PEDRO PAMINTUAN AND RUPERTO D. TAN, PETITIONERS, VS. COURT OF APPEALS, LORENTE O. YARISANTOS AND LOURDES O. YARISANTOS, RESPONDENTS.

The question before respondent Court of Appeals, as before us, is
the right of private respondents, the lessors Llorente O. Yarisantos and
Lourdes O. Yarisantos, to rescind a contract of lease
for nonpayment of rentals on time.  The
facts as found by respondent Court left no doubt that there was indeed such a failure to do so on the part of petitioners, Ruperto Tan and Pedro Pamintuan,
respectively the lessees and sublessees.  Article 1659 of the Civil Code, which grants
the right to the lessor in the event of the failure
on the part of the lessee to comply with his obligations, is thus applicable.^[1] So it was held by respondent Court of
Appeals.  We cannot do otherwise.  We affirm.

The complaint for rescission was filed by private respondents who
succeeded to the rights of the previous lessor, Patrocinio A. Vda. de Gaerlan, from whom the disputed two lots situated in Sampaloc, Manila
were purchased.  The lease contract in
favor of private petitioners Tan and Pamintuan
provided for an agreed monthly rental of P15.00 payable promptly at the end of
every month for each lot, or P30.00 for the two, the lease entered into on October 10, 1951 to expire at the
discretion of the lessee after twenty years. 
There was another provision that failure on the part of the lessee to
pay the rental for six consecutive months would automatically annul the
contract.^[2]
The complaint for rescission filed by private respondents as plaintiffs against
petitioners as defendants on November
12, 1959 alleged that with respect to the first lot, defendant, now
petitioner, Ruperto Tan, was in arrears for a period
of twelve months and, with respect to the second lot, for a period of eight
months.  The judgment was in favor of
private respondents as plaintiffs, the contract of lease being rescinded by
virtue of the above Civil Code provision.

An appeal was then taken to respondent Court of Appeals.  It considered as “the one and only issue”
whether defendants, now petitioners, had violated the provision in the contract
of lease as to the monthly rental being promptly paid at the end of every month
as claimed by plaintiffs, now private respondents.  If they had not violated said provision, as
claimed by them in their answer to said complaint, then private respondents
have no right to ask for the rescission or annulment of the said contract of
lease.^[3]

This is how respondent Court resolved the issue:  “While claiming to have committed no
such violations, [petitioners] nevertheless admit that ‘[they] in their
pleadings nor at any time during the trial, never claimed to have offered to
pay the rental at the end of each month beginning the month of October,
1958.  On the contrary, they impliedly admitted
in their plead­ings and they do now formally admit here, no such monthly
payments were ever made’ * * *.  With
[their] above admission that ‘no such monthly payments were ever made’ by them
to [private respondents] it stands clear that they violated the aforequoted provision of paragraph 2 of the contract of
lease ‘That the agreed monthly rental
of [Fifteen Pesos] (P15.00), Philippine Currency, payable promptly at the end
of every month for each lot or Thirty Pesos (P30.00), Philippine Currency for the
two lots, shall be maintained, * * *.’ [So] clearly, said violation of
lessees’ * * * obligation ‘to pay the price of the lease according to the terms stipulated’ (Article 1657 of
the New Civil Code), entitles [private respondents] to rescind said contract
of lease under Article 1659 of the same Code providing that ‘If the lessor or the lessee should not comply with the obligations
set forth in articles 1654 and 1657, the aggrieved party may ask for the
rescission of the contract and indemnification for damages or only the latter,
allowing the contract to remain in force.’”^[4]

From the decision of respondent Court of Appeals of October 30, 1967 affirming the
judgment of the lower court, a petition for review was filed with this
Tribunal.  A careful perusal of the
records of the case and the legal grounds support of this petition yields the
conclusion that no error of law could be imputed to respondent Court.

1.  Much is made in the third
error assigned of private respondents being bereft of the right to ask for
rescission in view of their refusal to recognize the existence of the lease
contract.  Such an argument was raised
and rejected by respondent Court of Appeals in these words:  “Of course, we do not overlook ‘* * *
that the defense of the appellants (against such failure to pay every month) is
that the appellees as early as May, 1958, refused to
recognize the existence and/or binding effect of the lease contract, Exh. A and the appellees
maintained this judicial stand until final decision was had in the ejectment case, Civil Case No. 63700, with the Municipal
Court of Manila, in December, 1959 or a month after they filed their complaint
in these proceedings.’ * * * Refusal on plaintiffs’ part to recognize the
existence and/or binding effect of the said lease contract Exhibit A is only
like saying that the latter would not accept payment of rentals thereunder.  In such
a situation, defendants’ remedy is not to violate their own obligation under
Exhibit A but to make tender of payment of such rentals and, if refused, to
make consignation thereof in court.  * *
*.'”^[5]

Nor is this all
that was said by respondent Court of Appeals on the matter.  Thus: 
“Defendants, however, take exception to the said remedy by
rescission, contending that there is paragraph 3 of the said lease contract
providing ‘That failure on the part of the [lessee] to pay the rentals for six (6) consecutive months shall
automatically annul this
contract’.  Defendants’ argument
at page 20 of their brief runs thus: 
‘What good is there to grant the
lessees a six-month period of grace if the lessor can
rescind the lease contract anyway, with but a month’s failure to pay the same rentals?’
The aforequoted argument was neatly answered by the
lower court as follows:  ‘The right to
rescind the contract pursuant to Article 1659
of the Civil Code is different from the automatic annulment of the same
contract in accordance with the provision of paragraph 3 thereof.  They arise from different causes and are
based on different grounds.  In making
deposit of rentals at six-month intervals, the defendants prevent the automatic
cancellation of the contract but did not deprive the owner to ask for the
rescission of the contract for failure of the lessee to pay the stipulated
rentals promptly at the end of every month. 
It was never contemplated that the rentals were to be payable every six
months, otherwise, there would have been no necessity for the stipulation in
paragraph 2 of the contract.  Indeed, the
intention that the lessee should
pay rentals monthly is emphasized by the
provision that such rentals should be paid ‘promptly at the end
of every month’ * * *.”^[6]

2.  It was likewise assigned as the second error that in view of
a previous favorable decision by the Court of First Instance of Manila of a consignation
case filed by private petitioner Tan against private respondents to compel the
latter to accept the rentals at the rate of P15.00 monthly as well as another
decision dismissing an ejectment suit filed by
private respondents against such petitioner, the principle of res adjudicata
would apply.  This point was raised and
decided adversely against petitioner by respondent Court of Appeals thus:  “Another contention of defendants that
the consignation and ejectment cases elsewhere
referred to constitute res adjudicata
or are a bar to the present action is also without merit because the
subject-matter and causes of action in the said cases are distinct from those
in the instant case.”^[7] Such a defense was thus
unavailing.  It did not suffice to preclude
the operation of Article 1659.  An
independent and separate clause of action had, as correctly stated by
respondent Court, already come into being.

3.  It would thus appear
clear that the first error assigned to the effect that the contract of lease
could not be rescinded is devoid of merit. 
Article 1659 speaks in categorical language.  Private respondents, as the aggrieved
parties, had the right to ask for rescission, there being a failure on the part
of petitioners to comply with their obligations as lessee and sublessee, respectively. 
With the lessors having decided to avail
themselves of such a right under the law, no court can validly stand in the way of the enforcement thereof.  That was what the lower court, presided by
the Honorable Judge Conrado Vasquez, and respondent
Court of Appeals did.  To impute what was
done by them as error would be to disregard what the law so plainly commands.

An excerpt from an opinion in Malicsi
v. Carpizo,^[8]
penned by Justice Barrera, is relevant. 
Thus:  “And, Article 1659 of
the same Code expressly provides, among others, that if the lessee should not
comply with his obligation of paying the price (rental of the lease according
to the terms stipulated), ‘the aggrieved party may ask for the rescission
of the contract and indemnification for damages, or only the latter, allowing
the contract to remain in force’.  In the
instant case, appellant failed and refused to pay the monthly stipulated rental
of the property subject matter of the aforementioned lease contract for the
months of January and February, 1958. 
Consequently, appellee had the right under
said provision of the Civil Code to bring, as he did, the present action for
rescission of said Contract of Lease, and the trial court correctly declared
the rescission thereof.  Appellant claims
that she had not defaulted in the payment of said rental as no demand to make
payment was made on her by appellee.  This is a question of fact which can not be
raised here and the finding of the lower court to this effect is binding on
us.'”^[9]

That is all that need be said as to this petition for the review
of the decision of respondent Court of Appeals complained of, the last error
assigned being obviously untenable, as no recovery would lie against private
respondents and in favor of petitioners on their counter-claim.

WHEREFORE, the decision of respondent Court of October 30,
1967 is affirmed.  Costs against
petitioners.

Concepcion, C.J., Makalintal,
Zaldivar, Castro, Villamor and Makasiar, JJ., concur.

Reyes, J.B.L. and Barredo, JJ., concur in the
result.

Teehankee, J., concurs in a separate opinion.

^[1]
Article 1659 of the Civil Code reads in full: 
“If the lessor or the lessee should not
comply with the obligations set forth in articles 1654 and 1657, the aggrieved
party may ask for the rescission of the contract and indemnification for
damages, or only the latter, allowing the contract to remain in force.”

^[2]
Decision of respondent Court of Appeals, Appendix to Brief of Petitioners, p.
49.

^[3]
Ibid, pp. 60-61.

^[4]
Ibid, pp. 61-62.

^[5]
Ibid, p. 62.

^[6]
Ibid, pp. 63-64.

^[7]
Ibid, p. 65.

^[8]
L-17493, June 30, 1962, 5
SCRA 507.

^[9]
Ibid, pp. 509-510.