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MARCELITO D. QUEVADA v. CA

FACTS:

The petitioner filed a petition for review against the decision and resolution of the Court of Appeals (CA) in a case stemming from a lease agreement between the petitioner and the private respondent. The initial lease agreement was from August 15, 1994, to August 15, 1995, with an extension from August 15, 1995, to April 15, 1996. However, after the expiration of the extension, the private respondent continued to possess the property without payment of any reasonable compensation. The petitioner made several demands for the private respondent to vacate, but he refused. The matter was then referred to the barangay court for conciliation. The private respondent repudiated the "agreement to vacate as of December 31, 1997." A notice to vacate and pay rent was served on the private respondent on January 20, 1998. The private respondent claimed that he had started building a house on the lot earlier and occupied it as his residence. The petitioner offered to sell the lot to the private respondent but set a deadline for payment. The Metropolitan Trial Court ruled in favor of the petitioner, ordering the private respondent to vacate and pay compensation. The Regional Trial Court and Court of Appeals affirmed the decision. The case is now before the Supreme Court on petition for review.

The issues in the case include the propriety of the action for ejectment, the authority of the private respondent to bring the action despite not being the titled owner of the property, the possibility of reimbursing the petitioner for the value of the house on the property, and the existence of an implied trust.

The action for ejectment falls under the jurisdiction of the Metropolitan Trial Court and must be filed within one year after being unlawfully deprived of possession of the property. The private respondent, as the lessor, filed the action within the prescribed period.

The private respondent was deprived of possession of the property after the petitioner's lease expired. Despite several demands to vacate, the petitioner refused and even repudiated an agreement to vacate that was reached before the barangay court.

Under the rules, the lessor can commence an action against the lessee after making a demand for payment or compliance with the lease conditions and for the lessee to vacate. The lease contract was not extended after its expiration, and the petitioner's continued occupancy of the premises was only by tolerance. However, possession by tolerance becomes unlawful when the possessor refuses to vacate upon demand made by the owner.

Furthermore, the petitioner did not honor the agreement to vacate made before the barangay court. A written notice was served, giving the petitioner fifteen days to vacate the property, but he did not comply, leading to the filing of the ejectment action.

ISSUES:

  1. Whether the filing of the action for ejectment was within the prescribed period.

  2. Whether the prescriptive period for the cause of action was interrupted during the pendency of the case before the barangay authorities.

  3. Whether the action for unlawful detainer can be filed by a person who is not the titled owner of the leased property.

  4. Whether or not the petitioner is entitled to continue in possession of the leased property upon the termination or expiration of his right to possess.

  5. Whether or not the petitioner should be paid for the value of the portion of the house covered by the lease.

  6. Whether or not an implied trust exists between the petitioner and the private respondent.

  7. Whether or not there is a resulting trust in favor of the petitioner.

  8. Whether or not there is a constructive trust in favor of the petitioner.

RULING:

  1. The action for ejectment was filed within the prescribed period. The unlawful deprivation or withholding of possession started from the date the written notice to vacate was served, not from the expiration of the lease contract. The action was properly commenced within one year from the unlawful deprivation of possession.

  2. The prescriptive period for the cause of action was suspended during the pendency of the case before the barangay authorities. The 60-day period of suspension shall be deducted from the one-year period within which to file the action for ejectment.

  3. The action for unlawful detainer can be filed by a person who is not the titled owner of the leased property. The purpose of the action is to determine the actual physical possession of the property, not its ownership. The judgment rendered in the action is merely provisional and not conclusive as to the issue of ownership.

  4. The petitioner is not entitled to continue in possession of the leased property upon the termination or expiration of his right to possess. While the petitioner is initially in prior lawful possession of the property, his possession becomes unlawful upon the termination or expiration of his right to possess. His prior physical possession does not automatically entitle him to continue in possession and does not give him a better right to the property.

  5. The petitioner should be paid for the value of the portion of the house covered by the lease, which will be offset against the rentals due. The value of the portion of the house covered by the lease should be determined in order to offset it against the reasonable rent due for the continued use and occupancy of the leased premises until the petitioner vacates and surrenders it to the private respondent.

  6. There is no implied trust between the petitioner and the private respondent. Aside from the lessor-lessee relationship between them, no other legal relationship exists that shows equitable ownership of the land belonging to the petitioner and its legal title to the private respondent. The agreement to vacate before the barangay court negates the contention that an implied trust exists between the parties.

  7. No resulting trust exists in favor of the petitioner as there was no evidence presented to show that the conveyance of the land was to secure payment of a debt.

  8. No constructive trust exists in favor of the petitioner as there was no allegation of fraud, duress, or abuse of confidence on the part of the private respondent.

PRINCIPLES:

  • Possession by tolerance becomes unlawful when the possessor refuses to vacate upon demand made by the owner.

  • The prescriptive period for the cause of action in ejectment cases starts from the date of unlawful deprivation of possession, not from the expiration of the lease contract.

  • The prescriptive period for the cause of action is suspended during the pendency of the case before the barangay authorities.

  • The action for unlawful detainer can be filed by a person who is not the titled owner of the leased property.

  • Ejectment cases are designed to restore physical possession to one who has been illegally deprived of such possession, without prejudice to the settlement of opposing claims of juridical possession in appropriate proceedings.

  • The summary nature of an ejectment suit focuses on the actual physical possession of the property, not on the ownership of the property.

  • The possessory character and the purpose of summary ejectment and plenary action for recovery of possession and/or ownership of the land in Philippine jurisprudence.

  • Article 448 of the Civil Code, which provides for the rights of the owner of the land where something has been built, sown, or planted in good faith.

  • The need for supporting evidence to prove consent in cases where a builder has constructed improvements with the consent of the owner.

  • The principle of equitable compensation and offsetting the value of a portion of the house covered by a lease against rentals due.

  • The principle of unjust enrichment and the prohibition against enriching one party at the expense of another.

  • The definition of a trust as a fiduciary relationship with respect to property that involves the existence of equitable duties imposed upon the holder of the title to the property for the benefit of another.

  • Article 1456 of the Civil Code provides that if property is acquired through mistake or fraud, the person obtaining it is considered a trustee of an implied trust for the benefit of the person from whom the property comes.

  • The burden of proving the existence of a trust rests on the party asserting its existence, and such proof must be clear and satisfactory, showing the existence of the trust and its elements.

  • An implied trust may be proven orally, but the evidence must be trustworthy and received by the courts with caution, as it may be easily fabricated. It cannot be based on vague, uncertain, or equivocal declarations.