G.R. No. 148632 August 31, 2005
Belen Dela Torre vs. Bicol University, represented by Dr. Lylia Corporal-Sena and/or Dr. Emiliano Aberin

FACTS

Petitioner Belen Dela Torre entered into a Contract of Lease with respondent Bicol University (BU) on April 2, 1990, allowing her to construct and operate an eatery within the university compound for a monthly rental. On February 28, 1994, BU discovered illegal electrical connections from Dela Torre’s eatery tapped to the university’s mainline, leading to an assessment for unpaid electrical consumption. She was also assessed for unpaid rentals from 1990 to 1994. Subsequently, BU issued memoranda directing the stoppage of operation of temporary stores within the campus. In a letter dated October 4, 1994, BU unilaterally terminated the lease contract, citing a Board of Regents’ desire to rid the campus of such stores for health and security reasons.
Dela Torre filed a Complaint for Breach of Contract and Damages, alleging the termination was premature as she had two years remaining on the lease and was motivated by BU’s favoritism toward another tenant. In their Answer, BU contended Dela Torre had violated the lease terms by exceeding the leased area, using non-light materials, failing to pay rentals, and illegally tapping utility lines, justifying termination.

ISSUE

Whether the unilateral termination of the Contract of Lease by Bicol University was valid.

RULING

The Supreme Court upheld the validity of the termination, affirming the Court of Appeals. The legal logic centers on the principle that a party in breach cannot demand performance from the other. The Court found Dela Torre committed substantial violations of the lease contract, including unauthorized expansion of the leased area and illegal tapping of utilities, which constituted breach. While BU’s termination letter cited only the policy to remove stores and not these specific violations, the Court ruled that the existence of a valid cause for termination—Dela Torre’s breaches—rendered the termination lawful. The cause need not be explicitly stated in the termination notice if it exists at the time of termination, as the law does not require the guilty party to be notified of the precise grounds.
However, the Court clarified that BU could not use the unpaid rentals and illegal utility tapping as grounds for the termination’s validity since these were not mentioned in the termination letter. These violations were instead properly raised in BU’s counterclaim for monetary claims, which the Court sustained, ordering Dela Torre to pay the assessed amounts. The termination was deemed an exercise of BU’s right arising from Dela Torre’s breach, not from the stated policy reason alone. Thus, the petition was denied.