G.R. No. L-7189, March 9, 1912
ADOLFO RAZLAG, plaintiff-appellant, vs. SANCHO BALANTACBO, defendant-appellee.

FACTS

On August 18, 1903, plaintiff Adolfo Razlag and defendant Sancho Balantacbo entered into a ten-year lease contract (19051915) for a lot in Santa Cruz, Laguna. The contract allowed Razlag to sublet the property. Razlag sublet the lot to the Provincial Board of Laguna, but this sublease ended on December 31, 1909. Subsequently, Balantacbo took possession of the lot. Razlag filed a complaint alleging that Balantacbo unlawfully occupied the property, violating the lease contract. Razlag also claimed that he had made improvements on the lot (planting trees, grading, fencing) worth about ₱8,000, intending to build a sanitarium. He alleged that Balantacbo’s actions damaged these improvements, making the lot unsuitable for its intended purpose, and sought indemnity for losses and damages totaling ₱5,600, including attorney’s fees. The trial court ruled in favor of Balantacbo, declaring the lease contract rescinded and denying Razlag’s claims for indemnity. Razlag appealed.

ISSUE

1. Whether the contract of lease between Razlag and Balantacbo was validly rescinded.
2. Whether Balantacbo is liable to indemnify Razlag for losses and damages resulting from the alleged violation of the lease contract.

RULING

1. On the rescission of the lease contract: The Supreme Court affirmed the trial court’s decision, holding that the contract of lease was validly rescinded. The Court found that Razlag, by subletting the property to the Provincial Board of Laguna, effectively transferred all his rights and interests in the lease. The Provincial Board used the lot for purposes inconsistent with the original lease (e.g., as a carabao corral and playground), and Razlag did not object to this change. When the sublease ended, Balantacbo rightfully repossessed the property. The Court noted that Razlag’s failure to assert his rights and his acquiescence to the Provincial Board’s use of the land indicated an implied renunciation of his interests under the original lease.

2. On the claim for indemnity: The Court denied Razlag’s claim for indemnity. Under Article 1101 of the Civil Code, indemnity for losses and damages requires proof that the obligor acted with fraud, negligence, delay, or contravened the stipulations of the contract. The Court found no evidence that Balantacbo acted fraudulently, negligently, or in violation of the lease terms. The damage to the improvements (e.g., trees being cut) was attributed to the Provincial Board’s use of the property as a corral and playground, not to Balantacbo’s actions. Since Razlag sublet the property and allowed such use, he assumed the risk of damage to his improvements. Thus, Balantacbo was not liable for indemnity.

The Supreme Court affirmed the trial court’s judgment in its entirety, with costs against Razlag. The preliminary injunction issued earlier was deemed dissolved due to the valid rescission of the lease contract.