G.R. No. 1759
July 15, 1905

FACTS:
On April 30, 1901, the parties entered into a contract. At that time, defendant Emilio Ledesma was a tenant of Hacienda Imbang, owned by Leandro Locsin, with an annual rent of ₱3,000 payable in two installments (₱1,500 each in February and April). In the contract, Ledesma acknowledged an existing debt of ₱6,750 to plaintiff Alejandro Montelibano. Ledesma agreed to deliver to Montelibano all sugar produced on his estate until April 30, 1902. In return, Montelibano agreed to pay the ₱3,000 rent for the year 1902.

Ledesma failed to deliver all sugar as stipulated, selling part to third parties in January or February 1902. Montelibano paid ₱1,200 of the February rent installment (₱1,500), with the remaining ₱300 paid in September 1902. He did not pay the April installment of ₱1,500. Ledesma was later ejected from the hacienda in July 1902 due to nonpayment of rent.

In the trial court, Montelibano sued to enforce the debt acknowledgment, while Ledesma counterclaimed for damages, alleging that Montelibano’s failure to pay rent in full led to his eviction. The lower court ruled in favor of Montelibano.

ISSUE:
Whether Ledesma is entitled to damages on his counterclaim, given the mutual obligations under the contract and the alleged breach by Montelibano.

RULING:
The Supreme Court AFFIRMED the lower court’s judgment, holding that Ledesma is not entitled to damages.

The Court found that Ledesma first breached the contract by selling sugar to third parties before any failure by Montelibano to pay rent. Montelibano’s cause of action was based on the pre-existing debt acknowledged in the contract, not on Ledesma’s breach regarding sugar delivery. Thus, the complaint did not need to allege Ledesma’s breach.

Regarding rent payments:
– The ₱300 delay in February did not justify Ledesma’s prior breach, and evidence suggested an arrangement for extended payment.
– The April rent of ₱1,500 was due on April 30, 1902the same day the contract endedand Montelibano’s nonpayment did not precede Ledesma’s breach.
– Ledesma’s eviction in July 1902 resulted from nonpayment of the April rent, not the February delay.

The burden of proof for the counterclaim lay with Ledesma, who failed to show that Montelibano’s actions directly caused his damages. Therefore, Ledesma could not recover damages while in breach himself.

Costs were imposed on appellant Ledesma.