GR 116895; (July, 2000) (Digest)
G.R. No. 116895 ; July 7, 2000
Aramis B. Aguilar, petitioner, vs. Court of Appeals, Aurelio T. Juguilon and Patria F. Juguilon, respondents.
FACTS
On July 6, 1982, petitioner Aramis Aguilar entered into a 25-year lease contract with respondent spouses Juguilon over two parcels of land in Pasay City. The contract obligated Aguilar to construct a commercial building and pay escalating monthly rentals. He paid a one-year advance rental. The spouses vacated their residence on the property and initiated ejectment against other tenants. Due to delays in vacating the premises, the parties executed an amendment in 1985, moving the lease commencement to October 1, 1983. However, Aguilar did not commence construction. Instead, he assigned a portion of the leased area to a third party and constructed only a temporary restaurant/storage structure. The spouses, having moved back into the property to save on rent, demanded lease payments. Aguilar refused, arguing no actual delivery of the leased premises occurred, thus suspending his rental obligations.
ISSUE
Whether there was a valid delivery of the leased property to the petitioner, making him liable for accrued rentals despite the absence of construction and his non-possession of the entire area.
RULING
Yes, there was constructive delivery, and petitioner is liable for rentals, subject to equitable adjustment. The Supreme Court affirmed the Court of Appeals but modified the rental computation. The execution of the public instrument of lease constituted constructive delivery of the property under Article 1498 of the Civil Code. This presumptive delivery vested in Aguilar the right to the use and enjoyment of the property from the contract’s effective date, making the obligation to pay rent demandable. His failure to build did not negate this delivery but constituted a breach of a contractual undertaking, for which rescission could be a remedy for the lessors.
However, the Court found the private respondents were unjustly enriching themselves by demanding full rent while themselves occupying a portion (432 sqm) of the leased premises. Equity demands that Aguilar be liable only for the rental value of the area not occupied by the lessors. Therefore, the accrued rentals must be computed based only on the remaining 1,517 square meters. The lease was effectively rescinded due to Aguilar’s assignment of a portion of the land, which made it impossible to fulfill the contract’s central condition of constructing a single commercial building over the entire premises.