G.R. No.

116896 May 5, 1997

PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, petitioner,

vs.
COURT OF APPEALS, MA. TERESA S. RAYMUNDO-ABARRA, JOSE
S. RAYMUNDO, ANTONIO S. RAYMUNDO, RENE S. RAYMUNDO, and
AMADOR S. RAYMUNDO, respondents.

DAVIDE, JR., J.:

PNCC vs. CA (GR No. 116896, May 5, 1997)

FACTS:
Petitioner PNCC and private respondents entered into a Lease Agreement on
November 18, 1985 for a five (5)-year lease, commencing on the date of issuance
of the industrial clearance by the Ministry of Human Settlements to the petitioner.
It was also stated in the Agreement that rental shall be paid by the
petitioner yearly, the first annual rent shall be in the amount of Two Hundred Forty
Thousand Pesos (Php 240,000.00). On January 7, 1986, upon obtaining of
Temporary Use Permit from the Ministry of Human Settlement by the petitioner,
private respondents wrote a letter requesting the petitioner to pay the first annual
rental, they also emphasized that they had stopped considering other proposals to
lease in consideration to the existing agreement with the petitioner. However,
petitioner failed to fulfill its obligation and expressed its intention to terminate the
contract due to financial as well as technical difficulties. The petitioner also argued
that it was only obligated to pay the amount of Php 20,000.00 as payment for the
one-month period of lease, counted from January 7, 1986 (when the Permit was
issued) to February 7, 1986. This prompted the respondent to file an action against
the petitioner for specific performance with damages before the Regional Trial
Court of Pasig. The trial court and the Court of Appeals favored the respondents,
hence this petition. 
 
ISSUE: 
Whether or not the petitioner is entitled to avail the benefit of Articles 1266 and
1267 of the New Civil Code.
 
RULING:
No. Firstly, the petitioner cannot take refuge in Article 1266 since said article is
only applicable to obligations “to do”, and not to obligations “to give”. “To give”
is a prestation which consists in the delivery of a movable or an immovable thing
in order to create a real right, or for the use of the recipient, or for its simple
possession, or in order to return it to its owner. The obligation to pay rentals or
deliver the thing in a contract of lease falls within the prestation “to give”. 
 
Secondly, the principle rebus sic stantibus (a treaty or agreement remains valid
only if the same conditions prevailing at the time of contracting continue to exist at
the time of performance) neither fits in with the facts of this case. It was noted that
the petitioner has entered into the Contract of Lease with private respondents with
open eyes of the deteriorating conditions of the country since the assassination of
the late Senator NinoyAquino. 
 
The instant petition was denied.