Desbarats v. Vera
REITERATIONFacts
The Antecedents: Plaintiffs filed an ejectment complaint against the defendant for the "Burke Building." The Municipal Court ordered the defendant to vacate and pay P110,000 in back rentals and P19,000 monthly thereafter. The defendant appealed to the Court of First Instance (CFI). Procedural History: The CFI ordered the defendant to vacate and pay rentals at P10,400 monthly from June 1, 1947, until vacation, deducting amounts collected by plaintiffs from sublessees. Both parties appealed. The Petition: Plaintiffs-appellants contended the CFI erred in reducing the monthly rental from P19,000 to P10,400, despite no verbal agreement on elevator installation. Defendant-appellant claimed Carrascoso was responsible for uncollected sub-rentals, sought reimbursement for improvements, and requested lease extension. He also claimed attorney's fees.
Issue(s)
Whether the lower court erred in reducing the monthly rental from P19,000 to P10,400. Whether the lower court erred in its determination of rental for a portion occupied by the defendant. Whether plaintiff Carrascoso is legally responsible for uncollected rentals from subtenants. Whether the defendant is entitled to reimbursement for improvements made on the leased property. Whether the defendant is entitled to an extension of the lease contract. Whether the defendant is entitled to attorney's fees.
Ruling
The decision of the Court of First Instance is modified. The defendant is ordered to pay P19,000 as monthly rental from the date of default until he vacated the leased building, with legal interest from the date of demand, deducting amounts directly received by plaintiffs from defendant's sublessees during the said period. The decision is affirmed in all other respects. No special pronouncement as to costs.
Ratio Decidendi
On the reduction of monthly rental: The Court found merit in the plaintiffs' contention. While agreeing that no verbal understanding existed regarding elevator installation, it held this was insufficient justification to reduce the agreed P19,000 monthly rental. The Court emphasized that the contract is the law between the parties and that the defendant, having entered into a written lease, assumed the risk of contingencies like the lack of an elevator, which he should have foreseen. Equity cannot prevail over a clear and undisputed express agreement. On the rental for a portion occupied by the defendant: The Court found the lower court's determination of P2,000 monthly rental for a specific portion to be reasonable considering the circumstances, including the total rentals collected from other sublessees (around P10,400) and the declining rental market in Manila. It noted that basing the rental on the original P19,000 fixed two years prior would be unfair given the changed conditions. On Carrascoso's responsibility for uncollected rentals: The Court ruled that Carrascoso was not legally responsible. His intervention in collecting rentals directly from subtenants was authorized by Article 1552 of the Civil Code, which allows a sublessee to pay the lessor directly the amount due at the time of demand. Carrascoso acted to protect the principals' interest due to the defendant's failure to remit agreed rentals, and this intervention was made with the defendant's express conformity. Therefore, Carrascoso cannot be made responsible for rentals he failed to collect due to the subtenants' fault. On reimbursement for improvements: The Court denied the defendant's claim for reimbursement. The lease agreement explicitly stated that upon termination, all alterations and improvements would become the property of the lessors without compensation to the lessee. The Court reiterated that equity cannot override a clear contractual stipulation. On lease extension: The Court denied the defendant's request for lease extension. It noted that the contract required mutual agreement for renewal, which was lacking. Furthermore, the defendant's prior action of returning the greater portion of the building was inconsistent with a claim for extension, as previously held by the Court in a resolution. On attorney's fees: The Court denied the defendant's counterclaim for attorney's fees. Such fees could only be collected if the plaintiffs were declared at fault and responsible therefor as per the lease agreement, and if the claim was set up in the Municipal Court. Neither condition was met.
Main Doctrine
The contract of lease is the law between the parties, and equity cannot prevail over clear and express stipulations, especially concerning rentals and improvements, unless there is a legal basis for modification or nullification.