G.R. No. L-1802 - Reyes vs. Caltex , Inc.

On December 23, 1940, Toribio Reyes (lessor) and Caltex (Philippines) Inc. (lessee) executed a written lease of two parcels of land in Barrio Baclaran, Paranaque, Rizal.
The lease term was ten years, renewable for another ten at the lessee’s option, at a monthly rental of ₱120.00 for the first term and ₱150.00 for the renewal, payable in advance within the first ten days of each month.

Paragraph 6 of the contract allowed the lessee to terminate on thirty days’ written notice if structures were destroyed by fire or storm, if prevented from distributing petroleum products, or if the business became unduly burdensome; rent would be prorated to termination.

In December 1941, Japanese troops seized the premises and used them as a sentry post. Lessee officers (Americans) were interned, and Caltex operations ceased for the duration of the occupation.
Upon liberation, Caltex resumed possession and tendered rent only from February 1945 onward, leaving unpaid rent from January 1942 through January 1945 (₱6,900.00).

Lessor sued in the Court of First Instance of Rizal to annul the lease and recover unpaid rent.
The trial court applied Articles 1554 and 1575 of the Civil Code, held that the occupation excused payment, and ruled for the defendant-lessee.

Applicability of Articles 1554, 1575, and 1560 of the Civil Code to a commercial lease occupied by enemy forces.
Whether the Japanese seizure constitutes a “perturbación de mero hecho” relieving the lessee of rent obligations under Article 1560.
Whether Article 1575 (rent reduction for loss of fruits in agricultural leases) applies to a lease for gasoline‐distribution premises.
Whether the lessee properly invoked the contract’s termination clause in paragraph 6.