G.R. No. 1633 : April 29, 1905

FACTS:
On March 12, 1900, Nicolas Cepillo Cruz, as lessor and legal representative of the owner Maria Casas, entered into a contract of lease with Co-Cuaco for a warehouse in Binondo, Manila. The lease was for a definite term of three years, commencing January 1, 1900, with a monthly rent of 60 pesos. A special stipulation allowed Co-Cuaco to reimburse himself for 245 pesos (part of a 400-peso repair indemnity) by retaining 30 pesos from the monthly rent of 60 pesos, beginning March 1900, until the sum was fully recovered.

The lease term expired on January 1, 1903. Upon expiration, Cruz demanded that Co-Cuaco vacate the premises. Co-Cuaco refused to leave, prompting Cruz to file an action for ejectment and recovery of unpaid rent. The justice of the peace court ruled in favor of Cruz. Co-Cuaco appealed to the Court of First Instance, which also ruled in favor of Cruz, ordering Co-Cuaco’s ejectment and payment of back rent at 60 pesos per month until vacatur. Co-Cuaco appealed to the Supreme Court.

ISSUE:
Whether or not the lessee, Co-Cuaco, has the right to retain possession of the leased premises after the expiration of the fixed-term lease contract on the ground that he had a claim for reimbursement for repairs made.

RULING:
NO. The Supreme Court AFFIRMED the decision of the Court of First Instance.

The Court held that a lease for a definite period expires on the appointed day without the need for a demand to vacate, pursuant to Articles 1565 and 1581 of the Civil Code. Since the three-year term stipulated in the contract expired on January 1, 1903, and Co-Cuaco acknowledged this fact, his right to possess the premises ceased. His obligation to vacate arose from that date, or at the latest, from the time he was required to do so by the lessor.

The Court rejected Co-Cuaco’s defense that he could retain possession due to the unpaid balance for repairs. The evidence indicated that under the contract’s terms, Co-Cuaco should have fully reimbursed himself for the 245 pesos within about nine months (by around November 1900) by deducting 30 pesos monthly from the rent. Therefore, from December 1900 onward, the lessor was entitled to receive the full rent of 60 pesos. There was no proof that the lessor refused to honor this stipulation. Consequently, Co-Cuaco had no outstanding claim that could justify retention of possession under Article 502 of the Civil Code.

The Supreme Court, limited to reviewing questions of law as no new trial was sought, found no error in the lower court’s judgment. The motion by the plaintiff-appellee for an increase in the appeal bond was denied as moot, the only remaining act being the execution of the final judgment.