Puahay Lao v. Dimtoy Suarez

Summary

This case involves a lease dispute where lessors Alejandro and Dimtoy Suarez sought to eject lessee Puahay Lao for non-payment of rent and contractual violations. The lessee failed to pay monthly rentals from July to October 1960 and, crucially, failed to include the stipulated 20% liquidated damages when consigning delayed payments. The Supreme Court upheld the lessors' right to terminate the lease, ruling that the failure to pay liquidated damages constituted a material breach justifying rescission under both the contract terms and Article 1673 of the Civil Code. The Court also rejected the notion that an indefinite lease could continue indefinitely at the tenant's sole discretion, as this would violate fundamental contract principles requiring mutual consent. The decision affirmed the lower courts' orders for ejectment and payment of damages, establishing important precedent on lease termination rights and indefinite lease duration limits.