G.R. No. 38085 , November 13, 1933
ANGELA MONTENEGRO, plaintiff-appellee, vs. CONSUELO ROXAS DE GOMEZ, ET AL., defendant-appellants.

FACTS

Plaintiff Angela Montenegro leased the “Paris Building” from defendant Consuelo Roxas de Gomez for three years at a monthly rental of P4,000. The building was occupied by several tenants at the start of the lease. Despite efforts by the defendant’s attorney-in-fact, three tenants—B.A. Green, G.C. Sellner, and Manila Improvement Co., Inc.—refused to vacate certain rooms, preventing Montenegro from taking full material possession of the entire building. Montenegro paid rent from June 1930 to October 1931 but withheld payment for November and December 1931. She filed an action for rescission of the lease contract, accounting, and damages. The trial court rescinded the contract and ordered an accounting.

ISSUE

Whether the plaintiff-lessee is entitled to rescind the contract of lease due to the defendant-lessor’s failure to deliver full material possession of the leased property.

RULING

Yes. The Supreme Court affirmed the trial court’s decision. The execution of a lease contract is only presumptively equivalent to delivery of possession, but this presumption is rebuttable. Evidence clearly showed that the lessee was not placed in material possession of the entire building because three tenants retained occupancy of portions despite the lessor’s efforts. Under Article 1556 of the Civil Code, a lessee has the right to rescind the contract if not placed in material possession of the leased property. The lessee’s continued payment of rent for a period did not constitute estoppel or waiver of this right, as it was done to avoid breaching the contract while seeking to enforce her rights. Rescission was proper.

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