Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-32908 November 28, 1930
KAPISANAN BANAHAW, INC., plaintiff-appellant,
vs.
JUAN DEJARME and CANDIDA ALVERO, defendants-appellees.
Manuel Escudero and Maximo Nisolada for appellant.
Teofilo Mendoza for defendant.
STREET, J.:
This action was instituted in Court of First Instance of Tayabas by Kapisanan Banahaw, Inc., for the purpose of obtaining the recission of a lease contract executed on August 26, 1927, between the plaintiff, as lessor, and the defendants, Juan Dejarme and his wife, Candida Alevero, as lessees, as well as to recover possession of the land covered by the lease with damages and costs. The cause heaving been heard upon the answer of the defendants and proof submitted by the respective parties, the trail court rendered judgment denying the petition of or rescission and absolving the defendant from the complaint with costs against the plaintiff. From this judgment the plaintiff appealed.
The plaintiff is an agricultural association incorporates under the laws of the Philippine Islands with its principal office in Dolores, Tayabas, while the defendants, husband and wife, are residents of the same municipality. It appears that on about August 10, 1925, the plaintiff sold the defendants upon conditional sale, a parcel o land the same that is the subject of this action for the sun of P16,000. Upon this contract the defendants pais apparently P3,000, but having failed to comply in all respects with the terms of the agreement, they were sued by the plaintiff in the Court of First Instance of Tayabas. This litigations was however, compromised and the action dismissed, upon surrender, by the defendants, of the their rights under said contract. The parties to said litigation seem to have been forced into this compromise by a pressing need for money and when as a result of the compromise the property had been returned to the control of the plaintiff it was at once sold with a larger tract of which it formed a part, to Nicanor Padilla upon contract of sale with pacto de retro at three years, for the sum of P20,000. under this contract the plaintiff as seller was permitted to continue in possession in the character of lessee for the period covered by the right of redemption. Having thus retained possession in the character of lessee, the Kapisanan Banahaw, Inc., in turn entered into ac contract of sublease with the defendant Dejarme, whereby the same land that had been previously sold to the latter was returned to his possession in the character of lessee. This contract is that, after the lease should have been in force for one year, the lessee would have a right to buy the property outright for the sum of P18,666, payable in cash, with further stipulation that, upon availing himself of this privilege, Dejarme should pay to the seller an amount equivalent to the rent of the property for three months, such payment to be in addition to the stipulated rent due for the semester current at the time the purchase should be effected.
With respect to the rent to be paid during the continuance of the lease it was stipulated that the annual rent should be in the amount of P2,160 per annum, one half of which should be paid in advance within the first fifteen days of each six-months period (semester) during which the contract of lease was to run. It was further agreed that the sublessees should pay the taxes assessed against the land during the period of the lease, said taxes to be [paid in the name of the Kapisanan Banahaw. Inc., and official receipts for such payments to be delivered to it. Another stipulation was to the effect that the sublessees would take care of the rented property as if it were their own and that they would not gather immature coconuts form the property. Finally, it was declared:
(d) If any condition of this sublease be not fulfilled the right or option to purchase therefore granted the sublease, shall at once be revoked annulled and cancelled and the possession of the property restored; provided that f notwithstanding such breach of contract the lessees should continue in possession with or without the consent of the Kapisanan Banahaw, Inc., such action shall in no way be construed as an extension or novation of the option or right to purchase, which it is hereby covenanted and agreed, shall be, ipso facto, cancelled annulled, and rendered of no effect.
With respect to this provision it need only be observed that it is a mere reminder of the right recognized in articles 1124 and 1291 (5) of the Civil Code, of resolving or rescinding a contract for failure to comply with its stipulation. The provision quoted does not extend in any degree the remedies conferred by law.lawphil.net
It will be observed that under the contract the half yearly payments of rent were to be paid in advance within the first fifteen days of each semester, and the major point of controversy in this case is as to the date when the semesters begin. With respect tot his question the following facts are pertinent: In fixing the price at which Dejarme was to be permitted to buy the property after the first year of the lease should have elapsed the contracting parties took as a basis an estimate contained in a letter of Dejarme addressed too the president of Kapisanan Banahaw, Inc., under date of August 6, 1927. In this estimate there appears an item representing interest form August 1 to August 31, 1927, amounting to P140.13. Now this item was included in the price fixed for the purchase of the property; and the trial court correctly held that, after the lease was signed, no rent be collected for the last eleven days of the current months, August 21 to 31, inclusive. It result that for the purpose of estimating the rental periods the first semester should be taken as beginning on September 1 of each year covered by the lease and running to February 28 of the next year.
Now it is admitted that the rent for the first semester (September 1, 1927 to February 28, 1928) has been paid; and it is proved that the rent for the second semester (March 1 to August 31, 1928) was paid on March 1, 1928, as per receipt Exhibit 1. Furthermore, the rent for the third semester was paid on September 16, 1928, as per Exhibit 2, and although this last receipt recites that the semester for which payment was made covered the period from February 20 to August 20, 1928, this statement is doubtless a mistake, for which payment was made covered the period form February 20 to August 20,1928, this statement is doubtless a mistake, in view of the fact that Dejarme had previously accounted fort the rent for the period covering the fractional part of August, 1027, as already shown. In this connection it will be noted that this last payment was made eleven days late, if the plaintiff's theory of the date from which rent should be counted is correct, while it was paid only one day late, if the defendants' theory as to the date when payment was due is accepted.
With respect to the payment which should have been , made within the first fifteen days of March, 1929, for the rent of the fourth semester, we find that on March 10 Dejarme was officially informed by the Kapisanan Banahaw, Inc., that the period for the payment of said rent had lapsed and that payment of the rent would not be received. The position thus assumed by the plaintiff was based on the assumption that the period covered by this installment ran from February 20 to August 20, 1929. As we have already shown this contention is untenable. Of course no valid tender of the rent was made by Dejarme in cash on March 10, but the making of such tender was excused when the plaintiff peremptorily informed the defendant that payment would not be received. A debtor does not incur in default by failing to make a fruitless tender after notification from the credit that the money will not be received.
Our conclusion is that Dejarme has never been in default for the non-payment of the fourth installment of rent, and the contract cannot be resolved or rescinded on account of such supposed default. Furthermore, we entertain no doubt that the institution of this lawsuit was a mere act of reprisal against Dejarme arising form his refusal to submit to an extortion of an additional amount over what was actually due upon the stipulated rent. In this connection Dejarme stated that upon making payment of the prior installments he had paid an additional sum of P450 which was never included in the receipts. The true inwardness of this transaction is revealed when the fact is noted hat the rent charged against Dejarme under this contract was estimated upon the basis of about 12 per centum per annum on the purchase price of the place and the additional amount paid but both noted in the receipts amounted to about 5 per centum of the same amount. Dejarme says that he and been submitting to this charge on this representation made by the plaintiff that it was paying 17 per cent to Padilla, but in course of time he found that this representation was false, and that in fact the plaintiff was making him carry the whole thereto, the plaintiff was actually making a profit by charging Dejarme an excess over his portion of the debt to Padilla. Upon reflecting ob this situation Dejarme decided to discontinue this additional payment, which was in effect nothing more than a concealed usurious charge of an extra five per centum on the purchase price of the place. We consider this explanation made by Dejarme as being probably true, and although it does nit materially change the legal aspects of the case, it show the motive behind the refusal of the plaintiff to grant a trivial extension of time for the payment of the fourth installment of rent, supposing Dejarme actually to have been in default.
And even supposing that this installment of the rent may in fact have been due on March 5, 1929, as the plaintiff's officers contends we are nevertheless of the opinion that under the circumstances of this case such default would not justify the resolution or rescission of the contract. Under the third paragraph of article 1124 of the Civil Code, the court is given a discretionary power to allow a period within which a person in default may be permitted to perform the stipulation upon which the claim for resolution of the contract is based. In other words, the right to resolve or rescind a contract is not absolute (Ocejo, Perez & Co. vs. International Banking Corporation, 37 Phil., 631); and this discretionary power on the part of the court should be exercised without hesitation in a case where a virtual forfeiture of valuable rights is sought to be enforced as an act of mere reprisal fro a refusal of the debtor to submit to a usurious charge. Moreover, as we said by this court in Song Fo & Co. vs. Hawaiian-Philippine CO. (47 Phil., 821, 827), the general rule is that rescission will not be permitted for a slight or casual breach of a contract, but only for such breaches as are so substantial and fundamental as to defeat the object of the parties in making the agreement. In that case it was held that a delay in the payment of a small quantity of molasses for some twenty days was not such a violation of an essential condition of the contract as warranted rescission for non-performance.
The forgoing discussion covers the most vital feature for the case; but error is assigned by the appellant tot he failure of the trial court to declare the contract rescinded for the alleged default of Dejarme in not paying taxes on the property during the period covered by the lease, as well as for certain abuses alleged to have been committed by him in taking immature coconuts from the trees on the leased property. The discussion contained in the appealed decision sufficiently answer contentions, and our conclusion is that no error prejudicial to the plaintiff was committed in the decision of the trial court.
In conclusion we observe that if we had found that Dejarme was really in default, it would have been proper for the court to fix a term within which he should be required to pay the rent due from him under the contract, but since the making of a tender on the date when the money was due was excused in consequence of the attitude of the plaintiff, no such order is necessary and the duty to pay must be revived by proper demand hereafter made upon Dejarme by the plaintiff.
The judgment will therefore be affirmed, and it is so ordered, with costs against the appellant.
Avanceña, C.J., Malcolm, Villamor, Ostrand, Johns, Romualdez and Villa-Real, JJ., concur.
Johnson, J., I dissent.
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