Title

Vda. de Villaruel vs. Manila Motor Co., Inc.

Case Decision Date

G.R. No. L-10394 Dec 13, 1958

A Philippine jurisprudence case involving a dispute between lessors and a

lessee over rental payments and liability for the loss of leased premises during
the Japanese occupation, where the court ruled in favor of the lessee,
exempting them from paying rent during the period of ouster and holding the
lessors liable for the subsequent accidental loss of the premises.

104 Phil. 926

[ G.R. No. L-10394. December 13, 1958 ]

CLAUDINA VDA. DE VILLARUEL, ET AL., PLAINTIFFS AND APPELLEES, VS. MANILA

MOTOB CO., INC. AND ARTURO COLMENARES, DEFENDANTS AND APPELLANTS.

DECISION

REYES, J.B.L., J.:

Manila Motor Co., Inc., and Arturo Colmenares interpose this appeal against the decision of
the Court of First Instance of Negros Occidental, in its Civil Case No. 648, ordering the
defendant Manila Motor Co., Inc. to pay to the plaintiffs Villaruel the sum of (a) P11,900 with
legal interest from May 18, 1953, on which date, the court below declared invalid the
continued operation of the Debt Moratorium, under the first cause of action; (6) P38,395 with
legal interest from the date of filing of the original complaint on April 26, 1947, on the second
cause of action; and against both the Manila Motor Co., Inc. and its co-defendant, Arturo
Colmenares, the sum of P30,000 to be paid, jointly and severally, with respect to the third
cause of action.

On May 31, 1940, the plaintiffs Villaruel and the defendant Manila Motor Co., Inc. entered into
a contract (Ex- hibit "A") whereby, the former agreed to convey by way of lease to the latter
the following described premises;
(a) Five hundred (500) square meters of floor space of a building of strong materials for
automobile showroom, offices, and store room for automobile spare parts;

(b) Another building of strong materials for automobile repair shop; and
(c) A 5-bedroom house of strong materials for residence of the Bacolod Branch Manager of
the defendant company.The term of the lease was five (5) years, to commence from the time
that the building were delivered and placed at the disposal of the lessee company, ready for
immediate occupancy. The contract was renewable for an additional period of five (5) years.
The Manila Motor Company, in consideration of the above covenants, agreed to pay to the
lessors, or their duly authorized representative, a monthly rental of Three Hundred (F300)
pesos payable in advance before the fifth day of each month, and for the residential house of
its branch manager, a monthly rental not to exceed Fifty (P50) pesos "payable separately by
the Manager".

The leased premises were placed in the possession of the lessee on the 31st day of October,
1940, from which date, the period of the lease started to run under their agreement.

This situation, the Manila Motor Co., Inc. and its branch manager enjoying the premises, and
the lessors receiving the corresponding rentals as stipulated, continued until the invasion of
1941; and shortly after the Japanese military occupation of the Provincial Capital of Bacolod
the enemy forces held and used the properties leased as part of their quarters from June
1,1942 to March 29, 1945, ousting the lessee therefrom. No payment of rentals were made at
any time during the said period.

Immediately upon the liberation of the said city in 1945, the American Forces occupied the
same buildings that were vacated by the Japanese, including those leased by the plaintiffs,
until October 31, 1945. Monthly rentals were paid by the said occupants to the owners during
the time that they were in possession, as the same rate that the defendant company used to
pay.

Thereafter, when the United States Army finally gave up the occupancy the premises, the
Manila Motor Co., Inc., through their branch manager, Rafael B. Grey, decided to exercise
their option to renew the contract for the additional period of live (5) years, and the parties
agreed that the seven months occupancy by the U. S. Army would not be counted as part of
the new 5-year term. Simultaneously with such renewal, the company sublet the same
buildings, except that used for the residence of the branch manager, to the other defendant,
Arturo Colmenares.

However, before resuming the collection of rentals, Dr. Alfredo Villaruel, who was entrusted
with the same, consulted Atty. Luis Hilado on whether they (the lessors) had the right to
collect, from the defendant company, rentals corresponding to the time during which the
Japanese military forces had control over the leased prem- ises. Upon being advised that
they had such a right, Dr. Villaruel demanded payment thereof, but the defendant company
refused to pay. As a result, Dr. Villaruel gave notice seeking the rescission of the contract of
lease and the payment of rentals from June 1, -1942 to March 31, 1945 totalling P11,900. This
was also rejected by the defendant company in its letter to Villaruel, dated July 27, 1946.

Sometime on that same month of July, Rafael B. Grey offered to pay to Dr. Villaruel the sum
of P350, for which, tenderer requested a receipt that would state that it was in full payment
for the said month. The latter expressed willingness to accept the tendered amount provided,
however, that his acceptance should be understood to be without prejudice to their demand
for the rescission of the contract, and for increased rentals until their buildings were
returned to them. Later, Dr. Villaruel indicated his willingness to limit the condition of his
acceptance to be that "neither the lessee nor the lessors admit the contention of the other by
the mere fact of payment". As no accord could still be reached between the parties as to the
context of the receipt, no payment was thereafter tendered until the end of November, 1946.
On December 4, 1946 (the day after the defendant company notified Dr. Villaruel by telegram,
that it cancelled the power of attorney given to Grey, and that it now authorized Arturo
Colmenares, instead, to pay the rent of P350 each month), the Manila Motor Co., Inc. remitted
to Dr. Villaruel by letter, the sum of P350.00. For this payment, the latter issued a receipt
stating- that it was "without prejudice" to their demand for rents in arrears and for the
rescission of the contract of lease.

After it had become evident that the parties could not settle their case amicably, the lessors
commenced this action on April 26, 1947 with the Court of First Instance of Negros
Occidental against the appellants herein. During the pendency of the case, a fire originating
from the projection room of the City Theatre, into which Artura Colmenares, (the sublessee)
had converted the former repair shop of the Manila Motor Co. Inc., completely razed the
building, engulfing also the main building where Colmenares had opened a soda fountain
and refreshment parlor, and made partitions for store spaces which he rented to,other
persons.

Because of the aforesaid occurrence, plaintiffs demanded reimbursement from the

defendants, but having been refused, they filed a supplemental complaint to include as their
third cause of action, the recovery of the value of the burned buildings.

Defendants filed their amended answer and also moved for the dismissal of the plaintiffs'
first and second causes of action invoking the Debt Moratorium that was then in force. The
dismissal was granted by the trial court on February 5, 1951, but hearing was set as regards
the third cause of action.

On August 11,1952, the defendant company filed a motion for summary judgment dismissing
the plaintiffs, third cause of action, to which plaintiffs registered objection coupled with a
petition for reconsideration of the order of the court dismissing the first and second causes
of action. Pending the resolution of this incident, plaintiffs, on October 2, 1953, called the
court's attention to the decision in the case of Rutter vs. Esteban (93 Phil., 68; 49 Off. Gaz. [5]
1807) invalidating the continued effectivity of the Moratorium Law (R. A. 342). On November
25, 1958, the trial court denied the defendant company's motion for summary judgment and
set aside its previous order dismissing the first and second causes of action. The case was
accordingly heard and thereafter, judgment was rendered in plaintiffs' favor in the terms set
in the opening paragraph 6f this decision. Thereafter, the defendants regularly appealed to
this Court.

The defendants-appellants raise a number of procedural points. The first of these relates to
their contention that the supplemental complaint which included a third cause of action,
should not have,been admitted, as it brought about a change in the original theory of the case
and that it raised new issues not theretofore considered. This argument cannot be sustained
under the circumstances. This action was inceptionally instituted for the rescission of the
contract of lease and for the recovery of unpaid rentals before and after liberation. When the
leased buildings were destroyed, the plaintiffs-lessors demanded from the defendants-
lessees, instead, the value of the burned premises, basing their right to do so on defendants'
alleged default in the payment of post-liberation rentals (which was also their basis in
formerly seeking for rescission). This cannot be considered as already altering the theory of
the case which is merely a change in the relief prayed for, brought about by circumstances
occurring during the pendency of the action, and is not improper. (Southern Pacific Co. vs.
Conway, 115 F. 2d 746; Suburban Improvement Company vs. Scott Lumber Co., 87 A.L.R. 555,
59 F. 2d 711). The filing of the supplemental complaint can well be justified also under section
2, Rule 17 of the Rules of Court (on amendments) "to the end that the real matter in dispute
and all matters in the action in dispute between the parties may, as far as possible be
completely determined in a single proceedings". It is to be noted furthermore, that the
admission or rejection of this kind of pleadings is within the sound discretion of the court
that will not be disturbed on appeal in the absence of abuse thereof (see Sec 5, Rule 17, Rules
of Court), especially so, as in this case, where no substantial procedural prejudice is caused
to the adverse party.

It is urged that the dismissal of the first and second causes of action on February 5, 1951 had
the effect of a dismissal "with prejudice" as the court did not make any qualification in its
dismissal order. Appellants, apparently, lost sight of the fact that the dismissal was premised
on the existence of the "Debt Moratorium" which suspended the enforcement of the
obligation up to a certain time. The reference thereto by the lower court amounted to a
dismissal "without prejudice", since in effect it ruled that the plaintiffs could not, at the time
they sought it, enforce their right of action against the defendants, but plaintiffs must wait
until the moratorium was lifted. In this way, the court qualified its dismissal.

Taking up the case on its merits, it is readily seen that the key to the entire dispute is the
question whether the defendant-appellant Manila Motor Co., Inc. should be held liable for the
rentals of the premises leased corresponding to the lapse of time that they were occupied as
quarters or barracks by the invading Japanese army, and whether said appellant was placed
in default by its refusal to comply with the demand to pay such rents. For if the Motor
Company was not so liable, then it never was in default nor was it chargeable for the
accidental lose of the buildings, nor for any damages except the rental at the contract rate
from its reoccupation of the premises leased until the same were accidentally destroyed by
fire on March 2, 1948.

The appellees contended, and the court below has held, that the ouster of the lessee company
by the Japanese occupation forces from 1942 until liberation, while operating to deprive the
lessee of the enjoyment of the thing leased, was, nevertheless, a mere act of trespass
("perturbation de mero hecho") that, under the Spanish Civil Code of 1889 (in force here until
1950), did not exempt the lessee from the duty to pay rent. We find that contention and ruling
erroneous and untenable.

The pertinent articles of the Civil Code of Spain of 1889 provide:

"Art. 1554. It shall be the duty of the lessor;

1. To deliver to the lessee the thing which is the subject matter of the contract;

2. To make thereon, during the lease, all repairs necessary in order to keep it in serviceable
condition for the purpose for which it was intended;

3. To maintain the lessee in the peaceful enjoyment of the lease during the entire term of the
contract,"

"Art. 1560. The lessor shall not be liable for any act of mere disturbance of a third person of
the use of the leased property; but the lessee shall have a direct action against the trespasser.

If the third person, be it the Government or a private individual, has acted in reliance upon a
right, such action shall not be deemed a mere act of disturbance." (Italics supplied)Under the
first paragraph of article 1560 the lessor does not answer for a mere act of trespass
(perturbation de mero hecho) as distinguished from trespass under color of title
(perturbation de derecho). As to what would constitute a mere act of trespass, this Court in
the case of Goldstein vs. Roces (34 Phil. 562), made this pronouncement:
"Si el hecho perturbador no va acompaiiado ni precedido de nada que revele una intencion
propiamente juridica en el que lo realiza, de tal suerte que el arrendatarin solo pueda
apreciar el hecho material desnudo de toda forma o motivacidn de derecho, entendemos que
se trata de una perturbacion de mero hecho."Upon the basis of the distinction thus
established between the perturbacidn de hecho and the perturbacion de de hecho, it is
demonstrable that the ouster of the appellant by the Japanese occupying forces belongs to
the second class of disturbances, de derecho. For under the generally accepted principles of
international law (and it must be remembered that those principles are made by our
Constitution a part of the law of our nation[1]) a belligerent occupant (like the Japanese in
1942-1945) may legitimately billet or quarter its trcjops in privately owned land and buildings
for the duration of its military operations, or as military necessity should demand. The well
known writer Oppenheim, discoursing on the laws of war on land, says upon this topic;
"Immovable private enemy property may under no circumstances or conditions be
appropriated by an invading belligerent. Should he confiscate and sell private land or
buildings, the buyer would acquire no right whatever to the property. Article 46 of the Hague
Regulations expressly enacts that 'private property may not be confiscated.' But confiscation
differs from the temporary use of private land and building for all kinds of purposes
demanded by the necessities of war. What has been said above with regard to utilization of
public buildings applies equally to private buildings. If necessary, they may be converted into
hospitals, barracks, and stables without compensation for the proprietors, and they may also
be converted into fortifications. A humane belligerent will not drive the wretched inhabitants
into the street if he can help it. But under the pressure of necessity he may be obliged to do
this, and he is certainly not prohibited from doing it. (Italics supplied) (Oppenheim &
Lauterpach, International Law, Vol. II, p. 812, 1944 Ed.)The view thus expressed is concurred
in by other writers. Hyde (International Law, Vol. 3, p. 1893, 2nd Rev. Ed.) quotes the U. S. War
Department 1940 Rules of Land Warfare (Rule No. 324) to the effect that --
"The measure of permissible devastation is found in the strict necessities of war. As an end
in itself, as a separate measure of war, devastation is not sanctioned by the law of war. There
must be some reasonably close connection between the destruction of property and the
overcoming of the enemy's army. Thus the rule requiring respect for private property is not
violated through damage resulting from operations, movements, or combats of the army;
that is, real estate may be utilized for marches, camp sites, construction of trenches, etc.
Buildings may be used for shelter for troops, the sick and wounded, for animals, for
reconnaissance, cover defense, etc. Fences, woods, crops, buildings, etc., may be demolished,
cut down, and removed to clear a field of fire, to construct bridges, to furnish fuel if
imperatively needed for the army." (Italics supplied)Reference may also be made to Rule 336:

"What may be requisitioned.Practically everything may be re- quisitioned under this article
(art. LII of the regulations above quoted) that is necessary for the maintenance of the army
and not of direct' military use, such as fuel, food, forage, clothing, tobacco, printing presses,
type, leather, cloth, etc. Billeting of troops for quarters and subsistence is also authorized."
(Italics supplied)

And Forest and Tucker state:

"The billegerent occupant may destroy or appropriate public property which may have a
hostile purpose, as forts, arms, armories, etc. The occupying force may enjoy the income
from the public sources. Strictly private property should be inviolable, except so far as the
necessity of war requires contrary action." (Forest and Tucker, International Law, 9th Ed., p.
277) (Italics supplied)The distinction between confiscation and temporary sequestration of
private property by a belligerent occupant was also passed upon by this Court in Haw Pia vs.
China Banking Corporation, 80 Phil. 604, wherein the right of Japan to sequester or take
temporary control over enemy private property in the interest of its military effort was
expressly recognized.

We are thus forced to conclude that in evicting the lessee, Manila Motor Co., Inc. from the
leased buildings and occupying the same as quarters for troops, the Japanese authorities
acted pursuant to a right recognized by international and domestic law. Its act of
dispossession, therefore did not constitute perturbacion de hecho but a perturbation de
derecho for which the lessors Villaruel (and not the appellants lessees) were liable (Art. 1560,
supra) and for the consequences of which said lessors must respond, since the result of the
disturbance was the deprivation of the lessee of the peaceful use and enjoyment of the
property leased. Wherefore, the latter's corresponding obligation to pay rentals ceased
during such deprivation.

The Supreme Court of Spain, in its Sentenda of 6 December 1944, squarely declared the
resolutory effect of the military sequestration of properties under lease upon the lessee's
obligation to pay rent (Jurisprudencia Civil, Segunda Serie, Tomo 8, pp. 583, 608):
"Considerando que para resolver acerca de la procedeneia del presente recurso es preeiso
partir de las bases de hecho sentadas en la sentenda recurrida, y no impugnadas al amparo
del numero 7. del articulo 1.692 de la Ley de Enjuiciamiento civil, es decir, de que hallandose
vigente el contrato de arrendamiento celebrado entre actor y demandada, en fecha que no se
precisa, entre los dias del 18 al 31 de1 julio de 1936, los locales objeto de dicho contrato de
arrendamiento, y en los que no funcionaba de tiempo anterior la industria para cuyo
ejercicio se arrendaron, fueron requisados per el Ejercito Nacional, con motivo de la guerra
civil, para que se instalara en los mismos la Junta de Donativos al Ejercito del Sur, aun cundo
en dicha incautacion, que se hizo a la propiedad de la finca, no se observaron las
formalidades legates, a causa de las circunstancias extraordinarias por que a la sazon
atravesaba Sevilla, hecho que no consta se hiciera saber por los arrendatarios demandados al
actor, pero que fue" notorio en aquella capital, donde residia el actor, que de el debi6 tener
conocimiento. Se estima igualmente por la Sala que el hecho de que la industria no
funcionara en el local no tuvo influencia alguna sobre su incautacion por el Ejercito."

"Considerando que sobre tales bases de hecho es de desestimar el primer motivo del
recurso: violacidn de los articulos 1.254, 1.278 y 1.091 del C6digo civil, que sancionan, en
te"rminos generates, la encacia de los contratos> puesto que en el presente caso de los que se
trata en definitiva es de determinar si por virtud de fuerza mayor, la requisa a que se hace
referencia, ajena, por lo tahto, a culpa, asi del arrendatario como del arrendador, se vio aquel
privado del posible disfrute de la finca arrendada, y de si por virtud de esta circunstancia esta
o no exento de la obliga- cion de abonar la renta pactada durante el tiempo que subsistio la
incautaci6n; y es indudable la afirmativa en cuanto al primer extremo, puesto que la
sentencia recurrida establece que el hecho de que no funcionase la industria y estuvieran los
locales cerrados no actuo como causa de la requisa de estos por el Ejercito." "Considerando
que la sentencia recurrida, en cuanto no da lugar al pago de las rentas correspondientes al
tiempo que duro la incautacion, lejos de infringir, por aplicacion indebida, el art. 1.568 del
Cddigo civil, se ajusta a la orientaci6n marcada en el mismo, puesto que este precepto legal
dispone que el arrendatario tiene accion contra el tercero perturbador de mero hecho en la
posesion de la finca arrendada, pero no contra la Administraci6n o contra los que obran en
virtud de un derecho que les corresponde; y aqui la perturbacion que experimento el
arrendador en su posesion, como consecuencia de la requisa, no puede calificarse como de
mero hecho-, conforme al citado articulo, puesto que la finca fue requisada por la autoridad
militar para fines de guerra, de donde se sigue que el arrendatario tenfa que soportar la
privacion de su tenencia material a traves del arrendador, con quien ha de entenderse la
requisa de la cosa arrendada."In addition, the text of Art. 1560, in its first paragraph (iam
quot) assumes that in case of mere disturbance (perturbacion de mero hecho) "the lessee
shall have a direct action against the trespasser." This assumption evidently does not
contemplate the case of dispossession of the lessee by a military occupant, as pointed out by
Mr. Chief Justice Paras in his dissenting opinion in Reyes vs. Caltex (Phil.) Inc., 84 Phil. 669;
for, the reason that the lessee could not have a direct action against the military occupant. It
would be most unrealistic to expect that the occupation courts, placed under the authority of
the occupying belligerent, should entertain at the time a suit for forcible entry against the
Japanese army. The plaintiffs, their lawyers, and in all probability, the Judge and court
personnel, would face "severest penalties" for such defiance of the invader.

The present case is distinguishable from Lo Ching vs. Archbishop of Manila (81 Phil., 601) in
that the act of the Japanese military involved in the latter case, clearly went beyond the limits
set by the Hague Conventions, in seizing the property and delivering it to another private
party; and from Reyes vs. Caltex (Phil.) Inc., 84 Phil. 654, in that the rights of the military
occupant under international law were not raised or put in issue in said case; and moreover,
the lessee there, by failing to rescind the lease upon seizure of the premises by the Japanese
military, despite the stipulated power to do so, resumed business and decided to hold unto
the long term lease for the balance of its 20-year period, starting from December 23, 1940. In
the case before us, the occupation of the leased property by the Japanese army covered the
major portion of the five-year contractual period, without any option to rescind by the lessee.

The lessor's position is not improved by regarding the military seizure of the property under
lease as a case of force majeure or fortuitous event. Ordinarily, a party may not be held
responsible therefor, despite the fact that it prevented compliance of its obligations. But lease
being a contract that calls for prestations that are both reciprocal and repetitive (tractum
successivum), the obligations of either party are not discharged at any given moment, but
must be fulfilled all throughout the term of the contract- As a result, any substantial failure
by one party to fulfill its commitments at any time during the contract period gives rise to a
failure of consideration (causa) for the obligations of the other party and excuses the latter
from the correlative performance, because the causa in lease must exist not only at the
perfection but throughout the term of the contract. No lessee would agree to pay rent for
premises he could not enjoy. As expressed by Marcel Planiol (quoted in 4 Castan, Derecho
Civil, 7th Edition, p. 264)
"Como la obligacidn del arrendador es sucesiva y se renueva todos los dias, la subsistencia
del arrendamiento se hace imposible cuando, por cualquier razon, el arrendador no puede ya
procurar al arrendatario el disfrute de la cosa."This effect of the failure of reciprocity appears
whether the failure is due to fault or to fortuitous event; the only difference being that in case
of fault, the other party is entitled to rescind the contract in totot and collect damages, while
in casual non-performance it becomes entitled only to a suspension pro tanto of its own
commitments. This rule is recognized in par. 2 of Art. 1558, authorizing the lessee to demand
reduction of the rent in case of repairs depriving him of the possession of part of the
property; and in Art. 1575, enabling the lessee of rural property to demand reduction of the
rent if more than one-half of the fruits are lost by extraordinary fortuitous event. Of course,
where it becomes immediately apparent that the loss of possession or enjoyment will be
permanent, as in the case of accidental destruction of a leased building, the lease contract
terminates.

Applying these principles, the Sentencia of December 1944, already adverted to, ruled as
follows:
"Considerando que privado el arrendador, por tal hecho, del disfrute de sta, es manifiesta la
imposibilidad en que se vi6 de cumplir la tercera de las obligaciones que el impone el
artfculo 1.554 del Codigo Civil, obligaci6n (la de mantener al arrendatario en el disfrute de la
cosa arrendada) que ha de entenderse reciproca de la de pago de renta pactada, que impone
al arrendatario et numero primero del art. 1.555 de dicho Cuerpo legal, y por ello no puede
aer exigida."

"Considerando que, aunque no sean estrictamente aplicables al caso los articulos 1.124, 1.556
y 1.568, que se citan como infringidos por el recurrente, suponiendo que a ellos ha entendido
refer irse la Audiencia (lo que impediria, en todo caso, la estimacion del recurso por este
motivo, ya que dichos articulos no se citan en la sentencia de instancia), es evidente que ellos
proclaman la reciprocidad de las obligaciones entre arrendatario y arrendador, y en este
sentido, tratandose de un incumplimiento inculpable de contrato, pueden servir, como
tambien el 1.558, en cuanto preven la reduccion de rentas o posible restricci6n del contrato
cuando el arrendatario se ve privado, por obras realizadas en la finca arrendada, del disfrute
de este, de fundamento, con las demas preceptos invocados, a una extencion de renta
mientras subsiste la imposibilidad de utilizer. la eosa arrendada, sobre todo cuando los
artfeulos 157 y 158 del Reglamento de Requisas de 13 de enero de 1921 estatuyen claramente
que las requisas de edificio se hacga a la propiedad, y es el propietario el que puede pedir
indemniza* don, uno de cuyos elementos es el precio del alquiler que le sea satisfecho por el
inmueble incautado."We are aware that the rule in the common law is otherwise, due to its
regarding a lease as- a conveyance to the lessee of a temporary estate or title to the leased
property jso that loss of possession due to war or other fortuitous event leaves the tenant
liable for the rent in the absence of stipulation. The fundamental difference between the
common law and the civil law concepts has been outlined by the United States in Viterbo vs.
Friedlander, 30 L. Ed. (U.S.) pp- 776, 778, in this wise:
"But as to the nature and effect of a lease for years, at ' a certain rent which the lessee agrees
to pay, and containing no express covenant on the part of the lessor, the two systems differ
materially. The common law regards such a lease as the grant of an estate for years, which
the lessee takes a title in, and is" bound to pay the stipulated rent for, notwithstanding any
injury by flood, fire or external violence, at least unless the injury is such a destruction of the
land as to amount to an eviction; and by that law the lessor is under no implied covenant to
repair, or even that the premises shall be fit for the purpose for which they are leased. Fowler
vs. Bott, 6 Mass. 63; 3 Kent, Com. 465, 466; Broom, Legal Maxims, 3d ed. 213, 214; Doupe vs.
Genin, 45 N. Y. 119; Kingbury vs. Westfall, 61 N. Y. 356. Naumberg vs. Young, 15 Vroom, 331;
Bowe vs. Hunking, 135 Mass. 380; Man- chester Warehouse Co. vs. Carr, L.R. 5 C.P.D. 507.

The civil law, on the other hand, regards a lease for years as mere transfer of the use and
enjoyment of the property; and holds the landlord bound, without any express covenant, to
keep it in repair and otherwise fit for use and enjoyment for the purpose for which it is
leased, even when the need of repair or the unfitness is caused by an inevitable accident, and
if he does not do so, the tenant may have the lease annulled, or the rent abated. Dig. 19, 2, 9, 2;
19, 2, 15, 1, 2; 19, 2, 25, 2; 19, 2, 39; 2 Gomez, Variae Resolutiones c. 3, sees. 1-3, 18, 19: Gregorio
Lopez in 5 Partidas, tit. 8, 11. 8, 22; Doroat, Droit Civil, pt. 1, lib. 1, tit 4, sec. 1, no. 1; sec. 3 nos. 1,
3, 6, Pothier, Contract de Louage, nos. 8, 6, 11, 22, 53, 103, 106, 189-155.

It is accordingly laid down in the Pandects, on the authority of Julian, 'If anyone has let an
estate, that, even if anything happens by vis major, he must make it good, he must stand by
his contract/ si quis fundum locaverit, ut, etiamsi quid vi majore aceidtsset, hoe ei
praestaretur, pacto standum esse; Dig. 19, 2, 9, 2; and on the authority of Ulpian, that 'A lease
does not change the tnrnership,' non solet locatio dominium mutare; Dig. 19, 2, 39; .-and that
the lessee has a right of action, if he cannot enjoy the thing which he has hired, si re quam
conduxit frui non liceat, whether because his possession, either of the whole or of part of the
field, is not made good, or a house, or stable or sheepfoldV is not repaired; and the landlord
ought to warrant the tenant, dominum colono praestare debere, against every irresistible
force, omnvm vim cut resisti non potest, such as floods, flocks of birds, or any like cause, or
invasion of enemies; and if the whole crop should be destroyed by a heavy rainfall, or the
olives should be spoiled by blight, or by extraordinary heat of the sun, solis fern;ore non
assueto, it would be the loss of the landlord, damnum domini futurum; and so if the field falls
in by an earthquake, for there must be made good to the tenant a field that he can enjoy,
oportere enim agrum praestari conductori, ut frui possit; but if any loss arises from defects
in the thing itself, si qua tamen vitia ex ipsa re ortiantur, as if wine turns sour, or standing
corn is spoiled by worms or weeds, or if nothing extraordinary happens, si vero nihil extra
consuetudinem acciderit, it is the loss of the tenant, damnum coloni esse. Dig. 19, 2; 15, 1, 2."
(Italics supplied)
In short, the law applies to leases the rule enunciated by the Canonists and the Bartolist
School of Post glossatorse, that "contractus qui tractum successivum habent et
dependentiam de futuro, sub conditione rebus sic stantibus intelliguntur," they are
understood entered subject to the condition that things will remain as they are, without
material change.

It is also worthy of note that the lessors, through Dr. Javier ViUaruel, agreed after liberation
to a renewal of the contract of lease for another five years (from June 1, 1946 to May 31 of
1951) without making any reservation regarding the alleged liability of the lessee company
for the rentals corresponding to,the period of occupancy of the premises by the Japanese
army, and without in sisting that the non-payment of such rental was a breach of the contract
of lease. This passivity of the lessors strongly supports the claim of the lessees that the
rentals in question were verbally waived. The proffered explanation is that the lessors could
not refuse to renew the lease, because the privilege of renewal had been granted to the
lessees in the original contract. Such excuse is untenable: if the lessors deemed that the
contract had been breached by the lessee's non-payment of the occupation rents how could
they admit the lessee's right to renew a contract that the lessee itself had violated?

But this is not all. The lessors accepted payment of current rentals from October 1945 to June
1946. It was only in July 1946 that they insisted upon collecting also the 1942-1945 rents, and
refused to accept further payments tendered by the lessee unless their right to collect the
occupation rental was recognized or reserved. After refusing the rents from July to
November 1946, unless the lessee recognized their right to occupation rentals, the appellees
(lessors) demanded rescission of the contract and a rental of Pl,740 monthly in lieu of the
stipulated F350 per month. (Exhibit "C").

This attitude of the lessors was doubly wrongful: first, because as already shown, the
dispossession by the Japanese army exempted the lessee from his obligation to pay rent for
the period of its ouster; and second, because even if the lessee had been liable for that rent,
its collection in 1946 was barred by the moratorium order, Executive Order No. 32, that
remained in force until replaced by Rep. Act 342 in 1948. To apply the current rentals to the
occupation obligations would amount to enforcing them contrary to the moratorium decreed
by the government.

Clearly, then, the lessor' insistence upon collecting the occupation rentals for 1942-1945 was
unwarranted in law. Hence, their refusal to accept the current rentals without, qualification
placed them in default (mora creditoris or accpiendi) with the result that thereafter, they had
to bear all supervening risks of accidental injury or destruction of the leased premises. While
not expressly declared by the Code of 1889, this result is clearly inferable from the nature and
effects of mow., and from Articles 1185, 1452 [par. 3] and 1589).
"Art. 1185. When the obligation to deliver a certain and determinate thing arises from the
commission of a crime or misdemeanor the obligor shall not be exempted from the payment
of its value, whatever the cause of its loss may have been, unless, having offered the thing to
the person entitled to receive it, the latter should have refused without reason to accept it."

"Art. 1452. * * *.

If fungible things should be sold for a price fixed with relation to weight, number, or
measure, they shall not be at the purchaser's risk until they have been weighed, counted, or
measured, unless the purchaser should be in default."

"Art. 1589. If the person who contracted to do the wofk bound himself to furnish the
materials, he shall bear the loss in case of the destruction of the work before it is delivered,
unless its acceptance has been delayed by the default of the other party."While there is a
presumption that the loss of the thing leased is due to the fault of the lessee (Civil Code of
1889, Art. 1563), it is noteworthy that the lessors have not invoked that presumption either
here or in the court below. On the contrary, the parties and the trial court have all proceeded
and discussed the issues taking for granted that the destruction of the leased buildings was
purely fortuitous. We see no reason for departing from that assumption and further
prolonging this litigation.

That the lessee and sublessee did not consign or deposit in court the rentals tendered to and
improperly rejected by the lessors, did not render the debtor liable for default (mora
solvendi) nor answerable for fortuitous events because, as explained by the Supreme Court
of Spain in its Sentenda of 5 June 1944
"Al exigir el art. 1176 del C6digo Civil la consignacion para liberar al deudor 710 quiere decir
que necesariamente kaya de practicorse, y no baste el ofrecimiento de pago que de aquella
no fuere seguido, a efectos de exclusion de las consecuencias de la mora solvendi." (8
Manresa, Comentarios, 5th Ed., Vol. I, p. 136).In other words, the only effect of the failure to
consign the rentals in court was that the obligation to pay them subsisted (P.N.B. vs. Relative
92 Phil., 203) and the lessee remained liable for the amount of the unpaid contract rent,
corresponding to the period from July to November, 1946; it being undisputed that, from
December 1946 up to March 2,1948, when the commercial buildings were burned, the
defendants-appellants have paid the contract rentals at the rate of P350 per month. But the
failure to consign did not eradicate the default (mora) of the lessors nor the risk of loss that
lay upon them. (3 Castan, Der. Civ., 8th Ed., p. 145; 4 Puig Pena, Der. Civ., part. 1, p. 234; Diaz
Pairo, Teoria Gen. de las Obligaciones [3rd Ed.], Vol. 1, pp. 192-193).
In view of the foregoing, we hold:
(a) That the dispossession of the lessee from the premises by the Japanese army of
occupation was not an act of mere trespass (perturbacion de mero hecho) but one de
derecho chargeable to the lessors;

(b) That such dispossession, though not due to fault of lessors or lessee, nevertheless
resulted in the exemption of the lessee from its obligation to pay rent during the period that it
was deprived of the possession and enjoyment of the premises leased;

(c) That the insistence of the lessors to collect such rentals was unwarranted;

(d) That the lessors were not justified in refusing to accept the tender of current rentals
unless the lessee should recognize their right to the rents corresponding to the period that
the lessee was not in possession;

(e) That by their improper refusal to accept the current rents tendered by the lessee, the
lessors incurred in default (mora) and they must shoulder the subsequent accidental loss of
the premises leased;

(f) That the mora of the lessors was not cured by the failure of the lessee to make the
consignation of the rejected payments, but the lessee remained obligated to pay the amounts
tendered and not consigned by it in court.Consequently, it was reversible error to sentence
the appellants to pay P2,165 a month as reasonable value of the occupation of the premises
from July 1946, and the value of the destroyed buildings amounting to P30,000.

Wherefore, the decision appealed from is modified in the sense that the appellant Manila
Motor Company should pay to the appellees Villaruel only the rents for the leased premises
corresponding to the period from July up to November 1946, at the rate of P350 a month, or a
total of P1,750. Costs against appellees in both instances. So ordered.

Paras, C. J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, and
Endencia, JJ., concur.

Judgment modified.
[1] Art. 2. Sec. - The Philippines renounces war as an instrument of national policy, and adopts

the generally accepted principles of international law as part of the nations:" (Constitution of
the Philippines) - Applied in Go Kim Chan vs. Valdez 75 Phil.113; Tubo vs. Griess, 78 Phil 249;
Dizon vs Commanding General, 81 Phil. 286.