PENTA PACIFIC REALTY v. LEY CONSTRUCTION

 

PENTA PACIFIC REALTY CORPORATION, petitioner v. LEY CONSTRUCTION AND DEVELOPMENT CORPORATION, respondent

G.R. No. 161589. November 24, 2014. 

TOPIC: Jurisdiction over the subject matter of an action is determined from the allegations of the initiatory pleading.

FACTS:

The petitioner owned the 25th floor of the Pacific Star Building located in Makati City with an area of 1,068.67 square meters. The respondent leased 444.03 square meters of the premises (subject property). The respondent expressed the intention to purchase the entire property. The parties executed a contract to sell, denominated as a reservation agreement.

The reservation agreement contained the following cancellation or forfeiture provision:

Any failure on [the respondent's] part to pay the full downpayment, or deliver the post-dated checks or pay the monthly amortization on the due date, shall entitle [the petitioner], at its option, to impose a penalty interest at the rate of three percent (3%) per month on the outstanding balance or to cancel this agreement without need of any court action and to forfeit, in its favor, any reservation deposits or payments already made on the unit, without prior notice.

After paying US$538,735.00, the respondent stopped paying the stipulated monthly amortizations. In a letter dated February 5, 1998, the petitioner's counsel informed the respondent of its failure to pay its amortizations since August 1997, and demanded the payment of US$961,564.50.

Through its letter of February 17, 1998, the respondent submitted the following proposals, namely: (1) that the US$538,735.00 paid under the reservation agreement be applied as rental payments for the use and occupation of the subject property in the period from March 1997 to February 28, 1998; (2) that the balance of US$417,355.45 after deducting the rental payments from March 1997 to February 28, 1998 should be returned to it; and (3) that the respondent be allowed to lease the subject property beginning March 1998.

The petitioner rejected the respondent's proposals. In its letter of May 25, 1999, the petitioner's counsel wrote to the respondent:

1.    notarial cancellation of the Reservation Agreement and/or sale of the property and to forfeit the payments respondent made in favor of petitioner

2.    final and formal demand is hereby made upon respondent to peacefully and quietly vacate the same within ten (10) days from receipt hereof.

3.    charge respondent the amount of P9,782,226.50 corresponding to reasonable rentals and other charges as of January 22, 1999.

Petitioner filed the complaint for ejectment in the MeTC following the respondent's failure to comply with the demands to pay and vacate.

MeTC: ruled in favor of the petitioner and found that the respondent's lawful possession of the property had been by virtue of the contract of lease, but had become unlawful when the respondent had failed to comply with its obligation to pay the monthly rentals for the subject property

RTC: nullified the MeTC's decision on the ground of lack of jurisdiction, holding that the appropriate action was either accion publiciana or accion reinvidicatoria over which the MeTC had no jurisdiction. It found that the complaint did not specifically aver facts constitutive of unlawful detainer, i.e. it did not show how entry had been effected and how the dispossession had started; and that the requirement of formal demand had not been complied with by the petitioner.

CA: affirmed the judgment of the RTC. It concluded that the petitioner's action was not unlawful detainer, but another kind of action for the recovery of possession.

ISSUE: Whether or not MeTC has jurisdiction based on the allegations in the complaint.

ARGUMENTS

PETITIONER

RESPONDENT

1.    MeTC had jurisdiction because its complaint made out a clear case of unlawful detainer, emphasizing that the basis of the complaint was the failure of the respondent to pay the stipulated monthly rentals under the revived contract of lease; 2.    that even if the cause of action was upon the nonpayment of the purchase price under the reservation agreement, the MeTC still had jurisdiction over the action because an unlawful detainer case could also arise from a vendor-vendee relationship; 3.    and that, accordingly, the nonpayment of rentals or of the purchase price sufficiently established its better right to possess the subject property.

1.    it had not violated any existing contract of lease with the petitioner because the contract of lease dated January 31, 1997 was based on the agreement between the respondent and Century Properties; 2.    that it had entered into the possession of the subject property as the buyer-owner pursuant to the reservation agreement; 1.    and that the recovery of possession should have been by accion publiciana or accion reinvidicatoria, and not unlawful detainer.

 

RULING:

1. Yes, MeTC has jurisdiction based on the allegations in the complaint.

In an action for forcible entry or unlawful detainer, the main issue is possession de facto, independently of any claim of ownership or possession de jure that either party may set forth in his pleading.

In unlawful detainer, the complaint must allege the cause of action according to the manner set forth in Section 1, Rule 70 of the Rules of Court, to wit:

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

The complaint must further allege the plaintiff's compliance with the jurisdictional requirement of demand as prescribed by Section 2, Rule 70 of the Rules of Court.

For the action to come under the exclusive original jurisdiction of the MTC, therefore, the complaint must allege that:

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

2.    the defendant's possession of the property eventually became illegal or unlawful upon notice by the plaintiff to the defendant of the expiration or the termination of the defendant's right of possession;

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

4.    the plaintiff instituted the action within one year from the unlawful deprivation or withholding of possession.

The complaint herein sufficiently alleged all the foregoing requisites for unlawful detainer.

As earlier shown, the final letter dated May 25, 1999 of the petitioner's counsel demanded that the respondent vacate the subject property. After the demand went unheeded, the petitioner initiated this suit in the MeTC on July 9, 1999, well within the one-year period from the date of the last demand.

The allegations of the complaint made out a case of unlawful detainer, vesting the MeTC with exclusive original jurisdiction over the complaint. As alleged therein, the cause of action of the petitioner was to recover possession of the subject property from the respondent upon the latter's failure to comply with the former's demand to vacate the subject property after the latter's right to remain thereon terminated by virtue of the demand to vacate. Indeed, the possession of the latter, although lawful at its commencement, became unlawful upon its non-compliance with the former's demand to vacate.

The jurisdiction of the MeTC was not ousted by the fact that what was ultimately proved as to how entry by the respondent had been made or when the dispossession had started might have departed from that alleged in the complaint. As earlier stated, jurisdiction over the subject matter was determined from the allegations of the complaint, which clearly set forth a cause of action for unlawful detainer.

WHEREFORE, we REVERSE and SET ASIDE the decision promulgated on October 9, 2003 by the Court of Appeals arming the decision rendered on June 10, 2002 by the Regional Trial Court of Makati City, Branch 58; REINSTATE the decision rendered on January 12, 2000 by the Metropolitan Trial Court, Branch 64, of Makati City; and ORDER the respondent to pay the costs of suit.