LEASE DIGESTS

Sales & Lease 2C

UNITED REALTY CORPORATION VS. COURT OF APPEALS

G.R. No. L-62603, 27 March 1990
Topic

Facts:

In March 1964 and December 1964, United Realty Corporation (United) and Rev. Father
Jose Torralba Sy entered into separate lease contracts over two apartments: 913-E and 193-
F, Josefina Street, Sampaloc Manila. Both leases had a common month-to-month duration
with rent at P200 per month, payable in advance on the first 10 days of each month, until
the either party terminates the lease by giving five days notice in writing.

Both contracts stipulated that the United (lessor) is entitled to collect P400 every month as
damages in case the lessee shall continuously withhold possession of the apartments after
being notified of termination of his right to occupy. Rev. Fr. Sy (lessee) removed the portion
separating the two apartments and converted them for use as a Buddhist chapel.

On 1 August 1970, United leased to Rev. Fr. Sy the apartment in 937-E for the monthly
rent of P300, payable in advance within the first 10 days of the month for use as residence
only. The contract entitled United to collect P500 every month in case Rev. Fr. Sy shall
continuously withhold possession of the apartments after notice of termination.

On 24 September 1975, United sent a letter to Rev. Fr. Sy that effective 1 November 1975,
rent for the two apartments will be P500 per door or P1000 for both doors, payable in the
same terms, and requested that Rev. Fr. Sy inform United of his decision regarding the new
rates. Instead, Rev. Fr. Sy complained to the Department of Public Information in
Malacanang, contending that PD 20 (amending Sections 1, 3, 4, and 5 of RA 6395) prohibits
the increase of rentals which does not exceed P300 per month.

The Presidential Complaint and Action Committee found no violation of PD 20 as the

leased properties were principally used as a Buddhist temple, which is not a dwelling
covered under PD 20. However, after Rev. Fr. Sy wrote to Assistant Executive Secretary
Zamora, the latter issued Opinion No. 480 Series of 1975 holding that the increase in rental
violated PD 20 and the leased premises cannot be considered a commercial establishment
just because ¼ of the two-door apartments were used as a chapel incidental to Rev. Fr.
Say’s calling as a monk which is not for profit.

Later, Secretary Zamora, as Presidential Assistant for Legal Affairs, issued Opinion No.
629, Series of 1976, which held that (1) the leased premises may not be considered
commercial because it was used as a place for worship; (2) the prohibition against rental
increase under PD 20 only applies to dwelling units just because Rev. Fr. Sy incidentally
lived there as well; and (3) lease rentals are conventional between the parties, but limited
by to reasonable levels only as per equity and justice. Still, Rev. Fr. Sy failed to vacate the
leased premises.

United filed a complaint for unlawful detainer in the City Court of Manila, but was
dismissed. On appeal, the Court of First Instance, and the Court of Appeals affirmed the
City Court.

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Issue(s):
1. Whether or not the prohibitions of PD 20 apply to the lease contracts, which involve
Rev. Fr. Sy’s Buddhist chapel

Held:
1. No, the lease contracts were for definite periods and the leased premises
are not used as a dwelling or a residence, but a Buddhist temple.

The two contracts of lease show that their periods are from month to month and that the
lease may be terminated when either party gives a 5 days notice in writing. These
stipulations demonstrate that the agreement of lease is for a definite period.

Under Section of 5(f) of B.P. Blg. 25 one of the grounds for ejectment is the expiration of the
period of a written lease contract. Rev. Fr. Sy’s failure to pay the increased rental prompted
United to terminate the contract and ask the former to vacate. A lease contract may be
terminated at the end of any month, which shall be deemed terminated upon the refusal to
pay the increased monthly rental demanded by the petitioner, provided the same is not
exorbitant.

Rev. Fr. Sy does not use the two apartments subject of litigation as his residence, but for a
Buddhist Temple. Thus, it is with more reason that this lease agreement does not fall
within the protective mantle of the provision of P.D. No. 20 and B.P. No. 25 which covers
only dwelling units.

Since the lease agreement in question is for a definite period it follows that petitioner has a
right to judicially eject private respondent from the premises as an exception to the general
rule provided for in Section 4 of P.D. No. 20 which provides as follows:

Except when the lease is for a definite period, the provisions of paragraph (1) of
Article 1673 of the Civil Code of the Philippines insofar as they refer to dwelling
unit or land on which another's dwelling is located shall be suspended until
otherwise provided; but other provisions of the Civil Code and the Rules of Court
of the Philippines on lease contracts insofar as they are not in conflict with the
provisions of this Act, shall apply.

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LEGAR MANAGEMENT & REALTY CORPORATION VS. COURT OF APPEALS

G.R. No. 117423, 24 January 1996
Topic

Facts:

Spouses Legasto owned an apartment building along E. Rodriguez, Quezon City. They
entered into a written contract of lease with no definite period with Felipe Pascual and
Dionosio Ancheta involving Unit 318-T of said building. Sometime in 1987, the Spouses
Legasto and their children organized Legar Management & Realty Corporation (Legar) and
transferred and assigned all their rights, interests, and privileges over certain properties,
including the apartment building.

Legar allowed Pascual and Ancheta to continue occupying the unit by virtue of a verbal
contract of lease, which was renewable on a month-to-month basis for a monthly rent of
P1,545.

On 21 April 1992, Legar wrote to Pascual a formal notice of termination, requesting him to
vacate Unit 318-T by the end of May 1992. A similar formal notice was sent to Ancheta on 4
June 1992, demanding vacation of the same unit by the end of June 1992. Both refused.

Legar instituted an ejectment case against Dionisio and Pascial with MTC of Quezon City,
which found that the verbal contract of lease on a month-to-month basis is for a definite
period, and may be terminated at the end of the month. On Appeal, the RTC reversed the
MTC, holding that the mere expiration of the month-to-month lease period as per Article
1687 of the Civil Code does not automatically give rise to ejectment in cases governed by
the Rent Control Law, in light of Section 5 of BP Blg. 877. The Court of Appeals affirmed
the RTC.

Issue(s):
1. Whether or not the lessee of a residential property covered by the Rent Control Law
can be ejected on the basis alone of the expiration of the verbal lease contract under
which rentals are paid monthly.

Held:
1. Yes, a month-to-month lease is a lease with a definite period, the expiration
of which upon previous demand by the lessor to vacate, can justify
ejectment.

This issue was resolved in the case of Acab vs. Court of Appeals, G.R. No. 112285, 21
February 1992 (241 SCRA 546).

In a long line of cases, beginning with Rivera v. Florendo, 143 SCRA 278 (1986), this Court
has held that said provision does not suspend the effects of Article 1687 of the New Civil
Code.

Lease agreements with no specified period, but in which rentals are paid monthly, are
considered to be on a month-to-month basis. They are for a definite period and expire after

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the last day of any given thirty-day period, upon proper demand and notice by the lessor, to
vacate.

In the case at bench, it was found by all three lower courts that the lease over the subject
property was on a month-to-month basis, and that there was proper notice of non-renewal
of contract and demand for vacation of premises made by petitioners on private respondent.

Therefore, the verbal lease agreement entered into by private respondent and petitioners
father and predecessor-in-interest has been validly terminated, in which case there is
sufficient cause for ejectment under Section 5(f) of Batas Pambansa Blg. 877.

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GUZMAN, BOCALING & CO. VS. BONNEVIE

G.R. No. 86150, 2 March 1992
Topic

Facts:

Africa Valdez de Reynoso, the administratrix of the Intestate Estate of Jose L. Reynoso
leased to Raoul Bonnevie and Christopher Bonnevie a parcel of land, measuring 600 meters
with 2 buildings constructed thereon, for one year beginning 8 August 1976 at a monthly
rental rate of P4,000. The lease stipulated that in case the lessor decides to sell the leased
property, the lessees shall be given a first priority to purchase the same.

On 3 November 1976, Reynoso notified the Bonnevies’ by registered mail that she was
selling the leased premises for P600,000 less a mortgage loan of P100,000, and was giving
them 30 days from receipt of letter. Reynoso said that if the Bonnevies’ did not exercise
their right, she would expect them to vacate the property not later than March 1977.

On 20 January 1977, Reynoso said another letter advising the Bonnevies’ that she had
already sold the property after they failed to exercise their right of first priority. The
Bonnevies wrote Reynoso that neither of them had received her first letter.

On 7 March 1977, the leased premises were sold to Guzman, Bocaling & Co (GBC) for
P400,000, of which P137,500 was paid immediately and the balance of P262,500 payable
only when the premise were vacated.

On 12 April 1977, Reynoso wrote to the Bonnevies demanding they vacate within 15 days
for their failure to pay rentals for 4 months. When they refused, Reynoso filed a complaint
for ejectment against them before the City Court of Manila. Later, the parties submitted a
Compromise Agreement, which was approved, but eventually set aside in 1979.

On 29 April 1980, while the ejectment case was pending in the City Court, the Bonnevies
filed an action before the Court of First Instance for annulment of the sale between Reynoso
and GBC and prayed for Reynoso be required to sell the property to them under the same
terms agreed upon in the sale to GBC.

On 5 May 1980, the City Court ordered the Bonnevies to vacate the premises. The
Bonnevies appealed to the CFI, which consolidated the appeal with the action for
annulment of sale. The CFI modified the decision of the lower court: (1) the Bonnevies were
ordered to vacate the leased premises, (2) pay the rent; (3) annulled the sale to GBC and
ordered Reynoso to execute a deed of sale with mortgage over the property in favor of the
Bonnevies.

Reynoso and GBC appealed to the Court of Appeals, which affirmed the lower court.

Issue(s):
1. Whether or not the Court of Appeals erred affirming the annulment of the sale to
BGC that ordered Reynoso to execute a deed of sale with mortgage over the property
in favor of the Bonnevies.

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Held:
1. No, there was no satisfactory proof that Reynoso gave notice to the
Bonnevies’ and GBC is not a purchaser in good faith.

Reynoso claimed to have sent the November 3, 1976 letter by registered mail, but the
registry return card was not offered in evidence. What she presented instead was a copy of
the said letter with a photocopy of only the face of a registry return card claimed to refer to
the said letter. A copy of the other side of the card showing the signature of the person who
received the letter and the data of the receipt was not submitted. There is thus no
satisfactory proof that the letter was received by the Bonnevies.

Even if the letter had indeed been sent to and received by the private respondent and they
did not exercise their right of first priority, Reynoso would still be guilty of violating
Paragraph 20 of the Contract of Lease which specifically stated that the private
respondents could exercise the right of first priority, "all things and conditions being equal."
The Court reads this mean that there should be identity of the terms and conditions to be
offered to the Bonnevies and all other prospective buyers, with the Bonnevies to enjoy the
right of first priority.

The selling price qouted to the Bonnevies was P600,000.00, to be fully paid in cash less only
the mortgage lien of P100,000.00. On the other hand, the selling price offered to and
accepted by the petitioner was only P400,000.00 and only P137,500.00 was paid in cash
while the balance of P272,500.00 was to be paid "when the property (was) cleared of tenants
or occupants

Even if the Bonnevies could not buy it at the price qouted, Reynoso could not sell it to
another for a lower price and under more favorable terms and conditions. Only if the
Bonnevies failed to exercise their right of first priority could Reynoso lawfully sell the
subject property to others, and at that only under the same terms and conditions offered to
the Bonnevies.

GBC cannot be deemed a purchaser in good faith for the record shows that its categorically
admitted it was aware of the lease in favor of the Bonnevies, who were actually occupying
the subject property at the time it was sold to it. Although the Contract of Lease was not
annotated on the transfer certificate of title in the name of the late Jose Reynoso and Africa
Reynoso, the petitioner cannot deny actual knowledge of such lease which was equivalent to
and indeed more binding than presumed notice by registration.

Good faith connotes an honest intention to abstain from taking unconscientious advantage
of another. Tested by these principles, the petitioner cannot tenably claim to be a buyer in
good faith as it had notice of the lease of the property by the Bonnevies and such knowledge
should have cautioned it to look deeper into the agreement to determine if it involved
stipulations that would prejudice its own interests. GBC only has itself to blame. Having
known that the property it was buying was under lease, it behooved it as a prudent person
to have required Reynoso or the broker to show to it the Contract of Lease in which Par. 20
is contained.

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ETCUBAN VS. COURT OF APPEALS

G.R. No. L-45164, 16 March 1987
Topic

Facts:

Dominico Etcuban and his fellow co-heirs inherited from their father a piece of land
approximately 14.0400 hectares, which was the subject matter in dispute before the CFI of
Cebu in a case for settlement of estate. Dominico, his late father’s spouse, and his siblings
were declared co-owners of the subject property. In December 1967, the 11 co-owners
executed 11 deeds of sale of their respective shares to Spouses Songaila for the total sum of
P26,340.

Dominico instituted an action for legal redemption of his share before the Trial Court,
alleging that his co-owners leased and sold their respective shares without giving due
notice to him as a co-owner. He only discovered the 11 deeds of sale during a hearing in
1972 where only 3 co-owners admitted their respective sales. Spouses Songaila countered
that Dominico knew of the sales sometime in August 1968 or earlier, and that Dominico lost
his right to redeem under Article 1623 of the Civil Code because such may be exercised only
within 30 days from notice of sale, which the records show that Dominico knew.

The trial court ruled in favor of Dominico and allowed him to exercise his right of
redemption for the price of P26,340. Spouses Songaila appealed to the Court of Appeals on
the ground that Dominico’s failure to tender the redemption price or consign the same in
court or to make a specific offer before filing the complaint for legal redemption has barred
the right to redeem.

The CA held Dominico failed to make a valid tender of the sale price within the period fixed
by Article 1623 of the Civil Code. The CA held that written notice was given to Dominico of
thse sale in 1967 in the form of an answer with counterclaim to the civil case instituted by
Songaila in 1972.

Issue(s):
1. Whether the Court of Appeals correctly held that Dominico is barred from exercising
his right to redeem the property.

Held:
1. Yes, the 30-day period of legal redemption had expired and Dominico failed
to comply with the requirements of Article 1623.

The records reveal that on 27 May 1974 Dominico had deposited with the lower court the
amount of P26,340. The answer with counterclaim was filed on 18 March 1972––more than
2 years later. This is clearly outside the 30-day period of legal redemption, the period of
which is non-extendible. While it is true that written notice is required by the law (Art.
1623), it is equally true that the same "Art. 1623 does not prescribe any particular form of
notice, nor any distinctive method for notifying the redemptioner. "So long, therefore, as the
latter is informed in writing of the sale and the particulars thereof, the 30 days for
redemption start running, and the redemptioner has no real cause to complain.

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SPOUSES CLUTARIO VS. COURT OF APPEALS

G.R. No. 76656, 11 December 1992
Topic

Facts:

Spouses Gandia own a two-story residential apartment and occupy the upper story while
Spouses Clutario, by virtue of a verbal lease since 1961, occupy the upper story of the house
for monthly rent of P150.

On 9 May 1980, Spouses Gandia, through counsel, wrote a letter to Spouses Clutario giving
them 90 days to vacate. Spouses Gandia alleged that due to their advanced age and failing
health, they decided to occupy the entire apartment, including the ground floor leased to
Spouses Clutario. The Clutarios did not need the demand letter, prompting the Gandias to
bring the matter to the Katarungan Pambarangay for settlement, which did not succeed.
Another demand letter was sent.

The Clutarios had been in arrears in rental payments from August 1980. On 4 March 1981,
the Gandias filed an ejectment complaint against the Clutarios before the MeTC of Quezon
City citing (1) the need for the premises; and (2) non-payment of rentals from August 1980.
Pending the ejectment case, the Clutarios paid all back rentals. The MeTC dismissed the
complaint and held that the Gandias failed to support their cause of action with substantial
evidence.

The Gandias appealed to the RTC, which reversed the MeTC and ruled that the Clutarios’
nonpayment of rentals for more than 3 months and the Gandias’ need for the leased
premises are sufficient causes for the former’s ejectment. The Clutarios appealed to the
Court of Appeals, which affirmed the RTC, holding that non-payment of rent for 3 months
and the need to repossess the property for their own use as grounds for ejectment under
Section 5 of BP 25.

Issue(s):
1. Whether or not the Gandias’ acceptance of back rentals waives the three months of
non-payment as a ground for ejectment.

2. Whether or not the Gandias can invoke the need to use the entire apartment as a
valid ground to eject considering they have other apartment units available for
occupancy.

Held:
1. No, jurisprudence holds that acceptance by the lessor of payment of rentals
in arrears does not constitute a waiver of default in payment of rentals as a
valid ground for ejectment.

When the Clutarios paid the back rentals on May 15, 1981, the Gandias had already filed
the complaint for ejectment earlier, to be specific, on March 4, 1981. The conduct of the
Gandias subsequent to their acceptance of the back rentals belies any intention to waive

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their right to eject the Clutarios as a result of the latter's failure to pay the rent for more
than three (3) months.

Proof of any one of the factors enumerated in section 5 of B.P. Blg. 25 (1979) is sufficient
cause for judicial ejectment of a lessee. Having proved one of such grounds, i.e., arrears in
payment of rent for three (3) months at any one time, private respondents may legally eject
petitioners without having to prove the other grounds for ejectment. Nevertheless, to
bolster their action for ejectment, private respondents invoked in their complaint a second
ground for ejectment, namely, their need for the leased premises.

2. Yes, the CA found that these other apartments were already tenanted.

The Clutarios are bound by the established jurisprudence that under B.P. Blg. 25 (1979),
the need by the lessor of the leased premises for his own use or that of his immediate family
is a valid ground for ejectment. They, however, submit that this ground for ejectment is not
available to the Gandias who own, apart from the disputed premises, three other apartment
units located at Nos. 56-A, 56-B and 56-C Liberty St., Murphy, Cubao, Quezon City, at least
one of which is allegedly available for occupancy by private respondents.

Indeed, for the lessor to be able to validly eject the lessee on the ground of need for the
leased property, it must be shown that there is no other available residential unit to satisfy
that need. The non-availability must exist at the time of the demand by the lessor on the
lessee to vacate the property. In the instant case, the Clutarios allege that the other
apartment units of the Gandias are vacant and available to the latter for occupancy. The
Gandias deny this allegation, claiming that the other units were occupied when they gave
notice to the the Clutarios vacate the disputed premises, and remain so occupied until now.
The Court of Appeals ruled that "the other apartments of Gandias were tenanted.

The need for the leased premises by the lessor as a valid ground for ejectment has already
been given a liberal interpretation in Caudal v. Court of Appeals, where it was held that the
conversion of the leased property into a servants' quarters was a legitimate need within the
purview of sec. 5 (c) of B.P. Blg. 25 (1979). The law does not strictly confine the meaning of
the word "residence" mainly for habitation purposes as restrictedly interpreted by
petitioner. In a way, the definition admits a measure of liberality, albeit limited, since a
residence may also be the site of a home industry, or a retail store or be used for business
purposes so long as it is principally used for dwelling purposes.

The Gandias’ decision to occupy both the lower and upper portions of the property sprang
not only from mere convenience, but from necessity as well, due to their advanced age and
the poor health of respondent Melquiades Gandia. While the upper portion of the premises
may have been sufficient to satisfy private respondents' residential needs in 1961 when
they leased the lower portion to petitioners, it no longer sufficed in 1980 or nineteen (19)
years later, when they served the notice to vacate, their personal circumstances having
drastically changed.

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YEK SENG CO VS. COURT OF APPEALS

G.R. No. 87415, 23 January 1992
Topic

Facts:

Dewey and David Yap owned a building in Manila, which Yek Seng Co, via a verbal lease,
for monthly rent of P3,000, used for its general merchandise business for more than 20
years.

On 2 December 1985, the Yaps notified Yek Seng Co they were terminating the lease as
they intended to renovate the building and use it themselves. Yek Seng Co refused to
vacate, prompting the Yaps to file a complaint for ejectment against Yek Seng Co before the
MTC of Manila. Yek Seng Co filed a petition for consignment of the monthly rentals which
he claimed had been refused by the Yaps.

The MTC ruled in favor of the Yaps and ordered Yek Seng Co to vacate. The RTC and CA
affirmed the lower court, but Yek Seng Co appealed to the Supreme Court, on the ground
that he was not given an extension of the lease following Article 1687 of the Civil Code. Yek
Seng Co argued that the cases of Araneta vs. De Mesa and Divino vs. Marcos apply to his
argument for an extension of lease.

Issue(s):
1. Whether or not Yek Seng Co is entitled to an extension of his lease under Article
1687 of the Cvil Code.

Held:
1. No, Yek Seng Co’s lease was on a month-to-month basis and had already
terminated at the time the Yaps asked him to vacate the leased premises.

The applicable case is Cruz v. Intermediate Appellate Court where it was held that a lease
on a month-to-month basis is one with a definite period and the lessee cannot avail of the
benefits under Article 1687, which only applies if there is no definite term. The two cases
cited by Yek Seng Co are not applicable at all to this case.

Given that Yek Seng Co paid rent monthly and the term had not been expressly agreed
upon, the lease was understood under Article 1687 to be terminable from month to month.

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YAP VS. CRUZ

G.R. No. 89307, 8 May 1992
Topic

Facts:

Dr. Vergel Cruz was a bonafide tenant of Amado Bugayon, Jr. for almost 5 years, paying
monthly rent of P1,400, and had introduced several improvements and operated a
veterinary clinic known as Malate Veterinary Clinic.

Sometime in July 1985, Cruz offered for sale the goodwill of the veterinary clinic and some
of the equipment to the would be buyers Dr. Yap, Evelia Bdiagan, Teresita Baladad, and
Florencia de Vera. Cruz introduced the Dr. Yap to Bugayon as the person interested in
taking over the clinic. Negotiations, however did not materialize because the would be
buyers entered into a lease contract for the said premises for a monthly rent of P1,800 with
Bugayon. Cruz filed an action for forcible entry with damages before the Metropolitan Trial
Court of Manila against Yap and Bugayon.

The MetC ruled in favor of Cruz and ordered Yap to vacate and surrender possession of the
premises to Cruz. The RTC and CA affirmed the MetC ruling. Yap appealed to the Supreme
Court, and argued that the Cruz’s lease on a month-to-month basis was automatically
terminated because he stopped paying rent during the negotiations for the sale of goodwill.
Essentially, Yap claims a right to the premises apart from the proposed sale of goodwill
because he contracted the lease with Bugayon after negotiations for the sale of goodwill fell
through.

Issue(s):
1. Whether Bugayon’s new lease contract with Yap as the lessee is valid.

Held:
1. No, Cruz’s lease was still valid and subsisting when Yap and Bugayon
contracted the new lease.

Cruz’s transfer of leasehold rights is conditional in nature and has no force and effect if the
condition is not complied with. In this case, the condition was to obtain the secure the
necessary permits from the government.

Although Cruz’s lease is on a month-to-month basis, there was no proper notice or demand
to vacate. Absent such notice, Cruz’s lease subsists and has not expired. Neither can his
non-payment be a ground to terminate since there was neither demand to pay nor refusal to
pay. Yap’s new lease deprived Cruz of his lease, thus the action for forcible entry was
proper.

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SAMELO VS. MANOTOK SERVICES, INC.

G.R. No. 170509
Topic

Facts:

Manotok Services, Inc. (Manotok) claimed to be administrator or a parcel of land known as

Lot 9-A situated in Tondo Manila. On 31 January 1997, Manotok entered into a lease
contract with Viegely Samelo of a portion of Lot 9-A, described as Lot 4, for one year with a
monthly rental of P3,960. The lease expired on 31 December 1997, but Samelo continued
occupying the leased premises without paying rent.

On 5 August 1998, Manotok, through its president, sent a letter to Samelo demanding she
vacate the premises and pay compensation for use and occupancy. Samelo did not heed
these demands.

On 18 November 1998, Manotok filed a complaint for unlawful detainer against Samelo
before the Metropolitan Trial Court (MeTC) in Manila. Samelo answered that (1) Manotok
had no right to collect rent because the leased premises are located inside the property of
the Philippine National Railways (PNR); (2) her signature in the contract was obtained
through Manotok’s misrepresentation; and (3) she claimed to be the owner of the leased
premises as she has possessed it since 1944.

The MeTC ruled in favor of Manotok and ordered Samelo to vacate the premises. The RTC
reversed the MeTC and held that Manotok had no authority to collect rent as it failed to
show authority to administer the leased premises. The CA reversed the RTC and reinstated
the MeTC judgment, and held that Samelo is estopped from questioning Manotok’s right
over the subject property because the tenant in an action involving possession of the leased
premises cannot controvert the landlord’s title or assert any right adverse to that title
without first delivering the premises.

Before the Supreme Court, Samelo argued that the CA erred in ruling that a tenant is not
permitted to deny the title of his landlord and maintained that Manotok is not the owner or
administrator of the leased premises.

Issue(s):
1. Whether Manotok has a better right of possession over the leased premises.

Held:
1. Yes, Manotok has a better right of possession.

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. 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 Thus, when the relationship of lessor and lessee is established in

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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.

The lease between the parties is undisputed. Samelo cannot deny that she signed the lease
contract. Moreover, the lease expired on 31 December 1997, but Manotok dd not give
Samelo notice to vacate, which was sent only on 5 August 1998, while Samelo enjoyed the
subject premises for more than 15 days without objection.

Manotok’s inaction shows no intention to discontinue the lease and created an implied new
lease (tacita reconduccion) pursuant to Article 1670 of the Civil Code:

“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.”

The requisites of an implied new lease are (a) the term of the original lease has expired; (b)
the lessor has not given notice to vacate; and (c) the lessee continued enjoying the thing
leased for 15 day with the acquiescence of the lessor.

Since rent was paid on a monthly basis, the lease is considered to be a month-to-month
basis, under Article 1687 of the Civil Code. A lease from month to month is considered one
with a definite period, which expires at the end of each month upon demand to vacate by
the lessor. When Manotok sent notice to vacate on 5 August 1998, the implied new lease
was aborted and such as expired at the end of that month. After notice, the lessee’s right to
continue in possession ceases and her possession becomes one of detainer.

Section 2(b), Rule 131 of the Rules of Court prohibits the tenant from denying the title of
his landlord at the time of the commencement of the relation of the landlord and the tenant.
Article 1436 of the Civil Code states that a lessee or a bailee is estopped form asserting title
to the thing leased. The juridical relationship between lessor and lessee carries with it
recognition of the lessor’s title. The lessee is estopped from denying the lessor’s title or
asserting a better tile, but also in some third person while remaining in possession of the
leased premises. This estoppel applies even though the lessor had no title at the time of the
contract, and may be asserted by the original lessor and those who succeed to his title. Once
a lease is shown to exist, the parties cannot overturn the this conclusive presumption of the
lessor’s valid title or a better right of possession to the leased premises.

Samelo’s claim of acquisitive prescription is self-serving and unsubstantiated. There is

likewise no need to resolve the issue of ownership since it is not required to determine the
issue of possession. The fact of the lease and the expiration of its terms are the only
elements in an action for unlawful detainer.

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MANILA INTERNATIONAL AIRPORT AUTHORITY VS. DING VELAYO SPORTS CENTER

G.R. No. 161718, 14 December 2011
Topic

Facts:

On 15 February 1967, the Manila International Airport Authority (MIAA), then known as
the Civil Aeronautics Administration (CAA) and Salem Investment Corporation (Salem)
entered into a lease contract whereby Salem leased a parcel of land known as Lot 2-A with
an area of 76,328 square meters, in front of the Manila International Airport in Pasay City.

The lease was meant to beautify Lot 2-A from its swampy and talahib-infested condition
into a land area within which a modern hotel could be constructed. The term was for 25
years commencing from the date of receipt of approval of the contract by the Secretary of
Public Works and Communications, and renewable at the lessee’s option for another 25
years.

On 30 September 1974, Salem transferred all lease rights and existing improvements on a
portion of Lot 2-A measuring over 15,534 square meters, in favor if Ding Velayo Export
Corporation (Velayo) for P1,050,000. Velayo then entered into a lease CAA for a period of 6
years.

On 27 April 1976, Velayo transferred its lease rights of 8,481 square meters to Ding Velayo
Sports Center, Inc for P500,000. Velayo Sports then entered into a lease with CAA to
construct a sports complex and a parking lot. Monthly rentals were P2,025 per month. The
lease also prohibited subletting the premises and transfer of leasehold rights.

Pursuant to Administrative Order No. 4, Series of 1982, CAA increased the rent to total
monthly rate of P42,405. On 18 October 1986, Velayo Sports wrote to oppose the increase,
on the ground that their leased premises does not form part of the airport or its immediate
premises. Following the exchange, CAA kept charging Velayo Sports the original monthly
rate.

More than 60 days prior to the expiration of the lease, Velayo Sports, through its president,
sent a letter dated 2 December 1991 stating that it was interested in renewing the lease for
another 25 years. CAA’s General Manager declined to renew the lease and ordered Velayo
Sports to vacate the leased premises within 5 days and pay arrears as of January 1992
totaling P15,671,173.75.

On 30 March 1992, Velayo Sports filed before the RTC a complaint for injunction,
consignation, and damages with a prayer for temporary restraining order against MIAA,
praying for the renewal of the lease for another 25 years. The RTC issued the TRO,
preventing MIAA from taking possession of the leased property.

MIAA answered that its lease with Velayo terminated on 15 February 1992, as explicitly
stated in the contract, and the renewal provision was not mandatory, and invoked its right
to terminate the lease since Velayo violated its conditions in not establishing a shopping
center, easing parking congestion, and violated the prohibition on sub-lease.

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The RTC denied MIAA’s motion and granted Velayo’s motion for consignment of monthly
rentals, and eventually ruled in favor of Velayo Sports. MIAA appealed to the CA, and
argued that RTC erred in renewing the lease contract, but the CA affirmed the RTC.

Before the SC, MIAA argued that the lease cannot be made to depend on the sole will of
Velayo for the same would be void as a potestative condition.

Issue(s):
1. Whether or not the option to renew was valid and binding.

Held:
1. Yes, the option to renew is valid and binding.

Allied Banking Corporation vs. Court of Appeals held that

“[A]n express stipulation giving the lessee the sole option to renew the lease is
frequent and subject to statutory restrictions, valid and binding on the parties.
The fact that such option is binding only on the lessor and can be exercised only
by the lessee does not render it void for lack of mutuality. After all, the lessor is
free to give or not give the option to the lessee. And while the lessee has a right
to elect whether to continue with the lease or not, once he exercises his option to
continue and the lessor accepts, both parties are thereafter bound by the new
lease agreement. Their rights and obligations become mutually fixed, and the
lessee is entitled to retain possession of the property for the duration of the new
lease, and the lessor may hold him liable for the rent therefor. The lessee cannot
thereafter escape liability even if he should subsequently decide to abandon the
premises. Mutuality obtains in such a contract and equality exists between the
lessor and the lessee since they remain with the same faculties in respect to
fulfillment.”

Paragraph 17 of the lease contract solely granted Velayo Sports the option of renewing the
lease, the only requirement was for Velayo to notify the MIAA to renew the lease within 60
days prior to the expiration of the original lease.Records show that Velayo Sports duly
complied with the only condition for renewal. It has not been disputed that the lease was
willingly and knowingly entered into by the parties. As held in the Allied banking case, the
right of renewal constitutes a part of the interest of Velayo Sports, and forms an integral
part of the lease.

MIAA incorrectly characterizes the option to renew as merely a procedural basis for
negotiation for the renewal of the lease and its terms. In case the lessee chooses to renew
the lease, but there are no specified terms, the same ones as the original lease shall govern.
The renewed lease between MIAA and Velayo Sports shall be the same as the original
lease. The MIAA did not register any protest or objection to alleged incompleteness of
regularity in Velayo’s performance of its obligations. MIAA only raised the issue of
incompleteness when it was brought to court by Velayo Sports for refusing to renew the
lease. Moreover, there is no violation of the lease by Velayo of the terms of the lease. The
increased rental fee was not published as per Article 2 of the Civil Code. MIAA is also
estopped from opposing the renewal of the lease.

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MAKATI LEASING AND FINANCE CORPORATION VS. WEAREVER TEXTILE MILLS, INC.
G.R. No. L-58469, 16 May 1983
Topic

Facts:

Wearever Textile Mills, Inc. discounted and assigned several receivables with Makati
Leasing and Finance Corporation under a Receivable Purchase Agreement. As security for
such receivables, Wearever executed a chattel mortgage over certain raw materials
inventory and machinery.

Makati Leasing filed a petition for extrajudicial foreclosure of the chattel mortgage after
Wearever defaulted. The Deputy Sheriff, however, could not implement the foreclosure
because he failed to enter Wearever’s premises, prompting Makati Leasing to file a
complaint for judicial foreclosure, before the CFI of Rizal, with a prayer for replevin.

The CFI issued the writ of seizure, which was restrained by the CFI after the Wearever’s
motion for reconsideration, but later lifted and enforced. The Sheriff enforced the seizure
order and removed the main drive motor of the mortgaged machinery.

Wearever filed a petition for certiorari and prohibition before the Court of Appeals, which
set aside the CFI’s orders and ordered the return of the drive motor because machinery
cannot be subject of replevin or chattel mortgage because it is real property that is attached
to the ground under Article 415 of the Civil Code.

Makati Leasing filed a petition for certiorari before the Supreme Court.

Issue(s):
1. Whether the machinery in suit is real or personal property.

Held:
1. The machinery is personal property.

In Tumalad v. Vicencio, a house was considered personal property for purposes of executing
a chattel mortgage as long as the parties to the contract so agree and no innocent third
party will be prejudiced.

The same goes for any machinery, which is movable in nature and immobilized only by
destination or purpose, may be likewise treated as such.

Wearever incorrectly contends that estoppel cannot apply against it because it never agreed
that the machinery be considered personal, but was dictated on by Makati Leasing to sign a
printed form of chattel mortgage in blank form at the time of signing. Makati Leasing
correctly points out, on the other hand, that the status of the machinery as movable or
immovable was never an issue before the CFI and the CA except in a supplemental
memorandum filed by Wearever in the CA.

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DKC HOLDINGS CORPORATION VS. COURT OF APPEALS

G.R. No. 118248, 5 April 2000
Topic

Facts:

On 16 March 1988 DKC Holdings Corporation entered into a lease with option to buy with
Encarnacion Bartolome, where DKC was given the option to lease or lease with purchase a
parcel of land measuring 14.021 sq. m., for monthly rent of P3,000, which was also
consideration for reservation of its option.

The contract stated that, the option must be exercised within a period of 2 years from the
signing of the contract. Within the option period, DKC shall serve formal written notice
upon Encarnacion. The contract also provided that in case DKC chose to lease the property,
it may take actual possession of the premises and lease it for a period of 6 years with
monthly rent of P15,000, and renewable for another 6 years for a monthly rent of P18,000,
in case of renewal.

DKC regularly paid the monthly P3000 for the contract until Encarnacion’s death in
January 1990. DKC then coursed payment to Victor, the sole heir of Encarnacion. Victor,
however, refused to accept these payments.

On 10 January 1990, Victor executed an Affidavit of Self-Adjudication over all of

Encarnacion’s properties, including the leased premises. Thus, a TCT was issued in his
name.

On 14 March 1990, DKC sent Victor, via registered mail, notice that it was exercising the
option to lease the property, tendering P15,000 as rent for the month of March. Victor again
refused to accept the rental fee and to surrender possession of the premises.

DKC thus opened a savings account with China Banking Corporation in the name of Victor
Bartolome and deposited therein the P15,000 rent for March, as well as P6,000 reservation
fees for the months of February and March. DKC alos tried to annotate the contract on
Victor’s title, but the Register of deeds refused to annotate the same or even enter it in the
day book or primary register.

On 23 April 1990, DKC filed a complaint for specific performance against Victor and the
Reigster of Deeds before the RTC of Valenzuela, praying for possession of the property
according the contract.

The RTC dismissed DKC’s complaint and ordered it to pay Victor attorney’s fees. The Court
of Appeals affirmed the RTC. DKC argued Victor was bound and that it correctly exercised
its option under the contract.

Issue(s):
1. Whether the lease with option to buy between DKC and Encarnacion binds her sole
heir, Victor, after her death.
2. Whether the DKC correctly exercised its option to lease.

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Held:
1. Yes, Victor is bound under Article 1311 and jurisprudence.

Article 1311 of the Civil Code provides that contracts take effect only between the parties,
their assigns and heirs, except in case where the rights and obligations arising from the
contract are not transmissible by their nature, or by stipulation or by provision of law. The
heir is not liable beyond the value of the property he received from the decedent.

The general rule is that heirs are bound by contracts entered into by their predecessors-in-
interest except when the rights and obligations arising therefrom are not transmissible by
(1) nature, (2) stipulation, or (3) provision of law.

In this case, there is neither contractual stipulation nor law making the rights and
obligations under the contract intransmissible. The nature of the rights and obligations in
the lease with option to buy are transmissible by nature.

Arturo Tolentino wrote that intransmissible are those which are purely personal, either by
law, or by nature of the obligations arising therefrom. Contracts may also state that
payment of money debts are not transmitted to the heirs of a party, but charged against his
estate.

A good measure for whether a contract terminates upon the death of one of the parties is
whether it is of such a character that the promisors’ personal representative may perform
it. Where the service or act is of such a character that another may perform it, or where the
contract’s terms show that performance by others was contemplated, death does not
terminate the contract or excuse nonperformance.

In this case, there is no personal act required from the late Encarnacion Bartolome. Her
obligation in the contract to deliver possession of the subject property may be performed by
Victor.

It was held that if the predecessor was duty-bound to reconvery land to another, and at his
death, the reconveyance had not been made, the heirs can be compelled to execute the
proper deed for reconveryance. The principle is that heirs cannot escape the legal
consequence of a transaction entered into by their predecessor-in-interest because they
have inherited the property subject to the liability affecting their common ancestor. The
lease contract, which is a property, passes to the personal representative of the deceased.
Victor is bound by Article 1311 of the Civil Code and case law to comply.

2. Yes, DKC complied with the contractual provisions on the exercising the
option.

DKC’s payment for reservation fees during the 2-year option period is not disputed. Victor
admitted payment of such fees, except for February and March 1990. DKC also paid the
monthly rental fee of P15,000 by depositing the same in the China Bank savings account.

DKC also complied with its duty to inform the other party of its intention to exercise its
option through its letter dated 12 March 1990, well within the option period.

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NENITA QUALITY FOODS CORPORATION VS. GALABO

G.R. No. 174191, 30 January 2013
Topic

Facts:

In 1948, Donato Galabo obtained Lot 722, a portion of the Arakaki Plantation in Davao City
owned by National Abaca and Other Fibers Corporation. The Galabos assumed that Lot 722
included Lot 102 as said in the original survey of 1916 to 1920.

The Board of Liquidators had Lot 722 resurveyed in the 1950s. Allegedly, Lot 102 was not
included, thus it was likewise not included when Donato obtained his TCT for Lot 22 in
April 1953. Donato, however, continued possessing and cultivating Lot 102.

When Net Quality Foods Corporation (NQFC) opened business in Davao City in the late
50s, it offered to buy Lot 102, but Donato declined and put up “Not for Sale” and “No
Trespassing” signs on the property. In the 70s, Crisostomo Galabo fenced off the property
and built his house on it.

On 19 August 1994, the Galabos received a letter from Santos Natin, claiming to be the
owner and demanding they vacate Lot 102. He claimed he acquired title through a Deed of
Transfer of Rights dated 10 July 1979. The Galabos denied Natin’s claim and asserted
they’d occupied Lot 102, which the BOL recognized and showed Certification dated 2000
confirming Donato as the long-time occupant and awardee of the property.

NQFC claimed that Santos immediately occupied Lot 102 after he bought it from the
Galabos in 1972 and claimed it under his name for taxation purposes. Santos likewise was
granted Free Patent over Lot 102 by the Bureau of Lands and obtained OCT in June 1974.

The Galabos filed a complaint for forcible entry before the MTCC on 17 September 2001,
alleging they had been in prior physical possession of Lot 102 and NQFC deprived then of
possession through force, intimidation, strategy, threats, and stealth.

The MTCC dismissed the complaint and held that the Galabos relinquished their rights
over Lot 102 when they executed the Deed of Transfer in Santos’ favor and that the NQFC
validly acquired ownership of the lot when it purchased it form Santos. The Galabos
appealed to the RTC, which affirmed the MTCC. On appeal before the CA, the Galabos
argued that the RTC erred in holding that NQFC had prior possession based on its Deed of
Absolute Sale.

Thee CA granted Galabos’ appeal and ordered NQFC to vacate Lot 102. The CA explained
that in a forcible entry case, one only has to prove prior material and physical possession of
the property and undue deprivation by force, intimidation, stealth, threats, and strategy.
The CA added that Donato’s failure to perfect title over Lot 102 should not weigh against
his children as the issue in a forcible entry is one of possession de facto and not of
possession de jure.

NQFC appealed to the Supreme Court and argued it had a better right to the property.

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Issue(s):
1. Whether NQFC had been in prior physical possession of Lot 102.

Held:
1. No, the Galabos had proven prior physical possession which they were
deprived of by force, intimidation, stealth, threats, or strategy, as proper in
ejectment cases.

Possession contemplated by the concept of ownership is not the same as possession in issue
in a forcible entry case. Possession in forcible entry suits refers only to possession de facto,
or actual or material possession, and not possession flowing out of ownership.
Jurisprudence holds that possession in forcible entry cases refers to nothing more than
physical possession or possession de facto, not possession de jure or legal possession.

In a forcible entry case, "a party who can prove prior possession can recover such possession
even against the owner himself. Whatever may be the character of his possession, if he has
in his favor prior possession in time, he has the security that entitles him to remain on the
property until a person with a better right lawfully ejects him." He cannot be ejected by
force, violence or terror -- not even by its owners. An action for forcible entry is summary in
nature aimed only at providing an expeditious means of protecting actual possession.
Ejectment suits are intended to "prevent breach of x x x peace and criminal disorder and to
compel the party out of possession to respect and resort to the law alone to obtain what he
claims is his." NWQFC merely narrated how it acquired ownership of Lot 102, but not
proven actual possession required in forcible entry cases.

Section 1, Rule 70 of the Rules of Court provides when an action for forcible entry, and
unlawful detainer, is proper:

“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. [emphasis ours; italics supplied]”

The plaintiff in a forcible entry suit must allege and prove (1) prior physical possession of
the property; and (2) unlawful deprivation of it by the defendant through force,
intimidation, strategy, threat or stealth. However, Section 16, Rule 70 provides that
ownership shall be resolved in deciding the issue of possession if it is intertwined with
ownership, as an exception. In this case, it is not relevant.

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RACAZA VS. GOZUM

G.R. No. 148759, 8 June 2006
Topic

Facts:

Germelina T. Racaza and Bernaldita T. Paras own a parcel of land in Pasig City, titled in
their name. A two-story, three-door apartment stands on said parcel of land, which their
father, the late Carlos Torres, owned.

In 1981, Ernesto Gozum occupied the back portion of the property for a monthly rent of
P3,500, even after Carlos Torres’s death on 26 December 1993.

On 1 July 1995, the sisters sent Gozum a letter of demand to vacate the premises. After a
failed barangay conciliation, the sisters filed an ejectment case on 24 November 1995 before
the Metropolitan Trial Court against Gozum, but it was dismissed due to a technicality.

Two years later, on 27 May 1997, the sisters sent Gozum another formal demand letter on
the ground that the verbal lease contract had already expired sometime in July 1995, the
same was not renewed, and Gozum has stopped paying rent. When Gozum did not heed the
second demand letter, the sisters filed a complaint for recovery of possession or accion
publiciana on 4 June 1997 before the RTC of Pasig.

Gozum answered that he has a 10-year lease over the premises from 1 October 1989 to 30
September 1999, thus the notice to vacate and the case are premature. He also countered
that he had been paying rent, but the sisters had refused to receive payments, which he
deposited with the bank. He added that the lease contract gave him the right of first refusal
to buy the property, but the sisters violated the same because they sold the property to a
certain Ernesto Brana.

The RTC ordered Gozum to vacate the premises and turn over the leased premises to the
sisters, as well as pay rent. Gozum appealed to the Court of Appeals, reversed the RTC and
held that the RTC had no jurisdiction over the complaint for accion publiciana because it
had been filed before the lapse of 1 year from the date the last letter of demand was made
to Gozum. The CA held the proper remedy was an action for unlawful detainer.

On appeal to the Supreme Court, the sisters countered that Gozum is estopped from raising
any jurisdictional issue because he never argued during trial or during appeal that second
demand letter divested the RTC of jurisdiction over the complaint.

Issue(s):
1. Whether the CA erred in holding that accion publiciana was not proper.

Held:
1. Yes, accion publiciana was proper and correctly availed of by the sisters.

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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. This summary action should be filed with the municipal trial courts
within one year after the occurrence of the unlawful deprivation or withholding of
possession. Beyond the one-year period, the real right of possession may be recovered
through the filing of an accion publiciana with the regional trial courts.

Gozum incorrectly argues that the sisters should have filed an unlawful detainer case
before the metropolitan or municipal trial courts. He argued that the one-year period before
filing an accion publiciana is reckoned from the date of the second demand letter dated 27
May 1997.

The records, however, show otherwise. Demand or notice to vacate is not a jurisdictional
requirement when the action is based on the expiration of the lease. Any notice given would
only negate any inference that the lessor has agreed to extend the period of the lease. The
law requires notice to be served only when the action is due to the lessees failure to pay or
the failure to comply with the conditions of the lease. The one-year period is thus counted
from the date of first dispossession. To reiterate, the allegation that the lease was on a
month-to-month basis is tantamount to saying that the lease expired every month. Since
the lease already expired mid-year in 1995 as communicated in petitioners letter dated July
1, 1995, it was at that time that respondents occupancy became unlawful.

Even if demand or notice was necessary, the second letter shows that the sisters merely
reiterated their original demand for Gozum to vacate based on the expiration of the verbal
lease. Subsequent demands which are in the nature of reminders of reiterations of original
demand do not operate to renew the one-year period to commence the ejectment suit.

Ejectment proceedings are summary in nature, thus the complaint must state facts that
would bring the party clearly within the class of cases for which the statutes provide a
remedy. The sisters alleged that (1) they are the owners of the property, being the
successors-in-interest of the original owners; (2) their predecessors-in-interest entered into
a verbal lease agreement with Gozum on a month-to-month basis; (3) they decided to
terminate the verbal lease contract upon the expiration of the last monthly term sometime
in 1995; and (4) on July 1, 1995, they demanded that Gozum leave the property, but he
refused to do so.

These allegations constitute a cause of action based on unlawful deprivation or withholding

of possession. The sisters seek recovery of possession of the leased premises, following the
lapse of the term of the verbal lease contract between their father and Gozum. The
allegation that the lease is on a month-to-month basis becomes material because it signifies
the lease is terminable at the end of every month.

The sisters may exercise their right to terminate the contract at the end of any month even
if none of the conditions of the contract had been violated, and payment of rent cannot
defeat their right to terminate. Such notice was property served on 1 July 1995.

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Gozum’s right to remain in possession of the subject property was extinguished upon the
expiration of the 30-day grace period to vacate given in the demand letter. Gozum is obliged
to turn over the property to the sisters, otherwise the latter have the right to rest to
ejectment or to recover possession. Their complaint falls under two classes of ejectment
suits: (1) unlawful detainer under Rule 70 cognizable the metropolitan or municipal trial
courts; and (2) accion for publiciana cognizable by the regional trial courts.

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LANUZA VS. MUNOZ

G.R. No. 147372, 27 May 2004
Topic

Facts:

Ma. Consuela Munoz filed a complaint for unlawful detainer against spouses Lanuza before
the Municipal Trial Court of Muntinlupa. Munoz claimed to be the owner of a lot in
Alabang, as evidenced by a title in her name, together with a nine-door apartment built
upon said land. Munoz allegedly bought the lot from spouses Lanuza in 1996 evidenced by a
Deed of Absolute Sale.

She added that when she bought the lot, the Lanuzas occupied Door 2 and possessed Door
3. Munoz tolerated this until January 1997 and demanded they pay rent: P5,000 monthly
for Door 2 and P6,000 monthly starting February 1997. However, Munoz claimed the
Lanuzas had not paid a single cent nor vacate despite her repeated demands.

The Lanuzas answered they were the lawful owners of the subject property and denied
selling it to Munoz, but that it was her father Francisco who persuaded the mto sign an
Absolute Deed of Sale in 1996 purportedly to expedite the sale of property as agreed upon
between them and Francisco Munoz. They agreed the property would be sold once the
apartment was repaired and remodeled, with profits split to three portions with Francisco
Munoz shouldering the P3.5 million to renovate and improve the same.

The Lanuzas added the property was still unsold after several months until Francisco
Munoz sent them a letter dated 24 January 1997 notifying them of expiration of their
agreement to sell and his intention to rent the property should the Lanuzas continue
occupying the premises. They later learned that Francisco and Ma. Consuela registered the
simulated Deed of Sale and, on 3 June 1997, they filed their complaint for rescission of
contract before the RTC of Muntinlupa.

On 14 January 1999 the MTC dismissed Consuela’s unlawful detainer case for lack of
jurisdiction for lack of demand. Given the absence of demand, it was the RTC that had
jurisdiction. Consuela appealed to the RTC, which upheld the MTC. Consuela appealed to
the CA, which reversed the RTC and remanded the case to the MTC for further
proceedings.

The CA declared that while the demand to pay and vacate is required by Section 2, Rule 70
of the Rules of Court in ejectment suits for non-payment of rents, Consuela’s ejectment case
was not for payment of rents, but for termination of the Lanuzas’ right to occupy the
premises due to Consuela’s cessation of tolerance extended to them.

The Lanuzas appealed to the Supreme Court and argued that a demand to vacate is
necessary for Consuela’s unlawful detainer case to prosper.

Issue(s):
1. Whether to the CA erred in holding that demand to pay and vacate is not required
as per Section 2, Rule 70 of the Rules of Court.

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Held:
1. No, Consuela’s complaint for unlawful detainer is based on her withdrawal
of tolerance of the Lanuzas’ stay in her property, not their failure to pay
rent because there was no lease agreed between the parties.

Section 2, Rule 70 applies where there is a lessor-lessee relationship under a lease contract,
which does not exist in this case. The rule likewise applies only when the grounds for
ejectment are non-payment of rentals or violation of conditions of the lease; notice to vacate
is crucial in these grounds. A demand, however, is not a pre-requisite to an action to
terminate the lease because of the expiration of its term.

The Lanuzas invoke Gallarde vs. Moran and Murga vs. Chan, but these do not apply. The
Murga case involved a lease contract, which gave the lessor the option to purchase
improvements by the lessee. The Gallarde case involved an agreement to pay rentals on the
dates set by the parties. The instant case, however, does not involve a lease agreement.

Even assuming a demand to vacate was required for Consuela’s case to prosper, her
allegations in the complaint constitute sufficient compliance with the jurisdictional
requirement concerning previous demand to establish a cause of action for unlawful
detainer. She alleged the Lanuzas were occupying the premises by tolerance, which she
withdrew, but despite her demands, the Lanuzas did not vacate.

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ESTEBAN VS. MARCELO

G.R. No. 197725, 31 July 2013
Topic

Facts:

The late Gabriel Esteban possessed a piece of land in Mandaluyong City since the ‘50s. In
the ‘60s, his sister constructed a foundry shop upon the property. In the ‘70s, after foundry
operations were unproductive, spouses Marcelo were allowed to reside for a monthly rent of
P50. Since March 2001, the Marcelos have stopped paying rent, which by that time
amounted to P160.

On 31 October 2005, Esteban, through counsel, sent the Marcelos a demand letter requiring
them to settle their arrears and vacate within 5 days from receipt of demand. The Marcelos
failed to comply, thus Marcelo instituted an unlawful detainer case against them on 6
December 2005.

The Metropolitan Trial Court ruled there was valid grounds to eject with the jurisdictional
requirement of demand complied with, thus ordered the Marcelos to vacate the property
pursuant to Article 1673 of the Civil Code, on the grounds of expiration of the lease and
non-payment of monthly rent. On appeal, the RTc affirmed the MeTC, thus the Marcelos
appealed to the Court of Appeals.

The CA held that more than a year had passed since the year of dispossession in 2001 until
the filing of the complaint for ejectment in 2005, thus the case was no longer accion
interdictal cognizable by the MeTC, but accion publiciana that should have been filed before
the RTC. The CA held that the MeTC had no jurisdiction, thus its decision was null and
that the Marcelos can not be ejected because they are protected by PD 1517 and qualify as
beneficiaries under Section 16 of RA 7279.

In 5 July 2011, the CA resolved to deny the partial motion for reconsideration anchored on
Esteban’s son Mark Anthony to substitute him upon the former’s death. Mark Anthony
appealed to the Supreme Court and argued, among others, that (1) the case had been
properly filed as an accion interdictal cognizable by the MeTC within the one-year
prescriptive period counted from the date of last demand on 31 October 2005; and (2) the
case base the Marcelos’ unlawful occupancy on their failure or refusal to vacate after
demand and failure to pay.

Issue(s):
1. Whether Esteban’s ejectment case was proper and cognizable by the MeTC.

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Held:
1. Yes, the one-year prescription period is counted from the last date to pay
and vacate, which was on 31 October 2005, while the case was filed on 6
December 2005.

Case law holds that mere failure to pay rent does not ipso fact make a tenant’s possession of
the premises unlawful, but the owner’s demand for tenant to vacate the premises, when the
former has failed to pay rents on time and refused or failed to vacate. Thus, the lessor shall
make a demand upon the lessee to pay or comply with the conditions of the lease and to
vacate the premises. Such refusal by the lessor violates the owner’s right of possession, and
gives rise to an action for unlawful detainer.

In cases where there is more than one demand to pay and vacate, the reckoning point of one
year for filing the unlawful detainer is from the last demand, as the lessor may choose to
waive his cause of action and let the defaulting lessee remain in the leased premises.

Moreover, PD 1517 does not apply in the absence of showing that the subject land has been
declared and classified as area for priority development and a Land Reform Zone. Neither
can the CA apply RA 7279 to the Marcelos because they never sought protection under such
law. Both laws were not even raised as issues in litigation, thus may not be considered and
ruled upon.

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MACASLANG VS. ZAMORA

G.R. No. 156375
Topic

Facts:

On 10 March 1999, spouses Zamora filed a complaint for unlawful detainer in the MTCC
alleging that Dolores Macaslang sold them a residential land in Danao City, and that
Macaslang requested to be allowed to live in the house with a promise to vacate as soon as
she found a new residence. The Zamoras alleged that Macaslang failed to leave the
premises after a year, despite their demands. The MTCC rendered judgment favoring the
Zamoras.

Macaslang appealed to the RTC, alleging that there was no such sale because her signature
was forged. She prayed for the RTC to remand the case back to the MTC, but the RTC
dismissed the Zamoras’ complaint for failure to state a cause of action. The Zamoras
appealed to the CA, which reversed the RTC’s decision. Before the Supreme Court,
Macaslang argued that there was no prior demand to vacate and comply with the
conditions of the lease before the Zamoras filed the ejectment case.

Issue(s):
1. Whether the CA erred in upholding the Zamoras’ unlawful detainer case.

Held:
1. Yes, although the CA correctly held that the prior demand was made and
that the complaint sufficiently alleges a cause of action for unlawful
detainer, but there was no sale between the parties, but an equitable
mortgage. The RTC correctly dismissed the case.

The Zamoras’ complaint alleged (1) Macaslang initially possessed the property by contract
or tolerance of the Zamoras; (2) Macaslang’s possession became illegal upon notice by the
Zamoras about the termination of her possession; (3) Macaslang remained in possession
and deprived the Zamoras of the property and enjoyment; and (4) the Zamoras instituted
the complaint for ejectment within 1 year from their last demand to vacate.

However, the RTC found that the Zamoras bought the land for P100,000 as written in the
deed of sale, but then the Zamoras later sent demands to pay P1.1 million and P1.6 million.
This revealed the true nature of their transaction as an equitable mortgage, under Article
1602 of the Civil Code. Macaslang, therefore, never sold the property to the Zamoras.
Macaslang’s defense that she retained ownership or the property is a proper subject for
determination by the MTC, but only to determine the rightful possessor of the property
under Section 16, Rule 70 of the Rules of Court:

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.(4a)

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Lastly, the MTCC committed procedural lapses that must be corrected: (1) allowing a
motion to declare default against Macaslang, but this is expressly prohibited by Section 13,
Rule 70; (2) reception of the oral testimony when Rule 70 only allows submission of
affidavits, not oral testimony.

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VALDEZ VS. FABELLA

G.R. No. 132424, 2 May 2006
Topic

Facts:

Spouses Valdez filed an unlawful detainer case against Spouses Fabella before the MTC of
Rizal. The Valdezes claimed to own a residential lot in Antipolo, which they bought from
Carolina Realty sometime in November 1992 by virtue of a Sales Contract. They claimed
that the Fabellas without any color of title occupied the lot and built a house, driving them
of rightful possession. The Valdezes added they orally demanded the Fabellas to peacefully
surrender the premises, but they refused to vacate, even after referring the matter to the
Barangay.

The Fabellas contended that the complaint failed to state that the Valdezes had prior
physical possession or that they were lessors. They added they had been in open,
continuous, and adverse possession of the lot for more than 30 years, as attested by an
ocular inspection report from the DENR.

The MTC ruled in favor of the Valdezes and ordered the Fabellas to vacate the property and
pay rent. The Fabellas appealed to the RTC, which affirmed the lower court. They appealed
to the CA, which reversed the decision and held that the Valdezes failed to make a case for
unlawful detainer because they failed to show that they had given the Fabellas right to
occupy the land or they had tolerated the same.

The Valdezes appealed to the Supreme Court and argued that their complaint clearly made
out a case for unlawful detainer because they alleged the Fabellas unlawfully withheld
possession of the property. They added that the summary action for ejectment is the proper
remedy available to the owner if another occupies the land at the former’s tolerance or
permission without any contract between the two.

Issue(s):
1. Whether the Valdezes’s complaint showed a cause of action for a case for unlawful
detainer.

Held:
1. No, the Valdezes’ allegations neither show that they permitted or tolerated
Fabellas’s occupation nor were deprived by Fabellas of possession. Nothing
shows how the Fabellas entered or dispossessed the Valdezes.

There are three kinds of actions to recover real property: (1) accion interdictal; (2) accion
publiciana; (3) accion reivindicatoria.

Accion interdictal compromises forcible entry (detentacion) and unlawful detainer

(desahuico). 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. In forcible entry, the possession of the

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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
Municipal Trial Court or Metropolitan Trial Court has jurisdiction over these two actions,
which are summary in nature. They must be brought one year from the date of actual entry
on the land for forcible entry, and one year from date of last demand in unlawful detainer.
Both cases involve the issue of 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. Here, the complaint is filed more than a year after the defendant
turned plaintiff out of possession or a year after the defendant’s possession had become
illegal.

Accion reivindicatoria is an action to recover ownership brought in the proper RTC in an

ordinary civil proceeding.

It is essential in unlawful detainer cases 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.

The nature of the defendants entry into the land determines the cause of action for either
forcible entry or unlawful detainer. Illegal entry gives rise to forcible entry, while legal
entry, but possession that becomes illegal gives rise to unlawful detainer. The court
acquires jurisdiction in ejectment cases when the complaint clearly states facts constitutive
of forcible entry or unlawful detainer. Failure to show how entry was affected or when
dispossession started, either accion publiciana or accion reivindicatoria are the proper
remedies.

In Go vs. Court of Appeals, evidence revealed the defendant’s possession was illegal from
the beginning, thus forcible entry was the proper remedy. In Ten Forty Realty and
Development Corp vs. Cruz, the court held it was improper that a complaint for unlawful
detainer contained only bare allegations that the defendant occupied the disputed property
by mere tolerance without showing such tolerance was present right from the start.

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ENCARNACION VS. AMIGO

G.R. No. 169793
Topic

Facts:

Victoriano Encarnacion owned Lot 2121-B-1, measuring 100 sq.m. lot, and Lot 2121-B-2,
measuring 607 sq. m., in Isabela. Rogelio Valiente, originally owned these lots and sold it
to Nicasio Mallapitan in 1982. Mallapitan then sold it to Victoriano Magpantay in 1985.

Nieves Amigo allegedly entered the premises and possessed a portion of the property
sometime in 1985 without Magpantay’s permission. After Magpantay’s death, his widow
executed an Affidavit of Waiver in 1992 in favor of her son-in-law Victoriano Encarnacion.
Amigo continued occupying the land even after Encarnacion consolidated his titles over the
land.

Encarnacion demanded Amigo to vacate via registered mail delivered on 12 February 2001
evidenced by the registry return receipt. Amigo, however, refused. On 2 March 2001,
Encarnacion filed an ejectment complaint before the Municipal Trial Court. Amigo
answered that he had been in actual possession and occupation of a portion of the land
since 1968, and that Encarnacion’s Free Patent and titles were tainted with irregularities.

The MTC ruled against Amigo and ordered him to vacate and pay rent. Amigo appealed to
the RTC, which dismissed the case on the ground that the MTC had no jurisdiction over the
case. Encarnacion appealed to the CA, which remanded the case to the RTC for further
accion publiciana proceedings. On appeal before the Supreme Court, Encarnacion argued
that the CA erred in holding that the proper action is accion publiciana and not unlawful
detainer.

Issue(s):
1. Whether the CA erred in holding that the proper action is accion publiciana.

Held:
1. Yes, Encarnacion had been dispossessed of his property for 6 years, which
is beyond the one-year period for unlawful detainer.

There are three kinds of actions for the recovery of possession of real property:

1. 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
recovery of physical possession where the dispossession has not lasted for more than one
year, and should be brought in the proper inferior court;

2. Accion publiciana or the plenary action for the recovery of the real right of possession,
which should be brought in the proper Regional Trial Court when the dispossession has
lasted for more than one year; and

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3. Accion reinvindicatoria or accion de reivindicacion, which is an action for the recovery of

ownership which must be brought in the proper Regional Trial Court.

The material element in an action for the recovery of possession of property in this case is
the length of time of dispossession. The Rules of Court provide that forcible entry and and
unlawful detainer are granted to 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.

These remedies afford the person deprived of the possession to file at any time within one
year after such unlawful deprivation or withholding of possession, 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.

On the other hand, dispossession lasting for more than a year gives rise to an action for
accion publiciana, which should be brought before the proper RTC.
stuf
The CA was correct in holding that accion publiciana is proper. Jurisdiction over the subject
matter of the action is determined by the allegations of the complaint at the time of filing.

In this case, Encarnacion became the owner of the property on 11 April 1995 by virtue of a
waiver of rights executed by his mother-in-law. He filed the ejectment case on 2 March 2001
after his demand letter dated 1 February 2001 went unheeded. Although his complaint was
within the one-year period, it is also true that he became the lawful owner of the property
in 1995 and has been deprived of possession for 6 years. This length of time is beyond the
period for accion interdictal, but within the period for accion publiciana, which is a suit for
recovery of the right to possess. It is an ordinary civil proceeding to determine the better
right of possession of realty independently of title.

It has been held that accion publiciana is proper of the owner of the land knew that another
person was occupying his property for 18 years before filing an ejectment complaint.

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VALDEZ, JR. VS. COURT OF APPEALS

G.R. No. 132424, 2 May 2006
Topic

Facts:

Spouses Valdez filed an unlawful detainer complaint against spouses Fabella before the
Municipal Trial Court of Antipolo. The Valdezes claimed they bought the subject property
in Carolina Executive Village, Barangay Sta. Cruz, Antipolo from Carolina Realty
sometime in November 1992 by virtue of a Sales Contract, but that the Fabellas, without
any color of title, occupied said lot, built their house, and deprived them of right
possession.The Valdezes alleged that they orally asked the Fabellas to peacefully surrender
the premises to them, but they went unheeded.

The Fabellas countered that the complaint failed to state that the Valdezes had prior
physical possession of the property or that the Valdezs were lessors. The Fabellas claimed
ownership of the land because they have been in open, continuous, and adverse possession
for more then 30 years.

The MTC ruled in favor of the Valdezes and ordered the Fabellas to pay rent and vacate.
The Valdezes appealed to the RTC, which affirmed the MTC. The Valdezes appealed to the
Court of Appeals, which reversed the RTC on the ground that the Valdezes failed to make a
case for unlawful detainer for failing to show that the Fabellas had the right to occupy the
premises or that their occupation was tolerated.

The Valdezes appealed to the Supreme Court and argued that their complaint sufficiently
made a case for unlawful detainer for alleging that the Fabellas unlawfully withheld from
them the possession of the subject property.

Issue(s):
1. Whether the Valdezes’ complaint failed to make a cause for unlawful detainer.

Held:
1. No, the Valdezes’s complaint do not contain any averment of fact that
substantiates their claim that they permitted or tolerated Fabella’s
occupation of the property.

The complaint contains only bare allegations that Fabellas, 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 the Fabellas’s
entry was effected or how and when dispossession started. Admittedly, no express contract
existed between the parties. This failure of the Valdezes to allege the key jurisdictional
facts constitutive of unlawful detainer is fatal.

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

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sought to be recovered. Otherwise, if the possession was unlawful from the start, an action
for unlawful detainer would be an improper remedy.

The nature of defendants entry into the land 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.

In the case of Ten Forty Realty and Development Corp. v. Cruz, petitioners complaint for
unlawful detainer merely contained the bare allegations that (1) respondent immediately
occupied the subject property after its sale to her, an action merely tolerated by petitioner;
and (2) her allegedly illegal occupation of the premises was by mere tolerance. The court, in
finding that the alleged tolerance did not justify the action

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, but this claim was unsubstantiated and evidence showed the the
defendant’s possession was illegal from the start.

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LUMBUAN VS. RONQUILLO

G.R. No. 155713, 5 May 2006
Topic

Facts:

Milagros Lumbuan owns Lot 19-A in Tondo, Manila. On 20 February 1995, Milagors leased
it to Alfredo Ronquillo for three years with a monthly rental of P5,000, with interest, and to
be used exclusively for Ronquillo’s fastfood business, unless another use is given with
Lumbuan’s prior written consent. However, Ronquillo later used the leased premises as
residence without Lumbuan’s prior consent. He also failed to pay the annual increase in
rent starting 1996, even during 1997. He failed to pay arrears despite Lumbuan’s repeated
demands.

On 15 November 1997, Lumbuan referred the matter to the Barangay Chairmans office,
but the parties failed to arrive at a settlement. The Barangay Chiarman issued a
Certificate to File Action, thus on 8 December 1997, Lumbuan filed an action for unlawful
detainer before the MeTC of Manila.

Before the MeTC received Ronquillo’s answer, Lumbuan filed a motion for summary
judgment. The MeTC acted upon this motion and rendered a decision, ordering Ronquillo to
vacate and pay unpaid rentals with legal interest. Ronquillo filed a manifestation calling
the MeTC’s attention to the fact that he filed an answer on time and prayed for the decision
to be set aside. The MeTC, however, treated Ronquillo’s manifestation as a motion for
reconsideration, which is a prohibited pleading under the Rules on Summary Procedure.

Ronquillo appealed to the RTC Branch 38, which reversed the MeTC and directed the
parties to go back to the Lupon Chairman or Punong Barangay for further proceedings for
strict compliance with the condition that the case records be remanded to the MeTC if the
parties fail to reach an amicable settlement.

Ronquillo appealed to the Court of Appeals, which reversed the RTC and ordered the
dismissal of the ejectment case. The CA held that the court should dismiss a complaint
when mandatory mediation and conciliation in the barangay level is not complied with.

Ronquillo appealed to the Supreme Court; pending his appeal, the parties went through
barangay conciliation proceedings as directed by the RTC. However, they again failed to
arrive at an amicable settlement, thus the RTC remanded the case back to the MeTC to
hear the ejectment complaint. Thus, the MeTC ordered to vacate and pay unpaid rent.

Ronquillo appealed again to the RTC, which upheld the lower court. He appealed again to
the CA, which was pending. Although the procedural defect was cured due to compliance
with the Punong Barangay conciliation proceedings, the SC gave due course Ronquillo’s
pending appeal to clear any lingering doubt on whether the CA erred in dismissing the
complaint.

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Issue(s):
1. Whether the CA erred in dismissing the complaint for failure to comply with
mandatory mediation and conciliation proceedings in the barangay level.

Held:
1. Yes, the CA erred because there was sufficient compliance with the law.

The RTC Branch 38 correctly ordered the parties to go back to the Lupon Chairman or
Punong Barangay for further proceedings, which were held but failed to reach an amicable
settlement. There was, indeed, substantial compliance with the law.

The Katarungang Pambarangay rules are meant to reduce court litigation and prevent the
deterioration of the quality of justice, which is caused by indiscriminate filing of cases in
courts. Section 412(a) of RA 7160 requires parties to undergo a conciliation process before
the Lupon chairman or the Pangkat as a precondition to the filing of a complaint in court:

SECTION 412. Conciliation. (a) Pre-condition to Filing of Complaint in Court.

No complaint, petition, action, or proceeding involving any matter within the
authority of the lupon shall be filed or instituted directly in court or any other
government office for adjudication, unless there has been a confrontation
between the parties before the lupon chairman or the pangkat, and that no
conciliation or settlement has been reached as certified by
the lupon secretary or pangkat secretary as attested to by
the lupon or pangkat chairman.

In the case at bar, the Lupon/Pangkat Chairman and Lupon/Pangkat Secretary signed
the Certificate to File Action stating that no settlement was reached by the parties. While
no pangkat was constituted, it was not denied that the parties met at the office of the
Barangay chairman for possible settlement. However, no agreement was reached.

Despite the fact that no pangkat was formed, there was substantial compliance with the
law. Section 412 of RA 7160 provides that the confrontation before the Lupon Chairman of
the pangkat is sufficient compliance for filing the case in court. This is true despite Section
410(b) of RA 7160, which provides that the Barangay Chairman shall constitute a pangkat
if he fails in mediation efforts. These two provisions should be construed together.

Since the records of the proceedings are with the CA due to Ronquillo’s latest appeal, the
CA is in a better position to adjudicate the rights of the parties.

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