This is an  appeal by  certiorari under Rule 46 from a judgment of the Court of Appeals.

On 8  November  1948  Inma Rohde Shotwell, successor- in-interest of the late William H. Rohde, the lessor,  sued the lessee and the assignee in the Court of First Instance of Manila to  recover from them allegedly due  and unpaid rentals from 1 January 1942 to 30 November 1945. After hearing, the Court rendered judgment

* * *  in  favor of the plaintiff and against the  defendant Manila Motor  Co., Inc., ordering the latter to pay  the former the sum of P175.00 (rental for the month of January 1945),  with  interest at the rate of  six per centum per annum  from the  date of the filing of the complaint until fully paid; and declaring the contract of lease  terminated as of the destruction of the buildings in February, 1945.  The case against  the defendant  Chartered Bank of India, Australia & China is dismissed for  lack of  evidence.  The payment of the rental due from the defendant Manila Motor Co., Inc., is suspended until the Moratorium Law has been lifted, unless the said defendant waives its right Tinder  said Law.  With costs against  the above named defendant.

From this  judgment the plaintiff appealed  to  the Court of Appeals.  The judgment appealed from was affirmed,

*  *  * with the only modification that the  payment  of  the  amount of P175.00 as rental of the  property involved in this litigation for the month of January, 1945, is  not suspended  and should be made as soon as this decision becomes final.   The costs are taxed  against the appellants.

The findings of the Court  of appeals are, as follows:

*  * * on Septempber  1, 1937,  William H.  Rhode,  now deceased, father of  plaintiff  Inma  Rohde Shotwell,  and the  Manila Motor Co., Inc., entered  into a contract of lease for 14  years, covering three parcels of land together with  all  buildings and improvements thereoit,  situated on  Ongpin, Manila, the buildings fronting on Tambakan alley (Exh. A same as Exh. 10), at a monthly rental of  P1,,050.00 for the first four  years  and P1,100.00 for the succeeding years.  Two months and five  days  later, or on November 6,  1937,  the Manila  Motor Co., Inc.  assigned, with, the  express consent of William H. Rohde (Exh. B), said lease to the defendant Chartered Bank of  India, Australia & 'China  under the following reservations:

"1. That this  assignment does not carry with  it  any of the  liabilities and obligations undertaken - and assumed by the Manila Motor Co., Inc. in  said lease;  but  that the Chartered Bank of India,  Australia & China has  the option at any time to undertake  and assume the said liabilities  and  obligations upon written  notice by registered  mail to  the lessor, William H. Rhode;

"2. That this assignment shall  in no way absolve or release the  Manila Motor Co., Inc. from the  obligations  and  liabilities  it has contracted in said  lease."   (Exhibit  B.)

There  is no  denial that the defendant Chartered Bank of India, Australia & China  never exercised its option  on  said lease, and in accordance with paragraphs 1 and 2 of the contract aforequoted, We declare that the assignment thereof Was made  just to  benefit said defendant Bank and not to work against it unless said Bank would  have exercised  the option.  Consequently, the dismissal  of the complaint with  regard to this  defendant was proper  and is hereby affirmed.

As to the other defendant, the Manila Motor Co.,  Inc., the questions at issue to be determined are whether  or not (1) the lease contract  (Exh. A)  was novated; (2) the destruction of the buildings of  the  leased properly during  the battle of liberation  in February of 1945, caused the termination of  the  lease;  (8)  the Executive Order on moratorium still  affects  the payment  of any of the rentals that might be due  the plaintiffs;  and  (4) there is any  balance of the accumulated rentals of the premises that the Manila Motor Co.,  Inc. is bound to pay to the plaintiffs, with interests thereon from the filing of this action.

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As held  by the court a quo,  "the  main portion  of the leased premises was sealed by  the  Japanese military forces, such that the defendant Manila  Motor  Co., Inc., was not able to continue engaging in  automobile business during the  Japanese  occupation, and that the said main portion of the ground floor was occupied by the  Central Garage which belonged to the then puppet government. A  small  portion of  the  groundfloor was occupied by the  Manila Food Industry which was owned and  operated by  the defendant Manila  Motor  Co.,  Inc.,  through  its  president,  Mr. Bachrach." It is part of the history  of said occupation days that the  rentals of all buildings  in general were  reduced at least to half, and the amount  of P125.00 or P175.00 paid monthly by the defendant Manila Motor Co., Inc. must have been accepted by the lessor in full payment  of said rentals, not only because  the reduction  thereof was in consonance with the general policy on rentals then prevailing, but because the lessor was  unable to  maintain the lessee in its right to occupy without hindrance  the whole  premises leased to the latter.  Anyway, the plaintiffs have not proved that defendant Manila Motor Co.,  Inc. and plaintiffs'  predecessor in interest, or Mrs. Isabel Salgado de  Rohde, agreed that the reduced  monthly rental of P125.00 or P175.00 that said defendant continued  paying during  the Japanese occupation was only in partial satisfaction of the monthly rental stipulated in the contract (Exhibit A), with the understanding that the balance would be fully liquidated after the war.

It has been stated before that the buildings on the property leased were totally destroyed in the battle for the liberation of Manila in February of 1945,  and the next question for Us to pan upon and, decide is whether  such destruction caused  the  termination  of the lease.  The old Civil Code prescribes: ,

"Art. 1543. In the lease  of things one of the parties thereto binds himself to give to the other the enjoyment  or use of a thing for a definite period and for a certain price"',

and two of the  duties or obligations of the  lessor are:

"2. To make thereon, during the lease, all  repairs necessary in order. to keep  it in serviceable condition for  the purpose for which it was  intended;  and

"3. To maintain the lessee in the peaceful  enjoyment of the lease during the entire term of the contract."   (Art. 1554.)

When the contract of lease (Exhibit A) was entered into between William H. Rohde and the Manila Motor Co., Inc., there were already buildings on the land,  and We believe with the trial judge that said defendant would not  have entered into the contract were  it not for the suitableness of those buildings which  it could and  did use in  its automobile business, and that  the conditions of the lease would have been different if there were no such buildings thereon. As the record shows,  the reason on the part of the  Manila Motor Co., Inc., to  enter into that contract on  September 1, 1937, was "that  these buildings were substantial and  the  improvements  were suitable  for the business in which we were going into, selling and repairing automobiles" (t. s. n.  p. 908).

It is true that according to the terms of the contract (Exhibit A), the lessee had the right to make alterations and improvements in the buildings now situated on the above described premises, as it may desire and  may replace all or  any of  said buildings with a new building or buildings  of  equal  or greater value,  and that all the repairs and renewals shall be for the  account of the leasee which shall  keep the premises in reasonable good repair, but these covenants which certainly were made for the benefit of the Manila Motor Co., Inc., do not and could not bind  the  lease to  make any renewals if the. latter did not so desire.  Moreover,  the  repairs and renewals referred to  in the contract were those to be carried out before the expiration of the term or other determination of the lease, which were to become the property of the lessor,  and it certainly would  be most  unfair to  give any other  interpretation to the contract, for it would  be tantamount  to transferring  the  losses  of the owner and the  lessor  for the  destruction  of the  buildings, which  he ' or  his successors-in-interest could  have  claimed  from the  War Damage  Commission, to the shoulders of the lessee  that was not at fault in the devastation caused by the ravages of war.  If under the obligation "to make all repairs  necessary  in order to keep the property leased in serviceable condition for the purpose for which it was intended"  (Art. 1554, No. 2, of the Civil Code), the lessor cannot, be compelled to rebuild the property destroyed by fortuitous event  (Lizarez vs. Hernaez, 40  Phil.  981),  We do  not  see any reason why the lessee  could be obliged to make the renewal, replacement  or  rebuilding: of the improvements for  the  benefit of  the lessor  in order to  make the lease continue in operation under circumstances  that might be disadvantageous to the lessee, when  the contract itself left that reconstruction  or replacement at  the will of the latter.  Article 1568 of  the  old  Civil Code prescribes  that:

"If the thing leased  should be lost  or either of  the contracting parties fails to comply with his undertaking, the provisions of Articles 1182  and  1183  and of  Articles 1101 and 1124 respectively shall  be observed,"

and Article 1182  provides that:

"An obligation which consists in the delivery of a determinate thing shall be extinguished  if such  thing should be  lost or destroyed without fault on the part  of the debtor and  before he is in default (mora)."

In this connection  appellees' counsel  quotes the following  from Manresa:  "There  is no room for doubt that the loss  of the thing extinguishes the  lease contract * * * " and that "by  loss of the thing  shall  be understood not only its  material and  complete  destruction, but also such essential  change of condition or state that renders it  unfit  for  the  purpose  to  which  it  was  being used" (Translation-Appellees' brief, p.  111).  Such being the case, We cannot declare that the lower court committed the  second1 of the errors assigned to  it,  and, consequently, the defendant-appellee, the Manila Motor  Co., Inc., cannot be held liable for any rents after the liberation of the City of Manila, or from February  1 to November 30, 1945, as pretended by appellees.

The part  of the  decision that suspends the payment of the rental due from the defendant  Manila  Motor Co., Inc.., until the moratorium would be  lifted, unless the said defendant waives its right under  such  law,  was in  accordance with previous  decisions  of the Supreme Court, but  the doctrine  has  been recently  changed (Royal L. Rutter vs.  Placido 3.  Esteban SC-G.  R. L-3708, May 18,  1953, and other decisions that followed), and there is now  no reason  for   such   suspension.  Defendant-appellee   Manila   Motor Co., Inc. is, therefore, in  duty bound to  pay the sum of f 175.00 as rental  of the  premises  for the month  of January,  1945.  Anyway, said defendant in its answer admits its obligation to pay that rental for said month.

The Court of Appeals found that there were buildings on the land when the contract of lease  (Exhibit A)  was entered into between William H. Rohde and  the  Manila Motor Co.,  Inc. and that the reason the latter entered into such lease  contract was "that these buildings were substantial and the improvements were suitable for the business  in which we were  going into, selling  and  repairing automobiles;" and both the trial and appellate Courts are of the opinion  '"that said defendant would not have entered into the contract were it not for the suitableness of those buildings which it could and did use in  its automobile business, and that the conditions  of the lease would have been  different  if there were no such  buildings thereon."

The destruction of the buildings during  the battle for liberation in February 1945 terminated the lease contract. Article 1568 of the Civil Code provides:

If the thing leased should be lost or  either of the contracting parties fails  to comply  with  his undertaking, the provisions of Articles 1182 and 1183 and  of Articles 1101 and 1124 respectively shall be observed.

Article .1182  of the same  Code provides:

An  obligation which consists in the delivery of a determinate thing shall be extinguished if such thing should be lost or destroyed without fault on the part of the  debtor and before he  is in default (mora).

The petitioner contends  that the destruction  of the buildings  has not terminated the  lease contract because not only the buildings  but also the land on which they had been erected formed part of the  consideration or causa of  the contract of  lease.  But the  buildings  and the land constitute an indivisible unit and the  destruction of the buildings has extinguished the obligation or terminated the lease contract.  The stipulation on the rebuilding of the destroyed improvements is potestative on the part of the lessee.  The latter, is not bound to  do  so.

The Court of Appeals found that in view of the sealing of a  large part  of the leased premises by  the Japanese military forces; occupation of a large part of the ground floor  by the Central  Garage  owned and  operated by the then  puppet Government, a small part only of the ground floor  having been left in  possession of the Manila  Food Industry which was  owned and operated by the Manila Motor Co., Inc.; and  the reduction at least to half of the rentals  then prevailing, the amount of P125 or P175 paid monthly by the defendant Manila Motor Co., Inc. must have been  accepted by the  lessor in full payment of the rentals. The  trial  court  found "that the monthly rental during the Japanese occupation was reduced by mutual agreement between the lessor  and the lessee  from P1,100 to P125  or P175."  On  appeal, the Court of Appeals found that "the evidence on record fully justifies the conclusions arrived  at by the trial judge as stated in the paragraph preceding the  dispositive  part of  the   decision quoted above."  In view of this agreement the point whether the sealing  and  occupation of a large part of the leased premises by the Imperial Japanese Army and by the.Central  Garage of the Japanese-sponsored Government was just  a  mere  trespass (perturbation de  mero  hecho)  or juridical disturbance (perturbation de derecho) need not be passed upon.

The Court of Appeals found that, with the express consent  of William H. Rohde, the lessor, the Manila Motor Co., Inc., the lessee,  assigned said lease to the defendant Chartered Bank of India, Australia & China, under the following terms and  conditions:

1. That this assignment does not carry with it any of the liabilities  and obligations  undertaken and  assumed by  the  Manila Motor Co., Inc. in said lease; but that the Chartered Bank of India, Australia & China has  the option at any time to  undertake and assume the said liabilities  and obligations upon written notice by registered mail  to the lessor, William H. Rohde;
   
   
2. That this assignment  shall  in no way absolve or release the Manila Motor Co.,  Inc. from the obligations and liabilities it has contracted in said lease.  (Exhibit B.)

and that the  Bank did not  exercise  its  option to under take and assume  the  liabilities  and obligations  of  the Manila  Motor Co.   For that reason  the Bank cannot be held liable for any amount  of rental allegedly due  from and unpaid by the lessee to  the  lessor or his successor-in- interest.

Finding  no error in  the  judgment under  review we affirm it, with costs against  the  petitioner.

Paras, C. J., Bengzon, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., and Endencia, JJ., concur.