[123] MIDWAY MARITIME v.
CASTRO PROVISIONS APPLICABLE:
G.R. No. 189061 | August 6, 2014 | J. Reyes
Petitioner: MIDWAY MARITIME AND TECHNOLOGICAL FOUNDATION,
represented by its Chairman/President PhD in Education DR. SABINO M.
MANGLICMOT
Respondens: MARISSA E. CASTRO, ET AL.
SUMMARY
Petitioner is a lessee of 2 parcels of land owned by the wife (Adoracion) of its
president after buying it from Union Bank (which also bought it from the respondents‘
father’s corporation (jusko) – the respondents‘ parents being the original owners.
The two parcels of land were subsequently sold (due to foreclosure of mortgage) to
the father (Tomas) of the wife (Adoracion) of petitioner’s president. Prior to this sale
by auction, the respondents (Castro children) were living in the residential building
constructed thereon as lessees of the corporation. In a previous case (on writ of
possession of the 2 parcels of land and the residential house), the SC ruled that the
the residential building should not have been included in the Writ of Possession
because such was owned by the Castros. The petitioner however comes to Court
arguing that it is a lessor of Adoracion, and not the lessor of respondents’s mother,
with regard to the residential building because Adoracion is the owner of the 2
parcels of land and therefore the owner of the residential building.
The SC held that petitioner is a lessee of the respondents and not of Adoracion. It
found that Midway Maritime has actually been paying rentals for the entire building in
question; and that Midway Maritime’s payment of the rentals to respondents’ mother
(Lourdes) confirms the existence of its agreement to lease the residential building
from respondents. Once a contact of lease is shown to exist between the parties, the
lessee cannot by any proof, however strong, overturn the conclusive presumption
that the lessor has a valid title to or a better right of possession to the subject
premises than the lessee. Moreover, Midway Maritime was aware of the
circumstances surrounding the sale of the two parcels of land and the nature of the
respondents’ claim over the residential house. Yet, Midway Maritime still chose to
lease the building from Lourdes Castro. Consequently, it is now estopped from
denying the respondents’ title over the residential building. Petition denied.
TOPIC: RULE 131 SECTION 3 – CONCLUSIVE PRESUMPTIONS
DOCTRINE: Once a contact of lease is shown to exist between the parties, the
lessee cannot by any proof, however strong, overturn the conclusive presumption
that the lessor has a valid title to or a better right of possession to the subject
premises than the lessee. Section 2(b), Rule 131 of the Rules of Court prohibits a
tenant from denying the title of his landlord at the time of the commencement of the
relation of landlord and tenant between them.
 Rule 131 Section 2. Conclusive presumptions. — The following are instances
of conclusive presumptions:
(a) Whenever a party has, by his own declaration, act, or omission,
intentionally and deliberately led to another to believe a particular thing true,
and to act upon such belief, he cannot, in any litigation arising out of such
declaration, act or omission, be permitted to falsify it:
(b) The tenant is not permitted to deny the title of his landlord at the time of
commencement of the relation of landlord and tenant between them. (3a)
FACTS:
 Petitioner Midway Maritime is a lessee of two parcels of land owned by
Adoracion, the wife of Midway Maritime’s president Dr. Manglicmot.
o Inside the property (a portion of the two parcels of land) is a residential
building which the subject matter of the dispute.
 Antecedent facts (these happened simultaneously):
o Writ of Possession and the residential building
 The two parcels of land were origially owned by respondents‘
father, Louis Castro Sr. who is the president of Cabanatuan
City Colleges (CCC)
 Castro Sr. mortgaged the property to Bancom Dev’t Corp to
secure a loan
 During the subsistence of the mortgage, the board of CCC
agreed to lease a portion of the property to respondents
(children of Castro Sr.) for 15years. The children built the
residential house in dispute.
 When CCC failed to pay its obligation, Bancom foreclosed the
mortgage and the property was sold at a public auction
(Bancom being the highest bidder).
 Bancom assigned the credit to Union Bank and the latter later
on consolidated ist ownership of the property.
 Union Bank then sought the issuance of a Writ of Possession,
including the residential building, to which the respondemts
opposed.
 SC in this case ruled that the residential house owned by the
respondents should not have been included in the Writ of
Possession.
o Adoracion‘s father (Tomas) bought the two parcels of land from Union
Bank
 Tomas leased the property to petitioner Midway Maritime and
sold the same to is daughter Adoracion.
o Petitioner Midway Maritime leased the building from respondents‘
mother, Lourdes Castro.
 Hence, when petitioner failed to pay its rentals to respondents, several suits
were brought by the respondents Castros against petitioner (Action for
ownership, recovery of possession, damages)
 RTC: ruled in favor of respondents Castro as the absolute owners of the building
in question
o “Ordering the [petitioner] to pay the [respondents] the sum of
[P]672,000.00 by way of unpaid rentals from August 1995 at
[P]6,000.00 and from October 1995 at [P]10,000.00 until fully paid.”
 CA: Affirmed the RTC ruling
 Argument of Midway Maritime:
o contests the award of rentals  when Tomas bought the 2 parcels of
land from Union Bank, the sale included the improvements thereon
which includes the residential building
o The lease between CCC and the respondents already expired at the
time of the sale and they are now the current lessees of the property
albeit the residential house is still standing
ISSUES w/ HOLDING & RATIO
1. W/N (a) Midway Maritime is a lessee of respondents Castro (lessor) as
regards the residential building and (b) whether or not Midway Maritime
may overturn the conclusive presumption that the Castros have a valid
title or better right to possession of the building – YES for first, NO for
second.
 From June 1993 to July 1995 (26 months), Midway Maritime has been
paying rentals for the entire building in question. Such finding is borne
by the records of the case:
 Cash disbursement voucher issued by Midway Maritime to
Mrs. Lourdes Castro (mother of respondents)  contained the
statement “payment of building rentals.. xxx”
 Midway Maritime’s payment of the rentals confirms the existence of its
agreement to lease the residential building from respondents Castro.
 Given the existence of the lease, the petitioner’s claim denying the
respondents’ ownership of the residential house must be rejected.
 It is settled that "[o]nce a contact of lease is shown to exist
between the parties, the lessee cannot by any proof, however
strong, overturn the conclusive presumption that the lessor has a
valid title to or a better right of possession to the subject
premises than the lessee.
 Section 2(b), Rule 131 of the Rules of Court prohibits a tenant
from denying the title of his landlord at the time of the
commencement of the relation of landlord and tenant between
them
 Santos v. National Statistics Office: The Court expounded on
the rule on estoppel against a tenant and further clarified that
what a tenant is estopped from denying is the title of his
landlord at the time of the commencement of the
landlord-tenant relation.
 If the title asserted is one that is alleged to have
been acquired subsequent to the commencement of
that relation, the presumption will not apply.
 IN THIS CASE, Midway Maritime’s basis for insisting on Adoracion’s
ownership dates back to the latter’s purchase of the two parcels of land
from her father Tomas. It was Tomas who bought the property in an
auction sale by Union Bank in 1993 and leased the same to the
petitioner in the same year.
 Note must be made that the Midway Maritime’s president,
Manglicmot, is the husband of Adoracion and son-in-law of
Tomas.
 It is not improbable that at the time Midway Maritime leased
the residential building from the respondents’ mother in 1993,
it was aware of the circumstances surrounding the sale of the
two parcels of land and the nature of the respondents’ claim
over the residential house.
 Yet, Midway Maritime still chose to lease the building from
Lourdes Castro. Consequently, it is now estopped from
denying the respondents’ title over the residential building.
 More importantly, the respondents’ ownership of the
residential building is already an established fact.
 The property subject of the mortgage and
consequently the auction sale pertains only to these
two parcels of land and did not include the residential
house.
RULING: WHEREFORE, the petition is DENIED for lack of merit.