SAMSON VS CA (DEGREE OF
DILIGENCE)
R-santos leased a commercial unit from Susana
Realty for almost 20 yrs on a yearly basis.
However, the latter informed the R-santos that
the leased that is to expire will not be renewed.
Nonetheless, R-santos continued occupying the
subject property beyond the extended term.
R-santos received a letter from Susan Realty
regarding the increase in rent with retroactive
effect.
Few days later, P-samson offered to buy the R’s
store and his right to lease the subject premises.
Upon agreement, the parties signed the proposal
and R paid 150k with the balance that shall be
paid upon renewal of the contract. Few months
later, P was directed to vacate the premises due
to R’s failure to renew his lease. Thus, P filed an
action for damages on the ground of fraud and
bad faith against R. P contended that R stated in
the proposal that the lease was impliedly
renewed and this misrepresentation induced him
to purchase the store and leasehold right of R.
The CA modified the decision of the RTC after
finding out that R did not exercise bad faith/
fraud. Hence this petition for review.
ISSUE: WON R-santos is guilty of bad faith/
fraud.
RULING: the court ruled that R-Santos is guilty
of fraud/ bad faith in representing that the lease
has been impliedly renewed. Hence, this induced
P to enter into a contract with R-santos.
“Bad faith is essentially a state of mind
affirmatively operating with furtive design or
with some motive of ill-will. It does not simply
connote bad judgment or negligence. thus
synonymous with fraud and involves a design to
mislead or deceive another, not prompted by an
honest mistake as to one's rights or duties, but
by some interested or sinister motive.”
“In contracts, the kind of fraud that will vitiate
consent is one where, through insidious words or
machinations of one of the contracting parties,
the other is induced to enter into a contract
which, without them, he would not have agreed
to. This is known as dolo causante or causal
fraud which is basically a deception employed
by one party prior to or simultaneous to the
contract in order to secure the consent of the
other” Which is the case in this case (?)
The Lessors letter to Rled him to believe that the
lease was impliedly renewed and formal renewal
will be made upon arrival of the owner. This was
also admitted by the P himself. Thus, from the
start, it was known to both parties that, insofar
as the agreement regarding the transfer of
private respondent's leasehold right to petitioner
was concerned, the object thereof relates to a
future right.
After careful examination of records. The
court sustained the lower courts decision that
R was neither guilty of fraud/bad faith in
claiming that there was implied renewal in his
leased. Causal fraud or bad faith on the part
of one of the contracting parties which
allegedly induced the other to enter into a
contract must be proved by clear and
convincing evidence. This petitioner failed to
do