FACTS:

The case involves a dispute between the petitioner, a lessee, and the respondent, who claimed to be the lessor of the property. The property in question was originally leased to Mr. Fernando Lopez Lim, but upon his death, his children, including Valentine Lim, became the occupants. Valentine Lim requested financial assistance from the respondent to purchase the apartment unit from the owner, the Roman Catholic Archbishop of Manila (RCAM). In exchange for the financial assistance, Valentine Lim executed a waiver in favor of the respondent. Based on this waiver, the respondent executed a contract of lease with the petitioner for a period of 3 months. However, after signing the contract and paying the rentals, the petitioner discovered that the apartment was actually owned by RCAM. When the lease expired, the respondent demanded that the petitioner vacate the premises, but the petitioner refused to comply. The respondent filed a complaint for unlawful detainer against the petitioner. The Metropolitan Trial Court (MTC) found the respondent guilty of concealment amounting to fraud and dismissed the complaint for unlawful detainer. On appeal, the Regional Trial Court (RTC) found that the concealment did not amount to fraud, but was an honest belief of the respondent that she became the owner of the property by reason of the waiver. The RTC ordered the petitioner to pay rental arrearages to the respondent for the period September 1996 to December 1997. Meanwhile, the petitioner entered into a separate lease contract with RCAM for the same property from January 1, 1998, to December 31, 1998. The Court of Appeals (CA) affirmed the RTC's ruling and ordered the petitioner to pay rental arrearages to the respondent. The petitioner filed the present Petition for Review on Certiorari to challenge the CA's decision.

ISSUES:

1. • Whether or not petitioner should be held liable to pay respondent the amount of P86,000.00 representing the alleged rental arrearages from September 1996 to December 1997.

RULING:

1. The Court held that the petitioner should not be held liable to pay respondent the amount of P86,000 representing the alleged rental arrearages from September 1996 to December 1997. The misrepresentation of respondent as the owner or lessor of the property did not amount to fraud but was merely an error. The Court also found that petitioner had been negligent in not immediately communicating with the owner of the property regarding her discovery, which implied her acknowledgment of respondent's right to sublease the property. The Court ultimately ruled in favor of the petitioner and dismissed respondent's claim for rental arrearages.

PRINCIPLES: