Case Digest: Iloilo Jar Coporation vs Comglasco Corporation, 815 SCRA 1, G.R. No. 219509

Iloilo Jar Coporation vs Comglasco Corporation, 815 SCRA 1, G.R. No. 219509, January 18, 2017

Subject: Obligations and Contracts

FACTS

On August 16, 2000, petitioner Iloilo Jar Corporation (Iloilo Jar), as lessor, and respondent Comglasco Corporation/Aguila Glass (Comglasco), as lessee, entered into a lease contract over a portion of a warehouse building. The term of the lease was for a period of three (3) years or until August 15, 2003.

On December 1, 2001, Comglasco requested for the pre-termination of the lease effective on the same date. Iloilo Jar, however, rejected the request on the ground that the pre-termination of the lease contract was not stipulated therein. Despite the denial of the request for pre-termination, Comglasco still removed all its stock, merchandise and equipment from the leased premises on January 15, 2002. From the time of the withdrawal of the equipment, and notwithstanding several demand letters, Comglasco no longer paid all rentals accruing from the said date.

On September 14, 2003, Iloilo Jar sent a final demand letter to Comglasco, but it was again ignored. Consequently, Iloilo Jar filed a civil action for breach of contract and damages before the RTC on October 10, 2003.

On June 28, 2004, Comglasco filed its Answer and raised an affirmative defense, arguing that by virtue of Article 1267 of the Civil Code, it was released from its obligation from the lease contract. It explained that the consideration thereof had become so difficult due to the global and regional economic crisis that had plagued the economy. Likewise, Comglasco admitted that it had removed its stocks and merchandise but it did not refuse to pay the rentals because the lease contract was already deemed terminated. Further, it averred that though it received the demand letters, it did not amount to a refusal to pay the rent because the lease contract had been pre-terminated in the first place.

ISSUE

Whether or not petitioner’s contention has merit.

RULING

No.

Under Art. 1267, when the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part. However, the court ruled that the article applies to obligations to do and not to obligations to give.

In this case, the respondent cannot invoke Art 1267 of the NCC in not paying their rent because the obligation to pay rentals or deliver the thing in a contract of lease falls within the prestation "to give".