G.R. 135721, 27 May 2004

FACTS:

Agricom and Dee entered into a 15-year lease contract over the rubber plantation owned by the former. Among the stipulations in the contract was the payment of deposit in the amount of P135,000.00 and payment of back rentals in case of non-payment of rentals for three months. The contract also stipulated that Agricom had the duty to maintain Dee in the quiet peaceful possession and enjoyment of the leased premises.

A labor case for illegal dismissal and unfair labor practice was filed against Agricom, Amado Dee (Chua Tee Dee’s husband) and Pioneer. This case arose from the fact that some of the plantation laborers were dismissed from work due to the contract of lease with Dee. In addition, Dee also complained of being pestered by some individuals who claimed portions of the plantation as their own property.

Pioneer defaulted in its monthly payments, prompting Agricom to file a complaint for sum of money. In its Answer, Dee asserted that Agricom committed breach of contract for its failure to maintain her in peaceful possession and enjoyment of the leased premises. The breach, in turn, entitled her to suspend payment of rentals.

ISSUE:

Whether the lease contract is valid and petitioners are liable to pay back rentals, including rentals already paid for.

RULING:

The cause or essential purpose in a contract of lease is the use or enjoyment of a thing. It is consensual, bilateral, onerous and commutative, The owner temporarily grants the use of his or her property to another who undertakes to pay rent therefor. In the case at bar, petitioner Chua Tee Dee is the lessee of the private respondent Agricom. As lessor, the Agricom had the duty to maintain the petitioner in the peaceful and adequate enjoyment of the leased premises. Such duty was made as part of the contract of lease entered into by the parties. Even if it had not been so, the lessor is still duty-bound under Art. 1654 of the Civil Code, thus:

Art. 1654. The lessor is obliged:

(1) To deliver the thing which is the object of the contract in such a condition as to render it fit for the use intended;
(2) To make on the same during the lease all the necessary repairs in order to keep it suitable for the use to which it has been devoted, unless there is a stipulation to the contrary:
(3) To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract.

The duty “to maintain the lessee in the peaceful and adequate enjoyment of the lease for the duration of the contract” mentioned in no. 3 of the article is merely a warranty that the lessee shall not be disturbed in his legal, and not physical, possession.

In the case at bar, the petitioner claims that several people presented tax declarations to her and claimed some portions of the leased premises. However, no case was filed by any of the said claimants against her or her lessor during the time she occupied the premises.

Patently, then, the petitioner had not been disturbed in her legal possession of the property in derogation of Article 1654 of the New Civil Code. When the petitioner’s representative saw that a portion of the leased premises was being fenced by the claimants, she had all the right to sue the intruders who had disturbed her physical possession61 as provided for in Article 1664 of the New Civil Code. However, the petitioner did not file any suit against any of the claimants. Thus, it cannot be said that the private respondent violated paragraph 11 of the contract of lease.

In sum, then, the petitioner failed to prove that the private respondent breached any of the provisions of the contract of lease. Thus, the petitioner had no valid reason to suspend the payment of rentals under Art. 1658.

*Case digest by Meriam Rika R. Wong, JD – 4, Andres Bonifacio College, SY 2019-2020