RACELIS V SPOUSES GERMIL JAVIER and REBECCA JAVIER G.R. No. 189609 January 29, 2018

FACTS

The respondents, Spouses Germil and Rebecca Javier offered to purchase a property from the petitioner Victoria Racelis. Since they could not afford to pay the price, they offered to lease the property while they raise enough money which were also agreed to by the petitioner. The respondents tendered a sum of representing "initial payment or goodwill money." They continued to pay rental fees but later on refused to pay when the petitioner had requested them to vacate the property and terminated the lease agreement after the latter had realized that they had no genuine intention of purchasing the property. The respondents refused to vacate and that made the petitioner to disconnect the electrical services of the property and filed an ejectment complaint against the respondents. The Metropolitan Trial Court dismissed the complaint and ruled that the respondents were entitled to suspend the payment of rent under Article 1658 of the Civil Code due to petitioner’s act of disconnecting electric service over the property. Also, it declared that the their obligation had been extinguished and that the advanced rent and deposit were sufficient to cover their unpaid rent. On appeal, the Regional Trial Court reversed the lower court’s decision. They ruled that the amount paid by the spouses was not given as an advanced payment for rental but as part of the purchase price of the property. An appeal was file by the spouses in the Court of Appeals where it ruled in favor of them. Aggrieved, the petitioner filed this present petition for review.

ISSUE
1. Whether or not respondents Spouses Germil and Rebecca Javier can invoke their right to suspend the payment of rent under Article 1658 of the Civil Code

RULING
1. No. Article 1658 of the Civil Code allows a lessee to postpone the payment I of rent if the lessor fails to either (1) "make the necessary repairs" on the property or (2) "maintain the lessee in peaceful and adequate enjoyment of the property leased." This provision implements the obligation imposed on lessors under Article 1654(3) of the Civil Code. However, this rule will not apply in the present case because the lease had already expired when petitioner requested for the temporary disconnection of electrical service. Petitioner demanded respondents to vacate the premises however instead of surrendering the premises to petitioner, respondents unlawfully withheld possession of the property. Respondents continued to stay in the premises until they moved to their new residence. At that point, petitioner was no longer obligated to maintain respondents in the "peaceful and adequate enjoyment of the lease for the entire duration of the contract." Therefore, respondents cannot use the disconnection of electrical service as justification to suspend the payment of rent.
Assuming that respondents were entitled to invoke their right under Article 1658 of the Civil Code, this does exonerate them from their obligation under Article 1657 of the Civil Code "to pay the price of the lease according to the terms stipulated." Lessees who exercise their right under Article 1658 of the Civil Code are not freed from the obligations imposed by law or contract. Moreover, respondents' obligation to pay rent was not extinguished when they transferred to their new residence. Respondents are liable for a reasonable amount of rent for the use and continued occupation of the property upon the expiration of the lease. To hold otherwise would unjustly enrich respondents at petitioner's expense.