G.R. No. L-72456 February 19, 1987
LUZ J. HENSON, petitioner, vs. THE INTERMEDIATE APPELLATE COURT, ELY FUDERANAN and LUISA COMMENDADOR, respondents.

FACTS

Petitioner Luz J. Henson, owner of a building, entered into a one-year lease contract with private respondent Ely Fuderanan, representing Sto. Niño Travel and Tour Agency, for an office space. The contract, executed on May 15, 1980, stipulated a monthly rental of P2,000.00 and required a three-month advance rental and a three-month guarantee deposit. A key provision stated that if the lessee terminated the contract before its expiration, the guarantee deposit would be forfeited and the lessee would still be liable for rentals for the unexpired portion as liquidated damages. Fuderanan paid the required deposits and an advance rental, part of which was a postdated check from respondent Luisa Commendador.
On May 30, 1980, the Bureau of Tourism Services disapproved the agency’s request to transfer its office to Henson’s building due to a failure to meet space requirements. Consequently, the private respondents vacated the premises by mid-June and informed Henson. Commendador’s postdated check was subsequently dishonored. Henson filed a complaint to recover the value of the dishonored check and rentals for the unexpired lease term.

ISSUE

Whether the private respondents are liable for the unpaid rentals for the unexpired portion of the lease contract despite the government’s disapproval of their business transfer request.

RULING

Yes. The Supreme Court reversed the appellate court and reinstated the lessee’s liability. The contract was the law between the parties and contained clear, unambiguous terms. The obligation to pay rent for the entire contract period was absolute and not contingent upon the lessee’s ability to secure government approval for its business operations. The Court emphasized that the contract did not condition its validity or the lessee’s obligations on obtaining such permits. The stipulation requiring the lessee to comply with laws pertained to regulations concerning the leased premises itself (e.g., sanitation, safety), not to the separate licensing requirements of the lessee’s own business. The private respondents’ inability to use the premises for their intended purpose due to the government’s denial was a business risk they assumed, not a valid ground for rescission or non-payment. The Court held that enforcing the contract as written did not constitute “judicial rewriting” of the agreement; it was merely applying its explicit terms. Therefore, Fuderanan was ordered to pay the value of the dishonored check with interest and the rentals for the unexpired term, with the returnable deposit to be offset against the latter amount. Commendador’s liability was limited to the check as an accommodation party.