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Chua Tee Dee v.

Facts: Manuel Alba, the president of Agricom, had entered into a lease agreement
with Amado Dee where to lease the rubber plantation of Dee, named Pioneer
Enterprises. Among the stipulations in the contract was the payment of deposit in
the amount of P135,000 with 2% interest per month in case as penalty, further
stipulating automatic termination and back payment of back rentals in case of nonpayment of rentals for three months. The contract also stipulated that Agricom had
the duty to maintain Dee in the quiet peaceful possession and enjoyment of the
leased premises.
On May 1985, a labor case for illegal dismissal and unfair labor practice was filed
against Agricom, Amado Dee (Chua Tee Dees husband) and Pioneer, which dragged
on for years. The labor arbiter held that the termination was illegal. The
respondents were ordered to pay its employees separation pay and backwages, but
the complaint for unfair labor practice was dismissed for lack of merit.
Aside from the labor case, Pioneer, complained of being pestered by
individuals who claimed portions of the plantation as their own property,
prevented it from operating fully the agreed area stated in the lease contract.
complained that the death of Pioneers foreman sometime in 1990
exacerbated the unresolved labor problem.

It also

Later on, Pioneer defaulted in its monthly payments, prompting Agricom to file a
complaint for the collection of the amount. Dee asserted that Agricom committed
breach of contract for its failure to maintain her in peaceful possession and
enjoyment of the leased premises. The breach, in turn, entitled her to suspend
payment of rentals.
In the meantime, on June 1991, the Agricom extended a personal loan of P30,000 to
Lillian Carriedo as evidenced by a voucher and a personal receipt signed by
Carriedo. Then judgment was finally rendered, the complaint was dismissed and the
lease contract terminated, the court stating that it was Agricoms duty as lessor to
maintain the lessee in peaceful possession and enjoyment of the leased premises.
Upon motion for recommendation, the lower court reversed its own ruling, ordering
Dee to pay Agricom back rentals and rentals for the first three years of the lease
already paid for. The CA affirmed the order.
Dees Contention: The suspension of the payment of rentals is justified by the fact
that the private respondent Agricom breached its lease contract with her, claims
that the private respondent failed to maintain her in a quiet and peaceful enjoyment
of the leased premises.
Issue: Is Dee still liable for the back rentals, including those that were already paid?

Held: On the issue of suspension of payment of rentals, Dee anchors her argument
on Art. 1658, NCC, which entitles the lessee to suspend payment of rent in case the
lessor fails to make the necessary repairs or to maintain the lessee in peaceful and
adequate enjoyment of the property leased. Dee asserted that she was harassed by
The cause or essential purpose in a contract of lease is the use or enjoyment of a
thing.56 It is consensual, bilateral, onerous and commutative, the owner
temporarily grants the use of his or her property to another who undertakes to pay
rent therefor. In the case at bar, petitioner Chua Tee Dee is the lessee of the private
respondent Agricom. As lessor, the Agricom had the duty to maintain the petitioner
in the peaceful and adequate enjoyment of the leased premises. Such duty was
made as part of the contract of lease entered into by the parties.
The duty to maintain the lessee in the peaceful and adequate enjoyment
of the lease for the duration of the contract is merely a warranty that the
lessee shall not be disturbed in his legal, and not physical, possession. In
the present case, however, petitioner had not been disturbed in her legal
possession of the property as she did not file any suit against any of the
As to the claims of loss due to the labor dispute, the SC held that Dee
failed to prove that she suffered any loss from the labor case that was
filed against her enterprise and her husband. During the period of pendency
of the labor case, Dee regularly paid the monthly rentals. It was only after the labor
case has been resolved that she started to fail to pay her rentals, strongly indicating
that the labor case has not dampened her peaceful and adequate possession of the
leased premises.
It was ruled that Dee should not be made to pay rentals for the first three years of
the lease, since those rentals were already paid for. Moreover, the personal loan
extended by Dee to Lillian Carriedo should not be charged against Agricom. While it
is true that the petitioner and Carriedo had agreed that the personal loan of the
latter shall be chargeable against Agricoms account, the private respondent is
not privy to the agreement; nor did it agree to pay the said loan. It must be stressed
that the private respondent has a personality separate and distinct from its