G.R. No.

L-46205 December 29, 1977

MARGARITA CACO, thru her surviving heir, CARLOS CACO,

petitioner-appellant
vs.
THE COURT OF APPEALS and BENIGNO SALAO,
respondents-appellees.

Facts:

On May 30, 1972, Margarita Caco instituted against Benigno

Salao Civil Case No. C-2428 in the Court of First Instance of Rizal
at Caloocan City, seeking the rescission of a contract of lease and
the recovery of the possession of the leased premises and the
recovery of unpaid rentals as well as attorney's fees, actual and
incidental expenses and moral damages.

The complaint 3 alleged that on February 13, 1958, the plaintiff

and defendant entered into a lease contract of a parcel of land
located in Santolan, Malabon, Rizal, containing an area of 2,638
square meters, more or less, declared under Tax No. 27013 in the
name of Martin Buenaventura and valued at P2,870.00; that the
contract of lease was for a period of five (5) years at a yearly
rental of P400.00; that on May 3, 1958, the parties executed
another contract of lease over the same parcel of land extending
the period of lease for fifteen (15) years to end on February 28,
1978 at an increased annual rental of P600.00; that in accordance
with the terms and conditions of the amended lease agreement;
the defendant obligated himself to pay the yearly rental for said lot
in the amount of P600.00 on the first day of the month of March of
every year payable in advance; that the defendant failed to pay
the yearly rental for 1972 and despite repeated demands, he still
failed to comply with his obligation; that aside from having failed
to pay the yearly rental, the defendant violated the terms of the
lease contract by (a) assigning the lease to one Amelia S. Antonio
without the knowledge and consent of the plaintiff; and (b)
allowing the present occupants of the leased premises to devote
the same to the purpose not intended by the parties; that on April
7, 1972, the plaintiff made a written demand to the defendant to
vacate the premises but the latter has ignored and chosen not to
make any reply to said demand, but instead allowed a Chinaman
to start a new construction inside the premises

Issue: W/N rescission of Contract of Lease is proper

Held:

By reason of law and equity rescission of the Contract of Lease

would have been proper and just and damages claimed by
petitioner would have been fairly awarded if not for abuse of
discretion by the respondent court involved in the case at bar. 5

It is to be noted that the private respondent transferred not only all

rights over the lease contract but the assignee Amelia S. Antonio
assumed all the obligations imposed on the lessee in said
contract. lt is clear that the intention was for Benigno Salao to
disassociate himself completely from the lease contract he had
entered into with the petitioner. This agreement is an assignment
of the lease and not a mere sub-lease of the leased premises. 7

The Court of Appeals held that the assignment made by Benigno

Salao in favor of his granddaughter, Amelia S. Antonio, does not
constitute a ground for the rescission of the contract of lease
because there is no provision in the lease contract prohibiting the
assignment of the lease.