Chua Tee Dee v. CA

Chua Tee Dee v. CA Facts: Manuel Alba, the president of Agricom, had entered into a lease agreement with Amado Dee where to lease the rubber plantation of Dee, named Pioneer Enterprises. Among the stipulations in the contract was the payment of deposit in the amount of P135,000 with 2% interest per month in case as penalty, further stipulating automatic termination and back payment of back rentals in case of nonpayment of rentals for three months. The contract also stipulated that Agricom had the duty to maintain Dee in the quiet peaceful possession and enjoyment of the leased premises. On May 1985, a labor case for illegal dismissal and unfair labor practice was filed against Agricom, Amado Dee (Chua Tee Dee’s husband) and Pioneer, which dragged on for years. The labor arbiter held that the termination was illegal. The respondents were ordered to pay its employees’ separation pay and backwages, but the complaint for unfair labor practice was dismissed for lack of merit. Aside from the labor case, Pioneer, complained of being pestered by individuals who claimed portions of the plantation as their own property, prevented it from operating fully the agreed area stated in the lease contract. complained that the death of Pioneer’s foreman sometime in 1990 exacerbated the unresolved labor problem.

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Later on, Pioneer defaulted in its monthly payments, prompting Agricom to file a complaint for the collection of the amount. Dee asserted that Agricom committed breach of contract for its failure to maintain her in peaceful possession and enjoyment of the leased premises. The breach, in turn, entitled her to suspend payment of rentals. In the meantime, on June 1991, the Agricom extended a personal loan of P30,000 to Lillian Carriedo as evidenced by a voucher and a personal receipt signed by Carriedo. Then judgment was finally rendered, the complaint was dismissed and the lease contract terminated, the court stating that it was Agricom’s duty as lessor to maintain the lessee in peaceful possession and enjoyment of the leased premises. Upon motion for recommendation, the lower court reversed its own ruling, ordering Dee to pay Agricom back rentals and rentals for the first three years of the lease already paid for. The CA affirmed the order. Dee’s Contention: The suspension of the payment of rentals is justified by the fact that the private respondent Agricom breached its lease contract with her, claims that the private respondent failed to maintain her in a quiet and peaceful enjoyment of the leased premises. Issue: Is Dee still liable for the back rentals, including those that were already paid?

Held: On the issue of suspension of payment of rentals, Dee anchors her argument on Art. 1658, NCC, which entitles the lessee to suspend payment of rent in case the lessor fails to make the necessary repairs or to maintain the lessee in peaceful and adequate enjoyment of the property leased. Dee asserted that she was harassed by squatters and several claimants of the leased premises. The cause or essential purpose in a contract of lease is the use or enjoyment of a thing.56 It is consensual, bilateral, onerous and commutative, the owner temporarily grants the use of his or her property to another who undertakes to pay rent therefor. In the case at bar, petitioner Chua Tee Dee is the lessee of the private respondent Agricom. As lessor, the Agricom had the duty to maintain the petitioner in the peaceful and adequate enjoyment of the leased premises. Such duty was made as part of the contract of lease entered into by the parties. The duty “to maintain the lessee in the peaceful and adequate enjoyment of the lease for the duration of the contract” is merely a warranty that the lessee shall not be disturbed in his legal, and not physical, possession. In the present case, however, petitioner had not been disturbed in her legal possession of the property as she did not file any suit against any of the claimants. As to the claims of loss due to the labor dispute, the SC held that Dee failed to prove that she suffered any loss from the labor case that was filed against her enterprise and her husband. During the period of pendency of the labor case, Dee regularly paid the monthly rentals. It was only after the labor case has been resolved that she started to fail to pay her rentals, strongly indicating that the labor case has not dampened her peaceful and adequate possession of the leased premises. It was ruled that Dee should not be made to pay rentals for the first three years of the lease, since those rentals were already paid for. Moreover, the personal loan extended by Dee to Lillian Carriedo should not be charged against Agricom. While it is true that the petitioner and Carriedo had agreed that the personal loan of the latter shall be “chargeable against Agricom’s account,” the private respondent is not privy to the agreement; nor did it agree to pay the said loan. It must be stressed that the private respondent has a personality separate and distinct from its stockholders.