RULE 68: FORECLOSURE OF REAL ESTATE MORTGAGE

1. SENO V. PESTOLANTE

FACTS: Seno filed an action before CFI Cebu to recover the balance of P600 plus interest (the original debt which was P1,900) from Pestolante and, in default of payment thereof, to order the foreclosure of the chattel mortgage executed by the latter defendant covering personal properties valued at P2,500. A certain Barimbao was in possession of the mortgaged property and refused to surrender it because he claims he purchased it from Pestolante.

Pestolante filed a motion to dismiss on the ground, among others, that the court had no jurisdiction to take cognizance of the case, it appearing that the action was only to collect a balance of P600 which was under the original jurisdiction of the Justice of the Peace. The court granted the MTD.

ISSUE: Whether the CFI had jurisdiction over the case?

RULING: YES. While it is true that the purpose of the action is to recover the sum of P600, plus interest, which comes within the original jurisdiction of the justice of the peace court, it is as well true that the action involved the foreclosure of the chattel mortgage executed by Pestolante to secure the payment of his obligation, which mortgage covers personal properties valued at more than P2,000.

When the mortgagor refuses to surrender possession of the mortgaged chattel an action of judicial foreclosure necessarily arises. And in a similar case, this Court said: "Where . . . the debtor refuses to yield up the property, the creditor must institute an action, either to effect a judicial foreclosure directly, or to secure possession as a preliminary to the sale above quoted" Seno had to institute the present action because the occupant Barimbao refused to surrender the possession of the mortgaged chattel. The action had to be instituted before the CFI because the chattel is worth more than P2,000, an amount which is under the jurisdiction of the CFI. The basis of the value to determine the court with jurisdiction is the actual amount of the chattel, not the remaining balance of the debt.

2. LIMPIN V. IAC

FACTS:

- 2 lots were mortgaged by spouses Aquino to Guillermo Ponce as security for a loan of Php2,200,00.00. The mortgages were registered.

- Subsequently, the lots were sold by the Aquinos to Butuan Bay Wood Export Corporation.

- Limpin obtained a money judgment against Butuan Bay Wood, and to satisfy the judgment, the two lots were levied on and sold at public auction in 1980, Limpin being the highest bidder. Limpin later sold the lots to his co-petitioner Sarmiento.

- However, a day before Limpin’s levy on the 2 lots, Ponce had initiated judicial proceedings for the foreclosure of the mortgage over said two (2) lots. Judgment was rendered in his favor and became final; and at the ensuing foreclosure sale, the lots were acquired by Ponce himself as highest bidder.

- Ponce then moved for confirmation of the foreclosure sale. The lower court refused to confirm the sale, but the appellate court ordered the trial court to confirm the sale, subject to the equity of redemption of respondent Limpin (and now Sarmiento).

- The Supreme Court affirmed the decision of the appellate court in January, 1987.

- The trial court subsequently confirmed the sale and issued a writ of possession in favor of Ponce in June, 1987.

- However, Sarmiento did not try to exercise that right before,at or about the time of the confirmation of the foreclosure sale by Judge Solano. Instead, he instituted no less than two (2) actions in the same Regional Trial Court which were assigned to another branch, presided over by Hon. Teodoro Beltran- attempting to relitigate precisely the same issues which this Court and the Intermediate Appellate Court had already passed upon and resolved adversely to him.

- It was not until March 11, 1988-nine months or so after entry of the judgment recognizing his equity of redemption as successor-in-interest of the original mortgagors that Sarmiento finally attempted to exercise his unforeclosed equity of redemption. Ponce argued that Sarmiento’s right to exercise his equity of redemption over those lots had long expired, but Judge Solano did not share this view, and ruled accordingly.

- Thus the issue has been brought to this Court for resolution by Ponce's "Motion for Clarification"

ISSUE:Whether or not Sarmiento can still exercise his equity of redemption.

DECISION: Sarmiento's position was that the June 1987 confirmation of the sale of the two lots could not have cut off ... (his) equity of redemption." He also argues that he had not been informed of the time when his right of redemption

would be cut-off, because he "never received a copy of any Motion for Confirmation, much less notice of hearing thereon in violation of his right to due process;" that to hold otherwise would "render nugatory the decision of the Court of Appeals and this ... Court on the issue;" and that he is entitled to a reasonable time, e.g., a year, for the exercise of his equity of redemption.However the Supreme Court held that the equity of redemption is, to be sure, different from and should not be confused with the right of redemption. No right of redemption exists in a judicial foreclosure, except only where the mortgagee is a bank or banking institution. In a judicial foreclosure, if the mortgagee is not a bank or banking institution, the foreclosure sale, "when confirmed by an order of the court. ... shall operate to divest the rights of all the parties to the action and to vest their rights in the purchaser." There then exists only what is known as the equity of redemption. This is simply the right of the defendant mortgagor to extinguish the mortgage and retain ownership of the property by paying the secured debt within the 90-day period after the judgment becomes final, in accordance with Rule 68, or even after the foreclosure sale but prior to its confirmation.

Thus the mortgagor's equity (not right) of redemption may be exercised by him even beyond the 90-day period "from the date of service of the order,' and even after the foreclosure sale itself, provided it be before the order of confirmation of the sale. After such order of confirmation, no redemption can be effected any longer.It is this same equity of redemption that is conferred by law on the mortgagor's successors-in-interest, or third persons acquiring rights over the mortgaged property subsequent, and therefore subordinate, to the mortgagee's lien. If these subsequent or junior lienholders be not joined in the foreclosure action, the judgment in the mortgagor's favor is ineffective as to them, of course. In that case, they retain what is known as the "unforeclosed equity of redemption," and a separate foreclosure proceeding should be brought to require them to redeem from the first mortgagee, or the party acquiring title to the mortgaged property at the foreclosure sale, within 90 days, under penalty of losing that prerogative to redeem. In the case at bar, however, there is no occasion to speak of any "unforeclosed equity of redemption' in Sarmiento's favor since he was properly impleaded in the judicial proceeding where his and Ponce's rights over the mortgaged property were ventilated and specifically adjudicated.

The rejection by this Court of Sarmiento's and Limpin's appeal in its Decision of January, 1987, should therefore have sufficiently alerted Sarmiento that confirmation could come at any time after this Court's Decision became final, with or without any action from Ponce. He cannot, in the circumstances, claim unfair surprise. He should, upon being notified of this Court's Decision, have

taken steps to redeem the properties in question or, at the very least, served the Trial Court and Ponce with notice of his intention to exercise his equity of redemption. There was certainly time enough to do this, the order confirming the foreclosure sale issuing only on June, 1987—had he not occupied himself with the fruitless maneuverings to re-litigate the issues already recounted. Indeed, had he made an attempt to redeem, even belatedly but within a reasonable period of time after learning of the order of confirmation (the record shows he did learn of it within three [3) days after its issuance), he might perhaps have given the Court some reason to consider his bid on equitable grounds. He did not. He let nine (9) months pass, to repeat, in carrying out improper (and contumacious stratagems to negate the judgments against him, before making any such move.Thus the equity of redemption claimed and invoked by Sarmiento lapsed and ceased to exist without having been properly exercised. 3. QUIMSON V. PNB (MISSING DIGEST)

- without passing on the question raised in the pleadings before it as to whether in an instance where the property sought to be repurchased is only one of several properties separately mortgaged by the same mortgagor to the said Bank at different times but sold in a single foreclosure proceeding together with the others because the separate deeds of mortgage commonly provide that each shall be security for all obligations of the mortgagor to the Bank, as in this case, should be the amount of the particular loan for which the property being redeemed was mortgaged or the total of all the loans covered by all the mortgages involved in the said foreclosure.

-  cannot alter the fact that in the very deed of mortgage relied upon by them, appellants' predecessor agreed to make the same property a security not only for the P2,500.00 loan already obtained by him but for all other obligations he may subsequently have to the appellee bank and subsequently, he did incur other such obligations, all amounting to over P64,000.00 albeit secured by other mortgages.

- We can only say that this Court is without power to alter or modify the terms and conditions of contractual obligations freely agreed upon by the parties on a mere plea of the

obligor that he is without means to fully comply with it or that he feels the same to be inequitable.  

- The property was mortgaged for P2,500.00. Because of the failure of said Francisco Quimson to pay the mortgage loans, the Philippine National Bank filed foreclosure proceedings in the Court of First Instance of Nueva Ecija.

- Public auction, highest bidder PNB. Confirmation of sale.

- Plaintiffs who are the heirs of the late Francisco Quimson want to redeem the property from the Philippine National Bank. Defendant Philippine National Bank, however, refused alleging that the period of redemption which is to be counted from the date of judicial confirmation has already expired and that the property has already been sold to Ricardo S. Mendoza.

- Plaintiffs argued that the period of redemption should be counted from the date that the sale and the judicial confirmation were registered on September 19, 1963

- The rule in judicial foreclosure is different in that the period of redemption is counted from the time of judicial confirmation.

- ISSUE: w/n the the period of redemption should be counted from the date of the judicial confirmation of the sale, not from the registration of the certificate of the sale and decree of the confirmation of the sale.

- The property therein involved is registered land. While, indeed, sales on foreclosure of properties mortgaged to the Philippine National Bank may partake of being sui generis, they need not depart from the sound principles governing registration of transactions concerning lands coming under the Land Registration Act or the Torrens system.- It is the law in this jurisdiction that when property brought under the operation of the Land Registration Act is sold, the operative act is the registration of the deed of conveyance. The deed of

sale does not "take effect as a conveyance, or bind the land" until it is registered- W/n the sale of PNB to Mendoza should be treated null and void because of the existence of the right of redemption- We are not now in a position to decide whether or not appellants' pretended right of redemption herein in controversy may still be exercised because it is not clear whether or not they have made within one year after registration of the sale the appropriate tender to the proper party, it follows that We cannot now also pass upon the question of whether or not the sale of the subject property to appellee Mendoza by appellee Bank on April 16, 1959 is null and void.- the decision of the lower court is modified in the sense that the appellants may be allowed to redeem the subject property after this decision has become final, if they have taken the proper steps to enable them to exercise their right thereto by having made within one (1) year from the registration of the execution sale the appropriate tender to the proper party, and provided that they pay the full amount fixed in the writ of execution of over P64,000.00, 

4. RAMOS V. MANALAC & LOPEZ

FACTS:-The Ramoses executed an SPA in favor of their brother Eladio Ramos, giving the latter authority to mortgage their land to Romualdo Rivera to obtain a loan.-Eladio Ramos failed to pay, thus, Rivera filed an action to foreclose. Summons were served only upon Eladio who acknowledged the service in behalf of his siblings. -The trial court ordered the sale and public auction of the mortgaged properties in 1941, which were eventually sold to Rivera, who sold the same to Felipa Lopez.-Lopez asked for a writ of possession from the court in 1947, which was granted. The Ramoses deed not take heed of the writ, thus they were made to explain why they should not be punished for contempt. -The Ramoses argued that the writ being issued more than fiver years after the confirmation of sale in invalid, and that the sale was illegal since they were not served the summons.

ISSUE:

1. Whether the foreclosure of the mortgage was valid despite the service of summons only to Eladio and not to the rest of his brothers? Yes.

2. Whether the writ could be issued more than five years after the order of sale? Yes.

RATIO:1. In the first place, the court cannot entertain the claim of the Ramoses

which is a collateral attack on the validity of the judgment, specially after nine years have lapsed. Further, assuming arguendo that there was defect in the service of summons, this was cured when the petitioners voluntarily appeared and answered through their attorney of record.

2. The issuance of a writ is NOT an execution of judgment but is merely ministerial and complementary duty of the court to put an end to litigation, which the court can undertake after the lapse of five years, provided the statute of limitations and the rights of third persons have not intervened in the meantime. This is a case where the judgment involved is already final and executed. The property was sold by order of the court, and the purchaser has transferred them to a third person who desires possession of the land. No plausible reason is seen why the court cannot issue a peremptory order to place the ultimate purchaser in the possession of the property. The general rule is that after a sale has been made under a decree in a foreclosure suit, the court has the power to give possession to the purchaser, and the latter will not be driven to an action at law to obtain possession. The court has power to enforce its own decrees and thus avoid circuitous action and vexatious litigation.

5. GRIMALT v. VELASQUEZ

FACTS: The plaintiff, Grimalt, brought an action to foreclose a mortgage upon defendant's property. Judgment was rendered for plaintiff and, not having paid within the time limited, the mortgaged property was offered for sale. The highest bidder at the sale was Sy Quio, the appellant, who paid the Sheriff the full amount of his bid.

The court, without notice to the mortgagor, affirmed the sale upon the motion of the purchaser. Shortly after the mortgagor moved to set aside the order of affirmance upon the ground that it was void for lack of notice, and at the same

time deposited the full amount due under the judgment of foreclosure, with interest and costs.

The court granted the motion to set aside the affirmance of the foreclosure sale, but imposed upon the mortgagor the condition of paying Sy Quio interest at the rate of 10 per cent per annum upon the amount of his bid from the time it was paid to the sheriff until its return to the bidder.

From that part of the decision decreeing the payment of interest the judgment debtor appealed, as did the bidder. Sy Quio, from that part of the decree by which the affirmance of the sale to him was set aside. The appeal of Sy Quio was disposed of by a decision dated October 2, 1917 (36 Phil. Rep., 936) The present decision relates only to the appeal of the mortgagor.

ISSUE: 1. Whether or not bidder is entitled to mortgaged property? NO2. Whether or not mortgagor should pay interest to the bidder? NO

HELD: The appealed judgment is hereby affirmed in so far as it denies the affirmance of the sale of the mortgaged property, but is reversed in so far as it requires upon the defendant, Macaria V. Velazquez, to pay the appellant, Sy Quio, interest upon the money deposited by him to cover his bid at the sale so set aside, and the action of the said Sy Quio against defendant with respect to such interest is dismissed.

RATIO: Persons who bid at a foreclosure sale are assumed to know that the mere fact of being the highest bidder does not vest such bidder with the ownership of the property. The action by which the ownership of the property is conveyed is the approval of the sale by the court.

If the debtor discharges the obligation at any time before a valid order is entered, confirming the sale, the right of the bidder is limited to the return of the money paid by him to cover his bid. The debtor, in paying the creditor the amount of the judgment for the purpose of discharging his property from the lien of the mortgage of discharging his property from the lien of the mortgage, infringes no right whatever of the bidder. (Only Reimbursement of the paid bid price)

Consequently, it is error to require the mortgagor to pay the bidder interest upon sum deposited by him. Interest is payable by virtue of a contractual undertaking, or as a result of the breach of an obligation after the obligor has been put in default. With respect to one who becomes a bidder at a foreclosure sale, the owner of the mortgaged property is in no sense a debtor of any person who voluntarily takes part in the bidding.

The mortgagor by paying to the plaintiff the amount of her debt, for the purpose of freeing her property from the lien of the mortgage, makes use of a right which in no sense violates any right of the bidder. The latter, by making his bid and depositing the money, does not acquire a right but a mere expectancy, subject to the contingency of a valid approval of the sale by the court before the mortgage on the property is discharged by payment.

6. SY V. CA

FACTS: Carlos Coquinco executed a real estate mortgage in favour of private respondent State Investment House Inc. (SIHI) in order to secure a loan of Php 1 million. He however failed to pay his outstanding balance of Php 1,126,220.56(interest included) thus the property was extra-judicially foreclosed. SIHI emerged as the highest bidder and bought the property at the public auction at Php 760,000.

In the meantime, petitioner acquired from Coquinco by virtue of a deed of assignment the right of redemption of the property. Hence, before the end of the 1-year redemption period, petitioner tendered to SIHI 2 manager’s check to redeem the property. The first check amounted to P760,000 representing the purchase price at the public auction and the second check amounted to P91,120 representing the 1% interest for 12 months. The checks totalled P851,200. SIHI rejected the offer so the petitioner consigned the payment to the court to compel SIHI to accept the payment. The day before the end of the redemption period, petitioner directly redeemed the property from the sheriff of the court by tendering the same amount in the checks who issued the certificate of redemption.SIHI sought to annul the consignment arguing that the amount consigned in court is insufficient to redeem the property.

ISSUE: W/N in determining the redemption price is sufficient.

HELD: The redemption price tendered is insufficient and SIHI had the right to consolidate the title in its own name after the lapse of the redemption period. Petitioner based the redemption price under Act 3135 as amended relating to Sec 30 Rule 39 of the Rules of Court. It provides that the redemption price would be the purchase price in the public auction with 1% per month interest in addition to any payment of any assessment of taxes which the purchaser had paid and interest of the same rate. If this would be applicable, petitioner tendered the correct amount.

However, the flaw in pet’s argument is that it did not consider that the purchaser was a credit institution. For this reason, the applicable provision is Sec 78 of the General Banking Act as amended by PD 1828. It provides that the redemption price would be the amount fixed by court or the or the amount due under the mortgage deed, as the case may be, with interest thereon at the rate specified in the mortgage PLUS all the costs, and judicial and other expenses incurred by the bank or institution concerned by reason of the execution and sale and as a result of the custody of said property less the income received from the property. The provision is applicable not only to banking institutions but to credit institutions as well. SIHI is a credit institution thus, the General Banking Act is applicable.

Moreover, the deed of assignment can be construed as subrogation hence, petitioner only stepped into the shoes of Coquinco. As such he would be liable to all the deficiencies of Coquinco which would include the expenses of the foreclosure sale plus interest. Clearly, the redemption price tendered was insufficient.

7. TOLENTINO v. CA

FACTS: Ceferino de la Cruz died leaving a homestead land to the de la Cruz heirs. The heirs sold the land to Jose & Vicenta Tolentino. The Tolentinos loaned P4K from BPI and mortgaged this land plus 2 others as security. They failed to pay and the lots were judicially foreclosed and sold to BPI. The heirs filed an action in the CFI to repurchase their land. The Tolentinos were declared in default for failing to answer on time and the court ruled in favor of the heirs. BPI executed a deed of conveyance over the homestead land. The petition for relief of the Tolentinos were denied. Vicenta tried to redeem the properties from BPI but it only agreed to have her redeem the 2 other lots for P75k. Vicenta consigned with the sheriff P91k for the 3 lots but eventually ordered a stop payment. The Tolentinos filed a redemption case in the CFI which was dismissed. The CA said that the tender was not valid.

ISSUE: W/N the Tolentinos may redeem the properties. – ONLY THE 2 LANDS (NOT THE HOMESTEAD LAND).

HELD/RATIO: The Tolentinos are not indebted to BPI since their indebtedness was extinguished with the foreclosure and sale. What remains is the right of the Tolentinos to redeem the properties within the prescribed period. This right of redemption is an absolute privilege, dependent upon the discretion of the redemptioners. If the redemptioners choose to exercise their right of

redemption, it is the policy of the law to aid rather than to defeat the right of redemption. Thus the Tolentinos may redeem the properties other than the homestead land. They should pay not the amount of the loan but the auction purchase price + 1% interest/month + taxes/assessment.

A formal offer to redeem with a bona fide tender of the redemption price is not essential where the right to redeem is exercised thru the filing of judicial actions made simultaneously with the deposit of the redemption price with the Sheriff, within the period of redemption. This formal offer is only essential to preserve the right of redemption for future enforcement even beyond such period of redemption. Also, the redemption is not invalidated by the fact that the sheriff accepted a check. The check as a medium of payment in commercial transactions is too firmly established by usage to permit of any doubt upon this point at the present day. In addition, no importance may be attached to the stop-payment order, for the same will not militate against the right of the Tolentinos to redeem, such redemption being optional and not compulsory. It was not shown that said stop payment order was made in bad faith.

8. GRAVINA V. CA

Facts: Gravina owns a 116 Sq. Meter Lot in Tondo. Mortgaged it to the Daily Savings Loan Association in 1973 as security

for 109,000 loan. They failed to pay and so foreclosed. It was consolidated and registered. A New TCT was issued. It was later sold to Mercantile Finance for 40,000 and a new TCT was

issued. Then it was sold by Mercantile Financing to Spouses Tan for 66, 500

pesos and a again new TCT was issued. In 1983 the Spouses Tan filed an ejected case. The MTC Granted but RTC reversed, stating that Accion Renvidicatoria

was the proper remedy. So they filed in the RTC. This time the RTC granted and they filed a

Motion for Execution Pending Appeal. It was denied and they filed a Certiorari with the Court of Appeals, which

consolidated their appeal. Affirmed the RTC decision but denied the Certiorari.

Issue: Whether the decision should be reversed, NO.

Ruling:

Personal notice was not required under Act 3135 as long as there was publication. This was satisfied when it was published in the Evening News, a newspaper of general circulation in Manila.

Since there was no contractual stipulation, no personal notice was required.

No prohibition for employees (Spouses Tan) of DLSA to buy the land. In addition, they did not purchase the land directly but through Mercantile Financing.

No collusion was proven.

9. OUANO V. CA

Facts: Ouano mortgaged land to PNB as security for a 104, 300 peso loan. She defaulted on the loan so they filed a extrajudicial foreclosure. Sale

was set for 11/04/1980. There was compliance with the posting and publication.

But did not take place. It was canceled and reset, 4 times. In all instances, she filed a request to postpone it.

In these requests, she agreed to it without need of publication. Finally, it was sold on 05/29/1981 to PNB as only bidder. As PNB failed to redeem, consolidated and later sold to the Alfredo. But after send demand letter to the Alfredo (Ouano Brother) saying that

the sale was invalid and asked for the land back. Later filed a complaint v. PNB. The Brother joined, filing an intervention. In the interim the sale was finalized and he got a new TCT. RTC declared the sale VOID. Court of Appeals Affirmed.

Issue: Whether the decision should be reversed, NO.Ruling:

Under Act 3135, Publication is essential. The waivers are void v. public policy. The publication is for the public,

not Ouano. This is shown by the fact personal notice is not even required. EVEN if the waivers are valid, she agreed only to waive publication,

there was likewise NO waiver of posting. As regard the waivers, only the 1st one was filed BEFORE the sale. All the rest were filed AFTER the sale.

The mortgagee in this case was remiss in duty to comply with the law. After all the provision that allows postponement of sale under the Rules

of Court does not apply to Extrajudicial Sale, only Judicial Sale.

In addition, neither can estoppel give rise to a waiver that is against public policy.

Neither is she guilty of laches.

10. YULIENCO v. COURT OF APPEALS

FACTS:- Spouses Yulienco obtained a loan of P20M from Advance Capital

Corporation (ACC) with interest at 24% per annum and evidenced by a promissory note.

- To secure the loan, deeds of real estate mortgage were executed on their properties in Makati City, Benguet, and Quezon City (a residential house and lot).

- When petitioners failed to pay the loan in full, ACC filed a petition for extrajudicial foreclosure of the properties.

- To forestall the foreclosure of their properties, the petitioners filed a petition for injunction, reformation, and damages with prayer for temporary restraining order and/or preliminary injunction against ACC with the RTC of Makati, questioning the validity of the promissory notes and real estate mortgage.

- RTC of Makati granted petitioners’ prayer for preliminary injunction as to the foreclosure of their property in Makati City, but not as to the Quezon City and Benguet properties. The Court had no jurisdiction to enforce a writ of preliminary injunction outside of its territorial jurisdiction.

- Public auction was held on Sept. 27, 1993 and petitioners’ Quezon City property was sold to ACC as highest bidder.

- When petitioners failed to redeem the foreclosed property, ACC caused the consolidation of its ownership and paid the necessary taxes with the Bureau of Internal Revenue to effect the transfer of title to its name. Accordingly, the Register of Deeds of Quezon City cancelled the TCT of the spouses and issued another TCT in ACC’s name. Tax declarations over the subject property were likewise transferred in the name of ACC after it paid real estate taxes. From then on, private respondent ACC has been paying real taxes on the property.

- Petitioners continued to occupy the house and lot over the property. - In 1999, ACC filed with the RTC of Quezon City a petition for the issuance

of a writ of possession.- RTC granted the petition for writ of possession.

ISSUE: W/N the Court committed grave abuse of discretion when it granted the writ of possession

RULING: No.

RATIO:Petitioners cannot anchor their case on the purported interest they have, as owners, over the land and the improvements thereon. They been stripped of their rights over the property when, as mortgagors, they failed to redeem it after foreclosure took place. A mortgagor has only one year after registration of sale with the Register of Deeds within which to redeem the foreclosed real estate. After that one-year period, he loses all his interests over it. This is in consonance with Section 78 of Republic Act 337, otherwise known as the "General Banking Act," which provides:

SEC. 78. …In the event of foreclosure, whether judicially or extrajudicially, of any mortgage on real estate which is security for any loan granted before the passage of this Act or under the provisions of this Act, the mortgagor or debtor whose real property has been sold at public auction, judicially or extrajudicially, for the full or partial payment of an obligation to any bank, banking, or credit institution, within the purview of this Act, shall have the right, within one year after the sale of the real estate as a result of the foreclosure of the respective mortgage, to redeem the property by paying the amount fixed by the court in the order of execution… (Emphasis supplied.)

Likewise, Section 6 of Act 3135 states:SEC. 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term of one year from and after the date of the sale;… (Emphasis supplied.)

Well established is the rule that after the consolidation of title in the buyer’s name, for failure of the mortgagor to redeem, the writ of possession becomes a matter of right. Its issuance to a purchaser in an extrajudicial foreclosure is merely a ministerial function. The writ of possession issues as a matter of course upon the filing of the proper motion and the approval of the corresponding bond. The judge issuing the writ following these express provisions of law neither exercises his official discretion nor judgment. As such, the court granting the writ cannot be charged with having acted without jurisdiction or with grave abuse of discretion.

Under Section 7 of Act No. 3135 and Section 35 [now Section 33] of Rule 39, the purchaser in a foreclosure sale is entitled to possession of the property. The bank in this case has a better right to possess the subject property because of its title over the same.

Until the foreclosure sale of the property in question is annulled by a court of competent jurisdiction, petitioners are bereft of valid title and right to prevent the issuance of a writ of possession to respondent corporation. Until then, it is the trial court’s ministerial function to grant the possessory writ to said corporation. No error could be attributed to the respondent appellate court for affirming the trial court’s order in favor of private respondent, Advance Capital Corporation.

*With regard to the jurisdiction of the RTC of Quezon City to grant the writ of possession despite the pending case with the RTC of Makati, the Court stated that jurisdiction over a petition for a writ of possession lies in the court of the province, city, or municipality where the property subject thereof is located . Since the property is situated in Quezon City, the RTC of Quezon City had jurisdiction to grant the writ.

RULE 69: PARTITION

1. RUSSEL V. VESTIL

Facts: Petitioners Russel et al. filed a complaint against respondents Tagalog et al. denominated “DECLARATION OF NULLITY AND PARTITION” with the RTC of Mandaue City on Sept. 28, 1994. The complaint alleged that petitioners are co-owners of the disputed parcel of land and which was previously owned by spouses Tautho. Upon the death of the said spouses, the property was inherited by the legal heirs, herein petitioners and respondents.

Since then, the lot had remained undivided until petitioners discovered a public document entitled “DECLARATION OF HEIRS AND DEED OF CONFIRMATION OF A PREVIOUS ORAL AGREEMENT OF PATITION” and by virtue of this deed, respondents divided among themselves to the exclusion of petitioners.

Petitioners argue that the document is false, no oral partition took place and prayed that an order be issued to partition the property. Respondents filed an MTD on the ground of lack of jurisdiction of the RTC because total assessed value was P5k. MTD was granted.

Issue: W/N RTC had jurisdiction?

Ruling: Yes. RTC has jurisdiction over the case because an action to nullify Declaration of heirs and Deed of Confirmation of Previous Oral Partition is NOT CAPABLE OF PECUNIARY ESTIMATION. Where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the RTC has jurisdiction.

Examples of incapable of pecuniary estimation- specific performance, support, foreclosure. Since the main purpose of the petitioners’ action is to declare null and void the document which the private respondent made, it is action which is incapable of pecuniary estimation. While the complaint also prays for partition, it is only incidental to the main action.

2. RUGUIAN V. RUGUIAN

FACTS: Plaintiffs, Diego Ruguian, et al., filed an action for partition of a certain parcel of land in Ilocos Norte. They alleged that they and defendant Roman Ruguian are heirs of the decedent Calixto Ruguian and that the land belonged to the estate of Calixto. Defendant Roman filed a general denial and alleged that he was the owner of the land and had been in uninterrupted possession of the same for a period of 40 years. The lower court ruled in favor of plaintiffs and ordered a partition of the property.

ISSUE: Whether or not partition was proper.

HELD: NO. The defendant presents no document to sustain his contention. There is a preponderance of evidence, however, showing that the defendant had been in possession of the land for a period of about 30 years. The evidence also shows that if the land was deeded at all to the defendant, it must have been deeded by Calixto and his brother Mariano Ruguian.

Since there was no documentary evidence, however, to support the contention of the defendant that the land had been deeded and conveyed to him, and that a third person, Mariano Ruguian, who had an interest in the land was not made a party to the suit, a partition of the land in question cannot be granted. An action will not lie for the partition of an undivided interest in the land without the joinder of all co-owners.

The decision of the lower court is reversed for the reason that the evidence shows that all of the parties interested in the land in question are not parties to the suit.

3. MIRANDA V. CA

FACTS: Petitioner Miranda, administrator of the intestate estate of Dydongco, filed a civil case against the respondents (children of Dydongco) for recovery of properties of the decedent alleged to have been fraudulently and in bad faith and in breach of their fiduciary trust, concealed, appropriated and converted as their own. The complaint alleged that when Dydongco was still alive, he went to China, leaving some of his business in the Philippines to his children and Manager and employees of his aforesaid business. Accordingly, these respondents took over said businesses, assets, bank accounts, etc., and eventually organized a fake partnership. Also, with funds belonging to Dydongco, the respondents purchased lands on which they constructed apartments. The rentals on these apartments were also appropriated for their own good by said respondents.

Miranda, as administrator, now prayed that judgment be rendered declaring the said business, assets, and other property which are in the possession of the respondents to be turned over and delivered to the Estate of Dydongco, as well as to render accounts of these properties. Initially, the first RTC Judge who handled the case, Judge Mendoza, rendered a decision (1965 decision) sentencing the respondents to deliver to the administrator the properties found to belong to the estate, and to render accounting of the fruits and proceeds thereof. Because of the denial of the appeal in the lower courts, the respondents eventually brought this case to the SC via petition for certiorari. In 1968, the SC denied this petition and remanded the case to the CFI. This denial was based on the premise that their appeal should be taken after the rendition of the accounting of fruits and proceeds as necessary for the completion of the relief granted.

After the case was remanded back to the CFI, there was already a new judge (Judge Tantuico) who presided therein. To resolve the motions presented by the parties, Judge Tantuico excluded certain valuable properties from the decedent and absolved certain respondents from the obligation of turning over the possession to petitioner. Hence, this decision (rendered in 1969) substantially altered and changed the previous decision made by Judge Mendoza. This decision was appealed by both parties. Petitioner’s stand is that the first decision of Judge Mendoza is NOT interlocutory in nature, but one which is final in character, and which nothing is left to be done except for accounting. On the contrary, respondents said that the original decision of the former judge is

merely interlocutory in nature as there remains to be done. The CA found for the respondents and thereby said that Judge Mendoza’s original decision was merely interlocutory in nature, and therefore the later decision of Judge Tantuico was not made with grave abuse of discretion.

HELD: The CA erred in holding that respondent Judge Tantuico could change, alter and amend his predecessor’s decision on the merits for recovery of properties with accounting as if it were a mere interlocutory order or process, when all this Court held (in 1968 decision) was that, said original decision of Judge Mendoza was not appealable until after the accounting also ordered was rendered and approved so as to complete the relief granted. Hence the only remaining authority of Judge Tantuico was not to review, revise or reverse Judge Mendoza’s original decision but to enforce, receive and act on the accounting as ordered in the decision for the completion of the relief granted.

The original decision of Judge Mendoza is manifestly a judgment determining the merits of the case. This court, in 1968 decision, mere remanded the case for the rendition of the accounting for the completion of the said relief. A judge who succeeds another judge does not assume reviewing and appellate authority over his predecessor’s judgment on the merits. Thus, the appellate court is called upon to review only a single decision and not two decisions.

Insofar as Judge Mendoza’s judgment granting the claim for recovery of properties was concerned, Judge Tantuico was authorized by Rule 39 to stay enforcement until the rendering of the subsequent judgment on the accounting. But, this rule does not grant Judge Tantuico an authority to revise Judge Mendoza’s original judgment on the merits. Rule 39 says that judgment directing an accounting shall not be stayed after its rendition and before an appeal is taken or during the pendency of an appeal. Thus, if the judgment directing accounting is upheld on appeal, there would be no time lost and the accounting as rendered could be passed upon by the trial court at the stage of execution; and if the judgment were reversed on appeal, reimbursement of the actual expenses incurred by the successful appellant. As a general rule, an appeal stays the execution of judgment. But in case of accounting, such is not the case.

Judge Mendoza’s judgment for recovery with accounting of the properties of the decedent’s estate was and is a definitive and final judgment on the merits, although almost 11 years later, the accounting has yet to be rendered. The obligation to deliver and return cannot be affected or prejudiced by the rendition of accounting. This means that the definitive judgment is no longer subject to change but must stand as basis of the accounting ordered. The present case is one of definitive judgment ordering the recovery of properties. The mere incident

of accounting of fruits as a necessary consequence of the judgment on merits by no means makes the judgment an interlocutory one subject to change. Accordingly, the CA’s decision is set aside.

4. MUNICIPALITY OF BINAN V. GARCIA

Facts: An expropriation suit was filed by the Municipality against 11 defendants, who are the owners of an aggregate area which the municipality intended to use a site for a new market. One of the defendants, Erlinda Francisco, filed a motion to dismiss. The Court issued a writ in favor of the Municipality. Francisco filed a Motion for Separate Trial as she had a constitutional defense of vested right via a pre-existing Locational Clearance granted by the HSRC, which was granted. Evidence was presented by Francisco and the complaint for expropriation was dismissed in her favor. The Municipality filed a motion for reconsideration which was denied for being filed beyond the 15-day period for appeal prescribed by law.

Issue: W/N the MR was filed out of time?

Held: NO. In actions for eminent domain and for partition, no less than 2 appeals are allowed by law and the period for appeal is 30 days counted from notice of order and not the ordinary period of 15 days prescribed for actions in general.

A two-phase feature is found in an action for partition. The first phase is the determination of w/n a co-ownership exists and a partition is proper, and may be made by voluntary agreement of all the parties interested in the property. This phase ends with a declaration (a) that plaintiff is not entitled to have partition because a co-ownership doesn’t exist or the partition is legally prohibited, or (b) that co-ownership exists, partition is proper in the premises and an accounting of rents and profits received by defendant is in order. In either case, the decision is a final one and may be appealed by the party aggrieved.

The second phase commences when the parties fail to agree upon the partition directed by the court. Partition shall then be done for the parties by the court with the assistance of not more than 3 Commissioners. This stage may also deal with the rendition of the accounting itself and its approval by the court after the parties have been heard and awarded recovery of their share in the rents and profits in the real property in question. This order shall also be final and appealable.

The appealability of the orders in actions for partition or recovery of property and/or accounting has been upheld in previous cases such as Miranda v. CA.

5. QUIMPO V. VDA. DE BELTRAN

FACTS: Eustaquia Perfecto-Abad (Eustaquia) was the owner of several parcels of

land in Goa, Camarines Sur, described as Parcels I-IV. In 1966, Joaquin and respondents undertook an oral partition of parcel III

(San Jose property) and parcel IV. Half was given to Joaquin and the other half to the respondents. However, no document of partition was executed, because Joaquin refused to execute a deed.

Consuelo and Ireneo occupied their respective shares in the San Jose property, and installed several tenants over their share in parcel IV. Joaquin, on the other hand, became the administrator of the remaining undivided properties and of the shares of respondents Danilo, Marites, Anita and Helen, who were still minors at that time.

In 1989, Danilo, Marites, Anita and Helen wanted to take possession of the portions allotted to them, but Joaquin prevented them from occupying the same, and also refused to partition parcels I and II. And so, the respondents filed a complaint for judicial partition and/or recovery of possession with the RTC of Camarines Sur. As an affirmative defense, Joaquin presented deeds of sale over the properties and also claimed that he had been in continuous, open and adverse possession of the properties since 1946.

During the pendency of the case, Joaquin died and was substituted by his wife and children (The Quimpos).

The RTC decided in favor of the respondents, declaring them as co-owners of all the properties left by Eustaquia. It ruled that the fact that Joaquin was not gainfully employed and had no known source of income showed that the deeds of sale presented stated a false and fictitious consideration. Moreover, Eustaquia could not have possibly given her consent to the sale because she was already 91 years old at that time. The RTC also sustained the oral partition.

The CA affirmed on the ground that the deeds of sale only surfaced 43 years after its alleged execution and 23 years from the time of the oral partition. Hence, the instant petition for review on certiorari filed by the Quimpos.

ISSUE: W/N the oral partition between Joaquin and the respondents is valid

RULING: ORAL PARTITION VALID.

For 43 years, Consuelo and Ireneo occupied their portions of the San Jose property, and Joaquin never disturbed their possession. They also installed tenants in parcel IV, and Joaquin did not prevent them from doing so, nor did

he assert his ownership over the same. These unerringly point to the fact that there was indeed an oral partition of parcels III and IV.

In Maglucot-aw v. Maglucot, we held that: “[P]artition may be inferred from circumstances sufficiently strong to support the presumption. Thus…[i]t has been held that recitals in deeds, possession and occupation of land, improvements made thereon for a long series of years, and acquiescence for 60 years, furnish sufficient evidence that there was an actual partition of land either by deed or by proceedings in the probate court, which had been lost and were not recorded.”

Furthermore, in Hernandez v. Andal, we explained that “in spite of the statute of frauds, courts of equity have enforced oral partition when it has been completely or partly performed.” Regardless of whether it is valid and enforceable at law.”

In numerous cases it has been held or stated that parol partitions may be sustained on the ground of estoppel of the parties to assert the rights of a tenant in common. Equity will confirm such partition and in a proper case decree title in accordance with the possession in severalty.

The CA, therefore, committed no reversible error in sustaining the oral partition over parcels III and IV and in invalidating the deeds of sale between Eustaquia and Joaquin.

Petition dismissed.

RULE 70: FORCIBLE ENTRY & UNLAWFUL DETAINER

Reyes v. Sta. Maria | Teehankee

G.R. No. L-33213, June 29, 1979 | 91 SCRA 164

FACTS

Petitioners filed an action to quiet title on residential lot in Bulacan and to recover the possession thereof from respondents

They averred that through their tolerance and goodwill, thru the intervention and entreaty of one Maximo Santos, father of the defendants, the latter used and occupied the land free of charge, under the following

conditions, to wit: (a) that instead of paying rentals on the premises defendants undertook to pay the corresponding real estate taxes on the land; and (b) that said defendants will leave and vacate the premises anytime the plaintiffs so demand

Plaintiffs verbally notified defendants that they needed the land, hence, said defendants should vacate, but said defendants unreasonably refused at the same time claiming ownership of the property, and alleging further that they bought the same from a certain Pablo Aguinaldo

Petitioners accordingly prayed in their complaint for judgment declaring them as owners of the property and ordering the defendants to vacate the premises and return the possession of the same to them

Respondents filed a motion to dismiss the complaint on the ground that "the court has no jurisdiction over the nature of the action or suit" and that the action embodied in petitioners' complaint "is actually one for ejectment or unlawful detainer. Consequently, the case falls within the original exclusive jurisdiction of the inferior court or municipal court"

The lower court issued granted the motion to dismiss.

ISSUES & ARGUMENTS

Whether the dismissal of the case was proper

HOLDING & RATIO DECIDENDI

NO.

Such action was clearly an accion publiciana for the recovery of the right to possess (possesion de jure) (if not an accion reivindicatoria) falling within the lower

court's jurisdiction and not a mere action for detainer to recover physical possession (possession de facto) which would fall within the jurisdiction of the municipal court (if filed within one year after unlawful deprivation or withholding of possession) as erroneously held by the lower court in its dismissal order.

The complaint shows on its face that respondents' refusal to deliver the possession of the property was due to their adverse claim of ownership of the property and their counter-allegation that they had bought it from a certain Pablo Aguinaldo, and, therefore, petitioners' action was clearly one for recovery of their right to possess the property (possession de jure) as well as to be declared the owners

There are 3 kinds of actions for the recovery of possession of real property, namely, (1) the summary action for forcible entry or detainer, which seeks the recovery of physical possession only and is brought within one year in the justice of the peace court; (2) the accion publiciana which is for the recovery of the right to possess and is a plenary action in an ordinary civil proceeding in a CFI; and (3) accion de reivindicacion which seeks the recovery of ownership (which of course includes the jus utendi and the jus fruendi also brought in the CFI

The only issue in forcible entry and detainer cases is the physical possession of real property possession de facto and not possession de jure. If plaintiff can prove a prior possession in himself, he may recover such possession even from the owner himself. Whatever may be the character of his prior possession, if he has in his favor priority of time, he has the security that entitles him to stay on the property until he is lawfully ejected by a person having a better right by either accion publiciana or accion reivindicatoria. Petitioners' action was not merely for recovery of possession de facto. Their action was clearly one of accion publiciana for recovery of possession de jure if not one of accion reivindicatoria for declaration of their ownership of the land.

Accion publiciana or the plenary action in an ordinary civil proceeding to determine the better and legal right to possess (independently of title) clearly falls within the jurisdiction of the CFI and not of the Municipal Courts.

Petitioners, therefore, correctly filed their accion publiciana before the lower court. Having been fully apprised of respondents' refusal to surrender possession and their contrary claim of ownership of the same property, petitioners properly filed their accion publiciana with the CFI to avoid getting enmeshed in what would certainly have been another jurisdictional dispute, since they could reasonably foresee that if indeed they had filed a summary action for illegal detainer instead in the municipal court, respondents would then have contended, contrary to their present claim, that the municipal court is without jurisdiction over the detainer case by virtue of their contrary claim of ownership of the property

Hilario v. Court of Appeals

260 SCRA 420 (1996)

Facts:

The spouses Hilario purchased a house and lot from the spouses Palileo under a deed of sale dated March 5, 1986. Another document was executed on the same day granting spouses Palileo the right to repurchase within one year.

The Hilarios further allowed the spouses Palileo to remain in possession of the property on the verbal understanding that the Palileos would vacate the same after two years from the date of sale. The period passed without the Palileos complying, even after demands by the Hilarios so a complaint for unlawful detainer was filed by the Hilarios with the MTC.

The Palileos alleged that the deed of sale was in fact a deed of mortgage and that the obligation secured by such mortgage had already been extinguished. Thus, they remained owners and their continued physical possession of the property bolsters the assertion it was only a mortgage contract. The Palileos also questioned the MTC’s jurisdiction.

The MTC affirmed its jurisdiction over the case and ruled that the deed of conveyance was a deed of sale which vested in the Hilarios the right of ownership and consequently, of possession. RTC affirmed this ruling. The Palileos appealed to the CA.

On the reasoning that the issue raised by the Palileos ultimately rested upon and involved the question of ownership, particularly on the assumption that the deed of conveyance was actually a mortgage contract, the CA reversed and set aside the judgments of the RTC and MTC.

Issue: W/N the case involved an issue of ownership which would deprive the MTC of jurisdiction over the case

Holding/Ratio Decidendi:

No, the MTC was not deprived of jurisdiction. Section 33(2) of Batas Pambansa Blg. 129, provides that the MTC has the exclusive original jurisdiction over cases of forcible entry and unlawful detainer and in such cases where 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.

Therefore, as the law now stands, inferior courts retain jurisdiction over ejectment cases even if the question of possession cannot be resolved without passing upon the issue of ownership; but this is subject to the same caveat that the issue posed as to ownership could be resolved by the court for the sole purpose of determining the issue of possession. An adjudication made therein regarding the issue of ownership should be regarded as merely provisional and, therefore, would not bar or prejudice an action between the same parties involving title to the land.

The foregoing doctrine is a necessary consequence of the nature of forcible entry and unlawful detainer cases where the only issue to be settled is the physical or material possession over the real property, that is, possession de facto and not possession de jure.

Wilmon

FACTS: Wilmon Auto Supply Corporation, et al were lessees of a commercial building and bodegas standing on registered land in Iloilo City owned in common by Solinap et al.

The leases were embodied in uniformly worded deeds.The lease contracts, among others —

1) stipulated fixed terms or periods (September 1, 1987 to August 30, 1989);

2) provided for a deposit of an amount equal to two months' rents;

3) provided that the lessee should give the lessor 30 days prior notice of the intention to terminate or renew the contract, and that if no such written notice were given, the lessor would consider the contract terminated on the expiration of the term; and

4) contained a "reservation of lights" reading as follows: 3

Reservation of rights. — LESSOR reserves the rights to sell, mortgage, hypothecate or encumber the property so long as it requires the purchase(r) or mortgage creditors to respect the terms of this lease contract; provided further that LESSEE shall be duly informed about LESSOR's plan to sell the property.

After the expiration of the period fixed in the lease agreements, the lessors

executed a public instrument entitled "Deed of Absolute Sale," in virtue of which they sold the leased property to Star Group. The deed provided that the "Vendee shall henceforth deal with the lessees and occupants of the properties herein sold without any further warranty or obligation on the part of the Vendors."

Star Group filed an action for unlawful detainer in the MTC against the Wilmon, et al. Wilmon, et al refused to concede and impugned STAR’s right to eject them claiming that their leasehold rights were violated: their right of preemption, the buyer was not required to honor their leases and denied the option to renew.

Wilmon, et al filed a petition to annul the sale, to exercise their right of preemption and recover two mos. deposit, conveyance of the property and damages.

The RTC issued a restraining order to enjoin the MTC proceedings of the unlawful detainer. However, the writ was later dissolved as the RTC judge held that the MTC case involved issue of physical possession while the RTC case involved is one of ownership. Thus the suspension of unlawful detainer is not warranted.. The MR was denied. The RTC and CA did not rule in favor of Wilmon, et al to issue an injunction to the unlawful detainer.

ISSUE: Whether or not an action of unlawful detainer filed in the MTC against a lessee — grounded on the expiration of the latter's lease — should be abated or suspended by an action filed in the RTC by the defendant lessee — on the claim that he is entitled to a right of preemption (or prior purchase) of the premises in question and wishes to have said right judicially enforced?

RULING: Based on current jurisprudence, an ejectment case is not abated by the ff: Injunction suits, Accion publiciana, Writ of possession where ownership is the principal issue, Action for quieting of title to property, Suits for specific performance with damages, Action for reformation of instrument, Action for reconveyance of property or "accion reivindicatoria, Suits for annulment of sale, or title, or document affecting property.

The underlying reasons is because actions in the Regional Trial Court did not involve physical or de facto possession and, on not a few occasions, that the case in the Regional Trial Court was merely a ploy to delay disposition of the ejectment proceeding, or that the issues presented in the former could quite as easily be set up as defenses in the ejectment action and there resolved. This is specially true in the cases at bar, where the petitioners-lessees' claims — that the lessors (and the buyer of the leased premises) had violated their leasehold rights because (a) they (the lessees) were not accorded the right of preemption, (b) the

buyer was not required to respect their leases, and (c) the lessees were denied the option to renew their leases upon the expiration thereof — constituted their causes of action in the suits commenced by them in the Regional Court.

The precedents invoked by the petitioners do not represent current and prevailing doctrine; they might at most be deemed exceptions justifying the general rule. Moreover, the facts in the rulings invoked by them are quite readily distinguishable from the numerous precedents upholding said general rule.

In this case, we follow the general rule that an action to annul a sale or reconveyance in the RTC shall not abate the ejectment case pending in the MTC.

It may well be stressed in closing that as the law now stands, even when, in forcible entry and lawful detainer cases, "the defendant raises the question of ownership in his pleadings and the question of possession cannot be resolved without deciding that issue of ownership," the Metropolitan Trial Courts, Municipal Trial courts, and Municipal Trial Courts nevertheless have the undoubted competence to resolve "the issue of ownership . . . only to determine the issue of possession."

Spouses Munoz v. CA

Complainant NICOLAS GARCIA filed a complaint for unlawful detainer with MTC of Pampanga, alleging the following:

that he is an owner of an agricultural land; He and his co-owners acquired the lot by succession from their father

PEDRO; That the lot is tenanted by LORETO GARCIA; Defendants Spouses Munoz constructed their houses on the portion of

the lot without knowledge and consent of the owners; That NICOLAS sent letters to demand to asking Spouses Munoz’ to

remove their houses; Spouses Munoz refused to vacate their houses.

Spouses Munoz denied assertions of NICOLAS alleging that LORETO GARCIA (tenant) is deemed owner of land by virtue of PD 27. They also asserted that MTC lacks jurisdiction since the case is an accion publiciana recognizable by RTC.

MTC: in favor of NICOLAS, since he is a co-owner of lot.

RTC: reversed; NICOLAS failed to establish proof of prior possession over land since case at bar only deals with possession de facto (not de jure)

CA: set aside RTC decision. HENCE.

ISSUE: W/N complaint filed by NCOLAS was for summary proceeding of forcible entry (MTC has jurisdiction)or an accion publiciana (RTC has jurisdiction)?

HELD: RTC HAS JURISDICITION. Reversed.

1) There was no mention in the complaint of NICOLAS that he is in PRIOR POSSESSION of property with co-owners. It did not state when the tenant LORETO started to posses the property. It also failed to state that PEDRO was in prior possession of the property at the time of the entry by SPOUSES MUNOZ. Finally, it also failed to aver that when the entry was accomplished or when NICOLAS found out of such entry.

The failure to allege the TIME when unlawful deprivation took place is fatal because this will determine the start of the counting of the 1 year pd for the filing of the summary action of forcible entry. In effect, the action should either be an accion publiciana or reinvindicatoria with the RTC.

FORCIBLE ENTRY1 UNLAWFUL DETAINER

Possession illegal; it is an open challenge to the right of possessor

Possession legal until demand is made to recover possession or until possession fails to do an act (i.e. pay rent) which makes continued possession of premises illegal

Thus after lapse of 1 year, the suit must be started with RTC as accion publiciana.

Sumulong v. Court of Appeals

Facts:

Esperanza Sumulong entered into a contract of lease with Jopson Corp covering two adjoining lots along Earnshaw St., Sampaloc, Manila. Lease contract provided that if lessee abandons the property … lease contract shall become automatically terminated and cancelled, and premises vacated peacefully by lessee for lessor to hold.

Upon her return from the USA, Sumulong discovered that Joson had vacated the leased premises and tolerated the illegal entry of Inland. Pursuant to the abovementioned provision, the lease contract was rendered automatically terminated and cancelled. Sumulong then took

1 SC RULED THAT CA ERRED IN HOLDING THIS IS A CASE OF UNLAWFUL DETAINED. The fact that demand was made by NICOLAS for the SPOUSES MUNOZ to vacate premises doesn’t change the nature of the latter’s possession of property and convert action from forcible entry to unlawful detainer.

possession of the subject properties. To regain possession, Inland did the following:

1. misrepresented to plaintiff that Jopson is also the owner of Inland- Sumulong accepts

2. Dec 1989- Sumulong discovers misrepresentation, notified Jopson of termination of lease contract, took possession of properties

3. Inland pusuaded Sumulong to grant it temporary use of the properties pending negotiations for a lease- Sumulong perceives good faith, allows Inland to occupy

4. Inland insists on an unreasonably low amount of the lease rental- Sumulong decided not to lease premises to Inland; formally notifies termination of lease contract to Joson (March 1990)

5. April 1990- without Sumulong’s knowledge, Inland acquired sub-lease from Jopson; Sumulong then took over physical possession of the premises to secure its interest; Inland asked Sumulong if it could enter again and promised to finalize the lease contract; upon entry, Inland refused to enter into a lease contract and pay.

Sumulong filed a case for forcible entry. MTC ruled in favor of Sumulong because Inland entered the premises by stealth and strategy, since it had no sublease when it entered the premises. RTC reversed the MTC decision and said that the right to possession can be ventilated by way of another action. CA affirmed RTC decision.

Issue:

Whether the Civil Case should be dismissed?

Held and Ratio:

NOT DISMISSED. Although there is no cause of action for forcible entry, the allegations in the body sufficiently establish a cause of action for unlawful detainer. The MTC’s decision is consistent with that of unlawful detainer, except that the fixed reasonable compensation for the use of

the premises should only commence to run from December 1989 and not from June 1989.

Why not forcible entry? No strategy and stealth.

1. "Strategy" could only mean machination or artifice and considering that the parties tangled for weeks to reach an agreement on the terms and conditions of a contract of lease, no such machination or artifice could be said to have been employed by Inland.

2. "Stealth," is defined as any secret, sly, or clandestine act to avoid discovery and to gain entrance into or remain within residence of another without permission.

Why unlawful detainer? Inland refused to vacate.

Ong v. Parel

Facts: Petitioners spouses Ong are the registered owners of Lot No 18 of Rizal Park subdivision having purchased the property from the spouses Magbag in 1994.  Adjacent to this is Lot No.17 registered under the name of Visitacion Beltran, grandmother of respondent Parel. Petitioners filed an action for forcible entry against defendant alleging among other things that defendant through strategy and stealth constructed an overhang and hollow block wall along the common boundary of the parties’ adjoining lot, thereby illegally depriving petitioners of possession of the said portion of their lot; that they discovered the same in August 1994 when they had the boundaries of their lot resurveyed; that they made various demands on the defendant to remove the constructions and vacate the same. The defendant alleged that such constructions had already been in existence since 1956 and that these are within the boundary of lot 17 owned by her. Upon ocular inspection, the Commissioner and Geodetic Engineer reported that defendant’s house (wall, window, eaves of main building) encroached petitioners’ property. The MTC rendered judgment in favor of the petitioners.

Defendant filed an appeal with the RTC which reversed the MTC’s decision and dismissed the case for failure of the petitioners to prove prior physical possession of the subject lot. The case was appealed to the CA but it denied the petition because it found that the alleged encroachments were made by the late Visitacion at a time when she still owned both lots thus the introduction of the said construction could not be equated with strategy and stealth giving rise to forcible entry.  It was admitted by the petitioners in their petition that this case involves a boundary dispute and  the encroachment was discovered only upon a relocation survey of the property; such controversy could not be threshed out in an ejectment suit in view of the summary nature of the action, and the MTC, accordingly, is without jurisdiction. Hence, this petition.

Issue: Is a petition for forcible entry proper in this case?

Held: No. This is not a proper case for forcible entry, it is a boundary dispute wherein the adobe wall, overhang and window grill on the respondents’ side of the property encroach upon the petitioners’ side of the property.  

Section 1, Rule 70 of the Rules of Court requires that in actions for forcible entry the plaintiff is allegedly deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth and that the action is filed any time within one year from the time of such unlawful deprivation of possession.  This requirement implies that in such cases, the possession of the land by the defendant is unlawful from the beginning as he acquires possession thereof by unlawful means.  The plaintiff must allege and prove that he was in prior physical possession of the property in litigation until he was deprived thereof by the defendant.  The one year period within which to bring an action for forcible entry is generally counted from the date of actual entry on the land, except that when entry was made through stealth, the one year period is counted from the time the plaintiff learned thereof. If the alleged dispossession did not occur by any of the means stated in section 1, Rule 70, the proper recourse is to file a plenary action to recover possession with the RTC. Stealth is defined as any secret, sly, or clandestine act to avoid discovery and to gain entrance into or remain within residence of another without permission.

Petitioners failed to establish that respondents encroached upon their property through stealth as it was not shown when and how the alleged entry was made on the portion of their lot. The alleged encroachments

were made by the late Visitacion at a time when she still owned both lots. Respondent in her affidavit had affirmed that her grandmother Visitacion was the registered owner of Lot No. 17 with improvements which include the window sill overhang and the old adobe wall which were constructed as early as 1956 and these improvements are adjacent to the private alley from Elias Street which has to be opened and maintained as long as there exists building thereon; that the maintenance of such alley was made as an encumbrance in petitioners’ title when they bought the adjacent Lot no. 18.  Petitioners failed to present evidence to the contrary.

For failure of the petitioners to circumstantiate prior physical possession and the fact of entry by the defendant by force, intimidation, violence or stealth, the present action for forcible entry must exigently fail.  Where the complaint fails to specifically aver facts constitutive of forcible entry or unlawful detainer, as where it does not state how entry was effected or how and when dispossession started, the action should either be ACCION PUBLICIANA or ACCION REINVINDICATORIA for which the lower court has no jurisdiction.

Furthermore, neither does the instant case fall under a case for unlawful detainer. The complaint does not allege that the possession of respondent ever changed from illegal to legal anytime from their alleged illegal entry before petitioners made the demand to vacate.  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.  

ANTONIO CO TIAMCO vs. POMPEYO DIAZ

FACTS: Antonio Co Tiamco filed an action against Yao Boom Sim (alias Co Hue), Yao Ka Tiam (alias Chua Kui), and Sy Gui Gam (alias Go Si Pio) for unlawful detainer in a building in Manila. At trial, plaintiff offered as evidence, a notice to quit alleged to have been served upon defendants prior to the action. This was objected to on the ground that the fact sought to be proved thereby was not alleged in the complaint. Objection was sustained. An action for mandamus was brought by plaintiff before the CFI compel admission of evidence and was granted. When the trial was resumed in the municipal court, the evidence was admitted. Judgment was rendered against defendants who appealed to the CFI. The notice, was a part of the record elevated on appeal. In the CFI, the complaint filed in the municipal court was reproduced. Defendants filed a MTD upon the ground that there was no allegation in the complaint of a notice to quit or vacate the premises served upon them prior to the action and, therefore, the municipal court had no original

jurisdiction over the subject matter of the action and, as a consequence, the CFI had no appellate jurisdiction to try and decide the case. The motion was sustained and the case dismissed. Hence, this action for mandamus against the CFI to reinstate the petitioner's case.

ISSUE: Was unlawful detainer case validly dismissed? NO.

HELD: The order of dismissal is erroneous on the following grounds: (1) It relies on a wrong construction of the Rules of Court; (2) it is unwarranted under the circumstances of the case; and (3) the complaint filed is sufficient in itself.

It is apparent from that a demand is a pre-requisite to an action for unlawful detainer, when the action is "for failure to pay rent due or to comply with the conditions of his lease," and where the action is to terminate the lease because of the expiration of its term. A lease ceases upon the expiration of its term without the necessity of any notice to the tenant who thenceforth becomes a deforciant withholding the property unlawfully "after the expiration or termination of the right to hold possession by virtue of any contract, express or implied," In other words, upon the expiration of the term of a lease, the landlord may go into the property and occupy it, and if the lessee refuses to vacate the premises, an action for unlawful detainer may immediately be brought against him even before the expiration of the five days.

Indeed, upon the expiration of the lease, there may be a tacit renewal thereof (tacita reconduccion), as when, with the acquiescence of the lessor, the lessee continues enjoying the thing leased for fifteen days, and the lessor's acquiescence may be inferred from his failure to serve a notice to quit. But tacit renewal in such case, being a new contract is a matter of defense which may be alleged by defendant in his answer, no allegation being necessary in the complaint by way of anticipation of such defense.

There has been in this case a notice to quit, though not specifically pleaded in the complaint. That notice has been offered and admitted in the municipal court as evidence. And even supposing, without conceding, that the complaint is deficient in that regard, the deficiency was cured by evidence. This evidence was admitted upon objection of the defendant.

When evidence is offered on a matter not alleged in the pleadings, the court may admit it even against the objection of the adverse party, where the latter fails to satisfy the court that the admission of the evidence would prejudice him in maintaining his defense upon the merits, and the court may grant him a continuance to enable him to meet the new situation created by the evidence. Of course, the court, before allowing the evidence, as a matter of formality, should allow an amendment of the pleading and the municipal court did not do so in the case. Since, however, the municipal court is not one record, the rule on amendments should not therein be rigidly applied. Furthermore, where the failure to order an amendment does not appear to have caused surprise or prejudice to the objecting party, it may be allowed as a harmless error. Well-known is the rule that

departures from procedure may be forgiven where they do not appear to have impaired the substantial rights of the parties.

It is true that the case was dismissed by the respondent court, it was there on appeal and for trial de novo, independently of any evidence that had been presented in the municipal court. But the admissibility of the notice to quit as evidence, should have been considered by the respondent court as a closed question in so far its jurisdiction was concerned, for it was one of the branches of that court which, in an action for mandamus, issued a writ compelling the municipal court to admit the evidence. When the writ has been issued and has become final and has been obeyed, it is perfectly valid and should be respected. Specially is this so in the instant case where the complaint filed was sufficient and under its allegations the municipal court was bound to admit the evidence.

We, therefore, believe and so hold that the respondent court having judicial knowledge of the mandamus proceedings was duty bound to give due regard and full weight to the final and executed judgment therein rendered and, had it done so, it would have found that the supposed deficiency of the complaint pointed out in the motion to dismiss had already been supplied by evidence admitted by order of one of its branches; that the curative evidence was already before it as a part of the record elevated on appeal by the municipal court; and that to throw away the whole case only because the complaint was silent on a fact well known to all the parties and to the court was certainly to defeat the paramount interests of justice for the sake of a useless technicality.

In an action for unlawful detainer, a simple allegation that defendant is unlawfully withholding possession from plaintiff is made sufficient, for the words "unlawfully withholding" imply possession on the part of the defendant, which was legal in the beginning having no other source than a contract, express or implied, possession which has legal in the beginning having no other source than a contract, express or implied possession which has later expired as a right and is being withheld by defendant. Thus, a form of a pleading is devised which is brief and concise and though apparently too general it is so worded as clearly to apprise the defendant of the substance of the claim. Other details like the one-year period within which the action should be brought, and the demand when required to be made by the Rules must be proved but need not be alleged in the complaint.

It is true that according to Rule 4 section 3, the complaint in an inferior court shall state "the grounds of action" but no other facts are required in the form to be stated aside from those that are already therein stated which are thus deemed sufficient grounds for action.

The principle underlying the brevity and simplicity of this form of pleading rests upon considerations of public policy. Cases of forcible entry and detainer are summary in nature for they involve perturbation of social order which must be restored as promptly as possible and accordingly technicalities or details of procedure which may cause unnecessary delay should carefully be avoided.

PENAS V. CA

FACTS: Subject of this controversy were 2 apartments in QC, which were leased by Penas Sr. to private respondent Lupo Calaycay at a rental fee of P110/month. The written lease contract was on a month to month basis. Penas, Sr. died in 1976 so an extra-judicial settlement of his estate was executed by his surviving heirs, one of whom is his son, Penas, Jr. In 1990, the petitioners notified Calaycay that effective March 1990, they were terminating the written month to month lease contract as they were no longer interested to renew the same and demanded that the latter vacate the premises on or before February 28, 1990. The petitioners stated in the letter thatthey would allow the lease to continue provided a new lease contract would be executed for a period of (1) year at an increased monthly rental of P2,500 (later reduced to P2K).

Calaycay continued staying on the leased premises and effective March 1990, he deposited the monthly rentals with PNB in his name ITF (in trust for) Penas, Jr. On August 10, 1992, Penas sent another letter to the defendant to vacate the subject premises and to pay back rentals amounting to P60K. On September 25, 1992, Penas filed an unlawful detainer suit on the ground of termination of the month to month lease contract and failure of the defendant to execute a new lease agreement with increased rentals.

MTC QC dismissed the complaint for lack of jurisdiction because the complaint was allegedly filed more than 1 year after private respondent began unlawfully occupying the premises. The CA affirmed the TC decision reinforcing that since herein petitioners were not collecting the rentals being deposited by private respondent to PNB, there no longer was any lease contract between the parties for 2 years since the first letter of the petitioners. The Court of Appeals thus agreed that the proper remedy of the petitioners was to file an action for recovery of possession in the RTC.

ISSUE: Whether the MTC had jurisdiction over the petitioner’s complaint?

RULING: YES.

The 1 year period provided for in section 1, Rule 70 of the Rules of Court within which a complaint for unlawful detainer can be filed should be counted from the LAST letter of demand to vacate, the reason being that the lessor has the right to waive his right of action based on previous demands and let the lessee remain meanwhile in the premises.

In the present case, the first demand letter gave Calaycay the option to either vacate the premises or agree to execute a new lease contract on an annual basis. The notice giving the lessee the alternative either to pay the increased rental or otherwise vacate the land is NOT the demand contemplated by the Rules of Court in unlawful detainer cases. When after such notice, the lessee elects to stay, he thereby merely assumes the new rental and cannot be ejected until he defaults in said obligation and necessary demand is first made.

The facts of this case do not warrant a departure from said settled doctrine. It should be noted that even if the private respondent was depositing rentals in trust for the petitioners, what was being deposited were rentals at the old rate, which petitioners were not bound to accept or withdraw. When Calaycay elected to remain in the premises after petitioners had sent him the first letter, he assumed the new rental rate and could be ejected from the premises only upon default and by a proper demand from the petitioners. The demand was made on 10 August 1992, followed by the action for unlawful detainer on 25 September 1992. Private respondent was thus ordered by the SC to vacate the premises and pay back rentals.