G.R. No. L-38059 September 4, 1975
JOSE QUI, petitioner, vs. THE HONORABLE COURT OF APPEALS, TRINIDAD AUSTRIA and DOMINGO AUSTRIA, respondents.

FACTS

Private respondents, the Austrias, filed an unlawful detainer action against petitioner Jose Quì for alleged violations of their 20-year lease contract dated February 20, 1960. The contract required Quì to pay an annual rental of P1,200 and to construct and maintain a factory building on the leased land in Caloocan City. Quì paid advance rentals for the first five years and constructed the factory, but it was destroyed by fire in December 1960. He did not rebuild it and instead used the land for a poultry and piggery business. After the advance rental period ended on February 20, 1965, Quì applied an outstanding P600 loan he had extended to the Austrias against the next rental installment. The Austrias demanded his ejectment for non-payment of rentals and failure to maintain a factory. Quì later tendered payment via postal money orders, which were received after the complaint was filed.

ISSUE

Whether the lessee’s failure to reconstruct the burned factory building constitutes a breach of the lease contract justifying ejectment, given that the contract did not stipulate a period for such reconstruction.

RULING

The Supreme Court ruled in favor of the petitioner, setting aside the Court of Appeals’ ejectment order. The legal logic centers on the application of Article 1197 of the New Civil Code. The lease contract obligated the lessee to construct and maintain a factory but was silent on a specific period for rebuilding in case of destruction. When an obligation does not fix a period but from its nature and circumstances it is evident that a period was intended, the courts may fix the duration. Here, the Court inferred that the parties contemplated a period for reconstruction. Consequently, the respondents’ remedy was not immediate ejectment but a judicial action to first fix a reasonable period for Quì to fulfill his obligation to rebuild. Only after the court fixes such a period and the lessee fails to comply within it can a breach be deemed to occur. The interim use of the property for a poultry and piggery, while a deviation from the stipulated factory purpose, did not per se constitute a fundamental breach warranting rescission without this prior judicial determination of a period. Since no period was fixed by the court, Quì’s failure to reconstruct was not yet a actionable violation. The tender of rental payment, though late, also negated the claim of default in rentals. Therefore, the action for ejectment was premature.