UNITED STATES LINES COMPANY, PETITIONER, VS. SAN MIGUEL BREWERY, INC., RESPONDENT.

This is a petition to review by certiorari the decision of the Court of
Appeals in Case CA—G.R. No. 19188-R entitled “United States Lines
Company, plaintiff-appellee vs. San Miguel Brewery, Inc.
defendant-appellant” on the ground that said decision is contrary to
law.

The facts established by the evidence and admitted by
the parties are as follows: plaintiff-appellee United States Lines
Company, petitioner herein, is a foreign corporation duly licensed to
do business in the Philippines and is the agent in this country of the
vessel S/S “Peter J. McGuire”, while defendant-appellant, respondent
herein, operates the Insular Ice and Cold Storage Plant in Manila. On
November 1, 1951, while the S’S “Peter J. McGuire” was anchored in
Manila Bay, its refrigeration facilities went out of order. Mr. Finch,
one of petitioner’s officers, contacted Chua Seng, Manager of the
People’s Food Supply to inform him that they needed a place wherein to
store the perishable supplies of the vessel. Chua recommended the
Insular Ice and Cold Storage Plant, and after arrangements made between
Finch and Jose H. Martinez, then in-charge of the plant, compartment A
in room I-B on the ground floor of the storage plant was leased to the
petitioner at a daily rental of P19.00. The food provisions of the
vessel were stored in said compartment on November 1, 1951 and
withdrawn on November 6, 1951 when they were brought by launch direct
to the S/S “Peter J. McGuire” in the Manila Bay. It was then that
petitioner found the foodstuffs stored by it to have been gnawed,
soiled and damaged by rodents. Whereupon, petitioner reported the
matter to the Bureau of Quarantine, whose representative Dr. Isagani
Chanco went aboard the vessel and examined the foodstuffs. Dr. Chanco
found “evidence of rat bites and gnawings” as well as “several pieces
of rat excrete” in the food provisions, for which reason he told the
captain of the vessel to throw the provisions out of sea because they
were contaminated and no longer fit for consumption. Employees of the
Rodent Control Section of the Bureau of Quarantine were ordered by its
Director to catch the rats in respondent’s cold storage plant, and in
three weeks, i.e., from November 19 to December 15, 1951, a total of 66
rats were caught by these government employees in said room I-B of the
storage plant.

The United States Lines Company, therefore,
brought an action in the Court of First Instance of Manila, against the
San Miguel Brewery, Inc. to recover the sum of P2,262.38 for damages
and another amount in the sum of P600.00 for attorney’s fees. Defendant
interposed several affirmative defenses and in turn asked for damages
in the sum of P4,000.00 by way of counterclaim.

The Court of First Instance of Manila rendered judgment sentencing
defendant to pay plaintiff said sum off P2,262.38 as damages, with
interest at the rate of 6% per annum from the date of the decision
until said amount is paid in full, another amount in the sum of P500.00
as attorney’s fees and the costs of the suit, and dismissing
defendant’s counterclaim against the plaintiff. Defendant appealed to
the Court of Appeals which reversed the decision of the Court of First
Instance insofar as it ordered appellant to pay appellee the amounts
stated’ in the lower court’s judgment, but affirmed the decision
insofar as it dismissed defendant’s counterclaim.

Not satisfied with the decision of the Court of Appeals petitioner has
elevated the case to Us for resolution of the main legal issue
involved, which is, whether a lessor of a cold storage plant may be
held responsible for the deterioration of the foodstuffs stored in one
of its cold storage rooms by a lessee thereof, because said foodstuffs
were gnawed by rodents which gained entrance into said cold storage
room.

Before proceeding to consider the main issue in this case, which is a
legal one, it might be proper to consider the statement in the decision
of the Court of Appeals that “a serious doubt has been engendered in
the mind of this Court” because of the supposed ‘lone and
uncorroborated testimony of James Boyd” without “other evidence
presented by the plaintiff to prove that rats were actually found
inside room I-B of the ice plant at the time the provisions in question
were withdrawn therefrom.” Evidently, the respondent, court failed to
take into account that among the evidence submitted at the trial of the
case is the fact (which fact the Court of First Instance considered
decisive), that between November 19 to December 15, 1951, as many as 66
rats were caught by employees of the Bureau of Quarantine inside the
big room, one compartment of which was leased to petitioner. While the
rats were caught about 10 days after the foodstuffs were withdrawn from
the compartment, there is no evidence to show that the rats entered the
big room and the compartment after the foodstuffs had been removed
therefrom, and the possibility is that they must have been in the room
when the compartment was leased. Under these circumstances, We agree
with the finding of the Court of First Instance that the destruction of
the foodstuffs, was caused by the rats that were caught by the
Quarantine service. To Our mind, therefore, there cannot be any
reasonable doubt that the rats that gnawed the foodstuffs were already
in the big room containing the compartment leased by the defendant to
the plaintiff, at the time of such lease.

The legal question before Us is the ruling of the respondent court that
a lessee is not entitled to damages caused by a defect in the leased
premises unless there has been fraud and bad faith on the part of the
lessor. In support of its ruling, the case of Yap Kim Chuan vs.
Tiaoqui, 31 Phil. 433 is cited by the respondent court. We have
examined the case cited and We find that the citation is the syllabus
alone, without consideration of the facts.

The facts of that case are that a torrential rain had fallen (considered as force majeure),
which had caused the building leased to be drenched with water; thereby
damaging the articles deposited by the lessee in the building. The
reason for absolving the defendant from the action for damages was
because the court found that the damage was caused by a force majeure,
namely, the unexpected torrential rain that fell while the goods of the
plaintiff were stored in the building. The syllabus of the decision
cited does not reflect correctly the ruling of the court as claimed by
appellee to be, namely, that a lessor is liable to damages for defects
in the thing leased only if he is guilty of bad faith or fraud.

Coming now to the legal merits of the case, We declare: considering
that the agreement between the petitioner United States Lines Company
and the respondent San Miguel Brewery, Inc. should be understood as
having warranted that the leased premises would be free from rats,
which would destroy the foodstuffs stored in the premises. To such
effect is the provision of Article 1653 of the Civil Code, which is as
follows:

“Art. 1653. The provisions governing warranty, contained in the Title on Sales, shall foe applicable to the contract of lease.

“In the cases where the return of the price is required, reduction
shall be made in proportion to the time during which the lessee enjoyed
the thing.”

The warranty provided for is found in Article 1566 of the Civil Code, and is as follows:

“Art. 1566. The vendor is responsible to the vendee for any hidden faults or defects in the thing sold, even though he was not aware thereof.

“This provision shall not apply if the contrary has been stipulated,
and the vendor was not aware of the hidden faults or defects in the
thing sold.”

There being no reason or
ground for not applying the above provisions of law to the respondent
lessor, We set aside the decision of the Court of Appeals subject of
the present appeal and affirm that of the Court of First Instance,
which is that the defendant-respondent shall pay to the
plaintiff-petitioner the sum of P2,262.38, as damages, with interest at
the rate of 6% per annum from the date of the decision until said
amount is paid in full, plus P500.00 as attorney’s fees and the costs
of the suit.

SO ORDERED.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, and Makalintal, JJ., concur.