Immaculate Conception Academy v. Ama Computer College

Summary

This case involved a lease contract dispute between Immaculate Conception Academy (ICA) and AMA Computer College over a structurally defective building. AMA leased ICA's three-storey building for 10 years but discovered serious structural defects after a municipal inspection revealed multiple cracks, deflections, and vibrations making the building unsafe for occupancy. AMA rescinded the contract and demanded reimbursement. The Supreme Court ruled that while AMA was not justified in rescinding based on alleged fraudulent concealment (since the defects were observable during inspection), the building was indeed structurally unsafe. The Court ordered ICA to return AMA's deposits and advance rentals but awarded exemplary damages to ICA and Dr. Campos' heirs due to AMA's reckless fraud allegations. The decision balanced contractual obligations with safety concerns under Article 1660 of the Civil Code.