely upon the
uncontrolled will of one of the contracting parties.
An express agreement which gives the lessee the sole option to renew the
lease is frequent and subject to statutory restrictions, valid and binding on
the parties. This option, which is provided in the same lease agreement, is
fundamentally part of the consideration in the contract and is no different
from any other provision of the lease carrying an undertaking on the part of
the lessor to act conditioned on the performance by the lessee. xxx
The fact that such option is binding only on the lessor and can be
exercised only by the lessee does not render it void for lack of
mutuality. After all, the lessor is free to give or not to give the option to
the lessee. And while the lessee has a right to elect whether to
continue with the lease or not, once he exercises his option to
continue and the lessor accepts, both parties are thereafter bound by
the new lease agreement. Their rights and obligations become
mutually fixed, and the lessee is entitled to retain possession of the
property for the duration of the new lease, and the lessor may hold him
liable for the rent therefor. The lessee cannot thereafter escape liability
even if he should subsequently decide to abandon the
premises. Mutuality obtains in such a contract and equality exists
between the lessor and the lessee since they remain with the same
faculties in respect to fulfillment.[22] (Emphasis supplied)
As correctly ruled by the MTC in its decision, the grant of benefit of the
period in favor of the lessee was given in exchange for no less than an
26 | S a l e s & L e a s e H W # 6 P a r t X V I t o X V I I I VILLAR

automatic 20% yearly increase in monthly rentals. This additional condition

was not present in the Puahay and Singson cases.
Moreover, the express provision in the lease agreement of the parties that
violation of any of the terms and conditions of the contract shall be sufficient
ground for termination thereof by the lessor, removes the contract from the
application of Article 1308.
Lastly, after having the lessees believe that their lease contract is one with
an indefinite period subject only to prompt payment of the monthly rentals by
the lessees, we agree with private respondents that the lessor is estopped
from claiming otherwise.[23]
In the case of Opulencia vs. Court of Appeals,[24] this Court held that
petitioner is estopped from backing out of her representations in the contract
with respondent, that is, she may not renege on her own acts and
representations, to the prejudice of the respondents who relied on them. We
have held in a long line of cases that neither the law nor the courts will
extricate a party from an unwise or undesirable contract he or she entered
into with all the required formalities and will full awareness of its
consequences.[25]
Anent the second issue, we likewise hold that the contention of petitioner is
without merit. The Court of Appeals found that the petitioners allegation of
respondents non-payment is false. This is a finding of fact which we respect
and uphold, absent any showing of arbitrariness or grave abuse on the part
of the court. Furthermore, the statement of petitioner that the correct amount
of rents cannot be considered in a consignation case but only in the
ejectment case is misleading because nowhere in the decision of the
appellate court did it state otherwise. This second issue is clearly just a futile
attempt to overthrow the appellate courts ruling.
Nevertheless, suffice it to be stated that under Article 1258 of the Civil Code
which provides:
Art. 1258. Consignation shall be made by depositing the things due at the
disposal of judicial authority, before whom to tender of payment shall be
proved, in a proper case, and the announcement of the consignation in other
cases.
The consignation having been made, the interested parties shall also be
notified thereof.
the rationale for consignation is to avoid the performance of an obligation
becoming more onerous to the debtor by reason of causes not imputable to
him.[26] Whether or not petitioner has a cause of action to eject private
respondents from the leased premises due to refusal of the lessees to pay
the increased monthly rentals had been duly determined in the ejectment
case by the Municipal Trial Court which was correctly upheld by the Court of
Appeals.
WHEREFORE, finding no error in the assailed decision, we DENY the
petition for lack of merit and AFFIRM the decision of the Court of Appeals.
Costs against petitioner.
SO ORDERED.
Bellosillo, (Chairman), Quisumbing, and Callejo, Sr., JJ., concur.
Mendoza, J., on official leave.