1. INTERNATIONAL LAW; SEQUESTRATION OF PRIVATE PROPERTY BY BELLIGERENT OCCUPANT RECOGNIZED; LESSOR OF SEIZED PROPERTY LIABLE FOR DISTURBANCE. — Under the generally accepted principles of international law, which are made part of the law of the Philippines, a belligerent occupant (like the Japanese) may legitimately billet or quarter its troops in privately owned land and buildings for the duration of its military operations, or as military necessity should demand. Thus, when the Japanese forces evicted appellant lessee company from the leased buildings and occupied the same as quarters for its troops, the Japanese authorities acted pursuant to a right recognized by international and domestic law. Its act of dispossession, therefore, did not constitute a mere act of trespass (perturbacion de mero hecho) but a trespass under color of title (perturbacion de derecho) chargeable to the lessors of the seized premises, since the belligerent occupant acted pursuant to a right that the law recognizes.

2. ID.; ID.; ID.; LIABILITY OF LESSEE FOR RENTS DURING OCCUPATION OF PROPERTY. — Such dispossession, though not due to the fault of the lessors or lessee nevertheless deprived the lessee of the enjoyment of the thing leased. Wherefore, the lessee’s corresponding obligation to pay rentals ceased during such deprivation.

3. ID.; ID.; ID.; IMPORTER REFUSAL TO ACCEPT RENTS PLACES LESSORS IN DEFAULT; LIABILITY FOR SUPERVENING RISK. — Since the lessee was exempt from paying the rents for the period of its ouster, the insistence of the lessors to collect the rentals corresponding to said period was unwarranted and their refusal to accept the currant rents tendered by the lessee was unjustified. Such refusal places the lessors in default (mora) and they must shoulder the subsequent accidental loss of the premises leased.

4. ID.; ID.; ID.; ID.; ID.; MORA OF LESSORS NOT CURED BY FAILURE OF LESSEE TO CONSIGN RENTS IN COURT. — The mora of the lessors was not cured by the failure of the lessee to make the consignation of the rejected payments, but the lessee remained obligated to pay the amounts tendered and not consigned by it in court.

5. PLEADING AND PRACTICE; CHANGE IN THE RELIEF PRAYED DURING THE PENDENCY OF THE ACTION. — A change in the relief prayed, brought about by circumstances occurring during the pendency of the action, is not improper. This is justified under Section 2, Rule 17 of the Rules of Court (on amendments) "to the end that the real matter in dispute and all matters in the action in dispute between the parties may, as far as possible be completely determined in a single proceeding."cralaw virtua1aw library

6. ID.; DISMISSAL WITHOUT PREJUDICE. — The dismissal of plaintiffs’ two causes of action in the case at bar was premised on the existence of the "Debt Moratorium" which suspended the enforcement of the obligation up to a certain time. The reference thereto by the court amounted to a dismissal "without prejudice", since in effect it ruled that the plaintiffs could not, at the time they sought it, enforce their right of action against the defendants, but they must wait until the moratorium was lifted. In this way, the court qualified its dismissal.

Manila Motor Co., Inc., and Arturo Colmenares interpose this appeal against the decision of the Court of First Instance of Negros Occidental, in its Civil Case No. 648, ordering the defendant Manila Motor Co., Inc. to pay to the plaintiffs Villaruel the sum of (a) P11,900 with legal interest from May 18, 1953, on which date, the court below declared invalid the continued operation of the Debt Moratorium, under the first cause of action; (b) P38,395 with legal interest from the date of filing of the original complaint on April 26, 1947, on the second cause of action; and against both the Manila Motor Co., Inc. and its co-defendant, Arturo Colmenares, the sum of P30,000 to be paid, jointly and severally, with respect to the third cause of action.

On May 31, 1940, the plaintiffs Villaruel and the defendant Manila Motor Co., Inc. entered into a contract (Exhibit "A") whereby, the former agreed to convey by way of lease to the latter the following described premises;

(a) Five hundred (500) square meters of floor space of a building of strong materials for automobile showroom, offices, and store room for automobile spare parts;

(b) Another building of strong materials for automobile repair shop; and

(c) A 5-bedroom house of strong materials for residence of the Bacolod Branch Manager of the defendant company.

The term of the lease was five (5) years, to commence from the time that the building were delivered and placed at the disposal of the lessee company, ready for immediate occupancy. The contract was renewable for an additional period of five (5) years. The Manila Motor Company, in consideration of the above covenants, agreed to pay to the lessors, or their duly authorized representative, a monthly rental of Three Hundred (P300) pesos payable in advance before the fifth day of each month, and for the residential house of its branch manager, a monthly rental not to exceed Fifty (P50) pesos "payable separately by the Manager."

The leased premises were placed in the possession of the lessee on the 31st day of October, 1940, from which date, the period of the lease started to run under their agreement.

This situation, the Manila Motor Co., Inc. and its branch manager enjoying the premises, and the lessors receiving the corresponding rentals as stipulated, continued until the invasion of 1941; and shortly after the Japanese military occupation of the Provincial Capital of Bacolod the enemy forces held and used the properties leased as part of their quarters from June 1, 1942 to March 29, 1945, ousting the lessee therefrom. No payment of rentals were made at any time during the said period.

Immediately upon the liberation of the said city in 1945, the American Forces occupied the same buildings that were vacated by the Japanese, including those leased by the plaintiffs, until October 31, 1945. Monthly rentals were paid by the said occupants to the owners during the time that they were in possession, as the same rate that the defendant company used to pay.

Thereafter, when the United States Army finally gave up the occupancy the premises, the Manila Motor Co., Inc., through their branch manager, Rafael B. Grey, decided to exercise their option to renew the contract for the additional period of five (5) years, and the parties agreed that the seven months occupancy by the U. S. Army would not be counted as part of the new 5-year term. Simultaneously with such renewal, the company sublet the same buildings, except that used for the residence of the branch manager, to the other defendant, Arturo Colmenares.

However, before resuming the collection of rentals, Dr. Alfredo Villaruel, who was entrusted with the same, consulted Atty. Luis Hilado on whether they (the lessors) had the right to collect, from the defendant company, rentals corresponding to the time during which the Japanese military forces had control over the leased premises. Upon being advised that they had such a right, Dr. Villaruel demanded payment thereof, but the defendant company refused to pay. As a result, Dr. Villaruel gave notice seeking the rescission of the contract of lease and the payment of rentals from June 1, 1942 to March 31, 1945 totalling P11,900. This was also rejected by the defendant company in its letter to Villaruel, dated July 27, 1946.

Sometime on that same month of July, Rafael B. Grey offered to pay to Dr. Villaruel the sum of P350, for which, tenderer requested a receipt that would state that it was in full payment for the said month. The latter expressed willingness to accept the tendered amount provided, however, that his acceptance should be understood to be without prejudice to their demand for the rescission of the contract, and for increased rentals until their buildings were returned to them. Later, Dr. Villaruel indicated his willingness to limit the condition of his acceptance to be that "neither the lessee nor the lessors admit the contention of the other by the mere fact of payment." As no accord could still be reached between the parties as to the context of the receipt, no payment was thereafter tendered until the end of November, 1946. On December 4, 1946 (the day after the defendant company notified Dr. Villaruel by telegram, that it cancelled the power of attorney given to Grey, and that it now authorized Arturo Colmenares, instead, to pay the rent of P350 each month), the Manila Motor Co., Inc. remitted to Dr. Villaruel by letter, the sum of P350.90. For this payment, the latter issued a receipt stating that it was "without prejudice" to their demand for rents in arrears and for the rescission of the contract of lease.

After it had become evident that the parties could not settle their case amicably, the lessors commenced this action on April 26, 1947 with the Court of First Instance of Negros Occidental against the appellants herein. During the pendency of the case, a fire originating from the projection room of the City Theatre, into which Arturo Colmenares, (the sublessee) had converted the former repair shop of the Manila Motor Co. Inc., completely razed the building, engulfing also the main building where Colmenares had opened a soda fountain and refreshment parlor, and made partitions for store spaces which he rented to other persons.

Because of the aforesaid occurrence, plaintiffs demanded reimbursement from the defendants, but having been refused, they filed a supplemental complaint to include as their third cause of action, the recovery of the value of the burned buildings.

Defendants filed their amended answer and also moved for the dismissal of the plaintiffs’ first and second causes of action invoking the Debt Moratorium that was then in force. The dismissal was granted by the trial court on February 5, 1951, but hearing was set as regards the third cause of action.

On August 11, 1952, the defendant company filed a motion for summary judgment dismissing the plaintiffs, third cause of action, to which plaintiffs registered objection coupled with a petition for reconsideration of the order of the court dismissing the first and second causes of action. Pending the resolution of this incident, plaintiffs, on October 2, 1953, called the court’s attention to the decision in the case of Rutter v. Esteban (93 Phil., 68; 49 Off. Gaz. [5] 1807) invalidating the continued effectivity of the Moratorium Law (R. A. 342). On November 25, 1953, the trial court denied the defendant company’s motion for summary judgment and set aside its previous order dismissing the first and second causes of action. The case was accordingly heard and thereafter, judgment was rendered in plaintiffs’ favor in the terms set in the opening paragraph of this decision. Thereafter, the defendants regularly appealed to this Court.

The defendants-appellants raise a number of procedural points. The first of these relates to their contention that the supplemental complaint which included a third cause of action, should not have been admitted, as it brought about a change in the original theory of the case and that it raised new issues not theretofore considered. This argument cannot be sustained under the circumstances. This action was inceptionally instituted for the rescission of the contract of lease and for the recovery of unpaid rentals before and after liberation. When the leased buildings were destroyed, the plaintiffs-lessors demanded from the defendants-lessees, instead, the value of the burned premises, basing their right to do so on defendants’ alleged default in the payment of post-liberation rentals (which was also their basis in formerly seeking for rescission). This cannot be considered as already altering the theory of the case which is merely a change in the relief prayed for, brought about by circumstances occurring during the pendency of the action, and is not improper. (Southern Pacific Co. v. Conway, 115 F. 2d 746; Suburban Improvement Company v. Scott Lumber Co., 87 A.L.R. 555, 59 F. 2d 711). The filing of the supplemental complaint can well be justified also under section 2, Rule 17 of the Rules of Court (on amendments) "to the end that the real matter in dispute and all matters in the action in dispute between the parties may, as far as possible be completely determined in a single proceedings." It is to be noted furthermore, that the admission or rejection of this kind of pleadings is within the sound discretion of the court that will not be disturbed on appeal in the absence of abuse thereof (see Sec. 5, Rule 17, Rules of Court), especially so, as in this case, where no substantial procedural prejudice is caused to the adverse party.

It is urged that the dismissal of the first and second causes of action on February 5, 1951 had the effect of a dismissal "with prejudice" as the court did not make any qualification in its dismissal order. Appellants, apparently, lost sight of the fact that the dismissal was premised on the existence of the "Debt Moratorium" which suspended the enforcement of the obligation up to a certain time. The reference thereto by the lower court amounted to a dismissal "without prejudice", since in effect it ruled that the plaintiffs could not, at the time they sought it, enforce their right of action against the defendants, but plaintiffs must wait until the moratorium was lifted. In this way, the court qualified its dismissal.

Taking up the case on its merits, it is readily seen that the key to the entire dispute is the question whether the defendant-appellant Manila Motor Co., Inc. should be held liable for the rentals of the premises leased corresponding to the lapse of time that they were occupied as quarters or barracks by the invading Japanese army, and whether said appellant was placed in default by its refusal to comply with the demand to pay such rents. For if the Motor Company was not so liable, then it never was in default nor was it chargeable for the accidental lose of the buildings, nor for any damages except the rental at the contract rate from its reoccupation of the premises leased until the same were accidentally destroyed by fire on March 2, 1948.

The appellees contended, and the court below has held, that the ouster of the lessee company by the Japanese occupation forces from 1942 until liberation, while operating to deprive the lessee of the enjoyment of the thing leased, was, nevertheless, a mere act of trespass ("perturbacion de mero hecho") that, under the Spanish Civil Code of 1889 (in force here until 1950), did not exempt the lessee from the duty to pay rent. We find that contention and ruling erroneous and untenable.

The pertinent articles of the Civil Code of Spain of 1889 provide:jgc:chanrobles.com.ph

"ART. 1554. It shall be the duty of the lessor;

1. To deliver to the lessee the thing which is the subject matter of the contract;

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;

3. To maintain the lessee in the peaceful enjoyment of the lease during the entire term of the contract."cralaw virtua1aw library

"ART. 1560. The lessor shall not be liable for any act of mere disturbance of a third person of the use of the leased property; but the lessee shall have a direct action against the trespasser.

If the third person, be it the Government or a private individual, has acted in reliance upon a right, such action shall not be deemed a mere act of disturbance." (Italics supplied)

Under the first paragraph of article 1560 the lessor does not answer for a mere act of trespass (perturbacion de mero hecho) as distinguished from trespass under color of title (perturbacion de derecho). As to what would constitute a mere act of trespass, this Court in the case of Goldstein v. Roces (34 Phil. 562), made this pronouncement:jgc:chanrobles.com.ph

"Si el hecho perturbador no va acompañado ni precedido de nada que revele una intencion propiamente juridica en el que lo realiza, de tal suerte que el arrendatario solo pueda apreciar el hecho material desnudo de toda forma o motivacion de derecho, entendemos que se trata de una perturbacion de mero hecho."cralaw virtua1aw library

Upon the basis of the distinction thus established between the perturbacion de hecho and the perturbacion de derecho, it is demonstrable that the ouster of the appellant by the Japanese occupying forces belongs to the second class of disturbances, de derecho. For under the generally accepted principles of international law (and it must be remembered that those principles are made by our Constitution a part of the law of our nation 1) a belligerent occupant (like the Japanese in 1942-1945) may legitimately billet or quarter its troops in privately owned land and buildings for the duration of its military operations, or as military necessity should demand. The well known writer Oppenheim, discoursing on the laws of war on land, says upon this topic;

"Immovable private enemy property may under no circumstances or conditions be appropriated by an invading belligerent. Should he confiscate and sell private land or buildings, the buyer would acquire no right whatever to the property. Article 46 of the Hague Regulations expressly enacts that ’private property may not be confiscated.’ But confiscation differs from the temporary use of private land and building for all kinds of purposes demanded by the necessities of war. What has been said above with regard to utilization of public buildings applies equally to private buildings. If necessary, they may be converted into hospitals, barracks, and stables without compensation for the proprietors, and they may also be converted into fortifications. A humane belligerent will not drive the wretched inhabitants into the street if he can help it. But under the pressure of necessity he may be obliged to do this, and he is certainly not prohibited from doing it. (Italics supplied) (Oppenheim & Lauterpach, International Law, Vol. II, p. 312, 1944 Ed.)

The view thus expressed is concurred in by other writers. Hyde (International Law, Vol. 3, p. 1893, 2nd Rev. Ed.) quotes the U. S. War Department 1940 Rules of Land Warfare (Rule No. 324) to the effect that —

"The measure of permissible devastation is found in the strict necessities of war. As an end in itself, as a separate measure of war, devastation is not sanctioned by the law of war. There must be some reasonably close connection between the destruction of property and the overcoming of the enemy’s army. Thus the rule requiring respect for private property is not violated through damage resulting from operations, movements, or combats of the army; that is, real estate may be utilized for marches, camp sites, construction of trenches, etc. Building may be used for shelter for troops, the sick and wounded, for animals, for reconnaisance, cover defense, etc. Fences, woods, crops, buildings, etc., may be demolished, cut down, and removed to clear a field of fire, to construct bridges, to furnish fuel if imperatively needed for the army." (Emphasis supplied)

Reference may also be made to Rule 336:jgc:chanrobles.com.ph

"What may be requisitioned. — Practically everything may be requisitioned under this article (art. LII of the regulations above quoted) that is necessary for the maintenance of the army and not of direct military use, such as fuel, food, forage, clothing, tobacco, printing presses, type, leather, cloth, etc. Billeting of troops for quarters and subsistence is also authorized." (Emphasis supplied)

And Forest and Tucker state:jgc:chanrobles.com.ph

"The belligerent occupant may destroy or appropriate public property which may have a hostile purpose, as forts, arms, armories, etc. The occupying force may enjoy the income from the public sources. Strictly private property should be inviolable, exce pt so for as the necessity of war requires contrary action." (Forest and Tucker, International Law, 9th Ed., p. 277) (Emphasis supplied)

The distinction between confiscation and temporary sequestration of private property by a belligerent occupant was also passed upon by this Court in Haw Pia v. China Banking Corporation, 80 Phil. 604, wherein the right of Japan to sequester or take temporary control over enemy private property in the interest of its military effort was expressly recognized.

We are thus forced to conclude that in evicting the lessee, Manila Motor Co., Inc. from the leased buildings and occupying the same as quarters for troops, the Japanese authorities acted pursuant to a right recognized by international and domestic law. Its act of dispossession, therefore, did not constitute perturbacion de hecho but a perturbacion de derecho for which the lessors Villaruel (and not the appellants lessees) were liable (Art. 1560, su pra) and for the consequences of which said lessors must respond, since the result of the disturbance was the deprivation of the lessee of the peaceful use and enjoyment of the property leased. Wherefore, the latter’s corresponding obligation to pay rentals ceased during such deprivation.

The Supreme Court of Spain, in its Sentencia of 6 December 1944, squarely declared the resolutory effect of the military sequestration of properties under lease upon the lessee’s obligation to pay rent (Jurisprudencia Civil, Segunda Serie, Tomo 8, pp. 583, 608):jgc:chanrobles.com.ph

"Considerando que para resolver acerca de la procedencia del presente recurso es preciso partir de las bases de hecho sentadas en la sentencia recurrida, y no impugnadas al amparo del n