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Lease Dispute: Equal Fault Ruling

The petitioner and respondent entered into a 5-year lease contract for a fishpond. However, the fishpond was demolished by court sheriffs during the lease period. The respondent filed a damages case claiming the petitioner violated the lease by not allowing peaceful enjoyment of the property. The trial court found the lease void as the property actually belonged to the state. The appellate court disagreed, finding the respondent was an innocent party. However, the Supreme Court ruled the parties were in pari delicto (equal fault) as the respondent was aware the petitioner's lease application for the property had not been approved, indicating a lack of ownership, so neither party could recover from the other.

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Marjurie Quince
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65 views1 page

Lease Dispute: Equal Fault Ruling

The petitioner and respondent entered into a 5-year lease contract for a fishpond. However, the fishpond was demolished by court sheriffs during the lease period. The respondent filed a damages case claiming the petitioner violated the lease by not allowing peaceful enjoyment of the property. The trial court found the lease void as the property actually belonged to the state. The appellate court disagreed, finding the respondent was an innocent party. However, the Supreme Court ruled the parties were in pari delicto (equal fault) as the respondent was aware the petitioner's lease application for the property had not been approved, indicating a lack of ownership, so neither party could recover from the other.

Uploaded by

Marjurie Quince
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as RTF, PDF, TXT or read online on Scribd
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Facts:

In February 1986, Petitoner Menchavez and Respondent Teves, Jr. executed a contract of
lease for a period of five years. During the lease period, the Cebu Regional Trial Court sheriffs
demolished the fishpond dikes constructed by respondent Teves. Teves subsequently filed for
damages. He alleged that the lessors had violated their Contract of Lease on the grounds of the
provision that they were not able to have peaceful and adequate enjoyment of the property
during the agreed lease period. Respondent also adds that previous finding of a trial court was
withheld from him wherein the petitioners were ordered to remove the dikes that were illegally
constructed.

The RTC declared the Contract of Lease between both parties as void ab initio as the
disputed property was under the propery of the State. RTC ruled in favor of the petitioners.
Respondent elevated the case to the CA. The CA disagreed with the RTC’s ruling that both
parties were at equal fault or pari delicto. While there was negligence on the part of the
respondent for having failed to verify the ownership of the property, there was no evidence that
he had knowledge of the petitioner’s lack of ownership. Thus, this petition was made.

Respondent citing Art. 1412 of the Civil Code, contends that he can recover from
petitioners, because he is an innocent party to the Contract of Lease. Petitioners allegedly
induced him to enter into it through serious misrepresentation.

Issue:

Were the Parties in Pari Delicto?

Ruling:

Unquestionably, petitioners leased out a property that did not belong to them, one that they had no
authority to sublease. The trial court correctly observed that petitioners still had a pending lease
application with the State at the time they entered into the Contract with respondent.

Contrary to respondents contention, he had notice of their doubtful ownership of the fishpond.
Respondent himself admitted that he was aware that the petitioners’ lease application for the fishpond
had not yet been approved. Thus, he knowingly entered into the Contract with the risk that the application
might be disapproved. Noteworthy is the fact that the existence of a fishpond lease application
necessarily contradicts a claim of ownership. That respondent did not know of petitioners’ lack of
ownership is therefore incredible.

The evidence of respondent himself shows that he negotiated the lease of the fishpond with both Juan
Menchavez Sr. and Juan Menchavez Jr. in the office of his lawyer, Atty. Jorge Esparagoza. Both parties
are equally at fault, neither may recover against the other.

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