ENRIQUE LEGARDA KOH, PLAINTIFF AND APPELLEE, VS. LUCIO ONGSIACO, DEFENDANT AND APPELLANT.

This
appeal by bill of exceptions was taken by counsel for the defendant
from the judgment of April 5, 1915, in which the trial court condemned
the defendant to pay the plaintiff the sum of P1,020, the amount of the
profits the latter failed to collect, and to pay the costs of the trial.

On
December 16, 1914, plaintiff Enrique Legarda Koh filed a complaint,
dated December 15, 1915 [1914], in the Court of First Instance of
Manila against Lucio Ongsiaco,alleging that he had leased the
apartments (accesorias) Nos. 511 and 513 on Calle Santo Cristo,
district of Binondo, Manila, owned by the defendant, for the term of
one yearcounting from December 1, 1913, extendible for one year more;
that, notwithstanding that the plaintiff had informed the defendant,
prior to December 1,1914, that he desired to lease the said properties
for another year, to wit, until December 1, 1915, the defendant,
unlawfully, against the will of the lessee and to his injury and
prejudice, seized and took possession of the accesorias, camarin and bodega
leased by the plaintiff; that the latter was thereby unable to sublease
the same to other persons as he had contracted to do; and that by such
unlawful seizure and taking possession he had suffered damages
amounting to the sum of P3,000. Plaintiff therefore prayed the court to
render judgment against the defendant, ordering the latter to pay to
him the said amount of damages together with the costs.

On
December 17, 1914, counsel for the defendant, in answer to the
aforementioned complaint, denied each and all the allegations therein
contained and, in special defense, set forth that it was true the
plaintiff had leased the properties specified in the complaint from
December 1, 1913, at a monthly rental of P240; that the term of the
lease was extendible for an indeterminate period of time, at the will
of the parties, as shown in the lease contract which was attached to
his answer and made a part thereof; and that as the defendant and the
plaintiff had not come to an agreement with respect to the extension of
the said lease, the defendant took possession of the properties on
December 1, 1914. Said counsel therefore prayed that his client be
absolved from the complaint with the costs against the plaintiff.

After
trial and the introduction of evidence by bothparties, the court
rendered the judgment aforementioned, to which the defendant excepted
and in writing moved for a reopening of the case and a new trial. This
motion was overruled, exception was entered by the defendant and, upon
presentation of the proper bill of exceptions, the same was approved
and transmitted to the Clerk of this Court.

The defendant unquestionably leased the apartments or accesorias, together with the warehouse or bodega
in the rear, situated at Nos. 511 and 513 Calle Santo Cristo, Binondo,
to the plaintiff Enrique Legarda Koh for the fixed and determined
period of one year from December 1, 1913, which term, according to the
copy of the said contract of lease, Exhibit 1, was to be extendible at
the will of the parties.

The questions, then, submitted to
the decision of this court are whether the plaintiff-lessee was or was
not entitled to the agreed extension of the term of the lease and to
continue to lease the said properties under the said contract of lease
at the expiration of the term of one year fixed therein; and, if so,
whether the plaintiff is or is not entitled to recover losses and
damages occasioned through his failure to collect a greater rental by
subrenting the said two apartments and the warehouse connected
therewith.

The record shows that on November 14, 1913, the
defendant Lucio Ongsiaco executed a written contract, Exhibit 1,
whereby he leased to the plaintiff Legarda Koh the apartments Nos. 511
and 513 Calle Santo Cristo, at a rental price of P120 for each door or
apartment. The fourth condition of the said contract reads as follows:

“The
term of the said contract shall be that of one year, counting from the
1st of December of the present year (1913), which term shall be
extendible at the will of both parties.“

The record
further shows that about the 7th or 8th of December, 1914, the
plaintiff went to Ongsiaco’s house and urged him to execute a new
contract for the lease of his properties for another year, in
accordance with the clause providing for the extension of the term of
the contract, Exhibit 1; that the defendant agreed to do this, telling
the plaintiff to return on the following day and to leave with
defendant the copy of the said contract Exhibit 1 which the plaintiff
was carrying; that the latter did so, but the said copy was not
returned to the plaintiff; that in spite of the fact that he went
several times to the lessor’s house the defendant always avoided
meeting him so that, before the plaintiff had finished his negotations
for the renewal of the contract, the defendant’s caretaker of said
properties, Juan de los Santos, notified the sublessee of the said
apartments that from the month of December, 1914, the rental of P325
should be paid to the defendant and not to the plaintiff; that this was
in fact done, the sublessee refusing to pay the said rental to the
plaintiff; that the plaintiff, therefore, deposited the sum of 1*240,
the rental price he was paying, in court and filed his complaint in
these proceedings.

As the plaintiff had no copy of the
contract of lease, Exhibit 1, having left his with the defendant—a
statement which was not contradicted by the defense—the only proof of
the said contract is the copy furnished by the defendant himself. Said
copy says that the said lease shall be extendible at the will of both parties.
The plaintiff admitted the genuineness of his signature to the lease
contract and also the authenticity of this document, with the exception
of the words at the will of both parties contained in the
fourth paragraph thereof—these having been inserted by someone without
his knowledge and consent. In effect, the defendant’s only witness, the
caretaker of the defendant’s properties, testified that it was he who
inserted the said words, at the will of both parties, adding
them to the end of the fourth paragraph after the document had already
been executed and had been certified to before the notary, though this
witness furthermore said that the plaintiff’s copy also bore the same
interlineation, and that it was made with the plaintiff’s knowledge and
consent.

The words added at the end of the fourth paragraph
arenot initialed by the person who wrote them, nor do they appear to
have been written with the concurrence of both parties, inasmuch as the
signature of the persons affected by the said change do not appear on
the margin. The omission is contrary to the custom usually observed in
drawing up documents, for, when a written contract is amended by
inserting an addition or making any alteration by hand, the parties
should write their initials on the margin of the document opposite the
place where the amendment was made, or should mention it at the end of
the document in token of their consent. As this requisite was not
complied with in the contract in question it must be concluded that the
amendment was made without the plaintiff’s consent. Therefore in the
original and true contract stipulated between the parties it was
covenanted that the term of the lease should be that of one year,
counting from December 1, 1913, and that this term should be
extendible. (Exhibit 1.)

According to article 1091 of the
Civil Code, obligations arising from contracts have legal force between
the contracting parties and must be fulfilled in accordance with their
stipulations. Therefore, if the defendant bound himself to lease his
properties for the period of one year, which term should be extendible,
it is evident and strictly in accord with justice that the
plaintiff-lessee has a right, at the termination of the first period of
one year, to have the said contract of lease renewed in fulfilment of
the stipulated extension of the term of the lease; otherwise, the
clause contained in the document Exhibit 1, that the lease at its
termination would be extendible, would be worthless.

The
defendant-appellant is wrong in his contention that the renewal or
extension of the contract depended solely upon himself, notwithstanding
the stipulations contained in said contract, inasmuch as the renewal
and continuation of the lease could not be left wholly to the
plaintiff’s free will, without counting on the defendant’s consent—a
consent expressly granted in the promise that the term would be
extended, which term, although its duration was not fixed, should be
understood to be for another year, a period equal to and not greater
than the term of the lease.

When a contract of lease provides
that the term thereofis extendible, the agreement is understood as
being in favor of the lessee, and the latter is authorized to renew the
contract and to continue to occupy the leased property, after notifying
the lessor to that effect. The lessor, can withdraw from the said
contract only after having fulfilled his promise to grant the extension
of time stipulated therein, unless the lessee has failed to comply with
or has violated the conditions of the contract. It is not necessary
that the extension be expressly conceded by the lessor because he
consented thereto in the original contract.

The plaintiff-lessee, therefore, had a right to continue to lease the defendant’s two apartments until November 30, 1915.

The fact that the plaintiff only paid the sum of P240 per month as rental for the two accesorias and the bodega,
and that he subleased these properties to the Chinaman Yu Tek for the
sum of P325 per month is unquestioned. The plaintiff-lessee therefore
made a net profit of P85 every month. The trial judge, taking this sum
as a basis, found that for the twelve months ending December 1, 1915,
the plaintiff had been injured in the amount of P1,020, the net value
of the profits which he was unable to collect through the fault of
defendant and he therefore ordered the latter to pay this amount to the
plaintiff.

The foregoing facts lead to the conclusion that
the lessor, Ongsiaco, violated the fourth paragraph of the contract of
lease by refusing to comply with the agreement to extend the lease and,
notwithstanding that the plaintiff in his pleadings did not deny under
oath the authenticity and due insertion in the contract Exhibit 1 of
the phrase at the will of both parties, yet the defendant in allowing evidence to be presented at the trial with regard to whether the said phrase at the will of both parties
was written in the contract before or after the document had been
signed by the contracting parties and ratified by them before the
notary and as to whether they were inserted with the plaintiff’s
knowledge, consented to the questions being submitted to the court and
waived his right to claim that the said phrase was written in the
contract with the actual knowledge and consent of the plaintiff lessee.

“If
the terms of a contract are clear and leave no doubt as to the
intentions of the contracting parties, the literal sense of its
stipulations shall be observed.” (Civ. Code, art. 1281.)

“In
order to judge as to the intention of the contracting parties,
attention must principally be paid to their acts, contemporaneous and
subsequent to the contract.” (Civ. Code, art. 1282.)

The
contracting parties agreed that Enrique Legarda Koh should lease the
properties of Lucio Ongsiaco for the term of one year and that this
period should be extendable, asthe length of the extension was not
fixed, it must be understood that the renewed period should be for at
least one year. The contracting parties stipulated that the one-year
period, at its expiration, might be extended as is so stated in the
written contract, and no reason has been advanced by the lessor to
justify any failure to comply with the said stipulation, to the
lessee’s detriment.

For the foregoing reasons, whereby the errors assigned to the judgment
appealed from are deemed to have been refuted, the said judgment should
be, as it is hereby, affirmed, with the costs against the appellant. So
ordered.

Carson, Trent, and Araullo, JJ., concur.

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[February 27, 1917]
DECISION ON MOTION FOR REHEARING.

Torres, J.:

Counsel for the defendant-appellant has moved for a rehearing in the
present case on the ground that there was no agreement between the
contracting parties to extend the term of the contract of lease at the
expiration of the first year, and that the word “extendible/’ which
appears in the fourth paragraph of the contract, does not mean, and
cannot be construed to mean, that the power to extend the term of the
lease is an exclusive privilege of the lessee.

The word “extendible,” contained in the contract executed between
the plaintiff and the defendant, means that the term of the contract
could be -extended and is equivalent to a promise to extend made by the
defendant to the plaintiff-lessee, and, as a unilateral stipulation,
obliges the promisor to fulfill his promise. Both the defendant
Ongsiaco and the plaintiff Legarda Koh testified that the contract was
extendible at the expiration of its term, and the lessee, accepting the
promise, acquired the right to demand its fulfillment by virtue of the
special and obligatory juridic relation established between them.

The plaintiff-lessee, after notifying the lessor that he wished to
continue the contract, by virtue of the word “extendible” acquired the
right to elect between continuing his occupancy of the properties in
accordance with the lease, a promise for the extension of the term of
which was made him, and of giving them up by refraining from demanding
the fulfillment of said promise. Therefore, the right arising out of
the grant of the extension of the term of the lease is understood as
having been created in favor of the lessee, who is entitled to require
that the lessor fulfill his promise—a unilateral one contained in the
contraact and accepted by the lessee. The consequence of that promise
is that its fulfillment shall depend solely on the will of one of the
contracting parties, the one to whom the promise was made. Such a
concession cannot be considered as anomaloues and opposed to the
principles of law tounching contracts, inasmuch as the lessor was
entirely free to make or not to make the promise, within the most ample
liberty enjoyed by every citizen in the exercise of his rights; but
once the promise was made and the contract was made to read that the
term of the latter should be extendible, the lessor cannot be permitted
afterwards to evade fulfillment of this obligation which he freely
assumed, for , as law 1, title 1, book 10, of the Novisima Recopilacion
says: “When it appears that a person wishes to bind himself in favor of
another by some promise, or by a contract, or in some other manner, he
will be held to comply with what he obligated himself to perform, and
he will not be heard to except on the ground that there was no
stipulation that amounted to a formal promise made in accordance with
law, etc.” This law is one of those on which the provisions of the
Civil Code now in force are based.

Articel 1255 of the said Code provides:

“The contracting parties may make the agreement and establish the
clauses and conditions which they may deem advisable, provided they are
not in contravention of law, morals, or public order.”

It was convenanted that the term of the contract should be
extendible, and this promise must be complied with by the person
obligated; but as he refused to do so voluntarily, the courts have had
to require his compliance with the stipulations which in all contracts
are the law.

On the foregoing grounds the defendant’s motion is denied and he must abide by this decision. So ordered.

Carson, Moreland, Trent, and Araullo, JJ., concur.