GREGORIO ARANETA, INC., PLAINTIFF AND APPELLEE, VS. LYRIC FILM EXCHANGE, INC., DEFENDANT AND APPELLANT.

Plaintiff
is the owner of a building in the City of Manila which defendant rented
from the 1st of February, 1929, until the 31st of December, 1931, at a
monthly rental of P1,500. The building was used as a cine theatre.

Towards the end of May, 1931, a piece of metal covering the walls fell
down and disclosed that the wall was rotten and that the theatre was in
too dangerous a condition for use. The facts were reported by defendant
to the owner, while the City Engineer ordered the theatre closed until
proper repairs had been made.

Plaintiff at once inspected
the building and hired a contractor to make the necessary repairs,
which were done in some thirteen working days and within thirty days of
the receipt of notice of the bad condition of the building.

When defendant was notified that the premises were repaired, it
formally notified plaintiff that it regarded the contract as cancelled,
and this suit was immediately instituted for the unexpired portion of
the contract of lease.

Shortly after the discovery of the
condition of the building, defendant removed its equipment and
machinery from the building and has not again occupied it. Defendant
claims that it notified plaintiff under date of May 28, 1931, that
owing to the fact that the building was not kept in proper repair,
defendant regarded the contract of lease for the premises as rescinded.

Plaintiff claims that it never got such letter and did not know of the
intention of the defendant to claim that the lease had been cancelled
until it received a copy of an extract of a special directors’ meeting
of defendant corporation held on July 14, 1931.

After trial
the Court of First Instance of Manila held that defendant had no right
to cancel the contract of lease and gave judgment for seven months’
rental as provided for in the contract of lease.

From that decision defendant appeals and makes the following assignments of error:

“1.
The trial court erred in not finding that the leased premises were in a
dangerously ruinous condition when vacated by defendant.

“2. The trial court erred in not finding that the contract of lease was
rescinded by defendant both expressly and by implication from the acts
of the latter.

“3. The trial court erred in ruling that
defendant had no right to rescind the contract of lease when the
premises were in such a dangerously ruinous condition, as to make them
unfit for the purpose for which they had been intended.

“4. The trial court erred in refusing to allow defendant to present
evidence to prove that Exhibits G, I and L, signed and sent by
Guillermo Garcia Bosque, were neither authorized nor ratified by
defendant and did not bind the same.

“5. The trial court
erred in ordering defendant to pay to plaintiff ‘future rents’ for the
period from June 1, 1931, to December 31, 1931, in the total sum of
P10,500.

“6. The trial court erred in absolving plaintiff
from defendant’s cross-complaint, and failing to award the full measure
of damages to defendant.”

There can be no
question that on and after May 27, 1931, the premises were, until
repaired, in a too dangerously ruinous condition to be utilized for the
purpose of the lease. Both parties could be seriously condemned had
they attempted to hold public exhibitions in the theatre in the
condition in which it was, as a catastrophe might well have taken
place. But such an express finding is not necessary for a proper
resolution of the question at issue.

As to the second
assignment of error, there can be no question that defendant attempted
to rescind the contract. It may well be doubted that the letter of May
28, 1931, was ever in fact mailed, but defendant removed its property
from the premises and never again occupied them for the purpose of
giving an exhibition. It also promptly notified plaintiff of its
position after the July 14th directors’ meeting.

The third
assignment of error reaches the heart of the controversy, and the
correct answer is found in construing article 1558 of the Civil Code,
together with article 6 of the contract and the facts of the case.
Article 1558 of the Code reads as follows:

“Art.
1558. If, during the lease, it should be necessary to make any urgent
repairs upon the thing leased which cannot be postponed until the
expiration thereof, the lessee shall be obliged to permit the work,
even though it be very annoying to him, and even if during such repairs
he may be deprived of a part of the estate.

“If the work of
making the repairs should continue more than forty days, the price of
the lease shall be reduced in proportion to the time and to the part of
the estate of which the lessee is deprived.

“If the work
should be of such a nature that the part which the lessee and his
family require for their dwelling becomes uninhabitable, he may rescind
the contract.”

The contract provision, translated, reads:

“Sixth.
The party of the second part shall receive the building in its present
state; and all painting, repairs, and any other works to be done on the
building from the commencement of the contract and during the period
thereof shall be for the account of the party of the second part, with
the exception of repairs on the roof to prevent leakage and those which
are necessary due to force majeure or to keep the building in a serviceable state.”

The repairs took less than forty days, and the place was not a
dwelling. Under the lease contract, if the premises, for any cause,
became unfit for the purpose of exhibiting pictures, it was the duty of
plaintiff to repair it at its own expense. This, plaintiff has done.
There is nothing in the contract nor is there a provision of the Civil
Code, that gives the defendant the right to cancel the contract on the
facts of this case. The third assignment of error cannot therefore be
sustained, which virtually disposes of the entire case.

Plaintiff in its complaint recited three letters, the pertinent parts of which, translated, read:

“* * * We shall abide by our signed contract.” (Exh. G.)

“*
* * We agree to continue paying you the rent in accordance with our
agreement but we shall try to sublease the cinematograph to another
person * * *.” (Exhibit I.)

“* * * although we do not make
use of the building, we shall pay the rents up to the end of this year
in accordance with our contract * * *. As regards the rents
corresponding to the months of June to December, we shall monthly pay
them as we have been doing until now.” (Exhibit L.)

and when defendant tendered testimony to show that the party who signed
those letters was not authorized by defendant, the trial court refused
to receive the testimony on the ground that the letters having, been
set out in the complaint and not denied in the answer, section 103 of
the Code of Civil Procedure controlled.

In this, the trial
court was in error. Plaintiff was suing on the written contract of
lease, not on these letters. ‘They might have some evidential value,
but evidence, even in writing, does not necessarily have a proper place
in the pleadings. However, even granting that such ruling of the trial
court was incorrect, plaintiff has not been harmed thereby because in
our view of the case it is immaterial whether or not such letters were
authorized.

As to the fifth assignment of error, defendant
had claimed that the contract was rescinded and that it had notified
plaintiff in writing to that effect. Plaintiff thereupon brought this1
suit, which is virtually a suit for specific performance, and the claim
for rentals from the date of the filing of the suit to December 31,
1931, is therefore not premature. In any event, if error had been
committed, it has been cured by proof.

Defendant also
presented a cross-complaint for alleged loss of profits due to the
imperfect condition of the building from May 27, 1931, to December 31,
1931, under paragraph 2 of article 1554 of the Civil Code, which reads:

“2.
To make thereon, during the lease, all repairs necessary in order to
keep it in serviceable condition for the purpose for which it was
intended.”

No authorities are cited by the
appellant to the effect that it is incumbent upon the owner to
constantly inspect the premises and that if he fails to do so or
through error of judgment fails to make repairs before the damage is
material, the lessee has a cause of action. This is contrary to
universal practice, as the lessee is in possession and if repairs are
necessary, which it is the duty of the owner to make, the lessee should
call upon the owner to make the necessary repairs. If the owner then
fails to perform his duty, action would lie. In this case when the
lessee in possession notified the owner of the bad condition of the
building, the owner promptly made the necessary repairs. There is
therefore no basis for the counterclaim, and the sixth assignment of
error cannot be sustained.

The judgment appealed from is affirmed. Costs against appellant. So ordered.

Avanceña, C. J., Malcolm, Villa-Real, and Imperial, JJ., concur.