G.R. No. L-25014. October 17, 1973.
DOLORES LAHORA VDA. DE CASTRO, ARSENIO DE CASTRO, JR., WILFREDO DE CASTRO, IRINEO DE CASTRO and VIRGINIA DE CASTRO ALEJANDRO, petitioners, vs. GREGORIO ATIENZA, respondent.

FACTS

On January 24, 1956, co-owners Tomas de Castro and Arsenio de Castro, Sr. leased their 26-hectare fishpond in Bulacan to Gregorio Atienza for five years at P5,000 annual rental, with the first year’s rent paid in advance. Tomas died, and in November 1956, Arsenio and Atienza mutually agreed to cancel the lease. They executed an agreement (Exhibit A) stipulating that each lessor (Arsenio and Felisa Cruz Vda. de Castro, representing Tomas’s heirs) would refund P2,500 to Atienza by December 30, 1956. Felisa, however, refused to sign this cancellation agreement.
Arsenio failed to refund his share of P2,500. Atienza demanded payment, and upon Arsenio’s refusal, filed a suit for recovery. Arsenio, and later his heirs as substitutes upon his death, contended he was not liable because the cancellation was conditioned upon Felisa’s concurrence, which was not obtained. The trial court ruled for Atienza, a decision affirmed by the Court of Appeals.

ISSUE

Whether a co-owner, who independently leased his undivided share to a lessee, can be held solely liable on his separate undertaking to refund advance rental upon a mutual agreement to cancel said lease, notwithstanding the non-cancellation of the co-owner’s separate lease with the same lessee.

RULING

Yes. The Supreme Court affirmed the appellate court’s judgment, holding petitioner Arsenio de Castro, Sr. (and subsequently his heirs) liable for the refund. The core legal principle is derived from the nature of co-ownership under Article 493 of the Civil Code. Each co-owner has full ownership of his ideal share, including the right to alienate or lease it independently. Consequently, the contract of lease (Exhibit 1) was effectively two separate leases: one by Tomas and another by Arsenio, each covering their respective undivided halves.
Since Arsenio could independently lease his share, he could also independently cancel that specific lease agreement with Atienza. The mutual cancellation agreement (Exhibit A) between Arsenio and Atienza was valid and binding as between them, creating a clear obligation for Arsenio to return the P2,500 corresponding to his share of the advance rental. The consent of the co-owner, Felisa, was not a suspensive condition for the effectivity of Arsenio’s own cancellation and refund obligation. The Court found that Arsenio, being the party interested in cancelling to lease to others, undertook to secure Felisa’s signature and could not use his own failure to do so to evade his distinct contractual duty. His liability was personal and direct, arising from his own act of entering into and then cancelling the lease over his proprietary interest.