UNLAWFUL DETAINER CASES:

FIRST DIVISION

SPOUSES BONIFACIO R. VALDEZ, G.R. No. 132424

JR. and VENIDA M. VALDEZ,
Petitioners, Present:
PANGANIBAN, C.J.
Chairperson,
YNARES-SANTIAGO,
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.

HON. COURT OF APPEALS, SPOUSES Promulgated:

GABRIEL FABELLA and FRANCISCA
FABELLA,
Respondents. May 2, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

This petition for review under Rule 45 of the Rules of Court, filed
by petitioners spouses Bonifacio R. Valdez, Jr. and Venida M. Valdez,
seeks to nullify and set aside the 22 April 1997 decision [1] and 30
January 1998 resolution of the Court of Appeals in CA-G.R. SP No.
43492, which reversed the judgment, dated 8 January 1997, of the
Regional Trial Court of Antipolo, Rizal, Branch 74, in Civil Case No.
3607, which, in turn, affirmed in toto the decision rendered by the
Municipal Trial Court of Antipolo, Rizal, Branch II, in Civil Case No.
2547.
This case originated from a complaint for unlawful detainer
filed by petitioners Bonifacio and Venida Valdez against private
respondents Gabriel and Francisca Fabellabefore the Municipal Trial
Court of Antipolo, Rizal. The complaint alleges these material facts:

2. That plaintiffs are the registered owner[s] of a

piece of residential lot denominated as Lot [N]o. 3 Blk 19
located at Carolina Executive Village, Brgy. Sta. Cruz,
Antipolo, Rizal which [they] acquired from Carolina
Realty, Inc. Sometime [i]n November 1992 by virtue of
Sales Contract, xerox copy of which is hereto attached
marked as Annex A and the xerox copy of the Torrens
Certificate of Title in her name marked as Annex B;

3. That defendants, without any color of title

whatsoever occupie[d] the said lot by building their
house in the said lot thereby depriving the herein
plaintiffs rightful possession thereof;

4. That for several times, plaintiffs orally asked the

herein defendants to peacefully surrender the premises
to them, but the latter stubbornly refused to vacate the
lot they unlawfully occupied;

5. That despite plaintiffs referral of the matter to the

Barangay, defendants still refused to heed the plea of
the former to surrender the lot peacefully;

6. That because of the unfounded refusal of the

herein defendants to settle the case amicably, the
Barangay Captain was forced to issue the necessary
Certification to File Action in favor of the herein plaintiffs
in order that the necessary cause of action be taken
before the proper court, xerox copy of which is hereto
attached marked as Annex C;

7. That by reason of the deliberate, malicious and

unfounded refusal of the defendants to
vacate/surrender the premises in question, the herein
plaintiffs were constrained to engage the professional
services of counsel thus incurring expenses amounting to
TEN THOUSAND PESOS (P10,000.00) representing
acceptance fee and additional ONE THOUSAND PESOS
(P1,000.00) per appearance, who on July 12, 1994 sent a
formal demand was likewise ignored, (sic) copy of which
is hereto attached as Annex D;

8. That likewise by virtue of the adamant refusal of

the defendants to vacate/surrender the said premises in
question, plaintiff[s] suffered serious anxiety, sleepless
nights, mental torture and moral erosion; x x x[2]
In their answer, private respondents contended that the complaint
failed to state that petitioners had prior physical possession of the
property or that they were the lessors of the former. In the alternative,
private respondents claimed ownership over the land on the ground
that they had been in open, continuous, and adverse possession
thereof for more than thirty years, as attested by an ocular inspection
report from the Department of Environment and Natural
Resources. They also stressed that the complaint failed to comply
with Supreme Court Circular No. 28-91 regarding affidavits against
non-forum shopping.

The Municipal Trial Court (MTC) rendered a decision in favor of the

petitioners, ordering private respondents to vacate the property and
to pay rent for the use and occupation of the same plus attorneys
fees.

Private respondents appealed the MTCs decision to the Regional

Trial Court (RTC). The RTC, in a decision dated 8 January
1997, affirmed in toto the decision of the MTC.

Undeterred, the private respondents filed a petition for review

with the Court of Appeals on 10 March 1997 questioning the decision
of the RTC.

In a decision dated 22 April 1997, the Court of Appeals reversed and

set aside the decision of the RTC. It held that petitioners failed to
make a case for unlawful detainer because they failed to show that
they had given the private respondents the right to occupy the
premises or that they had tolerated private respondents possession
of the same, which is a requirement in unlawful detainer cases. It
added that the allegations in petitioners complaint lack jurisdictional
elements for forcible entry which requires an allegation of prior
material possession. The Court of Appeals ratiocinated thus:

An examination of the complaint reveals that key

jurisdictional allegations that will support an action for
ejectment are conspicuously lacking. In particular, an
allegation of prior material possession is mandatory in
forcible entry, xxx and the complaint is deficient in this
respect. On the other hand, neither does there appear to
be a case of unlawful detainer, since the private
respondents failed to show that they had given the
petitioners the right to occupy the premises, which right
has now [been] extinguished.

xxx
 In light of the foregoing, the conclusion is inevitable that
the Municipal Trial Court before which the action for
ejectment was filed had no jurisdiction over the
case. Consequently, the dismissal thereof is in order.

WHEREFORE, the Petition is hereby GIVEN DUE COURSE,

and GRANTED. The decision dated 08 January
1997 rendered by the respondent court is hereby
REVERSED and SET ASIDE,and judgment is hereby
rendered DISMISSING the complaint in Civil Case No.
2547 of the Municipal Trial Court of Antipolo, Rizal for lack
of jurisdiction.[3]

Petitioners filed a motion for reconsideration which was denied in a

resolution dated 30 January 1998.[4]
Hence, the instant petition.
Petitioners submit the following issues for the Courts
consideration[5]:

A. WHETHER OR NOT THE ALLEGATIONS OF THE

COMPLAINT CLEARLY MADE OUT A CASE FOR UNLAWFUL
DETAINER.

B. WHETHER OR NOT BASED ON THE ALLEGATION(S)

OF THE COMPLAINT, THE MUNICIPAL TRIAL COURT OF
ANTIPOLO, RIZAL, CLEARLY HAS ORIGINAL JURISDICTION
OVER THE INSTANT COMPLAINT FILED BEFORE IT.

Since the two issues are closely intertwined, they shall be discussed
together.

In the main, petitioners claim that the averments of their complaint

make out a case for unlawful detainer having alleged that private
respondents unlawfully withheld from them the possession of the
property in question, which allegation is sufficient to establish a case
for unlawful detainer. They further contend that the summary action
for ejectment is the proper remedy available to the owner if another
occupies the land at the formers tolerance or permission without any
contract between the two as the latter is bound by an implied
promise to vacate the land upon demand by the owner.

The petition is not meritorious.

Under existing law and jurisprudence, there are three kinds of actions
available to recover possession of real property:
(a) accion interdictal; (b) accion publiciana; and
(c) accionreivindicatoria.[6]

Accion interdictal comprises two distinct causes of action, namely,

forcible entry (detentacion) and unlawful detainer (desahuico).[7] In
forcible entry, one is deprived of physical possession of real property
by means of force, intimidation, strategy, threats, or stealth whereas
in unlawful detainer, one illegally withholds possession after the
expiration or termination of his right to hold possession under any
contract, express or implied.[8] The two are distinguished from each
other in that in forcible entry, the possession of the defendant is
illegal from the beginning, and that the issue is which party has
prior de facto possession while in unlawful detainer, possession of the
defendant is originally legal but became illegal due to the expiration
or termination of the right to possess.[9]

The jurisdiction of these two actions, which are summary in nature,

lies in the proper municipal trial court or metropolitan trial
court.[10] Both actions must be brought within one year from the date
of actual entry on the land, in case of forcible entry, and from the
date of last demand, in case of unlawful detainer.[11] The issue in said
cases is the right to physical possession.

Accion publiciana is the plenary action to recover the right of

possession which should be brought in the proper regional trial court
when dispossession has lasted for more than one year.[12] It is an
ordinary civil proceeding to determine the better right of possession
of realty independently of title.[13] In other words, if at the time of the
filing of the complaint more than one year had elapsed since
defendant had turned plaintiff out of possession or defendants
possession had become illegal, the action will be, not one of the
forcible entry or illegal detainer, but an accion publiciana. On the
other hand, accion reivindicatoria is an action to recover ownership
also brought in the proper regional trial court in an ordinary civil
proceeding.[14]

To justify an action for unlawful detainer, it is essential that the

plaintiffs supposed acts of tolerance must have been present right
from the start of the possession which is later sought to be
recovered.[15] Otherwise, if the possession was unlawful from the start,
an action for unlawful detainer would be an improper remedy.[16] As
explained in Sarona v. Villegas[17]:

But even where possession preceding the suit is by

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

xxxx

A close assessment of the law and the concept of

the word tolerance confirms our view heretofore
expressed that such tolerance must be present right from
the start of possession sought to be recovered, to
categorize a cause of action as one of unlawful detainer
- not of forcible entry. Indeed, to hold otherwise would
espouse a dangerous doctrine. And for two
reasons: First.Forcible entry into the land is an open
challenge to the right of the possessor. Violation of that
right authorizes the speedy redress in the inferior court -
provided for in the rules. If one year from the forcible
entry is allowed to lapse before suit is filed, then the
remedy ceases to be speedy; and the possessor is
deemed to have waived his right to seek relief in the
inferior court. Second, if a forcible entry action in the
inferior court is allowed after the lapse of a number of
years, then the result may well be that no action of
forcible entry can really prescribe. No matter how long
such defendant is in physical possession, plaintiff will
merely make a demand, bring suit in the inferior court
upon a plea of tolerance to prevent prescription to set in
- and summarily throw him out of the land. Such a
conclusion is unreasonable. Especially if we bear in mind
the postulates that proceedings of forcible entry and
unlawful detainer are summary in nature, and that the
one year time-bar to suit is but in pursuance of the
summary nature of the action.[18] (Underlining supplied)

It is the nature of defendants entry into the land which

determines the cause of action, whether it is forcible entry or
unlawful detainer. If the entry is illegal, then the action which may be
filed against the intruder is forcible entry. If, however, the entry is
legal but the possession thereafter becomes illegal, the case is
unlawful detainer.
 Indeed, to vest the court jurisdiction to effect the ejectment of
an occupant, it is necessary that the complaint should embody such
a statement of facts as brings the party clearly within the class of
cases for which the statutes provide a remedy, as these proceedings
are summary in nature.[19] The complaint must show enough on its
face the court jurisdiction without resort to parol testimony.[20]

The jurisdictional facts must appear on the face of the

complaint. When the complaint fails to aver facts constitutive of
forcible entry or unlawful detainer, as where it does not state how
entry was affected or how and when dispossession started, the
remedy should either be an accion publiciana or
an accion reivindicatoria in the proper regional trial court.[21] Thus,
in Go, Jr. v. Court of Appeals,[22] petitioners filed an unlawful detainer
case against respondent alleging that they were the owners of the
parcel of land through intestate succession which was occupied by
respondent by mere tolerance of petitioners as well as their
deceased mother. Resolving the issue on whether or not petitioners
case for unlawful detainer will prosper, the court ruled[23]:

Petitioners alleged in their complaint that they inherited

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

It is settled that one whose stay is merely tolerated

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

The evidence revealed that the possession of

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

And in the case of Ten Forty Realty and Development Corp. v.

Cruz,[24]petitioners complaint for unlawful detainer merely contained
the bare allegations that (1) respondent immediately occupied the
subject property after its sale to her, an action merely tolerated by
petitioner; and (2) her allegedly illegal occupation of the premises
was by mere tolerance. The court, in finding that the alleged
tolerance did not justify the action for unlawful detainer, held:

To justify an action for unlawful detainer, the permission or

tolerance must have been present at the beginning of
the possession. x x x

xxxx

In this case, the Complaint and the other pleadings

do not recite any averment of fact that would
substantiate the claim of petitioner that it permitted or
tolerated the occupation of the property by Respondent
Cruz. The complaint contains only bare allegations that 1)
respondent immediately occupied the subject property
after its sale to her, an action merely tolerated by
petitioner; and 2) her allegedly illegal occupation of the
premises was by mere tolerance.

These allegations contradict, rather than support,

petitioners theory that its cause of action is for unlawful
detainer. First, these arguments advance the view that
respondents occupation of the property was unlawful at
its inception. Second, they counter the essential
requirement in unlawful detainer cases that petitioners
supposed act of sufferance or tolerance must be present
right from the start of a possession that is later sought to
be recovered.[25]

In the instant case, the allegations in the complaint do not

contain any averment of fact that would substantiate petitioners
claim that they permitted or tolerated the occupation of the
property by respondents. The complaint contains only bare
allegations that respondents without any color of title whatsoever
occupies the land in question by building their house in the said land
thereby depriving petitioners the possession thereof. Nothing has
been said on how respondents entry was effected or how and when
dispossession started. Admittedly, no express contract existed
between the parties. This failure of petitioners to allege the key
jurisdictional facts constitutive of unlawful detainer is fatal.[26] Since
the complaint did not satisfy the jurisdictional requirement of a valid
cause for unlawful detainer, the municipal trial court had no
jurisdiction over the case.[27]It is in this light that this Court finds that
the Court of Appeals correctly found that the municipal trial court
had no jurisdiction over the complaint.

WHEREFORE, the petition is DENIED and the judgment of the

Court of Appeals dismissing the complaint in Civil Case No. 2547 of
the MTC Antipolo, Rizal for lack of jurisdiction is hereby AFFIRMED.

No pronouncement as to costs.
SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

THIRD DIVISION

G.R. No. 196529 July 01, 2013

WILLIAM T. GO, PETITIONER,

vs.
ALBERTO T. LOOYUKO, SUBSTITUTED BY HIS LEGAL HEIRS TERESITA C.
LOOYUKO, ALBERTO LOOYUKO, JR., ABRAHAM LOOYUKO AND
STEPHANIE LOOYUKO (MINORS, REPRESENTED BY THEIR MOTHER
TERESITA LOOYUKO), ALVIN, AMOS, AARON, DAVID, SOLOMON AND
NOAH, ALL SURNAMED PADECIO, RESPONDENTS.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of

Court assailing the October 29, 2009 Decision 1 and the March 30,
2011 Resolution of the Court of Appeals (CA), in CA-G.R. SP No.
84844, which set aside the March 29, 2004 Decision2 of the Regional
Trial Court, Branch 88, Quezon City (QC RTC), and reinstated the May
20, 2000 Decision3 of the Metropolitan Trial Court, Branch 35, Quezon
City (MeTC) in an action for unlawful detainer.

The Facts:

Respondent Alberto T. Looyuko (Looyuko) and Jimmy Go, brother of

petitioner William Go (William) were partners in a business called
Noah’s Ark Group of Companies (Noah’s Ark). Their partnership was
embodied in a written agreement, dated February 9, 1982.

Sometime in 1986, William was appointed Chief of Staff of Noah’s Ark

Sugar Refinery. He was allowed by Looyuko to occupy the
townhouse in Gilmore Townhomes, Granada Street, Quezon City. On
October 10, 1986, another agreement was entered into by Looyuko
and Jimmy in furtherance of their business partnership.

In a letter, dated October 28, 1998, Looyuko demanded that William

vacate the townhouse. Jimmy filed an adverse claim over the
property, annotating his interest on the title as co-owner. He claimed
that the townhouse was bought using funds from Noah’s Ark and,
hence, part of the property of the partnership. William refused to
vacate the property relying on the strength of his brother’s adverse
claim.

On December 2, 1998, Looyuko filed a complaint for unlawful

detainer against William before the MeTC. He adduced as evidence
the Transfer Certificate of Title (TCT) No. 108763 issued in his name as
well as the aforementioned demand letter. He alleged that William’s
occupation was merely by tolerance, on the understanding that he
should vacate the property upon demand. On the other hand,
William presented the partnership agreements, the contract to sell of
the subject property to Noah’s Ark, and the cash voucher
evidencing payment for the acquisition of the property.

On May 20, 2000, the MeTC rendered a decision in favor of Looyuko

stating that he had the right to the possession of the said townhouse
as its registered owner. William then appealed to the QC RTC.
Meanwhile, Looyuko filed a motion for execution pending appeal on
the ground that the supersedeas bond was insufficient.

On his part, William filed a motion to suspend proceedings in the

unlawful detainer case because a complaint for specific
performance against Looyuko had been filed by Jimmy before
Branch 167 of the RTC of Pasig City (Pasig RTC), docketed as Civil
Case No. 67921, to establish his alleged right as a co-owner. In March
2001, the QC RTC ruled in favor of William and deferred the
proceedings in the unlawful detainer case to await the outcome of
the civil case before the Pasig RTC. The QC RTC also denied
Looyuko’s two motions for execution.

The CA, however, reversed the QC RTC orders and directed the
immediate execution of the MTC Decision.

On March 29, 2004, the QC RTC issued a decision in the action for
unlawful detainer, reversing the findings of the MTC and ruling in
favor of William. It held that the property was purchased in the name
of Noah’s Ark and that Looyuko held the title for purpose of
expediency only. The QC RTC also gave credence to the affidavit
and authorization executed by Jimmy, finding them to be
unrebutted. The said documents stated that William’s authority to
occupy the disputed property was part of his privilege as Chief of
Staff of Noah’s Ark.

Looyuko filed a Petition for Review under Rule 42 of the Rules of Court
before the CA. In its assailed October 29, 2009 Decision, the CA ruled
in favor of Looyuko and held that the issue of possession could be
resolved without ruling on the claim of ownership. The CA stated that
the TCT presented by Looyuko unequivocally showed that he owned
the property and, as a consequence of ownership, he was entitled
to its possession. It ruled that the validity of Looyuko’s title could be
assailed through a direct proceeding but not in an action for
ejectment. William filed a motion for reconsideration, which was
subsequently denied by the CA in its assailed March 30, 2011
Resolution.

Hence, this petition with the following

ASSIGNMENT OF ERRORS:

I.

THE HONORABLE COURT ERRED IN GRANTING THE INSTANT

PETITION.

II.

THE HONORABLE COURT ERRED IN HOLDING THAT THE

EJECTMENT CASE CAN PROCEED WITHOUT RESOLVING
THE ISSUE OF OWNERSHIP RAISED BY PETITIONER.4
Petitioner William, in his pleadings, argues that the QC RTC correctly
appreciated the evidence he presented to prove Jimmy’s
co-ownership, reiterating that his evidence shows that the actual
owner is not respondent Looyuko but Noah’s Ark, and that he was
allowed to use the property as part of his benefits and privileges as its
Chief of Staff. He further argues that the CA erred in holding that the
ejectment case could proceed without resolving the issue of
ownership, and posits that the issue of ownership was properly raised
and the MeTC, in fact, addressed such issue. He contends that he is
not attacking the validity of the certificate of title and that a
certificate of title does not foreclose the fact that the same may be
under co-ownership not mentioned in the certificate. He also argues
that respondent Looyuko failed to prove that he had prior physical
possession of the property before he was unlawfully deprived of it,
which is fundamental in an ejectment case.

The Court’s Ruling

The petition is bereft of merit.

It is apparent from the arguments of William that he is calling for the

Court to reevaluate the evidence presented by the parties. A
petition for review under Rule 45 of the Rules of Court should cover
only questions of law. Questions of fact are not reviewable by this
Court. The issue to be resolved must be limited to determining what
the law is on a certain set of facts. Once the issue invites a review of
the evidence, the question posed is one of fact.5 William is, therefore,
raising questions of facts beyond the ambit of the Court’s review.

Even if the Court were to reevaluate the evidence presented,

considering the divergent positions of the courts below, the petition
would still fail.

This petition involves an action for unlawful detainer, which 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 an unlawful detainer case is
originally legal but becomes illegal due to the expiration or
termination of the right to possess.6 The sole issue for resolution in an
unlawful detainer case is physical or material possession of the
property involved, independent of any claim of ownership by any of
the parties.7 When the defendant, however, 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.8

The Court agrees with William that the issue of ownership should be
ruled upon considering that such has been raised and it appears
that it is inextricably linked to the question of possession. Its resolution
will then boil down to which of the parties’ respective evidence
deserves more weight.9 Even granting, however, that all the pieces
of documentary evidence presented by William are valid, they will
fail to bolster his case.1âwphi1

The Court has consistently upheld the registered owners’ superior

right to possess the property in unlawful detainer cases. 10 It is an
age-old rule that the person who has a Torrens Title over a land is
entitled to its possession.11 It has repeatedly been emphasized that
when the property is registered under the Torrens system, the
registered owner’s title to the property is presumed legal and cannot
be collaterally attacked, especially in a mere action for unlawful
detainer.12 It has even been held that it does not even matter if the
party’s title to the property is questionable.13

The TCT of respondent Looyuko is, therefore, evidence of

indefeasible title over the property and, as its holder, he is entitled to
its possession as a matter of right. Thus, the partnership agreements
and other documentary evidence presented by petitioner William
are not, by themselves, enough to offset Looyuko’s right as registered
owner. It must be underscored, however, that this adjudication on
ownership is merely provisional and would not bar or prejudice the
action between Jimmy and Looyuko involving their claimed shares in
the title over the property.

Lastly, William is mistaken in his argument that respondent Looyuko’s

prior physical possession is necessary for his action for unlawful
detainer to prosper. Section 1 of Rule 70 of the Rules of Court lays
down the requirements for filing a complaint for unlawful detainer, to
wit:

Sec. 1. Who may institute proceedings, and when. – Subject to the

provision of the next succeeding section, a person deprived of the
possession of any land or building by force, intimidation, threat,
strategy, or stealth, or a lessor, vendor, vendee, or other person
against whom the possession of any land or building is unlawfully
withheld after the expiration or termination of the right to hold
possession, by virtue of any contract, express or implied, or the legal
representatives or assigns of any such lessor, vendor, vendee, or
other person, may, at any time within one (1) year after such
unlawful deprivation or withholding of possession, bring an action in
the proper Municipal Trial Court against the person or persons
unlawfully withholding or depriving of possession, or any person or
persons claiming under them, for the restitution of such possession,
together with damages and costs.

Nowhere does it appear in the above-cited rule that, in an action for

unlawful detainer, the plaintiff be in prior physical possession of the
property. Thus, it has been held that prior physical possession by the
plaintiff is not an indispensable requirement in an unlawful detainer
case brought by a vendee or other person against whom the
possession of any land is unlawfully withheld after the expiration or
termination of a right to hold possession.14

In fine, this Court finds no cogent reason to reverse and set aside the
findings and conclusions of the CA.

WHEREFORE, the petition is DENIED, without prejudice to the

outcome of Civil Case No. 67921 before Branch 167 of the RTC of
Pasig City.

SO ORDERED.

THIRD DIVISION

LOURDES DELA CRUZ, G.R. No. 139442

Petitioner,
Present:

QUISUMBING, J., Chairperson,

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

HON. COURT OF APPEALS Promulgated:

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

DECISION

VELASCO, JR., J.:

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

Holy Bible, Matthew 25:29

The Case

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

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

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

On January 14, 1997, petitioner was sent a written demand to

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

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

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

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

The Ruling of the Manila MeTC

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

WHEREFORE, judgment is hereby rendered in favor of

the plaintiff as follows:

1. Ordering the defendant and all persons claiming

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

2. Ordering the defendant to pay the plaintiff the

amount of P360.00 a month from December 1996 to
November 1997; P432.00 a month from December
1997 to November 1998, plus 20% for each
subsequent year until the premises shall have been
vacated and turned over to the plaintiff;
 3. Ordering the defendant to pay the plaintiff the
amount of P10,000.00 as attorneys fees; and, the
costs of the suit.

SO ORDERED.[3]

The Ruling of the Regional Trial Court

Unconvinced, petitioner Dela Cruz appealed the Decision of

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

The Ruling of the Court of Appeals

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

Petitioner tried to have the CA reconsider its Decision but was

rebutted in its July 16, 1999 Resolution.

Unyielding to the CA Decision and the denial of her request for

reconsideration, petitioner Dela Cruz now seeks legal remedy
through the instant Petition for Review on Certiorari before the Court.

The Issues

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

THE HON. COURT OF APPEALS, WITH DUE RESPECT,

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

THE HON. COURT OF APPEALS, WITH DUE RESPECT,

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

The Courts Ruling

Discussion on Rule 45

Before we dwell on the principal issues, a few procedural matters

must first be resolved.

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

Secondly, the petition unnecessarily impleaded the CA in violation of

Section 4, Rule 45. We will let this breach pass only because there is a
need to entertain the petition due to the conflicting rulings between
the lower courts; however, a repetition may result to sanctions.

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

However, the petition is bereft of merit.

On the Issue of Jurisdiction

Jurisdiction is the power or capacity given by the law to a court

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

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

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

Section 33. Jurisdiction of Metropolitan Trial Courts,

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

(2) Exclusive original jurisdiction over cases of forcible

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

Thus exclusive, original jurisdiction over ejectment proceedings

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

The other kind of ejectment proceeding is unlawful detainer

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

A person who wants to recover physical possession of his real

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

On the other hand, Section 19, of Chapter II of B.P. No. 129 on

Regional Trial Courts provides:

Section 19. Jurisdiction in civil cases.Regional Trial

Courts shall exercise exclusive original jurisdiction:

xxxx

(2) In all civil actions which involve the title to, or

possession of, real property, or any interest therein,
except actions for forcible entry into and unlawful
detainer of lands or buildings, original jurisdiction
over which is conferred upon Metropolitan Trial
Courts, Municipal Trial Courts and Municipal Circuit
Trial Courts.
 Two (2) kinds of action to recover possession of real property
which fall under the jurisdiction of the RTC are: (1) the plenary action
for the recovery of the real right of possession (accion publiciana)
when the dispossession has lasted for more than one year or when
the action was filed more than one (1) year from date of the last
demand received by the lessee or defendant; and (2) an action for
the recovery of ownership (accion reivindicatoria) which includes
the recovery of possession.

These actions are governed by the regular rules of procedure

and adjudication takes a longer period than the summary ejectment
suit.

To determine whether a complaint for recovery of possession

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

This general rule however admits exceptions. In Ignacio v. CFI

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

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

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

Let us refer to the allegations of the complaint filed in the

Manila MeTC in Civil Case No. 98-89174, which we quote verbatim:

3. That plaintiff is the absolute and registered owner

of a parcel of land located at No. 1332, Lacson
Street, Sampaloc, Manila now being occupied by
defendant;
 4. That plaintiff purchased the above-said parcel of
land together with its improvements from the legal
heirs of the late EMERLINDA DIMAYUGA REYES on
November 26, 1996, under and by virtue of a Deed
of Absolute Sale x x x;
5. That pursuant to the said deed of sale, the title to
the land and all its improvements was transferred in
plaintiffs name as evidenced by Transfer Certificate
of Title No. 233273 issued by the Register of Deeds of
Manila on April 22, 1997 x x x;

6. That prior to said sale, the previous owners,

represented by Mr. Lino Reyes, husband of the said
deceased Emerlinda D. Reyes and the administrator
of her estate, was in possession and control of the
property subject of this complaint;
7. That also prior to said sale, defendant, without the
knowledge and consent of Mr. Lino Reyes,
surreptitiously and by means of stealth and strategy
entered, used and occupied the said premises thus
depriving the former of rightful possession thereof;
8. That on February 21, 1994, Mr. Lino Reyes, through
Atty. Alejo Sedico, his lawyer, furnished the
defendants a letter formally demanding that
defendant vacate the premises x x x;

9. That, however, defendant failed and refused to

vacate despite just and legal demand by Mr. Lino
Reyes;

10. That after the sale to plaintiff of said premises,

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

11. That defendant failed and refused and still fails

and refuses to vacate the premises without legal
cause or justifiable reason whatsoever;[11]

The answer of petitioner averred:

4. The Court has no jurisdiction over the case, having

been filed by plaintiff more than the reglementary
one year period to commence forcible entry case,
which is reckoned from the date of the alleged
unlawful entry of defendant by the use of stealth
and strategy into the premises;

5. For more than four decades now, defendant has

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

6. In this circumstances [sic], defendant enjoys the

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

7. Throughout the years of her tenancy, defendant

has been updated in her rental payment until the
collector of the original owner-lessor no longer came
around as she has done theretofore;

7.1. As a result, she was compelled to file a

petition for consignation of rent before the
Metropolitan Trial Court of Manila;

8. A bona fide tenant within the ambit if [sic] P.D. 20

and the subsequent rental control status, including
B.P. Blg. 25, under its terms, cannot be ousted on a
plea of expiration of her monthly lease;

9. Her lease constitutes a legal encumbrance upon

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

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

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

Undeniably, the aforequoted allegations of the complaint are

vague and iffy in revealing the nature of the action for ejectment.

The allegations in the complaint show that prior to the sale by

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

As previously discussed, the settled rule is jurisdiction is based

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

Based on the complaint and the answer, it is apparent that the

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

Thus, an ejectment complaint based on possession by

tolerance of the owner, like the Tan Te complaint, is a specie of
unlawful detainer cases.

As early as 1913, case law introduced the concept of

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

Where despite the lessees failure to pay rent after

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

In allowing several years to pass without requiring the

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

From the foregoing jurisprudence, it is unequivocal that

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

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

The case of Barnes v. Padilla[17] elucidates the rationale behind

the exercise by this Court of the power to relax, or even suspend, the
application of the rules of procedure:

Let it be emphasized that the rules of procedure

should be viewed as mere tools designed to
facilitate the attainment of justice. Their strict and
rigid application, which would result in technicalities
that tend to frustrate rather than promote substantial
justice, must always be eschewed. Even the Rules of
Court reflect this principle. The power to suspend or
even disregard rules can be so pervasive and
 compelling as to alter even that which this Court
itself has already declared to be final x x x.

The emerging trend in the rulings of this Court is to

afford every party litigant the amplest opportunity
for the proper and just determination of his cause,
free from the constraints of technicalities. Time and
again, this Court has consistently held that rules must
not be applied rigidly so as not to override
substantial justice.[18]

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

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

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

At the heart of every ejectment suit is the issue of who is

entitled to physical possession of the lot or possession de facto.

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

1. Petitioner admitted in her Answer that she was a rent-paying

tenant of the Reyeses, predecessors-in-interest of respondent Tan
Te. As such, she recognized the ownership of the lot by respondent,
which includes the right of possession.

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

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

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

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

Even granting for the sake of argument that we entertain the

issue, we rule that the intended expropriation of respondents lot (TCT
No. 233273) by the city government of Manila will not affect the
resolution of this petition. For one thing, the issue can be raised by
petitioner in the appropriate legal proceeding. Secondly, the
intended expropriation might not even be implemented since it is
clear from the ordinance that the City Mayor will still locate available
funds for project, meaning the said expense is not a regular item in
the budget.

WHEREFORE, this petition is DENIED for lack of merit. The April 30,
1999 Decision of the Court of Appeals reinstating the April 3, 1998
MeTC Decision in Civil Case No. 156730-CV and the July 16, 1999
Resolution in CA-G.R. SP No. 49097 are hereby AFFIRMED IN TOTO.

No costs.

SO ORDERED.

PRESBITERO J. VELASCO, JR.

Associate Justice

SECOND DIVISION

MR. SERGIO VILLADAR, JR. & G.R. No. 166458

MRS. CARLOTA A. VILLADAR,
Petitioners, Present:

QUISUMBING, J., Chairperson,

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

ELDON ZABALA and SAMUEL Promulgated:

ZABALA, SR.,
Respondents. February 14, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

QUISUMBING, J.:

Petitioners Mr. and Mrs. Sergio Villadar, Jr. appeal the

Decision[1] dated November 28, 2003 of the Court of Appeals in CA-G.R.
SP No. 71439 and the Resolution[2]dated December 1, 2004, denying the
motion for reconsideration. The Court of Appeals had reversed the
Decision[3] dated April 15, 2002 of the Regional Trial Court (RTC), Branch
58, Cebu City in Civil Case No. CEB-27050, and ordered petitioners to
surrender possession of portions of Lot Nos. 5095-A and 5095-B to
respondents Eldon Zabala and Samuel Zabala, Sr.

The antecedent facts are as follows:

Respondent Samuel Zabala, Sr. was the owner of Lot No. 5095 covered
by Transfer Certificate of Title (TCT) No. 78269,[4] located at San
Nicolas, Cebu City, and comprising 438 square meters. On January 13, 1995,
Samuel, Sr., together with his wife Maria Luz Zabala, sold one-half of Lot No.
5095 to his mother-in-law Estelita Villadar for P75,000 on installment
basis. Except for a note of partial payment of P6,500,[5] no contract was
executed nor was there an agreement on when Estelita shall pay all
installments.

On February 28, 1997, Samuel, Sr. sold the other half of Lot No. 5095
to respondent Eldon Zabala. Lot No. 5095 was subdivided and upon
cancellation of TCT No. 78269, Lot No. 5095-A under TCT No.
145182[6] was registered in Eldons name. Lot No. 5095-B under TCT No.
145183[7] was registered in Samuel, Sr.s name.

On April 20, 1997, Estelita made an additional payment

of P22,500,[8] leaving a balance of only P36,500 after deducting all previous
payments. Later, however, the spouses Samuel, Sr. and Maria Luz decided
to cancel the sale after a confrontation with Estelita at the Office of the
Barangay Captain of Barangay Basak, San Nicolas, CebuCity.

Samuel, Sr. together with his son Samuel Zabala, Jr. also filed a
complaint for ejectment with the Office of the Lupong Tagapamayapa of
Barangay Basak against Estelitas son, petitioner Sergio Villadar, Jr., who
occupied one of the houses that stood on the property. On June 14, 1998,
said office issued to Samuel, Sr. a certificate to file action after petitioner
Sergio Villadar, Jr. failed to appear for conciliation.

On October 27, 1998, Eldon and Samuel, Sr. filed a Complaint [9] for
unlawful detainer against petitioners Sergio Villadar, Jr. and his wife Carlota
Alimurung before the Municipal Trial Court in Cities (MTCC), Branch
8, Cebu City. In their complaint, they alleged that they own Lot Nos. 5095-A
and 5095-B, and that in the latter part of 1986, they allowed petitioners to
stay in a vacant store on the lot out of pity, subject to the condition that
petitioners would leave once respondents need the premises for the use of
their own families. In January 1998, they demanded that petitioners vacate
the store because they needed the store for the use of their children but
petitioners refused to leave.

In their Answer,[10] petitioners claimed that one-half of Lot No. 5095 was
sold on installment to Sergio Villadar, Jr.s mother, Estelita Villadar, on January
13, 1995 for P75,000; that on January 13, 1995, Estelita made a downpayment
of P6,500 and had an unpaid balance of only P36,500 as of April 20, 1997; that
by virtue of the sale, Estelita became the owner of the premises where their
house stood; that they derive their title from Estelita who promised and agreed
to give them one-half of one-half of Lot No. 5095 after she has fully paid the
price and obtained a separate title in her name; that they constructed a
residential house, which now straddles Lot Nos. 5095-A and 5095-B because
of respondents wrongful subdivision of Lot No. 5095; that Estelita tried to
tender the balance of the purchase price, but Samuel, Sr. unjustifiably refused
to receive the payment; that because of such refusal, Estelita and Sergio
Villadar, Jr. sought the intervention of the Lupon Authority of Barangay Basak,
San Nicolas, Cebu City but no settlement was reached; that assuming that they
and Estelita are adjudged to have an inferior right over one-half of the lot, they
are builders in good faith and they should be allowed to retain the lot until they
are paid or reimbursed the amount of P80,000, which is the value of the house
they built on the premises.

On August 27, 2001, the MTCC dismissed the complaint.[11] The

MTCC ruled that petitioners could not be deprived of their possession of the
disputed portion because one-half of Lot No. 5095 had already been sold in
1995 to Estelita Villadar, who was the source of petitioners right to possess
it. The dispositive portion of the decision states:
WHEREFORE, upon the premises, judgment is hereby rendered
against [p]laintiffs and this case is DISMISSED; [de]fendants are hereby
granted to recover the costs of this litigation in the sum of P10,000.00
from [p]laintiffs who are hereby directed to pay the same.

SO ORDERED.[12]

Respondents Eldon and Samuel, Sr. appealed to the RTC which

affirmed the MTCCs ruling.
Upon appeal, the Court of Appeals in a Decision dated November 28,
2003 reversed the rulings of the MTCC and RTC. The Court of Appeals
ruled that although there was an oral agreement between Samuel Zabala, Sr.
and Estelita Villadar for the sale of one-half of Lot No. 5095, Samuel Zabala,
Sr. had reserved title to the property in his name until full payment of the
purchase price had been made by Estelita. The pertinent portions of the
Court of Appeals decision state:
xxxx
It is undisputed that there was a verbal agreement between petitioner
Samuel Zabala, Sr. and the respondents for the sale of Lot No. 50[95]-B for
P75,000.00 on January 13, 1995. The sale of Lot No. 5095-B, although not
in writing, had been perfected as the parties had agreed upon the object of
the contract, which was Lot 5095-B, and the price, which was P75,000.00
(Article 1475, Civil Code of the Philippines). Similarly, We sustain the
validity of the oral sale as no written form is really required for the validity
of a contract of sale (Article 1483, Civil Code of the Philippines). But, as
correctly observed by the trial court, the term or manner of payment of the
purchase price had not been agreed upon by the parties in which case
petitioner Samuel Zabala, Jr. should seek the intervention of the court to fix
the period when Estelita vda. De Villadar should pay in full the
consideration of the sale. Where the period has been fixed by the court and
Estelita refused to pay the remaining balance of P36,500.00, that would be
the opportune time for petitioner Samuel Zabala, Sr. to cause the rescission
of the oral contract. As it is, however, petitioner Samuel Zabala, Sr. could
not rescind or cancel the contract on the ground that Estelita failed to pay
the remaining balance of the purchase price because he had no cause for
cancellation or rescission yet in view of fact that no period had been agreed
upon by him and Estelita when the P36,500.00 should be paid. Thus, unless
the contract of sale is rescinded, it remains to be valid.
On a different light, however, We note and We are inclined to
believe, based on the evidence submitted to Us and in determining the
intentions of petitioner Samuel Zabala, Sr. and the respondents spouses,
that the sale, being one on installment basis, petitioner Samuel Zabala, [Sr.]
had reserved title to the property in his name until full payment of the
purchase price had been made by Estelita. This explains why title
of Lot No. 5095-B, specifically TCT No. 145183, was registered in his
name when Lot No. 5095 was divided into two lots and Estelita had not
sought the registration of the lot in her name. Although respondents
occupied the store or house on the common boundary of [Lot Nos.]
50[95]-A and 50[95]-B, their occupation or possession did not constitute
delivery of the land subject of the oral contract of sale so as to have
effectively transferred ownership thereof to Estelita. Therefore, even
assuming that respondents were the ones who constructed the house or
store on Lot No. 50[95]-B, they had no right to construct any structure
thereon because their mother, Estelita, did not own the land until she had
fully paid the consideration of the sale.
As no right was acquired by the respondents better than the right
pertaining to Estelita, the occupancy and possession by the respondents of
the subject land was merely tolerated by the owner, herein
plaintiff-petitioner Samuel Zabala, Sr. Similarly, respondents did not have
the right to possess or occupy that portion of the land belonging to
petitioner Eldon Zabala. Their occupation with respect to that portion was,
likewise, merely tolerated by the owner and, thus, it was the duty of the
respondents to surrender possession thereof upon demand by petitioner
Eldon. From July 23, 1998 then, when a formal demand (Rollo, p. 63) was
made upon the respondents to vacate the premises, the possession of the
respondents had become unlawful and they were subject to ejectment.
Respondents could not claim that they were builders in good faith
of the house. From their allegations in their Answer with Counterclaim
(par. 2.3), respondent Sergio Villadar, Jr. knew and admitted that Lot No.
5095-B was not yet fully paid and a separate title thereto had not yet been
issued in the name of Estelita (Rollo, p. 55) from whom he and his wife
allegedly derived their title. Being builders in bad faith, they cannot, as a
matter of right, recover the value of the house or the improvements
thereon, if any, from the petitioners, much less retain possession of the
premises (Article 449, Civil Code of the Philippines). Respondents have
 no right, whatsoever, except the right to be reimbursed for necessary
expenses which they had incurred for the preservation of both portions of
[Lot] Nos. 50[95]-A and 50[95]-B (Article 452, Civil Code of
the Philippines) occupied by them.
WHEREFORE, in view of the foregoing, the petition
is GIVEN DUE COURSE. The Decision dated April 15, 2002 of the
Regional Trial Court, Branch 58, Cebu City affirming the Decision dated
August 27, 2001 of the Municipal Trial Court in Cities, Branch 8, Cebu City,
is hereby REVERSED and SET ASIDE, and another one entered ordering
defendants-respondents to surrender the physical and material possession of
that portion of Lot No. 50[95]-A and Lot No. 50[95]-B upon which their
house was constructed to petitioners Samuel Zabala, Sr. and Eldon Zabala.

SO ORDERED.[13]

On December 1, 2004, the Court of Appeals likewise denied

petitioners motion for reconsideration. Hence, this petition.

Petitioners raise the following issues in their Memorandum:

I.
WHETHER OR NOT THE HON. COURT OF APPEALS ERRED IN
GIVING DUE COURSE TO RESPONDENTS PETITION FOR
REVIEW AND RENDERING A DECISION THERE[O]N, INSTEAD
OF DISMISSING THE SAME FOR VIOLATION OF SEC. 2(d) OF
RULE 42 OF THE 1997 RULES OF CIVIL PROCEDURE.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OF JURISDICTION, AND MISAPPREHENSION OF FACTS, IN
RULING THAT THERE WAS NO DELIVERY OF POSSESSION TO
ESTELITA VILLADAR OF THE PORTION OF LOT [NO.] 5095 SOLD
TO HER IN PETITIONERS EXH. 1 BY RESPONDENT SAMUEL
ZABALA[,] SR. AND WIFE, WHICH IS THE RECEIPT
DATED JANUARY 13, 1995 OF THE PARTIAL PAYMENT OF
ESTELITA VILLADAR OF ITS CONSIDERATION ADMITTED BY
RESPONDENT SAMUEL ZABALA SR. [SIC]
III.
WHETHER OR NOT THE HON. COURT OF APPEALS ERRED IN
HOLDING THAT ESTELITA VILLADAR DID NOT OWN THE LAND
WHERE HER AND PETITIONERS HOUSES STAND BECAUSE SHE
HAD NOT FULLY PAID THE CONSIDERATION OF THE SALE.
IV.
WHETHER OR NOT THE HON. COURT OF APPEALS HOLDING. . .
THAT PETITIONERS OCCUPANCY OF THE PREMISES
 OF LOT [NO.] 5095 WAS BY MERE TOLERANCE OF THE
RESPONDENTS [WAS RIGHT].
V.
WHETHER OR NOT PETITIONERS ARE EJECTIBLE [SIC] FROM
THE PREMISES OF LOT [NO.] 5095.
VI.
ASSUMING THAT THEY ARE, WHETHER OR NOT THE HON.
COURT OF APPEALS HOLDING [WAS] RIGHT THAT PETITIONERS
WERE NOT BUILDERS IN GOOD FAITH OF THEIR RESIDENTIAL
HOUSE IN THE PREMISES AT A COST OF P80,000.00 (P.3. CAS
DECISION ANNEX A, PETITION); HENCE NOT REIMBURSABLE
FOR SAID EXPENSES THEREOF, AND HAVE NO RIGHT OF
RETENTION.
VII.
WHETHER THE COURT A QUO WAS RIGHT OR NOT IN NOT
DISMISSING OUTRIGHTLY THE [RESPONDENTS] COMPLAINT,
FOR NON-COMPLIANCE WITH THE KATARUNGANG
PAMBARANGAY LAW AND THIS HON. COURTS ADM. CIR. NO.
14-93, AND RULE 16, SEC. 1 (j) OF THE 1997 RULES OF CIVIL
PROCEDURE.
VIII.
WHETHER OR NOT THE RESPONDENTS COMPLAINT AT THE
COURT A QUO IS DISMISSABLE UNDER THE RULING OF THE
SUPREME COURT IN THE CASE OF SARM[I]ENTO V. COURT OF
APPEALS, G.R. NO. 116192, NOV. 16, 1995, ON THE GROUND THAT
IT IS NOT COGNIZABLE BY THE SAID COURT.[14]

Essentially, the main issue for our resolution is whether the appellate
court erred in reversing the RTCs ruling that the respondents can not validly
eject petitioners.

Petitioners argue that Estelita owns one-half of Lot No. 5095 and that
their possession of the disputed portion was based on their agreement with
Estelita, not upon respondents tolerance. Petitioners also add that they cannot
be summarily ejected from the disputed portion without first resolving the
ownership of the land sold to Estelita in an accion publiciana.[15]

Respondents counter that since Estelita failed to pay the full price
within two years, Samuel, Sr., who reserved his title until full payment,
retained ownership. Respondents insist that petitioners must vacate upon
demand since their possession is merely tolerated and they have no better
right than Estelita.[16]

Prefatorily, we restate a now settled doctrine.[17] Where the issue of

possession in an unlawful detainer suit is closely intertwined with the issue
of ownership, as in this case, the MTCC can provisionally resolve the issue
of ownership for the sole purpose of determining the issue of
possession.[18] The judgment, however, is not conclusive in any action
involving title or ownership and will not bar an action between the same
parties respecting title to the land or building.[19]

After carefully examining the records of this case, we are constrained to

reverse the appellate courts decision. First, we find erroneous and without
factual basis the appellate courts conclusion that Samuel, Sr. reserved his title
to the land he sold to Estelita. Rather, the RTC aptly ruled that no evidence
proved that Samuel, Sr. reserved his title. In respondents complaint,[20] position
paper[21] and joint affidavit[22] with the MTCC, and even in their petition for
review[23] before the Court of Appeals, respondents never alleged that Samuel,
Sr. reserved his title. While the price was payable on installment, there was no
agreement between Estelita and Samuel, Sr. that the latter reserved his title,
conditioning the transfer of ownership upon full payment of the price.[24]

Patently therefore, the oral contract was a contract of sale, not a

contract to sell. It is in a contract to sell that ownership is, by agreement,
reserved in the seller and is not to pass to the buyer until full payment of the
purchase price.[25] Notably, the Court of Appeals stated that unless rescinded,
the perfected contract of sale remains valid.[26]Incidentally, this statement
reveals the inconsistency of the Court of Appeals in finding that Samuel,
Sr. reserved his title and also saying that the transaction was a contract of
sale. Worse, despite the parties common submission that the sale was
between Estelita and Samuel, Sr., the Court of Appeals misappreciated that
it was between petitioners and Samuel, Sr.[27]

We also note respondents inconsistent positions as this case was tried

and appealed. Their complaint was silent on the sale to Estelita. As they
appealed to the RTC, respondents advanced a new but erroneous theory that
the sale to Estelita was actually an oral agreement to sell, [28] such that by
agreement ownership was reserved by seller Samuel, Sr.[29] Respondents
soon abandoned that theory in their petition before the Court of Appeals and
argued that the sale agreement in 1995 with Estelita was immaterial in this
case.[30] Now before us, respondents resurrect their contention in the RTC
and echo the appellate courts error that Samuel, Sr. reserved his title.

Second, the records belie respondents allegation that Estelitas

installments were payable in two years. We note that on April 20, 1997, or
more than two years after Estelitas initial payment of P6,500 on January 13,
1995,[31] Maria Luz accepted Estelitas additional payment of P22,500.[32]

Anent Samuel, Sr.s decision to cancel the sale and refusal to receive
Estelitas payment of the balance of the price,[33] we find that Samuel, Sr. neither
notified Estelita by notarial act that he was rescinding the sale nor did he sue in
court to rescind the sale.[34] In addition, the records do not show Samuel, Sr.s
compliance with the requirements of the Realty Installment Buyer Protection
Act that actual cancellation takes place after 30 days from receipt by the buyer
of the notice of cancellation or the demand for rescission of the contract by
notarial act and upon full payment of the cash surrender value to the buyer,
which in this case is 50% of Estelitas total payments for more than two
years.[35]

Thus, under the circumstances, Estelitas claim of ownership is valid,

absent a valid rescission or cancellation of the contract of sale. Hence, she
was properly within her rights when she allowed petitioners to occupy part
of the land she bought upon her promise to sell it to them. Relatedly,
respondents now concede that the land sold to Estelita is Lot No.
5095-B,[36] but the disputed portion straddles Lot Nos. 5095-B and 5095-A.

While Samuel, Sr. is the registered owner of Lot No. 5095-B, he has
no cause to eject petitioners for alleged unlawful detainer since a finding of
unlawfulness of petitioners possession of the disputed portion depends upon
the rescission of the contract of sale between Samuel, Sr. and Estelita. [37] We
hasten to add that rescission is not even absolute for the court may fix a
period within which Estelita, if she is found in default, may be permitted to
comply with her obligation.[38]

As regards Lot No. 5095-A, we find respondent Eldons detainer suit

premature for failure to exhaust all administrative remedies. [39] As aptly
pointed out by petitioners,[40] Eldon did not comply[41] with Section 412 of
the Local Government Code (LGC), which sets forth a pre-condition to the
filing of complaints in court, to wit:
SECTION 412. Conciliation. (a) Pre-condition to filing of
complaint in court. No complaint, petition, action, or proceeding involving
any matter within the authority of the lupon shall be filed or instituted
directly in court or any other government office for adjudication, unless
there has been a confrontation between the parties before the lupon
chairman or the pangkat, and that no conciliation or settlement has been
reached as certified by the lupon secretary or pangkat secretary as attested
to by the lupon or pangkat chairman or unless the settlement has been
repudiated by the parties thereto.

xxxx

Conformably with said Section 412, the MTCC should have dismissed
Eldons complaint. For our part, this Court is without authority to refuse to
give effect to, and wipe off the statute books, Section 412 of the LGC
insofar as this case and other cases governed by the Rules on Summary
Procedure are concerned.[42]

Moreover, we are unconvinced of Eldons claim that out of pity he also

allowed petitioners to stay on the disputed portion in 1986 because he only
bought what is now Lot No. 5095-A in 1997.
 WHEREFORE, we GRANT the petition and SET ASIDE the assailed
Decision dated November 28, 2003 and Resolution dated December 1, 2004 of
the Court of Appeals in CA-G.R. SP No. 71439. The appellate court erred in
reversing the RTCs Order to respect petitioners possession of the disputed
property. Respondents unlawful detainer complaint is hereby DISMISSED,
without prejudice to any appropriate suit between the parties respecting title to
the disputed portion.

Costs against respondents.

SO ORDERED.
In Barba v. Court of Appeals,[24] this Court categorically ruled that:

Where the cause of action is unlawful detainer, prior possession is

not always a condition sine qua non. A complaint for
unlawful detainer should be distinguished from that of forcible
entry. In forcible entry, the plaintiff has prior possession of the
property and he is deprived thereof by the defendant through force,
intimidation, threat, strategy or stealth. In an unlawful detainer, the
defendant unlawfully withholds possession of the property after the
expiration or termination of his right thereto under any contract,
express or implied; hence, prior physical possession is not required.
x x x. In ejectment cases, therefore, possession of land does not
only mean actual or physical possession or occupation but also
includes the subjection of the thing to the action of ones will or by
the proper acts and legal formalities established for acquiring such
right, such as the execution of a deed of sale over a property.
(Barba v. Court of Appeals, 426 Phil. 598, 607-608 (2002).

In an unlawful detainer case, the defendants possession was originally lawful

but ceased to be so by the expiration of his right to possess. Hence the
phrase unlawful withholding has been held to imply possession on the part of
the defendant, which was legal from the beginning, having no other source
than a contract, express or implied, and which later expired as a right and is
being withheld by defendant.[25] The issue of rightful possession is the one
decisive, for in such action, the defendant is the party in actual possession
and the plaintiffs cause of action is the termination of the defendants right to
continue in possession.[26] 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. Nor does the law require one in possession of a
house to reside in the house to maintain his possession.[27] As lessor of the
subject property, respondent is legally considered as being in possession
thereof. Hence, the fact of actual possession becomes a non-issue.
26 Sumulong v. Court of Appeals, G.R. No. 108817, 10 May 1994, 232 SCRA 372, 382-383.

27 De la Rosa v. Carlos, 460 Phil. 367, 373 (2003).

________

THIRD DIVISION

[G.R. No. 151212. September 10, 2003]

TEN FORTY REALTY AND DEVELOPMENT CORP., Represented

by its President, VERONICA G. LORENZANA, petitioner, vs.
MARINA CRUZ, respondent.

DECISION
PANGANIBAN, J.:

In an ejectment suit, the question of ownership may be provisionally ruled

upon for the sole purpose of determining who is entitled to possession de facto. In
the present case, both parties base their alleged right to possess on their right to
own. Hence, the Court of Appeals did not err in passing upon the question of
ownership to be able to decide who was entitled to physical possession of the
disputed land.

The Case

Before us is a Petition for Review[1] under Rule 45 of the Rules of Court,

seeking to nullify the August 31, 2001 Decision [2] and December 19, 2001
Resolution[3] of the Court of Appeals (CA) in CA- GR SP No. 64861. The
dispositive portion of the assailed Decision is as follows:

WHEREFORE, premises considered, the petition is hereby DISMISSED and

the Decision dated May 4, 2001 is hereby AFFIRMED. [4]

The assailed Resolution denied petitioner's Motion for Reconsideration.

The Facts

The facts of the case are narrated by the CA as follows:

A complaint for ejectment was filed by [Petitioner Ten Forty Realty and
Development Corporation] against x x x [Respondent Marina Cruz] before the
Municipal Trial Court in Cities (MTCC) of Olongapo City, docketed as Civil
Case 4269, which alleged that: petitioner is the true and absolute owner of a
parcel of lot and residential house situated in #71 18th Street, E.B.B. Olongapo
City, particularly described as:

A parcel of residential house and lot situated in the above-mentioned address

containing an area of 324 square meters more or less bounded on the Northeast
by 041 (Lot 255, Ts-308); on the Southeast by 044 (Lot 255, Ts-308); on the
Southwest by 043 (Lot 226-A & 18th street) and on the Northwest by 045 (Lot
227, Ts-308) and declared for taxation purposes in the name of [petitioner]
under T.D. No. 002-4595-R and 002-4596.

having acquired the same on December 5, 1996 from Barbara Galino by virtue
of a Deed of Absolute Sale; the sale was acknowledged by said Barbara Galino
through a 'Katunayan'; payment of the capital gains tax for the transfer of the
property was evidenced by a Certification Authorizing Registration issued by
the Bureau of Internal Revenue; petitioner came to know that Barbara Galino
sold the same property on April 24, 1998 to Cruz, who immediately occupied
the property and which occupation was merely tolerated by petitioner; on
October 16, 1998, a complaint for ejectment was filed with the Barangay East
Bajac-Bajac, Olongapo City but for failure to arrive at an amicable settlement,
a Certificate to File Action was issued; on April 12, 1999 a demand letter was
sent to [respondent] to vacate and pay reasonable amount for the use and
occupation of the same, but was ignored by the latter; and due to the refusal of
[respondent] to vacate the premises, petitioner was constrained to secure the
services of a counsel for an agreed fee of P5,000.00 as attorneys fee
and P500.00 as appearance fee and incurred an expense of P5,000.00 for
litigation.

In respondents Answer with Counterclaim, it was alleged that: petitioner is not

qualified to own the residential lot in dispute, being a public land; according to
Barbara Galino, she did not sell her house and lot to petitioner but merely
obtained a loan from Veronica Lorenzana; the payment of the capital gains tax
does not necessarily show that the Deed of Absolute Sale was at that time
already in existence; the court has no jurisdiction over the subject matter
because the complaint was filed beyond the one (1) year period after the
alleged unlawful deprivation of possession; there is no allegation that petitioner
had been in prior possession of the premises and the same was lost thru force,
stealth or violence; evidence will show that it was Barbara Galino who was in
possession at the time of the sale and vacated the property in favor of
respondent; never was there an occasion when petitioner occupied a portion of
the premises, before respondent occupied the lot in April 1998, she caused the
cancellation of the tax declaration in the name of Barbara Galino and a new one
issued in respondents name; petitioner obtained its tax declaration over the
same property on November 3, 1998, seven (7) months [after] the respondent
[obtained hers]; at the time the house and lot [were] bought by respondent, the
house was not habitable, the power and water connections were disconnected;
being a public land, respondent filed a miscellaneous sales application with the
Community Environment and Natural Resources Office in Olongapo City; and
the action for ejectment cannot succeed where it appears that respondent had
been in possession of the property prior to the petitioner. [5]

In a Decision[6] dated October 30, 2000, the Municipal Trial Court in Cities
(MTCC) ordered respondent to vacate the property and surrender to petitioner
possession thereof. It also directed her to pay, as damages for its continued
unlawful use, P500 a month from April 24, 1999 until the property was
vacated, P5,000 as attorneys fees, and the costs of the suit.
On appeal, the Regional Trial Court[7] (RTC) of Olongapo City (Branch 72)
reversed the MTCC. The RTC ruled as follows: 1) respondents entry into the
property was not by mere tolerance of petitioner, but by virtue of a Waiver and
Transfer of Possessory Rights and Deed of Sale in her favor; 2) the execution of
the Deed of Sale without actual transfer of the physical possession did not have
the effect of making petitioner the owner of the property, because there was no
delivery of the object of the sale as provided for in Article 1428 of the Civil Code;
and 3) being a corporation, petitioner was disqualified from acquiring the property,
which was public land.

Ruling of the Court of Appeals

Sustaining the RTC, the CA held that petitioner had failed to make a case for
unlawful detainer, because no contract -- express or implied -- had been entered
into by the parties with regard to possession of the property. It ruled that the
action should have been for forcible entry, in which prior physical possession was
indispensable -- a circumstance petitioner had not shown either.
The appellate court also held that petitioner had challenged the RTCs ruling
on the question of ownership for the purpose of compensating for the latters
failure to counter such ruling.The RTC had held that, as a corporation, petitioner
had no right to acquire the property which was alienable public land.
Hence, this Petition.[8]

Issues

Petitioner submits the following issues for our consideration:

1. The Honorable Court of Appeals had clearly erred in not holding that
[r]espondents occupation or possession of the property in question
was merely through the tolerance or permission of the herein
[p]etitioner;

[2.] The Honorable Court of Appeals had likewise erred in holding that
the ejectment case should have been a forcible entry case where
prior physical possession is indispensable; and
 [3.] The Honorable Court of Appeals had also erred when it ruled that
the herein [r]espondents possession or occupation of the said
property is in the nature of an exercise of ownership which should
put the herein [p]etitioner on guard. [9]

The Courts Ruling

The Petition has no merit.

First Issue:
Alleged Occupation by Tolerance

Petitioner faults the CA for not holding that the former merely tolerated
respondents occupation of the subject property. By raising this issue, petitioner is
in effect asking this Court to reassess factual findings. As a general rule, this kind
of reassessment cannot be done through a petition for review on certiorari under
Rule 45 of the Rules of Court, because this Court is not a trier of facts; it reviews
only questions of law.[10] Petitioner has not given us ample reasons to depart from
the general rule.
On the basis of the facts found by the CA and the RTC, we find that petitioner
failed to substantiate its case for unlawful detainer. Admittedly, no express
contract existed between the parties. Not shown either was the corporations
alleged tolerance of respondents possession.
While possession by tolerance may initially be lawful, it ceases to be so upon
the owners demand that the possessor by tolerance vacate the property. [11] To
justify an action for unlawful detainer, the permission or tolerance must have been
present at the beginning of the possession.[12] Otherwise, if the possession was
unlawful from the start, an action for unlawful detainer would be an improper
remedy. Sarona v. Villegas[13] elucidates thus:

A close assessment of the law and the concept of the word tolerance confirms
our view heretofore expressed that such tolerance must be present right from
the start of possession sought to be recovered, to categorize a cause of action as
one of unlawful detainer not of forcible entry. Indeed, to hold otherwise would
espouse a dangerous doctrine. And for two reasons. First. Forcible entry into
the land is an open challenge to the right of the possessor. Violation of that
right authorizes the speedy redress in the inferior court provided for in the
rules. If one year from the forcible entry is allowed to lapse before suit is filed,
then the remedy ceases to be speedy; and the possessor is deemed to have
waived his right to seek relief in the inferior court. Second, if a forcible entry
action in the inferior court is allowed after the lapse of a number of years, then
the result may well be that no action for forcible entry can really prescribe. No
matter how long such defendant is in physical possession, plaintiff will merely
make a demand, bring suit in the inferior court upon a plea of tolerance to
prevent prescription to set in and summarily throw him out of the land. Such a
conclusion is unreasonable. Especially if we bear in mind the postulates that
proceedings of forcible entry and unlawful detainer are summary in nature, and
that the one year time bar to suit is but in pursuance of the summary nature of
the action.[14]

In this case, the Complaint and the other pleadings do not recite
any averment of fact that would substantiate the claim of petitioner that it
permitted or tolerated the occupation of the property by Respondent Cruz. The
Complaint contains only bare allegations that 1) respondent immediately occupied
the subject property after its sale to her, an action merely tolerated by
petitioner;[15] and 2) her allegedly illegal occupation of the premises was by mere
tolerance.[16]
These allegations contradict, rather than support, petitioners theory that its
cause of action is for unlawful detainer. First, these arguments advance the view
that respondents occupation of the property was unlawful at its inception. Second,
they counter the essential requirement in unlawful detainer cases that petitioners
supposed act of sufferance or tolerance must be present right from the start of a
possession that is later sought to be recovered.[17]
As the bare allegation of petitioners tolerance of respondents occupation of
the premises has not been proven, the possession should be deemed illegal from
the beginning. Thus, the CA correctly ruled that the ejectment case should have
been for forcible entry -- an action that had already prescribed, however, when the
Complaint was filed on May 12, 1999. The prescriptive period of one year for
forcible entry cases is reckoned from the date of respondents actual entry into the
land, which in this case was on April 24, 1998.

Second Issue:
Nature of the Case

Much of the difficulty in the present controversy stems from the legal
characterization of the ejectment Complaint filed by petitioner. Specifically, was it
for unlawful detainer or for forcible entry?
The answer is given in Section 1 of Rule 70 of the Rules of Court, which we
reproduce as follows:

SECTION 1. Who may institute proceedings, and when. - Subject to the

provisions of the next succeeding section, a person deprived of the possession
of any land or building by force, intimidation, threat, strategy, or stealth, or a
lessor, vendor, vendee, or other person against whom the possession of any
land or building is unlawfully withheld after the expiration or termination of the
right to hold possession, by virtue of any contract, express or implied, or the
legal representatives or assigns of any such lessor, vendor, vendee, or other
person, may, at any time within one (1) year after such unlawful deprivation or
withholding of possession, bring an action in the proper Municipal Trial Court
against the person or persons unlawfully withholding or depriving of
possession, or any person or persons claiming under them, for the restitution of
such possession, together with damages and costs.
 While both causes of action deal only with the sole issue of physical or de
facto possession,[18] the two cases are really separate and distinct, as explained
below:

x x x. In forcible entry, one is deprived of physical possession of land or

building by means of force, intimidation, threat, strategy, or stealth. In unlawful
detainer, one unlawfully withholds possession thereof after the expiration or
termination of his right to hold possession under any contract, express or
implied. In forcible entry, the possession is illegal from the beginning and the
basic inquiry centers on who has the prior possession de facto. In unlawful
detainer, the possession was originally lawful but became unlawful by the
expiration or termination of the right to possess, hence the issue of rightful
possession is decisive for, in such action, the defendant is in actual possession
and the plaintiffs cause of action is the termination of the defendants right to
continue in possession.

What determines the cause of action is the nature of defendants entry into the
land. If the entry is illegal, then the action which may be filed against the
intruder within one year therefrom is forcible entry. If, on the other hand, the
entry is legal but the possession thereafter became illegal, the case is one of
unlawful detainer which must be filed within one year from the date of the last
demand. [19]

It is axiomatic that what determines the nature of an action as well as which

court has jurisdiction over it are the allegations in the complaint [20] and the
character of the relief sought.[21]
In its Complaint, petitioner alleged that, having acquired the subject property
from Barbara Galino on December 5, 1996,[22] it was the true and absolute
owner[23] thereof; that Galino had sold the property to Respondent Cruz on April 24,
1998;[24] that after the sale, the latter immediately occupied the property, an action
that was merely tolerated by petitioner;[25] and that, in a letter given to respondent
on April 12, 1999,[26] petitioner had demanded that the former vacate the property,
but that she refused to do so.[27] Petitioner thereupon prayed for judgment ordering
her to vacate the property and to pay reasonable rentals for the use of the
premises, attorneys fees and the costs of the suit.[28]
The above allegations appeared to show the elements of unlawful
detainer. They also conferred initiatory jurisdiction on the MTCC, because the
case was filed a month after the last demand to vacate -- hence, within the
one-year prescriptive period.
However, what was actually proven by petitioner was that possession by
respondent had been illegal from the beginning. While the Complaint was crafted
to be an unlawful detainer suit, petitioners real cause of action was for forcible
entry, which had already prescribed. Consequently, the MTCC had no more
jurisdiction over the action.
The appellate court, therefore, did not err when it ruled that petitioners
Complaint for unlawful detainer was a mere subterfuge or a disguised substitute
action for forcible entry, which had already prescribed. To repeat, to maintain a
viable action for forcible entry, plaintiff must have been in prior physical
possession of the property; this is an essential element of the suit.[29]

Third Issue:
Alleged Acts of Ownership

Petitioner next questions the CAs pronouncement that respondents

occupation of the property was an exercise of a right flowing from a claim of
ownership. It submits that the appellate court should not have passed upon the
issue of ownership, because the only question for resolution in an ejectment suit
is that of possession de facto.
Clearly, each of the parties claimed the right to possess the disputed property
because of alleged ownership of it. Hence, no error could have been imputed to
the appellate court when it passed upon the issue of ownership only for the
purpose of resolving the issue of possession de facto.[30] The CAs holding is
moreover in accord with jurisprudence and the law.

Execution of a Deed of Sale

Not Sufficient as Delivery

In a contract of sale, the buyer acquires the thing sold only upon its delivery in
any of the ways specified in Articles 1497 to 1501, or in any other manner
signifying an agreement that the possession is transferred from the vendor to the
vendee.[31] With respect to incorporeal property, Article 1498 lays down the general
rule: the execution of a public instrument shall be equivalent to the delivery of the
thing that is the object of the contract if, from the deed, the contrary does not
appear or cannot be clearly inferred.
However, ownership is transferred not by contract but by tradition or
delivery.[32] Nowhere in the Civil Code is it provided that the execution of a Deed of
Sale is a conclusive presumption of delivery of possession of a piece of real
estate.[33]
This Court has held that the execution of a public instrument gives rise only to
a prima facie presumption of delivery. Such presumption is destroyed when the
delivery is not effected because of a legal impediment. [34] Pasagui v.
Villablanca[35] had earlier ruled that such constructive or symbolic delivery, being
merely presumptive, was deemed negated by the failure of the vendee to take
actual possession of the land sold.
It is undisputed that petitioner did not occupy the property from the time it was
allegedly sold to it on December 5, 1996 or at any time thereafter. Nonetheless, it
maintains that Galinos continued stay in the premises from the time of the sale up
to the time respondents occupation of the same on April 24, 1998, was
possession held on its behalf and had the effect of delivery under the law. [36]
Both the RTC and the CA disagreed. According to the RTC, petitioner did not
gain control and possession of the property, because Galino had continued to
exercise ownership rights over the realty. That is, she had remained in
possession, continued to declare it as her property for tax purposes and sold it to
respondent in 1998.
 For its part, the CA found it highly unbelievable that petitioner -- which claims
to be the owner of the disputed property -- would tolerate possession of the
property by respondent from April 24, 1998 up to October 16, 1998. How could it
have been so tolerant despite its knowledge that the property had been sold to
her, and that it was by virtue of that sale that she had undertaken major repairs
and improvements on it?
Petitioner should have likewise been put on guard by respondents declaration
of the property for tax purposes on April 23, 1998, [37] as annotated in the tax
certificate filed seven months later.[38] Verily, the tax declaration represented an
adverse claim over the unregistered property and was inimical to the right of
petitioner.
Indeed, the above circumstances derogated its claim of control and
possession of the property.

Order of Preference in Double

Sale of Immovable Property

The ownership of immovable property sold to two different buyers at different

times is governed by Article 1544 of the Civil Code, which reads as follows:

Article 1544. x x x

Should it be immovable property, the ownership shall belong to the person

acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in possession; and, in the absence thereof, to the person
who presents the oldest title, provided there is good faith.

Galino allegedly sold the property in question to petitioner on December 5,

1996 and, subsequently, to respondent on April 24, 1998. Petitioner thus argues
that being the first buyer, it has a better right to own the realty. However, it has not
been able to establish that its Deed of Sale was recorded in the Registry of Deeds
of Olongapo City.[39] Its claim of an unattested and unverified notation on its Deed
of Absolute Sale[40] is not equivalent to registration. It admits that, indeed, the sale
has not been recorded in the Registry of Deeds.[41]
In the absence of the required inscription, the law gives preferential right to
the buyer who in good faith is first in possession. In determining the question of
who is first in possession, certain basic parameters have been established by
jurisprudence.
First, the possession mentioned in Article 1544 includes not only material but
also symbolic possession.[42] Second, possessors in good faith are those who are
not aware of any flaw in their title or mode of acquisition.[43] Third, buyers of real
property that is in the possession of persons other than the seller must be wary --
they must investigate the rights of the possessors.[44] Fourth, good faith is always
presumed; upon those who allege bad faith on the part of the possessors rests
the burden of proof.[45]
 Earlier, we ruled that the subject property had not been delivered to petitioner;
hence, it did not acquire possession either materially or symbolically. As between
the two buyers, therefore, respondent was first in actual possession of the
property.
Petitioner has not proven that respondent was aware that her mode of
acquiring the property was defective at the time she acquired it from Galino. At the
time, the property -- which was public land -- had not been registered in the name
of Galino; thus, respondent relied on the tax declarations thereon. As shown, the
formers name appeared on the tax declarations for the property until its sale to the
latter in 1998. Galino was in fact occupying the realty when respondent took over
possession. Thus, there was no circumstance that could have placed the latter
upon inquiry or required her to further investigate petitioners right of ownership.

Disqualification from Ownership

of Alienable Public Land

Private corporations are disqualified from acquiring lands of the public domain,
as provided under Section 3 of Article XII of the Constitution, which we quote:

Sec. 3. Lands of the public domain are classified into agricultural, forest or
timber, mineral lands, and national parks. Agricultural lands of the public
domain may be further classified by law according to the uses to which they
may be devoted. Alienable lands of the public domain shall be limited to
agricultural lands. Private corporations or associations may not hold such
alienable lands of the public domain except by lease, for a period not exceeding
twenty-five years, and not to exceed one thousand hectares in area. Citizens of
the Philippines may not lease not more than five hundred hectares, or acquire
not more than twelve hectares thereof by purchase, homestead, or grant. x x x.
(Italics supplied)

While corporations cannot acquire land of the public domain, they can
however acquire private land.[46] Hence, the next issue that needs to be resolved is
the determination of whether the disputed property is private land or of the public
domain.
According to the certification by the City Planning and Development Office of
Olongapo City, the contested property in this case is alienable and disposable
public land.[47] It was for this reason that respondent filed a miscellaneous sales
application to acquire it.[48]
On the other hand, petitioner has not presented proof that, at the time it
purchased the property from Galino, the property had ceased to be of the public
domain and was already private land. The established rule is that alienable and
disposable land of the public domain held and occupied by a possessor --
personally or through predecessors-in-interest, openly, continuously, and
exclusively for 30 years -- is ipso jure converted to private property by the mere
lapse of time.[49]
In view of the foregoing, we affirm the appellate courts ruling that respondent
is entitled to possession de facto. This determination, however, is only provisional
in nature.[50] Well-settled is the rule that an award of possession de facto over a
piece of property does not constitute res judicata as to the issue of its
ownership.[51]
WHEREFORE, this Petition is DENIED and the assailed
Decision AFFIRMED. Costs against petitioner.
SO ORDERED.
Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.
Puno, (Chairman), on official leave.

[1]
Rollo, pp. 8-19.
[2]
Penned by Justice Remedios A. Salazar-Fernando and concurred in by Justices Romeo A.
Brawner (Division chairman) and Rebecca de Guia-Salvador (member); id., pp. 139-147.
[3]
Rollo, p. 162.
[4]
CA Decision, p. 8; rollo, p. 146.
[5]
Id., pp. 1-3 & 139-141.
[6]
Penned by Judge Eduardo D. Alfonso Jr.
[7]
The RTC Decision dated May 4, 2001 was penned by Judge Eliodoro G. Ubiadas.
[8]
The case was deemed submitted for decision on August 9, 2002, upon the Courts receipt of
respondents Memorandum signed by Atty. Carmelino M. Roque. Petitioners
Memorandum, filed on July 23, 2002, was signed by Atty. Oscar L. Karaan.
[9]
Petitioners Memorandum, p. 8; rollo, p. 199.
[10]
Alfaro v. Court of Appeals, 416 Phil. 310, August 28, 2001; Villalon v. Court of Appeals, 377 Phil.
556, December 2, 1999; Cebu Shipyard and Engineering Works v. William Lines, 366 Phil.
439, May 5, 1999.
[11]
Arcal v. CA, 348 Phil. 813, January 26, 1998; Hilario v. CA, 329 Phil. 202, August 7, 1996, citing
Odsigue v. CA, 233 SCRA 626, July 4, 1994.
[12]
Go Jr. v. CA, supra.
[13]
131 Phil. 365, March 27, 1968.
[14]
Id., p. 373, per Sanchez, J.
[15]
Complaint, par. 7, p. 3; rollo, p. 22.
[16]
Position Paper of petitioner, p. 2; rollo, p. 50.
[17]
Go Jr. v. CA, supra.
[18]
Amagan v. Marayag, 383 Phil. 486, February 28, 2000.
[19]
Go v. CA, supra, p. 184, per Gonzaga-Reyes, J., citing Sarmiento v. CA, 320 Phil. 146, 153-154,
November 16, 1995, per Regalado J.
[20]
Ibid.; Isidro v. Court of Appeals, 228 SCRA 503, December 15, 1993; 33(2) of Batas Pambansa
(BP) Blg. 129, as amended by Republic Act (RA) No. 7691.
[21]
Chico v. CA, 348 Phil. 37, January 5, 1998, citing several cases; Caiza v. CA, 335 Phil. 1107,
February 24, 1997.
[22]
Id., par. 3, pp. 2 &. 21.
[23]
Complaint, par. 2, p. 1; rollo, p. 20.
[24]
Id., par. 6, p. 2; ibid.
[25]
Id., par. 7, p. 3; id, p. 22.
[26]
Id., par. 10, p. 3; ibid.
[27]
Id., par. 11, p. 3; ibid.
[28]
Id., p. 4; id, p. 23.
[29]
Gener v. De Leon, 367 SCRA 631, October 19, 2001; Tirona v. Alejo, 367 SCRA 17, October 10,
2001. The other essential element of forcible entry is deprivation of possession by force,
intimidation, threats, strategy, or stealth.
[30]
16 of Rule 70 of the Rules of Court.
[31]
Article 1496 of the Civil Code.
[32]
Equatorial Realty Development Inc. v. Mayfair Theater, Inc., 370 SCRA 56, November 21, 2001;
Ocejo, Perez & Co. v. International Bank, 37 Phil. 631, February 14, 1918; Roman v.
Grimlt, 6 Phil. 96, April 11, 1906.
[33]
Santos v. Santos, 366 SCRA 395, October 2, 2001.
[34]
Equatorial Realty Development Inc. v. Mayfair Theater, Inc., supra.
[35]
Supra.
[36]
Article 1497 of the Civil Code provides that the thing sold shall be understood as delivered,
when it is placed in the control and possession of the vendee.
[37]
Annex I, Declaration of Real Property; rollo, p. 41.
[38]
Annexes A and B of Complaint; rollo, pp. 25-26.
[39]
Under Section 113 of Presidential Decree (PD) No. 1529, to constitute constructive notice to the
whole world, instruments of conveyance over unregistered lands must be registered in the
office of the Register of Deeds for the province or city where the land lies.
[40]
Annex C of Complaint; rollo, p. 27.
[41]
Petitioners Memorandum, p. 10; rollo, p. 201.
[42]
Navera v. CA, 184 SCRA 585, April 26, 1990.
[43]
Article 526 of the Civil Code.

[44]
;
Cardente v. Intermediate Appellate Court, 155 SCRA 685, November 27, 1987 Conspecto v.
Fruto, 31 Phil. 144, July 23, 1915, cited in Bautista v. CA, 230 SCRA 446, February 28,
1994.
[45]
Development Bank of the Philippines v. CA, 375 Phil. 114, October 13, 1999; Ballatan v. CA,
363 Phil. 408, March 2, 1999.
[46]
See Section 7 of Article XII of the Constitution; Bernas, The 1987 Constitution of the Republic of
the Philippines: a Commentary, 1996 ed., p. 1020.
[47]
Rollo, p. 48.
[48]
Under the Public Land Act (Commonwealth Act No. 141, as amended), alienable public land
may be acquired by the filing of an application for a sales, a homestead, a free or a special
patent.
[49]
Republic v. CA, 374 Phil. 209, September 30, 1999; Natividad v. CA, 202 SCRA 493, October 4,
1991; Republic v. Intermediate Appellate Court, 168 SCRA 165, November 29, 1988;
Director of Lands v. Intermediate Appellate Court, 146 SCRA 509, December 29, 1986.
[50]
Amagan v. Marayag, supra.
[51]
Javelosa v. CA, 333 Phil. 331, December 10, 1996.