G.R. No. L-11068; March 29, 1916
FERNANDEZ HERMANOS, plaintiffs-appellees, vs. HAROLD M. PITT, defendant-appellant.

FACTS:
On July 1, 1913, Fernandez Hermanos (lessor) and Harold M. Pitt (lessee) entered into a contract of lease for a term of four years at a monthly rent of P350, payable within the first five days of each succeeding month. The lessee occupied the premises until August 8, 1914, when he served a written notice on the lessor, claiming that under the lease’s terms (particularly paragraph 10), the contract had “automatically lapsed” due to his own failure to pay the rent for July 1914. He vacated the premises and turned them over to the lessor’s caretaker, despite the lessor’s objection and desire for him to continue under the lease. The lessor, after unsuccessful efforts to re-let the property, secured a new tenant only by November 1, 1914. The lessor filed an action to recover unpaid rent, costs for advertising, and future rent due under the lease until its original expiration. The case was submitted on a stipulation of facts.

ISSUE:
Whether the lessee’s failure to pay rent automatically rescinded the lease contract under paragraph 10, thereby releasing him from his obligation to pay rent for the remainder of the four-year term.

RULING:
No. The Supreme Court affirmed the judgment of the Court of First Instance in favor of the lessor. The Court held that paragraph 10 of the lease did not grant the lessee the right to terminate the contract. Rather, it was a stipulation for the benefit of the lessor, granting him the option to rescind the lease upon the lessee’s breach. The lessee cannot take advantage of his own wrongful act (non-payment of rent) to unilaterally extinguish his contractual obligations. The lease, having a fixed term of four years and containing no provision allowing the lessee to terminate it early, remained binding upon the lessee. His abandonment constituted a breach, and he remained liable for the rent due under the contract, subject to the lessor’s duty to mitigate damages by seeking a new tenant. The lessee was therefore liable for unpaid rent, advertising expenses, and the difference between the original rent and the rent obtained from the new tenant for the unexpired term.