G.R. No. 49020 ; February 28, 1944
MANUEL ERNESTO GONZALES, petitioner, vs. VICENTE MATEO, ET AL., respondents.

FACTS

Respondents, operating as an unregistered partnership named “Samahang Sabungang Malaya,” leased their cockpit in Malolos, Bulacan, to petitioner Manuel Ernesto Gonzales under a written contract dated January 5, 1937. The lease was for six years at a yearly rental of P100, with the following conditions: (a) all necessary work to make the cockpit usable was to be done by Gonzales at his own expense; (b) upon lease expiration, all improvements made by Gonzales would remain with the partnership without compensation; and (c) the partnership would pay the real estate taxes and land rent. Before using the cockpit, Gonzales made improvements but placed the posts on stone slabs without cementing or bracing them, despite a respondent’s advice. On September 12, 1937, during a heavily attended cockfight, the building collapsed and was never used again. The lessors demanded Gonzales either reconstruct the cockpit or pay P3,000 in damages plus unpaid rentals. Gonzales refused, arguing his obligation was only for improvements, not repairs, and that the collapse was due to hidden defects concealed by the lessors. The Court of First Instance of Bulacan ruled in favor of the lessors, ordering reconstruction or payment of P3,000 plus P500 in back rentals. The Court of Appeals modified this, reducing damages to P1,000. Gonzales appealed to the Supreme Court via certiorari, seeking complete absolution from liability.

ISSUE

Whether the lessee, Manuel Ernesto Gonzales, is liable for the collapse of the leased cockpit building due to his failure to make necessary repairs or improvements as stipulated in the contract.

RULING

The Supreme Court affirmed the judgment of the Court of Appeals, holding Gonzales liable. The Court found that under the lease contract, Gonzales expressly assumed the obligation to do all necessary work to put the cockpit in serviceable condition at his own expense, relieving the lessors of their statutory duty under Article 1554 of the Civil Code to make necessary repairs. This assumption was justified by the nominal rent, the lessors’ payment of taxes, and the substantial profits Gonzales expected from operating the cockpit. The Court rejected Gonzales’s distinction between “repairs” and “improvements,” stating that work necessary for serviceability constituted improvements benefiting the lessors without reimbursement. The collapse was attributed not to hidden defects but to Gonzales’s negligence in failing to properly secure the posts despite prior advice, making him liable under Article 1563 for deterioration due to his fault and under Article 1101 for damages caused by failure to fulfill contractual obligations.