[G.R. No. 7480. November 22, 1912. ]
MIGUEL VELASCO Y CUARTERONI, Plaintiff-Appellee, v. LAO TAM, Defendant-Appellant.
Chicote & Miranda for Appellant.
Rodriguez & Castillo for Appellee.
1. INTERPRETATION OF CONTRACTS; LANDLORD AND TENANT; RENTS. — The first rule for interpretation of contracts fixed in the Civil Code is that "if the terms of a contract are clear and leave no doubt as to the intention of the contracting parties, the literal sense of its stipulations shall be observed." (Art. 1281.) The terms of this clause of the contract being clear, "the tenant will pay as rent to the minor proprietors or their legal representative five hundred and forty Philippine pesos (P540) a month, payable in advance within the first six days thereof," and leaving no doubt as to the intention of the contracting parties, the trial judge in holding to the literal sense of the foregoing clause has not violated the law of interpretation of contracts or erred in declaring that the contract does not concede the defendant exemption from the payment of rent on the leased lot for the time reconstruction of the building lasted.
2. ID.; ID.; ID.; DESTRUCTION OF THE PROPERTY OF FIRE. — In a contract of lease whereby the owner cedes the lot and the tenant agrees to build thereon, such building to belong to the owner at the termination of the eleven-year lease, this clause implies no condition, either temporary or final, with reference to the owner’s right to receive the monthly rent to which he is entitled, because of accident, such as fire, which prevents the tenant from getting wholly or partially the rent he obtained from the building, nor does such clause carry with it the intention to make the owner’s right to collect the monthly rental stipulated in his favor by that other foregoing clause in absolute terms, not subject to condition, either temporary or final, depend upon the tenant’s right to get profit from his building.
3. ID.; ID.; ID.; ID.; EXTENSION OF THE LEASE. — The possible event of fire having been foreseen and the parties having agreed that in such case the time for the running of the contract should be extended for a period equal to that consumed in reconstruction or repair of the building: "provided, the contract shall be extended under the same stipulated conditions for the months that may be necessary for repair or reconstruction;" there is no ground for the inference that the intention of the parties was that the effects of the contract of lease should be understood to be suspended for the party damaged by fire during the time of reconstruction of the building thereby destroyed. Their intention can not be other than what the plain terms of the clause of the contract express, which means that the proprietor indemnify the tenant by extension of the time of the lease for a period equal to that wherein he was unable to obtain rent, nor can the case provided for in advance produce any other effect than expressly agreed upon beforehand for that particular case.
4. ID.; ID.; ID.; ID.; ID. — In order to suspend the effects of the obligation of the tenant in the case at bar, it is necessary that the courts find at the trial conclusive facts showing the terms of the contract to be contrary to the evident intention of the contracting parties.
D E C I S I O N
ARELLANO, C.J. :
On December 9, 1902, Mariano Ocampo Lao Simco leased from the Ycaza family a lot at a rental of P540 per month for a period of eleven years, to count from April 10, 1903, under the stipulation that he should construct thereon a building which at the end of the eleven years’ term of the contract would become the property of the lessor family. On January 4, 1910, a part of the building constructed was destroyed by fire, and, as a result thereof, instead of the P1,068 which the building had been producing theretofore, it subsequently produced only P555, until the repairs on it were completed on August 31, 1910. During the eight months that it took to make the repairs, Lao Tam, the successor of Lao Simco in the lease of the lot, was willing to pay one-half of the P540 per month stipulated by his predecessor in the contract aforementioned. But the lessor family refused to assent to this claim on the part of the lessee, Lao Tam; and hence, the present suit to compel him to pay the whole of the stipulated rent of P540 per month, for the months from January to August, 1910, the period when the building was undergoing repair, in accordance wherewith it was decided by the trial judge, who sentenced the defendant, Lao Tam, to pay to the plaintiff the sum of P2,075.04, with legal interest thereon from the time of the presentation of the complaint, and the costs.
The defendant appealed through a bill of exceptions with right to a review of the evidence; but this can not now be reviewed, for the reason that it was not forwarded to this court. The sole assignment of error alleged is that the trial court violated the law governing the construction of contracts by finding, erroneously, that the contract entered into does not allow the defendant exemption from the payment of the rent for the lot leased, for the period of time the building was under reconstruction.
The clause of the contract concerned in the said assignment of error is couched in the following language:jgc:chanrobles.com.ph
"The tenant shall pay by way of rent to the minor proprietors or their legitimate representative the sum of five hundred and forty pesos (540) monthly in advance and within the first six days of the months to which it pertains."cralaw virtua1aw library
The first rule in the matter is that "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." (Civil Code, 1281.) The terms of the contract in question being clear and leaving no doubt as to the intentions of the contracting parties, the trial judge, who had to abide by the literal sense of the preinserted clause rendered, in conformity therewith, the judgment now on appeal.
But the appellant alleges that the evident intention of the contracting parties was other than that expressed by the words of the contract, as though he meant that the second rule of interpretation of the same article, No. 1281 of the Civil Code, not cited by him, should apply, which reads as follows: "If the words should appear contrary to the evident intention of the contracting parties, the intention shall prevail."cralaw virtua1aw library
And, to prove the evident intention of the contracting parties, he argues thus:chanrob1es virtual 1aw library
The purpose of the lessee in taking the lot was to derive profit from the rent of the building which he was to construct thereon; and that of the lessors, in turn, in giving a lease on the lot, was not merely nor exactly to obtain the stipulated monthly rent, but, more especially, to acquire the ownership of the building constructed by the lessee at his own expense, without any outlay or sacrifice whatever on their part. This is proved by the fact that, although the contract was executed in December, 1902, the lessee did not begin to pay rent for the lease of the lot until April, 1903, for the reason that the period between these dates was the time calculated for the construction of the building, which in fact was finished on April 10, 1903. This indeed shows, says the appellant, the intention of the contracting parties with respect to the payment of the rent for the lot, and was no other than that the lessee should begin to pay it whenever he should begin to obtain rent from the building constructed on the lot, since the ground was leased for this purpose.
The appellees, however, say: (1) That it is sufficient to see how the appellant himself, in his special defense, alleges the terms of the contract, in order to be convinced of the untruthfulness of what he now asserts, to wit, that although the contract was signed in December, 1902, he did not begin to pay the rent until April 10, 1903, for he himself stated the part that Mariano Ocampo Lao Simco took in the contract, by saying: "As lessee for the term of eleven years, counting from April 10, 1903;" consequently, if he began to pay on the 10th of April, 1902, it was because on that date he began to be the lessee of the lot; (2) that, if he did not begin to be the lessee nor to pay the rent until April 10, 1903, it was because up to this same date another lessee, named Vy Santing, had been paying the rent; (3) that neither is it true that the construction of the said building was finished on the 10th of April, 1903, but that it was begun the very next day, the 11th, and was completed in July, 1903. Therefore, it is not true that the rent was not collected for the period between the 9th of December, 1902, and the 10th of April, 1903, in consideration of the fact that the lessee had not yet begun to collect rent for the building, since, in that case, the rent for the lot should not have begun to be collected until after July, 1903, which is when the construction of the building was finished, yet, notwithstanding, in the period between April and July, 1903, the rent for the lot was being paid by the lessee.
The appellant, insisting on his contention, says: "The possible event of the building being burned was foreseen, and as such a mishap might result in at least its partial destruction and, consequently, a partial suspension of the profits which the lessee intended to obtain from the contract of lease, it was stipulated that in such a case the term of the lease, previously agreed upon, should be extended so as to include the whole time employed in reconstruction, which stipulation was couched in the following language: "The term of the contract shall be understood to be extended, under the same conditions herein stipulated, for such number of months as may be required for the repairs or the rebuilding.’ The parties," infers the appellant, "desired to covenant that during the time of reconstruction of the building destroyed or damaged by fire, the effects of the contract of lease should be understood to be suspended with respect to the part burned, but to be resumed for the whole time that, from the instant of the occurrence of the fire, was yet to elapse before the expiration of the term of the contract of lease."cralaw virtua1aw library
The trial judge in his decision stated: "Whether the building be totally lost, in which case it would have to be rebuilt, or whether it be partially destroyed, in which event it could be repaired out of the money collected from the fire insurance policy, it is unquestionable that the lessee would be deprived of the rents, either totally or partially, as the case might be, during the months required to rebuild or repair the building; but, to compensate his loss through either of the contingencies mentioned, it is provided that he shall be indemnified by the owner of the lot by an extension of the term of the lease for a period of time equal to that during which he should be prevented from obtaining rents." Indeed it does not appear that the aforesaid clause of the contract says or can say more than what is meant by its clear and precise language.
If the case had not been foreseen of the possible occurrence of fire, perhaps doubt might have arisen as to whether the lessee, having lost half of his building, should not be obliged to pay but one-half of the rent for the lot; but that case having been foreseen and stipulation having been made in provision thereof, the occurrence of the case provided for can produce no other effect than that stipulated, to wit, an extension of the term of the contract for so long a time as the repair or reconstruction should require; and if it required eight months, then the contract has eight months longer to run beyond the eleven years originally stipulated. This, and nothing more, can be the meaning of the clause referred to.
The obligation contracted by the appellant to pay P540 per month as rent for the lot, is expressed in absolute terms, is not subject to condition, either temporary or final. The clause of the contract in which the lessee freely and voluntarily contracted such obligation, is binding law which the courts must apply pursuant to the terms of its expression and they have no discretional power to construe it in another sense, for the reason that its wording is clear and leaves no doubt as to the intention of the contracting parties. Were it intended that the payment of the rent for the lot should depend upon the renting of the building, this should have been stipulated in the contract, and if it was not done, the courts can not supply deficiencies in the contract by introducing provisions not expressed therein. In order that the force and effect of the obligation in question may be suspended, it is requisite that the courts find on trial conclusive facts which show that the terms of the contract are contrary to the evident intention of the contracting parties; as hereinbefore stated, no such proof was found in the present case, but rather the contrary was proved, without contradiction or question of any kind.
If the building that was erected had not been occupied, on the supposition that it was not destroyed, for a part or any of the time, and, consequently, if no rent had been collected therefrom, it would neither be just nor reasonable to contend that the owner of the lot should not collect for a part or any of the time the rent which the builder had agreed to pay, for, to do so, would be to make the owner dependent upon the favorable or unfavorable outcome of the private business of the builder, which it would be absurd to think could have entered into the intention, whether evident or suggested, of the contracting parties. Likewise, if, instead of P1,068, the builder had obtained a rent of P4,000, the owner of the lot would not be entitled to collect a greater part for the ground.
Nor would it aid toward obliging the owner of the lot to suffer a reduction of the rent which he is entitled to collect in accordance with the special law of his contract, if some general rule of law should be established, for example (in the Philippines there is none), that the lessor, in a case like the present care, should be from the beginning, and not at the end of eleven years, a joint owner of the building; for though the ownership of the house were divided between the owner of the ground and the owner of the surface right, the latter could not, on such account, in the event of the partial destruction of the building, escape payment to the former of the stipulated rental price, inasmuch as only in the case where the net revenue from the thing subject to the payment of an annual income, be insufficient to pay the latter, could such income be reduced, either by agreement or formal declaration of the court — an exception finally repealed by article 1624 of the Civil Code. But in the present case, neither was right to the ground established in the nature of a perpetual lease, nor may the hypothesis be admitted of the division of the ownership of the constructed building between the owner of the ground and the owner of the right to use the ground, inasmuch as the sole stipulation which the contracting parties made, and it is the sole law which must be applied by the courts, is that the building in question can pass into the ownership of the lessors only after the lapse of eleven years and eight months, counting from the 10th of April, 1903. So that, notwithstanding any general rule of law, the only law applicable to the case is the special one imposed upon themselves by the parties in their contract.
Moreover, serious consequences would be brought upon the builder by making the owner of the lot, or presuming him to be, a coparticipant in the ownership of the building, were this done or presumed in order to oblige him to make a reduction in the rent of the lot, once there was a reduction in the rent of the building: (1) Because, if the owner must suffer a reduction, he must also, inversely, obtain an increase, as these terms are correlative in all risks; and, (2) because, before compelling him to suffer a reduction in the rent of his lot in case of accident, by reason of the joint ownership he is supposed to have in another’s building, there would have to be, in the ordinary course of the contract, attributed to this joint ownership its inherent effects, that is, rights to the owner identical to those of the builder, his presumed joint owner, and thus would the absurdity be reached of having to attribute to the owner a right to the collection of one-half of the rent from the building, which would make the contract truly one-sided, not only according to what its terms express, as stated by the appellant, but also according to what they do not express, pursuant to this theory.
No general rule of law is applicable whereby the owner of the ground may be deemed to have a right of ownership in the building from the moment the contract is executed.
As between the litigating parties in this case, their special law provides for the case of copartnership in the building, in the clause of the contract which reads as follows: "In the event of a fire, such repairs as the building may require, or its reconstruction, shall be made without loss of time, with the obligation on the part of the owners of the land to contribute, pursuant to the preceding clause, the part corresponding to them of the value of the insurance policy, to the extent of which amount they shall be deemed coparticipants in the building, but they renounce and disclaim all profits and losses which may fall to their share by reason of such coparticipation, and the period of the contract shall be understood to be extended, under the same conditions herein stipulated, for such number of months as may be required for the repairs of the rebuilding." (B. of E., p. 7.) So it is clearly seen that the evident intention of the parties was that the owners of the lot should not gain any partnership in the building except in the event of a fire, if they contributed their share in the fire insurance policy, and that their share of joint ownership should be proportionate to the amount of their share in such insurance, notwithstanding which amount they should not be entitled to any of the profits nor bear any of the losses derived from the building. No fact nor datum whatever is available to show whether they did or did not gain a partnership in the building, for the evidence was not forwarded with the bill of exceptions, nor does the latter contain an insertion of the "preceding" clause, mentioned in the above quotation, whereby, apparently, it was convenanted what part of the value of the insurance was to pertain to the owners of the land. Be this as it may, what is certain and settled is that this special law of the contracting parties dispels the idea that they may be joint owners from the beginning, instead of from the time of the occurrence of a fire, and that even in the latter event they would be joint owners only for the purposes of reconstruction or repairs, with no power on the part of the owner of the building the slightest amount of his profits. Wherefore, it would be extremely inconsistent, in this same case, to allow the owner of the building to reduce, and by so much as one-half, the profits belonging to the owner of the ground.
On the hypothesis that these profits are so great as to render the contract truly one-sided, in the first place, it ought not to have been signed, for it was not imposed upon the lessees, and in the second, the latter is not entitled under color of compensation and on his own authority to make a reduction in the rents, but this is for the courts to do, through due legal action, should there be warrant of law, as in the case (if it may be a comparison) of a "superficially" whose income is insufficient, through a partial destruction of the building erected, to pay the annuity.
Neither for the sole error assigned, nor under any of the other points of view brought out by the ample discussion accorded this case, can this appeal meet with success.
The judgment appealed from is affirmed, with the costs of this instance against the Appellant. So ordered.
Torres, Mapa, Johnson, Carson, and Trent, JJ., concur.