Republic of the Philippines

Supreme Court
Manila

SECOND DIVISION

REPUBLIC OF THE PHILIPPINES G.R. No. 194880

and NATIONAL POWER
CORPORATION, both represented Present:
by the PRIVATIZATION
MANAGEMENT OFFICE, CARPIO, J., Chairperson,
Petitioners, BRION,
PEREZ,
- versus - SERENO, and
REYES, JJ.

SUNVAR REALTY DEVELOPMENT

CORPORATION, Respondent. Promulgated:

June 20, 2012

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DECISION

SERENO, J.:

This is a Rule 45 Petition questioning the Decision of the Regional Trial

Court (RTC) of Makati City, which ordered the dismissal of the Complaint for
unlawful detainer filed by petitioners herein with the Metropolitan Trial Court.

Petitioners Republic of the Philippines (Republic) and National Power

Corporation (NPC) are registered co-owners of several parcels of land located
along Pasong Tamo Extension and Vito Cruz in Makati City, and covered by four
Transfer Certificates of Title (TCTs).[1] The main subject matter of the instant
Petition is one of these four parcels of land covered by TCT No. 458365, with an
area of approximately 22,294 square meters (hereinafter, the subject property).
Eighty percent (80%) of the subject property is owned by petitioner Republic,
while the remaining twenty percent (20%) belongs to petitioner NPC. [2] Petitioners
are being represented in this case by the Privatization Management Office (PMO),
which is the agency tasked with the administration and disposal of government
assets.[3] Meanwhile, respondent Sunvar Realty Development Corporation (Sunvar)
occupied the subject property by virtue of sublease agreements, which had in the
meantime expired.

The factual antecedents of the case are straightforward. On 26 December

[4]
1977, petitioners leased the four parcels of land, including the subject property, to
the Technology Resource Center Foundation, Inc., (TRCFI) for a period of 25
years beginning 01 January 1978 and ending on 31 December 2002.[5] Under the
Contract of Lease (the main lease contract), petitioners granted TRCFI the right to
sublease any portion of the four parcels of land.[6]

Exercising its right, TRCFI consequently subleased a majority of the subject

property to respondent Sunvar through several sublease agreements (the sublease
agreements).[7]Although these agreements commenced on different dates, all of
them contained common provisions on the terms of the sublease and were
altogether set to expire on 31 December 2002, the expiration date of TRCFIs main
lease contract with petitioners, but subject to renewal at the option of respondent:[8]

The term of the sublease shall be for an initial period of [variable] years
and [variable] months commencing on [variable], renewable for another twenty-
five (25) years at SUNVARs exclusive option.[9]

According to petitioners, in all the sublease agreements, respondent Sunvar

agreed to return or surrender the subleased land, without any delay whatsoever
upon the termination or expiration of the sublease contract or any renewal or
extension thereof.[10]

During the period of its sublease, respondent Sunvar introduced useful

improvements, consisting of several commercial buildings, and leased out the
spaces therein.[11] It also profitably utilized the other open spaces on the subject
property as parking areas for customers and guests.[12]

In 1987, following a reorganization of the government, TRCFI was

dissolved. In its stead, the Philippine Development Alternatives Foundation
(PDAF) was created, assuming the functions previously performed by TRCFI.[13]

On 26 April 2002, less than a year before the expiration of the main lease
contract and the sublease agreements, respondent Sunvar wrote to PDAF as
successor of TRCFI. Respondent expressed its desire to exercise the option to
renew the sublease over the subject property and proposed an increased rental rate
and a renewal period of another 25 years. [14]On even date, it also wrote to the
Office of the President, Department of Environment and Natural Resources and
petitioner NPC. The letters expressed the same desire to renew the lease over the
subject property under the new rental rate and renewal period.[15]

On 10 May 2002, PDAF informed respondent that the notice of renewal of

the lease had already been sent to petitioners, but that it had yet to receive a
response.[16] It further explained that the proposal of respondent for the renewal of
the sublease could not yet be acted upon, and neither could the proposed rental
payments be accepted.[17] Respondent acknowledged receipt of the letter and
requested PDAF to apprise the former of any specific actions undertaken with
respect to the said lease arrangement over the subject property.[18]

On 03 June 2002, six months before the main contract of lease was to expire,
petitioner NPC through Atty. Rainer B. Butalid, Vice-President and General
Counsel notified PDAF of the formers decision not to renew the contract of lease.
[19]
In turn, PDAF notified respondent of NPCs decision.[20]

On the other hand, petitioner Republic through then Senior Deputy

Executive Secretary Waldo Q. Flores likewise notified PDAF of the formers
decision not to renew the lease contract.[21] The Republic reasoned that the parties
had earlier agreed to shorten the corporate life of PDAF and to transfer the latters
assets to the former for the purpose of selling them to raise funds. [22] On 25 June
2002, PDAF duly informed respondent Sunvar of petitioner Republics decision not
to renew the lease and quoted the Memorandum of Senior Deputy Executive
Secretary Flores.[23]
 On 31 December 2002, the main lease contract with PDAF, as well as its
sublease agreements with respondent Sunvar, all expired. Hence, petitioners
recovered from PDAF all the rights over the subject property and the three other
parcels of land. Thereafter, petitioner Republic transferred the subject property to
the PMO for disposition. Nevertheless, respondent Sunvar continued to occupy the
property.

On 22 February 2008, or six years after the main lease contract expired,
petitioner Republic, through the Office of the Solicitor General (OSG), advised
respondent Sunvar to completely vacate the subject property within thirty (30)
days.[24] The latter duly received the Notice from the OSG through registered mail,
[25]
but failed to vacate and remained on the property.[26]

On 03 February 2009, respondent Sunvar received from respondent OSG a

final notice to vacate within 15 days.[27] When the period lapsed, respondent Sunvar
again refused to vacate the property and continued to occupy it.

On 02 April 2009, the PMO issued an Inspection and Appraisal Report to

determine the fair rental value of the subject property and petitioners lost income a
loss arising from the refusal of respondent Sunvar to vacate the property after the
expiration of the main lease contract and sublease agreements. [28] Using the market
comparison approach, the PMO determined that the fair rental value of the subject
property was 10,364,000 per month, and that respondent Sunvar owed petitioners
a total of 630,123,700 from 01 January 2002 to 31 March 2009.[29]

On 23 July 2009, petitioners filed the Complaint dated 26 May 2009 for
unlawful detainer with the Metropolitan Trial Court (MeTC) of Makati City.
Petitioners prayed that respondent Sunvar be ordered to vacate the subject property
and to pay damages for the illegal use and lost income owing to them:

WHEREFORE, PREMISES CONSIDERED, it is most respectfully

prayed that after proper proceedings, judgment be rendered:

1. Ordering defendant SUNVAR REALTY DEVELOPMENT

CORPORATION and all persons, natural and juridical, claiming rights under it,
to vacate the subject property and peacefully surrender the same, with the
useful improvements therein, to the plaintiffs or to their authorized
representative; and
 2. Ordering defendant SUNVAR REALTY DEVELOPMENT
CORPORATION to pay plaintiffs damages in the amount of SIX HUNDRED
THIRTY MILLION ONE HUNDRED TWENTY THREE THOUSAND
SEVEN HUNDRED PESOS (630,123,700.00) for the illegal and
unauthorized use and occupation of the subject property from January 1, 2003
to March 31, 2009, and the amount of TEN MILLION THREE HUNDRED
SIXTY-FOUR THOUSAND PESOS (10,364,000.00) per month from April 1,
2008 until the subject property, together with its improvements, are completely
vacated and peacefully surrendered to the plaintiffs or to their authorized
representative.[30]

Respondent Sunvar moved to dismiss the Complaint and argued that the
allegations of petitioners in the Complaint did not constitute an action for unlawful
detainer, since no privity of contract existed between them. [31] In the alternative, it
also argued that petitioners cause of action was more properly an accion
publiciana, which fell within the jurisdiction of the RTC, and not the MeTC,
considering that the petitioners supposed dispossession of the subject property by
respondent had already lasted for more than one year.

In its Order dated 16 September 2009, the MeTC denied the Motion to
Dismiss and directed respondent Sunvar to file an answer to petitioners Complaint.
[32]
The lower court likewise denied the Motion for Reconsideration [33] filed by
respondent.[34] Respondent later on filed its Answer[35] to the Complaint.[36]

Despite the filing of its Answer in the summary proceedings for ejectment,
respondent Sunvar filed a Rule 65 Petition for Certiorari with the RTC of Makati
City to assail the denial by the MeTC of respondents Motion to Dismiss.[37]

In answer to the Rule 65 Petition of respondent, petitioners placed in issue

the jurisdiction of the RTC and reasoned that the Rules on Summary Procedure
expressly prohibited the filing of a petition for certiorari against the interlocutory
orders of the MeTC.[38] Hence, they prayed for the outright dismissal of
the certiorari Petition of respondent Sunvar.

The RTC denied the motion for dismissal and ruled that extraordinary
circumstances called for an exception to the general rule on summary proceedings.
[39]
Petitioners filed a Motion for Reconsideration, [40] which was subsequently
denied by the RTC.[41] Hence, the hearing on the certiorari Petition of respondent
proceeded, and the parties filed their respective Memoranda.[42]
 In the assailed Order dated 01 December 2010, which discussed the merits
of the certiorari Petition, the RTC granted the Rule 65 Petition and directed the
MeTC to dismiss the Complaint for unlawful detainer for lack of jurisdiction.
[43]
The RTC reasoned that the one-year period for the filing of an unlawful detainer
case was reckoned from the expiration of the main lease contract and the sublease
agreements on 31 December 2002. Petitioners should have then filed an accion
publiciana with the RTC in 2009, instead of an unlawful detainer suit.

Hence, the instant Rule 45 Petition filed by petitioners.[44]

I
Petitioners Resort to a Rule 45 Petition

Before the Court proceeds with the legal questions in this case, there are
procedural issues that merit preliminary attention.

Respondent Sunvar argued that petitioners resort to a Rule 45 Petition for

Review on Certiorari before this Court is an improper mode of review of the
assailed RTC Decision. Allegedly, petitioners should have availed themselves of a
Rule 65 Petition instead, since the RTC Decision was an order of dismissal of the
Complaint, from which no appeal can be taken except by a certiorari petition.

The Court is unconvinced of the arguments of respondent Sunvar and holds

that the resort by petitioners to the present Rule 45 Petition is perfectly within the
bounds of our procedural rules.

As respondent Sunvar explained, no appeal may be taken from an order of

the RTC dismissing an action without prejudice, [45] but the aggrieved party may file
a certiorari petition under Rule 65.[46] Nevertheless, the Rules do not prohibit any
of the parties from filing a Rule 45 Petition with this Court, in case only questions
of law are raised or involved.[47] This latter situation was one that petitioners
found themselves in when they filed the instant Petition to raise only questions of
law.

In Republic v. Malabanan,[48] the Court clarified the three modes of appeal

from decisions of the RTC, to wit: (1) by ordinary appeal or appeal by writ of error
under Rule 41, whereby judgment was rendered in a civil or criminal action by the
RTC in the exercise of its original jurisdiction; (2) by a petition for review under
Rule 42, whereby judgment was rendered by the RTC in the exercise of its
appellate jurisdiction; and (3) by a petition for review on certiorari before the
Supreme Court under Rule 45. The first mode of appeal is taken to the [Court of
Appeals] on questions of fact or mixed questions of fact and law. The second mode
of appeal is brought to the CA on questions of fact, of law, or mixed questions of
fact and law. The third mode of appeal is elevated to the Supreme Court only
on questions of law.[49] (Emphasis supplied.)

There is a question of law when the issue does not call for an examination of
the probative value of the evidence presented or of the truth or falsehood of the
facts being admitted, and the doubt concerns the correct application of law and
jurisprudence on the matter.[50] The resolution of the issue must rest solely on what
the law provides on the given set of circumstances.[51]

In the instant case, petitioners raise only questions of law with respect to the
jurisdiction of the RTC to entertain a certiorari petition filed against the
interlocutory order of the MeTC in an unlawful detainer suit. At issue in the
present case is the correct application of the Rules on Summary Procedure; or,
more specifically, whether the RTC violated the Rules when it took cognizance and
granted the certiorari petition against the denial by the MeTC of the Motion to
Dismiss filed by respondent Sunvar. This is clearly a question of law that involves
the proper interpretation of the Rules on Summary Procedure. Therefore, the
instant Rule 45 Petition has been properly lodged with this Court.

II
Propriety of a Rule 65 Petition in Summary Proceedings

Proceeding now to determine that very question of law, the Court finds that
it was erroneous for the RTC to have taken cognizance of the Rule 65 Petition of
respondent Sunvar, since the Rules on Summary Procedure expressly prohibit this
relief for unfavorable interlocutory orders of the MeTC. Consequently, the assailed
RTC Decision is annulled.

Under the Rules on Summary Procedure, a certiorari petition under Rule 65

against an interlocutory order issued by the court in a summary proceeding is a
prohibited pleading.[52]The prohibition is plain enough, and its further exposition is
unnecessary verbiage.[53] The RTC should have dismissed outright respondent
Sunvars Rule 65 Petition, considering that it is a prohibited pleading. Petitioners
have already alerted the RTC of this legal bar and immediately prayed for the
dismissal of the certiorari Petition.[54] Yet, the RTC not only refused to dismiss
the certiorari Petition,[55] but even proceeded to hear the Rule 65 Petition on the
merits.

Respondent Sunvars reliance on Bayog v. Natino[56] and Go v. Court of

Appeals[57] to justify a certiorari review by the RTC owing to extraordinary
circumstances is misplaced. In both cases, there were peculiar and specific
circumstances that justified the filing of the mentioned prohibited pleadings under
the Revised Rules on Summary Procedure conditions that are not availing in the
case of respondent Sunvar.

In Bayog, Alejandro Bayog filed with the Municipal Circuit Trial Court
(MCTC) of Patnongon-Bugasong-Valderama, Antique an ejectment case against
Alberto Magdato, an agricultural tenant-lessee who had built a house over his
property. When Magdato, an illiterate farmer, received the Summons from the
MCTC to file his answer within 10 days, he was stricken with pulmonary
tuberculosis and was able to consult a lawyer in San Jose, Antique only after the
reglementary period. Hence, when the Answer of Magdato was filed three days
after the lapse of the 10-day period, the MCTC ruled that it could no longer take
cognizance of his Answer and, hence, ordered his ejectment from Bayogs land.
When his house was demolished in January 1994, Magdato filed a Petition for
Relief with the RTC-San Jose, Antique, claiming that he was a duly instituted
tenant in the agricultural property, and that he was deprived of due process. Bayog,
the landowner, moved to dismiss the Petition on the ground of lack of jurisdiction
on the part of the RTC, since a petition for relief from judgment covering a
summary proceeding was a prohibited pleading. The RTC, however, denied his
Motion to Dismiss and remanded the case to the MCTC for proper disposal.

In resolving the Rule 65 Petition, we ruled that although a petition for relief
from judgment was a prohibited pleading under the Revised Rules on Summary
Procedure, the Court nevertheless allowed the filing of the Petition pro hac vice,
since Magdato would otherwise suffer grave injustice and irreparable injury:

We disagree with the RTCs holding that a petition for relief from judgment
(Civil Case No. 2708) is not prohibited under the Revised Rule on Summary
 Procedure, in light of the Jakihaca ruling. When Section 19 of the Revised Rule
on Summary Procedure bars a petition for relief from judgment, or a petition
for certiorari, mandamus, or prohibition against any interlocutory order
issued by the court, it has in mind no other than Section 1, Rule 38 regarding
petitions for relief from judgment, and Rule 65 regarding petitions
for certiorari, mandamus, or prohibition, of the Rules of Court, respectively.
These petitions are cognizable by Regional Trial Courts, and not by Metropolitan
Trial Courts, Municipal Trial Courts, or Municipal Circuit Trial Courts. If Section
19 of the Revised Rule on Summary Procedure and Rules 38 and 65 of the Rules
of Court are juxtaposed, the conclusion is inevitable that no petition for relief
from judgment nor a special civil action of certiorari, prohibition,
or mandamus arising from cases covered by the Revised Rule on Summary
Procedure may be filed with a superior court. This is but consistent with the
mandate of Section 36 of B.P. Blg. 129 to achieve an expeditious and inexpensive
determination of the cases subject of summary procedure.

Nevertheless, in view of the unusual and peculiar circumstances of this

case, unless some form of relief is made available to MAGDATO, the grave
injustice and irreparable injury that visited him through no fault or
negligence on his part will only be perpetuated. Thus, the petition for relief
from judgment which he filed may be allowed or treated, pro hac vice, either
as an exception to the rule, or a regular appeal to the RTC, or even an action
to annul the order (decision) of the MCTC of 20 September 1993. As an
exception, the RTC correctly held that the circumstances alleged therein and the
justification pleaded worked in favor of MAGDATO, and that the motion to
dismiss Civil Case No. 2708 was without merit. xxx [58] (Emphasis supplied.)

On the other hand, in Go v. Court of Appeals, the Court was confronted with
a procedural void in the Revised Rules of Summary Procedure that justified the
resort to a Rule 65 Petition in the RTC. In that case, the preliminary conference in
the subject ejectment suit was held in abeyance by the Municipal Trial Court in
Cities (MTCC) of Iloilo City until after the case for specific performance involving
the same parties shall have been finally decided by the RTC. The affected party
appealed the suspension order to the RTC. In response, the adverse party moved to
dismiss the appeal on the ground that it concerned an interlocutory order in a
summary proceeding that was not the subject of an appeal. The RTC denied the
Motion to Dismiss and subsequently directed the MTCC to proceed with the
hearing of the ejectment suit, a ruling that was upheld by the appellate court.

In affirming the Decisions of the RTC and CA, the Supreme Court allowed
the filing of a petition for certiorari against an interlocutory order in an ejectment
suit, considering that the affected party was deprived of any recourse to the
MTCCs erroneous suspension of a summary proceeding. Retired Chief Justice
Artemio V. Panganiban eloquently explained the procedural void in this wise:

Indisputably, the appealed [suspension] order is interlocutory, for it does

not dispose of the case but leaves something else to be done by the trial court on
the merits of the case. It is axiomatic that an interlocutory order cannot be
challenged by an appeal. Thus, it has been held that the proper remedy in such
cases is an ordinary appeal from an adverse judgment on the merits incorporating
in said appeal the grounds for assailing the interlocutory order. Allowing appeals
from interlocutory orders would result in the sorry spectacle of a case being
subject of a counterproductive ping-pong to and from the appellate court as often
as a trial court is perceived to have made an error in any of its interlocutory
rulings. However, where the assailed interlocutory order is patently erroneous
and the remedy of appeal would not afford adequate and expeditious relief,
the Court may allow certiorari as a mode of redress.

Clearly, private respondent cannot appeal the order, being interlocutory.

But neither can it file a petition for certiorari, because ejectment suits fall under
the Revised Rules on Summary Procedure, Section 19(g) of which considers
petitions for certiorari prohibited pleadings:

xxxxxxxxx

Based on the foregoing, private respondent was literally caught between

Scylla and Charybdis in the procedural void observed by the Court of Appeals and
the RTC. Under these extraordinary circumstances, the Court is constrained
to provide it with a remedy consistent with the objective of speedy resolution
of cases.

As correctly held by Respondent Court of Appeals, the purpose of the

Rules on Summary Procedure is to achieve an expeditious and inexpensive
determination of cases without regard to technical rules. (Section 36, Chapter III,
BP Blg. 129) Pursuant to this objective, the Rules prohibit petitions for certiorari,
like a number of other pleadings, in order to prevent unnecessary delays and to
expedite the disposition of cases. In this case, however, private respondent
challenged the MTCC order delaying the ejectment suit, precisely to avoid
the mischief envisioned by the Rules.

Thus, this Court holds that in situations wherein a summary

proceeding is suspended indefinitely, a petition for certiorari alleging grave
abuse of discretion may be allowed. Because of the extraordinary
circumstances in this case, a petition for certiorari, in fact, gives spirit and life
to the Rules on Summary Procedure. A contrary ruling would unduly delay the
disposition of the case and negate the rationale of the said Rules. [59] (Emphasis
supplied.)
 Contrary to the assertion of respondent Sunvar, the factual circumstances in
these two cases are not comparable with respondents situation, and our rulings
therein are inapplicable to its cause of action in the present suit. As this Court
explained in Bayog, the general rule is that no special civil action for certiorari may
be filed with a superior court from cases covered by the Revised Rules on
Summary Procedure. Respondent Sunvar filed a certiorari Petition in an ejectment
suit pending before the MeTC. Worse, the subject matter of the Petition was the
denial of respondents Motion to Dismiss, which was necessarily an interlocutory
order, which is generally not the subject of an appeal. No circumstances similar to
the situation of the agricultural tenant-lessee in Bayog are present to support the
relaxation of the general rule in the instant case. Respondent cannot claim to have
been deprived of reasonable opportunities to argue its case before a summary
judicial proceeding.

Moreover, there exists no procedural void akin to that in Go v. Court of

Appeals that would justify respondents resort to a certiorari Petition before the
RTC. When confronted with the MeTCs adverse denial of its Motion to Dismiss in
the ejectment case, the expeditious and proper remedy for respondent should have
been to proceed with the summary hearings and to file its answer. Indeed, its resort
to a certiorari Petition in the RTC over an interlocutory order in a summary
ejectment proceeding was not only prohibited. The certiorari Petition was already
a superfluity on account of respondents having already taken advantage of a
speedy and available remedy by filing an Answer with the MeTC.

Respondent Sunvar failed to substantiate its claim of extraordinary

circumstances that would constrain this Court to apply the exceptions obtaining
in Bayog and Go. The Court hesitates to liberally dispense the benefits of these two
judicial precedents to litigants in summary proceedings, lest these exceptions be
regularly abused and freely availed of to defeat the very goal of an expeditious and
inexpensive determination of an unlawful detainer suit. If the Court were to relax
the interpretation of the prohibition against the filing of certiorari petitions under
the Revised Rules on Summary Procedure, the RTCs may be inundated with
similar prayers from adversely affected parties questioning every order of the
lower court and completely dispensing with the goal of summary proceedings in
forcible entry or unlawful detainer suits.

III
Reckoning the One-Year Period in Unlawful Detainer Cases
 We now come to another legal issue underlying the present Petition whether
the Complaint filed by petitioners is properly an action for unlawful detainer
within the jurisdiction of the MeTC or an accion publiciana lodged with the RTC.
At the heart of the controversy is the reckoning period of the one-year requirement
for unlawful detainer suits.

Whether or not petitioners action for unlawful detainer was brought within
one year after the unlawful withholding of possession will determine whether it
was properly filed with the MeTC. If, as petitioners argue, the one-year period
should be counted from respondent Sunvars receipt on 03 February 2009 of the
Final Notice to Vacate, then their Complaint was timely filed within the one-year
period and appropriately taken cognizance of by the MeTC. However, if the
reckoning period is pegged from the expiration of the main lease contract and/or
sublease agreement, then petitioners proper remedy should have been an accion
publiciana to be filed with the RTC.

The Court finds that petitioners correctly availed themselves of an action for
unlawful detainer and, hence, reverses the ruling of the RTC.

Under the Rules of Court, lessors against whom possession of any land is
unlawfully withheld after the expiration of the right to hold possession may by
virtue of any express or implied contract, and within one year after the unlawful
deprivation bring an action in the municipal trial court against the person
unlawfully withholding possession, for restitution of possession with damages and
costs.[60] Unless otherwise stipulated, the action of the lessor shall commence only
after a demand to pay or to comply with the conditions of the lease and to vacate is
made upon the lessee; or after a written notice of that demand is served upon the
person found on the premises, and the lessee fails to comply therewith within 15
days in the case of land or 5 days in the case of buildings.[61]

In Delos Reyes v. Spouses Odenes,[62] the Court recently defined the nature
and scope of an unlawful detainer suit, as follows:

Unlawful detainer is an action to recover possession of real property from

one who illegally withholds possession after the expiration or termination of his
right to hold possession under any contract, express or implied. The possession by
the defendant in unlawful detainer is originally legal but became illegal due to the
expiration or termination of the right to possess. The proceeding is summary in
nature, jurisdiction over which lies with the proper MTC or metropolitan trial
 court. The action must be brought up within one year from the date of last
demand, and the issue in the case must be the right to physical possession.
(Emphasis supplied.)

Hence, a complaint sufficiently alleges a cause of action for unlawful

detainer if it states the following elements:

1. Initially, the possession of the property by the defendant was

by contract with or by tolerance of the plaintiff.

2. Eventually, the possession became illegal upon the plaintiffs

notice to the defendant of the termination of the latters right of
possession.

3. Thereafter, the defendant remained in possession of the

property and deprived the plaintiff of the latters enjoyment.

4. Within one year from the making of the last demand on the
defendant to vacate the property, the plaintiff instituted the Complaint
for ejectment.[63]

On the other hand, accion publiciana is the plenary action to recover the
right of possession which should be brought in the proper regional trial court when
dispossession has lasted for more than one year. It is an ordinary civil proceeding
to determine the better right of possession of realty independently of title. In other
words, if at the time of the filing of the complaint, more than one year had
elapsed since defendant had turned plaintiff out of possession or defendants
possession had become illegal, the action will be, not one of forcible entry or
illegal detainer, but an accion publiciana.[64]

There are no substantial disagreements with respect to the first three

requisites for an action for unlawful detainer. Respondent Sunvar initially derived
its right to possess the subject property from its sublease agreements with TRCFI
and later on with PDAF. However, with the expiration of the lease agreements on
31 December 2002, respondent lost possessory rights over the subject property.
Nevertheless, it continued occupying the property for almost seven years
thereafter. It was only on 03 February 2009 that petitioners made a final demand
upon respondent Sunvar to turn over the property. What is disputed, however, is the
fourth requisite of an unlawful detainer suit.

The Court rules that the final requisite is likewise availing in this case, and
that the one-year period should be counted from the final demand made on 03
February 2009.

Contrary to the reasoning of the RTC,[65] the one-year period to file an

unlawful detainer case is not counted from the expiration of the lease contract on
31 December 2002. Indeed, the last demand for petitioners to vacate is the
reckoning period for determining the one-year period in an action for unlawful
detainer. Such one year period should be counted from the date of plaintiffs last
demand on defendant to vacate the real property, because only upon the lapse of
that period does the possession become unlawful.[66]

In case several demands to vacate are made, the period is reckoned from the
date of the last demand.[67] In Leonin v. Court of Appeals,[68] the Court, speaking
through Justice Conchita Carpio Morales, reckoned the one-year period to file the
unlawful detainer Complaint filed on 25 February 1997 from the latest demand
letter dated 24 October 1996, and not from the earlier demand letter dated 03 July
1995:

Prospero Leonin (Prospero) and five others were co-owners of a 400-

square meter property located at K-J Street, East Kamias, Quezon City whereon
was constructed a two-storey house and a three-door apartment identified as No.
1-A, B, and C.

Prospero and his co-owners allowed his siblings, herein petitioners, to

occupy Apartment C without paying any rentals.

xxxxxxxxx

Petitioners further contend that respondents remedy is accion

publiciana because their possession is not de facto, they having been authorized
by the true and lawful owners of the property; and that one year had elapsed
from respondents demand given on July 3, 1995 when the unlawful detainer
complaint was filed.

The petition fails.

 Contrary to petitioners contention, the allegations in the complaint make
out a case for unlawful detainer. Thus, respondent alleged, inter alia, that she is
the registered owner of the property and that petitioners, who are tenants by
tolerance, refused to vacate the premises despite the notice to vacate sent to them.

Likewise, contrary to petitioners contention, the one-year period for filing

a complaint for unlawful detainer is reckoned from the date of the last demand, in
this case October 24, 1996, the reason being that the lessor has the right to waive
his right of action based on previous demands and let the lessee remain
meanwhile in the premises. Thus, the filing of the complaint on February 25,
1997 was well within the one year reglementary period. [69] (Emphasis
supplied.)

From the time that the main lease contract and sublease agreements expired
(01 January 2003), respondent Sunvar no longer had any possessory right over the
subject property. Absent any express contractual renewal of the sublease agreement
or any separate lease contract, it illegally occupied the land or, at best, was allowed
to do so by mere tolerance of the registered owners petitioners herein. Thus,
respondent Sunvars possession became unlawful upon service of the final notice on
03 February 2009. Hence, as an unlawful occupant of the land of petitioners, and
without any contract between them, respondent is necessarily bound by an implied
promise that it will vacate upon demand, failing which a summary action for
ejectment is the proper remedy against them. [70] Upon service of the final notice of
demand, respondent Sunvar should have vacated the property and, consequently,
petitioners had one year or until 02 February 2010 in which to resort to the
summary action for unlawful detainer. In the instant case, their Complaint was
filed with the MeTC on 23 July 2009, which was well within the one-year period.

The Court is aware that petitioners had earlier served a Notice to Vacate on
22 February 2008, which could have possibly tolled the one-year period for filing
an unlawful detainer suit. Nevertheless, they can be deemed to have waived their
right of action against respondent Sunvar and continued to tolerate its occupation
of the subject property. That they sent a final Notice to Vacate almost a year later
gave respondent another opportunity to comply with their implied promise as
occupants by mere tolerance. Consequently, the one-year period for filing a
summary action for unlawful detainer with the MeTC must be reckoned from the
latest demand to vacate.
 In the past, the Court ruled that subsequent demands that are merely in the
nature of reminders of the original demand do not operate to renew the one-year
period within which to commence an ejectment suit, considering that the period
will still be reckoned from the date of the original demand. [71] If the subsequent
demands were merely in the nature of reminders of the original demand, the one-
year period to commence an ejectment suit would be counted from the first
demand.[72] However, respondent failed to raise in any of the proceedings below
this question of fact as to the nature of the second demand issued by the OSG. It is
now too late in the proceedings for them to argue that the 2009 Notice to Vacate
was a mere reiteration or reminder of the 2008 Notice to Vacate. In any event, this
factual determination is beyond the scope of the present Rule 45 Petition, which is
limited to resolving questions of law.

The Court notes that respondent Sunvar has continued to occupy the subject
property since the expiration of its sublease on 31 December 2002. The factual
issue of whether respondent has paid rentals to petitioners from the expiration of
the sublease to the present was never raised or sufficiently argued before this
Court. Nevertheless, it has not escaped the Courts attention that almost a decade
has passed without any resolution of this controversy regarding respondents
possession of the subject property, contrary to the aim of expeditious proceedings
under the Revised Rules on Summary Procedure. With the grant of the instant
Petition and the remand of the case to the MeTC for continued hearing, the Court
emphasizes the duty of the lower court to speedily resolve this matter once and for
all, especially since this case involves a prime property of the government located
in the countrys business district and the various opportunities for petitioners to gain
public revenues from the property.

WHEREFORE, the Court GRANTS the Petition for Review on Certiorari

dated 14 February 2011, filed by petitioners Republic and National Power
Corporation, which are represented here by the Privatization Management Office.
The assailed Decision dated 01 December 2010 of the Regional Trial Court of
Makati City, Branch 134, is hereby REVERSED and SET ASIDE. The
Metropolitan Trial Court of Makati City, Branch 63, is DIRECTED to proceed
with the summary proceedings for the unlawful detainer case in Civil Case No.
98708.

SO ORDERED.
 MARIA LOURDES P. A. SERENO
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Senior Associate Justice
Chairperson

ARTURO D. BRION JOSE PORTUGAL PEREZ

Associate Justice Associate Justice

BIENVENIDO L. REYES
Associate Justice

C E R T I F I C AT I O N

I certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Courts
Division.

ANTONIO T. CARPIO
 Senior Associate Justice
(Per Section 12, R.A. 296
The Judiciary Act of 1948, as amended)

Republic of the Philippines

Supreme Court
Manila
SECOND DIVISION

RUBEN C. CORPUZ, represented G.R. No. 183822

by Attorney-in-Fact Wenifreda C.
Agullana,
Petitioner,
Present:
-versus-
CARPIO, J.,
Chairperson,
PEREZ,
Sps. HILARION AGUSTIN and SERENO,
JUSTA AGUSTIN, REYES, and
Respondents.
PERLAS-BERNABE, JJ.

Promulgated:

January 18, 2012

x-----------------------------------------------------------x

DECISION

SERENO, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails
the Decision[1] dated 08 January 2008 of the Court of Appeals (CA) in CA-G.R. SP
No. 90645, which affirmed the Decision of the Regional Trial Court (RTC) of
Laoag City and its Resolution[2] dated 15 July 2008 denying the Motion for
Reconsideration. The RTC, in the exercise of its appellate jurisdiction, affirmed the
Decision of the Municipal Trial Court (MTC) of Laoag City, which had dismissed
the unlawful detainer case filed by herein petitioner.

The Factual Antecedents

The Court adopts the findings of fact of the CA as follows:
Ruben C. Corpuz (Ruben) filed a complaint for ejectment against Spouses
Hilarion and Justa Agustin on the allegation that he is the registered owner of
two parcels of land located in Santa Joaquina, Laoag City covered by TCT No.
12980 issued on October 29, 1976 by the Laoag City Register of Deeds and
with technical descriptions as follows:

1) A parcel of land (Lot No. 20 of the Cadastral Survey of Laoag),

with improvements thereon, situated in the barrio of Santa
Joaquina, Municipality of Laoag. Bounded x x x containing an
area of five thousand seven hundred and fifty nine (5,759) square
meters more or less x x x.

2) A parcel of land (Lot No. 11711 of the Cadastral Survey of

Laoag), with the improvements thereon, situated in the barrio of
Santa Joaquina, Municipality of Laoag. Bounded x x x, containing
an area of twenty thousand seven hundred and forty five (20,745)
square meters, more or less x x x.

Aforesaid parcels of land were formerly owned by Elias Duldulao in whose

name Original Certificate of Title No. O-1717 was issued. Duldulao sold said
properties on August 27, 1951 to Francisco D. Corpuz, father of Ruben C.
Corpuz. The elder Corpuz allowed spouses Agustin to occupy subject
properties, the latter being relatives.

Despite demand to vacate, the Agustins refused to leave the premises.

Ruben alleged further that he has the better right to possess subject property
having acquired the same from his father, Francisco, who executed a Deed of
Quitclaim in his favor on March 15, 1971.

Spouses Agustin, in their Answer, interposed the defense that on June 5, 1971
Francisco Corpuz, Ruben's father, disposed of subject property by executing a
Deed of Absolute Sale in their favor for a consideration of Eleven Thousand
One Hundred Fifty Pesos (P11,150.00).
 The Municipal Trial Court found for the spouses Agustin and dismissed the
complaint.

In sum, considering the evidence of the defendants which shows

that they entered into and occupied Lot No. 20 and the 9,657 sq. m.
portion of Lot No. 11711 as buyers or owners, disproving the
allegation of the plaintiff that defendants were merely allowed by
Francisco Corpuz to occupy the subject properties, being his
relatives, and considering further the length of time that the
defendants have been in possession, as owners, of Lot No. 20 and
the 9,657 sq. m. portion of Lot No. 11711, and have been
continuously exercising their rights of ownership thereon, this
court is of the view and holds, in so far as this case is concerned,
that the defendants are the ones entitled to the possession of Lot
No. 20 and the 9,657 sq. m. portion of Lot No. 11711.

WHEREFORE, premises considered, this case, is hereby

dismissed.

SO ORDERED.

On appeal, Branch XVI, Regional Trial Court of Laoag City affirmed said
dismissal, the dispositive portion of said decision states:

WHEREFORE, premises considered, the Appeal is hereby

DISMISSED for lack of merit and the JUDGMENT of the
Municipal Trial Court in Cities, Branch 01, Laoag City is hereby
AFFIRMED, with costs against the plaintiff-appellant.

SO ORDERED.[3]

Petitioner assailed the Decision of the RTC, affirming the earlier dismissal of the
case by the MTC, by instituting an appeal with the CA. On 08 January 2008, the
appellate court through its Fourteenth Division dismissed his appeal. [4] It noted that
his father engaged in a double sale when he conveyed the disputed properties to
petitioner and respondents. The Quitclaim executed by the elder Corpuz in favor
of petitioner was dated 15 March 1971, while the Deed of Sale with respondents
was later, on 15 June 1971; both documents were notarized shortly after their
execution.[5] The Quitclaim, which was subsequently inscribed at the back of
Original Certificate of Title (OCT) No. O-1717 on 29 October 1976, [6] resulted in
the issuance of Transfer Certificate of Title (TCT) No. T-12980 in the name of
petitioner. The Deed of Sale executed with respondents was, however, not
annotated at the back of OCT No. O-1717 and remained unregistered.[7]
 Based on the above findings, the CA ruled that petitioner had knowledge of
the sale of the disputed real property executed between Francisco Corpuz,
petitioner's father, and respondents. Due to this conveyance by the elder Corpuz to
respondents, the latter's possession thereof was in the nature of ownership. Thus,
in the context of an unlawful detainer case instituted by petitioner against
respondents, the appellate court concluded that respondents possession of the
property was not by mere tolerance of its former owner petitioner's father but was
in the exercise of ownership.[8]

The CA noted that petitioner had knowledge of his fathers sale of the properties to
respondents as early as 1973. However, despite knowledge of the sale, petitioner
failed to initiate any action to annul it and oust respondents from the subject
properties.[9] The appellate court rejected his contention that, as registered owner
of the disputed properties, he had a better right to possession thereof, compared to
the unregistered Deed of Sale relied upon by respondents in their defense of the
same properties. The CA ruled that the inaction on his part despite knowledge of
the sale in 1973 was equivalent to registration of respondents unregistered deed.
[10]
In dismissing his appeal, the CA concluded that respondents possession was not
... anchored on mere tolerance nor on any of the grounds for forcible entry or
unlawful detainer; hence the complaint for ejectment must fail. [11] The dispositive
portion of the assailed Decision reads:
WHEREFORE, in view of the foregoing, the instant petition is hereby
DISMISSED. The decision of Branch XVI, Regional Trial Court of Laoag City in
Civil Case No. 13293-16 is hereby AFFIRMED.

SO ORDERED.[12]

The Issues
Petitioner assigns the following errors in this Petition for Review on Certiorari:
I. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
FAILING TO CONSIDER THE LEGAL OWNERSHIP OF PETITIONER
ON THE DISPUTED PROPERTY TO CLAIM BETTER RIGHT TO
POSSESSION.

II. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN

THE APPRECIATION OF THE ALLEGED SALE IN FAVOR OF
 RESPONDENTS TO RULE THAT THEY HAVE BETTER RIGHT TO
POSSESSION.

III. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN

FAILING TO CONSIDER THE CASE OF JACINTO CO VS. MILITAR, ET
AL. (421 SCRA 455) WHICH IS SIMILAR TO THE INSTANT CASE.

IV. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN

DENYING THE PETITION FOR REVIEW RAISED BEFORE IT.[13]

Petitioner presents to this Court for resolution the core issue of his Petition: who
between the parties has the right to possession of the disputed properties --
petitioner, who is the registered owner under TCT No. T-12980; or respondents,
who have a notarized yet unregistered Deed of Absolute Sale over the same
properties?

The Court's Ruling

We DENY the Petition.

Although this case does not present a novel question of law, there is a need to
discuss the nature of an ejectment case for the recovery of physical possession in
relation to the Torrenssystem. A resolution of the issue would be relevant to the
determination of who has the better right to possession in this unlawful detainer
case.

One of the three kinds of action for the recovery of possession of real property
is accion interdictal, or an ejectment proceeding ... which may be either that for
forcible entry (detentacion) or unlawful detainer (desahucio), which is a summary
action for the recovery of physical possession where the dispossession has not
lasted for more than one year, and should be brought in the proper inferior court.
[14]
In ejectment proceedings, the courts resolve the basic question of who is
entitled to physical possession of the premises, possession referring to
possession de facto, and not possession de jure.[15]

Where the parties to an ejectment case raise the issue of ownership, the
courts may pass upon that issue to determine who between the parties has the
better right to possess the property. However, where the issue of ownership is
inseparably linked to that of possession, adjudication of the ownership issue is not
final and binding, but only for the purpose of resolving the issue of possession. The
adjudication of the issue of ownership is only provisional, and not a bar to an
action between the same parties involving title to the property.[16]

In the instant case, the position of respondents is that they are occupying the
disputed properties as owners, having acquired these from petitioner's father
through a Deed of Absolute Sale executed in 1971. Respondents believe that they
cannot be dispossessed of the disputed properties, since they are the owners and
are in actual possession thereof up to this date. Petitioner, however, rebuts this
claim of ownership, contending that he has registered the disputed properties in his
name and has been issued a land title under the Torrens system. He asserts that,
having registered the properties in his name, he is the recognized owner and
consequently has the better right to possession.

Indeed, a title issued under the Torrens system is entitled to all the attributes of
property ownership, which necessarily includes possession.[17] Petitioner is correct
that as a Torrens title holder over the subject properties, he is the rightful owner
and is entitled to possession thereof. However, the lower courts and the appellate
court consistently found that possession of the disputed properties by respondents
was in the nature of ownership, and not by mere tolerance of the elder Corpuz. In
fact, they have been in continuous, open and notorious possession of the property
for more than 30 years up to this day.

Petitioner cites Jacinto Co v. Rizal Militar, et al.,[18] which has facts and legal
issues identical to those of the instant case. The petitioner therein filed an unlawful
detainer case against the respondents over a disputed property. He had a Torrens
title thereto, while the respondents as actual occupants of the property claimed
ownership thereof based on their unregistered Deeds of Sale. The principal issue
was who between the two parties had the better right to possess the subject
property.

This Court resolved the issue by upholding the title holder as the one who
had the better right to possession of the disputed property based on the following
justification:
We have, time and again, held that the only issue for resolution in an unlawful
detainer case is physical or material possession of the property involved,
independent of any claim of ownership by any of the party litigants. Moreover, an
 ejectment suit is summary in nature and is not susceptible to circumvention by
the simple expedient of asserting ownership over the property.

In forcible entry and unlawful detainer cases, even if the defendant raises
the question of ownership in his pleadings and the question of possession cannot
be resolved without deciding the issue of ownership, the lower courts and the
Court of Appeals, nonetheless, have the undoubted competence to provisionally
resolve the issue of ownership for the sole purpose of determining the issue of
Possession.

Such decision, however, does not bind the title or affect the ownership of
the land nor is conclusive of the facts therein found in a case between the same
parties upon a different cause of action involving possession.

In the instant case, the evidence showed that as between the parties, it is
the petitioner who has a Torrens Title to the property. Respondents merely
showed their unregistered deeds of sale in support of their claims. The
Metropolitan Trial Court correctly relied on the transfer certificate of title in the
name of petitioner.

In Tenio-Obsequio v. Court of Appeals, it was held that the Torrens

System was adopted in this country because it was believed to be the most
effective measure to guarantee the integrity of land titles and to protect their
indefeasibility once the claim of ownership is established and recognized.

It is settled that a Torrens Certificate of title is indefeasible and binding

upon the whole world unless and until it has been nullified by a court of
competent jurisdiction. Under existing statutory and decisional law, the power to
pass upon the validity of such certificate of title at the first instance properly
belongs to the Regional Trial Courts in a direct proceeding for cancellation of
title.

As the registered owner, petitioner had a right to the possession of the

property, which is one of the attributes of his ownership. Respondents' argument
that petitioner is not an innocent purchaser for value and was guilty of bad faith
in having the subject land registered in his name is a collateral attack on the title
of petitioner, which is not allowed. A certificate of title cannot be subject to a
collateral attack and can be altered, modified or cancelled only in a direct
proceeding in accordance with law. [19]

The pronouncement in Co v. Militar was later reiterated in Spouses Pascual

v. Spouses Coronel[20] and in Spouses Barias v. Heirs of Bartolome Boneo, et al.,
[21]
wherein we consistently held the age-old rule that the person who has a Torrens
Title over a land is entitled to possession thereof.[22]
However, we cannot lose sight of the fact that the present petitioner has instituted
an unlawful detainer case against respondents. It is an established fact that for
more than three decades, the latter have been in continuous possession of the
subject property, which, as such, is in the concept of ownership and not by mere
tolerance of petitioners father. Under these circumstances, petitioner cannot simply
oust respondents from possession through the summary procedure of an ejectment
proceeding.

Instructive on this matter is Carbonilla v. Abiera,[23] which reads thus:

Without a doubt, the registered owner of real property is entitled to its
possession. However, the owner cannot simply wrest possession thereof from
whoever is in actual occupation of the property. To recover possession, he must
resort to the proper judicial remedy and, once he chooses what action to file, he is
required to satisfy the conditions necessary for such action to prosper.
In the present case, petitioner opted to file an ejectment case against
respondents. Ejectment casesforcible entry and unlawful detainerare summary
proceedings designed to provide expeditious means to protect actual possession
or the right to possession of the property involved. The only question that the
courts resolve in ejectment proceedings is: who is entitled to the physical
possession of the premises, that is, to the possession de facto and not to the
possession de jure. It does not even matter if a partys title to the property is
questionable. For this reason, an ejectment case will not necessarily be
decided in favor of one who has presented proof of ownership of the subject
property. Key jurisdictional facts constitutive of the particular ejectment case
filed must be averred in the complaint and sufficiently proven.
The statements in the complaint that respondents possession of the
building was by mere tolerance of petitioner clearly make out a case for unlawful
detainer. Unlawful detainer involves the persons withholding from another of the
possession of the real property to which the latter is entitled, after the expiration
or termination of the formers right to hold possession under the contract, either
expressed or implied.
A requisite for a valid cause of action in an unlawful detainer case is that
possession must be originally lawful, and such possession must have turned
unlawful only upon the expiration of the right to possess. It must be shown that
the possession was initially lawful; hence, the basis of such lawful possession
must be established. If, as in this case, the claim is that such possession is by
mere tolerance of the plaintiff, the acts of tolerance must be proved. (Emphasis
supplied.)

In this case, petitioner has not proven that respondents continued possession
of the subject properties was by mere tolerance of his father, except by a mere
allegation thereof. In fact, petitioner has not established when respondents
possession of the properties became unlawful a requisite for a valid cause of action
in an unlawful detainer case.

In Canlas v. Tubil,[24] we enumerated the elements that constitute the

sufficiency of a complaint for unlawful detainer, as follows:
Well-settled is the rule that what determines the nature of the action as well as the
court which has jurisdiction over the case are the allegations in the complaint. In
ejectment cases, the complaint should embody such statement of facts as to bring
the party clearly within the class of cases for which the statutes provide a remedy,
as these proceedings are summary in nature. The complaint must show enough on
its face to give the court jurisdiction without resort to parol evidence.

Unlawful detainer is an action to recover possession of real property from

one who illegally withholds possession after the expiration or termination of his
right to hold possession under any contract, express or implied. The possession of
the defendant in unlawful detainer is originally legal but became illegal due to the
expiration or termination of the right to possess.

An unlawful detainer proceeding is summary in nature, jurisdiction of

which lies in the proper municipal trial court or metropolitan trial court. The
action must be brought within one year from the date of last demand and the issue
in said case is the right to physical possession.
... ... ...
In Cabrera v. Getaruela, the Court held that a complaint sufficiently alleges a
cause of action for unlawful detainer if it recites the following:

(1) initially, possession of property by the defendant was by contract

with or by tolerance of the plaintiff;

(2) eventually, such possession became illegal upon notice by plaintiff to

defendant of the termination of the latters right of possession;

(3) thereafter, the defendant remained in possession of the property and

deprived the plaintiff of the enjoyment thereof; and

(4) within one year from the last demand on defendant to vacate the
property, the plaintiff instituted the complaint for ejectment.

Based on the above, it is obvious that petitioner has not complied with the
requirements sufficient to warrant the success of his unlawful detainer Complaint
against respondents. The lower courts and the CA have consistently upheld the
entitlement of respondents to continued possession of the subject properties, since
their possession has been established as one in the concept of ownership. Thus, the
courts correctly dismissed the unlawful detainer case of petitioner.

We concur in the appellate courts findings that petitioners father engaged in

a double sale of the disputed properties. The records of the case show that it took
petitioner more or less five years from 1971 when he acquired the property from
his father to 1976 when petitioner registered the conveyance and caused the
issuance of the land title registered in his name under the Torrens system.
Respondents, on the other hand, continued their possession of the properties, but
without bothering to register them or to initiate any action to fortify their
ownership.

We cannot, however, sustain the appellate courts conclusion that petitioner's

failure to initiate any action to annul the sale to respondents and oust them from
the disputed properties had the effect of registration of respondents unregistered
Deed of Absolute Sale. We held thus in Ruiz, Sr. v. Court of Appeals [25]:

(But) where a party has knowledge of a prior existing interest which is

unregistered at that time he acquired a right to the same land, his knowledge of
that prior unregistered interest has the effect of registration as to
him. Knowledge of an unregistered sale is equivalent to registration. As held
in Fernandez v. Court of Appeals [189 SCRA 780 (1990)],

Section 50 of Act No. 496 (now Sec. 51 of P.D. 1529),

provides that the registration of the deed is the operative act to bind
or affect the land insofar as third persons are concerned.But where
the party has knowledge of a prior existing interest which is
unregistered at the time he acquired a right to the same land, his
knowledge of that prior unregistered interest has the effect of
registration as to him. The Torrens system cannot be used as a
shield for the commission of fraud (Gustillo v. Maravilla, 48 Phil.
442). [Emphasis supplied.]

In this case, the Quitclaim executed by the elder Corpuz in favor of

petitioner was executed ahead of the Deed of Sale of respondents. Thus, the sale of
the subject properties by petitioners father to respondents cannot be considered as
a prior interest at the time that petitioner came to know of the transaction.
We also note that, based on the records, respondents do not dispute the existence of
TCT No. T-12980 registered in the name of petitioner. They allege, though, that the
land title issued to him was an act of fraud [26] on his part. We find this argument to
be equivalent to a collateral attack against the Torrens title of petitioner an attack
we cannot allow in the instant unlawful detainer case.

It is settled in jurisprudence that a Torrens certificate of title cannot be the

subject of collateral attack.[27] Such attack must be direct and not by a collateral
proceeding.[28] It is a well-established doctrine that the title represented by the
certificate cannot be changed, altered, modified, enlarged, or diminished in a
collateral proceeding.[29] Considering that this is an unlawful detainer case wherein
the sole issue to be decided is possession de facto rather than possession de jure, a
collateral attack by herein respondents on petitioner's title is proscribed.

Our ruling in the present case is only to resolve the issue of who has the
better right to possession in relation to the issue of disputed ownership of the
subject properties. Questions as to the validity of petitioner's Torrens title can be
ventilated in a proper suit instituted to directly attack its validity, an issue that we
cannot resolve definitively in this unlawful detainer case.

WHEREFORE, in view of the foregoing, we deny the instant Petition for

lack of merit. The Decisions of the Court of Appeals in CA-G.R. SP No. 90645
(dated January 08, 2008), of the Regional Trial Court of Laoag City in Civil Case
No. 3111-13293-65, as well as of the Municipal Trial Court of Laoag City in Civil
Case No. 3111 -- all dismissing the unlawful detainer case of petitioner
are AFFIRMED.

We make no pronouncements as to attorney's fees for lack of evidence.

SO ORDERED.

MARIA LOURDES P. A. SERENO

Associate Justice

WE CONCUR:
 ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE PORTUGAL PEREZ BIENVENIDO L. REYES

Associate Justice Associate Justice

ESTELA M. PERLAS-BERNABE
Associate Justice

AT T E S TAT I O N

I attest that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

C E R T I F I C AT I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairpersons Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.
 RENATO C. CORONA
Chief Justice

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

LOURDES DELA CRUZ, G.R. No. 139442

Petitioner,
Present:

QUISUMBING, J., Chairperson,

- versus - CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

HON. COURT OF APPEALS Promulgated:

and MELBA TAN TE,
Respondents. December 6, 2006
x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

For unto every one that hath shall be given, and he shall have
abundance: but from him that hath not shall be taken away even that which
he hath.

Holy Bible, Matthew 25:29

The Case
This petition for review seeks to nullify the April 30, 1999 Decision and the July
16, 1999 Resolution of the Court of Appeals in CA-G.R. SP No. 49097, which
reversed the Decision of the Manila Regional Trial Court (RTC), Branch 35, in
Civil Case No. 98-89174, and reinstated the Decision of the Manila Metropolitan
Trial Court (MeTC), Branch 20, which ordered petitioner Dela Cruz to vacate the
subject lot in favor of respondent Tan Te.[1]
The Facts

The Reyes family, represented by Mr. Lino Reyes, owned the lot located at
No. 1332 Lacson Street (formerly Gov. Forbes Street), Sampaloc,
Manila. Petitioner Lourdes Dela Cruz was one of their lessees, and she religiously
paid rent over a portion of the lot for well over 40 years. Sometime in 1989, a fire
struck the premises and destroyed, among others, petitioners dwelling. After the
fire, petitioner and some tenants returned to the said lot and rebuilt their respective
houses; simultaneously, the Reyes family made several verbal demands on the
remaining lessees, including petitioner, to vacate the lot but the latter did not
comply. On February 21, 1994, petitioner was served a written demand to vacate
said lot but refused to leave.Despite the setback, the Reyes family did not initiate
court proceedings against any of the lessees.

On November 26, 1996, the disputed lot was sold by the Reyeses to respondent
Melba Tan Te by virtue of the November 26, 1996 Deed of Absolute
Sale. Respondent bought the lot in question for residential purposes. Despite the
sale, petitioner Dela Cruz did not give up the lot.

On January 14, 1997, petitioner was sent a written demand to relinquish the
premises which she ignored, prompting respondent Tan Te to initiate conciliation
proceedings at the barangay level. While respondent attempted to settle the dispute
by offering financial assistance, petitioner countered by asking PhP 500,000.00 for
her house. Respondent rejected the counter offer which she considered
unconscionable. As a result, a certificate to file action was issued to Tan Te.

On September 8, 1997, respondent Tan Te filed an ejectment complaint with

damages before the Manila MeTC, entitled Melba Tan Te v. Lourdes Dela Cruz and
docketed as Civil Case No. 156730-CV. The complaint averred that: (1) the
previous owners, the Reyeses were in possession and control of the contested lot;
(2) on November 26, 1996, the lot was sold to Tan Te; (3) prior to the sale, Dela
Cruz forcibly entered the property with strategy and/or stealth; (4) the petitioner
unlawfully deprived the respondent of physical possession of the property and
continues to do so; and, (5) the respondent sent several written demands to
petitioner to vacate the premises but refused to do so.

On October 24, 1997, petitioner filed her answer and alleged that: (1) the MeTC
had no jurisdiction over the case because it falls within the jurisdiction of the RTC
as more than one year had elapsed from petitioners forcible entry; (2) she was a
rent-paying tenant protected by PD 20; [2] (3) her lease constituted a legal
encumbrance upon the property; and (4) the lot was subject of expropriation.

The Ruling of the Manila MeTC

On April 3, 1998, the MeTC decided as follows:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff as

follows:

1. Ordering the defendant and all persons claiming right under her to vacate
the premises situated at 1332 Lacson Street (formerly Gov. Forbes Street),
Sampaloc, Manila and peacefully return possession thereof to plaintiff;

2. Ordering the defendant to pay the plaintiff the amount of P360.00 a

month from December 1996 to November 1997; P432.00 a month from
December 1997 to November 1998, plus 20% for each subsequent year
until the premises shall have been vacated and turned over to the plaintiff;

3. Ordering the defendant to pay the plaintiff the amount of P10,000.00 as

attorneys fees; and, the costs of the suit.

SO ORDERED.[3]

The Ruling of the Regional Trial Court

Unconvinced, petitioner Dela Cruz appealed the Decision of the MeTC in the
Manila RTC and the appeal was docketed as Civil Case No. 98-89174. On
September 1, 1998, the RTC rendered its judgment setting aside the April 3, 1998
Decision of the Manila MeTC and dismissed respondent Tan Tes Complaint on the
ground that it was the RTC and not the MeTC which had jurisdiction over the
subject matter of the case. The RTC believed that since Tan Tes predecessor-in-
interest learned of petitioners intrusion into the lot as early as February 21, 1994,
the ejectment suit should have been filed within the one-year prescriptive period
which expired on February 21, 1995. Since the Reyes did not file the ejectment suit
and respondent Tan Te filed the action only on September 8, 1997, then the suit had
become an accion publiciana cognizable by the RTC.

The Ruling of the Court of Appeals

Disappointed at the turn of events, respondent Tan Te appealed the adverse
Decision to the Court of Appeals (CA) which was docketed as CA-G.R. SP No.
49097. This time, the CA rendered a Decision in favor of respondent Tan Te
reversing the Manila RTC September 1, 1998 Decision and reinstated the Manila
MeTC April 3, 1998 Decision.

Petitioner tried to have the CA reconsider its Decision but was rebutted in its July
16, 1999 Resolution.

Unyielding to the CA Decision and the denial of her request for reconsideration,
petitioner Dela Cruz now seeks legal remedy through the instant Petition for
Review on Certiorari before the Court.

The Issues

Petitioner Dela Cruz claims two (2) reversible errors on the part of the
appellate court, to wit:

THE HON. COURT OF APPEALS, WITH DUE RESPECT, WENT

BEYOND THE ISSUES OF THE CASE AND CONTRARY TO THOSE
OF THE TRIAL COURT.

THE HON. COURT OF APPEALS, WITH DUE RESPECT, ERRED IN

REVERSING THE DECISION OF THE RTC AND IN EFFECT,
 REINSTATING THE DECISION OF THE [MeTC] WHICH IS
CONTRADICTED BY THE EVIDENCE ON RECORD.[4]

The Courts Ruling

Discussion on Rule 45

Before we dwell on the principal issues, a few procedural matters must first be
resolved.

Petitioner Dela Cruz asks the Court to review the findings of facts of the CA, a
course of action proscribed by Section 1, Rule 45. Firm is the rule that findings of
fact of the CA are final and conclusive and cannot be reviewed on appeal to this
Court provided they are supported by evidence on record or substantial
evidence. Fortunately for petitioner, we will be liberal with her petition considering
that the CAs factual findings contradict those of the RTC, and there was an
asseveration that the court a quo went beyond the issues of the case. Indeed, these
grounds were considered exceptions to the factual issue bar rule.

Secondly, the petition unnecessarily impleaded the CA in violation of Section 4,

Rule 45. We will let this breach pass only because there is a need to entertain the
petition due to the conflicting rulings between the lower courts; however, a
repetition may result to sanctions.

The actual threshold issue is which court, the Manila RTC or the Manila MeTC,
has jurisdiction over the Tan Te ejectment suit. Once the jurisdictional issue is
settled, the heart of the dispute is whether or not respondent is entitled to the
ejectment of petitioner Dela Cruz from the premises.

However, the petition is bereft of merit.

On the Issue of Jurisdiction

 Jurisdiction is the power or capacity given by the law to a court or tribunal
to entertain, hear and determine certain controversies.[5] Jurisdiction over the
subject matter is conferred by law.

Section 33 of Chapter III -- on Metropolitan Trial Courts, Municipal Trial

Courts, and Municipal Circuit Trial Courts of B. P. No. 129[6] provides:

Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial

Courts and Municipal Circuit Trial Courts in civil cases.Metropolitan Trial
Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall
exercise:
xxxx

(2) Exclusive original jurisdiction over cases of forcible entry and unlawful
detainer: Provided, That when, in such cases, the defendant raises the
question of ownership in his pleadings and the question of possession
cannot be resolved without deciding the issue of ownership, the issue of
ownership shall be resolved only to determine the issue of possession.

Thus exclusive, original jurisdiction over ejectment proceedings (accion

interdictal) is lodged with the first level courts. This is clarified in Section 1, Rule
70 of the 1997 Rules of Civil Procedure that embraces an action for forcible entry
(detentacion), where one is deprived of physical possession of any land or building
by means of force, intimidation, threat, strategy, or stealth. In actions for forcible
entry, three (3) requisites have to be met for the municipal trial court to acquire
jurisdiction. First, the plaintiffs must allege their prior physical possession of the
property. Second, they must also assert that they were deprived of possession either
by force, intimidation, threat, strategy, or stealth. Third, the action must be filed
within one (1) year from the time the owners or legal possessors learned of their
deprivation of physical possession of the land or building.

The other kind of ejectment proceeding is unlawful detainer (desahucio),

where one unlawfully withholds possession of the subject property after the
expiration or termination of the right to possess. Here, the issue of rightful
possession is the one decisive; for in such action, the defendant is the party in
actual possession and the plaintiffs cause of action is the termination of the
defendants right to continue in possession.[7] The essential requisites of unlawful
detainer are: (1) the fact of lease by virtue of a contract express or implied; (2) the
expiration or termination of the possessors right to hold possession; (3)
withholding by the lessee of the possession of the land or building after expiration
or termination of the right to possession; (4) letter of demand upon lessee to pay
the rental or comply with the terms of the lease and vacate the premises; and (5)
the action must be filed within one (1) year from date of last demand received by
the defendant.

A person who wants to recover physical possession of his real property will
prefer an ejectment suit because it is governed by the Rule on Summary Procedure
which allows immediate execution of the judgment under Section 19, Rule 70
unless the defendant perfects an appeal in the RTC and complies with the
requirements to stay execution; all of which are nevertheless beneficial to the
interests of the lot owner or the holder of the right of possession.

On the other hand, Section 19, of Chapter II of B.P. No. 129 on Regional
Trial Courts provides:

Section 19. Jurisdiction in civil cases.Regional Trial Courts shall exercise

exclusive original jurisdiction:

xxxx

(2) In all civil actions which involve the title to, or possession of, real
property, or any interest therein, except actions for forcible entry into and
unlawful detainer of lands or buildings, original jurisdiction over which is
conferred upon Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts.

Two (2) kinds of action to recover possession of real property which fall
under the jurisdiction of the RTC are: (1) the plenary action for the recovery of the
real right of possession (accion publiciana) when the dispossession has lasted for
more than one year or when the action was filed more than one (1) year from date
of the last demand received by the lessee or defendant; and (2) an action for the
recovery of ownership (accion reivindicatoria) which includes the recovery of
possession.
 These actions are governed by the regular rules of procedure and
adjudication takes a longer period than the summary ejectment suit.

To determine whether a complaint for recovery of possession falls under the

jurisdiction of the MeTC (first level court) or the RTC (second level court), we are
compelled to go over the allegations of the complaint. The general rule is that what
determines the nature of the action and the court that has jurisdiction over the case
are the allegations in the complaint. These cannot be made to depend upon the
defenses set up in the answer or pleadings filed by the defendant.[8]

This general rule however admits exceptions. In Ignacio v. CFI of Bulacan,

it was held that while the allegations in the complaint make out a case for forcible
entry, where tenancy is averred by way of defense and is proved to be the real
issue, the case should be dismissed for lack of jurisdiction as the case should
properly be filed with the then Court of Agrarian Relations.[9]

The cause of action in a complaint is not what the designation of the

complaint states, but what the allegations in the body of the complaint define and
describe. The designation or caption is not controlling, more than the allegations in
the complaint themselves are, for it is not even an indispensable part of the
complaint.[10]

Let us refer to the allegations of the complaint filed in the Manila MeTC in
Civil Case No. 98-89174, which we quote verbatim:

3. That plaintiff is the absolute and registered owner of a parcel of land

located at No. 1332, Lacson Street, Sampaloc, Manila now being occupied
by defendant;

4. That plaintiff purchased the above-said parcel of land together with its
improvements from the legal heirs of the late EMERLINDA DIMAYUGA
REYES on November 26, 1996, under and by virtue of a Deed of Absolute
Sale x x x;
5. That pursuant to the said deed of sale, the title to the land and all its
improvements was transferred in plaintiffs name as evidenced by Transfer
Certificate of Title No. 233273 issued by the Register of Deeds of Manila
on April 22, 1997 x x x;
 6. That prior to said sale, the previous owners, represented by Mr. Lino
Reyes, husband of the said deceased Emerlinda D. Reyes and the
administrator of her estate, was in possession and control of the property
subject of this complaint;
7. That also prior to said sale, defendant, without the knowledge and
consent of Mr. Lino Reyes, surreptitiously and by means of stealth and
strategy entered, used and occupied the said premises thus depriving the
former of rightful possession thereof;
8. That on February 21, 1994, Mr. Lino Reyes, through Atty. Alejo Sedico,
his lawyer, furnished the defendants a letter formally demanding that
defendant vacate the premises x x x;

9. That, however, defendant failed and refused to vacate despite just and
legal demand by Mr. Lino Reyes;

10. That after the sale to plaintiff of said premises, plaintiff has several
times demanded of defendants to vacate the premises, the last demand
having been made on them personally and in writing on January 14, 1997 x
x x;

11. That defendant failed and refused and still fails and refuses to vacate the
premises without legal cause or justifiable reason whatsoever;[11]

The answer of petitioner averred:

4. The Court has no jurisdiction over the case, having been filed by plaintiff
more than the reglementary one year period to commence forcible entry
case, which is reckoned from the date of the alleged unlawful entry of
defendant by the use of stealth and strategy into the premises;

5. For more than four decades now, defendant has been and still is a rent-
paying tenant of the subject land occupied by their residential house, dating
back to the original owner-lessor, the Dimayuga family. Her lease with no
definite duration, commenced with a rent at P60.00 per month until it was
gradually increased in the ensuing years. As of November 1996, it stood at
P300.00 a month;

6. In this circumstances [sic], defendant enjoys the protective mantle of P.D.

20 and the subsequent rental control status against dispossession. She
cannot be ejected other than for causes prescribed under B.P. Blg.
25. Further, in case of sale of the land, she has the right of first refusal under
the express provision of P.D. 1571;

7. Throughout the years of her tenancy, defendant has been updated in her
rental payment until the collector of the original owner-lessor no longer
came around as she has done theretofore;
 7.1. As a result, she was compelled to file a petition for
consignation of rent before the Metropolitan Trial Court of Manila;

8. A bona fide tenant within the ambit if [sic] P.D. 20 and the subsequent
rental control status, including B.P. Blg. 25, under its terms, cannot be
ousted on a plea of expiration of her monthly lease;

9. Her lease constitutes a legal encumbrance upon the property of the

lessor/owner and binds the latters successor-in-interest who is under
obligation to respect it;

10. The land at bench is the subject of a pending expropriation proceedings;

11. Plaintiff being a married woman cannot sue or be sued without being
joined by her husband;[12]

Undeniably, the aforequoted allegations of the complaint are vague and iffy
in revealing the nature of the action for ejectment.

The allegations in the complaint show that prior to the sale by Lino Reyes,
representing the estate of his wife Emerlinda Reyes, he was in possession and
control of the subject lot but were deprived of said possession when petitioner, by
means of stealth and strategy, entered and occupied the same lot. These
circumstances imply that he had prior physical possession of the subject lot and
can make up a forcible entry complaint.
On the other hand, the allegation that petitioner Dela Cruz was served
several demands to leave the premises but refused to do so would seem to indicate
an action for unlawful detainer since a written demand is not necessary in an action
for forcible entry. It is a fact that the MeTC complaint was filed on September 8,
1997 within one (1) year from the date of the last written demand upon petitioner
Dela Cruz on January 14, 1997.

As previously discussed, the settled rule is jurisdiction is based on the

allegations in the initiatory pleading and the defenses in the answer are deemed
irrelevant and immaterial in its determination. However, we relax the rule and
consider the complaint at bar as an exception in view of the special and unique
circumstances present. First, as in Ignacio v. CFI of Bulacan,[13] the defense of lack
of jurisdiction was raised in the answer wherein there was an admission that
petitioner Dela Cruz was a lessee of the former owners of the lot, the Reyeses,
prior to the sale to respondent Tan Te. The fact that petitioner was a tenant of the
predecessors-in-interest of respondent Tan Te is material to the determination of
jurisdiction. Since this is a judicial admission against the interest of petitioner, such
admission can be considered in determining jurisdiction. Second, the ejectment suit
was filed with the Manila MeTC on September 8, 1997or more than nine (9) years
ago. To dismiss the complaint would be a serious blow to the effective dispensation
of justice as the parties will start anew and incur additional legal expenses after
having litigated for a long time. Equitable justice dictates that allegations in the
answer should be considered to aid in arriving at the real nature of the
action. Lastly, Section 6, Rule 1 of the Rules of Court clearly empowers the Court
to construe Rule 70 and other pertinent procedural issuances in a liberal manner to
promote just, speedy, and inexpensive disposition of every action and proceeding.

Based on the complaint and the answer, it is apparent that the Tan Te
ejectment complaint is after all a complaint for unlawful detainer. It was admitted
that petitioner Dela Cruz was a lessee of the Reyeses for around four (4)
decades. Thus, initially petitioner as lessee is the legal possessor of the subject lot
by virtue of a contract of lease. When fire destroyed her house, the Reyeses
considered the lease terminated; but petitioner Dela Cruz persisted in returning to
the lot and occupied it by strategy and stealth without the consent of the
owners. The Reyeses however tolerated the continued occupancy of the lot by
petitioner. Thus, when the lot was sold to respondent Tan Te, the rights of the
Reyeses, with respect to the lot, were transferred to their subrogee, respondent Tan
Te, who for a time also tolerated the stay of petitioner until she decided to eject
the latter by sending several demands, the last being the January 14, 1997 letter of
demand. Since the action was filed with the MeTC on September 8, 1997, the
action was instituted well within the one (1) year period reckoned from January 14,
1997. Hence, the nature of the complaint is one of unlawful detainer and the
Manila MeTC had jurisdiction over the complaint.

Thus, an ejectment complaint based on possession by tolerance of the

owner, like the Tan Te complaint, is a specie of unlawful detainer cases.
 As early as 1913, case law introduced the concept of possession by tolerance
in ejectment cases as follows:
It is true that the landlord might, upon the failure of the tenant to pay the
stipulated rents, consider the contract broken and demand immediate
possession of the rented property, thus converting a legal possession into
illegal possession. Upon the other hand, however, the landlord might
conclude to give the tenant credit for the payment of the rents and allow him
to continue indefinitely in the possession of the property. In other words, the
landlord might choose to give the tenant credit from month to month or
from year to year for the payment of their rent, relying upon his honesty of
his financial ability to pay the same. During such period the tenant would
not be in illegal possession of the property and the landlord could not
maintain an action of desahucio until after he had taken steps to convert the
legal possession into illegal possession. A mere failure to pay the rent in
accordance with the contract would justify the landlord, after the legal
notice, in bringing an action of desahucio. The landlord might, however,
elect to recognize the contract as still in force and sue for the sums due
under it. It would seem to be clear that the landlord might sue for the rents
due and [unpaid, without electing to terminate the contract of tenancy;]
[w]hether he can declare the contract of tenancy broken and sue in an action
desahucio for the possession of the property and in a separate actions for the
rents due and damages, etc.[14]
The concept of possession by tolerance in unlawful detainer cases was
further refined and applied in pertinent cases submitted for decision by 1966. The
rule was articulated as follows:

Where despite the lessees failure to pay rent after the first demand, the
lessor did not choose to bring an action in court but suffered the lessee to
continue occupying the land for nearly two years, after which the lessor
made a second demand, the one-year period for bringing the detainer case in
the justice of the peace court should be counted not from the day the lessee
refused the first demand for payment of rent but from the time the second
demand for rents and surrender of possession was not complied with.[15]
In Calubayan v. Pascual, a case usually cited in subsequent decisions on
ejectment, the concept of possession by tolerance was further elucidated as
follows:

In allowing several years to pass without requiring the occupant to vacate

the premises nor filing an action to eject him, plaintiffs have acquiesced to
defendants possession and use of the premises. It has been held that a
person who occupies the land of another at the latters tolerance or
permission, without any contract between them, is necessarily bound by
an implied promise that he will vacate upon demand, failing which a
 summary action for ejectment is the proper remedy against them. The status
of the defendant is analogous to that of a lessee or tenant whose term of
lease has expired but whose occupancy continued by tolerance of the
owner. In such a case, the unlawful deprivation or withholding of
possession is to be counted from the date of the demand to vacate.
[16]
(Emphasis supplied.)

From the foregoing jurisprudence, it is unequivocal that petitioners

possession after she intruded into the lot after the firewas by tolerance or leniency
of the Reyeses and hence, the action is properly an unlawful detainer case falling
under the jurisdiction of the Manila MeTC.

Even if we concede that it is the RTC and not the MeTC that has jurisdiction
over the Tan Te complaint, following the reasoning that neither respondent nor her
predecessor-in-interest filed an ejectment suit within one (1) year from February
21, 1994 when the Reyeses knew of the unlawful entry of petitioner, and hence, the
complaint is transformed into an accion publiciana, the Court deems it fair and just
to suspend its rules in order to render efficient, effective, and expeditious justice
considering the nine (9) year pendency of the ejectment suit. More importantly, if
there was uncertainty on the issue of jurisdiction that arose from the averments of
the complaint, the same cannot be attributed to respondent Tan Te but to
hercounsel who could have been confused as to the actual nature of the ejectment
suit. The lawyers apparent imprecise language used in the preparation of the
complaint without any participation on the part of Tan Te is sufficient special or
compelling reason for the grant of relief.

The case of Barnes v. Padilla[17] elucidates the rationale behind the exercise
by this Court of the power to relax, or even suspend, the application of the rules of
procedure:

Let it be emphasized that the rules of procedure should be viewed as mere

tools designed to facilitate the attainment of justice. Their strict and rigid
application, which would result in technicalities that tend to frustrate rather
than promote substantial justice, must always be eschewed. Even the Rules
of Court reflect this principle. The power to suspend or even disregard rules
can be so pervasive and compelling as to alter even that which this Court
itself has already declared to be final x x x.
 The emerging trend in the rulings of this Court is to afford every party
litigant the amplest opportunity for the proper and just determination of his
cause, free from the constraints of technicalities.Time and again, this Court
has consistently held that rules must not be applied rigidly so as not to
override substantial justice.[18]

Moreover, Section 8, Rule 40 authorizes the RTCin case of affirmance of an

order of the municipal trial court dismissing a case without trial on the merits and
the ground of dismissal is lack of jurisdiction over the subject matterto try the case
on the merits as if the case was originally filed with it if the RTC has jurisdiction
over the case. In the same vein, this Court, in the exercise of its rule-making power,
can suspend its rules with respect to this particular case (pro hac vice), even if
initially, the MeTC did not have jurisdiction over the ejectment suit, and decide to
assume jurisdiction over it in order to promptly resolve the dispute.

The issue of jurisdiction settled, we now scrutinize the main issue.

At the heart of every ejectment suit is the issue of who is entitled to physical
possession of the lot or possession de facto.

We rule in favor of respondent Tan Te for the following reasons:

1. Petitioner admitted in her Answer that she was a rent-paying tenant of the
Reyeses, predecessors-in-interest of respondent Tan Te. As such, she recognized
the ownership of the lot by respondent, which includes the right of possession.

2. After the fire raged over the structures on the subject lot in late 1989 the
contracts of lease expired, as a result of which Lino Reyes demanded that all
occupants, including petitioner, vacate the lot but the latter refused to abandon the
premises. During the duration of the lease, petitioners possession was legal but it
became unlawful after the fire when the lease contracts were deemed terminated
and demands were made for the tenants to return possession of the lot.

3. Petitioners possession is one by the Reyeses tolerance and generosity and

later by respondent Tan Tes.
 Petitioner fully knows that her stay in the subject lot is at the leniency and
magnanimity of Mr. Lino Reyes and later of respondent Tan Te; and her
acquiescence to such use of the lot carries with it an implicit and assumed
commitment that she would leave the premises the moment it is needed by the
owner. When respondent Tan Te made a last, written demand on January 14,
1997 and petitioner breached her promise to leave upon demand, she lost her right
to the physical possession of the lot. Thus, respondent Tan Te should now be
allowed to occupy her lot for residential purposes, a dream that will finally be
realized after nine (9) years of litigation.

Petitioner raises the ancillary issue that on March 15, 1998, the Manila City
Council passed and approved Ordinance No. 7951:
[a]uthorizing the Manila City Mayor to acquire either by negotiation or
expropriation certain parcels of land covered by Transfer Certificates of
Title Nos. 233273, 175106 and 140471, containing an area of One
Thousand Four Hundred Twenty Five (1,425) square meters, located at
Maria Clara and Governor Forbes Streets, Sta. Cruz, Manila, for low cost
housing and award to actual bonafide residents thereat and further
authorizing the City Mayor to avail for that purpose any available funds of
the city and other existing funding facilities from other government
agencies x x x.[19]

It readily appears that this issue was not presented before the Court of
Appeals in CA-G.R. SP No. 49097 despite the fact that the respondents petition
was filed on September 25, 1998, six months after the ordinance was passed. Thus,
this issue is proscribed as are all issues raised for the first time before the Court are
proscribed.

Even granting for the sake of argument that we entertain the issue, we rule
that the intended expropriation of respondents lot (TCT No. 233273) by the city
government of Manilawill not affect the resolution of this petition. For one thing,
the issue can be raised by petitioner in the appropriate legal proceeding. Secondly,
the intended expropriation might not even be implemented since it is clear from the
ordinance that the City Mayor will still locate available funds for project, meaning
the said expense is not a regular item in the budget.
 WHEREFORE, this petition is DENIED for lack of merit. The April 30,
1999 Decision of the Court of Appeals reinstating the April 3, 1998 MeTC
Decision in Civil Case No. 156730-CV and the July 16, 1999 Resolution in CA-
G.R. SP No. 49097 are hereby AFFIRMED IN TOTO.

No costs.

SO ORDERED.

PRESBITERO J. VELASCO, JR.

Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

ANTONIO T. CARPIO CONCHITA CARPIO MORALES

Associate Justice Associate Justice

DANTE O. TINGA
Associate Justice

AT T E S TAT I O N
I attest that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

C E R T I F I C AT I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.

ARTEMIO V. PANGANIBAN
Chief Justice

G.R. No. 202354 September 24, 2014

AMADA C. ZACARIAS, Petitioner,

vs.
VICTORIA ANACAY, EDNA ANACAY, CYNTHIAANACAYGUISIC, ANGELITO ANACAY, JERMIL
ISRAEL, JIMMY ROY ISRAEL and all other persons claiming authority under
them, Respondents.

DECISION

VILLARAMA, JR., J.:

Assailed in this petition for review under Rule 45 is the Decision dated June 20, 2012 of the Court of
1

Appeals (CA) in CA-G.R. SP No. 123195 which reversed the Decision dated August 22, 2011 of the
2

Regional Trial Court (RTC) of Cavite, Branch 18, Tagaytay City and affirmed the Decision dated
3

October 8, 2010 of the Municipal Circuit Trial Court (MCTC) of Amadeo-Silang, Cavite, Branch 17 in
Civil Case No. 862.
The present controversy stemmed from a complaint for Ejectment with Damages/Unlawful Detainer
4

filed on December 24, 2008 by petitioner Amada Zacarias thru her son and attorney-in-fact, Cesar C.
Zacarias, against the above-named respondents, Victoria Anacay and members of her household.
Said respondents are the occupants of a parcel of land with an area of seven hundred sixty-nine
(769) square meters, situated at Barangay Lalaan 1st, Silang, Cavite and covered by Tax
Declaration No. 18-026-01182 in the name of petitioner and issuedby Municipal Assessor Reynaldo
L. Bayot on August 31, 2007.

The parties were ordered to proceed to the Philippine Mediation Center pursuant to Section 2(a),
Rule 18 of the 1997 Rules of Civil Procedure, as amended. Mediation was unsuccessful and thus
the case was returned to the court.5

After due proceedings, the MCTC rendered a Decision dismissing the complaint, the dispositive
portion of which reads:

WHEREFORE, premises considered, judgment is, hereby, rendered in favor of defendants Victoria
Anacay, Edna Anacay, Santiago Amerna, Raymond and Cynthia Guisic, Angelito Anacay and
Myrlinda Yalo, and all persons acting under them, and against plaintiff Amada C. Zacarias,
represented by her attorney-in-fact, Cesar C. Zacarias, the instant Complaint for ejectment with
damages, Unlawful Detainer is, hereby, DISMISSED.

SO ORDERED. 6

The MCTC held that the allegations of the complaint failed to state the essential elements of an
action for unlawful detainer as the claim that petitioner had permitted or tolerated respondents
occupation of the subject property was unsubstantiated. It noted that the averments in the demand
letter sent by petitioners counsel that respondents entered the property through stealth and strategy,
and in petitioners own "Sinumpaang Salaysay", are more consistent withan action for forcible entry
which should have been filed within one year from the discovery of the alleged entry. Since petitioner
was deprived of the physical possession of her property through illegal means and the complaint
was filed after the lapse of one year from her discovery thereof, the MCTC ruled that it has no
jurisdiction over the case.

On appeal to the RTC, petitioner argued that unlawful detainer was the proper remedy considering
that she merely tolerated respondents stay in the premises after demand to vacate was made upon
them, and they had in fact entered into an agreement and she was only forced to take legal action
when respondents reneged on their promise to vacate the property after the lapse of the period
agreed upon.

In reversing the MCTC, the RTC pointed out that in her complaint, petitioner did not state that
respondents entered her property through stealth and strategy but that petitioner was in lawful
possession and acceded to the request of respondents to stay in the premises until May 2008 but
respondents reneged on their promise to vacate the property by that time. It held that the suit is one
for unlawful detainer because the respondents unlawfully withheld the property from petitioner after
she allowed them to stay there for one year.
With the subsequent oral agreement between the parties, the RTC ruled that respondents
occupation ofthe property without petitioners consent can be converted to a contract, such
agreement not being prohibited by law nor contrary to morals or good customs. Having satisfied the
requisites for an unlawful detainer action, the RTC found that petitioners complaint was filed within
the prescribed one-year period counted from the time the final demand to vacate was received by
the respondents on July 24, 2008.

The falloof the Decision of the RTC states:

WHEREFORE, premises considered, the Decision of the Municipal Circuit Trial Court of Silang-
Amadeo dated October 8, 2010 is hereby REVERSED AND SET ASIDE and a new one is entered
ordering the defendants and all claiming under their rights to: (1) vacate the subject property and
surrender possession and control over the same to the plaintiff; Pay the sum of Two Thousand
(P2,000.00) Pesos each as rentals or compensation for the use thereof starting from July 2008 until
the same is paid in full, with interests thereon at twelve (12%) percent per annum; (2) pay the sum of
Fifty Thousand (P50,000.00) Pesos, as moral damages; (3) pay the sum of Ten Thousand
(P10,000.00) Pesos, as exemplary damages; and (4) pay the sum of Twenty Thousand (P20,000.00)
Pesos, as attorneys fees.

SO ORDERED. 7

With the failure of respondents to file a notice of appeal within the reglementary period, the above
decision became final and executory. 8

On November 28, 2011, petitioner filed a motion for issuance of a writ of execution. At the hearing
heldon January 4, 2012,respondents were given a period of ten days within which to file their
comment. At the next scheduled hearing on February 6, 2012,respondents counsel appeared and
submitted a Formal Entry of Appearancewith Manifestation informing the court that on the same day
they had filed a petition for certiorari with prayer for injunction before the CA, copies ofwhich were
served to petitioner thru her counsel and to the RTC. Nonetheless, in its Order dated February 6,
2012, the RTC stated that said manifestation was "tantamount to [a] comment to the pending
motion" and thus gave petitioners counsel a period of ten (10) days within which to fileher Reply and
thereafter the incident will be submitted for resolution.
9

On June 20, 2012, the CA rendered its Decision, the dispositive portion of which reads:

WHEREFORE, the petition is GRANTED. Accordingly, the assailed Order dated August 22, 2011
rendered by the Regional Trial Court of Cavite, 4th Judicial Region, Branch 18, Tagaytay City is
REVERSED and SET ASIDE. The Decision dated October 8, 2010 rendered by the Municipal Circuit
Trial Court, Branch 17 is AFFIRMED.

SO ORDERED. 10

The CA held that the MCTC clearlyhad no jurisdiction over the case as the complaint did not satisfy
the jurisdictional requirement of a valid cause for unlawful detainer. Since the prescriptive period for
filing an action for forcible entry has lapsed, petitioner could not convert her action into one for
unlawful detainer, reckoning the one-year period to file her action from the time of her demand for
respondents to vacate the property.

Further, the CA said that while petitioner has shown that she is the lawful possessor of the subject
property,she availed of the wrong remedy to recover possession but nevertheless may still file an
accion publicianaor accion reivindicatoria with the proper regional trial court.

Petitioner contends that the CA erred and committed grave abuse of discretion amounting to lack
and/or excess of jurisdiction in nullifying the judgment of the RTC which has long become final and
executory. She argues that the suspension of the strictadherence to procedural rules cannot be
justified by unsupported allegationsof the respondents as to supposed non-receipt of documents
concerning this case.

On their part, respondents maintain that they were not aware of the proceedings before the RTC and
were not furnished a copy of the said courts adverse decision. They also stress that resort to
certiorari was proper and the suspension of procedural rules was justified by compelling
circumstances such as the imminentdestruction of the only property possessed by respondents who
are indigent, respondents lack of awareness of unfavorable judgment rendered on appeal by the
RTC, substantive merits of the case insofar as the jurisdictional requirements in a suit for unlawful
detainer, lack of showing that resortto certiorari petition was frivolous and dilatory, and there being
no prejudice caused to the other party.

After a thorough review of the records and the parties submissions, we find neither reversible error
nor grave abuse of discretion committed by the CA.

The invariable rule is that what determines the nature of the action, as well as the court which has
jurisdiction over the case, are the allegations in the complaint. In ejectment cases, the complaint
11

should embody such statement of facts as to bring the party clearly within the class of cases for
which Section 1 of Rule 70 provides a summary remedy, and must show enough on its face to give
12

the court jurisdiction without resort to parol evidence. Such remedy is either forcibleentry or
13

unlawful detainer. In forcible entry, the plaintiff is deprived of physical possession of his land or
building by means of force, intimidation, threat, strategy or stealth. In illegal detainer, the defendant
unlawfully withholds possession after the expiration or termination of his right thereto under any
contract, express or implied. 14

The MCTC and CA both ruled thatthe allegations in petitioners complaint make out a case for
forcible entry but not for unlawful detainer.

In Cabrera v. Getaruela, the Court held that a complaint sufficiently alleges a cause of action for
15

unlawful detainer if it recites the following:

(1) initially, possession of property by the defendant was by contract with or by toleranceof the
plaintiff;

(2) eventually, such possession became illegal upon notice by plaintiff to defendant of the
termination ofthe latters right of possession;
(3) thereafter, the defendant remained in possession of the property and deprived the plaintiff of the
enjoyment thereof; and

(4) within one year from the last demand on defendant to vacate the property, the plaintiff instituted
the complaint for ejectment.16

In this case, the Complaint alleged the following:

3. Plaintiff is the owner of that parcel of land situated at Barangay Lalaan 1st, Silang, Cavite with an
area of SEVEN HUNDRED SIXTY NINE (769) SQUARE METERS, and covered by Tax Declaration
No. 18-026-01182 issued by the Municipal Assessor of Silang, Cavite. Copy of said tax declaration is
hereto attached as Annex "B";

4. Plaintiff was in lawful possession and control over the subject property. She had it planted to
Bananas and other fruit bearing trees. However, sometime in May, 2007, she discovered that the
defendants have entered the subject property and occupied the same;

5. Consequently, Plaintiff demanded that they leave the premises. The defendants requested for
time toleave and she acceded to said request. The defendants committed to vacate the subject
property by the end of May, 2008;

6. Inspite of several repeateddemands, defendants unjustifiably refused to vacate the subject

premises prompting the Plaintiff to seek the assistance of a lawyer who wrote them a FORMAL and
FINAL DEMAND to vacate the premises and to pay reasonable compensation for their illegal use
and occupancy of the subject property. A copy of the DEMAND LETTER is hereto attached as Annex
"C";

7. Plaintiff also referred this matter to the Lupon Tagapamayapa of Barangay Lalaan 1st for possible
conciliation but to no avail as the defendants still refused to vacate the subject property. Thus, the
said Barangay issued a CERTIFICATION TOFILE ACTION, as evidenced by a copy thereto attached
as Annex "D";

xxxx 17

The above complaint failed to allegea cause of action for unlawful detainer as it does not describe
possession by the respondents being initially legal or tolerated by the petitioner and which became
illegal upon termination by the petitioner of suchlawful possession. Petitioners insistence that she
actually tolerated respondents continued occupation after her discovery of their entry into the
subject premises is incorrect. As she had averred, she discovered respondentsoccupation in May
2007. Such possession could not have been legal from the start as it was without her knowledge or
consent, much less was it based on any contract, express or implied. We stress that the possession
ofthe defendant in unlawful detainer is originally legal but became illegal due to the expiration or
termination of the right to possess.
18
In Valdez v. Court of Appeals, the Court ruled that where the complaint did not satisfy the
19

jurisdictional requirement of a valid cause for unlawful detainer, the municipal trial court had no
jurisdiction over the case. Thus:

To justify an action for unlawful detainer, it is essential that the plaintiffs supposed acts of tolerance
must have been present right from the start of the possession which is later sought to be recovered.
Otherwise, if the possession was unlawful from the start, an action for unlawful detainer would be an
improper remedy. As explained in Sarona v. Villegas:

But even where possession preceding the suit is by tolerance of the owner, still, distinction should be
made.

If right at the incipiencydefendants possession was with plaintiffs tolerance, we do not doubt that
the latter may require him to vacate the premises and sue before the inferior court under Section 1 of
Rule 70, within one year from the date of the demand to vacate.

xxxx

A close assessment of the law and the concept of the word "tolerance" confirms our view heretofore
expressed that such tolerance must be present right from the start of possession sought to be
recovered, to categorize a cause of action as one of unlawful detainer - not of forcible entry. Indeed,
to hold otherwise would espouse a dangerous doctrine. And for two reasons:First. Forcible entry into
the land is an open challenge tothe right of the possessor. Violation of that right authorizes the
speedy redress in the inferior court - provided for in the rules. If one year from the forcible entry is
allowed to lapse before suit is filed, then the remedy ceases to bespeedy; and the possessor is
deemed to have waived his right to seek relief in the inferior court. Second,if a forcible entry action in
the inferior courtis allowed after the lapse of a number of years, then the result may well be that no
action of forcible entry can really prescribe. No matter how long such defendant is in physical
possession, plaintiff will merely make a demand, bring suit in the inferior court upon a plea of
tolerance to prevent prescription to set in - and summarily throw him out of the land. Such a
conclusion is unreasonable. Especially if we bear in mind the postulates that proceedings of forcible
entry and unlawful detainer are summary in nature, and that the one year time-bar to suit is but in
pursuance of the summary nature of the action. (Italics and underscoring supplied)

It is the nature of defendants entry into the land which determines the cause of action, whether it is
forcible entry or unlawful detainer. If the entry is illegal, then the action which may be filed against
the intruder is forcible entry. If, however, the entry is legal but the possession thereafter becomes
illegal, the case is unlawful detainer.

Indeed, to vest the court jurisdiction to effect the ejectment of an occupant, it is necessary that the
complaint should embody such a statement of facts as brings the party clearly within the class of
cases for which the statutes provide a remedy, as these proceedings are summary in nature. The
complaint must show enough on its face the court jurisdiction without resort to parol testimony.

The jurisdictional facts must appear on the face of the complaint. When the complaint fails to aver
facts constitutive of forcible entry or unlawful detainer, as where it does not state how entry was
affected or how and when dispossession started, the remedy should either be an accion publicianaor
an accion reivindicatoria in the proper regional trial court. Thus, in Go, Jr. v. Court of Appeals,
petitioners filed an unlawful detainer case against respondent alleging that they were the owners of
the parcel of land through intestate succession which was occupied by respondent by mere
tolerance of petitioners as well as their deceased mother. Resolving the issue on whether or not
petitioners case for unlawful detainer will prosper, the court ruled:

Petitioners alleged in their complaint that they inherited the property registered under TCT No. C-
32110 from their parents; that possession thereof by private respondent was by tolerance of their
mother, and after her death, by their own tolerance; and that they had served written demand on
December, 1994, but that private respondent refused to vacate the property. x x x

It is settled that one whose stay is merely tolerated becomes a deforciant illegally occupying the land
the moment he is required to leave. It is essential in unlawful detainer cases of this kind, that
plaintiffs supposed acts of tolerance must have been present right from the start of the possession
which is later sought to be recovered. This is where petitioners cause of action fails. The appellate
court, in full agreement with the MTC made the conclusion that the alleged tolerance by their mother
and after her death, by them, was unsubstantiated. x x x

The evidence revealed that the possession of defendant was illegal at the inception and not merely
tolerated as alleged in the complaint, considering that defendant started to occupy the subject lot
and then built a house thereon without the permission and consent of petitioners and before them,
their mother. xxx Clearly, defendants entry into the land was effected clandestinely, without the
knowledge of the owners, consequently, it is categorized as possession by stealth which is forcible
entry. As explained in Sarona vs. Villegas, cited in Muoz vs. Court of Appeals[224 SCRA 216
(1992)] tolerance must be present right from the start of possession sought to be recovered, to
categorize a cause of action as one of unlawful detainer not of forcible entry x x x.

xxxx

In the instant case, the allegations in the complaint do not contain any averment of fact that would
substantiate petitioners claim that they permitted or tolerated the occupation of the property by
respondents. The complaint contains only bare allegations that "respondents without any color of
title whatsoever occupies the land in question by building their house in the said land thereby
depriving petitioners the possession thereof." Nothing has been said on how respondents entry was
effected or how and when dispossession started. Admittedly, no express contract existed between
the parties. This failure of petitioners to allege the key jurisdictional facts constitutive of unlawful
detainer is fatal. Since the complaint did not satisfy the jurisdictional requirement of a valid cause for
unlawful detainer, the municipal trial court had no jurisdiction over the case.It is in this light that this
Court finds that the Court of Appeals correctly found that the municipal trial court had no jurisdiction
over the complaint. (Emphasis supplied.)

The complaint in this case is similarly defective as it failed to allege how and when entry was
effected. The bare allegation of petitioner that "sometime in May, 2007, she discovered that the
defendants have enterep the subject property and occupied the same", as correctly found by the
MCTC and CA, would show that respondents entered the land and built their houses thereon
clandestinely and without petitioner's consent, which facts are constitutive of forcible entry, not
unlawful detainer. Consequently, the MCTC has no jurisdiction over the case and the RTC clearly
erred in reversing the lower court's ruling and granting reliefs prayed for by the petitioner.

Lastly, petitioner's argument that the CA gravely erred in nullifying a final and executory judgment of
the RTC deserves scant consideration.

It is well-settled that a court's jurisdiction may be raised at any stage of the proceedings, even on
appeal. The reason is that jurisdiction is conferred by law, and lack of it affects the very authority of
the court to take cognizance of and to render judgment on the action. Indeed, a void judgment for
20

want of jurisdiction is no judgment at all. It cannot be the source of any right nor the creator of any
obligation. All acts performed pursuant to it and all claims emanating from it have no legal effect.
Hence, it can never become final and any writ of execution based on it is void. 21

WHEREFORE, the petition is DENIED for lack of merit. The Decision dated June 20, 2012 of the
Court of Appeals in CA-G.R. SP No. 123195 is hereby AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

FIRST DIVISION

G.R. No. 187944, March 12, 2014

CARMENCITA SUAREZ, Petitioner, v. MR. AND MRS. FELIX E. EMBOY, JR. AND MARILOU P. EMBOY
DELANTAR, Respondents.

DECISION

REYES, J.:

For review in the instant Petition1 is the Decision2 rendered on March 19, 2009 and Resolution3 issued on
May 5, 2009 by the Court of Appeals (CA) in CAG.R. SP No. 03489. The CA granted the Petition for
Review4 filed by Mr. and Mrs. Felix Emboy, Jr. (Felix) and Marilou EmboyDelantar (Marilou) (respondents),
seeking to reverse the decisions of the Regional Trial Court (RTC), Branch 12, 5 and Municipal Trial Court in
Cities (MTCC), Branch 3,6 of Cebu City, rendered on February 26, 2008 in Civil Case No. CEB
33328,7 and on September 25, 2006 in Civil Case No. R49832, respectively. The RTC affirmed the
MTCC in upholding the claims of Carmencita Suarez (Carmencita) in her complaint for unlawful detainer
instituted against the respondents.

Antecedents

At the center of the dispute is a 222square meter parcel of land, designated as Lot No. 1907A2
(subject lot) of the subdivision plan Psd165686, situated in Barangay Duljo, Cebu City, and covered by
Transfer Certificate of Title (TCT) No. T174880 issued in the name of Carmencita on February 9, 2005. The
subject lot used to be a part of Lot No. 1907A,8 which was partitioned in the following manner among the
heirs of Spouses Carlos Padilla (Carlos) and Asuncion Pacres (Asuncion): 9

Lot No. TCT No. Heirs

1907A1 T54359 Spouses Rogelio and Praxedes Padilla
 1907A2 T54360 Heirs of Vicente Padilla (Vicente),
namely: (1) Azucena Padilla, married
to Felly Carrera; (2) Remedios Padilla
(Remedios), married to Oscar Dimay;
(3) Veronica Padilla (Veronica);10 and
(4) Moreno Padilla (Moreno), married
to Teresita Curso (Teresita)
1907A3 T54361 Cresencio Padilla
1907A4 T54362 Fructousa Baricuatro
1907A5 T54363 Claudia PadillaEmboy (Claudia)

A house, which is occupied by respondents Felix and Marilou, stands in the subject lot. The respondents
claim that their mother, Claudia, had occupied the subject lot during her lifetime and it was earmarked to
become her share in Lot No. 1907A. They had thereafter stayed in the subject lot for decades after
inheriting the same from Claudia, who had in turn succeeded her own parents, Carlos and Asuncion. 11

In 2004, respondents Felix and Marilou were asked by their cousins, who are the Heirs of Vicente, to vacate
the subject lot and to transfer to Lot No. 1907A5, a landlocked portion sans a right of way. They refused
to comply insisting that Claudias inheritance pertained to Lot No. 1907A2. 12

Not long after, the respondents received from Carmencitas counsel, Atty. Jufelenito R. Pareja (Atty. Pareja),
a demand letter, dated February 23, 2004, requiring them to vacate the subject lot. They were informed
that Carmencita had already purchased on February 12, 2004 the subject lot from the formers relatives.
However, the respondents did not heed the demand. Instead, they examined the records pertaining to the
subject lot and uncovered possible anomalies, i.e., forged signatures and alterations, in the execution of a
series of deeds of partition relative to Lot No. 1907A. On August 13, 2004, they filed before the RTC of
Cebu City a complaint13 for nullification of the partition and for the issuance of new TCTs covering the heirs
respective portions of Lot No. 1907A.14

On December 8, 2004, Carmencita filed before the MTCC and against the respondents a complaint for
unlawful detainer, the origin of the instant petition. She alleged that she bought the subject lot from
Remedios, Moreno, Veronica and Dionesia,15 the registered owners thereof and the persons who allowed the
respondents to occupy the same by mere tolerance. As their successorininterest, she claimed her
entitlement to possession of the subject lot and the right to demand from the respondents to vacate the
same.16

The MTCC upheld Carmencitas claims in its decision rendered on September 25, 2006. The respondents
were ordered to vacate the subject lot and remove at their expense all the improvements they had built
thereon. They were likewise made solidarily liable to pay Carmencita Php 20,000.00 as attorneys fees. 17

In the Decision dated February 26, 2008, the RTC affirmed in its entirety the MTCC ruling. 18

The respondents challenged the MTCC and RTC judgments through a Petition for Review 19 filed before the
CA.

The respondents argued that they have been occupying the subject lot in the concept of owners for several
decades. Carmencita, on the other hand, was a buyer in bad faith for having purchased the property
despite the notice of lis pendens clearly annotated on the subject lots title. Even her complaint for unlawful
detainer was filed on December 8, 2004 subsequent to the respondents institution on August 13, 2004 of a
petition for nullification of the partition. Citing Sarmiento v. CA,20the respondents emphasized that even if
one is the owner of the property, the possession thereof cannot be wrested from another who had been in
the physical or material possession of the same for more than one year by resorting to a summary action of
ejectment.21 The respondents also invoked the doctrine enunciated in Amagan v. Marayag22 that the
pendency of another action anchored on the issue of ownership justifies the suspension of an ejectment suit
involving the same real property. The foregoing is especially true in the case at bar where the issue of
possession is so interwoven with that of ownership. Besides, the resolution of the question of ownership
would necessarily result in the disposition of the issue of possession.

The respondents also stressed that the deed of sale dated April 1, 2004, which was attached to the
complaint for unlawful detainer, bore telltale signs of being spurious. First, Atty. Parejas demand letter
sent to the respondents instead referred to a deed of sale dated February 12, 2004. Secondly, Teresita, who
now lives in Luzon and has been estranged from Moreno since the 1980s, was a signatory in the deed of
sale. Thirdly, a certain Veronida Padilla, a fictitious person, also signed the deed of sale as among the
vendors, but she, too, was impleaded as a codefendant in the ejectment suit. Fourthly, the deed was only
registered the following year after its supposed execution.

The respondents insisted that the Heirs of Vicente, who had allegedly sold the subject lot to Carmencita, had
never physically occupied the same. Hence, there was no basis at all for Carmencitas claim that the
respondents possession of the subject lot was by mere tolerance of the alleged owners.

The respondents also presented before the CA a newly discovered evidence, which they found in an old
wooden chest in their ancestral home. A duly notarized document captioned as an Agreement,23dated
February 23, 1957, showed that Vicente and his spouse, Dionesia, had waived their hereditary rights to Lot
No. 1907A. The document stated that Vicente obtained a loan from the Philippine National Bank using Lot
No. 1907A as a collateral. The loan was paid by Carlos and Asuncion and the waiver must have been
executed in order to be fair to Vicentes siblings. Prescinding from the above, the Heirs of Vicente no longer
had ownership rights over the subject lot to convey to Carmencita.

The respondents also averred that Carmencitas complaint lacked a cause of action. The certification to file
an action was issued by the officials of Barangay Duljo in the name of James Tan Suarez, Carmencitas
brother, who had no real rights or interests over the subject lot. Further, while Carmencita based her claim
over the subject lot by virtue of a deed of sale executed on April 1, 2004, no demand to vacate was made
upon the respondents after that date. The absence of such demand rendered the complaint fatally
defective, as the date of its service should be the reckoning point of the oneyear period within which the
suit can be filed.

In support of the respondents prayer for the issuance of injunctive reliefs, they argued that their loss would
be irreparable. Moreover, the resolution of the respondents petition for nullification of the partition of Lot
No. 1907A, in which Carmencita was likewise impleaded as a defendant, would be rendered useless in the
event that the latters complaint for unlawful detainer would be granted and the formers ancestral house
demolished.

The Ruling of the CA

On March 19, 2009, the CA rendered the herein assailed Decision reversing the disquisitions of the courts a
quo and dismissing Carmencitas complaint for unlawful detainer. The CA explained: chanRoblesvirtualLa wlibrary

Section 1, Rule 70 of the Rules of Court provides:

Section 1. Who may institute proceedings, and when.Subject to the provisions of the next succeeding
section, a person deprived of the possession of any land or building by force, intimidation, threat, strategy,
or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land or building
is unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any
contract, express or implied, or the legal representatives or assigns of any such lessor, vendor, vendee, or
other person, may, at any time within one (1) year after such unlawful deprivation or withholding of
possession, bring an action in the proper Municipal Trial Court against the person or persons unlawfully
withholding or depriving of possession, or any person or persons claiming under them, for the
restitution of such possession, together with damages and costs.
The distinction between forcible entry and unlawful detainer was lucidly explained in Sarmiento vs. Court of
Appeals,:
Forcible entry and unlawful detainer cases are two distinct actions defined in Section 1, Rule 70 of the Rules
of Court. [In] forcible entry, one is deprived of physical possession of land or building by means of force,
intimidation, threat, strategy, or stealth. In unlawful detainer, one unlawfully withholds possession thereof
after the expiration or termination of his right to hold possession under any contract, express or implied. In
forcible entry, the possession is illegal from the beginning and the basic inquiry centers on who has the prior
possession de facto. In unlawful detainer, the possession was originally lawful but became unlawful by the
expiration or termination of the right to possess, hence the issue of rightful possession is decisive for, in
such action, the defendant is in actual possession and the plaintiffs cause of action is the termination of the
defendants right to continue in possession.
What determines the cause of action is the nature of defendants entry into the land. If the entry is illegal,
then the action which may be filed against the intruder within one (1) year therefrom is forcible entry. If, on
the other hand, the entry is legal but the possession thereafter became illegal, the case is one of unlawful
detainer which must be filed within one (1) year from the date of the last demand.
A close perusal of [Carmencitas] complaint a quo reveals that the action was neither one of forcible entry
nor unlawful detainer but essentially involved an issue of ownership which must be resolved in an accion
reivindicatoria. It did not characterize [the respondents] alleged entry into the land: whether the same was
legal or illegal. It did not state how [the respondents] entered the land and constructed a house thereon. It
was also silent on whether [the respondents] possession became legal before [Carmencita] demanded from
them to vacate the land. The complaint merely averred that their relatives previously owned the lot [the
respondents] were occupying and that after [Carmencita] purchased it[,] she, as its new owner, demanded
[for the respondents] to vacate the land. Moreover, it is undisputed that [the respondents] and their
ancestors have been occupying the land for several decades already. There was no averment as to how or
when [Carmencitas] predecessors tolerated [the respondents] possession of the land. Consequently, there
was no contract to speak of, whether express or implied, between [the respondents], on one hand, and
[Carmencita] or her predecessors, on the other, as would qualify [the respondents] possession of the land
as a case of unlawful detainer. Neither was it alleged that [the respondents] took possession of the land
through force, intimidation, threat, strategy or stealth to make out a case of forcible entry. In any event,
[Carmencita] cannot legally assert that [the respondents] possession of the land was by mere tolerance.
This is because [Carmencitas] predecessorsininterest did not yet own the property when [Claudia] took
possession thereof. Take note that [Carmencitas] predecessorsininterest merely stepped into the shoes
of their parents who were also coheirs of [Claudia]. Finally, to categorize a cause of action as one
constitutive of unlawful detainer, plaintiffs supposed acts of tolerance must have been present from the start
of the possession which he later seek[s] to recover. This is clearly wanting in the case at bar.

Indeed, when the complaint fails to aver facts constitutive of forcible entry or unlawful detainer, as where it
does not state how entry was effected or how and when dispossession started, as in the case at bar, the
remedy should either be an accion publiciana or an accion reivindicatoria in the proper RTC. If [Carmencita]
is truly the owner of the subject property and she was unlawfully deprived of the real right of possession or
ownership thereof, she should present her claim before the RTC in an accion publiciana or an accion
reivindicatoria, and not before the municipal trial court in a summary proceeding of unlawful detainer or
forcible entry.

Munoz vs. Court of Appeals enunciated:

For even if he is the owner, possession of the property cannot be wrested from another who had been in
possession thereof for more than twelve (12) years through a summary action for ejectment. Although
admittedly[,] petitioner may validly claim ownership based on the muniments of title it presented, such
evidence does not responsibly address the issue of prior actual possession raised in a forcible entry case. It
must be stated that regardless of actual condition of the title to the property, the party in peaceable quiet
possession shall not be turned out by a strong hand, violence or terror. Thus, a party who can prove prior
possession can recover such possession even against the owner himself. Whatever may be the character of
his prior possession, if he has in his favor priority in time, he has the security that entitles him to remain on
the property until he is lawfully ejected by a person having a better right by accion publiciana or accion
reivindicatoria.24 (Citations omitted and underscoring supplied)

In Carmencitas Motion for Reconsideration25 filed before the CA, she alleged that the case of Sarmiento cited
by the respondents is not applicable to the present controversy since it involves a boundary dispute, which is
properly the subject of an accion reivindicatoria and over which the MTCC has no jurisdiction. She claimed
that Rivera v. Rivera26 finds more relevance in the case at bar. In Rivera, the contending parties were each
others relatives and the Court ruled that in an unlawful detainer case, prior physical possession by the
complainant is not necessary.27 Instead, what is required is a better right of possession. Further, the MTCC
cannot be divested of jurisdiction just because the defendants assert ownership over the disputed property.

In the herein assailed Resolution dated May 5, 2009, the CA denied Carmencitas Motion for Reconsideration.

In essence, the instant petition presents the following issues:

Whether or not Carmencitas complaint against the respondents had sufficiently alleged and proven a cause
of action for unlawful detainer.
 II

Whether or not the pendency of the respondents petition for nullification of partition of Lot No. 1907A and
for the issuance of new certificates of title can abate Carmencitas ejectment suit.

Carmencitas Allegations

In support of the petition, Carmencita reiterates that she purchased the subject lot from the Heirs of
Vicente, who were then the registered owners thereof. At the time of the sale, respondents Felix and
Marilou were occupying the subject lot. Thus, Atty. Pareja, in Carmencitas behalf, demanded that they
vacate the property. The respondents refusal to comply with the demand turned them into deforciants
unlawfully withholding the possession of the subject lot from Carmencita, the new owner, whose recourse
was to file a complaint for unlawful detainer.

Further, Carmencita insists that a certificate of title shall not be subject to a collateral attack 28 and the issue
of ownership cannot be resolved in an action for unlawful detainer. A pending suit involving the question of
ownership of a piece of real property will not abate an ejectment complaint as the two are not based on the
same cause of action and are seeking different reliefs. 29

Additionally, Carmencita invokes the doctrine in Eastern Shipping Lines, Inc. v. CA30 that the registered
owner of a property is entitled to its possession. In Arcal v. CA,31 the Court also explained that the
occupation of a property not by its registered owner but by others depends on the formers tolerance, and
the occupants are bound by an implied promise to vacate upon demand, failing at which, a suit for
ejectment would be proper.32

The Respondents Arguments

In their Comment33 to the instant petition, the respondents stress that Carmencitas complaint for unlawful
detainer was fundamentally inadequate. There was practically no specific averment as to when and how
possession by tolerance of the respondents began. In the complaint, Carmencita made a general claim that
the respondents possessed the property by mere tolerance with the understanding that they would
voluntarily vacate the premises and remove their house(s) thereon upon demand by the owners.34
In Spouses Valdez, Jr. v. CA,35 the Court ruled that the failure of the complainants to allege key jurisdictional
facts constitutive of unlawful detainer is fatal and deprives the MTCC of jurisdiction over the action.

In their rejoinder,36 the respondents likewise argue that the issues of possession and ownership are
inseparably linked in the case at bar. Carmencitas complaint for ejectment was based solely on her spurious
title, which is already the subject of the respondents petition for nullification of partition of Lot No. 1907A.

Our Disquisition

The instant petition lacks merit.

Carmencita had not amply alleged

and proven that all the requisites for
unlawful detainer are present in the
case at bar.

Without a doubt, the registered owner of real property is entitled to its possession. However, the owner
cannot simply wrest possession thereof from whoever is in actual occupation of the property. To recover
possession, he must resort to the proper judicial remedy and, once he chooses what action to file, he is
required to satisfy the conditions necessary for such action to prosper.37

In Spouses Valdez, Jr.,38 the Court is instructive anent the three kinds of actions available to recover
possession of real property, viz: chanRoble svirtualLawlibrary

(a) accion interdictal; (b) accion publiciana; and (c) accion reivindicatoria.

Accion interdictal comprises two distinct causes of action, namely, forcible entry (detentacion) and unlawful
detainer (desahuico) [sic]. In forcible entry, one is deprived of physical possession of real property by
means of force, intimidation, strategy, threats, or stealth whereas in unlawful detainer, one illegally
withholds possession after the expiration or termination of his right to hold possession under any contract,
express or implied. The two are distinguished from each other in that in forcible entry, the possession of the
defendant is illegal from the beginning, and that the issue is which party has prior de facto possession while
in unlawful detainer, possession of the defendant is originally legal but became illegal due to the expiration
or termination of the right to possess.

The jurisdiction of these two actions, which are summary in nature, lies in the proper municipal trial court or
metropolitan trial court. Both actions must be brought within one year from the date of actual entry on the
land, in case of forcible entry, and from the date of last demand, in case of unlawful detainer. The issue in
said cases is the right to physical possession.

Accion publiciana is the plenary action to recover the right of possession which should be brought in the
proper regional trial court when dispossession has lasted for more than one year. It is an ordinary civil
proceeding to determine the better right of possession of realty independently of title. In other words, if at
the time of the filing of the complaint more than one year had elapsed since defendant had turned plaintiff
out of possession or defendants possession had become illegal, the action will be, not one of the forcible
entry or illegal detainer, but an accion publiciana. On the other hand, accion reivindicatoria is an action to
recover ownership also brought in the proper regional trial court in an ordinary civil proceeding. 39 (Citations
omitted)

In a complaint for unlawful detainer, the following key jurisdictional facts must be alleged and sufficiently
established:chanRoble svirtualLawlibrary

(1) initially, possession of property by the defendant was by contract with or

by tolerance of the plaintiff;
(2) eventually, such possession became illegal upon notice by plaintiff to
defendant of the termination of the latters right of possession;
(3) thereafter, the defendant remained in possession of the property and
deprived the plaintiff of the enjoyment thereof; and
(4) within one year from the last demand on defendant to vacate the
property, the plaintiff instituted the complaint for ejectment. 40
In the case at bar, the first requisite mentioned above is markedly absent. Carmencita failed to clearly
allege and prove how and when the respondents entered the subject lot and constructed a house upon
it.41 Carmencita was likewise conspicuously silent about the details on who specifically permitted the
respondents to occupy the lot, and how and when such tolerance came about. 42 Instead, Carmencita
cavalierly formulated a legal conclusion, sans factual substantiation, that (a) the respondents initial
occupation of the subject lot was lawful by virtue of tolerance by the registered owners, and (b) the
respondents became deforciants unlawfully withholding the subject lots possession after Carmencita, as
purchaser and new registered owner, had demanded for the former to vacate the property.43 It is worth
noting that the absence of the first requisite assumes even more importance in the light of the respondents
claim that for decades, they have been occupying the subject lot as owners thereof.

Again, this Court stresses that to give the court jurisdiction to effect the ejectment of an occupant or
deforciant on the land, it is necessary that the complaint must sufficiently show such a statement of facts as
to bring the party clearly within the class of cases for which the statutes provide a remedy, without resort to
parol testimony, as these proceedings are summary in nature. In short, the jurisdictional facts must appear
on the face of the complaint. When the complaint fails to aver facts constitutive of forcible entry or unlawful
detainer, as where it does not state how entry was effected or how and when dispossession started, the
remedy should either be an accion publiciana or accion reivindicatoria.44

As an exception to the general rule, the respondents petition for nullification of the partition of
Lot No. 1907A can abate Carmencitas suit for unlawful detainer.

In Amagan, the Court is emphatic that: chanRoble svirtualLawlibrary

As a general rule, therefore, a pending civil action involving ownership of the same property does not justify
the suspension of ejectment proceedings. The underlying reasons for the above ruling were that the
actions in the Regional Trial Court did not involve physical or de facto possession, and, on not a few
occasions, that the case in the Regional Trial Court was merely a ploy to delay disposition of the ejectment
proceeding, or that the issues presented in the former could quite as easily be set up as defenses in the
ejectment action and there resolved.

Only in rare instances is suspension allowed to await the outcome of the pending civil action. One such
exception is Vda. de Legaspi v. Avendao, wherein the Court declared: chanRoble svirtualLawlibrary

x x x. Where the action, therefore, is one of illegal detainer, as distinguished from one of forcible entry,
and the right of the plaintiff to recover the premises is seriously placed in issue in a proper judicial
proceeding, it is more equitable and just and less productive of confusion and disturbance of physical
possession, with all its concomitant inconvenience and expenses. For the Court in which the issue of legal
possession, whether involving ownership or not, is brought to restrain, should a petition for preliminary
injunction be filed with it, the effects of any order or decision in the unlawful detainer case in order to await
the final judgment in the more substantive case involving legal possession or ownership. It is only where
there has been forcible entry that as a matter of public policy the right to physical possession should be
immediately set at rest in favor of the prior possession regardless of the fact that the other party might
ultimately be found to have superior claim to the premises involved, thereby to discourage any attempt to
recover possession thru force, strategy or stealth and without resorting to the courts.

xxxx

Indisputably, the execution of the MCTC Decision would have resulted in the demolition of the house subject
of the ejectment suit; thus, by parity of reasoning, considerations of equity require the suspension of the
ejectment proceedings. We note that, like Vda. de Legaspi, the respondents suit is one of unlawful detainer
and not of forcible entry. And most certainly, the ejectment of petitioners would mean a demolition of their
house, a matter that is likely to create the confusion, disturbance, inconveniences and expenses
mentioned in the said exceptional case.

Necessarily, the affirmance of the MCTC Decision would cause the respondent to go through the whole
gamut of enforcing it by physically removing the petitioners from the premises they claim to have been
occupying since 1937. (Respondent is claiming ownership only of the land, not of the house.) Needlessly,
the litigants as well as the courts will be wasting much time and effort by proceeding at a stage wherein the
outcome is at best temporary, but the result of enforcement is permanent, unjust and probably irreparable.

We should stress that respondents claim to physical possession is based not on an expired or a violated
contract of lease, but allegedly on mere tolerance. Without in any way prejudging the proceedings for the
quieting of title, we deem it judicious under the present exceptional circumstances to suspend the ejectment
case.45 (Citations omitted)

The Court then quoted with favor the following portion of the Decision dated July 8, 1997, penned by
Associate Justice Artemio G. Tuquero in CAG.R. No. 43611SP, from which the Amagan case sprang: chanRoble svirtualLawlibrary

ONE. Private respondent Teodorico T. Marayag anchors his action for unlawful detainer on the theory that
petitioners possession of the property in question was by mere tolerance. However, in answer to his
demand letter dated April 13, 1996 x x x, petitioners categorically denied having any agreement with him,
verbal or written, asserting that they are owners of the premises we are occupying at 108 J.P. Rizal Street,
San Vicente, Silang, Cavite. In other words, it is not merely physical possession but ownership as well that
is involved in this case.[]

TWO. In fact, to protect their rights to the premises in question, petitioners filed an action for
reconveyance, quieting of title and damages against private respondents, docketed as Civil Case No. TG
1682 of the Regional Trial Court, Branch 18, Tagaytay City. The issue of ownership is squarely raised in this
action. Undoubtedly, the resolution of this issue will be determinative of who is entitled to the possession of
the premises in question.[]

THREE. The immediate execution of the judgment in the unlawful detainer case will include the removal of
the petitioners house [from] the lot in question.[]

To the mind of the Court it is injudicious, nay inequitable, to allow demolition of petitioners house prior to
the determination of the question of ownership [of] the lot on which it stands.46 (Citation omitted)

We find the doctrines enunciated in Amagan squarely applicable to the instant petition for reasons discussed
hereunder.

Carmencitas complaint for unlawful detainer is anchored upon the proposition that the respondents have
been in possession of the subject lot by mere tolerance of the owners. The respondents, on the other hand,
raise the defense of ownership of the subject lot and point to the pendency of Civil Case No. CEB30548,
a petition for nullification of the partition of Lot No. 1907A, in which Carmencita and the Heirs of
Vicente were impleaded as parties. Further, should Carmencitas complaint be granted, the respondents
house, which has been standing in the subject lot for decades, would be subject to demolition. The
foregoing circumstances, thus, justify the exclusion of the instant petition from the purview of the general
rule.

All told, we find no reversible error committed by the CA in dismissing Carmencitas complaint for unlawful
detainer. As discussed above, the jurisdictional requirement of possession by mere tolerance of the owners
had not been amply alleged and proven. Moreover, circumstances exist which justify the abatement of the
ejectment proceedings. Carmencita can ventilate her ownership claims in an action more suited for the
purpose. The respondents, on other hand, need not be exposed to the risk of having their house demolished
pending the resolution of their petition for nullification of the partition of Lot No. 1907A, where ownership
over the subject lot is likewise presented as an issue.

IN VIEW OF THE FOREGOING, the instant petition is DENIED. The Decision rendered on March 19, 2009
and Resolution issued on May 5, 2009 by the Court of Appeals in CAG.R. SP No. 03489 are AFFIRMED.

SO ORDERED.

SECOND DIVISION

G.R. No. 200969, August 03, 2015

CONSOLACION D. ROMERO AND ROSARIO S.D. DOMINGO, Petitioners, v. ENGRACIA D.

SINGSON, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 seeks to set aside the February 29, 2012 Decision2 of the Court of
Appeals (CA) in CA-G.R. SP No. 114363 which granted herein respondent's Petition for Review, reversed the
December 11, 2009 Order3 of the Regional Trial Court of Pasig City, Branch 160 (RTC) in SCA No. 3144, and
reinstated the said RTC's April 29, 2009 Decision.4

Factual Antecedents

The parties herein - petitioners Consolacion Domingo Romero and Rosario S.D. Domingo and respondent
Engracia Domingo Singson - are siblings. Their parents, Macario and Felicidad Domingo, own a 223-square
meter piece of property (the subject property) located at 127 F. Sevilla Street, San Juan City, Metro Manila
covered by Transfer Certificate of Title No. (32600) (23937) 845-R5 (TCT 845-R) which was issued in 1953.
It appears that petitioners and other siblings, Rafael and Ramon Domingo, are the actual occupants of the
subject property, having stayed there with their parents since birth. On the other hand, respondent took up
residence in Mandaluyong City after getting married.

On February 22, 1981, Macario passed away, while Felicidad died on September 14, 1997. 6

On June 7, 2006, TCT 845-R was cancelled and a new certificate of title -Transfer Certificate of Title No.
12575-R7 or 125758 (TCT 12575) - was issued in respondent's name, by virtue of a notarized "Absolute Deed
of Sale"9 ostensibly executed on June 6, 2006 by and between Macario and Felicidad - as sellers, and
respondent - as buyer. And this despite the fact that Macario and Felicidad were then already deceased.

Soon thereafter, respondent sent letters to her siblings demanding that they vacate the subject property,
under pain of litigation.
Petitioners and their other siblings just as soon filed a Complaint 10 against respondent and the Register of
Deeds of San Juan City for annulment and cancellation of TCT 12575 and the June 6, 2006 deed of sale,
reconveyance, and damages, on the claim that the deed of sale is a forgery and that as heirs of Macario and
Felicidad, the true owners of the subject property, they were entitled to a reconveyance of the same. The
case was docketed as Civil Case No. 70898-SJ and assigned to Branch 160 of the RTC of Pasig City.

Ruling of the Metropolitan Trial Court (MeTC)

On September 26, 2006, respondent filed an unlawful detainer suit against petitioners and her brothers
Rafael and Ramon before the MeTC of San Juan City. Docketed as Civil Case No. 9534 and assigned to MeTC
Branch 58, respondent in her Complaint11 sought to evict her siblings from the subject property on the claim
that she is the owner of the same; that her siblings' stay therein was merely tolerated; and that she now
needed the premises to serve as her daughters' residence. Thus, she prayed that her siblings be ordered to
vacate the premises and pay monthly rent of P2,000.00 from date of demand until they vacate the
premises, as well as attorney's fees and costs of suit.

In their Answer,12 petitioners prayed for dismissal, claiming that the June 6, 2006 deed of sale was a forgery,
and no certificate of title in her name could be issued; that they thus remained co-owners of the subject
property, and respondent had no right to evict them; and that the pendency of Civil Case No. 70898-SJ bars
the ejectment suit against them.

After proceedings or on September 17, 2007, the MeTC rendered a Decision, 13 decreeing as follows:
chanRoble svirtualLawlibrary

Anent the first issue of jurisdiction, the Court answers in the affirmative xxx.

xxxx

From the above-quoted verse, the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts have the exclusive original jurisdiction over this case. Moreover, in the case of Hilario vs. Court of
Appeals, (260 SCRA 420,426 citing: Refugia, Et al[.] vs. Court of Appeals, Et al[.,] G.R. No. 118284, July 4,
1996) the Supreme Court held: 'xxx inferior courts retain jurisdiction over ejectment cases even if the
question of possession cannot be resolved without passing upon the issue of ownership; but this is subject
to the caveat that the issue raised as to ownership be resolved by the Trial Court for the sole purpose of
determining the issue of possession x x x.' Thus, even where the defendants assert in their Answer,
ownership of or Title to the property, the inferior Court is not deprived of its jurisdiction, xxx

xxxx

As to the second issue as to whether or not plaintiff may validly eject the defendants, again this Court
answers in the affirmative, since the plaintiff is a holder of a Torrens Title which is a right in rem. The
defendants in their defense that they have filed a case before the Regional Trial Court questioning the Title
of the plaintiff is their right and prerogative, unless however restrained by higher court, this Court will
proceed as mandated by law and jurisprudence. This action for unlawful detainer is sanctioned by Rule 70 of
the 1997 Rules of Civil Procedure which provides:

xxxx

While the defendants claim that their parents are still the owner[s] of the subject property in litigation and
during their lifetime have not awarded nor alienated said property to anybody, why then has plaintiff the
Title of said property? If it was secured fraudulently, the same is of no moment since it has its own forum to
address to [sic]. Moreover, the pendency of an action questioning the ownership of the property does not
bar the filing or consideration of an ejectment suit nor the execution of the judgment therein xxx. As
correctly pointed out by the plaintiff, 'ownership may be exercised over things or rights,' Art. 427 of the New
Civil Code. Likewise, Art. 428 of the same code provides that: 'the owner has the right to enjoy and dispose
of a thing, without other limitations than those established by law. The owner has also a right of action
against the holder and possessor of the thing in order to recover it.' Further, Art. 434 states that 'in an
action to recover, the property must be identified, and the plaintiff must rely on the strength of his Title and
not on the weakness of the defendant's claim.' The defendants therefore can be validly ejected from the
premises in question since this is not accion publiciana as claimed by the defendants.

Finally, on the third issue of damages and the side issue of reasonable compensation for the use of the
subject premises, the Supreme Court in the case of Balanon-Anicete vs. Balano, 402 SCRA 514 held: 'xxx
persons who occupy the land of another at the latter's tolerance or permission without any contract between
them [are] necessarily bound by an implied promise that they will vacate the same upon demand, failing in
which a summary action for ejectment is the proper remedy against them.' Hence, upon demand, plaintiff is
entitled to collect reasonable compensation for the actual occupation of the subject property which is
P2,000.00 per month and the payment of attorney's fees. Since no evidence was presented relative to
damages, the Court cannot award the same.

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Ordering the defendants and all persons claiming rights under them to vacate the subject property known
as No. 127 F. Sevilla St., San Juan, Metro Manila and to surrender peaceful possession thereof to the plaintiff
in this case;

2. Ordering the defendants to pay plaintiff the amount of P2,000.00 per month for the actual use and
occupation of the subject property reckoned from date of extrajudicial demand which is August 7, 2006,
until defendants shall have finally vacated the premises;

3. Ordering the defendants to pay plaintiff the amount of P10,000.00 as and by way of attorney's fees; and

4. The costs of suit.

SO ORDERED.14 cralawla wlibrary

chanroblesvirtuallawlibrary Ruling of the Regional Trial Court

In an appeal before the RTC docketed as SCA Case No. 3144, petitioners and their co-defendants argued
that the MeTC erred in not resolving the issue of ownership, in ordering them to vacate the premises, in
deciding issues which were not framed by the parties, and in not granting them damages and awarding the
same instead to respondent.

On April, 29, 2009, the RTC rendered its Decision,15 pronouncing as follows:
chanRoble svirtualLawlibrary

Stripped of its non-essentials, the appeal primarily hinges on the lower court's failure to rule upon the issue
on the validity of Transfer Certificate of Title No. 12575 of the lot, subject of the ejectment suit.

Upon a judicious consideration of the arguments raised by the parties in their respective memorandum vis-
a-vis the decision of the court a quo, this court opines and so holds that the said court did not err in its
findings. The validity of a transfer certificate of title cannot be raised in the said ejectment suit as it partakes
of a collateral attack against the said title. This is not allowed under the principle of indefeasibility of a
Torrens title. The issue on the validity of title i.e., whether or not it was fraudulently issued, can only be
raised in an action expressly instituted for that purpose.

The ruling of the Supreme Court in the case of Raymundo and Perla De Guzman vs. Praxides J. Agbagala,
G.R. No. 163566, February 19, 2008 is revelatory, thus:
chanRoble svirtualLawlibrary

'Indeed, a decree of registration or patent and the certificate of title issued pursuant thereto may be
attacked on the ground of falsification or fraud within one year from the date of their issuance. Such an
attack must be direct and not by a collateral proceeding. The rationale is this:

xxx [The] public should be able to rely on the registered title. The Torrens System was adopted in this
country because it was believed to be the most effective measure to guarantee the integrity of land titles
and to protect their indefeasibility once the claim of ownership is established and recognized.'
For reasons aforestated, the appeal is hereby DENIED.

WHEREFORE, premises considered, judgment is hereby rendered affirming in toto in [sic] the decision of the
lower court dated September 17, 2007.

With costs against the appellant.

SO ORDERED.16 cralawla wlibrary

On motion for reconsideration, however, the RTC reversed itself. Thus, in a December 11, 2009 Order,17 it
held that -
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2. This Court's Findings

At the outset, it should be mentioned that the court a quo should have dismissed the complaint outright for
failure to comply with a condition precedent under Section 10, Rule 16 of the Rules of Civil Procedure, the
parties being siblings and there being no allegations in the complaint as regards efforts at compromise
having been exerted, a matter that was raised in the answer of defendants Consolation Romero and Rosario
D. Domingo.

2.1. The Issue of MeTC Jurisdiction

The court a quo is correct in ruling that it has jurisdiction over this case, the allegations in the complaint
being so phrased as to present one apparently for unlawful detainer. It did not matter that after answers
were filed and further proceedings were had, what emerged were issues of ownership and possession being
intricately interwoven, the court being clothed with jurisdiction to provisionally adjudicate the issue of
ownership, it being necessary in resolving the question of possession.

2.2. The Issue of Whether or Not Plaintiff Can Eject Defendants

In Barnachea vs. Court of Appeals, et al., it was held that one of the features of an unlawful detainer case is
possession of property by defendant being at the start legal, becoming illegal by reason of the termination of
right to possess based on his contract or other arrangement with plaintiff.

hi this case, the legal possession of subject premises by defendants-appellants, they being the heirs of
original owners Macario and Felicidad Domingo, has not ceased. The basis for the claimed ownership by
plaintiff-appellee is a deed of absolute sale dated 06 June 2006 (Exhibit "2") showing the signatures of
vendor Sps. Domingo whose respective death certificates indicate that Macario died on 22 February 1981
and Felicidad on 14 September 1997. It is clear that the deed of sale became the basis for the transfer of
subject property in plaintiff-appellee's name under TCT No. 12575 (Exhibit "A"), a fact that prompted herein
defendants-appellants to file a complaint for annulment of sale and reconveyance of ownership, docketed as
Civil Case No. 70898-SJ earlier than this subject case.

It appearing that defendants-appellants' occupancy of subject property is premised on their right thereto as
co-owners, being compulsory heirs of their parents, and it not being established that they had alienated
such right in favor of their sister, herein plaintiff-appellee, the latter cannot eject them therefrom.

2.3. The Issue of Whether or Not Defendants are Entitled to Damages

While defendants Rafael and Ramon Domingo allege and pray for actual and moral damages and attorney's
fees in their answer and all [the] defendants do so in their position paper, the court can award only the last,
it being established that they were compelled to litigate to protect their right, and such award being just and
equitable. As for actual and moral damages, there is no sufficient basis for a grant thereof. It is noted that
not a single affidavit of any of the four defendants is attached to their position paper, as required under
Section 10, Rule 70, Rules of Civil Procedure, and Section 9, Revised Rule on Summary Procedure.

WHEREFORE, the foregoing considered, the court hereby grants the motion for reconsideration of its
decision on appeal affirming in toto the decision of the Metropolitan Trial Court, Branch 58, San Juan City.
Consequently, it hereby reverses said decision by decreeing that plaintiff-appellee has no cause of action
against herein defendants-appellants who are entitled to possession of the subject premises, rendering the
complaint dismissible and hereby dismisses it. Corrolarily, plaintiff-appellee's motion for execution is hereby
denied. Plaintiff-appellee is hereby ordered to pay defendants-appellants P8,000.00 each in attorney's fees.
Costs against plaintiff-appellee.

SO ORDERED.18 cralawla wlibrary

Respondent filed a Motion for Reconsideration,19 which the RTC denied in a subsequent Order 20dated May 17,
2010. The trial court held:
chanRoble svirtualLawlibrary

In essence, plaintiff argues that possession and not ownership should have been the central issue in this
appealed ejectment suit. As the subject property is titled in plaintiffs name, necessarily, she has better right
of possession than defendants.

The court is not persuaded. Germane is Section 16, Rule 70 of the 1997 Rules of Civil Procedure, to wit:
chanRoble svirtualLawlibrary
Section 16. Resolving defense of ownership. - When the defendant raises the defense of ownership in his
pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the
issue of ownership shall be resolved only to determine the issue of possession.
Having determined the ownership issue in resolving defendants' right of possession pursuant to the
aforestated rule, the court hereby finds no cogent reason or sufficient justification to reconsider its previous
ruling dated 11 December 2009.

WHEREFORE, the motion for reconsideration is hereby DENIED for lack of merit.

SO ORDERED.21 cralawla wlibrary

Ruling of the Court of Appeals

chanroblesvirtuallawlibrary

Respondent filed a Petition for Review22 with the CA, docketed as CA-G.R. SP No. 114363. On February 29,
2012, the CA rendered judgment, as follows:
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Petitioner seeks to reverse and set aside the assailed Orders since the RTC allegedly erred:
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'I.

IN RULING THAT THE RESPONDENTS CANNOT BE EJECTED FROM THE SUBJECT PREMISES, THEIR
OCCUPANCY BEING PREMISED ON THEIR RIGHT AS CO-OWNERS, BEING COMPULSORY HEIRS OF THEIR
[PETITIONER] PARENTS AND IT NOT BEING ESTABLISHED THAT THEY HAD ALIENATED SUCH RIGHT IN
FAVOR OF THE PETITIONER.

II.

IN RULING THAT THE RESPONDENTS ARE ENTITLED TO THE AWARD OF ATTORNEY'S FEES.'
This Court's Ruling

Contending that the RTC erred when it held that respondents cannot be ejected from the subject lot because
they are co-owners thereof and heirs of their deceased parents, petitioner points out that the only issue that
should be tackled in an unlawfol detainer case is the right of a plaintiff to possession de facto over the
property in question.

For their part, respondents argue that they have legal and actual possession of the subject lot as they are
the heirs of their deceased parents who are the registered owners of said subject lot. On the other hand, the
title to the subject lot that was registered under petitioner's name is null and void for it was issued based on
a forged deed of absolute sale.

The petition has merit.

In an unlawful detainer case, the defendant's possession of a property becomes illegal when he is demanded
by the plaintiff to vacate therefrom due to the expiration or termination of his right to possess the same
under the contract but the defendant refuses to heed such demand. Thus, the sole issue to be resolved is
who between the parties have [sic] a right to the physical or material possession of the property involved,
independently of any claim of ownership by any of the parties.

However, where the issue of ownership is raised by any of the parties, the rule in Sec. 16, Rule 70 of the
Revised Rules of Court is explicit:
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Section 16. Resolving defense of ownership. - When the defendant raises the defense of ownership in his
pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the
issue of ownership shall be resolved only to determine the issue of possession.
In other words, while only possession de facto is the issue to be determined in an ejectment case, the issue
of ownership may be tackled if raised by any of the parties and only for the purpose of reaching a conclusion
on the issue of possession. Thus, in Esmaquel vs. Coprada, the Supreme Court had the occasion to once
again hold that:
chanRoble svirtualLawlibrary

'The sole issue for resolution in an unlawful detainer case is physical or material possession of the property
involved, independent of any claim of ownership by any of the parties. Where the issue of ownership is
raised by any of the parties, the courts may pass upon the same in order to determine who has the right to
possess the property. The adjudication is, however, merely provisional and would not bar or prejudice an
action between the same parties involving title to the property. Since the issue of ownership was raised in
the unlawful detainer case, its resolution boils down to which of the parties' respective evidence deserves
more weight.'
In the case at bar, both petitioner and respondents are claiming ownership over the subject lot. On the part
of petitioner, she maintains that she has a right to possession because she is the registered owner thereof,
as evidenced by TCT No. 12575-R which was issued in her name in 2006. On the other hand, respondents
maintain that they cannot be ejected from the subject lot because they are the compulsory heirs of their
deceased parents under whose names the subject lot was registered, as shown in TCT No. 845-R.

As between the two parties, this Court rules in favor of petitioner for she holds a more recently-issued
certificate of title, i.e., 2006, than that of their deceased parents whose certificate of title was issued in
1953. The issuance of the certificate of title in 2006 may be traced from TCT No. 845-R wherein at the last
page of its Memorandum of [E]ncumbrances is an entry which explicitly states that the title was transferred
to the name of petitioner on June 6, 2006 for a consideration of Php1,000.000.00. Clearly, the certificate of
title of the deceased parents was effectively cancelled in favor of petitioner. Hence, petitioner has a better
right to the possession de facto of the subject lot for, as held in Asuncion Urieta Vda. de Aguilar vs. Alfaro,
'the titleholder is entitled to all the attributes of ownership of the property, including possession.'

Respondents' insistence that the Torrens Certificate of petitioner should not be given any probative weight
because it is null and void is of no moment. The validity of a certificate of title cannot be collaterally
attacked. Rather, the attack should be made in an action instituted mainly for that purpose, x x x

xxxx

In short, a Torrens Certificate is evidence of the indefeasibility of the title to the property and the person
whose name appears therein is entitled to the possession of the property unless and until his title is nullified.
The reason being that the Torrens System was adopted as it is the most effective measure that will
guarantee the integrity of land titles and protect their indefeasibility once the claim of ownership is
established and recognized. Hence, the age-old rule that 'the person who has a Torrens Title over a land is
entitled to possession thereof.'

Unless there is already a judgment declaring petitioner's certificate of title as null and void, the presumption
of its validity must prevail, x x x

xxxx

All said, petitioner's right to possession over the subject lot must be respected in view of the certificate of
title thereto issued in her name.

WHEREFORE, the petition is GRANTED. The assailed Orders of the Regional Trial Court, Pasig City, Branch
160 are REVERSED and SET ASIDE. Its Decision dated April 29, 2009 affirming the Decision dated
September 17, 2007 of the Metropolitan Trial Court, San Juan City, Branch 58 is REINSTATED.

SO ORDERED.23 cralawla wlibrary

Hence, the instant Petition.

In a July 10, 2013 Resolution,24 this Court resolved to give due course to the Petition. chanroble slaw

Issues

Petitioners raise the following issues for resolution:

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THE COURT OF APPEALS (TWELFTH DIVISION) OBVIOUSLY ERRED IN FAILING TO DISMISS THE COMPLAINT
(ANNEX H) BECAUSE IT DID NOT COMPLY WITH THE JURISDICTIONAL ELEMENT REQUIRED BY LAW (SEC.
3, RULE 8, REVISED RULE OF COURT).

THE DECISION GRAVELY ERRED IN NOT HAVING RULED THAT RESPONDENT'S CAUSE OF ACTION IN HER
EJECTMENT COMPLAINT (ANNEX H) IS INDISPENSABLY INTERTWINED WITH THE ISSUE OF OWNERSHIP
RAISED BY PETITIONERS' DEFENSE, THUS RENDERING SAID COMPLAINT NOT AN UNLAWFUL DETAINER
CASE OVER WHICH THE MeTC HAS JURISDICTION, AS DECIDED IN THE ORDER DATED DECEMBER 9, 2009
(ANNEX X).
 C

THE DECISION IS SERIOUSLY MISTAKEN IN NOT HAVING UPHELD THE AWARD OF DAMAGES BY JUDGE
MYRNA Y. LM-VERANO IN FAVOR OF DEFENDANTS AND AGAINST RESPONDENT WHO OBVIOUSLY OBAINED
HER TITLE (ANNEX F) USING AN UNDISPUTABLY FRAUDULENT DEED OF ABSOLUTE SALE (ANNEX G).

THE DECISION INCORRECTLY RULED THAT PETITIONERS IN RAISING OWNERSHIP AS THEIR DEFENSE
(SEC. 16 IN RELATION TO SEC. 18, RULE 70, REVISED RULES OF COURT) CONSTITUTE A COLLATERAL
ATTACK ON THE TITLE OF RESPONDENT OBVIOUSLY AND UNDENIABLY PROCURED THRU FRAUD. 25 cralawla wlibrary

Petitioners' Arguments
chanroblesvirtuallawlibrary

In their Petition and Reply26 seeking reversal of the assailed CA dispositions and reinstatement of the RTC's
December 11, 2009 Order dismissing respondent's ejectment case, petitioners essentially argue that since
the parties to the case are siblings and no attempt at compromise was made by the respondent prior to the
filing of Civil Case No. 9534, then it should be dismissed for failure to comply with Rule 16, Section 1(j) of
the 1997 Rules of Civil Procedure27 in relation to Article 151 of the Family Code28 and Article 222 of the Civil
Code;29 that they could not be evicted from the subject property since they are co-owners of the same,
having inherited it from their deceased parents; that respondent's title was derived from a forged deed of
sale, which does not make her the sole owner of the subject property; that as co-owners and since
respondent's title is void, they have a right of possession over the subject property and they may not be
evicted therefrom; that their defense that respondent obtained her title through a forged deed of sale does
not constitute a collateral attack on such title, but is allowed in order to prove their legal right of possession
and ownership over the subject property.

Respondent's Arguments

In her Comment30 seeking denial of the Petition, respondent claims that the Petition should have been
dismissed since only two of the respondents in CA-G.R. SP No. 114363 filed the Petition before this Court;
that the findings of the CA do not merit review and modification, the same being correct; and that the
Petition is a mere reiteration of issues and arguments already passed upon exhaustively below. chanrobleslaw

Our Ruling

The Court grants the Petition.

The procedural issue of lack of attempts at compromise should be resolved in respondent's favor. True, no
suit between members of the same family shall prosper unless it should appear from the verified complaint
or petition that earnest efforts toward a compromise have been made. However, the failure of a party to
comply with this condition precedent is not a jurisdictional defect. If the opposing party fails to raise such
defect in a motion to dismiss, such defect is deemed waived. 31

hi arriving at its pronouncement, the CA passed upon the issue or claim of ownership, which both parties
raised. While the procedure taken is allowed -under Section 16, Rule 70 of the 1997 Rules of Civil
Procedure,32 the issue of ownership may be resolved only to determine the issue of possession - the CA
nonetheless committed serious and patent error in concluding that based solely on respondent's TCT 12575
issued in her name, she must be considered the singular owner of the subject property and thus entitled to
possession thereof- pursuant to the principle that "the person who has a Torrens Title over a land is entitled
to possession thereof."33 Such provisional determination of ownership should have been resolved in
petitioners' favor.

When the deed of sale in favor of respondent was purportedly executed by the parties thereto and notarized
on June 6, 2006, it is perfectly obvious that the signatures of the vendors therein, Macario and Felicidad,
were forged. They could not have signed the same, because both were by then long deceased: Macario died
on February 22, 1981, while Felicidad passed away on September 14, 1997. This makes the June 6, 2006
deed of sale null and void; being so, it is "equivalent to nothing; it produces no civil effect; and it does not
create, modify or extinguish a juridical relation."34

And while it is true that respondent has in her favor a Torrens title over the subject property, she
nonetheless acquired no right or title in her favor by virtue of the null and void June 6, 2006 deed. "Verily,
when the instrument presented is forged, even if accompanied by the owner's duplicate certificate of title,
the registered owner does not thereby lose his title, and neither does the assignee in the forged deed
acquire any right or title to the property."35

In sum, the fact that respondent has in her favor a certificate of title is of no moment; her title cannot be
used to validate the forgery or cure the void sale. As has been held in the past:
chanRoble svirtualLawlibrary

Insofar as a person who fraudulently obtained a property is concerned, the registration of the
property in said person's name would not be sufficient to vest in him or her the title to the
property. A certificate of title merely confirms or records title already existing and vested. The
indefeasibility of the Torrens title should not be used as a means to perpetrate fraud against the
rightful owner of real property. Good faith must concur with registration because, otherwise, registration
would be an exercise in futility. A Torrens title does not furnish a shield for fraud, notwithstanding
the long-standing rule that registration is a constructive notice of title binding upon the whole
world. The legal principle is that if the registration of the land is fraudulent, the person in whose name the
land is registered holds it as a mere trustee.36 (Emphasis supplied)
Since respondent acquired no right over the subject property, the same remained in the name of the original
registered owners, Macario and Felicidad. Being heirs of the owners, petitioners and respondent thus
became, and remain co-owners - by succession - of the subject property. As such, petitioners may exercise
all attributes of ownership over the same, including possession - whether de facto or dejure; respondent
thus has no right to exclude them from this right through an action for ejectment.

With the Court's determination that respondent's title is null and void, the matter of direct or collateral
attack is a foregone conclusion as well. "An action to declare the nullity of a void title does not prescribe and
is susceptible to direct, as well as to collateral, attack;"37 petitioners were not precluded from questioning
the validity of respondent's title in the ejectment case.

It does not appear either that petitioners are claiming exclusive ownership or possession of the subject
property. Quite the contrary, they acknowledge all this time that the property belongs to all the Domingo
siblings in co-ownership. In the absence of an allegation - or evidence - that petitioners are claiming
exclusive ownership over the co-owned property, respondent has no alternative cause of action for
ejectment which should prevent the dismissal of Civil Case No. 9534. The pronouncement in a previous case
applies here:
chanRoble svirtualLawlibrary

True it is that under Article 487 of the Civil Code,38 a co-owner may bring an action for ejectment against a
co-owner who takes exclusive possession and asserts exclusive ownership of a common property. It bears
stressing, however, that in this case, evidence is totally wanting to establish John's or Juliet's exclusive
ownership of the property in question. Neither did Juliet obtain possession thereof by virtue of a contract,
express or implied, or thru intimidation, threat, strategy or stealth. As borne by the record, Juliet was in
possession of the subject structure and the sari-sari store thereat by virtue of her being a co-owner thereof.
As such, she is as much entitled to enjoy its possession and ownership as John. 39 cralawlawlibrary

Indeed, it is respondent who is claiming exclusive ownership of the subject property owned in common.

Thus, left with no cause of action for ejectment against petitioners, respondent's ejectment case must be
dismissed.

There is likewise no merit to respondent's argument that since only two of the defendants in the ejectment
case filed the instant Petition, the same must necessarily be dismissed. There is no rule which requires that
all the parties in the proceedings before the CA must jointly take recourse with this Court or else such
recourse would be dismissible. The fact that Ramon and Rafael did not join in the instant Petition does not
bar petitioners from pursuing their case before this Court. Moreover, since petitioners, Ramon and Rafael are
siblings, co-heirs, co-owners, and occupants of the subject property, they all have common interests, and
their rights and liabilities are identical and so interwoven and dependent as to be inseparable. The reversal
of the assailed CA judgment should therefore inure to the benefit of Ramon and Rafael as well. The
December 11, 2009 Order of the RTC decreeing dismissal as against petitioners, Ramon, and Rafael, as
well as the payment of attorney's fees to all of them - may be reinstated in all respects.
chanRoble svirtualLawlibrary

xxx This Court has always recognized the general rule that in appellate proceedings, the reversal of the
judgment on appeal is binding only on the parties in the appealed case and does not affect or inure to the
benefit of those who did not join or were not made parties to the appeal. An exception to the rule exists,
however, where a judgment cannot be reversed as to the party appealing without affecting the rights of his
co-debtor, or where the rights and liabilities of the parties are so interwoven and dependent on each other
as to be inseparable, in which case a reversal as to one operates as a reversal as to all. This exception,
which is based on a communality of interest of said parties, is recognized in this jurisdiction. x x x 40
cralawlawlibrary

WHEREFORE, the Petition is GRANTED. The February 29, 2012 Decision of the Court of Appeals in CA-
chanroblesvirtuallawlibrary

G.R. SP No. 114363 is REVERSED and SET ASIDE. The December 11, 2009 Order of the Regional Trial
Court of Pasig City, Branch 160 in SCA No. 3144 is REINSTATED and AFFIRMED.

SO ORDERED. ChanRoblesVirtualawlibrary

FIRST DIVISION

G.R. No. 164277, October 08, 2014

FE U. QUIJANO, Petitioner, v. ATTY. DARYLL A. AMANTE, Respondent.

DECISION

BERSAMIN, J.:

Where the plaintiff does not prove her alleged tolerance of the defendant's occupation, the possession is
deemed illegal from the beginning. Hence, the action for unlawful detainer is an improper remedy. But the
action cannot be considered as one for forcible entry without any allegation in the complaint that the entry
of the defendant was by means of force, intimidation, threats, strategy or stealth.

Antecedents

The petitioner and her siblings, namely: Eliseo, Jose and Gloria, inherited from their father, the late Bibiano
Quijano, the parcel of land registered in the latter's name under Original Certificate of Title (OCT) No. 0-188
of the Registry of Deeds in Cebu City with an area of 15,790 square meters, more or less. 1 On April 23,
1990, prior to any partition among the heirs, Eliseo sold a portion of his share, measuring 600 square
meters, to respondent Atty. Daryll A. Amante (respondent), with the affected portion being described in the
deed of absolute sale Eliseo executed in the following manner: ChanRoblesVirtualawlibrary

A portion of a parcel of land located at the back of the Pleasant Homes Subdivision and also at the back of
Don Bosco Seminary, Punta Princesa, Cebu City, to be taken from my share of the whole lot; the portion sold
to Atty. Amante is only 600 square meters which is the area near the boundary facing the Pleasant Homes
Subdivision, Cebu City.2 chanRoblesvirtualLa wlibrary

On July 25, 1991, Eliseo, sickly and in need of money, sold an additional 1/3 portion of his share in the
property to the respondent, with their deed of absolute sale stating that the sale was with the approval of
Eliseo's siblings, and describing the portion subject of the sale as: ChanRoblesVirtualawlibrary

That the portion covered under this transaction is Specifically located right at the back of the seminary
facing Japer Memorial School and where the fence and house of Atty. Amante is located. 3 chanRoble svirtualLawlibrary

On September 30, 1992, Fe, Eliseo, Jose and Gloria executed a deed of extrajudicial partition to divide their
father's estate (consisting of the aforementioned parcel of land) among themselves. 4Pursuant to the deed
extrajudicial partition, OCT No. 0-188 was cancelled, and on July 12, 1994 the Register of Deeds issued
Transfer Certificate of Title (TCT) No. 6555, TCT No. 6556, TCT No. 6557 and TCT No. 6558 5 to the
petitioner, Gloria, Jose, and Eliseo, respectively. The partition resulted in the portions earlier sold by Eliseo to
the respondent being adjudicated to the petitioner instead of to Eliseo. 6

Due to the petitioner's needing her portion that was then occupied by the respondent, she demanded that
the latter vacate it. Despite several demands, the last of which was by the letter dated November 4,
1994,7 the respondent refused to vacate, prompting her to file agamst him on February 14, 1995 a
complaint for ejectment and damages in the Municipal Trial Court in Cities of Cebu City (MTCC), docketed as
Civil Case No. R-34426.8 She alleged therein that she was the registered owner of the parcel of land covered
by TCT No. 6555, a portion of which was being occupied by the respondent, who had constructed a
residential building thereon by the mere tolerance of Eliseo when the property she and her siblings had
inherited from their father had not yet been subdivided, and was thus still co-owned by them; and that the
respondent's occupation had become illegal following his refusal to vacate despite repeated demands.

The respondent denied that his possession of the disputed portion had been by mere tolerance of Eliseo. He
even asserted that he was in fact the owner and lawful possessor of the property, having bought it from
Eliseo; that the petitioner and her siblings could not deny knowing about the sale in his favor because they
could plainly see his house from the road; and that the deed of absolute sale itself stated that the sale to
him was with their approval, and that they had already known that his house and fence were existing; that
before he purchased the property, Eliseo informed him that he and his co-heirs had already orally partitioned
the estate of their father, and that the portion being sold to him was Eliseo's share; and that with his having
already purchased the property before the petitioner acquired it under the deed of extrajudicial partition,
she should respect his ownership and possession of it.9

Judgment of the MTCC

On February 5, 1996, the MTCC rendered its decision in favor of the petitioner,10 ruling that the deeds of sale
executed by Eliseo in favor of the respondent did not have the effect of conveying the disputed property to
him inasmuch as at the time of the sale, the parcel of land left by their father, which included the disputed
property, had not yet been partitioned, rendering Eliseo a mere co-owner of the undivided estate who had
no right to dispose of a definite portion thereof; that as a co-owner, Eliseo effectively conveyed to the
respondent only the portion that would ultimately be allotted to him once the property would be subdivided;
that because the disputed property was adjudicated to the petitioner under the deed of extrajudicial
settlement and partition, she was its owner with the consequent right of possession; and that, as such, she
had the right to demand that the respondent vacate the land.

The MTCC disposed as follows: ChanRoblesVirtualawlibrary

WHEREFORE, in view of all the foregoing premises, and on the basis thereof, judgment is hereby rendered in
favor of the plaintiff and against the defendant, ordering the defendant; to:

1) vacate from the portion, presently occupied by him and whereon his building stands, of that parcel of
land located in Cebu City covered by TCT No. 6555 and registered in the name of the plaintiff; and to
remove and/or demolish the building and all the structures that may have been built on said portion; chanrobleslaw

2) pay the plaintiff the rental of P1,000.00 a month for the portion in litigation from November 21, 1994
until such time that the defendant shall have vacated, and have removed all structures from said portion,
and have completely restored possession thereof to the plaintiff; and

3) pay unto the plaintiff the sum of P10,000.00 as attorney's fees; and the sum of P5,000.00 for litigation
expenses; and

4) to pay the costs of suit.

SO ORDERED.11

Decision of the RTC

On appeal, the Regional Trial Court (RTC) reversed the judgment of the MTCC, and dismissed the
complaint,12 holding that the summary proceeding for ejectment was not proper because the serious
question of ownership of the disputed property was involved, viz: ChanRoblesVirtualawlibrary

In the case at bar, by virtue of the deed of absolute sale executed by Eliseo Quijano, one of the co-heirs of
Fe Quijano, in 1990 and 1991, the defendant Atty. Amante took possession of the portion in question and
built his residential house thereat. It was only in 1992 that the heirs of Bibiano Quijano executed the deed of
extrajudicial partition, and instead of giving to Eliseo Quijano the portion that he already sold to the
defendant, the same was adjudicated to plaintiff, Fe Quijano to the great prejudice of the defendant herein
who had been in possession of the portion in question since 1990 and which possession is not possession de
facto but possession de jure because it is based on 2 deeds of conveyances executed by Eliseo Quijano.
There is, therefore, a serious question of ownership involved which cannot be determined in a summary
proceeding for ejectment. Since the defendant is in possession of the portion in question where his
residential house is built for several years, and before the extrajudicial partition, the possession of the
defendant, to repeat, is one of possession de jure and the plaintiff cannot eject the defendant in a summary
proceeding for ejectment involving only possession de facto. What the plaintiff should have done was to file
an action publiciana or action reinvindicatoria before the appropriate court for recovery of possession and
ownership. However, since there is a pending complaint for quieting of title filed by the defendant against
the plaintiff herein before the Regional Trial Court, the matter of ownership should be finally resolved in said
proceedings.13chanRoble svirtualLawlibrary

Undaunted, the petitioner moved for reconsideration, but the RTC denied her motion on November 13,
1996.14

Decision of the CA

The petitioner appealed to the CA by petition for review.

On May 26, 2004, the CA promulgated its decision,15 affirming the decision of the RTC, and dismissing the
case for ejectment, but on the ground that the respondent was either a co-owner or an assignee holding the
right of possession over the disputed property.

The CA observed that the RTC correctly dismissed the ejectment case because a question of ownership over
the disputed property was raised; that the rule that inferior courts could pass upon the issue of ownership to
determine the question of possession was well settled; that the institution of a separate action for quieting
of title by the respondent did not divest the MTCC of its authority to decide the ejectment case; that Eliseo,
as a co-owner, had no right to sell a definite portion of the undivided estate; that the deeds of sale Eliseo
executed in favor of the respondent were valid only with respect to the alienation of Eliseo's undivided
share; that after the execution of the deeds of sale, the respondent became a co-owner along with Eliseo
and his co-heirs, giving him the right to participate in the partition of the estate owned in common by them;
that because the respondent was not given any notice of the project of partition or of the intention to effect
the partition, the partition made by the petitioner and her co-heirs did not bind him; and that, as to him, the
entire estate was still co-owned by the heirs, giving him the right to the co-possession of the estate,
including the disputed portion.

Issues

The petitioner has come to the Court on appeal by certiorari,16 contending that the CA grossly erred in
holding that the respondent was either a co-owner or an assignee with the right of possession over the
disputed property.17

The petitioner explains that the respondent, being a lawyer, knew that Eliseo could not validly transfer the
ownership of the disputed property to him because the disputed property was then still a part of the
undivided estate co-owned by all the heirs of the late Bibiano Quijano; that the respondent's knowledge of
the defect in Eliseo's title and his failure to get the co-heirs' consent to the sale in a registrable document
tainted his acquisition with bad faith; that being a buyer in bad faith, the respondent necessarily became a
possessor and builder in bad faith; that she was not aware of the sale to the respondent, and it was her
ignorance of the sale that led her to believe that the respondent was occupying the disputed property by the
mere tolerance of Eliseo; that the partition was clearly done in good faith; and that she was entitled to the
possession of the disputed property as its owner, consequently giving her the right to recover it from the
respondent.18

To be resolved is the issue of who between the petitioner and the respondent had the better right to the
possession of the disputed property.

Ruling

The petition for review on certiorari lacks merit.

An ejectment case can be either for forcible entry or unlawful detainer. It is a summary proceeding designed
to provide expeditious means to protect the actual possession or the right to possession of the property
involved.19 The sole question for resolution in the case is the physical or material possession (possession de
facto) of the property in question, and neither a claim of juridical possession (possession de jure) nor an
averment of ownership by the defendant can outrightly deprive the trial court from taking due cognizance of
the case. Hence, even if the question of ownership is raised in the pleadings, like here, the court may pass
upon the issue but only to determine the question of possession especially if the question of ownership is
inseparably linked with the question of possession.20 The adjudication of ownership in that instance is merely
provisional, and will not bar or prejudice an action between the same parties involving the title to the
property.21
Considering that the parties are both claiming ownership of the disputed property, the CA properly ruled on
the issue of ownership for the sole purpose of determining who between them had the better right to
possess the disputed property.

The disputed property originally formed part of the estate of the late Bibiano Quijano, and passed on to his
heirs by operation of law upon his death.22 Prior to the partition, the estate was owned in common by the
heirs, subject to the payment of the debts of the deceased. 23 In a co-ownership, the undivided thing or right
belong to different persons, with each of them holding the property pro indiviso and exercising her rights
over the whole property. Each co-owner may use and enjoy the property with no other limitation than that
he shall not injure the interests of his co-owners. The underlying rationale is that until a division is actually
made, the respective share of each cannot be determined, and every co-owner exercises, together with his
co-participants, joint ownership of the pro indiviso property, in addition to his use and enjoyment of it.24

Even if an heir's right in the estate of the decedent has not yet been fully settled and partitioned and is thus
merely inchoate, Article 49325 of the Civil Code gives the heir the right to exercise acts of ownership.
cralawred

Accordingly, when Eliseo sold the disputed property to the respondent in 1990 and 1991, he was only a co-
owner along with his siblings, and could sell only that portion that would be allotted to him upon the
termination of the co-ownership. The sale did not vest ownership of the disputed property in the respondent
but transferred only the seller's pro indiviso share to him, consequently making him, as the buyer, a co-
owner of the disputed property until it is partitioned.26

As Eliseo's successor-in-interest or assignee, the respondent was vested with the right under Article 497 of
the Civil Code to take part in the partition of the estate and to challenge the partition undertaken without his
consent.27 Article 497 states:ChanRoblesVirtualawlibrary

Article 497. The creditors or assignees of the co-owners may take part in the division of the thing owned in
common and object to its being effected without their concurrence. But they cannot impugn any partition
already executed, unless there has been fraud, or in case it was made notwithstanding a formal opposition
presented to prevent it, without prejudice to the right of the debtor or assignor to maintain its validity.

The respondent could not deny that at the time of the sale he knew that the property he was buying was not
exclusively owned by Eliseo. He knew, too, that the co-heirs had entered into an oral agreement of partition
vis-a-vis the estate, such knowledge being explicitly stated in his answer to the complaint, to wit: ChanRoblesVirtualawlibrary

12. That defendant, before he acquired the land from Eliseo Quijano was informed by the latter that the
portion sold to him was his share already; that they have orally partitioned the whole lot before defendant
acquired the portion from him.28 chanRoble svirtualLawlibrary

His knowledge of Eliseo's co-ownership with his co-heirs, and of their oral agreement of partition
notwithstanding, the respondent still did not exercise his right under Article 497. Although Eliseo made it
appear to the respondent that the partition had already been completed and finalized, the co-heirs had not
taken possession yet of their respective shares to signify that they had ratified their agreement, if any. For
sure, the respondent was no stranger to the Quijanos, because he himself had served as the lawyer of Eliseo
and the petitioner herself.29 In that sense, it would have been easy for him to ascertain whether the
representation of Eliseo to him was true. As it turned out, there had been no prior oral agreement among
the heirs to partition the estate; otherwise, Eliseo would have questioned the deed of extrajudicial partition
because it did not conform to what they had supposedly agreed upon. Had the respondent been vigilant in
protecting his interest, he could have availed himself of the rights reserved to him by law, particularly the
right to take an active part in the partition and to object to the partition if he wanted to. It was only on
September 30, 1992, or two years and five months from the time of the first sale transaction, and a year
and two months from the time of the second sale transaction, that the co-heirs executed the deed of
extrajudicial partition. Having been silent despite his ample opportunity to participate in or to object to the
partition of the estate, the respondent was bound by whatever was ultimately agreed upon by the Quijanos.

There is no question that the holder of a Torrens title is the rightful owner of the property thereby covered
and is entitled to its possession.30 However, the Court cannot ignore that the statements in the petitioner's
complaint about the respondent's possession of the disputed property being by the mere tolerance of Eliseo
could be the basis for unlawful detainer. Unlawful detainer involves the defendant's withholding of the
possession of the property to which the plaintiff is entitled, after the expiration or termination of the former's
right to hold possession under the contract, whether express or implied. A requisite for a valid cause of
action of unlawful detainer is that the possession was originally lawful, but turned unlawful only upon the
expiration of the right to possess.
To show that the possession was initially lawful, the basis of such lawful possession must then be
established. With the averment here that the respondent's possession was by mere tolerance of the
petitioner, the acts of tolerance must be proved, for bare allegation of tolerance did not suffice. At least, the
petitioner should show the overt acts indicative of her or her predecessor's tolerance, or her co-heirs'
permission for him to occupy the disputed property.31 But she did not adduce such evidence. Instead, she
appeared to be herself not clear and definite as to his possession of the disputed property being merely
tolerated by Eliseo, as the following averment of her petition for review indicates: ChanRoblesVirtualawlibrary

6.9. Their ignorance of the said transaction of sale, particularly the petitioner, as they were not
duly informed by the vendor-co[-]owner Eliseo Quijano, [led] them to believe that the
respondent's occupancy of the subject premises was by mere tolerance of Eliseo, so that upon
partition of the whole property, said occupancy continued to be under tolerance of the petitioner when
the subject premises became a part of the land adjudicated to the latter; 32 (emphasis supplied) chanroblesvirtuallawlibrary

In contrast, the respondent consistently stood firm on his assertion that his possession of the disputed
property was in the concept of an owner, not by the mere tolerance of Eliseo, and actually presented the
deeds of sale transferring ownership of the property to him. 33

Considering that the allegation of the petitioner's tolerance of the respondent's possession of the disputed
property was not established, the possession could very well be deemed illegal from the beginning. In that
case, her action for unlawful detainer has to fail.34 Even so, the Court would not be justified to treat this
ejectment suit as one for forcible entry because the complaint contained no allegation that his entry in the
property had been by force, intimidation, threats, strategy or stealth.

Regardless, the issue of possession between the parties will still remain. To finally resolve such issue, they
should review their options and decide on their proper recourses. In the meantime, it is wise for the Court to
leave the door open to them in that respect. For now, therefore, this recourse of the petitioner has to be
dismissed.

WHEREFORE, the Court AFFIRMS the decision promulgated on May 26, 2004 subject to
the MODIFICATION that the unlawful detainer action is dismissed for being an improper remedy;
and ORDERS the petitioner to pay the costs of suit.

SO ORDERED. cralawla wlibrary

Republic of the Philippines

Supreme Court
Manila

SECOND DIVISION
 VIEGELY SAMELO, represented G.R. No. 170509
by Attorney-in-Fact CRISTINA
SAMELO,
Present:
Petitioner,

CARPIO, J., Chairperson,

BRION,
- versus - PEREZ,

SERENO, and

REYES, JJ.

MANOTOK SERVICES, INC., Promulgated:

allegedly represented by
PERPETUA BOCANEGRA
(deceased),
June 27, 2012
Respondent.

x------------------------------------------------------------------------------------x

DECISION

BRION, J.:
 Before us is the petition for review on certiorari[1] filed by
Viegely Samelo (petitioner), represented by her attorney-in-fact
Cristina Samelo, to challenge the decision dated June 21,
2005[2] and the resolution dated November 10, 2005 [3] of the
Court of Appeals (CA) in CA-G.R. SP No. 85664.

Background Facts

Manotok Services, Inc. (respondent) alleged that it is the

administrator of a parcel of land known as Lot 9-A, Block 2913,
situated at 2882 Dagupan Extension, Tondo, Manila. On January
31, 1997, the respondent entered into a contract with the
petitioner for the lease of a portion of Lot 9-A, Block 2913,
described as Lot 4, Block 15 (subject premises). The lease
contract was for a period of one (1) year, with a monthly rental
of P3,960.00. After the expiration of the lease contract on
December 31, 1997, the petitioner continued occupying the
subject premises without paying the rent. [4] On August 5, 1998,
the respondent, thru its President Rosa Manotok, sent a letter to
the petitioner demanding that she vacate the subject premises
and pay compensation for its use and occupancy. [5] The petitioner,
however, refused to heed these demands.

On November 18, 1998, the respondent filed a complaint for

unlawful detainer against the petitioner before the Metropolitan
Trial Court (MeTC), Branch 3, Manila.[6] The case was docketed as
Civil Case No. 161588-CV. The respondent prayed, among others,
that the petitioner and those claiming rights under her be ordered
to vacate the subject premises, and to pay compensation for its
use and occupancy.

In her answer, the petitioner alleged that the respondent had no

right to collect rentals because the subject premises are located
inside the property of the Philippine National Railways (PNR). She
also added that the respondent had no certificate of title over the
subject premises. The petitioner further claimed that her
signature in the contract of lease was obtained through the
respondents misrepresentation. She likewise maintained that she
is now the owner of the subject premises as she had been in
possession since 1944.[7]

The MeTC Ruling

The MeTC, in its judgment[8] of March 28, 2002, decided in

favor of the respondent, and ordered the petitioner to vacate the
subject premises and to deliver their peaceful possession to the
respondent. The MeTC held that the only issue to be resolved in
an unlawful detainer case is physical possession or possession de
facto, and that the respondent had established its right of
possession over the subject premises. It added that the
petitioners right under the lease contract already ceased upon the
expiration of the said contract. It further ruled that the petitioner
is already estopped from questioning the right of the respondent
over the subject premises when she entered into a contract of
lease with the respondent. The dispositive portion of the MeTC
judgment reads:

WHEREFORE, premises considered, judgment is hereby rendered

for the plaintiff and against defendant, ordering the latter and all
persons claiming rights under her:
 1. To vacate the premises located at 2882 Dagupan Extension,
Tondo, Manila, and deliver the peaceful possession thereof to
the plaintiff[;]

2. To pay plaintiff the sum of P40,075.20 as compensation for

the use and occupancy of the premises from January 1, 1998
to August 30, 1998, plus P4,554.00 a month starting
September 1, 1998, until defendant and all person[s]
claiming rights under her to finally vacate the premises[;]

3. To pay plaintiff the sum of P5,000.00 for and as attorneys

fees; and

4. To pay the cost of suit.[9]

The RTC Decision

The petitioner filed an appeal[10] with the Regional Trial Court

(RTC), Branch 50, Manila. The RTC, in its decision [11] of July 1,
2004, set aside the MeTCs decision, and dismissed the complaint
for unlawful detainer. The RTC held, among others, that the
respondent had no right to collect rentals as it failed to show that
it had authority to administer the subject premises and to enter
into a contract of lease with the petitioner. It also ruled that the
subject premises, which were formerly owned by the PNR, are
now owned by the petitioner by virtue of her possession and stay
in the premises since 1944.
 The CA Decision

Aggrieved by the reversal, the respondent filed a petition for

review with the CA, docketed as CA-G.R. SP No. 85664. [12] The CA,
in its decision of June 21, 2005, reversed and set aside the RTC
decision, and reinstated the MeTC judgment. The CA held that the
petitioner is now estopped from questioning the right of the
respondent over the subject property. It explained that in an
action involving the possession of the subject premises, a tenant
cannot controvert the title of his landlord or assert any rights
adverse to that title, without first delivering to the landlord the
premises acquired by virtue of the agreement between
themselves. The appellate court added that the petitioner cannot
claim that she repudiated the lease contract, in the absence of
any unequivocal acts of repudiation.

The CA further held that the only issue in an ejectment suit

is physical or material possession, although the trial courts may
provisionally resolve the issue of ownership for the sole purpose
of determining the issue of possession. It explained that the issue
of ownership is not required to determine the issue of possession
since the petitioner tacitly admitted that she is a lessee of the
subject premises.[13]

The petitioner moved to reconsider this decision, but the CA

denied her motion in its resolution dated November 10, 2005. [14]

In presenting her case before this Court, the petitioner

argued that the CA erred in ruling that a tenant is not permitted
to deny the title of his landlord. She maintained that the
respondent is not the owner or administrator of the subject
premises, and insisted that she had been in possession of the
land in question since 1944. She further added that she
repudiated the lease contract by filing a case for fraudulent
misrepresentation, intimidation, annulment of lease contract, and
quieting of title with injunction before another court. [15]

The Courts Ruling

We find the petition unmeritorious.

Respondent has a better right of possession over the subject

premises

An action for unlawful detainer exists when a person

unlawfully withholds possession of any land or building against or
from a lessor, vendor, vendee or other persons, after the
expiration or termination of the right to hold possession, by virtue
of any contract, express or implied. [16] The only issue to be
resolved in an unlawful detainer case is physical or material
possession of the property involved, independent of any claim of
ownership by any of the parties involved. [17] Thus, when the
relationship of lessor and lessee is established in an unlawful
detainer case, any attempt of the parties to inject the question of
ownership into the case is futile, except insofar as it might throw
light on the right of possession.[18]

In the present case, it is undisputed that the petitioner and

the respondent entered into a contract of lease. We note in this
regard that in her answer with affirmative defenses and
counterclaim before the MeTC, the petitioner did not deny that
she signed the lease contract (although she maintained that her
signature was obtained through the respondents
misrepresentations). Under the lease contract, the petitioner
obligated herself to pay a monthly rental to the respondent in the
amount of P3,960.00. The lease period was for one year,
commencing on January 1, 1997 and expiring on December 31,
1997. It bears emphasis that the respondent did not give the
petitioner a notice to vacate upon the expiration of the lease
contract in December 1997 (the notice to vacate was sent only on
August 5, 1998), and the latter continued enjoying the subject
premises for more than 15 days, without objection from the
respondent. By the inaction of the respondent as lessor, there can
be no inference that it intended to discontinue the lease contract.
[19]
An implied new lease was therefore created pursuant to Article
1670 of the Civil Code, which expressly provides:

Article 1670. If at the end of the contract the lessee should

continue enjoying the thing leased for fifteen days with the
acquiescence of the lessor, and unless a notice to the contrary by
either party has previously been given, it is understood that there is an
implied new lease, not for the period of the original contract, but for
the time established in Articles 1682 and 1687. The other terms of the
original contract shall be revived.

An implied new lease or tacita reconduccion will set in when

the following requisites are found to exist: a) the term of the
original contract of lease has expired; b) the lessor has not given
the lessee a notice to vacate; and c) the lessee continued
enjoying the thing leased for fifteen days with the acquiescence
of the lessor.[20] As earlier discussed, all these requisites have
been fulfilled in the present case.
 Article 1687 of the Civil Code on implied new lease provides:

Article 1687. If the period for the lease has not been fixed, it is
understood to be from year to year, if the rent agreed upon is
annual; from month to month, if it is monthly; from week to week, if
the rent is weekly; and from day to day, if the rent is to be paid daily.

Since the rent was paid on a monthly basis, the period of

lease is considered to be from month to month, in accordance
with Article 1687 of the Civil Code. [A] lease from month to month
is considered to be one with a definite period which expires at the
end of each month upon a demand to vacate by the lessor.
[21]
When the respondent sent a notice to vacate to the petitioner
on August 5, 1998, the tacita reconduccion was aborted, and the
contract is deemed to have expired at the end of that month. [A]
notice to vacate constitutes an express act on the part of the
lessor that it no longer consents to the continued occupation by
the lessee of its property.[22] After such notice, the lessees right to
continue in possession ceases and her possession becomes one of
detainer.[23]

Estoppel of tenant

We find no merit in the petitioners allegation that the

respondent had no authority to lease the subject premises
because the latter failed to prove that it is its owner or
administrator.
 The Rules of Court protects the respondent, as lessor, from
being questioned by the petitioner, as lessee, regarding its title or
better right of possession over the subject premises. Section 2(b),
Rule 131 of the Rules of Court states that the tenant is not
permitted to deny the title of his landlord at the time of the
commencement of the relation of landlord and tenant between
them. Article 1436 of the Civil Code likewise states that a lessee
or a bailee is estopped from asserting title to the thing leased or
received, as against the lessor or bailor.

These provisions bar the petitioner from contesting the

respondents title over the subject premises. The juridical
relationship between x x x [a] lessor and x x x [a lessee] carries
with it a recognition of the lessor's title. As [lessee, the petitioner
is] estopped [from denying the] landlord's title, or to assert a
better title not only in [herself], but also in some third person
while [she remains] in possession of the subject premises and
until [she surrenders] possession to the landlord. This estoppel
applies even though the lessor had no title at the time the
relation of [the] lessor and [the] lessee was created, and may be
asserted not only by the original lessor, but also by those who
succeed to his title.[24] Once a contact of lease is shown to exist
between the parties, the lessee cannot by any proof, however
strong, overturn the conclusive presumption that the lessor has a
valid title to or a better right of possession to the subject
premises than the lessee.

The Court thus explained in Tamio v. Ticson:[25]

Indeed, the relation of lessor and lessee does not depend on the
formers title but on the agreement between the parties, followed by
 the possession of the premises by the lessee under such agreement.
As long as the latter remains in undisturbed possession, it is immaterial
whether the lessor has a valid title or any title at all at the time the
relationship was entered into. [citations omitted]

The issue of ownership

We are likewise unpersuaded by the petitioners claim that

she has acquired possessory rights leading to ownership [26] over
the subject premises, having been in possession thereof since
1944. We emphasize that aside from her self-serving allegation,
the petitioner did not present any documentary evidence to
substantiate her claim that she stayed on the subject premises
since 1944. That the petitioner presented certificates of title of
the Manila Railroad Company over certain properties in Tondo,
Manila, which allegedly cover the subject premises, is of no
moment. One cannot recognize the right of another, and at the
same time claim adverse possession which can ripen to
ownership, thru acquisitive prescription. For prescription to set in,
the possession must be adverse, continuous, public, and to the
exclusion of [others].[27] Significantly, the RTC decision failed to
state its basis for concluding that the petitioner stayed in the
subject premises since 1944.

At any rate, we hold that no need exists to resolve the issue

of ownership in this case, since it is not required to determine the
issue of possession; the execution of the lease contract between
the petitioner, as lessee, and the respondent, as lessor, belies the
formers claim of ownership. We reiterate that the fact of the
lease and the expiration of its term are the only elements in an
action for unlawful detainer. The defense of ownership does not
change the summary nature of [this] action. x x x. Although a
wrongful possessor may at times be upheld by the courts, this is
merely temporary and solely for the maintenance of public order.
The question of ownership is to be settled in the proper court and
in a proper action.[28]

Interest on rentals due

Additionally, the petitioner is liable to pay interest by way of

damages for her failure to pay the rentals due for the use of the
subject premises.[29] We reiterate that the respondents
extrajudicial demand on the petitioner was made on August 5,
1998. Thus, from this date, the rentals due from the petitioner
shall earn interest at 6% per annum, until the judgment in this
case becomes final and executory. After the finality of judgment,
and until full payment of the rentals and interests due, the legal
rate of interest to be imposed shall be 12%.

WHEREFORE, in light of all the foregoing, we DENY the

petition. The decision and the resolution of the Court of Appeals
dated June 21, 2005 and November 10, 2005, respectively, in CA-
G.R. SP No. 85664 are AFFIRMED with the MODIFICATION that
the unpaid rentals shall earn a corresponding interest of six
percent (6%) per annum, to be computed from August 5, 1998
until the finality of this decision. After this decision becomes final
and executory, the rate of legal interest shall be computed at
twelve percent (12%) per annum from such finality until its
satisfaction.

SO ORDERED.

ARTURO D. BRION
 Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Senior Associate Justice
Chairperson

JOSE PORTUGAL PEREZ MARIA LOURDES P. A.

SERENO
Associate Justice
Associate Justice

BIENVENIDO L. REYES
Associate Justice
 CERTIFICATION

I certify that the conclusions in the above Decision had been

reached in consultation before the case was assigned to the writer
of the opinion of the Courts Division.

ANTONIO T. CARPIO
Senior Associate Justice
(Per Section 12, R.A. 296,

FIRST DIVISION

POLYTECHNIC UNIVERSITY G.R. No. 183612

OF THE PHILIPPINES,

Petitioner,

- versus -

GOLDEN HORIZON REALTY

CORPORATION,

Respondent.
x----------------------------------
--------x

G.R. No. 184260

NATIONAL DEVELOPMENT

COMPANY,
Present:
Petitioner,

PUNO, C.J., Chairperson,

- versus -
CARPIO MORALES,

LEONARDO-DE CASTRO,
GOLDEN HORIZON REALTY
BERSAMIN, and
CORPORATION,
VILLARAMA, JR., JJ.
Respondent.

Promulgated:

March 15, 2010

x-------------------------------------------------------------------------------
----------x

DECISION

VILLARAMA, JR., J.:

The above-titled consolidated petitions filed under Rule 45 of
the 1997 Rules of Civil Procedure, as amended, seek to reverse
the Decision[1] dated June 25, 2008 and Resolution dated August
22, 2008 of the Court of Appeals (CA) in CA-G.R. CV No. 84399
which affirmed the Decision[2] dated November 25, 2004 of the
Regional Trial Court (RTC) of Makati City, Branch 144 in Civil
Case No. 88-2238.

The undisputed facts are as follows:

Petitioner National Development Company (NDC) is a

government- owned and controlled corporation, created under
Commonwealth Act No. 182, as amended by Com. Act No. 311
and Presidential Decree (P.D.) No. 668. Petitioner Polytechnic
University of the Philippines (PUP) is a public, non-sectarian, non-
profit educational institution created in 1978 by virtue of P.D. No.
1341.

In the early sixties, NDC had in its disposal a ten (10)-hectare

property located along Pureza St., Sta. Mesa, Manila. The estate
was popularly known as the NDC Compound and covered by
Transfer Certificate of Title Nos. 92885, 110301 and 145470.

On September 7, 1977, NDC entered into a Contract of Lease (C-

33-77) with Golden Horizon Realty Corporation (GHRC) over a
portion of the property, with an area of 2,407 square meters for a
period of ten (10) years, renewable for another ten (10) years
with mutual consent of the parties.[3]

On May 4, 1978, a second Contract of Lease (C-12-78) was executed between

NDC and GHRC covering 3,222.80 square meters, also renewable upon mutual
consent after the expiration of the ten (10)-year lease period. In addition, GHRC
as lessee was granted the option to purchase the area leased, the price to be
negotiated and determined at the time the option to purchase is exercised.[4]
Under the lease agreements, GHRC was obliged to construct at its
own expense buildings of strong material at no less than the
stipulated cost, and other improvements which shall
automatically belong to the NDC as lessor upon the expiration of
the lease period. Accordingly, GHRC introduced permanent
improvements and structures as required by the terms of the
contract. After the completion of the industrial complex project,
for which GHRC spent P5 million, it was leased to various
manufacturers, industrialists and other businessmen thereby
generating hundreds of jobs.[5]

On June 13, 1988, before the expiration of the ten (10)-year

period under the second lease contract, GHRC wrote a letter to
NDC indicating its exercise of the option to renew the lease for
another ten (10) years. As no response was received from NDC,
GHRC sent another letter on August 12, 1988, reiterating its
desire to renew the contract and also requesting for priority to
negotiate for its purchase should NDC opt to sell the leased
premises.[6] NDC still did not reply but continued to accept rental
payments from GHRC and allowed the latter to remain in
possession of the property.

Sometime after September 1988, GHRC discovered that NDC had

decided to secretly dispose the property to a third party. On
October 21, 1988, GHRC filed in the RTC a complaint for specific
performance, damages with preliminary injunction and temporary
restraining order.[7]

In the meantime, then President Corazon C. Aquino issued

Memorandum Order No. 214 dated January 6, 1989, ordering the
transfer of the whole NDC Compound to the National Government,
which in turn would convey the said property in favor of PUP at
acquisition cost. The memorandum order cited the serious need of
PUP, considered the Poor Mans University, to expand its
campus, which adjoins the NDC Compound, to accommodate its
growing student population, and the willingness of PUP to buy and
of NDC to sell its property. The order of conveyance of the 10.31-
hectare property would automatically result in the cancellation of
NDCs total obligation in favor of the National Government in the
amount of P57,193,201.64.[8]

On February 20, 1989, the RTC issued a writ of preliminary

injunction enjoining NDC and its attorneys, representatives,
agents and any other persons assisting it from proceeding with
the sale and disposition of the leased premises. [9]

On February 23, 1989, PUP filed a motion to intervene as party

defendant, claiming that as a
purchaser pendente lite of a property subject of litigation it is
entitled to intervene in the proceedings. The RTC granted the said
motion and directed PUP to file its Answer-in-Intervention. [10]

PUP also demanded that GHRC vacate the premises, insisting that
the latters lease contract had already expired. Its demand letter
unheeded by GHRC, PUP filed an ejectment case (Civil Case No.
134416) before the Metropolitan Trial Court (MeTC) of Manila on
January 14, 1991.[11]

Due to this development, GHRC filed an Amended and/or

Supplemental Complaint to include as additional defendants PUP,
Honorable Executive Secretary Oscar Orbos and Judge Ernesto A.
Reyes of the Manila MeTC, and to enjoin the afore-mentioned
defendants from prosecuting Civil Case No. 134416 for ejectment.
A temporary restraining order was subsequently issued by the
RTC enjoining PUP from prosecuting and Judge
Francisco Brillantes, Jr. from proceeding with the ejectment case.
[12]

In its Second Amended and/or Supplemental Complaint, GHRC

argued that Memorandum Order No. 214 is a nullity, for
being violative of the writ of injunction issued by the trial court,
apart from being an infringement of the Constitutional prohibition
against impairment of obligation of contracts, an encroachment
on legislative functions and a bill of attainder. In the alternative,
should the trial court adjudge the memorandum order as valid,
GHRC contended that its existing right must still be respected by
allowing it to purchase the leased premises. [13]

Pre-trial was set but was suspended upon agreement of the

parties to await the final resolution of a similar case involving
NDC, PUP and another lessee of NDC, Firestone Ceramics, Inc.
(Firestone), then pending before the RTC of Pasay City. [14]

On November 14, 2001, this Court rendered a decision in G.R.

Nos. 143513 (Polytechnic University of the Philippines v. Court of
Appeals) and 143590 (National Development Corporation v.
Firestone Ceramics, Inc.),[15] which declared that the sale to PUP
by NDC of the portion leased by Firestone pursuant to
Memorandum Order No. 214 violated the right of first refusal
granted to Firestone under its third lease contract with NDC. We
thus decreed:
WHEREFORE, the petitions in G.R. No. 143513 and G.R. No.
143590 are DENIED. Inasmuch as the first contract of lease fixed the
area of the leased premises at 2.90118 hectares while the second
contract placed it at 2.60 hectares, let a ground survey of the leased
premises be immediately conducted by a duly licensed, registered
surveyor at the expense of private respondent FIRESTONE CERAMICS,
INC., within two (2) months from the finality of the judgment in this
case. Thereafter, private respondent FIRESTONE CERAMICS, INC., shall
have six (6) months from receipt of the approved survey within which
to exercise its right to purchase the leased property at P1,500.00 per
square meter, and petitioner Polytechnic University of the Philippines is
ordered to reconvey the property to FIRESTONE CERAMICS, INC., in the
exercise of its right of first refusal upon payment of the purchase price
thereof.

SO ORDERED.[16]
The RTC resumed the proceedings and when mediation and pre-
trial failed to settle the case amicably, trial on the merits ensued.
[17]

On November 25, 2004, the RTC rendered its decision upholding

the right of first refusal granted to GHRC under its lease contract
with NDC and ordering PUP to reconvey the said portion of the
property in favor of GHRC. The dispositive portion reads:
WHEREFORE, premises considered, judgment is hereby rendered
in favor of the plaintiff and against the defendants ordering the plaintiff
to cause immediate ground survey of the premises subject of the
leased contract under Lease Contract No. C-33-77 and C-12-78
measuring 2,407 and 3,222.8 square meters respectively, by a duly
licensed and registered surveyor at the expense of the plaintiff within
two months from receipt of this Decision and thereafter, the plaintiff
shall have six (6) months from receipt of the approved survey within
which to exercise its right to purchase the leased property at P554.74
per square meter. And finally, the defendant PUP, in whose name the
property is titled, is hereby ordered to reconvey the aforesaid property
to the plaintiff in the exercise of its right of its option to buy or first
refusal upon payment of the purchase price thereof.

The defendant NDC is hereby further ordered to pay the plaintiff

attorneys fees in the amount of P100,000.00.

The case against defendant Executive Secretary is dismissed

and this decision shall bind defendant Metropolitan Trial Court, Branch
20 of Manila.

With costs against defendants NDC and PUP.

SO ORDERED.[18]

NDC and PUP separately appealed the decision to the CA. [19] By
Decision of June 25, 2008, the CA affirmed in toto the decision of
the RTC.[20]
Both the RTC and the CA applied this Courts ruling in Polytechnic
University of the Philippines v. Court of Appeals (supra),
considering that GHRC is similarly situated as a lessee of NDC
whose right of first refusal under the lease contract was violated
by the sale of the property to PUP without NDC having first offered
to sell the same to GHRC despite the latters request for the
renewal of the lease and/or to purchase the leased premises prior
to the expiration of the second lease contract. The CA further
agreed with the RTCs finding that there was an implied renewal of
the lease upon the failure of NDC to act on GHRCs repeated
requests for renewal of the lease contract, both verbal and
written, and continuing to accept monthly rental payments from
GHRC which was allowed to continue in possession of the leased
premises.

The CA also rejected the argument of NDC and PUP that even
assuming that GHRC had the right of first refusal, said right
pertained only to the second lease contract, C-12-78 covering
3,222.80 square meters, and not to the first lease contract, C-33-
77 covering 2,407 square meters, which had already expired. It
sustained the RTCs finding that the two (2) lease contracts were
interrelated because each formed part of GHRCs industrial
complex, such that business operations would be rendered
useless and inoperative if the first contract were to be detached
from the other, as similarly held in the afore-mentioned case
of Polytechnic University of the Philippines v. Court of Appeals.

Petitioner PUP argues that respondents right to exercise the

option to purchase had expired with the termination of the
original contract of lease and was not carried over to the
subsequent implied new lease between respondent and petitioner
NDC. As testified to by their witnesses Leticia Cabantog and
Atty. Rhoel Mabazza, there was no agreement or document to the
effect that respondents request for extension or renewal of the
subject contracts of lease for another ten (10) years was
approved by NDC. Hence, respondent can no longer exercise the
option to purchase the leased premises when the same were
conveyed to PUP pursuant to Memorandum Order No. 214 dated
January 6, 1989, long after the expiration of C-33-77 and C-12-78
in September 1988.[21]

Petitioner PUP further contends that while it is conceded that

there was an implied new lease between respondent and
petitioner NDC after the expiration of the lease contracts, the
same did not include the right of first refusal originally granted to
respondent. The CA should have applied the ruling in Dizon v.
Magsaysay[22] that the lessee cannot any more exercise its option
to purchase after the lapse of the one (1)-year period of the lease
contract. With the implicit renewal of the lease on a monthly
basis, the other terms of the original contract of lease which are
revived in the implied new lease under Article 1670 of the Civil
Code are only those terms which are germane to the lessees right
of continued enjoyment of the property leased. The provision
entitling the lessee the option to purchase the leased premises is
not deemed incorporated in the impliedly renewed contract
because it is alien to the possession of the lessee. Consequently,
as in this case, respondents right of option to purchase the leased
premises was not violated despite the impliedly renewed contract
of lease with NDC. Respondent cannot favorably invoke the
decision in G.R. Nos. 143513 and 143590 (Polytechnic University
of the Philippines v. Court of Appeals) for the simple reason,
among others, that unlike in said cases, the contracts of lease of
respondent with NDC were not mutually extended or renewed for
another ten (10) years. Thus, when the leased premises were
conveyed to PUP, respondent did not any more have any right of
first refusal, which incidentally appears only in the second lease
contract and not in the first lease contract. [23]

On its part, petitioner NDC assails the CA in holding that the

contracts of lease were impliedly renewed for another ten (10)-
year period. The provisions of C-33-77 and C-12-78 clearly state
that the lessee is granted the option to renew for another ten (10)
years with the mutual consent of both parties. As regards the
continued receipt of rentals by NDC and possession by the
respondent of the leased premises, the impliedly renewed lease
was only month-to-month and not ten (10) years since the rentals
are being paid on a monthly basis, as held in Dizon v. Magsaysay.
[24]

Petitioner NDC further faults the CA in sustaining the RTCs

decision which erroneously granted respondent the option to
purchase the leased premises at the rate of P554.74 per square
meter, the same rate for which NDC sold the property to
petitioner PUP and/or the National Government, which is the mere
acquisition cost thereof. It must be noted that such consideration
or rate was imposed by Memorandum Order No. 214 under the
premise that it shall, in effect, be a sale and/or purchase from one
(1) government agency to another. It was intended merely as a
transfer of one (1) user of the National Government to another,
with the beneficiary, PUP in this case, merely returning to the
petitioner/transferor the cost of acquisition thereof, as appearing
on its accounting books. It does not in any way reflect the true
and fair market value of the property, nor was it a price a willing
seller would demand and accept for parting with his real
property. Such benefit, therefore, cannot be extended to
respondent as a private entity, as the latter does not share the
same pocket, so to speak, with the National Government. [25]

The issue to be resolved is whether or not our ruling

in Polytechnic University of the Philippines v. Court of
Appeals applies in this case involving another lessee of NDC who
claimed that the option to purchase the portion leased to it was
similarly violated by the sale of the NDC Compound in favor of
PUP pursuant to Memorandum Order No. 214.

We rule in the affirmative.

The second lease contract contained the following provision:

 III. It is mutually agreed by the parties that this Contract of
Lease shall be in full force and effect for a period of ten (10) years
counted from the effectivity of the payment of rental as provided under
sub-paragraph (b) of Article I, with option to renew for another ten (10)
years with the mutual consent of both parties. In no case should the
rentals be increased by more than 100% of the original amount fixed.

Lessee shall also have the option to purchase the area

leased, the price to be negotiated and determined at the time
the option to purchase is exercised. [EMPHASIS SUPPLIED]

An option is a contract by which the owner of the property agrees

with another person that the latter shall have the right to buy the
formers property at a fixed price within a certain time. It is a
condition offered or contract by which the owner stipulates with
another that the latter shall have the right to buy the property at
a fixed price within a certain time, or under, or in compliance with
certain terms and conditions; or which gives to the owner of the
property the right to sell or demand a sale. [26] It binds the
party, who has given the option, not to enter into the principal
contract with any other person during the period designated, and,
within that period, to enter into such contract with the one to
whom the option was granted, if the latter should decide to use
the option.[27]

Upon the other hand, a right of first refusal is a contractual

grant, not of the sale of a property, but of the first priority to buy
the property in the event the owner sells the same. [28] As
distinguished from an option contract, in a right of first refusal,
while the object might be made determinate, the exercise of
the right of first refusal would be dependent not only on the
owners eventual intention to enter into a binding juridical relation
with another but also on terms, including the price, that are yet to
be firmed up.[29]
As the option to purchase clause in the second lease contract has
no definite period within which the leased premises will be offered
for sale to respondent lessee and the price is made subject to
negotiation and determined only at the time the option to buy is
exercised, it is obviously a mere right of refusal, usually inserted
in lease contracts to give the lessee the first crack to buy the
property in case the lessor decides to sell the same. That
respondent was granted a right of first refusal under the second
lease contract appears not to have been disputed by
petitioners. What petitioners assail is the CAs erroneous
conclusion that such right of refusal subsisted even after the
expiration of the original lease period, when respondent was
allowed to continue staying in the leased premises under an
implied renewal of the lease and without the right of refusal
carried over to such month-to-month lease. Petitioners thus
maintain that no right of refusal was violated by the sale of the
property in favor of PUP pursuant to Memorandum Order No. 214.

Petitioners position is untenable.

When a lease contract contains a right of first refusal,

the lessor has the legal duty to the lessee not to sell the leased
property to anyone at any price until after the lessor has made an
offer to sell the property to the lessee and the lessee has failed to
accept it. Only after the lessee has failed to exercise his right
of first priority could the lessor sell the property to other buyers
under the same terms and conditions offered to the lessee, or
under terms and conditions more favorable to the lessor.[30]

Records showed that during the hearing on the application for a

writ of preliminary injunction, respondent adduced in evidence a
letter of Antonio A. Henson dated 15 July 1988 addressed to Mr.
Jake C. Lagonera, Director and Special Assistant to Executive
Secretary Catalino Macaraeg, reviewing a proposed memorandum
order submitted to President Corazon C. Aquino transferring the
whole NDC Compound, including the premises leased by
respondent, in favor of petitioner PUP. This letter was offered in
evidence by respondent to prove the existence of documents as
of that date and even prior to the expiration of the second lease
contract or the lapse of the ten (10)-year period counted from
the effectivity of the rental payment -- that is, one hundred and
fifty (150) days from the signing of the contract (May 4, 1978), as
provided in Art. I, paragraph (b) of C-12-78, or on October 1,
1988.

Respondent thus timely exercised its option to purchase on

August 12, 1988. However, considering that NDC had been
negotiating through the National Government for the sale of the
property in favor of PUP as early as July 15, 1988 without first
offering to sell it to respondent and even when respondent
communicated its desire to exercise the option to purchase
granted to it under the lease contract, it is clear that NDC violated
respondents right of first refusal. Under the premises, the matter
of the right of refusal not having been carried over to the
impliedly renewed month-to-month lease after the expiration of
the second lease contract on October 21, 1988 becomes
irrelevant since at the time of the negotiations of the sale to a
third party, petitioner PUP, respondents right of first refusal was
still subsisting.

Petitioner NDC in its memorandum contended that the CA erred in

applying the ruling in Polytechnic University of the Philippines v.
Court of Appeals pointing out that the case of lessee Firestone
Ceramics, Inc. is different because the lease contract therein had
not yet expired while in this case respondents lease contracts
have already expired and never renewed. The date of the
expiration of the lease contract in said case is December 31, 1989
which is prior to the issuance of Memorandum Order No. 214 on
January 6, 1989. In contrast, respondents lease contracts had
already expired (September 1988) at the time said memorandum
order was issued.[31]
Such contention does not hold water. As already mentioned, the
reckoning point of the offer of sale to a third party was not the
issuance of Memorandum Order No. 214 on January 6, 1989 but
the commencement of such negotiations as early as July 1988
when respondents right of first refusal was still subsisting and the
lease contracts still in force. Petitioner NDC did not bother to
respond to respondents letter of June 13, 1988 informing it of
respondents exercise of the option to renew and requesting to
discuss further the matter with NDC, nor to the subsequent letter
of August 12, 1988 reiterating the request for renewing the lease
for another ten (10) years and also the exercise of the option to
purchase under the lease contract.Petitioner NDC had dismissed
these letters as mere informative in nature, and a request at its
best.[32]

Perusal of the letter dated August 12, 1988, however, belies such
claim of petitioner NDC that it was merely informative, thus:

August 12, 1988

HON. ANTONIO HENSON

General Manager
NATIONAL DEVELOPMENT COMPANY
377 Se(n). Gil J. Puyat Avenue
Makati, Metro Manila

REF: Contract of Lease

Nos. C-33-77 & C-12-78

Dear Sir:

This is further to our earlier letter dated June 13, 1988

formally advising your goodselves of our intention to exercise
our option for another ten (10) years. Should the National
Development Company opt to sell the property covered by said
leases, we also request for priority to negotiate for its
purchase at terms and/or conditions mutually acceptable.
 As a backgrounder, we wish to inform you that since the start of our
lease, we have improved on the property by constructing bodega-type
buildings which presently house all legitimate trading and
manufacturing concerns. These business are substantial taxpayers,
employ not less than 300 employees and contribute even foreign
earnings.

It is in this context that we are requesting for the extension of

the lease contract to prevent serious economic disruption and
dislocation of the business concerns, as well as provide
ourselves, the lessee, an opportunity to recoup our
investments and obtain a fair return thereof.

Your favorable consideration on our request will be very much

appreciated.

very truly yours,

TIU HAN TENG

President[33]

As to petitioners argument that respondents right of first refusal

can be invoked only with respect to the second lease contract
which expressly provided for the option to purchase by the lessee,
and not in the first lease contract which contained no such clause,
we sustain the RTC and CA in finding that the second contract,
covering an area of 3,222.80 square meters, is interrelated to and
inseparable from the first contract over 2,407 square meters. The
structures built on the leased premises, which are adjacent to
each other, form part of an integrated system of a commercial
complex leased out to manufacturers, fabricators and other
businesses. Petitioners submitted a sketch plan and pictures
taken of the driveways, in an effort to show that the leased
premises can be used separately by respondent, and that the two
(2) lease contracts are distinct from each other. [34] Such was a
desperate attempt to downplay the commercial purpose of
respondents substantial improvements which greatly contributed
to the increased value of the leased premises. To prove that
petitioner NDC had considered the leased premises as a single
unit, respondent submitted evidence showing that NDC issued
only one (1) receipt for the rental payments for the two portions.
[35]
Respondent further presented the blueprint plan prepared by
its witness, Engr. Alejandro E. Tinio, who supervised the
construction of the structures on the leased premises, to show the
building concept as a one-stop industrial site and integrated
commercial complex.[36]

In fine, the CA was correct in declaring that there exists no

justifiable reason not to apply the same rationale in Polytechnic
University of the Philippines v. Court of Appeals in the case of
respondent who was similarly prejudiced by petitioner NDCs sale
of the property to PUP, as to entitle the respondent to exercise its
option to purchase until October 1988 inasmuch as the May 4,
1978 contract embodied the option to renew the lease for another
ten (10) years upon mutual consent and giving respondent the
option to purchase the leased premises for a price to be
negotiated and determined at the time such option was exercised
by respondent. It is to be noted that Memorandum Order No. 214
itself declared that the transfer is subject to such liens/leases
existing [on the subject property]. Thus:
...we now proceed to determine whether FIRESTONE should be
allowed to exercise its right of first refusal over the property.
Such right was expressly stated by NDC and FIRESTONE in par.
XV of their third contract denominated as A-10-78 executed on
22 December 1978 which, as found by the courts a quo, was
interrelated to and inseparable from their first contract
denominated as C-30-65 executed on 24 August 1965 and their
second contract denominated as C-26-68 executed on 8
January 1969. Thus -

Should the LESSOR desire to sell the leased

premises during the term of this Agreement, or any
extension thereof, the LESSOR shall first give to the
LESSEE, which shall have the right of first option to
purchase the leased premises subject to mutual
agreement of both parties.
 In the instant case, the right of first refusal is an integral and
indivisible part of the contract of lease and is inseparable from the
whole contract. The consideration for the right is built into the
reciprocal obligations of the parties. Thus, it is not correct for
petitioners to insist that there was no consideration paid by FIRESTONE
to entitle it to the exercise of the right, inasmuch as the stipulation is
part and parcel of the contract of lease making the consideration for
the lease the same as that for the option.

It is a settled principle in civil law that when a lease contract

contains a right of first refusal, the lessor is under a legal duty to the
lessee not to sell to anybody at any price until after he has made an
offer to sell to the latter at a certain price and the lessee has failed to
accept it. The lessee has a right that the lessors first offer shall be in
his favor.

The option in this case was incorporated in the contracts

of lease by NDC for the benefit of FIRESTONE which, in view of
the total amount of its investments in the property, wanted to
be assured that it would be given the first opportunity to buy
the property at a price for which it would be offered.
Consistent with their agreement, it was then implicit for NDC
to have first offered the leased premises of 2.60 hectares to
FIRESTONE prior to the sale in favor of PUP. Only if FIRESTONE
failed to exercise its right of first priority could NDC lawfully
sell the property to petitioner PUP.[37] [EMPHASIS SUPPLIED]

As we further ruled in the afore-cited case, the contractual grant

of a right of first refusal is enforceable, and following an earlier
ruling in Equatorial Realty Development, Inc. v. Mayfair Theater,
Inc.,[38] the execution of such right consists in directing the
grantor to comply with his obligation according to the terms at
which he should have offered the property in favor of the grantee
and at that price when the offer should have been made. We then
determined the proper rate at which the leased portion should
be reconveyed to respondent by PUP, to whom the lessor NDC
sold it in violation of respondent lessees right of first refusal, as
follows:
 It now becomes apropos to ask whether the courts a quo were
correct in fixing the proper consideration of the sale at P1,500.00 per
square meter. In contracts of sale, the basis of the right of first refusal
must be the current offer of the seller to sell or the offer to purchase of
the prospective buyer. Only after the lessee-grantee fails to exercise
its right under the same terms and within the period contemplated can
the owner validly offer to sell the property to a third person,
again, under the same terms as offered to the grantee. It appearing
that the whole NDC compound was sold to PUP forP554.74 per square
meter, it would have been more proper for the courts below to have
ordered the sale of the property also at the same price.
However, since FIRESTONE never raised this as an issue, while
on the other hand it admitted that the value of the property
stood at P1,500.00 per square meter, then we see no
compelling reason to modify the holdings of the courts a
quo that the leased premises be sold at that price.
[39]
[EMPHASIS SUPPLIED]

In the light of the foregoing, we hold that respondent, which did

not offer any amount to petitioner NDC, and neither disputed
the P1,500.00 per square meter actual value of NDCs property at
that time it was sold to PUP at P554.74 per square meter, as duly
considered by this Court in the Firestone case, should be bound
by such determination. Accordingly, the price at which the leased
premises should be sold to respondent in the exercise of its right
of first refusal under the lease contract with petitioner NDC, which
was pegged by the RTC at P554.74 per square meter, should be
adjusted to P1,500.00 per square meter, which more accurately
reflects its true value at that time of the sale in favor of petitioner
PUP.

Indeed, basic is the rule that a party to a contract cannot

unilaterally withdraw a right of first refusal that stands upon
valuable consideration.[40] We have categorically ruled that it is
not correct to say that there is no consideration for the grant of
the right of first refusal if such grant is embodied in the same
contract of lease. Since the stipulation forms part of the entire
lease contract, the consideration for the lease includes the
consideration for the grant of the right of first refusal. In entering
into the contract, the lessee is in effect stating that it consents to
lease the premises and to pay the price agreed upon provided
the lessor also consents that, should it sell the leased property,
then, the lessee shall be given the right to match the offered
purchase price and to buy the property at that price. [41]

We have further stressed that not even the avowed public welfare
or the constitutional priority accorded to education, invoked by
petitioner PUP in the Firestone case, would serve as license for us,
and any party for that matter, to destroy the sanctity of binding
obligations. While education may be prioritized for legislative and
budgetary purposes, it is doubtful if such importance can be used
to confiscate private property such as the right of first refusal
granted to a lessee of petitioner NDC. [42] Clearly, no reversible
error was committed by the CA in sustaining respondents
contractual right of first refusal and ordering the reconveyance of
the leased portion of petitioner NDCs property in its favor.

WHEREFORE, the petitions are DENIED. The Decision dated

November 25, 2004 of the Regional Trial Court of Makati City,
Branch 144 in Civil Case No. 88-2238, as affirmed by the Court of
Appeals in its Decision dated June 25, 2008 in CA-G.R. CV No.
84399, is hereby AFFIRMED with MODIFICATION in that the
price to be paid by respondent Golden Horizon Realty Corporation
for the leased portion of the NDC Compound under Lease
Contract Nos. C-33-77 and C-12-78 is hereby increased
to P1,500.00 per square meter.

No pronouncement as to costs.

SO ORDERED.
 MARTIN S. VILLARAMA, JR.

Associate Justice

WE CONCUR:

REYNATO S. PUNO

Chief Justice

Chairperson

CONCHITA CARPIO TERESITA J. LEONARDO-DE

MORALES CASTRO

Associate Justice Associate Justice

LUCAS P. BERSAMIN

Associate Justice

CERTIFICATION
Pursuant to Section 13, Article VIII of the 1987 Constitution, I
certify that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer
of the opinion of the Courts Division.

REYNATO S. PUNO

Chief Justice

Republic of the Philippines

Supreme Court

Manila

THIRD DIVISION

G.R. No. 180168

MANILA INTERNATIONAL AIRPORT
AUTHORITY,
Petitioner, Present:

VELASCO, JR., J., Chairperson,

PERALTA,
 ABAD,
MENDOZA, and
versus
PERLAS-BERNABE, JJ.

Promulgated:

February 27, 2012

AVIA FILIPINAS INTERNATIONAL,
INC.,

Respondent.

x-----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court, seeking the reversal and setting aside of the June 19, 2007 Decision and the 1

October 11, 2007 Resolution of the Court of Appeals (CA) in CA-G.R. CV No.
2

79325. The assailed CA Decision affirmed with modification the Decision dated 3

March 21, 2003 of the Regional Trial Court (RTC) of Quezon City, Branch 224, in
Civil Case No. Q-98-34395, while the CA Resolution denied petitioner's Motion for
Reconsideration.

The factual and procedural antecedents are as follows:

In September 1990, herein petitioner Manila International Airport Authority (MIAA)
entered into a contract of lease with herein respondent Avia Filipinas International
Corporation (AFIC), wherein MIAA allowed AFIC to use specific portions of land as
well as facilities within the Ninoy Aquino International Airport exclusively for the
latter's aircraft repair station and chartering operations. The contract was for one (1)
year, beginning September 1, 1990 until August 31, 1991, with a monthly rental
of P6,580.00.

In December 1990, MIAA issued Administrative Order No. 1, Series of 1990, which
revised the rates of dues, charges, fees or assessments for the use of its properties,
facilities and services within the airport complex. The Administrative Order was made
effective on December 1, 1990. As a consequence, the monthly rentals due from AFIC
was increased to P15,996.50. Nonetheless, MIAA did not require AFIC to pay the new
rental fee. Thus, it continued to pay the original fee of P6,580.00.

After the expiration of the contract, AFIC continued to use and occupy the leased
premises giving rise to an implied lease contract on a monthly basis. AFIC kept on
paying the original rental fee without protest on the part of MIAA.

Three years after the expiration of the original contract of lease, MIAA informed
AFIC, through a billing statement dated October 6, 1994, that the monthly rental over
the subject premises was increased to P15,966.50 beginning September 1, 1991,
which is the date immediately following the expiration of the original contract of
lease. MIAA sought recovery of the difference between the increased rental rate and
the original rental fee amounting to a total of P347,300.50 covering thirty-seven (37)
months between September 1, 1991 and September 31, 1994. Beginning October
1994, AFIC paid the increased rental fee. However, it refused to pay the lump sum
of P347,300.50 sought to be recovered by MIAA. For the continued refusal of AFIC
to pay the said lump sum, its employees were denied access to the leased premises
from July 1, 1997 until March 11, 1998. This, notwithstanding, AFIC continued
paying its rentals. Subsequently, AFIC was granted temporary access to the leased
premises.

AFIC then filed with the RTC of Quezon City a Complaint for damages with
injunction against MIAA and its General Manager seeking uninterrupted access to the
leased premises, recovery of actual and exemplary damages, refund of its monthly
rentals with interest at the time that it was denied access to the area being rented as
well as attorney's fees.

In its Answer with Counterclaim, MIAA contended that under its lease contract with
AFIC, MIAA is allowed to either increase or decrease the monthly rental; AFIC has
rental arrears in the amount of P347,300.50; AFIC was wrong in claiming that MIAA
took the law into its own hands in denying AFIC and its employees access to the
leased premises, because under the lease contract, in case of failure on the part of
AFIC to pay rentals for at least two (2) months, the contract shall become
automatically terminated and canceled without need of judicial action or process and
it shall be lawful for MIAA or any person or persons duly authorized on its behalf to
take possession of the property either by padlocking the premises or posting its guards
to prevent the entry of any person. MIAA prayed for the award of exemplary damages
as well as attorney's fees and litigation expenses.

On March 21, 2003, the RTC rendered its Decision, the dispositive portion of which
reads as follows:

WHEREFORE, in view of the foregoing, judgment is hereby

rendered in favor of the plaintiff [AFIC] and as against the defendants
[MIAA] ordering the latter to pay plaintiff the following:
a) the amount of P2,000,000.00 as actual damages;
b) the amount of P200,000.00 as exemplary damages;
 c) to refund the monthly rental payments beginning July 1,
1997 up [to] March 11, 1998 with interest at twelve
(12%) percent;
d) the amount of P100,000.00 as attorney's fees;
e) cost of suit.
IT IS SO ORDERED. 4

MIAA filed an appeal with the CA contending that the RTC erred in: (1) finding that
MIAA is not entitled to apply the increase in rentals as against AFIC; (2) finding that
MIAA is not entitled to padlock the leased premises or post guards to prevent entry of
AFIC therein; and (3) awarding actual and exemplary damages and attorney's fees.

On June 19, 2007, the CA rendered its assailed Decision, the dispositive portion of
which reads, thus:

WHEREFORE, premises considered, the decision of the Regional Trial

Court of Quezon City in Civil Case No. Q-98-34395 is hereby
AFFIRMED with MODIFICATION. The awards of actual/compensatory
damages and exemplary damages are deleted. The refund of monthly
rental payments from July 1, 1997 to March 11, 1998 shall earn interest
of six percent (6%) per annum from the date of the filing of the
complaint until the finality of this decision. An interest of twelve percent
(12%) per annum shall be imposed upon any unpaid balance from such
finality until the judgment amount is fully satisfied.

The award of attorney's fees stands.

SO ORDERED. 5
MIAA filed a Motion for Reconsideration, but the CA denied it via its Resolution
dated October 11, 2007.

Hence, the present petition for review on certiorari raising the following issues:

WHETHER THE HONORABLE COURT OF APPEALS CORRECTLY

INTERPRETED THE PROVISIONS OF THE LEASE CONTRACT IN
LINE WITH THE PROVISIONS OF THE CIVIL CODE AND
EXISTING JURISPRUDENCE ON CONTRACTS.

WHETHER THE PRINCIPLE OF UNJUST ENRICHMENT IS

APPLICABLE TO THE INSTANT CASE.

WHETHER RESPONDENT IS ENTITLED TO ATTORNEY'S FEES. 6

Petitioner MIAA contends that, as an administrative agency possessed of quasi-

legislative and quasi-judicial powers as provided for in its charter, it is empowered to
make rules and regulations and to levy fees and charges; that its issuance of
Administrative Order No. 1, Series of 1990 is pursuant to the exercise of the
abovementioned powers; that by signing the lease contract, respondent AFIC already
agreed and gave its consent to any further increase in rental rates; as such, the
provisions of the lease contract being cited by the CA which provides that any
amendment, alteration or modification [of the lease contract] shall not be valid and
binding, unless and until made in writing and signed by the parties thereto is deemed
complied with because respondent already consented to having any subsequent
amendments to Administrative Order No. 1 automatically incorporated in the lease
contract; that the above-quoted provisions should not also be interpreted as having the
effect of limiting the authority of MIAA to impose new rental rates in accordance with
its authority under its charter.
Petitioner also argues that it is not guilty of unjust enrichment when it denied
respondent access to the leased premises, because there is nothing unlawful in its act
of imposing sanctions against respondent for the latter's failure to pay the increased
rental.

Lastly, petitioner avers that respondent is not entitled to attorney's fees, considering
that it was not compelled to litigate and incur expenses to protect its interest by reason
of any unjustified act on the part of petitioner. Petitioner reiterates that it was merely
exercising its right as the owner and administrator of the leased property and, as such,
its acts may not be deemed unwarranted.

The petition lacks merit.

Article 1306 of the Civil Code provides that [t]he contracting parties may establish
such stipulations, clauses, terms and conditions as they may deem convenient,
provided they are not contrary to law, morals, good customs, public order, or public
policy.

Moreover, Article 1374 of the Civil Code clearly provides that [t]he various
stipulations of a contract shall be interpreted together, attributing to the doubtful ones
that sense which may result from all of them taken jointly. Indeed, in construing a
contract, the provisions thereof should not be read in isolation, but in relation to each
other and in their entirety so as to render them effective, having in mind the intention
of the parties and the purpose to be achieved. In other words, the stipulations in a
7

contract and other contract documents should be interpreted together with the end in
view of giving effect to all.
8
In the present case, the Court finds nothing repugnant to law with respect to the
questioned provisions of the contract of lease between petitioner and respondent. It is
true that Article II, Paragraph 2.04 of the Contract of Lease states that
[a]ny subsequent amendment to Administrative Order No. 4, Series of 1982, which
will effect a decrease or escalation of the monthly rental or impose new and additional
fees and charges, including but not limited to government/MIAA circulars, rules and
regulation to this effect, shall be deemed incorporated herein and shall automatically
amend this Contract insofar as the monthly rental is concerned. However, the Court
9

agrees with the CA that the abovequoted provision of the lease contract should not be
read in isolation. Rather, it should be read together with the provisions of Article VIII,
Paragraph 8.13, which provide that [a]ny amendment, alteration or modification
of th[e] Contract shall not be valid and binding, unless and until made in writing and
signed by the parties thereto. It is clear from the foregoing that the intention of the
10

parties is to subject such amendment to the conformity of both petitioner and

respondent. In the instant case, there is no showing that respondent gave his
acquiescence to the said amendment or modification of the contract.

The situation is different with respect to the payments of the increased rental fee made
by respondent beginning October 1994 because by then the amendment to the contract
was made in writing through a bill sent by petitioner to respondent. The fact that
11

respondent subsequently settled the said bill proves that he acceded to the increase in
rental fee. The same may not be said with respect to the questioned rental fees sought
to be recovered by petitioner between September 1991 and September 1994 because
no bill was made and forwarded to respondent on the basis of which it could have
given or withheld its conformity thereto.

It may not be amiss to point out that during the abovementioned period, respondent
continued to pay and petitioner kept on receiving the original rental fee
of P6,580.00 without any reservations or protests from the latter. Neither did
12

petitioner indicate in the official receipts it issued that the payments made by
respondent constitute only partial fulfillment of the latter's obligations. Article 1235 of
the Civil Code clearly states that [w]hen the obligee accepts the performance knowing
its incompleteness or irregularity, and without expressing any protest or objection, the
obligation is deemed fully complied with. For failing to make any protest or objection,
petitioner is already estopped from seeking recovery of the amount claimed.

Anent the second issue, since it has been established that petitioner has no legal basis
in requiring respondent to pay additional rental fees from September 1, 1991 to
September 30, 1994, it, thus, follows that petitioner's act of denying respondent and its
employees access to the leased premises from July 1, 1997 until March 11, 1998, by
reason of respondent's non-payment of the said additional fees, is likewise unjustified.

Under Paragraph 3, Article 1654 of the Civil Code, the lessor is obliged [t]o maintain
the lessee in the peaceful and adequate enjoyment of the lease for the entire duration
of the contract.

Moreover, Article 1658 of the same Code provides that [t]he lessee may suspend the
payment of the 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.

Furthermore, as correctly cited by the RTC, Article 19 of the Civil Code provides that
[e]very person must, in the exercise of his rights and in the performance of his duties,
act with justice, give everyone his due, and observe honesty and good faith.

Article 22 of the same Code also states that [e]very person who through an act of
performance by another, or any other means, acquires or comes into possession of
something at the expense of the latter without just or legal ground, shall return the
same to him. In accordance with jurisprudence, there is unjust enrichment when a
person unjustly retains a benefit to the loss of another, or when a person retains money
or property of another against the fundamental principles of justice, equity and good
conscience. The principle of unjust enrichment essentially contemplates payment
13

when there is no duty to pay, and the person who receives the payment has no right to
receive it.
14

In the instant case, it is clear that petitioner failed to maintain respondent in the
peaceful and adequate enjoyment of the leased premises by unjustifiably preventing
the latter access thereto. Consequently, in accordance with Article 1658 of the Civil
Code, respondent had no duty to make rent payments. Despite that, respondent still
continued to pay the rental fees agreed upon in the original contract. Thus, it would be
the height of inequity and injustice as well as unjust enrichment on the part of
petitioner if the rental fees paid by respondent during the time that it was denied
access to and prevented from using the leased premises be not returned to it.

With respect to attorney's fees, the Court finds no error on the part of the CA in
sustaining such award on the ground that petitioner's act of denying respondent and
its employees access to the leased premises has compelled respondent to litigate and
incur expenses to protect its interest. The Court likewise agrees with the CA that,
15

under the circumstances prevailing in the present case, attorney's fees may be granted
on grounds of justice and equity.16

Finally, the Court deems it proper to reiterate the provisions of Supreme Court
Administrative Circular No. 10-2000 which enjoins all judges of lower courts to
observe utmost caution, prudence and judiciousness in the issuance of writs of
execution to satisfy money judgments against government agencies and local
government units.

WHEREFORE, the petition is DENIED. The June 19, 2007 Decision and
October 11, 2007 Resolution of the Court of Appeals in CA-G.R. CV No. 79325
are AFFIRMED. The Regional Trial Court of Quezon City, Branch 224
is ORDERED to comply with the directives of Supreme Court Administrative
Circular No. 10-2000.
SO ORDERED.

DIOSDADO M. PERALTA

Associate Justice

WE CONCUR:

PRESBITERO J. VELASCO, JR.

Associate Justice

Chairperson

ROBERTO A. ABAD JOSE CATRAL MENDOZA

Associate Justice Associate Justice

ESTELA M. PERLAS-BERNABE
Associate Justice
 ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

PRESBITERO J. VELASCO, JR.

Associate Justice
Third Division, Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons
Attestation, I certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Courts
Division.

FIRST DIVISION
 [G.R. No. 143675. June 9, 2003]

SPOUSES ROMEO GUDA and EMILY GUDA, petitioners, vs. ALAN A.

LEYNES and SPOUSES MANUEL C. PERALTA and HAYDEE L.
PERALTA, respondents.

DECISION
VITUG, J.:

Respondent-spouses Manuel and Haydee Peralta were the owners of a residential

house and lot located at 626 Eduardo Quintos Street, Sampaloc, Manila. On 08 May
1987, they leased the property over to petitioners, the spouses Romeo and Emily Guda,
for a monthly rental of two thousand pesos. The contract of lease stipulated a term of
one year and that, thereafter, unless terminated by notice to that effect at least thirty
days before the expiration date, the agreement would be deemed renewed on a month-
to-month basis. Specifically, the agreement provided:

"1. This lease agreement shall be for a period of one (1) year commencing on May 15,
1987 up to and until May 14, 1988, it may thereafter be renewed subject to LESSORS
discretion, provided however, that if LESSORS do not exercise their right to terminate
this lease at least thirty (30) days before the said expiration date, this agreement shall
be deemed renewed on a monthly basis. [1]

And in -

x x x the event the Lessors shall desire to sell the leased premises, the LESSEES shall
be given the first option to buy the said premises, if they could meet the desired price
of the LESSORS, otherwise, the LESSEES shall vacate the leased premises within
thirty (30) days upon notice given to them by the new owner." [2]

Upon the expiration of the agreement on 14 May 1988, petitioners continued to

occupy the premises and to pay rent. Close to three years later, or on 01 May 1991, the
Peraltas sold the property to Alan A. Leynes, a brother of Haydee Peralta, herein
spouses co-respondent. Insisting on exercising their "option to buy" under the contract
of lease and contending that the sale to Leynes was void, petitioners refused to vacate
the premises. Respondent Alan C. Leynes was thereupon prompted to file a civil case
for ejectment before the Municipal Trial Court of Manila. The trial court ruled in favor of
Leynes. Aggrieved, the Guda spouses filed Civil Case No. 91-58154 before the
Regional Trial Court of Manila, Branch 33, for the annulment of the sale to Leynes and
for specific performance pursuant to the option to buy provision of the contract of lease
with the Peralta spouses. The trial court ruled in favor of the plaintiffs, declaring the sale
of the property to Alan A. Leynes void and ordering the conveyance of the premises to
the plaintiffs.
 On appeal to it, the Court of Appeals, in its judgment of 13 June 2000, reversed the
decision of the trial court.
In their instant petition, the spouses Guda would contend that when the lessors did
not give notice to terminate the contract of lease thirty days at least before its expiration
date and instead allowed the lessees to occupy the premises, all the terms thereof,
including the provision granting them the first option to buy the leased premises, were
automatically revived and that, accordingly, the sale of the property to Leynes without
giving them the opportunity to exercise the option made the sale void.
The Court of Appeals responded well to the above issue; speaking through Mr.
Justice Martin S. Villarama, Jr., the appellate court expounded:

It must be clarified that even if the Contract of Lease was renewed upon the failure of
the defendants Manuel and Haydee Peralta to exercise their right to terminate the
lease within the period of thirty (30) days prior to the expiration date, May 14, 1988,
such renewal was clearly qualified to be on a `monthly basis. This means that the
lease was converted into a `month-to-month lease, expiring at the end of each
month and renewable also every month. Otherwise, there is no definite period for the
contract of lease after such expiration date. Thus it has been ruled in a number of
cases that a lease on a month-to-month basis is, under Art. 1687 of the Civil Code, a
lease with a definite period, upon the expiration of which upon demand by the lessor
on the lessee to vacate, the ejectment of the lessee may be ordered. (Labastida vs.
Court of Appeals, 287 SCRA 662; De Vera vs. Court of Appeals, 260 SCRA
396.) Clearly, such lease is deemed to expire at the end of the month upon notice to
vacate addressed by the lessor to the lessee. (Paterno vs. Court of Appeals, 272 SCRA
770.)[3]

The contract of lease allowed the lessees to continue with their occupancy of the
leased premises on a month-to-month basis after its termination on 14 May 1988 if no
notice of such termination were given by the lessor at least thirty days before the expiry
date. The renewal clause is valid but the contract itself is not deemed renewed until
after notice or positive act is made to indicate its exercise by the parties. Meanwhile, the
juridical relation between the parties, constrained by the continued enjoyment of the
leased premises, is one of an implied lease based on the principle of tacita
reconduccion. Article 1670 of the Civil Code is thus apropos; it provides:

"If at the end of the contract the lessee should continue enjoying the thing leased for
fifteen days with the acquiescence of the lessor, and unless a notice to the contrary by
either party has previously been given, it is understood that there is an implied new
lease, not for the period of the original contract, but for the time established in articles
1682 and 1687. The other terms of the original contract shall be revived.

The terms of the original contract that are carried over to the implied new lease, as so
aptly ruled in Dizon vs. Magsaysay, cover only those terms that are germane to the
[4]
lessees enjoyment of the premises, such as the rent and terms of payment,
a dictum that has been reiterated in Dizon vs. Court of Appeals thusly:
[5]

"If the presumed will of the parties refers to the enjoyment of possession the
presumption covers the other terms of the contract related to such possession, such as
the amount of rental, the date when it must be paid, the care of the property, the
responsibility for repairs, etc. But no such presumption may be indulged in with
respect to special agreements which by nature are foreign to the right of occupancy or
enjoyment inherent in a contract of lease."[6]

Quite significantly, the option granted to petitioners would appear to have, in fact,
been abrogated when the 1987 contract of lease was ultimately superseded by an
agreement executed on 22 April 1991. The Court of Appeals found and elaborated:

We cannot sustain plaintiffs-appellees theory upon the evidence on record showing

that the terms and conditions of the Contract of Lease dated May 8, 1987 were not
even fully complied with and respected by the plaintiffs-appellees as lessees. The
evidence tends to show that plaintiffs-appellees were not residing on the leased
apartment but in another place which is their dress shop located at the same street
which further gave credence to defendants-appellants claim that the plaintiffs-
appellees had converted the leased apartment into a boarding house, in violation of the
provisions of the Contract of Lease. But what is significant is a subsequent written
agreement signed by plaintiff-appellee Emily Guda on April 22, 1991 showing that the
stipulated rental of P2,000.00 provided in the Contract of Lease was not complied
with because as of May 1, 1991, the lessees were paying a monthly rental of only
P1,500.00 for which reason they executed said new agreement providing for an
increased rental of P1,800.00 starting June 1, 1991. Plaintiff-appellee Emily Guda
likewise agreed therein that in case the property is sold, they will have to vacate the
premises after a months notice. (Exhibit `5-PI for Defendant Leynes) Such is a clear
indication that for all intents and purposes, the parties at that time no longer
considered the Contract of Lease dated May 8, 1987 as still in force and
subsisting. The fact that it was plaintiff-appellee Emily Guda who alone signed this
agreement is of no moment because the latter and her husband, plaintiff-appellee
Romeo Guda, had accepted benefits under this new lease agreement, in the form of a
lower monthly rental than the P2,000.00 stipulated in the previous Contract of
Lease. Besides, said new agreement merely reiterated the fact that the lease is on a
month-to-month basis, after the expiration of the term provided under the Contract of
Lease dated May 8, 1987.

The written agreement dated April 22, 1991 is a new lease agreement and not a
renewal of the original Contract of Lease between the parties. It is also a clear
evidence of plaintiffs-appellees knowledge about the expected sale of the property to a
third party. Indeed, plaintiffs-appellees cannot close their eyes to the fact that their
extended stay in the premises was allowed by the lessors with the understanding that
they shall vacate the premises within a months notice upon its sale to a third
party. Plaintiff-appellee Emily Guda who was actually the one who always dealt with
defendant-appellant Haydee Peralta, expressed her understanding and agreement to
the lessors desire to sell the property to Haydee Peraltas sibling in a letter written
shortly after their agreement of April 22, 1991, as follows:

`Nahihiya na akong ukupahin ko pa ang apartment ninyo isasauli ko na lang . . .

`Naintindihan ko naman ang paliwanag mo. Isa pa kapatid mo sila na gostong

kumuha. Siguro kung ibang tao puwede pa ako magreklamo e kapatid mo sila yes na
lang ako.

`Mare, papuntahin mo na lang ang kapatid mo para magkausap kami tungkol sa

pagsauli ko sa apartment.

`x x x (Exhibit `6-PI for Defendant Leynes)

When confronted in court by her declarations in the above-cited letter, plaintiff-

appellee Emily Guda merely stated that her letter was meant to inform the defendant-
appellant Haydee Peralta to send her sibling so they can talk about the sale of the
property to plaintiffs-appellees. (TSN, August 14, 1991, pp. 63-65.) The clear and
unmistakable terms of her letter, however, indicated the contrary as plaintiff-appellee
Emily Guda therein acknowledged, understood and accepted the fact that the first
option to buy, or rather, the right of first refusal granted to them under the Contract of
Sale, is no longer subsisting or in force at the time when she and Haydee Peralta
earlier agreed in writing for a new extended lease made subject to the condition that
once the property is sold to another, they will have [to] vacate the premises within one
(1) months notice.

With the Contract of Lease dated May 8, 1987 having been validly terminated and
superseded by a new written agreement dated April 22, 1991 which also reiterated a
month-to-month lease in force between the parties, the trial court thus erred in
declaring that defendants-appellants Manuel and Haydee Peralta violated the
provisions of the Contract of Lease in selling the leased property to defendant-
appellant Alan A. Leynes. [7]

All considered, the Court finds no sufficient justification to reverse the holding of the
appellate court.
WHEREFORE, the assailed decision of the Court of Appeals is AFFIRMED. No
costs.
 SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.

G.R. No. 106573 March 27, 1995

ANTONIO CHUA, petitioner,

vs.
COURT OF APPEALS, and STAR GROUP RESOURCES AND DEVELOPMENT,
INC., respondents.

QUIASON, J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court to reverse and
set aside the decision of the Court of appeals in CA-C.R, SF No. 27979, which dismissed petitioner's
of the Regional Trial Court, Branch 34, Iloilo City in Civil Case No. 20086. The decision of the trial
court affirmed the decision of the municipal Trial Court of Iloilo City in Civil Case No. 228(89),
ordering the ejectment of petitioner.

We deny the petition.

The operative facts of the case, as found by the Court of Appeals, are as follows:

Petitioner is one of the lessees of Lot No, 180-I located at corner Iznart and Ledesma
Streets, Iloilo City and formerly owned by and registered in the names of Lourdes
Locsin, Manuel Locsin, Ester Locsin Jarandilla, Maria Locsin Vda. de Araneta and
Jose Locsin under TCT No, T-46841 (later, TCT No. T-83230). It appears that
petitioner had been leasing Said property since 1938 by virtue of a written lease
contract which had been continuously renewed for a two-year term per renewal. The
latest written contract of lease covered the period from September 1, 1987 to August
30, 1989.

Meanwhile the Locsin executed a Deed of Absolute Sale dated September 18, 1989
conveying the subject premises to the herein private respondent Star Group
Resources and Development, Subsequently, petitioner admittedly received private
respondent to file a complaint of Unlawful Detainer on the ground of expiration of
termination of the lease, before the Municipal Trial Court of Iloilo City, Branch I in
Civil Case No. 228 989) petitioner filed his Answer with Counterclaim.
 "The case was tried under the regular procedure since the amount demanded
exceed P20,000.00. Trial ensued. After the parties presented their evidence in
support of their respective claims, the MTC-Iloilo City, Branch I rendered a Decision
dated October 10, 1991, the dispositive portion of which reads, as follows:

"WHEREFORE judgment is hereby rendered in favor of the plaintiff,

STAR GROUP RESOURCES AND DEVELOPMENT INC., and
against the defendant ANTONIO CHUA, ordering the latter or any
person or persons acting in his behalf to wit:

1. to vacate the premises of Lot No. 180-I, as well as,

the portion of the portion of the building standing
thereon covered by Transfer Certificate of Title No. T-
83230, situated at the corner of Ledesma and Iznart
Sts., Iloilo City and deliver possession to the plaintiff;

2. To pay plaintiff the amount of P9,500.00 per month

from September 1, 1989 with an increase of 20%
every September of each year, as reasonable
compensation for the use and occupation of the
premises, until the same are completely delivered to
the plaintiff; and,

3. To pay costs of suit."

Defendant's counterclaim is ordered dismissed for lack of merit (Rollo, pp. 43-45).

The pivotal issue is whether the lease contract has been renewed in accordance with the terms
thereof. The lease contract provides:

xxx xxx xxx

Term the term of this contract shall be for a period of Two (2) Years, beginning
September 1, 1987 to August 30, 1989

xxx xxx xxx

(Rollo, 110, p. 54).

The lease contract contains provisions on renewal and termination, thus:

xxx xxx xxx

Renewal LESSEE agrees to give LESSOR thirty (30) days prior written notice, in
advance, of its intention to terminate or renew this contract. If no written notice is
received from LESSEE of its intention to renew the contract, LESSOR shall consider
 the Contract to be terminated on the date the lease period ends. During the 30 days
period notice, unless LESSEE has given LESSOR its intention to renew lease ,
LESSOR may bring in the leased premises prospective tenants provided the same
be done during reasonable hours.

Termination LESSEE may terminate this Contract at any time giving LESSOR
thirty (30) days written notice in advance of its intention.

xxx xxx xxx

Upon termination of the period of lease unless LESSEE has indicated its intentions to
renew the contract, LESSEE shall return and surrender the leased premises in as
good a condition as reasonable wear and tear may permit without any delay
whatsoever, . . .

xxx xxx xxx

(Rollo, p. 56).

The contract is.emphatic that if "no written notice is received from LESSEE of its intention to renew
the contract," the contract terminates at the end of the lease period. It is also stipulated therein that
upon termination of the period of lease and "unless LESSEE has indicated its intention to renew the
contract," the lessee has to surrender the leased premises to the lessor.

The notice must be given 30 days before the expiration of the lease period, which was on August 30,
1989. The notice to renew dated August 18, 1989 sent by petitioner and received by the lessor on
August 22, 1989 cannot be treated.

The act of the lessor in renewing a leas even without the prior notice to renew on the part of the
lessee, is not a waiver as to a notice for renewal as required by a subsequent lease contract. For
such a result, there must be such conduct on the part of the lessor as to make the lessee reasonably
believe that said requirement of notice for renewal prior to the termination of the lease will not be
insisted on in the future. Some other acts or representations were needed to show that the lessor
had waived the notice requirement stipulated in each of the series of lease contracts The
circumstances attendant to the instant case are not enough, standing alone, to induce such a belief
(cf. 3A Corbin, Ibid., 493-498).

An essential element of estoppel is that the party sought to be concluded by it Should have intended
that his words or conduct would be relied upon by others and influence their action, or that he should
have known or had reason to believe that said words or conduct would have such an effect (28 Am.
Jur. 26. 647-648).

There is a difference between a waiver of the right to enforce a condition stipulated in the contract
and a waiver of the stipulation itself. As found by the Court of Appeals, the renewals of the lease
contract, inspite of the lack of or tardiness in giving the written notices, were mere acts of tolerance
on the part of the lessor. The renewals were mere exercises of the right of ownership of the lessor
which withholding the property (V Tolentino, Civil Code of the Philippines 241 [1992]; Co Tiamco, v.
Diaz, 75 Phil. 672 [1946])

Assuming that the provision Article 1670 is applicable to petitioner's case still that law does not
require that the notice to vacate be given before the lease expires. The notice required under said
provision is the one given after the expiration of the lease period for the purpose of aborting an
implied renewal of the lease (Gamboa's Incorporated v. Court of Appeals, 72 SCRA 131 [1976]). The
predecessor-in-interest of private respondent a Notice to Vacate an August 23, 1989 and private
respondent sent another notice to petitioner to vacate in November, 1989 (Rollo, pp. 44-50).

Assuming further that an implied lease arose, the lease would only be month-to-month since the
rentals were paid monthly and not for the period of the original contract (Civil Code of the
Philippines, Art. 1670 in relation to Art. 1687). A month-to-month lease under Article 1687 is a lease
with a definite period and is terminable at the end of each month upon demand to vacate by the
lessor (Palanca v. Intermediate Appellate Court, 180 SCRA 119 [1989]; Bondoc v. Court of Appeals,
177 SCRA 588 [1989]);

Petitioner claims that the provision of the lease contract on renewal is ambiguous because it does
not state the reference points as to when the 30-day notice to renew should be reckoned from unlike
the provision on termination of the lease, which specifically requires the sending of the notice to
terminate 30 days in advance of the expiry date (Rollo, pp. 22-24).

We do not find any ambiguity in the wording of the provision an termination of the lease. The
reference point sought by petitioner is the "date the lease period ends." The notice to renew must be
given 30 days before that date and if no such notice is given, the "LESSOR shall consider the
Contract to be terminated on the date the lease period ends."

There being no ambiguity in the applicable provision of the lease contract, there is no basis to allow
oral testimony whether under the Statute of Frauds (Civil Case of the Philippines, Art. 1403, par. 2
[5]) or the Parol Evidence Rule (Rules on Evidence, Rule 130', Sec. 9; Syquia v. Court of Appeals,
151 SCRA 505 [1987]), to prove that petitioner was given verbal assurance of a renewal of the lease
and "first priority to buy in case of sale of the leased premises" (Rollo, pp. 31-34).

The lease contract expressly reserves to the lessor the light to sell or mortgage the property. The
only obligation of the lessor was to inform the lessee of the plan to sell the property and to require
the purchaser or mortgagee to respect the terms of the lease contract.

Finally, the different considerations which petitioner claims entitle him to stay in the lessed premises
either involve questions of fact (e.g. the fraud and deceit after the expiration of the right of
possession (Revised Rules of Court, Rule 70, Sec. 1).

As to the valuable improvements which petitioner claims to have introduced on the premises, he can
invoke Article 1678 of the Civil Code of the Philippines, which allows a lessee to remove the
improvements made in good faith should the lessor not elect to retain them by paying the amounts
fixed by law for their value at the time the lease is terminated (Syquia v. Court of Appeals, supra).
WHEREFORE, the petition is DENIED.

SO ORDERED.