G.R. No. L-7180, March 30, 1912
RAFAEL ENRIQUEZ, ET AL., plaintiffs-appellants, vs. A.S. WATSON & CO. LTD., defendant-appellee.

FACTS

The plaintiffs, owners and lessors of a property on Escolta, Manila, filed an action against the defendant-lessee, A.S. Watson & Co. Ltd. The defendant had begun demolishing a thick, central stone wall inside the leased building, claiming it was old, weak, and occupied valuable space. The plaintiffs argued that the wall was essential for the building’s structural integrity, especially against earthquakes and typhoons, and that its removal constituted a substantial alteration of the leased premises without their consent. They sought to rescind the lease contract, obtain a permanent injunction against the demolition, and compel the restoration of the wall. The trial court modified a preliminary injunction, allowing the defendant to replace the wall with concrete pillars and arches under specific conditions, including posting a bond. The plaintiffs appealed.

ISSUE

1. Whether the lessee had the right, under the lease contract or by law, to demolish the central wall and alter the form and substance of the leased property without the lessors’ consent.
2. Whether such act justified the rescission of the lease contract.

RULING

1. No, the lessee had no right to demolish the wall. The Supreme Court held that a lessee is obligated to use the property as a careful householder and may not alter its form and substance without the owner’s express consent. The lease contract did not contain any stipulation authorizing the demolition of structural walls. The Court emphasized that in a country prone to earthquakes, such a central wall was vital for the building’s safety, and its removal constituted a substantial and unauthorized alteration.
2. Yes, the act justified rescission. The Court ruled that the defendant’s demolition of the wall, being a substantial violation of its obligations as a lessee, entitled the plaintiffs to rescind the lease contract under Article 1124 of the Civil Code (now Article 1191). The lessee’s action impaired the property’s safety and value, contravening the implied terms of the lease and the lessors’ rights.
The decision of the trial court was reversed. The Supreme Court declared the lease contract rescinded, made the preliminary injunction permanent to prohibit further demolition, and ordered the defendant to restore the wall to its original condition at its own expense. Costs were awarded against the defendant.