Facts:

In the case of The Bachrach Motor Co., Inc. vs. Cipriano E. Unson, A.D. Williams, and Jorge B. Vargas, decided on December 31, 1926, the appellant, Bachrach Motor Co., Inc., filed a suit against the Secretary of Commerce and Communications (Cipriano E. Unson), the Director of Public Works (A.D. Williams), and the Director of Lands (Jorge B. Vargas). The litigation arises from a lease agreement executed on November 3, 1921, wherein the Director of Lands, with the approval of the Secretary of Agriculture and Natural Resources, leased a parcel of land in the Port Area of Manila to the appellant for 25 years at an annual rental of ₱2,709.13 for the first ten years. The lease required the appellant to commence construction of permanent improvements within six months and complete them by May 3, 1923.

On March 9, 1923, the Director of Lands notified the plaintiff of its failure to start construction and offered a 15-day period to show cause why the contract should not be rescinded. Su

...

Facts:

Lease Agreement and Obligations

• On November 3, 1921, the Director of Lands, with the approval of the Secretary of Agriculture and Natural Resources, executed a 25-year lease in favor of Bachrach Motor Co., Inc. (plaintiff) for a parcel of land in the Port Area, Manila. The lease covered lots Nos. 1 to 11, Block 1, Reclamation No. 1, Manila Harbor, with an area of 7,086.1 square meters. The annual rent was P2,709.13 for the first ten years, payable in advance.
• The lease required the plaintiff to commence construction of permanent buildings and improvements for industrial, business, and commercial purposes within six months from the execution of the lease and to complete the construction by May 3, 1923.

Failure to Comply with Lease Terms

• On March 9, 1923, the Director of Lands notified the plaintiff that it had not commenced construction within the stipulated period and gave the plaintiff 15 days to show cause why the lease should not be rescinded.
• On March 12, 1923, the plaintiff responded, citing financial difficulties and proposing either the cancellation of the lease or an indefinite extension of time for improvements. The plaintiff also stated that if the lease were to be canceled, it should be done immediately to avoid further rental payments.

Government's Response and Plaintiff's Actions

• On March 27, 1923, the Director of Lands replied, stating that the plaintiff’s request for an extension would be given proper consideration. The plaintiff continued to pay rent, which the Director of Lands accepted, and the plaintiff made improvements to the land at considerable expense.

Cancellation of Lease

• On December 3, 1924, the Director of Lands issued an order canceling the lease, citing the plaintiff’s failure to construct the required improvements and the government’s need to reserve the land for railroad purposes. The order was approved by the Acting Secretary of Agriculture and Natural Resources on December 15, 1924.
• The plaintiff contested the cancellation, arguing that it was illegal and void for several reasons, including estoppel, lack of authority, and failure to compensate for improvements made.

Refusal to Approve Building Plans

• On July 1, 1925, the plaintiff submitted building plans to the Director of Public Works and the Secretary of Commerce and Communications for approval, as required by the lease and Section 63 of Act No. 2874. The defendants refused to approve the plans, citing the cancellation of the lease.

Issue:

1. Whether the cancellation of the lease by the Director of Lands was valid.
2. Whether the government was estopped from canceling the lease after accepting rent and allowing the plaintiff to make improvements.
3. Whether the refusal of the Director of Public Works and the Secretary of Commerce and Communications to approve the plaintiff’s building plans was lawful.
4. Whether the plaintiff was entitled to a refund of rent paid after the cancellation of the lease.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)