Case Summary (G.R. No. 204766)
Lease Agreement and Fire Incident
The lease included a stipulation regarding damages to the property, allowing the lessee to terminate the contract if the property became uninhabitable due to causes like fire. Following the fire that accidentally originated from an overheated electric fan, the respondent informed the petitioner that the property was uninhabitable and requested to pre-terminate the lease, along with reimbursement of the security deposit and advance rental payments.
Dispute Over Responsibility
The petitioner rejected the respondent's request for pre-termination, attributing the cause of the fire to gross negligence by the lessee. The Bureau of Fire Protection's report indicated that the fire was accidental, leading to conflicting positions between the parties. Witness testimony during the trial affirmed the accidental nature of the fire, implying no negligence on the part of the respondent.
Trial Court Decision
On October 23, 2000, the Regional Trial Court sided with the respondent, allowing the pre-termination of the lease. The court found that the respondent had successfully established that the fire was accidental, rendering the property uninhabitable without attributing fault to the lessee. The trial court also ruled that a public document was not required for the lease’s pre-termination.
Court of Appeals Ruling
Upon appeal, the Court of Appeals affirmed the trial court's decision, maintaining that the burden of proof for negligence fell upon the petitioner, and emphasizing that the evidence presented did not prove negligence on the part of the respondent. The appellate court acknowledged the applicant’s confusion between accident and negligence but upheld the trial court's conclusion regarding the respondent's right to pre-terminate the contract.
Petition for Review
The petitioner contested the appellate court's ruling, claiming it erroneously placed the burden of proof on them and misinterpreted the terms regarding accidental damage under the lease. They argued that the contractual stipulations had been violated, and therefore the respondent was not entitled to reimbursement as claimed.
Supreme Court's Findings
The Supreme Court reviewed the appellate court’s findings, emphasizing the contractual clause that allowed pre-termination in the event of damage rendering the premises unlivable. It affirmed that the fire was indeed accide
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Case Overview
- The case is a petition for review regarding the decision of the Court of Appeals (CA) concerning a lease contract between Felsan Realty & Development Corporation (Petitioner) and the Commonwealth of Australia (Respondent).
- The petition was filed following the CA's decision on December 2, 2004, which affirmed the Regional Trial Court's (RTC) ruling allowing the Respondent to pre-terminate the lease contract due to a fire incident.
Background of the Case
- Felsan Realty & Development Corporation owned a three-storey duplex residential house located in San Lorenzo Village, Makati City.
- On February 25, 1997, the Commonwealth of Australia entered a two-year lease for the property, with the lease set to end on February 21, 1999, at a monthly rental of P100,000.00.
- The Respondent paid P200,000.00 as a security deposit and P2,400,000.00 as advance rentals for the entire lease term.
- A fire broke out on November 4, 1997, which significantly damaged the premises, leading the Respondent to claim the property was uninhabitable.
Incident and Initial Claims
- The fire was reported to have been caused accidentally by an overheated electric fan according to the Bureau of Fire Protection.
- Following the incident, the Respondent requested to terminate the lease effective November 4, 1997, and sought refunds for advance rentals and the security deposit.
- The Petitioner rejected this request, arguing the fire was due to the Respondent's negligence.
Legal Proceedings
- The Respondent filed a complaint on November 13, 1998, claim