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UNION BANK OF THE PHILIPPINES, Petitioner, v.

PHILIPPINE RABBIT BUS LINES,


INC., Respondent.

DECISION

DEL CASTILLO, J.:

An ejectment case is not limited to lease agreements or deprivations of possession by force, intimidation,
threat, strategy, or stealth, It is as well an available remedy against one who withholds possession after the
expiration or termination of his right of possession under an express or implied contract, such as a contract
to sell

This Petition for Review on Certiorari1 assails the July 31, 2012 Decision2 of the Court of Appeals (CA)
dismissing the Petition for Review3 in CA-G.R. SP No. 102065, and its January 25, 2013 Resolution4denying
reconsideration of the assailed Decision.

Factual Antecedents

Petitioner Union Bank of the Philippines is the owner of two parcels of land totaling 1,181 square meters,
with improvements (subject property), in Poblacion, Alaminos, Pangasinan, covered by Transfer Certificates
of Title Nos. 21895 and 21896.5 Respondent Philippine Rabbit Bus Lines, Inc. was the former owner of the
lots but it lost the same by foreclosure to petitioner; nonetheless, respondent continued to occupy the same.

On November 8, 2001, petitioner and respondent executed a Contract to Sell6 covering the subject property
for P12,208,633.57, payable within seven years in quarterly installments (principal and interest) of
P824,757,97. The contract to sell stipulated, among others, that "[a]ll payments required under this
Contract to Sell shall be made by the [buyer] without need of notice, demand, or any other act or deed, at
the principal office address of the [seller];"7 and that should respondent fail to fully comply with the
agreement or in case the contract is canceled or rescinded, all its installment payments "shall also be
forfeited by way of penalty and liquidated damages"8 and "applied as rentals for [its] use and possession of
the property without need for any judicial action or notice to or demand upon the [buyer] and without
prejudice to such other rights as may be available to and at the option of the [seller] such as, but not
limited to bringing an action in court to enforce payment of the Purchase Price or the balance thereof and/or
for damages, or for any causes of action allowed by law."9 ChanRoblesVi rt ualawlib ra ry

Respondent failed to fully pay the stipulated price in the contract to sell. Petitioner thus sent a December 10,
2003 notarized demand letter entitled "Demand to Pay with Rescission of Three (3) Contracts to Sell dated
November 8, 2001,"10 which stated among others that -

Our records show that you have failed to pay your past due quarterly installment payments for August 31,
2003 and November 30, 2003 as per attached Statement of Account as of December 16, 2003 in the total
amount of PESOS: NINE MILLION NINE HUNDRED FORTY THOUSAND ONE HUNDRED NINETY SEVEN &
36/100 (59,940,197.36) x x x:

xxxx

Correspondingly, you are hereby given a period of thirty (30) days from receipt hereof within which to pay
your aforesaid past due installment payments, otherwise, your three (3) Contracts to Sell with UNION BANK
OF THE PHILIPPINES over the properties x x x are deemed automatically rescinded effective thirty (30) days
from the expiration of the 30-day period to update your past due installment payments without further
notice.11

Petitioner sent another letter-demand to vacate12 dated May 24, 2004 to respondent, stating as follows:

We write in connection with your proposal to purchase back the properties that are the subject of the three
(3) Contracts to Sell executed on November 8, 200313 and were rescinded effective February 28, 2004. x x x

As you are aware, we deferred the sending of the Demand to Vacate over the said properties because of the
three (3) postdated checks (PDC's) with an aggregate amount of P1.5 Million which you have tendered to
the bank, as well as your proposal to purchase again the said properties after the Rescission of the Contracts
to Sell last February 28, 2004. Unfortunately, out of the three (3) PDC's submitted to the bank, only one (1)
check had cleared amounting to P500,000.00 which shall be applied as rental payment as mentioned in our
letter dated March 17,2004.

Moreover, we wish to inform you that your proposal to purchase again the said properties as contained in
your letter dated April 16, 2004 was never finalized nor presented for approval given that you failed to make
good your promised payment of P1.5 Million. We have given you more than enough time but there is still no
relief in sight.

For this reason, the bank has decided to exercise its right to take physical possession of the above-
mentioned properties. As such, we are giving you fifteen (15) days upon receipt of this letter within which to
vacate the said properties and surrender possession of the premises to the bank, otherwise, we will be
constrained to refer your account for proper legal action.14

Thus, it appears that after petitioner sent its December 10, 2003 letter-demand to pay the amount of
P9,940,197.36, respondent was unable to pay and petitioner rescinded the contract to sell on February
28,2004. Despite the fact that the contract to sell has been rescinded, respondent proposed to continue with
the same and issued and tendered to the petitioner three postdated checks in the amount of PI.5 million as
payment. However, only one check in the amount of P500,000.00 cleared. Petitioner thus sent another
March 17, 2004 letter to respondent stating that the said P500,000.00 has been applied as rental payment;
respondent replied in an April 16, 2004 letter proposing to proceed with the sale. Petitioner thereafter sent
the above May 24, 2004 letter-demand to vacate, which respondent received on May 26, 2004.

Ruling of the Municipal Trial Court in Cities (MTCC)

On May 26, 2005, petitioner filed an ejectment case against respondent before the MTCC of Alaminos,
Pangasinan, which was docketed as Civil Case No. 2171. The Complaint15 for "Ejectment with Prayer for
Fixation of Rentals" prayed that respondent be evicted from the subject property, and that it be ordered to
pay petitioner rental in arrears in the amount of P1.5 million, P125,000.00 monthly rent from May 27, 2004
until respondent completely vacates the premises, attorney's fees, and costs.

In its Answer16 and Supplemental Answer,17 respondent prayed for dismissal, claiming that petitioner had no
cause of action for ejectment and the MTCC had no jurisdiction over the case because it involved breach of
contract and rescission of the contract to sell, which are cognizable by the Regional Trial Courts (RTC); that
since the case is one for rescission, there should be mutual restitution, but the amounts involved -
payments, interests and penalties - should be properly computed; that the demand to vacate was not
unequivocal and was improperly served; and that the verification and certification on non-forum shopping in
the Complaint were defective for lack of proper authority.

After proceedings in due course, the MTCC issued on October 25, 2006 a Decision18 dismissing Civil Case No.
2171 for lack of jurisdiction. It held that petitioner's case is one for rescission and enforcement of the
stipulations in the contract to sell; that the demand to vacate and fixing of rentals prayed for are
consequences of petitioner's unilateral cancellation of the contract and are thus inextricably connected with
rescission; and that there is "no definite expiration or termination of the [respondent's] right to
possess"19 the subject property, and such right depended "upon its fulfillment of the stipulations in the
contract."20
ChanRoblesVirtualawl ibra ry

Ruling of the Regional Trial Court

Petitioner appealed before the RTC,21 which rendered a Decision22 on August 6,2007, stating as follows:

The demand required and contemplated in Sec. 2 of Rule 70 of the Revised Rules of Court is a demand for
the defendant to pay the rentals due or to comply with the conditions of the lease and not only a demand to
vacate the premises; and where the defendant does not comply with the said demand within the period
provided by Sec. 2 then his possession becomes unlawful. Consequently, both demands to pay and to
vacate are necessary to make the defendant a deforciant in order that Ejectment suit may be filed and the
fact of such demands must be alleged in the complaint, otherwise the Inferior Court cannot acquire
jurisdiction over the case.

Analyzing the above letter of demand sent by the plaintiff-appellant to the defendant-appellee, the same did
not demand for the payment of the defendant-appellee's obligation. It was merely a demand to vacate
without the demand to pay.
Hence, the Court is of the considered opinion that such demand is not sufficient compliance with Sec. 2 of
Rule 70 of the Rules of Court. Furthermore, a Notice of Demand giving the lessee the alternative whether to
pay the rental or vacate the premises does not comply with the above rule (Vda. de Murga vs. Chan, L-24-
680, October 7, 1968). In the said letter of demand itself, it says: "As such, we are giving you fifteen (15)
days upon receipt of this letter within which to vacate the said properties and surrender possession of the
premises to the bank, otherwise we will be constrained to refer your account for proper legal action." To the
mind of the Court, this is not the final demand contemplated under the same rule, because should the
defendant fail to vacate, the plaintiff-appellant will still refer defendant-appellee's account for proper legal
action which does not comply with the requirements of said Sec. 2 of Rule 70 of the Rules of Court.

Moreover, it was ruled in the case of Penas Jr. vs. Court of Appeals, G.R. 12734, July 7, 1994, that an
alternative demand on either to renew the expired lease contract or vacate is not a definite demand to
vacate and would be insufficient basis for the filing of an action for unlawful detainer. Hence, the Court rules
that the demand letter x x x is not a definite demand to vacate because if it fails to vacate, the defendant-
appellee's account would still be referred for proper legal action hence, insufficient basis for filing an action
for unlawful detainer.

In such case, the jurisdictional requisite of demand to pay and to vacate was not complied with and the
lower court did not acquire jurisdiction over the unlawful detainer case, hence, it was properly dismissed.

There is no more need to discuss the other issues raised as they are now moot and academic.

WHEREFORE, foregoing premises considered, the instant appeal is dismissed. Without cost.

SO ORDERED.23 cralawred

Petitioner filed a Motion for Reconsideration,24 claiming that there was a previous demand to pay, that is, its
December 10, 2003 letter entitled "Demand to Pay with Rescission of Three (3) Contract to Sell dated
November 8, 2001;" that even then, demand to pay was not necessary because its cause of action for
ejectment was not based on non-payment of rent, but rescission of the contract to sell for violation of its
terms; and that the final and executory ruling in CA-G.R. SP No. 115438 - which involved the same parties
but a different contract to sell over different properties, and where it was held that the inferior court has
jurisdiction over the ejectment case notwithstanding respondent's claim that the case is one for rescission -
should guide the trial court in resolving the case. However, the RTC denied the motion in a November 29,
2007 Order.25 ChanRoble sVirt ualawli bra ry

Ruling of the Court of Appeals

Petitioner filed before the CA a Petition for Review,26 docketed as CA-G.R. SP No. 102065, advancing the
same arguments in its Motion for Reconsideration of the RTC Decision, adding that its demand to vacate was
unequivocal as it contained a threat that if respondent does not heed the demand, appropriate legal action
will be taken; and that all the requisite allegations in a complaint for ejectment were complied with. It
prayed that the RTC's August 6, 2007 Decision be set aside, and that a new one be issued granting the
reliefs prayed for in its Complaint.

On July 31, 2012, the CA rendered a Decision denying the Petition. It held that petitioner had a cause of
action for ejectment based on non-payment of rentals and refusal to vacate since respondent's right to
occupy the subject property terminated when it failed to honor the contract to sell by not paying the agreed
amortizations, and thereafter their agreement was converted into a lease, but respondent failed to pay rent
and did not vacate the premises; however, it failed to comply with the jurisdictional requirement of demand
to pay and vacate under Section 2, Rule 70 of the 1997 Rules of Civil Procedure27 (1997 Rules). It found, as
the RTC did, that while there was a demand to vacate upon respondent, there was no prior demand
to pay made on the latter; that since both requisites - demand to pay and vacate - must concur, the
absence of one strips the lower court of jurisdiction over petitioner's Complaint for ejectment.

Petitioner moved to reconsider, but in its January 25, 2013 Resolution, the CA held its ground. Hence, the
present Petition.

Issues
Petitioner submits that -

SINCE THE CONTRACT TO SELL BETWEEN PETITIONER UBP AND RESPONDENT PRBL WAS ALREADY
CANCELED DUE TO PRBL'S FAILURE TO PAY THE PURCHASE PRICE, IS IT STILL REQUIRED FOR THE
PETITIONER UBP TO ISSUE A DEMAND TO PAY PRIOR TO THE FILING OF THE EJECTMENT CASE?

IF SUCH DEMAND TO PAY IS REQUIRED, WAS THE PETITIONER UBP ABLE TO COMPLY WITH THE SAME
WHEN IT PREVIOUSLY MADE A DEMAND FOR THE RESPONDENT TO PAY THE AMOUNT DUE (EXHIBIT "B")
BEFORE ISSUING THE DEMAND TO VACATE (EXHIBIT "C")?

ASSUMING EX-GRATIA ARGUMENT! THAT NO DEMAND TO PAY WAS ISSUED BY THE PETITIONER PRIOR TO
THE FILING OF THIS CASE, WAS IT CORRECT FOR THE HONORABLE COURT TO HAVE CONSIDERED SUCH
ISSUE EVEN IF THE SAME WAS NOT RAISED BY THE PARTIES DURING THE PRE-TRIAL CONFERENCE AND
WAS NEVER TOUCHED BY THE PARTIES IN THEIR PLEADINGS?

SINCE THE ISSUE REGARDING UBP'S RIGHT TO EJECT PRBL FROM THE PREMISES HAD BEEN SETTLED
WITH FINALITY IN ANOTHER CASE DECIDED BY THE HONORABLE COURT OF APPEALS, CAN THE SAID
COURT IGNORE THE FINAL DECISION AND THEN RULE IN A CONTRARY MANNER?28 cral awred

Petitioner's Arguments

Petitioner essentially argues in its Petition and Reply29 that since the contract to sell was already rescinded,
it was no longer required to make a demand for payment prior to filing an ejectment suit; that in Union
Bank of the Philippines v. Maunlad Homes, Inc.,30 which involved a similar Contract to Sell executed by it,
this Court declared that in a contract to sell, the non-payment of the purchase price renders the agreement
without force and effect, and the buyer's act of withholding installment payments deprived it of the right to
continue possessing the property subject matter of the agreement; that since its ejectment case is anchored
not on failure to pay rent, but on violation of the contract to sell, no demand for payment was required; and
that, just the same, a demand to pay was made on December 10, 2003. Petitioner thus prays for reversal of
the assailed dispositions and the granting of the reliefs prayed for in its Complaint.

Respondent's Arguments

In its Comment,31 respondent finds no cogent or compelling reason to reverse the CA Decision, arguing that
since there was no demand to pay, the MTCC did not acquire jurisdiction over the petitioner's ejectment
case.

Our Ruling

The Petition must be granted.

It must have escaped the attention of the MTCC, the RTC, and the CA that an ejectment case is not limited
to lease agreements or deprivations of possession by force, intimidation, threat, strategy, or stealth. It is as
well available against one who withholds possession after the expiration or termination of his right of
possession under an express or implied contract, such as a contract to sell. Under Section 1, Rule 70 of the
1997 Rules, "a x x x 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." In such cases, it is sufficient to allege in the plaintiffs
complaint that -

1. The defendant originally had lawful possession of the property, either by virtue of a contract or by
tolerance of the plaintiff;

2. Eventually, the defendant's possession of the property became illegal or unlawful upon notice by the
plaintiff to defendant of the expiration or the termination of the defendant's right of possession;
3. Thereafter, the defendant remained in possession of the property and deprived the plaintiff the
enjoyment thereof; and

4. Within one year from the unlawful deprivation or withholding of possession, the plaintiff instituted the
complaint for ejectment.32

Upon an examination of the Complaint and evidence in Civil Case No. 2171, it appears that petitioner
complied with the above requirements. It alleged that respondent acquired the right to occupy the subject
property by virtue of the November 8, 2001 Contract to Sell; that respondent failed to pay the required
amortizations and thus was in violation of the stipulations of the agreement; that petitioner made a written
"Demand to Pay with Rescission of Three (3) Contracts to Sell dated November 8, 2001," but respondent
was unable to heed the demand; that respondent lost its right to retain possession of the subject property,
and it was illegally occupying the premises; that petitioner made another demand, this time a written
demand to vacate on May 24, 2004, which respondent received on May 26, 2004; that respondent refused
to vacate the premises; that on May 26, 2005, or within the one-year period required by the Rules, the
ejectment case was filed; and that there is a need to determine the rents and damages owing to petitioner.

It was plainly erroneous for the lower courts to require a demand to pay prior to filing of the ejectment case.
This is not one of the requisites in an ejectment case based on petitioner's contract to sell with respondent.
As correctly argued by petitioner, the full payment of the purchase price in a contract to sell is a positive
suspensive condition whose non-fulfillment is not a breach of contract, but merely an event that prevents
the seller from conveying title to the purchaser; in other words, the non-payment of the purchase price
renders the contract to sell ineffective and without force and effect.33 Respondent's failure and refusal to pay
the monthly amortizations as agreed rendered the contract to sell without force and effect; it therefore lost
its right to continue occupying the subject property, and should vacate the same.

Having arrived at the foregoing conclusions, the Court finds no need to discuss the other points raised in the
Petition.

WHEREFORE, the Petition is GRANTED. The assailed July 31, 2012 Decision and January 25,2013
Resolution of the Court of Appeals in CA-G.R. SP No. 102065 are REVERSED and SET ASIDE.

Respondent Philippine Rabbit Bus Lines, Inc. is ORDERED TO: 1) IMMEDIATELY VACATE the subject
property upon the finality of this Decision, and 2) PAY petitioner Union Bank of the Philippines all rentals-in-
arrears and accruing rentals until it vacates the property.

The case is REMANDED to the Municipal Trial Court in Cities of Alaminos, Pangasinan, or to any branch
thereof or court handling Civil Case No. 2171, for the determination of the amount of rentals; attorney's fees
and costs, if any; and interest, which are all due to petitioner.

SO ORDERED. chanroblesvi r

G.R. No. 190071 August 15, 2012

UNION BANK OF THE PHILIPPINES, Petitioner,


vs.
MAUNLAD HOMES, INC. and all other persons or entities claiming rights under
it, Respondents.

VILLARAMA, JR.,*

DECISION

BRION, J.:
Before the Court is the petition for review on certiorari1 under Rule 45 of the Rules of Court filed by
petitioner Union Bank of the Philippines (Union Bank), assailing the decision dated October 28,
20092 of the Court of Appeals (CA) in CA-G.R. SP No. 107772.

THE FACTS

Union Bank is the owner of a commercial complex located in Malolos, Bulacan, known as the
Maunlad Shopping Mall.

Sometime in August 2002, Union Bank, as seller, and respondent Maunlad Homes, Inc. (Maunlad
Homes), as buyer, entered into a contract to sell3 involving the Maunlad Shopping Mall. The contract
set the purchase price at ₱ 151 million, ₱ 2.4 million of which was to be paid by Maunlad Homes as
down payment payable on or before July 5, 2002, with the balance to be amortized over the
succeeding 180-month period.4 Under the contract, Union Bank authorized Maunlad Homes to take
possession of the property and to build or introduce improvements thereon. The parties also agreed
that if Maunlad Homes violates any of the provisions of the contract, all payments made will be
applied as rentals for the use and possession of the property, and all improvements introduced on
the land will accrue in favor of Union Bank.5 In the event of rescission due to failure to pay or to
comply with the terms of the contract, Maunlad Homes will be required to immediately vacate the
property and must voluntarily turn possession over to Union Bank.6

When Maunlad Homes failed to pay the monthly amortization, Union Bank sent the former a Notice
of Rescission of Contract7 dated February 5, 2003, demanding payment of the installments due
within 30 days from receipt; otherwise, it shall consider the contract automatically rescinded.
Maunlad Homes failed to comply. Hence, on November 19, 2003, Union Bank sent Maunlad Homes
a letter demanding payment of the rentals due and requiring that the subject property be vacated
and its possession turned over to the bank. When Maunlad Homes continued to refuse, Union Bank
instituted an ejectment suit before the Metropolitan Trial Court (MeTC) of Makati City, Branch 64, on
February 19, 2004. Maunlad Homes resisted the suit by claiming, among others, that it is the owner
of the property as Union Bank did not reserve ownership of the property under the terms of the
contract.8 By virtue of its ownership, Maunlad Homes claimed that it has the right to possess the
property.

On May 18, 2005, the MeTC dismissed Union Bank’s ejectment complaint.9 It found that Union
Bank’s cause of action was based on a breach of contract and that both parties are claiming a better
right to possess the property based on their respective claims of ownership of the property.

The MeTC ruled that the appropriate action to resolve these conflicting claims was an accion
reivindicatoria, over which it had no jurisdiction.

On appeal, the Regional Trial Court (RTC) of Makati City, Branch 139, affirmed the MeTC in its
decision dated July 17, 2008;10 it agreed with the MeTC that the issues raised in the complaint extend
beyond those commonly involved in an unlawful detainer suit. The RTC declared that the case
involved a determination of the rights of the parties under the contract. Additionally, the RTC noted
that the property is located in Malolos, Bulacan, but the ejectment suit was filed by Union Bank in
Makati City, based on the contract stipulation that "the venue of all suits and actions arising out or in
connection with the Contract to Sell shall be in Makati City."11 The RTC ruled that the proper venue
for the ejectment action is in Malolos, Bulacan, pursuant to the second paragraph of Section 1, Rule
4 of the Rules of Court, which states:
Section 1. Venue of real actions. - Actions affecting title to or possession of real property, or interest
therein, shall be commenced and tried in the proper court which has jurisdiction over the area
wherein the real property involved, or a portion thereof, is situated.

Forcible entry and detainer actions shall be commenced and tried in the municipal trial court of the
municipality or city wherein the real property involved, or a portion thereof, is situated. [emphasis
ours]

The RTC declared that Union Bank cannot rely on the waiver of venue provision in the contract
because ejectment is not an action arising out of or connected with the contract.

Union Bank appealed the RTC decision to the CA through a petition for review under Rule 42 of the
Rules of Court. The CA affirmed the RTC decision in its October 28, 2009 decision,12 ruling that
Union Bank’s claim of possession is based on its claim of ownership which in turn is based on its
interpretation of the terms and conditions of the contract, particularly, the provision on the
consequences of Maunlad Homes’ breach of contract. The CA determined that Union Bank’s cause
of action is premised on the interpretation and enforcement of the contract and the determination of
the validity of the rescission, both of which are matters beyond the jurisdiction of the MeTC.
Therefore, it ruled that the dismissal of the ejectment suit was proper. The CA, however, made no
further ruling on the issue of venue of the action.

From the CA’s judgment, Union Bank appealed to the Court by filing the present petition for review
on certiorariunder Rule 45 of the Rules of Court.

THE PARTIES’ ARGUMENTS

Union Bank disagreed with the CA’s finding that it is claiming ownership over the property through
the ejectment action. It claimed that it never lost ownership over the property despite the execution
of the contract, since only the right to possess was conceded to Maunlad Homes under the contract;
Union Bank never transferred ownership of the property to Maunlad Homes. Because of Maunlad
Homes’ failure to comply with the terms of the contract, Union Bank believes that it rightfully
rescinded the sale, which rescission terminated Maunlad Homes’ right to possess the subject
property. Since Maunlad Homes failed to turn over the possession of the subject property, Union
Bank believes that it correctly instituted the ejectment suit.

The Court initially denied Union Bank’s petition in its Resolution dated March 17, 2010.13 Upon motion
for reconsideration filed by Union Bank, the Court set aside its Resolution of March 17, 2010 (in a
Resolution dated May 30, 201114 ) and required Maunlad Homes to comment on the petition.

Maunlad Homes contested Union Bank’s arguments, invoking the rulings of the lower courts. It
considered Union Bank’s action as based on the propriety of the rescission of the contract, which, in
turn, is based on a determination of whether Maunlad Homes indeed failed to comply with the terms
of the contract; the propriety of the rescission, however, is a question that is within the RTC’s
jurisdiction. Hence, Maunlad Homes contended that the dismissal of the ejectment action was
proper.

THE COURT’S RULING

We find the petition meritorious.


The authority of the MeTC to
interpret contracts in an unlawful
detainer action

In any case involving the question of jurisdiction, the Court is guided by the settled doctrine that the
jurisdiction of a court is determined by the nature of the action pleaded by the litigant through the
allegations in his complaint.15

Unlawful detainer is an action to recover possession of real property from one who unlawfully
withholds possession after the expiration or termination of his right to hold possession under any
contract, express or implied. The possession of the defendant in unlawful detainer is originally legal
but became illegal due to expiration or termination of the right to possess.16 Under Section 1, Rule 70
of the Rules of Court, the action must be filed "within one (1) year after the unlawful deprivation or
withholding of possession." Thus, to fall within the jurisdiction of the MeTC, the complaint must
allege that –

1. the defendant originally had lawful possession of the property, either by virtue of a contract
or by tolerance of the plaintiff; 2. eventually, the defendant’s possession of the property
becameillegal or unlawful upon notice by the plaintiff to defendant of the expiration or the
termination of the defendant’s right of possession;

3. thereafter, the defendant remained in possession of the property and deprived the plaintiff
the enjoyment thereof; and

4. within one year from the unlawful deprivation or withholding of possession, the plaintiff
instituted the complaint for ejectment.17

Contrary to the findings of the lower courts, all four requirements were alleged in Union Bank’s
Complaint. Union Bank alleged that Maunlad Homes "maintained possession of the subject
properties" pursuant to the Contract to Sell.18 Maunlad Homes, however, "failed to faithfully comply
with the terms of payment," prompting Union Bank to "rescind the Contract to Sell in a Notice of
Rescission dated February 5, 2003."19 When Maunlad Homes "refused to turn over and vacate the
subject premises,"20 Union Bank sent another Demand Letter on November 19, 2003 to Maunlad
Homes requiring it (1) "[t]o pay the equivalent rentals-in-arrears as of October 2003 in the amount of
₱ 15,554,777.01 and monthly thereafter until the premises are fully vacated and turned over" to
Union Bank, and (2) to vacate the property peacefully and turn over possession to Union Bank.21 As
the demand went unheeded, Union Bank instituted an action for unlawful detainer before the MeTC
on February 19, 2004, within one year from the date of the last demand. These allegations clearly
demonstrate a cause of action for unlawful detainer and vested the MeTC jurisdiction over Union
Bank’s action.

Maunlad Homes denied Union Bank’s claim that its possession of the property had become
unlawful. It argued that its failure to make payments did not terminate its right to possess the
property because it already acquired ownership when Union Bank failed to reserve ownership of the
property under the contract. Despite Maunlad Homes’ claim of ownership of the property, the Court
rules that the MeTC retained its jurisdiction over the action; a defendant may not divest the MeTC of
its jurisdiction by merely claiming ownership of the property.22 Under Section 16, Rule 70 of the Rules
of Court, "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." Section 18, Rule 70 of the Rules of Court,
however, states that "the judgment x x x shall be conclusive with respect to the possession only and
shall in no wise bind the title or affect the ownership of the land or building."
The authority granted to the MeTC to preliminarily resolve the issue of ownership to determine the
issue of possession ultimately allows it to interpret and enforce the contract or agreement between
the plaintiff and the defendant. To deny the MeTC jurisdiction over a complaint merely because the
issue of possession requires the interpretation of a contract will effectively rule out unlawful detainer
as a remedy. As stated, in an action for unlawful detainer, the defendant’s right to possess the
property may be by virtue of a contract, express or implied; corollarily, the termination of the
defendant’s right to possess would be governed by the terms of the same contract. Interpretation of
the contract between the plaintiff and the defendant is inevitable because it is the contract that
initially granted the defendant the right to possess the property; it is this same contract that the
plaintiff subsequently claims was violated or extinguished, terminating the defendant’s right to
possess. We ruled in Sps. Refugia v. CA23that –

where the resolution of the issue of possession hinges on a determination of the validity and
interpretation of the document of title or any other contract on which the claim of possession is
premised, the inferior court may likewise pass upon these issues.

The MeTC’s ruling on the rights of the parties based on its interpretation of their contract is, of
course, not conclusive, but is merely provisional and is binding only with respect to the issue of
possession.

Thus, despite the CA’s opinion that Union Bank’s "case involves a determination of the rights of the
parties under the Contract to Sell,"24 it is not precluded from resolving this issue. Having acquired
jurisdiction over Union Bank’s action, the MeTC can resolve the conflicting claims of the parties
based on the facts presented and proved.

The right to possess the property was


extinguished when the contract to
sell failed to materialize

Maunlad Homes acquired possession of the property based on its contract with Union Bank. While
admitting that it suspended payment of the installments,25 Maunlad Homes contended that the
suspension of payment did not affect its right to possess the property because its contract with
Union Bank was one of sale and not to sell; hence, ownership of the

property has been transferred to it, allowing it to retain possession notwithstanding nonpayment of
installments. The terms of the contract, however, do not support this conclusion.

Section 11 of the contract between Union Bank and Maunlad Homes provides that "upon payment in
full of the Purchase Price of the Property x x x, the SELLER shall execute and deliver a Deed of
Absolute Sale conveying the Property to the BUYER."26 "Jurisprudence has established that where
the seller promises to execute a deed of absolute sale upon the completion by the buyer of the
payment of the price, the contract is only a contract to sell."27The presence of this provision generally
identifies the contract as being a mere contract to sell.28 After reviewing the terms of the contract
between Union Bank and Maunlad Homes, we find no reasonable ground to exempt the present
case from the general rule; the contract between Union Bank and Maunlad Homes is a contract to
sell.

In a contract to sell, the full payment of the purchase price is a positive suspensive condition whose
non-fulfillment is not a breach of contract, but merely an event that prevents the seller from
conveying title to the purchaser. "The non-payment of the purchase price renders the contract to sell
ineffective and without force and effect."29 Maunlad Homes’ act of withholding the installment
payments rendered the contract ineffective and without force and effect, and ultimately deprived
itself of the right to continue possessing Maunlad Shopping Mall.

The propriety of filing the unlawful


detainer action in Makati City
pursuant to the venue stipulation in
the contract

Maunlad Homes questioned the venue of Union Bank’s unlawful detainer action which was filed in
Makati City while the contested property is located in Malolos, Bulacan. Citing Section 1, Rule 4 of
the Rules of Court, Maunlad Homes claimed that the unlawful detainer action should have been filed
with the municipal trial court of the municipality or city where the real property involved is situated.
Union Bank, on the other hand, justified the filing of the complaint with the MeTC of Makati City on
the venue stipulation in the contract which states that "the venue of all suits and actions arising out
of or in connection with this Contract to Sell shall be at Makati City."30

While Section 1, Rule 4 of the Rules of Court states that ejectment actions shall be filed in "the
municipal trial court of the municipality or city wherein the real property involved x x x is situated,"
Section 4 of the same Rule provides that the rule shall not apply "where the parties have validly
agreed in writing before the filing of the action on the exclusive venue thereof." Precisely, in this
case, the parties provided for a different venue. In Villanueva v. Judge Mosqueda, etc., et al.,31 the
Court upheld the validity of a stipulation in a contract providing for a venue for ejectment actions
other than that stated in the Rules of Court. Since the unlawful detainer action is connected with the
contract, Union Bank rightfully filed the complaint with the MeTC of Makati City.

WHEREFORE, we hereby GRANT the petition and SET ASIDE the decision dated October 28,
2009 of the Court of Appeals in CA-G.R. SP No. 107772. Respondent Maunlad Homes, Inc.
is ORDERED TO VACATE the Maunlad Shopping Mall, the property subject of the case,
immediately upon the finality of this Decision. Respondent Maunlad Homes, Inc. is
further ORDERED TO PAY the rentals-in-arrears, as well as rentals accruing in the interim until it
vacates the property.

The case is REMANDED to the Metropolitan Trial Court of Makati City, Branch 64, to determine the
amount of rentals due. In addition to the amount determined as unpaid rent, respondent Maunlad
Homes, Inc. is ORDERED TO PAY legal interest of six percent (6o/o) per annum, from November
19, 2003, when the demand to pay and to vacate was made, up to the finality of this Decision.
Thereafter, an interest of twelve percent ( 12%) per annum shall be imposed on the total amount due
until full payment is made.

SO ORDERED.

G. R. No. 138955 - October 29, 2002

AMPARO ROXAS, Petitioner, v. HON. COURT OF APPEALS, and MANOTOK REALTY,


INC.,Respondents.

DECISION

QUISUMBING, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking the reversal of
the decision1 of the Honorable Court of Appeals in CA-G.R. SP No. 44650. The CA had affirmed that of
the Regional Trial Court2 of Marikina, Branch 273, in SCA No. 97-198-MK, which earlier overturned the
order3 of the Metropolitan Trial Court of Marikina, Branch 76, in Civil Case No. 96-6235, for unlawful
detainer.

The factual antecedents as found by the Court of Appeals are as follows:

A complaint for unlawful detainer was filed by herein private respondent Manotok Realty, Inc. against
herein petitioner Amparo Roxas before the Metropolitan Trial Court of Marikina, Branch 76. Manotok
Realty, Inc. alleged in its complaint that: it is the registered owner of a parcel of land located at the
Manotok-Ramos Subdivision IX, City of Marikina, Metro Manila, known as Lot 14, Block 9 duly covered
under Transfer Certificate of Title No. 100498; that sometime on September 18, 1961, plaintiff and
defendant entered into a Contract to Sell covering the subject property, however, on September 14,
1973, plaintiff notarially rescinded and cancelled the contract as of June 25, 1966 for defendant's
failure to comply with the terms thereof, specifically for her failure to pay the stipulated monthly
payments; that despite receipt of said notice of cancellation however, defendant continued in her
possession and occupation of subject parcel of land without any legal basis except by mere tolerance
of plaintiff; that defendant since and from that time of the service of the notice of rescission and the
demand to vacate on September 14, 1973, defendant has possessed and occupied said property
without making any payment to plaintiff of such reasonable compensation for her use and occupancy
thereof; that on August 3, 1995, plaintiff needing said property for its own use, made a final demand
to defendant, through counsel, to vacate subject property within three (3) months from receipt
thereof; that notwithstanding however her receipt of said final demand and the lapse of the three (3)
months period within which to vacate, defendant unlawfully failed and refused to vacate the same
without legal basis.

In her answer, Amparo Roxas denied the material allegations of the complaint, and by way of special
and affirmative defenses, alleged that the notice of cancellation has not been received by defendant
hence, a condition precedent has not been complied with, thus subject to dismissal; that she has
complied with all the terms and conditions of the Contract to Sell, but Manotok Realty, Inc. has not
been recording defendant's compliance, amounting to plaintiff's dealing in bad faith and with malice
afterthought; and by way of special and affirmative defense alleged that there is no cause of action
and therefore, the complaint must be dismissed; and by way of counterclaim seeks moral and
exemplary damages in the total amount of P200,000.00 and an award of attorney's fee in the amount
of P50,000.00.

After the requisite preliminary conference and the submission of affidavits and position papers by both
parties, Hon. Judge Jerry B. Gonzales of MeTC, Marikina City, Branch 76, dismissed the complaint on
the ground of lack of jurisdiction. In an order dated November 20, 1996, Judge Gonzales ratiocinated:

This is a clear case of ejectment through accion publiciana, jurisdiction of which belongs to the
Regional Trial Court because the cause of action is tolerance.

The Honorable Supreme Court in the case of Magin vs. Avelino,4 127 SCRA 602, said:

"Where the possession of the land by another is due to tolerance of owner the action for ejectment is
accion publiciana, not unlawful detainer or forcible entry."

Under the above doctrine, the demand being that of terminating possession allowed by tolerance of
the alleged owner, this Court has no jurisdiction to try the case.5

Aggrieved, Manotok Realty, Inc. appealed the matter before the Regional Trial Court of Marikina,
Branch 273. The RTC ruled for Manotok Realty, Inc. holding that the MeTC had jurisdiction to hear and
decide the case as "the complaint is one for unlawful detainer" as clearly alleged in the complaint,
"and not for accion publiciana as incorrectly ruled by the lower court."6

The RTC disposed of the case as follows:


WHEREFORE, foregoing premises considered, the judgement appealed from is hereby REVERSED and
SET ASIDE. Judgment is hereby rendered in favor of plaintiff-appellant and against defendant-appellee
Amparo Roxas, ordering the latter and all persons claiming rights under her:

1) to immediately vacate and surrender the possession of the premises in question described in
paragraph 3 of the complaint;

2) to pay plaintiff-appellant the amount of P2,000.00 per month as reasonable compensation for the
use and occupation of the subject premises from November 4, 1995 up to the time the premises in
question is fully vacated, and possession thereof is surrendered to plaintiff-appellant;

3) to pay plaintiff-appellant the sum of TEN THOUSAND (P10,000.00) PESOS as reasonable attorney's
fees, and the costs of suit.

SO ORDERED.7

The reversal of the MeTC order prompted Amparo Roxas to elevate the matter to the Court of Appeals
for review under Rule 42. However, the appellate court affirmed the aforequoted RTC decision opining
that Amparo's reliance on Velez vs. Avelino8 is misplaced for the latter partakes of a different factual
setting. The RTC of Marikina had found, inter alia:

In this particular case, the private respondents from the very beginning occupied the subject premises
without any contract and constructed thereon houses sans any building permits. The Court described
them as squatters and characterized their possession as one of tolerance.in the case at bench, the
petitioner was not a squatter but a lawful possessor of the property by virtue of a contract to sell duly
entered into by the petitioner and private respondent. Her occupation became illegal only upon her
refusal to vacate despite the cancellation of the contract to sell and a demand letter dated August 3,
1995 for her to vacate.

While in the Velez case, supra, there was no contract, express or implied, at the start, in the case at
bench, there was such an express contract to sell that governed the relationship between the
petitioner and private respondent. Accordingly, it is imperative in a case of unlawful detainer that the
incipient occupancy is founded on some legal authority such as an express or implied contract, which
however, has expired. In the Velez case supra, there was no expiration or termination to speak of
because there was really no contract in the first place, whereas, in the instant case there was.9

The aforesaid finding was upheld by the Court of Appeals.

Hence, this petition for review on certiorari raising the lone issue of:

WHETHER OR NOT THE REGULAR COURT HAS JURISDICTION TO TRY AND HEAR THE INSTANT
CASE.10

While this petition for review does not assign any specific error committed by the court a quo in
affirming the decision of the RTC, what petitioner raises is the question of jurisdiction of the regular
courts of justice over the subject matter of this case. According to her petition,11 the matter involved
in the present petition falls squarely within the jurisdiction of an administrative agency, namely the
Housing and Land Use Regulatory Board (HLURB).12 She explains that "this is for the simple reason
that the issue between the parties is the determination of whether or not the terms and conditions of
their contract to sell are violated." She adds that she is one of the buyers on installment of a
subdivision lot in private respondent's subdivision. For Manotok Realty Inc. is the subdivision owner
and/or developer. Consequently, according to petitioner, any question that may arise regarding their
contract, be it for non-payment of amortization, specific performance, or in general, violation of any
term or condition thereof, including a special instance of ejectment13 if proper, should be resolved
before the HLURB by a proper initiatory pleading filed thereat.14
Moreover, petitioner Amparo Roxas reiterated in her memorandum15 that although the complaint has
been framed to be one for unlawful detainer, the truth is that the matter involves a dispute between a
subdivision owner/developer and a subdivision lot buyer. She further asserts that she could not be
estopped from raising the question of lack of jurisdiction of the courts to try and hear the case
because, in her position paper filed with the MeTC, she has already raised the argument that the
matter was cognizable by the HLURB.

Respondent Manotok Realty, Inc., maintains the contrary, to wit, that the settled rule is that the
question of jurisdiction must be raised before the inferior court. Otherwise, petitioner is barred by
estoppel or even laches. Respondent contends that in the determination of whether or not an inferior
court has jurisdiction over ejectment suits, what determines the nature of the action as well as the
court that has jurisdiction over the case are the allegations in the complaint. Citing Sumulong vs.
CA,16 private respondent avers that the cause of action in a complaint is not what the designation of
the complaint states, but what the allegations in the body of the complaint define or prescribe. Private
respondent claims that the CA correctly pointed out that the complaint expressly provides that the
case is one for unlawful detainer and not an accion publiciana.

In our view, the following issues now appear for the Court's resolution: (1) whether petitioner could
still raise the issue of jurisdiction at this stage of the proceedings; and (2) whether the instant case
falls within the exclusive jurisdiction of the HLURB.

Considering the circumstances of the cases, including the averments of the parties, we find the
present petition without merit.

On the first issue, we hold that petitioner is already estopped from raising the issue of jurisdiction.
What she raised in her position paper as a special and affirmative defense was the purported failure of
the complaint to state a cause of action, arising from an alleged failure to exhaust administrative
remedies before the HLURB as a condition precedent to filing a case in court. This is not an explicit
attack on the court's jurisdiction over the subject matter of the complaint, but merely a claim for the
need to go through an alleged jurisdictional requirement, namely exhaustion of administrative
remedies.

Granted that she placed MeTC's jurisdiction at issue, on the supposition that it is the HLURB that has
jurisdiction over Manotok's complaint below, she abandoned her theory after she obtained a favorable
judgment at the MeTC. She chose not to appeal the MeTC's decision and instead consistently adopted
in her pleadings before the RTC and CA, the MeTC's ruling that the action is one for accion publiciana.
Nowhere in her pleadings before the RTC and CA did she raise the argument that jurisdiction properly
lies with the HLURB. As earlier mentioned, it was only in her present petition with this Court that she
squarely asserted for the first time that the HLURB has exclusive jurisdiction over the instant case.

Indeed, the general rule is that a question of jurisdiction may be raised at any time, even on appeal,
provided that doing so does not result in a mockery of the tenets of fair play.17 When, however, a
party adopts a particular theory, and the case is tried and decided upon that theory in the court
below, he will not be permitted to change his theory on appeal.18 Where the case was tried by the
lower court and the parties on a certain theory, it will be reviewed and decided on that theory, insofar
as the pleadings, liberally construed, permit, and not be approached from a different point of view.19

Petitioner is bound by the theory behind her arguments before the RTC and CA that the case is
properly an accion publiciana as the cause of action arises from the termination of possession by mere
tolerance. Her assertion now that the issue involves the determination of whether or not the terms
and conditions of the contract to sell have been violated by private respondent, which must be decided
by the HLURB, constitutes a change of theory that could require presentation of further evidence.
Given this premise, the Court cannot countenance petitioner's act of adopting inconsistent postures by
attacking the jurisdiction of the regular courts to which she has submitted, voluntarily. Estoppel bars
her from doing so.
Nevertheless, to avoid further delay in this case, let us resolve the second issue of whether the HLURB
has the exclusive primary jurisdiction to try and hear the instant case.20

In support of her position, petitioner cites Sec. 1 of P.D. 1344,21 to wit:

Sec. 1. In the exercise of its function to regulate the real estate trade and business and in addition to
its powers provided for in Presidential Decree No. 957, the National Housing Authority shall have
exclusive jurisdiction to hear and decide the cases of the following nature:

a. Unsound real estate business practices;

b. Claims involving refund and any other claims filed by subdivision lot or condominium unit
buyer against the project owner, developer, dealer, broker or salesman; and

c. Cases involving specific performance of contractual and statutory obligations filed by buyers of
subdivision lot or condominium unit against the owner, developer, dealer, broker or salesman.

In our view, the mere relationship between the parties, i.e., that of being subdivision owner/developer
and subdivision lot buyer, does not automatically vest jurisdiction in the HLURB. For an action to fall
within the exclusive jurisdiction of the HLURB, the decisive element is the nature of the action as
enumerated in Section 1 of P.D. 1344. On this matter, we have consistently held that the concerned
administrative agency, the National Housing Authority (NHA) before and now the HLURB, has
jurisdiction over complaints aimed at compelling the subdivision developer to comply with its
contractual and statutory obligations.

Thus, in Arranza vs. B.F. Homes, Inc.,22 we sustained the HLURB's jurisdiction over petitioners'
complaint for specific performance to enforce their rights as purchasers of subdivision lots as regards
rights of way, water, open spaces, road and perimeter wall repairs, and security. Also, in Que vs.
CA,23 we noted that:

. the complaint against Que is distinct from the complaint against GDREC and its officers before the
HLURB. The first basically pertains to non-performance by the buyer of her obligations to Klaver,
whereas the second deals with non-performance by the seller of its own obligations to the buyer, such
that Klaver properly sued them before different fora.

Accordingly, the second complaint by Klaver against GDREC and its officers for unsound real estate
practices consisting in their unwarranted delay in the delivery of Unit No. 1902-A to him was properly
lodged with the HLURB. Moreover, in Siasoco vs. Narvaja,24 we ruled that it is the HLURB, not the trial
court that has jurisdiction over complaints for specific performance filed against subdivision developers
to compel the latter to execute deeds of absolute sale and to deliver the certificates of titles to buyers.

But the antecedent circumstances to the present petition are in stark contrast to those in the cited
cases of Arranza and Que. Perusal of paragraphs (a), (b), and (c) of Sec. 1, P.D. 1344 abovecited, vis-
à-vis the allegations of the complaint25 for ejectment filed by Manotok Realty, Inc. with the MeTC,
shows clearly that the HLURB has no jurisdiction over the complaint. Note particularly pars. (b) and
(c) as worded, where the HLURB's jurisdiction concerns cases commenced by subdivision lot or
condominium unit buyers. As to par. (a), concerning "unsound real estate practices," it would appear
that the logical complainant would be the buyers and customers against the sellers (subdivision
owners and developers or condominium builders and realtors), and not vice versa.

Petitioner's reliance on Francel Realty Corporation vs. CA, is misplaced. In that case, the complaint for
unlawful detainer was premised on the "failure of the buyer on installment basis of real property to
pay based on the right to stop paying monthly amortizations under P.D. 957."26 That involves, "a
determinative question.exclusively cognizable by the HLURB," i.e., a determination of the rights and
obligations of parties in a sale of real estate under P.D. 957, not P.D. 1344. Private respondent
therein, Francisco Sycip, in fact, filed earlier a complaint against Francel Realty Corp. for "unsound
real estate business practices" with the HLURB. Thus, per Mendoza, J., "Petitioner's cause of action
against private respondent [Sycip] should instead be filed as a counterclaim in HLURB Case No. REM-
07-9004-80 in accordance with Rule 6, S.6 of the Rules of Court."27 That situation does not obtain in
the present case.

Petitioner Amparo Roxas' attempt to bring the case within HLURB's jurisdiction, by belatedly asserting
that the matter involved is the determination of whether or not the terms and conditions of the
contract to sell between the parties have been violated, would contravene settled jural principles.

First, the jurisdiction of a court over the subject matter is determined by the allegations of the
complaint and cannot be made to depend upon the defenses set up in the answer or pleadings filed by
the defendant.28 Since there is no dispute that the allegations of the complaint filed below by Manotok
Realty, Inc., sufficiently describe unlawful detainer, the MeTC of Marikina properly acquired jurisdiction
over the subject matter thereof.

Second, the cause of action for unlawful detainer between the present parties springs from the failure
of petitioner to vacate the premises upon lawful demand of the owner, the private respondent. For
petitioner's possession of the land in question is allegedly by mere tolerance or permission. Our ruling
in Banco de Oro Savings and Mortgage Bank vs. Court of Appeals29 is demonstrably applicable:

A person who occupies the land of another at the latter's tolerance or permission, without any contract
between them, is necessarily bound by an implied promise that he will vacate upon demand, failing
which, a summary action for ejectment is the proper remedy against him.

WHEREFORE, the decision of the Court of Appeals in CA-G.R. SP No. 44650 is AFFIRMED. Costs
against petitioner.

SO ORDERED.