Montenegro v. Roxas de Gomez
REITERATIONFacts
The Antecedents: Plaintiff Angela Montenegro filed an action against defendants, including Consuelo Roxas de Gomez, to rescind a contract of lease for the "Paris Building" in Escolta, Manila, seeking an accounting of monies collected and P10,000 in damages. Defendant Consuelo Roxas de Gomez owned the building, and the lease, executed on June 5, 1930, was for three years from June 1, 1930, at P4,000 monthly, with the plaintiff to receive possession of the entire building. However, previous lessees and other tenants refused to vacate, despite the plaintiff's efforts, including ejectment proceedings. The plaintiff paid rentals from June 1930 to October 1931 but failed to pay for November and December 1931, totaling P8,000. Procedural History: The Court of First Instance of Manila ruled in favor of the plaintiff, rescinding the lease contract and ordering the plaintiff to account for rentals collected and expenses incurred. The defendants subsequently appealed this decision. The Petition: The defendants-appellants argued that the trial court erred in several aspects, including not giving conclusive weight to the public instrument of lease, incorrectly holding that possession was not delivered, ruling that the plaintiff was not estopped from seeking rescission, and ultimately declaring the contract rescinded. They also contended that the trial court erred in denying their motion for a new trial.
Issue(s)
Whether the trial court erred in holding that the lessors did not deliver the possession of the property to the lessee. Whether the plaintiff is estopped from asking for the rescission of her contract of lease. Whether the trial court erred in declaring the contract of lease rescinded.
Ruling
The Supreme Court affirmed the judgment of the Court of First Instance of Manila, declaring the contract of lease rescinded. The Court held that the lessee is entitled to rescission because the material possession of the entire leased property was not delivered to her. The appeal was dismissed, with costs against the appellants.
Ratio Decidendi
On Issue 1: The Supreme Court held that the trial court did not err in finding that the lessors did not deliver the full material possession of the leased property to the lessee. While the greater portion of the building was delivered by June 20, 1930, the rooms occupied by B.A. Green, G.C. Sellner, and Manila Improvement Co., Inc., were never placed in the lessee's possession. The Court clarified that the execution of the public instrument of lease, while equivalent to delivery, establishes a disputable presumption that can be rebutted by clear and convincing evidence, which was present in this case. The lessee's inability to gain material possession of the entire premises entitled her to the remedy of rescission under Article 1556 of the Civil Code. On Issue 2: The Supreme Court ruled that the plaintiff was not estopped from seeking rescission of the lease contract. The appellants contended that by continuing to pay rent until November 1, 1931, the lessee acknowledged the consummation of the contract and waived her right to rescission. However, the Court found that the lessee's continued payment of rent was solely to avoid violating the terms of the contract affecting her obligations. These actions, therefore, could not be construed as a waiver of her right to seek rescission on the grounds of non-delivery of the leased property. The Court found no merit in the estoppel argument. On Issue 3: The Supreme Court affirmed the trial court's decision to declare the contract of lease rescinded. Based on the finding that the material possession of the entire leased property was not delivered to the lessee, the Court concluded that the lessee was entitled to rescission as provided by Article 1556 of the Civil Code. The Court found that the judgment appealed from was in accordance with the law and the facts established by the evidence, thus warranting its affirmation.
Main Doctrine
The Supreme Court affirmed the rescission of a lease contract because the lessor failed to deliver the material possession of the entire leased property to the lessee. The Court held that the execution of the lease agreement, while equivalent to delivery under certain circumstances, does not create a conclusive presumption of possession and can be overcome by evidence showing that parts of the property were not actually delivered to the lessee. The lessee's continued payment of rent, in this instance, was not considered a waiver of her right to seek rescission, as it was done to avoid violating the contract's terms.