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1. PHILIPPINE NATIONAL BANK vs. COURT OF APPEALS, HON.

JUDGE OF THE
REGIONAL TRIAL COURT OF GAPAN, NUEVA ECIJA, BR. 34, and NILDEFONSO
MONTANO
G.R. No. 105760, July 7, 1997, FRANCISCO, J. (84 SCAD 209)

FACTS:

In 1978, spouses Crisanto de la Cruz and Pepita Montano mortgaged two


parcels of land to petitioner PNB for a loan of P24,000.00. In 1984, PNB extra-judicially
foreclosed the mortgage and was the only bidder at the public auction sale. On the
same day, a Certificate of Sale over said lots was issued in favor of PNB and was
annotated on the Transfer Certificate of Title. In 1986, for the failure of the mortgagors
to redeem the property within a period of one year, PNB filed before the Regional Trial
Court of Gapan, Nueva Ecija a Petition for the Issuance of a Writ of Possession. The
RTC granted granted the petition and issued the writ.

Before implementation of the writ, petitioner Montano filed a Motion for the
Dissolution of the Writ of Possession alleging that he was instituted as tenant on the
subject property even before 1972 by the former owners of the land; the two lots are the
subject matters of CAR Case before the Regional Trial Court of Gapan, Nueva Ecija
which he instituted in 1983 against the mortgagors; after the foreclosure of the subject
land, his counsel wrote PNB of the pending case; the issuance of said Writ would
violate his rights; he was issued a certification by the Cabiao-San Isidro Agrarian
Reform Team that he is an agricultural lessee in the subject landholding and another
certification that he is an active member of the Samahang Nayon; and in line with the
ruling in "Clapano vs. Gapultos" that possession of property is given to a purchaser in
Extra-Judicial foreclosure unless a third-party is actually holding the property adversely
to the judgment debtor, he is to be considered a "third person". The RTC granted
Montano's motion to dissolve the writ of possession. PNB appealed but the case was
referred to the Court of Appeals which initially rendered judgment in favor of PNB but
eventually reversed itself upon motion by Montano.

ISSUE:

Whether PNB is entitled to a Writ of Possession of the land in question.

RULING:

PNB is not entitled to a Writ of Possession. The Court ruled that, granting that
PNB’s title over the subject property has been consolidated or confirmed in its favor, it is
not still entitled to a Writ of Possession, as the same may be issued in extrajudicial
foreclosure of real estate mortgage only if the debtor is in possession and no third
person had intervened. Such requisite is evidently lacking in the case at bar as it has
been established that Montano has been in possession and finally adjudged as the
tenant of the subject landholding.

Even if the fact of tenancy had not been reflected on the title, PNB admitted that
before they consented to the mortgage, an ocular inspection was conducted on the
landholding on the occasion of which, PNB’s Credit Investigator already found Montano
staying on the land and even interviewed the latter. It cannot be denied therefore, that
PNB had been put on notice by its actual knowledge of another person possessing the
land, no matter what the given reason may have been for Montano’s occupancy of the
properties in question.

Under Art. 428 of the NCC, the owner has the right to dispose of a thing without
other limitations than those established by law. As an incident of ownership, therefore,
there is nothing to prevent the landowner from donating his naked title to the land.
However, the new owner must respect the rights of the tenant.

Petition is denied.
2. REPUBLIC OF THE PHILIPPINES vs. HONORABLE SANDIGANBAYAN
(SPECIAL FIRST DIVISION), FERDINAND E. MARCOS (REPRESENTED BY HIS
ESTATE/HEIRS: IMELDA R. MARCOS, MARIA IMELDA [IMEE] MARCOS-
MANOTOC, FERDINAND R. MARCOS, JR. AND IRENE MARCOS-ARANETA) AND
IMELDA ROMUALDEZ MARCOS
G.R. No. 152154. July 15, 2003. CORONA, J.

FACTS:

In 1991, petitioner Republic, through the Presidential Commission on Good


Government (PCGG), represented by the Office of the Solicitor General (OSG), filed a
petition for forfeiture before the Sandiganbayan entitled Republic of the Philippines vs.
Ferdinand E. Marcos, represented by his Estate/Heirs and Imelda R. Marcos, pursuant
to RA 1379 in relation to Executive Order Nos. 1, 2, 14 and 14-A. In said case,
petitioner sought the declaration of the aggregate amount of US$356M deposited in
escrow in the PNB, as ill-gotten wealth. The funds were previously held by five account
groups, using various foreign foundations in certain Swiss banks. In addition, the
petition sought the forfeiture of US$25 million and US$5 million in treasury notes which
exceeded the Marcos couples salaries, other lawful income as well as income from
legitimately acquired property. The treasury notes are frozen at the Central Bank of the
Philippines, now Bangko Sentral ng Pilipinas, by virtue of the freeze order issued by the
PCGG.

Before the case was set for pre-trial, a General Agreement and the Supplemental
Agreements dated December 28, 1993 which sought to identify, collate, cause the
inventory of and distribute all assets presumed to be owned by the Marcos family under
the conditions contained therein were executed by the Marcos children and then PCGG
Chairman Magtanggol Gunigundo for a global settlement of the assets of the Marcos
family. Subsequently, respondent Marcos children filed a motion for the approval of said
agreements and for the enforcement thereof.

The General Agreement/Supplemental Agreements specified in one of its


premises the fact that petitioner obtained a judgment from the Swiss Federal Tribunal
on December 21, 1990, that the US$356M belongs in principle to the Republic of the
Philippines provided certain conditionalities are met. The said decision of the Swiss
Federal Supreme Court affirmed the decision of Zurich District Attorney Peter
Consandey who declared the various deposits in the name of the enumerated
foundations to be of illegal provenance and ordered that they be frozen to await the final
verdict in favor of the parties entitled to restitution.

Hearings were conducted by the Sandiganbayan on the motion to approve the


General/Supplemental Agreements. Respondent Ferdinand, Jr. was presented as
witness for the purpose of establishing the partial implementation of said agreements.

On October 18, 1996, petitioner filed a motion for summary judgment and/or
judgment on the pleadings but the Sandiganbayan denied petitioners on the ground that
the motion to approve the compromise agreement (took) precedence over the motion
for summary judgment.

Respondent Mrs. Marcos filed a manifestation on May 26, 1998 claiming she was
not a party to the motion for approval of the Compromise Agreement and that she
owned 90% of the funds with the remaining 10% belonging to the Marcos estate.

On August 10, 1995, petitioner filed with the District Attorney in Zurich,
Switzerland, an additional request for the immediate transfer of the deposits to an
escrow account in the PNB. The request was granted. On appeal by the Marcoses, the
Swiss Federal Supreme Court, in a decision dated December 10, 1997, upheld the
ruling of the District Attorney of Zurich granting the request for the transfer of the
funds. In 1998, the funds were remitted to the Philippines in escrow. Subsequently,
respondent Marcos children moved that the funds be placed in custodia legis because
the deposit in escrow in the PNB was allegedly in danger of dissipation by petitioner.
The Sandiganbayan, in its resolution dated September 8, 1998, granted the motion.

The case was set for trial. After several resettings, petitioner, on March 10, 2000,
filed another motion for summary judgment pertaining to the forfeiture of the US$356M.
The Motion was granted by the Sandiganbayan and stated that the Swiss deposits
which were transmitted to and now held in escrow at the PNB are deemed unlawfully
acquired as ill-gotten wealth and forfeited in favor of the State.

However, upon motion of the Marcoses, the Sandiganbayan reversed its


decision, thus denying the petitioners motion for summary judgment concluding that the
evidence offered for summary judgment of the case did not prove that the money in the
Swiss Banks belonged to the Marcos spouses because no legal proof exists in the
record as to the ownership by the Marcoses of the funds in escrow from the Swiss
Banks.

Hence this petition.

ISSUE:

Whether petitioner Republic was able to prove its case for forfeiture in
accordance with Sections 2 and 3 of RA 1379.

RULING:

The Marcoses having committed themselves to helping the less fortunate, in the
interest of peace, reconciliation and unity, and defendant Imelda Marcos affirms her
agreement with the Republic for the release and transfer of the US$150M for proper
disposition, without prejudice to the final outcome of the litigation respecting the
ownership of the remainder. Such statements were indicative of Imelda’s admission of
the Marcoses’ ownership of the Swiss deposits as in fact the Marcoses defend that it is
a legitimate asset including Marcos children asking the Sandiganbayan to place
the res (Swiss deposits) in custodia legis. By filing said motion, the Marcos children
revealed their ownership of the said deposits. The Undertaking entered into by the
PCGG, the PNB and the Marcos foundations on February 10, 1999, also confirmed the
Marcoses’ ownership of the Swiss bank deposits. The subject Undertaking brought to
light their readiness to pay the human rights victims out of the funds held in escrow in
the PNB.

Owing to the far-reaching historical and political implications of this case, the
Court considered and examined, individually and totally, the evidence of the parties,
even if it might have bordered on factual adjudication which, by authority of the rules
and jurisprudence, is not usually done by it. There is no doubt in its mind that
respondent Marcoses admitted ownership of the Swiss bank deposits.

In addressing the issue at hand, petitioner Republic has not failed to


establish a prima facie case for the forfeiture of the Swiss deposits.

Section 2 of RA 1379 explicitly states that whenever any public officer or


employee has acquired during his incumbency an amount of property which is
manifestly out of proportion to his salary as such public officer or employee and to his
other lawful income and the income from legitimately acquired property, said property
shall be presumed prima facie to have been unlawfully acquired. x x x

The elements which must concur for this prima facie presumption to apply are:
(1) the offender is a public officer or employee;
(2) he must have acquired a considerable amount of money or property during
his incumbency; and
(3) said amount is manifestly out of proportion to his salary as such public officer
or employee and to his other lawful income and the income from legitimately
acquired property.

It is undisputed that spouses Ferdinand and Imelda Marcos were former public
officers. Hence, the first element is clearly extant.

The second element deals with the amount of money or property acquired by
the public officer during his incumbency. The Marcos couple indubitably acquired and
owned properties during their term of office. In fact, the five groups of Swiss accounts
were admittedly owned by them. There is proof of the existence and ownership of these
assets and properties and it suffices to comply with the second element.

The third requirement is met if it can be shown that such assets, money or
property is manifestly out of proportion to the public officer’s salary and his other lawful
income. It is the proof of this third element that is crucial in determining whether
a prima facie presumption has been established in this case.

Petitioner Republic presented not only a schedule indicating the lawful income of
the Marcos spouses during their incumbency but also evidence that they had huge
deposits beyond such lawful income in Swiss banks under the names of five different
foundations. The Court believes petitioner was able to establish the prima
facie presumption that the assets and properties acquired by the Marcoses
were manifestly and patently disproportionate to their aggregate salaries as public
officials. Otherwise stated, petitioner presented enough evidence to convince us that the
Marcoses had dollar deposits amounting to US$356M representing the balance of the
Swiss accounts of the five foundations, an amount way, way beyond their aggregate
legitimate income of only US$304,372.43 during their incumbency as government
officials.

Respondent Mrs. Marcos argues that the foreign foundations should have been
impleaded as they were indispensable parties without whom no complete determination
of the issues could be made. In the present case, there was an admission by
respondent Imelda Marcos in her May 26, 1998 Manifestation before the
Sandiganbayan that she was the sole beneficiary of 90% of the subject matter in
controversy with the remaining 10% belonging to the estate of Ferdinand
Marcos. Viewed against this admission, the foreign foundations were not indispensable
parties. Their non-participation in the proceedings did not prevent the court from
deciding the case on its merits and according full relief to petitioner Republic. The
judgment ordering the return of the US$356M was neither inimical to the foundations
interests nor inconsistent with equity and good conscience. The admission of
respondent Imelda Marcos only confirmed what was already generally known: that the
foundations were established precisely to hide the money stolen by the Marcos spouses
from petitioner Republic. It negated whatever illusion there was, if any, that the foreign
foundations owned even a nominal part of the assets in question.

Finally, the release of the Swiss funds held in escrow in the PNB is dependent
solely on the decision of this jurisdiction that said funds belong to the petitioner
Republic. What is important is the Court’s own assessment of the sufficiency of the
evidence to rule in favor of either petitioner Republic or respondent Marcoses. In this
instance, despite the absence of the authenticated translations of the Swiss decisions,
the evidence on hand tilts convincingly in favor of petitioner Republic.

The petition is hereby GRANTED. The assailed Resolution of the


Sandiganbayan dated January 31, 2002 is SET ASIDE. The Swiss deposits which were
transferred to and are now deposited in escrow at the Philippine National Bank in the
estimated aggregate amount of US$658,175,373.60 as of January 31, 2002, plus
interest, are hereby forfeited in favor of petitioner Republic of the Philippines.
3. HEIRS OF DOMINGO P. BALOY, represented by RICARDO BALOY, ET AL.
vs. COURT OF APPEALS, DIRECTOR OF LANDS and PHILIPPINE NAVY
G.R. No. L-55912. November 26, 1986. PARAS, J.

FACTS:

The heirs of Domingo Baloy, represented by Ricardo Baloy applied with the
Court of First Instance of Zambales for the registration of 2 parcels of land located in
Olongapo City as part of their ancestral estate and covered by possessory information
title in the name of Domingo Baloy.

The Director of Lands and Philippine Navy that maintain that the property used to
be part of the U.S. Naval Reservation; that for failure of Domingo Baloy to file his claim
in accordance with Act No. 627, such claim is now forever barred; that the possession
of Baloy and his heirs was merely tolerated by the U.S. Government; that when the U.S.
Government relinquished to the Philippine Government all its rights to the use of the
property, the President of the Philippines issued Proclamation No. 320 declaring certain
tracts of land of the public domain in Olongapo City and Subic in Zambales as a naval
reservation subject however to the limitation that existing rights shall be respected; and
that the lands in dispute are within such reservation and may not, therefore, be subject
of registration.

The Trial Court ruled in favor of the petitioners but after the latter moved for
amendment of the decision to include their citizenship, legal capacities and other
personal circumstances, the trial court made a complete reversal of the judgment. The
Court of Appeals likewise ruled against the petitioners.

ISSUE:

Whether the lower court erred in denying applicant’s application for registration.

RULING:

The Court ruled in favor of the petitioners. The map presented by the Director of
Lands was the very map which established that the lots sought to be registered lay
outside of the naval reservation. Moreover, in 1966, the Bureau of Lands, through the
Chief of its Legal Division, officially declared the land as not part of the public domain
and that said Office has no jurisdiction over the premises.

The Court also cited the sister case involving a portion of the same ancestral
estate, same parties and same issues, which it decided favorable judgment under G.R.
No. L-46145 for the petitioners. Here, the Court ruled that the occupancy of the U.S.
Navy was not in the concept of owner. It partakes of the character of a commodatum. It
cannot therefore militate against the title of Domingo Baloy and his successors-in-
interest. One's ownership of a thing may be lost by prescription by reason of another's
possession if such possession be under claim of ownership, not where the possession
is only intended to be transient, as in the case of the U.S. Navy's occupation of the land
concerned, in which case the owner is not divested of his title, although it cannot be
exercised in the meantime.

The finding of respondent court that during the interim of 57 years from
November 26, 1902 to December 17, 1959 (when the U.S. Navy possessed the area)
the possessory rights of Baloy or heirs were merely suspended and not lost by
prescription. Letter No.1108-63 dated June 24, 1963 contains an official statement of
the position of the Republic of the Philippines with regard to the status of the land in
question. It recognizes the fact that Domingo Baloy and/or his heirs have been in
continuous possession of said land since 1894 as attested by an "Information
Possessoria" Title, which was granted by the Spanish Government. Hence, the
disputed property is private land and this possession was interrupted only by the
occupation of the land by the U.S. Navy in 1945 for recreational purposes. The U.S.
Navy eventually abandoned the premises. The heirs of the late Domingo P. Baloy, are
now in actual possession, and this has been so since the abandonment by the U.S.
Navy. A new recreation area is now being used by the U.S. Navy personnel and this
place is remote from the land in question.
4. Medical Plaza versus Cullen
Facts:
Respondent Robert H. Cullen purchased from MLHI condominium Unit No. 1201 of the
Medical Plaza Makati covered by Condominium Certificate of Title No. 45808 of the
Register of Deeds of Makati. Said title was later cancelled and Condominium Certificate
of Title No. 64218 was issued in the name of respondent. On September 19, 2002,
petitioner, through its corporate secretary, Dr. Jose Giovanni E. Dimayuga, demanded
from respondent payment for alleged unpaid association dues and assessments
amounting to ₱145,567.42. Respondent disputed this demand claiming that he had
been religiously paying his dues shown by the fact that he was previously elected
president and director of petitioner. Petitioner, on the other hand, claimed that
respondent’s obligation was a carry-over of that of MLHI. Consequently, respondent
was prevented from exercising his right to vote and be voted for during the 2002
election of petitioner’s Board of Directors. Respondent thus clarified from MLHI the
veracity of petitioner’s claim, but MLHI allegedly claimed that the same had already
been settled. This prompted respondent to demand from petitioner an explanation why
he was considered a delinquent payer despite the settlement of the obligation.
Petitioner failed to make such explanation. Petitioner and MLHI filed their separate
motions to dismiss the complaint on the ground of lack of jurisdiction. MLHI claims that it
is the Whether or not the Housing and Land Use Regulatory Board (HLURB) which is
vested with the exclusive jurisdiction to hear and decide the case. Petitioner, on the
other hand, raises the following specific grounds for the dismissal of the complaint: (1)
estoppel as respondent himself approved the assessment when he was the president;
(2) lack of jurisdiction as the case involves an intra-corporate controversy; (3)
prematurity for failure of respondent to exhaust all intra-corporate remedies; and (4) the
case is already moot and academic, the obligation having been settled between
petitioner and MLHI.
Issue: Whether HLURB has jurisdiction.
Held:
No. Republic Act No. 9904, or the Magna Carta for Homeowners and Homeowners’
Associations, approved on January7, 2010 and became effective on July 10, 2010,
empowers the Housing and Land Use Regulatory Board (HLURB) to hear and decide
inter-association and/or intra-association controversies or conflicts concerning
homeowners’ associations. However, we cannot apply the same in the present case as
it involves a controversy between a condominium unit owner and a condominium
corporation.
―Republic Act (RA) No. 9904, or the Magna Carta for Homeowners and Homeowners’
Associations, approved on January 7, 2010 and became effective on July 10, 2010,
empowers the HLURB to hear and decide inter-association and/or intra-association
controversies or conflicts concerning homeowners’ associations. However, we cannot
apply the same in the present case as it involves a controversy between a condominium
unit owner and a condominium corporation. While the term association as defined in the
law covers homeowners’ associations of other residential real property which is broad
enough to cover a condominium corporation, it does not seem to be the legislative
intent. A thorough review of the deliberations of the bicameral conference commitee
would show that the lawmakers did not intend to extend the coverage of the law to such
kind of association.
Condominium Act (R.A. No. 4726); The rights and obligations of the condominium unit
owners and the condominium corporation are set forth in the Condominium Act.
—To be sure ,RA 4726 or the Condominium Act was enacted to specifically govern a
condominium. Said law sanctions the creation of the condominium corporation which is
especially formed for the purpose of holding title to the common area, in which the
holders of separate interests shall automatically be members or Share holders, to the
exclusion of others, in proportion to the appurtenant interest of their respective units.
The rights and obligations of the condominium unit owners and the condominium
corporation are set forth in the above Act.

WHEREFORE, we hereby GRANT the petition and REVERSE the Court of Appeals
Decision dated July 10, 2007 and Resolution dated January 25, 2008 in CA-G.R. CV
No. 86614.
5. Kalipunan versus Robredo
Facts:

The members of petitioners Kalipunan ng Damayang Mahihirap, Inc. and Corazon de


Jesus Homeowners’ Association as well as the individual petitioners, Fernando Sevilla,
Estrelieta Bagasbas, Jocy Lopez, Elvira Vidol and Delia Frayres, were/are occupying
parcels of land owned by and located in the cities of San Juan, Navotas and Quezon
(collectively, the LGUs1). These LGUs sent the petitioners notices of eviction and
demolition pursuant to Section 28 (a) and (b) of RA 7279 in order to give way to the
implementation and construction of infrastructure projects2 in the areas illegally
occupied by the petitioners. On March 23, 2012, the petitioners directly filed a petition
for prohibition and mandamus before the Court, seeking to compel the Secretary of
Interior and Local Government, et al. (the public respondents)to first secure an eviction
and/or demolition order from the court prior to their implementation of Section 28 (a) and
(b) of RA 7279. The Mayor of Navotas prays for the outright dismissal of the petition for
its serious procedural defects. First, the petitioners ignored the hierarchy of courts when
they directly filed a Rule 65 petition before the Court.7 Second, the petitioners
incorrectly availed themselves of a petition for prohibition and mandamus in assailing
the constitutionality of Section 28 (a) and (b) of RA 7279. According to the Mayor of
Navotas, the office of a writ of prohibition is merely to prevent the public respondent’s
usurpation of power or improper assumption of jurisdiction. On the other hand, a writ of
mandamus only commands the public respondent to perform his ministerial functions.
Third, the petitioners failed to particularly state the grave abuse of discretion that the
Mayor of Navotas allegedly committed. Fourth, the petition does not present any
justiciable controversy since the City of Navotas had already successfully evicted the
petitioners in San Roque, Navotas on November 28, 2011. Fifth, the petition was filed
out of time since the petitioners were personally notified of the intended eviction and
demolition on September 23, 2011.

Issue: Whether or not public respondent has validly exercised its power of eviction and
demolition without prior court order.

Held: Yes. In the present case, the petitioners seek to prohibit the respondents from
implementing Section 28 (a) and (b) of RA 7279 without a prior court order of eviction
and/or demolition. In relation to this, paragraph 1, Section 28 of RA 7279 provides:

Sec. 28. Eviction and Demolition. — Eviction or demolition as a practice shall be


discouraged. Eviction or demolition, however, maybe allowed under the following
situations:

(a) When persons or entities occupy danger areas such as esteros, railroad
tracks, garbage dumps, riverbanks, shorelines, waterways, and other public
placessuch as sidewalks, roads, parks, and playgrounds;

(b) When government infrastructure projects with available funding are about to
be implemented;or
(c) When there is a court order for eviction and demolition. (emphasis and
underline ours)

A reading of this provision clearly shows that the acts complained of are beyond the
scope of a petition for prohibition and mandamus. The use of the permissive word "may"
implies that the public respondents have discretion when their duty to execute evictions
and/or demolitions shall be performed. Where the words of a statute are clear, plain,
and free from ambiguity, it must be given its literal meaning and applied without
attempted interpretation. To ensure that evictions and demolitions are conducted in a
just and humane manner, paragraph 2, Section 28 of RA 7279 commands the public
respondents to comply with the following prescribed procedure in executing eviction
and/or demolition orders:

In the execution of eviction or demolition orders involving underprivileged and homeless


citizens, the following shall be mandatory:

(1) Notice upon the effected persons orentities at least thirty (30) days prior to the
date of eviction or demolition;

(2) Adequate consultations on the matter of settlement with the duly designated
representatives of the families to be resettled and the affected communities in the
areas where they are to be relocated;

(3) Presence of local government officials or their representatives during eviction


or demolition;

(4) Proper identification of all persons taking part in the demolition;

(5) Execution of eviction or demolition only during regular office hours from
Mondays to Fridays and during good weather, unless the affected families
consent otherwise;

(6) No use of heavy equipment for demolition except for structures that are
permanent and of concrete materials;

(7) Proper uniforms for members ofthe Philippine National Police who shall
occupy the first line of law enforcement and observe proper disturbance control
procedures; and

(8) Adequate relocation, whether temporary or permanent: Provided, however, That in


cases of eviction and demolition pursuant to a court order involving underprivileged and
homeless citizens, relocation shall be undertaken by the local government unit
concerned and the National Housing Authority with the assistance of other government
agencies within forty-five (45) days from service of notice of final judgment by the court,
after which period the said order shall be executed: Provided, further, That should
relocation not be possible within the said period, financial assistance in the amount
equivalent to the prevailing minimum daily wage multiplied by sixty (60) days shall be
extended to the affected families by the local government unit concerned. Lastly, the
petitioners failed to substantiate their allegations that the public respondents gravely
abused their discretion in implementing Section 28 (a) and (b) of RA 7279. Instead, they
merely imputed jurisdictional abuse to the public respondents through general
averments in their pleading, but without any basis to support their claim.

WHEREFORE, premises considered, we hereby DISMISS the petition for its serious
procedural defects.
6. Reyes versus NHA
Facts:
National Housing Authority (NHA) filed separate complaints for the expropriation of
sugarcane lands, particularly Lot Nos. 6450, 6448-E, 6198-A and 6199 of the cadastral
survey of Dasmarias, Cavite belonging to the petitioners, before the then Court of First
Instance of Cavite, and docketed as Civil Case Nos. T.G.-392, T.G.-396 and T.G.-
417. The stated public purpose of the expropriation was the expansion of the Dasmarias
Resettlement Project to accommodate the squatters who were relocated from the
Metropolitan Manila area. The trial court rendered judgment ordering the expropriation
of these lots and the payment of just compensation. This was affirmed by the Supreme
Court in a decision rendered on October 29, 1987 in the case of NHA vs.
Zaballero[2] and which became final on November 26, 1987. For the alleged failure of
respondent NHA to comply with the above order, petitioners filed on April 28, 1992 a
complaint[5] for forfeiture of rights before the Regional Trial Court of Quezon City,
Branch 79, in Civil Case No. Q-92-12093. They alleged that respondent NHA had not
relocated squatters from the Metropolitan Manila area on the expropriated lands in
violation of the stated public purpose for expropriation and had not paid the just
compensation fixed by the court. They prayed that respondent NHA be enjoined from
disposing and alienating the expropriated properties and that judgment be rendered
forfeiting all its rights and interests under the expropriation judgment. In its
Answer,[6] respondent NHA averred that it had already paid a substantial amount to
herein petitioners and that the expropriation judgment could not be executed in view of
several issues raised by respondent NHA before the expropriation court (now Branch
18, RTC, Tagaytay City) concerning capital gains tax, registration fees and other
expenses for the transfer of title to respondent NHA, as well as the claims for attorneys
fees of Atty. Joaquin Yuseco, Jr., collaborating counsel for petitioners.

Issue: whether such payment can still be made and, if so, in what amount.
Held:
It was held that actual payment to the owner of the condemned property was a
condition precedent to the investment of the title to the property in the State albeit not to
the appropriation of it to public use. In Rexford v. Knight, the Court of Appeals of New
York said that the construction upon the statutes was that the fee did not vest in the
State until the payment of the compensation although the authority to enter upon and
appropriate the land was complete prior to the payment. Kennedy further said that both
on principle and authority the rule is that the right to enter on and use the property is
complete, as soon as the property is actually appropriated under the authority of
law for a public use, but that the title does not pass from the owner without his
consent, until just compensation has been made to him. With respect to the amount
of the just compensation still due and demandable from respondent NHA, the lower
courts erred in not awarding interest computed from the time the property is actually
taken to the time when compensation is actually paid or deposited in court. In Republic,
et al. vs. Court of Appeals, et al.,the Court imposed interest at 12% per annum in
order to help eliminate the issue of the constant fluctuation and inflation of the value of
the currency over time, thus:

The constitutional limitation of just compensation is considered to be the sum equivalent


to the market value of the property, broadly described to be the price fixed by the seller
in open market in the usual and ordinary course of legal action and competition or the
fair value of the property as between one who receives, and one who desires to sell, it
being fixed at the time of the actual taking by the government. Thus, if property is taken
for public use before compensation is deposited with the court having jurisdiction over
the case, the final compensation must include interests on its just value to be computed
from the time the property is taken to the time when compensation is actually paid or
deposited with the court. In fine, between the taking of the property and the actual
payment, legal interests accrue in order to place the owner in a position as good as (but
not better than) the position he was in before the taking occurred. WHEREFORE, the
appealed judgment is modified.
7.
8. ARABESQUE INDUSTRIAL PHILIPPINES, INC., Petitioner,
v. COURT OF APPEALS and PNOC DOCKYARD AND ENGINEERING CORPORATION
(PDEC), Respondents.
Michael P. Moralde for Petitioner.
Victorio Mario A. Dimagiba for Private Respondent.
[G.R. No. 101431. December 14, 1992.]

Although filed as a special civil action for certiorari under Rule 65, this petition is
actually in the nature of a petition for review under Rule 45 praying for the reversal of a decision
of the Court of Appeals; hence, We treat it under the latter Rule.
Facts:
Arabesque Industrial Philippines, Inc. (AIPI), bought at public auction the tugboat MT
Rover of respondent PDEC. Despite notice by PDEC that it was imposing lay day charges if the
boat was not removed from its premises the AIPI did not remove the boat; instead, it engaged
PDEC to repair it. The bill for the repair rose but the AIPI failed to pay the whole amount.
Subsequently, AIPI received from Atty. Chaves, a notice for the sale of the boat at public
auction. AIPI sued PDEC and Notary Public Rosendo Chaves for the nullification of the public
auction sale contending that Arts. 2241 and 2243 of the Civil Code cited by PDEC were not
applicable as AIPI was not yet judicially declared insolvent.
PDEC asserts its right to retain possession of the chattel until the repair fees are fully
settled, pursuant to Arts. 1731, 2098, 2105, 2112 and 2122 of the Civil Code. In its reply, AIPI
reiterates the arguments in its petition, and adds that Art. 1731 of the Civil Code, which states
that he who has executed works on a movable has the right to retain it by way of pledge until
paid, does not apply because it actually remitted payments to PDEC.
The RTC of Makati, upon AIPI posting a bond and admission of PDEC that the boat was
owned by the AIPI, granted the replevin and ordered the return of the boat. However, this was
set aside by the CA, on the ground that the chattel was not wrongfully detained but possessed
in the exercise of PDEC of a mechanic’s lien for its unpaid repair bills.

Issue: WON the CA erred in setting aside the writ of replevin.

Held: The Court of Appeals correctly set aside the writ of replevin. Such writ cannot be
properly directed against a lawful possessor of a chattel and the matter of ownership as well as
incurring of additional lay day fees by the continued detention of the boat by PDEC is therefore
inconsequential.
In this case, PDEC has the right to retain possession of the tugboat until the repair fees
are fully settled by AIPI.
9. CHIAO LIONG TAN, petitioner, vs.
THE HONORABLE COURT OF APPEALS, HON MANUEL T. MURO, Presiding Judge, RTC
of Manila, Branch 54 and TAN BAN YONG, respondents.
G.R. No. 106251 November 19, 1993

Facts: Petitioner Chiao Liong Tan claims to be the owner of a motor vehicle, Isuzu Elf
van, 1976 Model, that he has been in possession, enjoyment and utilization of the said motor
vehicle until it was taken from him by his older brother, Tan Ban Yong, the private respondent
herein. He allowed his brother to use the van but later refused to return the van to him and
appropriated the same for himself.
The private respondent testified that CLT Industries is a family business, that the vehicle
is use in the delivery of machinery to its customers. That he himself paid the whole price out of a
loan of P140,000.00 which he obtained from his friend Tan Pit Sin. That he gave a
downpayment to the petitioner and asked to purchase the van, the receipt was placed under the
petitioner’s name. Since he was still on good terms with him, private respondent allowed the
registration of the vehicle in petitioner's name with the understanding that he would keep the
van for himself because CLT Industries was not in a position to pay him. Hence, from the time of
the purchase, he had been in possession of the vehicle including the original registration papers
thereof but allowing petitioner from time to time to use the van for deliveries of machinery. That
the private respondent’s claims are corroborated by his witnesses.
Petitioner files action of replevin before the RTC Manila, which rendered judgement
declaring defendant Tan Ban Yong to be the owner of and entitled to the possession of the
vehicle. This was affirmed by the CA citing that the petitioner fails to overturn the order of
replevin by proving ownership.
Issue: WON ownership may be decided in a proceeding for replevin.
Held: YES. The action of replevin is possessory in character and determined nothing more
than the right of possession. However, when the title to the property is distinctly put in issue by
the defendant's plea and by reason of the policy to settle in one action all the conflicting claims
of the parties to the possession of the property in controversy, the question of ownership may
be resolved in the same proceeding.
Although a replevin action is primarily one for possession of personalty, yet it is
sufficiently flexible to authorize a settlement of all equities between the parties, arising from or
growing out of the main controversy. Thus, in an action for replevin where the defendant is
adjudged entitled to possession, he need not go to another forum to procure relief for the return
of the replevied property or secure a judgment for the value of the property in case the adjudged
return thereof could not be had.
* An implied trust was created when the certificate of registration of the motor vehicle was
placed in the name of the petitioner although the price thereof was not paid by him but by private
respondent. A trust, which derives its strength from the confidence one reposes on another
especially between brothers, does not lose that character simply because of what appears in a
legal document.
10. SPOUSES RAFAEL BENITEZ AND AVELINA BENITEZ, petitioners, vs. COURT
OF APPEALS, SPOUSES RENATO MACAPAGAL and ELIZABETH
MACAPAGAL, respondents.
[G.R. No. 104828. January 16, 1997]
This is a petition for review on certiorari assailing the Resolution of the Court of
Appeals.
Facts:
Both pairs of Spouses Benitez, the petitioners and Spouses Macapagal, the
private respondents bought parcels of land wherein the latter found out that the former
encroached a portion of the lot they purchased. The latter then filed a Civil Case with
the RTC, against the former for the recovery of possession. The parties were able to
reach a compromise in which the respondents sold the encroached portion to
petitioners. The respondents purchased another lot, adjacent to that of the petitioners.
After a relocation survey was conducted, the respondents discovered that the
petitioners’ house encroached a portion of their lot again. Despite verbal and written
demands, petitioners refused to vacate. A last notice to vacate was sent to petitioners.
Within 1 year from the last notice, the respondents filed with the MeTC, a Civil Case for
ejectment against petitioners. The MeTC decided in favor of the former, ordering the
petitioners and all persons claiming rights to vacate and surrender possession of the
subject premises, as well as to pay the amount of P930.00 a month until they finally
vacate the subject premises, the amount of P5,000.00 for and as attorney's fees; and
the cost of suit.
On appeal, the RTC and the CA affirmed such decision in toto.
Issues:
I. Whether the possession of the portion of the private respondents' land
encroached by petitioners' house can be recovered through an action of
ejectment, not accion publiciana.
II. The validity of the imposition of "rental" for the occupancy of the
encroached portion.
III. The denial of the petitioners’ claimed pre-emptive right to purchase the
encroached portion of the private respondents' land.

Held:
I. Private respondents' cause of action springs from Sec. 1, Rule 70 of the
Revised Rules of Court which allows any person unlawfully deprived of
possession by force, intimidation, threat, strategy, or stealth, or after
expiration of right to hold possession within 1 year from unlawful deprivation
to bring an action to recover possession. In the case before us, considering
that private respondents are unlawfully deprived of possession of the
encroached land and that the action for the recovery of possession thereof
was made within the one-year reglementary period, making ejectment is the
proper remedy.

II. The rent P930.00 a month to be paid until the petitioners vacate the premises
is technically not rent but damages. Damages are recoverable in ejectment
cases under Section 8, Rule 70 of the Revised Rules of Court. These
damages arise from the loss of the use and occupation of the property.

III. Article 448 of the Civil Code is unequivocal that the option to sell the land, on
which another in good faith builds, plants or sows on, belongs to the
landowner. There can be no pre-emptive right to buy even as a compromise,
as this prerogative belongs solely to the landowner. No compulsion can be
legally forced on him, contrary to what petitioners asks from this Court.

In sum, the petition has not shown cogent reasons and sufficient grounds to reverse the
unanimous ruling of the three lower courts. The MeTC, RTC and the Court of Appeals
were all in agreement in sustaining private respondents' rights. The petition
is DENIED. The assailed Resolution is hereby AFFIRMED.
11. PHILIPPINE TOURISM AUTHORITY (Now known AS TOURISM
INFRASTRUCTURE AND ENTERPRISE ZONE
AUTHORITY), Petitioner, v. MARCOSA A. SABANDAL-HERZENSTIEL, PEDRO
TAPALES, LUIS TAPALES, AND ROMEO TAPALES, Respondents.
G.R. No. 196741, July 17, 2013

Thid is a petition for review on certiorari assailing the Decision and Resolution of
the Court of Appeals.

Facts:
Petitioner PTA is the owner of the subject property and other parcels of land
located in Brgy. Basdiot, Moalboal, Cebu bought from Tri-Island Corporate Holdings,
Inc. It had then been in an actual, physical, continuous, and uninterrupted possession of
the subject property and had declared the same for taxation purposes. However, the
respondents Tapaleses, and Sabandal-Herzenstiel by force, strategy and stealth
entered into a portion of the subject property, on which they proceeded to cut down
some coconut trees, introduced improvements therein and fenced the said area.
Petitioner then made demands to vacate, the last of which was through a letter, which
the respondents ignored, prompting the filing of a forcible entry complaint against them
before the MCTC Cebu which was subsequently docketed as Civil Case No. 118.
In their Answer with Counterclaim, the Tapaleses acknowledged that the subject
property had already been sold by its administrator, Josefina Abrenica, to Tri-
Island. They, however, claimed that the sale was tainted with force and intimidation and
hence void, including the subsequent transactions covering the same
property. Notwithstanding the sale, they remained in actual and physical possession of
the subject property and even introduced improvements thereon. Consequently, in the
absence of any proof of prior possession by the petitioner, respondents claimed that the
forcible entry complaint must necessarily be dismissed.
The MCTC declared that the petitioner is the lawful owner of the subject property
and had been in prior possession. Subsequently, respondents' appeal to the RTC was
dismissed for their failure to file a memorandum on appeal as required under Section
7(b), Rule 40 of the Rules of Court. Their motion for reconsideration was similarly
denied in an Order. While the CA rendered the assailed Decision, nullifying and setting
aside the rulings of both the MCTC and RTC, and declaring Sabandal-Herzenstiel as
the lawful possessor of the subject property.

Issue: Whether or not the respondents may be lawfully ejected from the subject
property.
Held:
The petition is meritorious.
In an action for forcible entry, the plaintiff must prove that he was in prior
possession of the disputed property and that the defendant deprived him of his
possession by any of the means provided for in Section 1, Rule 70 of the Rules,
namely: force, intimidation, threats, strategy, and stealth.
In this case, respondents failed to establish their prior and continued possession
of the subject property after its sale in favor of petitioner. On the contrary, they even
admitted in their answer to the complaint that petitioner exercised dominion over the
same by instituting caretakers and leasing portions thereof to third persons. Suffice it to
state that possession in the eyes of the law does not mean that a man has to have his
feet on every square meter of the ground before he is deemed in possession. Thus,
finding petitioner’s assertion to be well-founded, the MCTC properly adjudged petitioner
to have prior possession over the subject property as against Sabandal-Herzenstiel,
who never claimed ownership or possession thereof.
The petition is GRANTED. The Decision and Resolution of the Court of Appeals,
Cebu City are hereby REVERSED and SET ASIDE. The Decision of the 12th Municipal
Circuit Trial Court of Moalboal-Alcantara-Badian-Alegria, Cebu in Civil Case No. 118
is REINSTATED.
12. MANUEL LAO, Petitioner, v. COURT OF APPEALS and BETTER HOMES
REALTY & HOUSING CORPORATION, Respondents.
[G.R. No. 115307. July 8, 1997.]
Facts:
Private respondent Better Homes Realty and Housing Corporation filed with the
MTC Quezon City, a complaint for unlawful detainer, on the ground that it is the owner
of the premises situated at Unit I, No. 21 N. Domingo Street, Quezon City, evidenced by
a Transfer Certificate of Title; that Manuel Lao the petitioner occupied the property
without rent, but on BHRHC’s pure liberality with the understanding that he would
vacate the property upon demand, but despite demand to vacate made by letter
received by Lao, he refused to vacate the premises. In his answer to the complaint, he
claimed that he is the true owner of the house and lot located at Unit 1, No. 21 N.
Domingo Street, Quezon City; that the BHRHC purchased the same from N. Domingo
but such agreement was actually a loan secured by mortgage; and that BHRHC’s cause
of action is for accion publiciana outside the jurisdiction of an inferior court.
The MeTC Quezon City rendered a judgment ordering Lao to vacate the
premises; to pay BHRHC a daily rent for the use and occupation of the premises; and to
pay for BHRHC attorney’s fees, and costs. On appeal, the RTC Quezon City rendered a
decision reversing that of the MeTc, and ordering the dismissal of the BHRHC’s
complaint for lack of merit, with costs taxed against it. In its decision, the RTC held that
the subject property was acquired by BHRHC from N. Domingo, by a deed of sale, and
BHRHC is now the registered owner under a Transfer Certificate of Title, but in truth
Lao is the beneficial owner of the property because the real transaction over the subject
property was not a sale but a loan secured by a mortgage. BHRHC filed an appeal with
the CA which reversed the decision of the RTC. CA ruled that the MeTC has no
jurisdiction to resolve the issue of ownership in an action for unlawful detainer.
The MeTC is not ousted of jurisdiction simply because the defendant raised the
question of ownership. The inferior court shall resolve the issue of ownership only to
determine who is entitled to the possession of the premises. Here, the MeTC ruled that
as owner, BHRHC is entitled to the possession of the premises because the Lao’s stay
is by mere tolerance of the BHRHC. On the other hand, the RTC ruled that the subject
property is owned by Lao and, consequently, dismissed the complaint for unlawful
detainer. Thus, the RTC resolve the issue of ownership, as if the case were originally
before it as an action for recovery of possession, or accion publiciana, within its original
jurisdiction.
In an appeal from a decision of the MeTC, in an unlawful detainer case, the RTC
is simply to determine whether the inferior court correctly resolve the issue of
possession; it shall not delve into the issue of ownership. What the RTC did was to rule
that the real agreement between the BHRHC and N. Domingo was not a sale, but an
equitable mortgage. The only issue was who has a better right to physical possession.
Consequently, the RTC erred in reversing the decision of the MeTC.

WHEREFORE, the Court hereby REVERSES the decision of the RTC. In lieu thereof,
We affirm the decision of the MeTC Quezon City sentencing the defendant and all
persons claiming right under him to vacate the premises situated at Unit I, No. 21 N.
Domingo Street, Quezon City, and to surrender possession to the plaintiff; to pay a daily
rent, until Lao shall have vacated the premises; and to pay BHRHC’s attorneys fees and
costs.
Issues:

I. Whether or not the lower court can decide on the issue of ownership in the
present ejectment case.

II. Whether or not private respondent had acquired ownership over the property
in question.

III. Whether or not petitioner should be ejected from the premises in question.

Held:

I. The Court of Appeals held that as a general rule, the issue in an ejectment
suit is possession de facto, not possession de jure, and that in the event the
issue of ownership is raised as a defense, the issue is taken up for the limited
purpose of determining who between the contending parties has the better
right to possession. Beyond this, the MTC acts in excess of its jurisdiction.
However, we hold that this is not a hard and fast rule that can be applied
automatically to all unlawful detainer cases.

II. Private Respondent Better Homes Realty and Housing Corporation anchored
its right in the ejectment suit on a contract of sale in which petitioner (through
their family corporation) transferred the title of the property in question.
Petitioner contends, however, that their transaction was not an absolute sale,
but an equitable mortgage.

III. We answer in the negative. An action for unlawful detainer is grounded on


Section 1, Rule 70 of the Rules of Court which provides that, ". . . a landlord,
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 landlord, 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 inferior 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. . . ."
Based on the previous discussion, there was no sale of the disputed property.
Hence, it still belongs to petitioner’s family corporation, N. Domingo Realty &
Development Corporation. Private respondent, being a mere mortgagee, has
no right to eject petitioner. Private respondent, as a creditor and mortgagee,."
. . cannot appropriate the things given by way of pledge or mortgage, or
dispose of them. Any stipulation to the contrary is null and void.
13. CENTRAL BANK OF THE PHILIPPINES, petitioner,
vs.

SPOUSES ALFONSO and ANACLETA BICHARA, respondents.

FACTS:
Respondents SPOUSES ALFONSO and ANACLETA BICHARA were the former registered owners
of two lots situated in Legazpi City. They sold the two properties to petitioner CENTRAL BANK OF
THE PHILIPPINES. The Deed of Sale contained the following pertinent stipulations:

a. Payment to be effected only after this Deed of Sale shall have been duly registered and
a clean title issued in the name of VENDEE. It is agreed that all fees and expenses
under this transaction shall be borne by the vendors.
b. VENDORS hereby likewise undertake at their expense to fill the parcels of land with an
escombro free from waste materials compacted to the street level upon signing of the
Deed of Sale.

Despite respondents' failure to pay the capital gains tax and other transfer fees, Transfer Certificate
of Title No. was nonetheless issued in petitioner's name. Two annotations were recorded in the
memorandum of encumbrance – an adverse claim and notice of lis pendens in favor of certain
Rempillos.
Despite the issuance of the title, petitioner failed to pay respondent. On its part, respondents did not
fill up the lot with escombro despite several demands made by petitioner. Petitioner was thus
constrained to undertake the filling up of the said lots which cost petitioner P45,000.00.9 Petitioner
deducted the said amount from the purchase price payable to respondents. Petitioner, however, still
did not pay the respondents.
Respondents commenced an action for rescission or specific performance with damages, against
petitioner before the Regional Trial Court alleging petitioner failed to pay the purchase price despite
demand. They prayed for the rescission of the contract of sale and the return of the properties, or in
the alternative that petitioner be compelled to pay the purchase price plus interest.
Petitioner tendered payment to respondents. Respondents refused the tender, however, in view of
their complaint for rescission. After receipt of summons, petitioner filed its answer averring that it
was justified in delaying payment of the purchase price in view of respondents' breach of several
conditions in the contract. First, petitioner alleged that respondents failed to deliver to the former free
and legal possession of the two properties, in view of the encumbrances noted in the title, in addition
to the presence of squatters who were not evicted by respondents. Second, it claimed that
respondents did not fill up the lots with escombro free from waste materials, as agreed upon.
After trial, the trial court issued its decision. Plaintiffs are ordered to accept the deposited amount as
full payment for the properties in question, considering that the sum by defendant in undertaking the
filling up of the properties is credited to the original purchase price. Legal interests and damages
included.
Both parties appealed the decision to the Court of Appeals. Appellate court rendered
judgment reversing the decision of the trial court. Instead it ordered the rescission of the contract of
sale and the reconveyance of the properties to respondents. The appellate court likewise ordered
respondents to reimburse petitioner the cost of filling up the lot with escambro, and petitioner to pay
respondents attorney's fees and costs.
Aggrieved by the ruling, petitioner elevated the matter to the Supreme Court via this instant petition.
ISSUE:
WHETHER COURT OF APPEALS FAILED TO RULE THAT PRIVATE RESPONDENTS DID NOT
COMPLY WITH THEIR OBLIGATIONS TO CBP IN GOOD FAITH THUS PRIVATE
RESPONDENTS ARE NOT ENTITLED AS A MATTER OF RIGHT THE RESCISSION.

HELD:

YES.

Certainly, non-payment of the purchase price constitutes a very good reason to rescind a sale, for it
violates the very essence of the contract of sale. We have consequently held that the nonpayment of
the purchase price is a resolutory condition, for which the remedy is either rescission or specific
performance under Article 1191. This is true for reciprocal obligations, where the obligation of one is
a resolutory condition of the other.
petitioner’s obligation to pay arose as soon as the deed of sale was registered and a clean title was
issued. However, petitioner justifies non-payment on respondents’ breach of several stipulations in
the contract. We have examined these alleged violations vis-à-vis the pertinent provisions of the
deed of sale, keeping in mind that only a substantial breach of the terms and conditions thereof will
warrant rescission. Whether a breach is substantial is largely determined by the attendant
circumstances.

Petitioner likewise insists that its delay in paying the purchase price was justified since squatters
occupied the premises, contravening the stipulation that the respondent vendors shall convey the
properties free from liens and encumbrances. Again, we cannot support petitioner’s view. The
squatters’ illegal occupation cannot be deemed a lien or encumbrance. By the express terms of
Article 1590 of the Civil Code, a mere act of trespass will not authorize the suspension of payment of
the price. Be that as it may, the usurpation became moot and academic when the squatters left of
their own volition in 1988 following a storm.

Respondents should not be allowed to rescind the contract where they themselves did not perform
their essential obligation thereunder. It should be emphasized that a contract of sale involves
reciprocity between the parties. Since respondents were in bad faith, they may not seek the
rescission of the agreement they themselves breached. Consequently, the decision rendered by the
trial court should be reinstated as being just and proper under the premises.

DECISION:

WHEREFORE, judgment is hereby rendered REVERSING and SETTING ASIDE the Decision dated
February 28, 1997 of the Court of Appeals. The Decision dated October 26, 1993 rendered by the
Regional Trial Court of Legazpi City in Civil Case No. 8645 is hereby REINSTATED. No
pronouncement as to costs.
14. ANALITA P. INOCENCIO, SUBSTITUTING FOR RAMON INOCENCIO
(DECEASED), Petitioner,
v.
HOSPICIO DE SAN JOSE, Respondent.

FACTS:

On 1 March 1946, Hospicio de San Jose leased a parcel of land located in Pasay City to German
Inocencio (German). The lease contract was effective for a period of one year and was renewed for
one-year periods several times. The last written contract was executed on 31 May 1951.

Section 6 of the lease contract provides:


This contract is nontransferable unless prior consent of the lessor is obtained in writing.

In 1946, German constructed two buildings on the parcel of land which he subleased. He also
designated his son Ramon Inocencio (Ramon) to administer the said property.

On 21 September 1990, German received a letter from HDSJ informing him that the increased
rentals shall take effect in November 1990 instead of August 1990, to give [him] ample time to make
the necessary rental adjustments with his sublessees.

German passed away in 1997. Evidence on record shows that Ramon did not notify HDSJ of
German’s death. After Germans passing, Ramon collected the rentals from the sublessees, and paid
the rentals to HDSJ, and the taxes on the property.

On 1 March 2001, HDSJ’s property administrator, Five Star Multi-Services, Inc., notified Ramon that
HDSJ is terminating the lease contract effective 31 March 2001.

Ramon then sent a letter to HDSJ dated 12 March 2001, suggesting that the lease contract be
renegotiated for the welfare of the sublessees occupying the parcel of land. HDSJ notified Ramon
that the lease contract shall not be renewed because Ramon has continually subleased the subject
premises to about 20 families (in addition to a commercial establishment without the knowledge and
consent of the lessor, HDSJ. Thereafter, HDSJ refused to accept Ramon’s tender of payment of
rentals.

ISSUE:

a. Whether subleased contracts entered into by Ramon after the death of German were invalid.
b. Whether Ramon has authority to transfer the lease or sublease the land.
c. Whether there was tortious interference on the art of HDSJ.
d. Whether HDSJ’s action for unlawful detainer was not barred by prescription.

HELD.

a. NO. Subleased contracts were valid.

Lease contracts, by their nature, are not personal. The general rule, therefore, is lease
contracts survive the death of the parties and continue to bind the heirs except if the contract
states otherwise.

In Sui Man Hui Chan v. Court of Appeals, 424 SCRA 127 (2004) we held that: A lease
contract is not essentially personal in character. Thus, the rights and obligations therein are
transmissible to the heirs. The general rule, therefore, 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) their nature, (2) stipulation or (3) provision of law. In
the subject Contract of Lease, not only were there no stipulations prohibiting any
transmission of rights, but it’s very terms and conditions explicitly provided for the
transmission of the rights of the lessor and of the lessee to their respective heirs and
successors.

The contract is the law between the parties. The death of a party does not excuse
nonperformance of a contract, which involves a property right, and the rights and obligations
thereunder pass to the successors or representatives of the deceased. Similarly,
nonperformance is not excused by the death of the party when the other party has a property
interest in the subject matter of the contract.

b. YES. Ramon had a right to sublease the premises since the lease contract did not contain
any stipulation forbidding subleasing. Article 1650 of the Civil Code states:chanrobles
virtua1aw 1ibrary

Art. 1650. When in the contract of lease of things there is no express prohibition, the lessee
may sublet the thing leased, in whole or in part, without prejudice to his responsibility for the
performance of the contract toward the lessor.

Therefore, we hold that the sublease contracts executed by Ramon were valid.

c. NO. HDSJ did not commit tortious interference. Article 1314 of the Civil Code states:

Art. 1314. Any third person who induces another to violate his contract shall be liable for
damages to the other contracting party.

As correctly pointed out by the Inocencios, tortious interference has the following elements:
(1) existence of a valid contract; (2) knowledge on the part of the third person of the
existence of the contract; and (3) interference of the third person without legal justification or
excuse.

The facts of the instant case show that there were valid sublease contracts which were
known to HDSJ. However, we find that the third element is lacking in this case.

HDSJ entered into agreements with Ramon’s former sublessees for purely economic
reasons (payment of rentals). HDSJ had a right to collect the rentals from the sublessees
upon termination of the lease contract. It does not appear that HDSJ was motivated by spite
or ill will towards the Inocencios.

d. NO. Section 1, Rule 70 of the Rules of Court provides that actions for unlawful detainer must
be filed “within one (1) year after such unlawful deprivation or withholding of possession.”

In interpreting the foregoing provision, this Court, in Republic v. Sunvar Realty Development
Corporation, 674 SCRA 320 (2012) held that: 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 plaintiff’s last demand on
defendant to vacate the real property, because only upon the lapse of that period does the
possession become unlawful.

DECISION:

Wherefore, the petition is PARTLY GRANTED. The Decision dated 12 January 2012 of the Court of
Appeals in CA-G.R. SP No. 117009 is AFFIRMED with modification. The case is
hereby REMANDED to the Metropolitan Trial Court of Pasay, Branch 48, for determination of the
value of the improvements to be paid to the Inocencios, if Hospicio de San Jose desires to keep the
improvements. Otherwise, the Inocencios shall be allowed to demolish the buildings at their
expense.ch
15.
16.

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