 Diversion of the Water from the Meuse

POINTS OF LAW
Interpretation of treaties (clear text; treaty as a whole, purpose, intention of the Parties, priority of
object and intent over literal meaning) - Law applicable (lex specialis derogat generali) -
Treaties (effects, equality of the Parties; obligation to implement; control of implementation) -General
principles of law (equity; inadimplenti non est adimplendum) -Equity - Counter-claim - Damages -
Judicial inspection.

Facts
On May l2th, 1863, Belgium and the Netherlands concluded a Treaty the purpose of which was "to
settle permanently and definitively the regime governing diversions of water from the Meuse for
the feeding of navigation canals and irrigation channels.(1) Article I of this Treaty provided for the
construction below Maestricht, in Netherlands territory, of a new intake which would constitute
"the feeding conduit for all canals situated below that town and for irrigation in the Campine and in
the Netherlands.(2)
The Belgian Government accepted the Treaty not without reluctance, in view of the fact that it
provided for only one intake and that to be situated in foreign territory.
When the economic development of the Belgian and Netherlands provinces of Limburg necessitated
the enlargement of certain canals and the construction of new works, the two States signed in 1925
a new agreement designed to settle the differences which had arisen in respect of the construction
programmes. After the rejection of this agreement by the Netherlands First Chamber, the
Netherlands proceeded to construct and complete the Juliana Canal, the Bosscheveld Lock and the
Borgharen barrage. On its part, Belgium began the construction of the Albert Canal, unfinished at
the time of the judgment, a barrage at Monsin and a lock at Neerhaeren.
As no further progress could be made in the settlement of the points at issue between the two
States, the Netherlands initiated proceedings in the Court by means of a unilateral application,
based on the declarations made by both the Netherlands and Belgium in which they accepted the
compulsory jurisdiction of the Court under Article 36 (a) of the Statute. Belgium, on its part, made a
counter-claim.
In the course of the proceedings and at the suggestion of the Belgian Agent, which the Netherlands
Agent did not oppose, the Court visited the locality in order to see on the spot the installations,
canals and waterways to which the dispute related and to witness practical demonstrations of the
operations of locks and installations connected therewith.

Submissions of the Parties

The Netherlands ask the Court in the main to adjudge and declare that the works already carried
out by Belgium were contrary to the Treaty of 1863, that the proposed works would be contrary to
it and, consequently, to "order Belgium a) to discontinue all the works" listed in the Netherlands'
submissions and "to restore to a condition consistent with the Treaty of 1863 all works constructed
in breach of that Treaty; b) to discontinue any feeding held to be contrary to the said Treaty and to
refrain from any further such feeding.(3)
On its part, Belgium asks the Court to declare the Netherlands' submissions ill-founded, as well as
to adjudge and declare, in respect of the counter-claim, that the Borgharen barrage was constructed
in breach of the stipulations of the Treaty of 1863, that the Juliana Canal is subject to the provisions
of the Treaty and, finally, to reserve the rights accruing to Belgium from the breaches so committed.

Summary of the Judgment

Since the questions at issue are governed by the Treaty of 1863, the Court at the outset discards the
application to the dispute of the general rules of international river law in favour of the
interpretation and application of the Treaty.
The Netherlands maintain that Article I of the Treaty,(4) which provides for a single feeder, situated
in Netherlands territory, gives them the right to supervise and control all the intakes, situated not
only in their own territory, but also in Belgian territory. This contention necessarily implies that
"the Treaty of 1863 intended to place the Parties in a situation of legal inequality by conferring on
the Nether-lands a right of control to which Belgium could not lay claim.(5) But, in order to allow the
existence of such inequality between the Parties to a treaty freely concluded, the text of the treaty
must say so in precise terms. In the absence of such terms, the Court rejects the Netherlands'
submission.
While criticizing the construction by Belgium of the Neerhaeren Lock, the Netherlands do not
invoke a specific provision of the Treaty. The Court grants that the Treaty has brought into
existence a certain régime which results from all its provisions taken together and that, accordingly,
it forms a complete whole, the different provisions of which cannot be dissociated from the others
and considered in isolation. This is equally the case with Article I which must be interpreted
together with the other Articles. In the light of this Article, thus interpreted, neither the
Netherlands' contention regarding the Neerhaeren Lock, nor the Belgian reply, can be accepted in
its entirety. Furthermore, the Court, after mentioning the construction by the Netherlands of the
Bosscheveld Lock, refuses to admit the Netherlands' complaint about the construction and
operation of a lock of which they themselves set an example in the past.
With regard to the supply by Belgium to a section of the Albert Canal of water taken from the Meuse
elsewhere than at Maestricht, the Court considers that the origin of the water is irrelevant. Nothing
prevents either Belgium or the Netherlands from making such use as they may see fit of the canals
covered by the Treaty, when the canals do not leave their own territory. Each of the two States is at
liberty in its own territory to modify such canals, to enlarge them, to trans-form them, to fill them in
and even to increase the volume of water in them, provided that the diversion of water at the feeder
mentioned in the Treaty and the volume of water to be discharged therefrom is not affected. The
same reasoning applies to the Netherlands' criticism of the proposed supply by Belgium to a section
of another canal of water taken from the Meuse elsewhere than at Maestricht.
Having thus rejected all the Netherlands' submissions, the Court proceeds to deal with the Belgian
counter-claims, the first of which concerns the Borgharen barrage. The Court finds that the Treaty
does not forbid the Netherlands from altering the depth of water in the Meuse at Maestricht
without the consent of Belgium, provided that neither the discharge of water through the feeder,
nor the volume of water which it must supply, nor the current in the Zuid-Willemsvaart is thereby
affected. It is subject to this condition, and not at their arbitrary discretion, that the Netherlands are
entitled, under the Treaty, to dispose of the waters of the Meuse at Maestricht. With regard to the
alleged interference, by the criticized construction, with the navigability of that part of the Meuse
common to both States, the Court considers that Belgium has not produced any proof of it. In reply
to the second Belgian submission, which relates to the Juliana Canal, the Court finds that the Treaty
was designed to regulate the supply of water to the canals situated on the left bank of the Meuse
only. Thus, canals situated on the right bank, such as the Juliana Canal, do not come under the
regime of water supply provided for by the Treaty.
For these reasons, the Court rejects both the Netherlands' submissions and the submissions
contained in the Belgian counter-claim.

Declaration of M. De visscher
M. De Visscher declares that he is unable to concur in the findings of the Court with regard to the
Belgian counter-claim.
 Treatment of Polish Nationals in the Danzig Territory

Advisory Opinion of 4 February 1932 (Series A/B, No. 44) Eighth Annual Report of the Permanent
Court of International Justice (15 June 1931—15 June 1932), Series E, No. 8, pp. 232–237 Legal
status of the Free City of Danzig—Treaty of Versailles of June 28th 1919; Convention on Paris
between Poland and the Free City of Danzig of November 9th 1920; Constitution of the Free City;
guarantee of the Constitution by the League of Nations—The right of Poland to submit to the High
Commissioner of the League of Nations at Danzig disputes concerning the Constitution (Treaty of
Versailles, Art. 103; Convention of Paris, Art. 39)—Interpretation of Articles 104:5 of the Treaty of
Versailles; relation between that provision and Article 33, paragraph 1, of the Convention of Paris;
interpretation of the latter provision.

History of the question

On September 30th, 1930, the diplomatic representative of Poland at Danzig wrote to the High
Commissioner of the League of Nations, asking him for a decision, under Article 39 of the
PolishDanzig Convention, concluded at Paris on November 9th, 1920, “in regard to the
unfavourable treatment of Polish nationals and other persons of Polish origin or speech in the
territory of the Free City
of Danzig”. At the same time the diplomatic representative submitted a series of conclusions,
accompanied by a statement of reasons, relating to the following points: public and private
education, recognition of school certificates, freedom to use the Polish language, nationality, paid
labour, acquisition of
landed property, allotment of dwellings, police registration, liberty of domicile and establishment.
In
his explanatory memorandum, the Polish diplomatic representative had emphasized that it had
become
clear that the position of the Polish population at Danzig, as established by Article 104 (5) of the
Treaty
of Versailles and Article 33 of the Convention of Paris, was imperilled.
This Polish request gave rise to very detailed written proceedings, in the course of which the High
Commissioner wrote to the Secretary-General of the League of Nations that “it would serve no
useful
purpose to examine the numerous concrete points submitted to the High Commissioner for
decision
in the request of the Polish Government of September 30th before the legal points involved have
been
settled beyond dispute”. Accordingly, with the consent of the Parties, he drew the Council’s
attention
to “the eminent desirability of asking the Permanent Court of International Justice to give an
advisory
opinion forthwith on the legal points on which the two Governments differ”.

The request for an advisory opinion

The Council accepted this suggestion, and on May 22nd, 1931, adopted a resolution asking the
Court to give an advisory opinion on the two following questions:
“(1) Is the question of the treatment of Polish nationals and other persons of Polish origin or
speech in the territory of the Free City of Danzig to be decided solely by reference to Article 104 (5)
of the Treaty of Versailles and Article 33, paragraph 1, of the Convention of Paris (and any other
treaty provisions in force which may be applicable), or also by reference to the Constitution of the
Free City; and is the Polish Government accordingly entitled to submit to the organs of the League
of Nations, by the method provided for in Article 103 of the Treaty of Versailles and Article 39 of
the Convention of Paris, disputes concerning the application to the above-mentioned persons of
the provisions of the Danzig Constitution and other laws of Danzig?
(2) What is the exact interpretation of Article 104 (5) of the Treaty of Versailles and of Article
33, paragraph 1, of the Convention of Paris, and, if the reply to question (1) is in the affirmative, of
the relevant provisions of the Constitution of the Free City?”

Communications, statements and hearings

According to the customary procedure, the request for an advisory opinion was communicated to
Members of the League of Nations and to States entitled to appear before the Court. Furthermore,
the
Registrar, by means of a special and direct communication, informed the Governments of the Polish
Republic and of the Free City of Danzig, which were regarded by the Court as likely, in accordance
with
Article 73, paragraph 1, sub-paragraph 2, of the Rules, to be able to furnish information on the
question submitted to the Court for an advisory opinion, that the Court was prepared to receive
from them
written statements and, if they so desired, to hear oral arguments presented on their behalf. Lastly,
the Registrar addressed to all States parties to the Treaty of Versailles a communication drawing
their
attention to the rights conferred upon them by Article 73, paragraph 1, sub-paragraph 3, of the
Rules
of Court.
242
Within the periods fixed by the President, and subsequently extended, memorials were filed on
behalf of the Danzig and Polish Governments. In the second of these periods Danzig alone filed a
reply.

Composition of the Court

For the examination of this case, the Court was composed as follows:
MM. Adatci, President; Guerrero, Vice-President; Baron Rolin-Jaequemyns, Count Rostworowski,
MM. Fromageot, Altamira, Anzilotti, Urrutia, Sir Cecil Hurst, M. Schücking, Jhr. van Eysinga,
M. Wang, Judges.
Dr. Bruns, appointed by the Free City as a Judge ad hoc, also sat on the Court for the purposes of
the case.

Opinion of the Court (analysis)

The Court delivered its opinion on February 4th, 1932.
After recapitulating the origin and evolution of the Constitution of Danzig, and of Article 33 of the
Convention of Paris, the Court proceeds to examine the first question.
It points out, to begin with, that the two parts of which it is composed are not two separate
questions, but constitute a single question, namely, the Polish Government’s right to resort to the
procedure
laid down in Article 103 of the Treaty of Versailles and in Article 39 of the Convention of Paris—
that
is to say, to the jurisdiction of the High Commissioner of the League of Nations at Danzig—to settle
disputes concerning the application of the provisions of the Danzig Constitution and other laws of
Danzig to Polish nationals and other persons of Polish origin and speech.
In regard to this point, the Court observes that the Danzig Constitution presents certain
peculiarities. Thus, the League of Nations, as guarantor of the Constitution, has the right and the
duty of
intervening in the event of a wrong application of the Constitution by Danzig. The question put to
the
Court does not, however, relate to Poland’s right to have recourse to the League, in the latter’s
capacity as guarantor of the Danzig Constitution, but solely to the right of the Polish Government,
acting
in its own name, to submit to the organs of the League, by the method provided for in Article 103 of
the Treaty of Versailles and Article 39 of the Convention of Paris, disputes concerning the
application
of the provisions of the Constitution and other Danzig laws to Polish nationals and other persons
of Polish origin or speech—in other words, to resort to the compulsory arbitral jurisdiction of those
organs. As regards the procedure referred to in the above-mentioned Articles, the Court holds that
the
Constitution is not one of the instruments for which the compulsory arbitral jurisdiction of the High
Commissioner is provided under Article 103 of the Treaty of Versailles. The same remark applies to
Article 39 of the Convention of Paris. As the Court observes in this connection, the general
principles
of international law apply to Danzig, in spite of its special legal status, subject however to the treaty
provisions binding upon the Free City; and the peculiar character of the Danzig Constitution only
affects the relations between the Free City and the League of Nations.
The Court adds that the application of the Danzig Constitution may, however, result in the violation
of an international obligation incumbent on Danzig towards Poland, whether under treaty
stipulations or under general international law. Should such a case arise, Poland would be entitled
to submit it
to the organs of the League under Article 103 of the Treaty of Versailles and Article 39 of the
Convention of Paris.
243
Before entering on an in interpretation of Article 104, Section 5, of the Treaty of Versailles, the
Court
points out that Article 104 contains a mandate conferred on the Principal Allied and Associated
Powers to negotiate a treaty between Poland and Danzig, with certain objects which are specified in
the
Article. The terms of the Resolution of the Conference of Ambassadors, dated May 5th, 1920, admit
of
the conclusion that, in the opinion of that Conference, the advantages guaranteed to Poland by
Article
104 were to be secured to her by the convention to be concluded, and that the guarantee only
became
effective between Poland and Danzig in virtue of the said convention.
The object of Section 5 of Article 104 is to ensure that there shall be no discrimination to the
detriment of Polish nationals and other persons of Polish origin or speech at Danzig. In the opinion
of the
Court, what this clause forbids is discrimination because of the Polish character of these persons.
This
prohibition must have the effect of eliminating discrimination in fact as well as in law. On this point
the Court observes that the question whether a measure is, or is not, in fact directed against the
persons
indicated by the Article must be decided on the merits of each case. The object of the prohibition is
to
prevent any unfavourable treatment, and not to grant a special régime of privileged treatment. The
Court holds that the clause is purely negative, and is confined to a prohibition of all discrimination;
it
is for this reason unable to read into it any standard of comparison.
In regard to the binding force of Article 104 (5) of the Treaty of Versailles, and the relation between
that clause and Article 33 of the Convention of Paris, the Court observes that what is provided in
Article 104 (5) is a rule of law, which has become binding upon the Free City, but only because this
clause has been reproduced in the Convention of Paris, and not because it is a provision of the
Treaty
of Versailles. From the standpoint of the relations between Danzig and Poland, the Convention of
Paris
is the instrument which is directly binding upon the Free City; but in case of doubt, recourse may be
had to the Treaty of Versailles to elucidate the meaning of the Convention; and, as an authentic
expression of the mandate conferred on the Principal Allied and Associated Powers, and of the
objects of the
Convention, the Article may be adduced against the Free City.
Proceeding next to interpret Article 33 of the Convention of Paris, the Court, in considering the
origin of this provision, observes, to begin with, that in its first form it merely accorded the régime
of minority protection, and that the Conference of Ambassadors believed that the application of
this régime would fulfil the objects of Article 104 (5) of the Treaty of Versailles. However, Article 33
underwent various modifications, and its second part, in the form finally adopted, repeats the terms
of Article 104 (5) of the Treaty of Versailles. The Polish Government holds that Article 33 now
accords
national treatment to Polish nationals and other persons of Polish origin or speech, whereas the
Danzig
Government considers that the Article still contains nothing more than an undertaking to apply the
minority régime to such persons.
The Court does not adopt either of these views. In its opinion, the Article should be considered as
containing two undertakings of Danzig: one to apply to minorities, in her territory, provisions
similar
to those applied by Poland in Polish territory; and the other, to provide against discrimination to
the
detriment of persons of Polish origin, nationality, or speech, on the ground of their Polish character.
This second engagement may be considered as a further guarantee that the Free City—whether
applying to the minorities in her territory provisions similar to those applied to minorities in
Poland,
or granting more extensive rights to these minorities, or to foreigners not belonging to a minority—
will
allow of no differential treatment to the prejudice of Polish nationals or other persons of Polish
origin
or speech on account of their Polish character.

Dissenting opinions
The Court’s opinion was adopted by nine votes to four. Two of the judges belonging to the majority
(Baron Rolin-Jaequemyns and Sir Cecil Hurst) stated that they did not concur in the grounds of the
Court’s opinion. Sir Cecil Hurst drew up a separate statement of the grounds, in which Baron
RolinJaequemyns concurred.
The four judges composing the minority (M. Guerrero, Count Rostworowski, MM. Fromageot and
Urrutia) appended a dissenting opinion to the opinion of the Court. It is apparent from the terms of
this dissenting opinion that the Court was unanimous in regard to the reply to the first question,
and
only differed upon the second question.

Dissenting opinion of M. Guerrero, Count Rostworowski, MM. Fromageot and Urrutia

While agreeing, in substance, with the Court’s reply to the first question submitted to the Court,
the dissenting judges differ from the majority in regard to the reply given to the second question.
They observe that Article 104 of the Treaty of Peace of Versailles contains an engagement whereby
the Principal Allied and Associated Powers undertook to negotiate a convention between Poland
and
Danzig. Therefore, the resulting Convention of Paris is an executive Convention, which implements
the
Treaty, and consequently leaves intact the force of the latter.
Citing several sources in support, the dissenting judges find that it is difficult to see how it can be
maintained that the provisions of Article 104 do not contain treaty law governing the relations
between
Poland and Danzig. They assert that the authors of the Peace Treaty, the Council of the League of
Nations, the High Commissioner, the Free City, and lastly the Court itself, have always hitherto
taken
this view.
The dissenting judges state that according to Article 104 (5), no discrimination is permitted at
Danzig to the detriment of Polish nationals or other persons of Polish origin or speech. That is a
provision of an absolutely general character. They hold that there is nothing to justify the addition
thereto of
any restrictions—whether directly or indirectly. In their view, the only difference between the
Polish
and Danzig elements at Danzig is that Poles who are not nationals of the Free City do not possess,
by
reason of that circumstance, any of the rights and duties of a political character which are an
essential element of allegiance. They further hold that Article 33, paragraph 1, not only provides for
the
protection of the minority elements of the Danzig population—including the members of the Polish
minority—but also for the full application of the régime, laid down in the Treaty of Peace, to all
Poles
in general.
The dissenting judges therefore conclude that, as regards Polish nationals and other persons
(including Danzig nationals) of Polish origin or speech, Article 104 (5) of the Treaty of Versailles
and
Article 33 (1) of the Convention of Paris ensure in the fullest possible way that in the territory of the
Free City of Danzig, there may be no discrimination to the detriment of these various Polish
elements,
as compared either with foreigners in general or with Danzig nationals who are not of Polish origin
or
speech, except as regards rights of a political character inherent in the capacity of a citizen of
Danzig,
no matter what the basis of such discrimination may be or the intention underlying it.

Separate opinion by Sir Cecil Hurst

Sir Cecil Hurst states that he accepts the answers which the Court is giving to the questions put
to it by the Council, but is not satisfied with some of the reasoning on which those answers are
based.

He shares the view that Article 104 (5) of the Treaty of Versailles is purely negative in character in
the sense that it does not establish any standard of comparison for the application of the
prohibition of
discrimination. He notes, however, that the discrimination to the prejudice of Polish citizens which
is
prohibited by Article 104 (5) of the Treaty of Versailles and Article 33 (1) of the Paris Convention
covers
discrimination to their prejudice as compared with Danzig citizens, and is not limited to
discrimination to their prejudice as compared with other foreigners. Consequently, where absence
of discrimination results in equality of treatment, it is equality as between Polish citizens and
Danzig citizens, and
not only as between Polish citizens and other foreigners.
Sir Cecil Hurst further considers that Article 104 of the Treaty of Versailles has a more far-reaching
effect than the Opinion of the Court suggests. In his view, Article 104 is not a mere transitory
or ephemeral provision which passed out of existence when the new convention was concluded. It
is
much more. Its paragraphs constitute “the restrictions limiting the political independence of the
Free
City which are the outcome of the Treaty of Versailles”. This means that the paragraphs of Article
104,
including paragraph 5, were intended to remain in operation after the Convention of Paris.
With regard to the interpretation of Article 33 of the Convention of Paris, Sir Cecil Hurst observes
that, with respect to the two undertakings contained therein, the text becomes so clear that a
reference
to the “travaux préparatoires” of the Conventions seems scarcely justifiable. The first undertaking
of
the Free City is to apply to “minorities” in Danzig provisions similar to those applied in Poland
under
Chapter I of the Minorities Treaty of 1919. The only doubt here is as to whether this undertaking
obliges the Free City to assure to Polish nationals, as well as to the rest of the inhabitants, the full
and
complete protection of life and liberty and the free exercise of their religion provided for by Article
2. As the Constitution of Danzig assures greater rights to all the inhabitants than those provided for
in Article 2, and as it is agreed that the guarantee of the Constitution by the League of Nations
implies
that the constitutional life of Danzig must always be in accordance with the terms of the
Constitution,
the question whether Poland is entitled to claim on behalf of her nationals at Danzig the benefit of
Article 2 is only of theoretical interest.
The second undertaking in Article 33 is a repetition of the rule laid down in paragraph 5 of Article
104 of the Treaty of Versailles. The result is that the sentence embodies a reaffirmation of the
nondiscrimination principle, but with the difference that it now becomes a direct treaty obligation
of the
Free City, and not merely a condition of the Free City’s existence resulting from the establishment of
the Free City on the terms and conditions laid down in the Treaty of Versailles. Sir Cecil Hurst notes
that Poland is entitled to claim equality of treatment at Danzig for her citizens and also for Poles by
origin or language.
 CLAUDINA VDA. DE VILLARUEL v. MANILA MOTOB CO.
104 Phil. 926

REYES, J.B.L., J.:

Manila Motor Co., Inc., and Arturo Colmenares interpose this appeal against the decision of the
Court of First Instance of Negros Occidental, in its Civil Case No. 648, ordering the defendant Manila
Motor Co., Inc. to pay to the plaintiffs Villaruel the sum of (a) P11,900 with legal interest from May
18, 1953, on which date, the court below declared invalid the continued operation of the Debt
Moratorium, under the first cause of action; (6) P38,395 with legal interest from the date of filing of
the original complaint on April 26, 1947, on the second cause of action; and against both the Manila
Motor Co., Inc. and its co-defendant, Arturo Colmenares, the sum of P30,000 to be paid, jointly and
severally, with respect to the third cause of action.

On May 31, 1940, the plaintiffs Villaruel and the defendant Manila Motor Co., Inc. entered into a
contract (Ex- hibit "A") whereby, the former agreed to convey by way of lease to the latter the
following described premises;
(a) Five hundred (500) square meters of floor space of a building of strong materials for automobile
showroom, offices, and store room for automobile spare parts;

(b) Another building of strong materials for automobile repair shop; and

(c) A 5-bedroom house of strong materials for residence of the Bacolod Branch Manager of the
defendant company.
The term of the lease was five (5) years, to commence from the time that the building were
delivered and placed at the disposal of the lessee company, ready for immediate occupancy. The
contract was renewable for an additional period of five (5) years. The Manila Motor Company, in
consideration of the above covenants, agreed to pay to the lessors, or their duly authorized
representative, a monthly rental of Three Hundred (F300) pesos payable in advance before the fifth
day of each month, and for the residential house of its branch manager, a monthly rental not to
exceed Fifty (P50) pesos "payable separately by the Manager".

The leased premises were placed in the possession of the lessee on the 31st day of October, 1940,
from which date, the period of the lease started to run under their agreement.

This situation, the Manila Motor Co., Inc. and its branch manager enjoying the premises, and the
lessors receiving the corresponding rentals as stipulated, continued until the invasion of 1941; and
shortly after the Japanese military occupation of the Provincial Capital of Bacolod the enemy forces
held and used the properties leased as part of their quarters from June 1,1942 to March 29, 1945,
ousting the lessee therefrom. No payment of rentals were made at any time during the said period.

Immediately upon the liberation of the said city in 1945, the American Forces occupied the same
buildings that were vacated by the Japanese, including those leased by the plaintiffs, until October
31, 1945. Monthly rentals were paid by the said occupants to the owners during the time that they
were in possession, as the same rate that the defendant company used to pay.

Thereafter, when the United States Army finally gave up the occupancy the premises, the Manila
Motor Co., Inc., through their branch manager, Rafael B. Grey, decided to exercise their option to
renew the contract for the additional period of live (5) years, and the parties agreed that the seven
months occupancy by the U. S. Army would not be counted as part of the new 5-year term.
Simultaneously with such renewal, the company sublet the same buildings, except that used for the
residence of the branch manager, to the other defendant, Arturo Colmenares.
However, before resuming the collection of rentals, Dr. Alfredo Villaruel, who was entrusted with
the same, consulted Atty. Luis Hilado on whether they (the lessors) had the right to collect, from the
defendant company, rentals corresponding to the time during which the Japanese military forces
had control over the leased prem- ises. Upon being advised that they had such a right, Dr. Villaruel
demanded payment thereof, but the defendant company refused to pay. As a result, Dr. Villaruel
gave notice seeking the rescission of the contract of lease and the payment of rentals from June 1, -
1942 to March 31, 1945 totalling P11,900. This was also rejected by the defendant company in its
letter to Villaruel, dated July 27, 1946.

Sometime on that same month of July, Rafael B. Grey offered to pay to Dr. Villaruel the sum of P350,
for which, tenderer requested a receipt that would state that it was in full payment for the said
month. The latter expressed willingness to accept the tendered amount provided, however, that his
acceptance should be understood to be without prejudice to their demand for the rescission of the
contract, and for increased rentals until their buildings were returned to them. Later, Dr. Villaruel
indicated his willingness to limit the condition of his acceptance to be that "neither the lessee nor
the lessors admit the contention of the other by the mere fact of payment". As no accord could still
be reached between the parties as to the context of the receipt, no payment was thereafter tendered
until the end of November, 1946. On December 4, 1946 (the day after the defendant company
notified Dr. Villaruel by telegram, that it cancelled the power of attorney given to Grey, and that it
now authorized Arturo Colmenares, instead, to pay the rent of P350 each month), the Manila Motor
Co., Inc. remitted to Dr. Villaruel by letter, the sum of P350.00. For this payment, the latter issued a
receipt stating- that it was "without prejudice" to their demand for rents in arrears and for the
rescission of the contract of lease.

After it had become evident that the parties could not settle their case amicably, the lessors
commenced this action on April 26, 1947 with the Court of First Instance of Negros Occidental
against the appellants herein. During the pendency of the case, a fire originating from the projection
room of the City Theatre, into which Artura Colmenares, (the sublessee) had converted the former
repair shop of the Manila Motor Co. Inc., completely razed the building, engulfing also the main
building where Colmenares had opened a soda fountain and refreshment parlor, and made
partitions for store spaces which he rented to,other persons.

Because of the aforesaid occurrence, plaintiffs demanded reimbursement from the defendants, but
having been refused, they filed a supplemental complaint to include as their third cause of action,
the recovery of the value of the burned buildings.

Defendants filed their amended answer and also moved for the dismissal of the plaintiffs' first and
second causes of action invoking the Debt Moratorium that was then in force. The dismissal was
granted by the trial court on February 5, 1951, but hearing was set as regards the third cause of
action.

On August 11,1952, the defendant company filed a motion for summary judgment dismissing the
plaintiffs, third cause of action, to which plaintiffs registered objection coupled with a petition for
reconsideration of the order of the court dismissing the first and second causes of action. Pending
the resolution of this incident, plaintiffs, on October 2, 1953, called the court's attention to the
decision in the case of Rutter vs. Esteban (93 Phil., 68; 49 Off. Gaz. [5] 1807) invalidating the
continued effectivity of the Moratorium Law (R. A. 342). On November 25, 1958, the trial court
denied the defendant company's motion for summary judgment and set aside its previous order
dismissing the first and second causes of action. The case was accordingly heard and thereafter,
judgment was rendered in plaintiffs' favor in the terms set in the opening paragraph 6f this
decision. Thereafter, the defendants regularly appealed to this Court.
The defendants-appellants raise a number of procedural points. The first of these relates to their
contention that the supplemental complaint which included a third cause of action, should not
have,been admitted, as it brought about a change in the original theory of the case and that it raised
new issues not theretofore considered. This argument cannot be sustained under the
circumstances. This action was inceptionally instituted for the rescission of the contract of lease
and for the recovery of unpaid rentals before and after liberation. When the leased buildings were
destroyed, the plaintiffs-lessors demanded from the defendants-lessees, instead, the value of the
burned premises, basing their right to do so on defendants' alleged default in the payment of post-
liberation rentals (which was also their basis in formerly seeking for rescission). This cannot be
considered as already altering the theory of the case which is merely a change in the relief prayed
for, brought about by circumstances occurring during the pendency of the action, and is not
improper. (Southern Pacific Co. vs. Conway, 115 F. 2d 746; Suburban Improvement Company vs.
Scott Lumber Co., 87 A.L.R. 555, 59 F. 2d 711). The filing of the supplemental complaint can well be
justified also under section 2, Rule 17 of the Rules of Court (on amendments) "to the end that the
real matter in dispute and all matters in the action in dispute between the parties may, as far as
possible be completely determined in a single proceedings". It is to be noted furthermore, that the
admission or rejection of this kind of pleadings is within the sound discretion of the court that will
not be disturbed on appeal in the absence of abuse thereof (see Sec 5, Rule 17, Rules of Court),
especially so, as in this case, where no substantial procedural prejudice is caused to the adverse
party.

It is urged that the dismissal of the first and second causes of action on February 5, 1951 had the
effect of a dismissal "with prejudice" as the court did not make any qualification in its dismissal
order. Appellants, apparently, lost sight of the fact that the dismissal was premised on the existence
of the "Debt Moratorium" which suspended the enforcement of the obligation up to a certain time.
The reference thereto by the lower court amounted to a dismissal "without prejudice", since in
effect it ruled that the plaintiffs could not, at the time they sought it, enforce their right of action
against the defendants, but plaintiffs must wait until the moratorium was lifted. In this way, the
court qualified its dismissal.

Taking up the case on its merits, it is readily seen that the key to the entire dispute is the question
whether the defendant-appellant Manila Motor Co., Inc. should be held liable for the rentals of the
premises leased corresponding to the lapse of time that they were occupied as quarters or barracks
by the invading Japanese army, and whether said appellant was placed in default by its refusal to
comply with the demand to pay such rents. For if the Motor Company was not so liable, then it
never was in default nor was it chargeable for the accidental lose of the buildings, nor for any
damages except the rental at the contract rate from its reoccupation of the premises leased until the
same were accidentally destroyed by fire on March 2, 1948.

The appellees contended, and the court below has held, that the ouster of the lessee company by the
Japanese occupation forces from 1942 until liberation, while operating to deprive the lessee of the
enjoyment of the thing leased, was, nevertheless, a mere act of trespass ("perturbation de mero
hecho") that, under the Spanish Civil Code of 1889 (in force here until 1950), did not exempt the
lessee from the duty to pay rent. We find that contention and ruling erroneous and untenable.

The pertinent articles of the Civil Code of Spain of 1889 provide:

"Art. 1554. It shall be the duty of the lessor;

1. To deliver to the lessee the thing which is the subject matter of the contract;

2. To make thereon, during the lease, all repairs necessary in order to keep it in serviceable
condition for the purpose for which it was intended;
3. To maintain the lessee in the peaceful enjoyment of the lease during the entire term of the
contract,"

"Art. 1560. The lessor shall not be liable for any act of mere disturbance of a third person of the use
of the leased property; but the lessee shall have a direct action against the trespasser.

If the third person, be it the Government or a private individual, has acted in reliance upon a right,
such action shall not be deemed a mere act of disturbance." (Italics supplied)
Under the first paragraph of article 1560 the lessor does not answer for a mere act of trespass
(perturbation de mero hecho) as distinguished from trespass under color of title (perturbation de
derecho). As to what would constitute a mere act of trespass, this Court in the case of Goldstein vs.
Roces (34 Phil. 562), made this pronouncement:
"Si el hecho perturbador no va acompaiiado ni precedido de nada que revele una intencion
propiamente juridica en el que lo realiza, de tal suerte que el arrendatarin solo pueda apreciar el
hecho material desnudo de toda forma o motivacidn de derecho, entendemos que se trata de una
perturbacion de mero hecho."
Upon the basis of the distinction thus established between the perturbacidn de hecho and the
perturbacion de de hecho, it is demonstrable that the ouster of the appellant by the Japanese
occupying forces belongs to the second class of disturbances, de derecho. For under the generally
accepted principles of international law (and it must be remembered that those principles are made
by our Constitution a part of the law of our nation[1]) a belligerent occupant (like the Japanese in
1942-1945) may legitimately billet or quarter its trcjops in privately owned land and buildings for
the duration of its military operations, or as military necessity should demand. The well known
writer Oppenheim, discoursing on the laws of war on land, says upon this topic;
"Immovable private enemy property may under no circumstances or conditions be appropriated by
an invading belligerent. Should he confiscate and sell private land or buildings, the buyer would
acquire no right whatever to the property. Article 46 of the Hague Regulations expressly enacts that
'private property may not be confiscated.' But confiscation differs from the temporary use of
private land and building for all kinds of purposes demanded by the necessities of war. What has
been said above with regard to utilization of public buildings applies equally to private buildings. If
necessary, they may be converted into hospitals, barracks, and stables without compensation for
the proprietors, and they may also be converted into fortifications. A humane belligerent will not
drive the wretched inhabitants into the street if he can help it. But under the pressure of necessity
he may be obliged to do this, and he is certainly not prohibited from doing it. (Italics supplied)
(Oppenheim & Lauterpach, International Law, Vol. II, p. 812, 1944 Ed.)
The view thus expressed is concurred in by other writers. Hyde (International Law, Vol. 3, p. 1893,
2nd Rev. Ed.) quotes the U. S. War Department 1940 Rules of Land Warfare (Rule No. 324) to the
effect that --
"The measure of permissible devastation is found in the strict necessities of war. As an end in itself,
as a separate measure of war, devastation is not sanctioned by the law of war. There must be some
reasonably close connection between the destruction of property and the overcoming of the
enemy's army. Thus the rule requiring respect for private property is not violated through damage
resulting from operations, movements, or combats of the army; that is, real estate may be utilized
for marches, camp sites, construction of trenches, etc. Buildings may be used for shelter for troops,
the sick and wounded, for animals, for reconnaissance, cover defense, etc. Fences, woods, crops,
buildings, etc., may be demolished, cut down, and removed to clear a field of fire, to construct
bridges, to furnish fuel if imperatively needed for the army." (Italics supplied)
Reference may also be made to Rule 336:

"What may be requisitioned. Practically everything may be re- quisitioned under this article (art. LII
of the regulations above quoted) that is necessary for the maintenance of the army and not of
direct' military use, such as fuel, food, forage, clothing, tobacco, printing presses, type, leather, cloth,
etc. Billeting of troops for quarters and subsistence is also authorized." (Italics supplied)
And Forest and Tucker state:
"The billegerent occupant may destroy or appropriate public property which may have a hostile
purpose, as forts, arms, armories, etc. The occupying force may enjoy the income from the public
sources. Strictly private property should be inviolable, except so far as the necessity of war requires
contrary action." (Forest and Tucker, International Law, 9th Ed., p. 277) (Italics supplied)
The distinction between confiscation and temporary sequestration of private property by a
belligerent occupant was also passed upon by this Court in Haw Pia vs. China Banking Corporation,
80 Phil. 604, wherein the right of Japan to sequester or take temporary control over enemy private
property in the interest of its military effort was expressly recognized.

We are thus forced to conclude that in evicting the lessee, Manila Motor Co., Inc. from the leased
buildings and occupying the same as quarters for troops, the Japanese authorities acted pursuant to
a right recognized by international and domestic law. Its act of dispossession, therefore did not
constitute perturbacion de hecho but a perturbation de derecho for which the lessors Villaruel (and
not the appellants lessees) were liable (Art. 1560, supra) and for the consequences of which said
lessors must respond, since the result of the disturbance was the deprivation of the lessee of the
peaceful use and enjoyment of the property leased. Wherefore, the latter's corresponding
obligation to pay rentals ceased during such deprivation.

The Supreme Court of Spain, in its Sentenda of 6 December 1944, squarely declared the resolutory
effect of the military sequestration of properties under lease upon the lessee's obligation to pay
rent (Jurisprudencia Civil, Segunda Serie, Tomo 8, pp. 583, 608):
"Considerando que para resolver acerca de la procedeneia del presente recurso es preeiso partir de
las bases de hecho sentadas en la sentenda recurrida, y no impugnadas al amparo del numero 7.°
del articulo 1.692 de la Ley de Enjuiciamiento civil, es decir, de que hallandose vigente el contrato
de arrendamiento celebrado entre actor y demandada, en fecha que no se precisa, entre los dias del
18 al 31 de1 julio de 1936, los locales objeto de dicho contrato de arrendamiento, y en los que no
funcionaba de tiempo anterior la industria para cuyo ejercicio se arrendaron, fueron requisados per
el Ejercito Nacional, con motivo de la guerra civil, para que se instalara en los mismos la Junta de
Donativos al Ejercito del Sur, aun cundo en dicha incautacion, que se hizo a la propiedad de la finca,
no se observaron las formalidades legates, a causa de las circunstancias extraordinarias por que a la
sazon atravesaba Sevilla, hecho que no consta se hiciera saber por los arrendatarios demandados al
actor, pero que fue" notorio en aquella capital, donde residia el actor, que de el debi6 tener
conocimiento. Se estima igualmente por la Sala que el hecho de que la industria no funcionara en el
local no tuvo influencia alguna sobre su incautacion por el Ejercito."

"Considerando que sobre tales bases de hecho es de desestimar el primer motivo del recurso:
violacidn de los articulos 1.254, 1.278 y 1.091 del C6digo civil, que sancionan, en te"rminos
generates, la encacia de los contratos> puesto que en el presente caso de los que se trata en
definitiva es de determinar si por virtud de fuerza mayor, la requisa a que se hace referencia, ajena,
por lo tahto, a culpa, asi del arrendatario como del arrendador, se vio aquel privado del posible
disfrute de la finca arrendada, y de si por virtud de esta circunstancia esta o no exento de la obliga-
cion de abonar la renta pactada durante el tiempo que subsistio la incautaci6n; y es indudable la
afirmativa en cuanto al primer extremo, puesto que la sentencia recurrida establece que el hecho de
que no funcionase la industria y estuvieran los locales cerrados no actuo como causa de la requisa
de estos por el Ejercito." "Considerando que la sentencia recurrida, en cuanto no da lugar al pago de
las rentas correspondientes al tiempo que duro la incautacion, lejos de infringir, por aplicacion
indebida, el art. 1.568 del Cddigo civil, se ajusta a la orientaci6n marcada en el mismo, puesto que
este precepto legal dispone que el arrendatario tiene accion contra el tercero perturbador de mero
hecho en la posesion de la finca arrendada, pero no contra la Administraci6n o contra los que obran
en virtud de un derecho que les corresponde; y aqui la perturbacion que experimento el arrendador
en su posesion, como consecuencia de la requisa, no puede calificarse como de mero hecho-,
conforme al citado articulo, puesto que la finca fue requisada por la autoridad militar para fines de
guerra, de donde se sigue que el arrendatario tenfa que soportar la privacion de su tenencia
material a traves del arrendador, con quien ha de entenderse la requisa de la cosa arrendada."
In addition, the text of Art. 1560, in its first paragraph (iam quot) assumes that in case of mere
disturbance (perturbacion de mero hecho) "the lessee shall have a direct action against the
trespasser." This assumption evidently does not contemplate the case of dispossession of the lessee
by a military occupant, as pointed out by Mr. Chief Justice Paras in his dissenting opinion in Reyes
vs. Caltex (Phil.) Inc., 84 Phil. 669; for, the reason that the lessee could not have a direct action
against the military occupant. It would be most unrealistic to expect that the occupation courts,
placed under the authority of the occupying belligerent, should entertain at the time a suit for
forcible entry against the Japanese army. The plaintiffs, their lawyers, and in all probability, the
Judge and court personnel, would face "severest penalties" for such defiance of the invader.

The present case is distinguishable from Lo Ching vs. Archbishop of Manila (81 Phil., 601) in that
the act of the Japanese military involved in the latter case, clearly went beyond the limits set by the
Hague Conventions, in seizing the property and delivering it to another private party; and from
Reyes vs. Caltex (Phil.) Inc., 84 Phil. 654, in that the rights of the military occupant under
international law were not raised or put in issue in said case; and moreover, the lessee there, by
failing to rescind the lease upon seizure of the premises by the Japanese military, despite the
stipulated power to do so, resumed business and decided to hold unto the long term lease for the
balance of its 20-year period, starting from December 23, 1940. In the case before us, the
occupation of the leased property by the Japanese army covered the major portion of the five-year
contractual period, without any option to rescind by the lessee.

The lessor's position is not improved by regarding the military seizure of the property under lease
as a case of force majeure or fortuitous event. Ordinarily, a party may not be held responsible
therefor, despite the fact that it prevented compliance of its obligations. But lease being a contract
that calls for prestations that are both reciprocal and repetitive (tractum successivum), the
obligations of either party are not discharged at any given moment, but must be fulfilled all
throughout the term of the contract- As a result, any substantial failure by one party to fulfill its
commitments at any time during the contract period gives rise to a failure of consideration (causa)
for the obligations of the other party and excuses the latter from the correlative performance,
because the causa in lease must exist not only at the perfection but throughout the term of the
contract. No lessee would agree to pay rent for premises he could not enjoy. As expressed by Marcel
Planiol (quoted in 4 Castan, Derecho Civil, 7th Edition, p. 264)
"Como la obligacidn del arrendador es sucesiva y se renueva todos los dias, la subsistencia del
arrendamiento se hace imposible cuando, por cualquier razon, el arrendador no puede ya procurar
al arrendatario el disfrute de la cosa."
This effect of the failure of reciprocity appears whether the failure is due to fault or to fortuitous
event; the only difference being that in case of fault, the other party is entitled to rescind the
contract in totot and collect damages, while in casual non-performance it becomes entitled only to a
suspension pro tanto of its own commitments. This rule is recognized in par. 2 of Art. 1558,
authorizing the lessee to demand reduction of the rent in case of repairs depriving him of the
possession of part of the property; and in Art. 1575, enabling the lessee of rural property to demand
reduction of the rent if more than one-half of the fruits are lost by extraordinary fortuitous event. Of
course, where it becomes immediately apparent that the loss of possession or enjoyment will be
permanent, as in the case of accidental destruction of a leased building, the lease contract
terminates.

Applying these principles, the Sentencia of December 1944, already adverted to, ruled as follows:
"Considerando que privado el arrendador, por tal hecho, del disfrute de £sta, es manifiesta la
imposibilidad en que se vi6 de cumplir la tercera de las obligaciones que el impone el artfculo 1.554
del Codigo Civil, obligaci6n (la de mantener al arrendatario en el disfrute de la cosa arrendada) que
ha de entenderse reciproca de la de pago de renta pactada, que impone al arrendatario et numero
primero del art. 1.555 de dicho Cuerpo legal, y por ello no puede aer exigida."

"Considerando que, aunque no sean estrictamente aplicables al caso los articulos 1.124, 1.556 y
1.568, que se citan como infringidos por el recurrente, suponiendo que a ellos ha entendido refer
irse la Audiencia (lo que impediria, en todo caso, la estimacion del recurso por este motivo, ya que
dichos articulos no se citan en la sentencia de instancia), es evidente que ellos proclaman la
reciprocidad de las obligaciones entre arrendatario y arrendador, y en este sentido, tratandose de
un incumplimiento inculpable de contrato, pueden servir, como tambien el 1.558, en cuanto preven
la reduccion de rentas o posible restricci6n del contrato cuando el arrendatario se ve privado, por
obras realizadas en la finca arrendada, del disfrute de este, de fundamento, con las demas preceptos
invocados, a una extencion de renta mientras subsiste la imposibilidad de utilizer. la eosa
arrendada, sobre todo cuando los artfeulos 157 y 158 del Reglamento de Requisas de 13 de enero
de 1921 estatuyen claramente que las requisas de edificio se hacga a la propiedad, y es el
propietario el que puede pedir indemniza* don, uno de cuyos elementos es el precio del alquiler
que le sea satisfecho por el inmueble incautado."
We are aware that the rule in the common law is otherwise, due to its regarding a lease as- a
conveyance to the lessee of a temporary estate or title to the leased property jso that loss of
possession due to war or other fortuitous event leaves the tenant liable for the rent in the absence
of stipulation. The fundamental difference between the common law and the civil law concepts has
been outlined by the United States in Viterbo vs. Friedlander, 30 L. Ed. (U.S.) pp- 776, 778, in this
wise:
"But as to the nature and effect of a lease for years, at ' a certain rent which the lessee agrees to pay,
and containing no express covenant on the part of the lessor, the two systems differ materially. The
common law regards such a lease as the grant of an estate for years, which the lessee takes a title in,
and is" bound to pay the stipulated rent for, notwithstanding any injury by flood, fire or external
violence, at least unless the injury is such a destruction of the land as to amount to an eviction; and
by that law the lessor is under no implied covenant to repair, or even that the premises shall be fit
for the purpose for which they are leased. Fowler vs. Bott, 6 Mass. 63; 3 Kent, Com. 465, 466;
Broom, Legal Maxims, 3d ed. 213, 214; Doupe vs. Genin, 45 N. Y. 119; Kingbury vs. Westfall, 61 N. Y.
356. Naumberg vs. Young, 15 Vroom, 331; Bowe vs. Hunking, 135 Mass. 380; Man- chester
Warehouse Co. vs. Carr, L.R. 5 C.P.D. 507.

The civil law, on the other hand, regards a lease for years as mere transfer of the use and enjoyment
of the property; and holds the landlord bound, without any express covenant, to keep it in repair
and otherwise fit for use and enjoyment for the purpose for which it is leased, even when the need
of repair or the unfitness is caused by an inevitable accident, and if he does not do so, the tenant
may have the lease annulled, or the rent abated. Dig. 19, 2, 9, 2; 19, 2, 15, 1, 2; 19, 2, 25, 2; 19, 2, 39;
2 Gomez, Variae Resolutiones c. 3, sees. 1-3, 18, 19: Gregorio Lopez in 5 Partidas, tit. 8, 11. 8, 22;
Doroat, Droit Civil, pt. 1, lib. 1, tit 4, sec. 1, no. 1; sec. 3 nos. 1, 3, 6, Pothier, Contract de Louage, nos.
8, 6, 11, 22, 53, 103, 106, 189-155.

It is accordingly laid down in the Pandects, on the authority of Julian, 'If anyone has let an estate,
that, even if anything happens by vis major, he must make it good, he must stand by his contract/ si
quis fundum locaverit, ut, etiamsi quid vi majore aceidtsset, hoe ei praestaretur, pacto standum
esse; Dig. 19, 2, 9, 2; and on the authority of Ulpian, that 'A lease does not change the tnrnership,'
non solet locatio dominium mutare; Dig. 19, 2, 39; .-and that the lessee has a right of action, if he
cannot enjoy the thing which he has hired, si re quam conduxit frui non liceat, whether because his
possession, either of the whole or of part of the field, is not made good, or a house, or stable or
sheepfoldV is not repaired; and the landlord ought to warrant the tenant, dominum colono
praestare debere, against every irresistible force, omnvm vim cut resisti non potest, such as floods,
flocks of birds, or any like cause, or invasion of enemies; and if the whole crop should be destroyed
by a heavy rainfall, or the olives should be spoiled by blight, or by extraordinary heat of the sun,
solis fern;ore non assueto, it would be the loss of the landlord, damnum domini futurum; and so if
the field falls in by an earthquake, for there must be made good to the tenant a field that he can
enjoy, oportere enim agrum praestari conductori, ut frui possit; but if any loss arises from defects in
the thing itself, si qua tamen vitia ex ipsa re ortiantur, as if wine turns sour, or standing corn is
spoiled by worms or weeds, or if nothing extraordinary happens, si vero nihil extra consuetudinem
acciderit, it is the loss of the tenant, damnum coloni esse. Dig. 19, 2; 15, 1, 2." (Italics supplied)

In short, the law applies to leases the rule enunciated by the Canonists and the Bartolist School of
Post glossatorse, that "contractus qui tractum successivum habent et dependentiam de futuro, sub
conditione rebus sic stantibus intelliguntur," they are understood entered subject to the condition
that things will remain as they are, without material change.

It is also worthy of note that the lessors, through Dr. Javier ViUaruel, agreed after liberation to a
renewal of the contract of lease for another five years (from June 1, 1946 to May 31 of 1951)
without making any reservation regarding the alleged liability of the lessee company for the rentals
corresponding to,the period of occupancy of the premises by the Japanese army, and without in
sisting that the non-payment of such rental was a breach of the contract of lease. This passivity of
the lessors strongly supports the claim of the lessees that the rentals in question were verbally
waived. The proffered explanation is that the lessors could not refuse to renew the lease, because
the privilege of renewal had been granted to the lessees in the original contract. Such excuse is
untenable: if the lessors deemed that the contract had been breached by the lessee's non-payment
of the occupation rents how could they admit the lessee's right to renew a contract that the lessee
itself had violated?

But this is not all. The lessors accepted payment of current rentals from October 1945 to June 1946.
It was only in July 1946 that they insisted upon collecting also the 1942-1945 rents, and refused to
accept further payments tendered by the lessee unless their right to collect the occupation rental
was recognized or reserved. After refusing the rents from July to November 1946, unless the lessee
recognized their right to occupation rentals, the appellees (lessors) demanded rescission of the
contract and a rental of Pl,740 monthly in lieu of the stipulated F350 per month. (Exhibit "C").

This attitude of the lessors was doubly wrongful: first, because as already shown, the dispossession
by the Japanese army exempted the lessee from his obligation to pay rent for the period of its
ouster; and second, because even if the lessee had been liable for that rent, its collection in 1946
was barred by the moratorium order, Executive Order No. 32, that remained in force until replaced
by Rep. Act 342 in 1948. To apply the current rentals to the occupation obligations would amount
to enforcing them contrary to the moratorium decreed by the government.

Clearly, then, the lessor' insistence upon collecting the occupation rentals for 1942-1945 was
unwarranted in law. Hence, their refusal to accept the current rentals without, qualification placed
them in default (mora creditoris or accpiendi) with the result that thereafter, they had to bear all
supervening risks of accidental injury or destruction of the leased premises. While not expressly
declared by the Code of 1889, this result is clearly inferable from the nature and effects of mow.,
and from Articles 1185, 1452 [par. 3] and 1589).
"Art. 1185. When the obligation to deliver a certain and determinate thing arises from the
commission of a crime or misdemeanor the obligor shall not be exempted from the payment of its
value, whatever the cause of its loss may have been, unless, having offered the thing to the person
entitled to receive it, the latter should have refused without reason to accept it."

"Art. 1452. * * *.
If fungible things should be sold for a price fixed with relation to weight, number, or measure, they
shall not be at the purchaser's risk until they have been weighed, counted, or measured, unless the
purchaser should be in default."

"Art. 1589. If the person who contracted to do the wofk bound himself to furnish the materials, he
shall bear the loss in case of the destruction of the work before it is delivered, unless its acceptance
has been delayed by the default of the other party."
While there is a presumption that the loss of the thing leased is due to the fault of the lessee (Civil
Code of 1889, Art. 1563), it is noteworthy that the lessors have not invoked that presumption either
here or in the court below. On the contrary, the parties and the trial court have all proceeded and
discussed the issues taking for granted that the destruction of the leased buildings was purely
fortuitous. We see no reason for departing from that assumption and further prolonging this
litigation.

That the lessee and sublessee did not consign or deposit in court the rentals tendered to and
improperly rejected by the lessors, did not render the debtor liable for default (mora solvendi) nor
answerable for fortuitous events because, as explained by the Supreme Court of Spain in its
Sentenda of 5 June 1944
"Al exigir el art. 1176 del C6digo Civil la consignacion para liberar al deudor 710 quiere decir que
necesariamente kaya de practicorse, y no baste el ofrecimiento de pago que de aquella no fuere
seguido, a efectos de exclusion de las consecuencias de la mora solvendi." (8 Manresa, Comentarios,
5th Ed., Vol. I, p. 136).
In other words, the only effect of the failure to consign the rentals in court was that the obligation to
pay them subsisted (P.N.B. vs. Relative 92 Phil., 203) and the lessee remained liable for the amount
of the unpaid contract rent, corresponding to the period from July to November, 1946; it being
undisputed that, from December 1946 up to March 2,1948, when the commercial buildings were
burned, the defendants-appellants have paid the contract rentals at the rate of P350 per month. But
the failure to consign did not eradicate the default (mora) of the lessors nor the risk of loss that lay
upon them. (3 Castan, Der. Civ., 8th Ed., p. 145; 4 Puig Pena, Der. Civ., part. 1, p. 234; Diaz Pairo,
Teoria Gen. de las Obligaciones [3rd Ed.], Vol. 1, pp. 192-193).

In view of the foregoing, we hold:

(a) That the dispossession of the lessee from the premises by the Japanese army of occupation was
not an act of mere trespass (perturbacion de mero hecho) but one de derecho chargeable to the
lessors;

(b) That such dispossession, though not due to fault of lessors or lessee, nevertheless resulted in the
exemption of the lessee from its obligation to pay rent during the period that it was deprived of the
possession and enjoyment of the premises leased;

(c) That the insistence of the lessors to collect such rentals was unwarranted;

(d) That the lessors were not justified in refusing to accept the tender of current rentals unless the
lessee should recognize their right to the rents corresponding to the period that the lessee was not
in possession;

(e) That by their improper refusal to accept the current rents tendered by the lessee, the lessors
incurred in default (mora) and they must shoulder the subsequent accidental loss of the premises
leased;

(f) That the mora of the lessors was not cured by the failure of the lessee to make the consignation
of the rejected payments, but the lessee remained obligated to pay the amounts tendered and not
consigned by it in court.
Consequently, it was reversible error to sentence the appellants to pay P2,165 a month as
reasonable value of the occupation of the premises from July 1946, and the value of the destroyed
buildings amounting to P30,000.

Wherefore, the decision appealed from is modified in the sense that the appellant Manila Motor
Company should pay to the appellees Villaruel only the rents for the leased premises corresponding
to the period from July up to November 1946, at the rate of P350 a month, or a total of P1,750. Costs
against appellees in both instances. So ordered.

Paras, C. J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, and Endencia, JJ.,
concur.

Judgment modified.

[1] Art. 2. Sec. - The Philippines renounces war as an instrument of national policy, and adopts the
generally accepted principles of international law as part of the nations:" (Constitution of the
Philippines) - Applied in Go Kim Chan vs. Valdez 75 Phil.113; Tubo vs. Griess, 78 Phil 249; Dizon vs
Commanding General, 81 Phil. 286.