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LEO WEE v. GEORGE DE CASTRO

FACTS:

Petitioner Leo Wee filed a Petition for Review on Certiorari seeking the reversal of the Decision and Resolution of the Court of Appeals. The lower courts ruled in favor of respondent George de Castro, ordering the petitioner to vacate the subject property. Respondents alleged that they are the registered owners of the property and that petitioner failed to pay the increased rental agreed upon. The rental dispute was brought to the Barangay Lupon but the parties failed to reach an agreement, prompting the issuance of a Certification to file action in court. Respondents sent a letter terminating the lease agreement and demanding that petitioner vacate the property. Petitioner refused to comply, leading respondents to file the complaint for ejectment.

Petitioner argued that there was no agreement to increase the monthly rentals and that the demand for an increase was exorbitant. He claimed that he religiously paid the agreed monthly rental. Petitioner also argued that respondents failed to comply with the jurisdictional requirement of conciliation before the Barangay Lupon before filing the complaint. He further claimed that the MTC lacked jurisdiction over the ejectment suit since the complaint did not allege an "unlawful withholding" by petitioner.

The parties stipulated certain facts during the Pre-Trial Conference, including petitioner tendering rental payment for January 2002 and paying rentals only in the agreed amount for the previous months. The MTC dismissed the complaint for failure to comply with the prior conciliation requirement. The RTC affirmed the dismissal, finding that the MTC Decision was based on facts and law.

The trial court agreed with petitioner's argument that there was no agreement to increase the monthly rent and that respondents should only be liable for the originally agreed amount. The court also ruled that respondents' failure to undergo the conciliation process before the barangay court barred the ejectment case. It found that the complaint did not allege "unlawful withholding" of possession and failed to comply with the rule that all co-owners must join an action. The trial court's decision was affirmed by the Court of Appeals, ordering petitioner to vacate the property and pay the increased rent as well as rental arrearages and attorney's fees.

This case involves the interpretation of Presidential Decree No. 1508, which establishes a system of amicable settlement of disputes at the barangay level. The complainants filed a complaint against the respondents without undergoing conciliation before the Lupon Chairman or the Pangkat ng Tagapagkasundo. The respondents argued that the complaint should be dismissed for failure to comply with the pre-condition for filing a complaint in court. The complainants claimed that the conciliation process is not mandatory. The lower court dismissed the complaint for lack of jurisdiction, prompting an appeal before the Court of Appeals.

ISSUES:

  1. Whether the Certification issued by the Barangay Lupon stating that no settlement was reached on the matter of rental increase is sufficient compliance with the prior conciliation requirement under the Katarungang Pambarangay Law to authorize the respondents to institute an ejectment suit against the petitioner.

  2. Whether the conciliation proceedings for the rental increase would logically and reasonably include the matter of possession of the property subject to the rental, the lease agreement, and the violation of its terms.

  3. Whether the period of the lease agreement is deemed terminated at the end of each month due to the monthly payment of rentals.

  4. Whether the lessor has the right to rescind the lease agreement for non-payment of the demanded increased rental.

  5. Whether one co-owner can bring an action for ejectment against the lessee without joining all the other co-owners.

  6. Whether the lack of a Special Power of Attorney affects the validity of the action for ejectment.

  7. Whether the lack of attachment of Special Power of Attorneys (SPAs) in the Complaint is fatal to the case.

  8. Whether the failure of one of the parties to sign the Verification and Certificate of Non-Forum Shopping is a ground for dismissing the case.

  9. Whether the failure to explicitly allege the jurisdictional fact of "unlawful withholding" is fatal to the cause of action.

  10. Whether the failure of the respondents' counsel to attach the Official Receipt of updated payment of Integrated Bar of the Philippines (IBP) dues is a ground for dismissing the Petition.

RULING:

  1. The Court ruled affirmatively. The Certification issued by the Barangay Lupon stating that no settlement was reached on the matter of rental increase is sufficient compliance with the prior conciliation requirement. While the Certification only refers to the rental increase and not the ejectment of the petitioner, it can be inferred that given the particular circumstances of the case, the conciliation proceedings for the amount of monthly rental should also include the matter of possession of the property, the lease agreement, and its violation.

  2. Yes, the period of the lease agreement is deemed terminated at the end of each month due to the monthly payment of rentals. The contract between the parties does not fix a specific period for the lease; therefore, it is understood to be from month to month. Since the rentals are paid monthly, the lease agreement expires by operation of law at the end of each month.

  3. Yes, the lessor has the right to rescind the lease agreement for non-payment of the demanded increased rental. The right of rescission is statutorily recognized in reciprocal obligations, such as contracts of lease. The lessor may avail of the remedy of rescission for breach of the lessee's statutory obligations, including non-payment of rent.

  4. Yes, one co-owner can bring an action for ejectment against the lessee without joining all the other co-owners. Article 487 of the New Civil Code allows any one of the co-owners to bring an action in ejectment. The suit is deemed to be instituted for the benefit of all co-owners, and complete relief can be afforded even without the participation of the other co-owners

  5. No, the lack of a Special Power of Attorney does not affect the validity of the action for ejectment. The Special Power of Attorney is considered mere surplusage and is not necessary for the authority of the co-owner to bring the action. The attorney-in-fact, who has authority to file the complaint on behalf of the co-owner, is a party to the ejectment suit and is authorized to sign the Verification and the Certificate of Non-Forum Shopping.

  6. The lack of attachment of the SPAs in the Complaint is not fatal to the case since it is undisputed that the plaintiff was granted the authority to file the action for ejectment prior to the institution of the case. The authority granted through the SPAs was given prior to the filing of the complaint, satisfying the requirement.

  7. The failure of one of the parties to sign the Verification and Certificate of Non-Forum Shopping may be excused if that party executed an Affidavit attesting to personal knowledge of the filing of the case. Hence, it does not serve as a ground for dismissing the case.

  8. The failure to explicitly allege the jurisdictional fact of "unlawful withholding" is not fatal to the cause of action. The allegations in the Complaint, even if the exact words "unlawful withholding" were not used, sufficiently imply an unlawful withholding of possession by the defendant, constituting unlawful detainer.

  9. The failure of the respondents' counsel to attach the Official Receipt of updated payment of IBP dues is now moot and academic since the counsel has already complied with the requirement. The rigid application of technicalities should be disregarded if it will result in a manifest failure or miscarriage of justice.

PRINCIPLES:

  • Presidential Decree No. 1508 (Katarungang Pambarangay Law) and Republic Act No. 7160 (The Local Government Code) require parties to undergo a conciliation process before the barangay courts as a precondition to filing a complaint in court for matters within the authority of the lupon, subject to certain exceptions.

  • The conciliation proceedings for one issue may include related matters, such as possession of the property subject to the rental, the lease agreement, and its violation.

  • The customs and traditions of indigenous cultural communities should be applied in settling disputes between members of the cultural communities.

  • The exceptions to the requirement of conciliation include: cases involving detention, deprivation of personal liberty, provisional remedies, statute of limitations, government parties, public officers or employees in relation to their official functions, offenses punishable by imprisonment exceeding one year or a fine exceeding PHP 5,000, offenses without private offended parties, disputes involving real properties in different cities or municipalities (unless agreed upon by the parties), disputes between parties residing in different barangays (unless barangays adjoin each other and parties agree to settlement), and other disputes determined by the President or Secretary of Justice in the interest of justice.

  • Article 1687 of the Civil Code - Specifies the presumed period of a lease agreement when the period is not fixed in the contract.

  • Article 1659 of the Civil Code - Provides the remedies available to the aggrieved party in a contract of lease, including rescission.

  • Article 487 of the New Civil Code - Allows any one of the co-owners to bring an action in ejectment for the recovery of possession of a co-owned property.

  • Power of Attorney - An instrument in writing by which one person appoints another as his agent and confers authority to perform certain specified acts on behalf of the principal. The lack of a Special Power of Attorney does not affect the validity of an action for ejectment when one co-owner brings the action.

  • In an ejectment suit, it is sufficient that one of the parties is authorized to institute the proceedings as the representative of the owner.

  • The personal signing of the verification requirement may be deemed substantially complied with if other parties with sufficient knowledge and belief to swear to the truth of the allegations in the petition have signed it.

  • The jurisdiction of a court and the nature of an action are determined by the allegations in the complaint and the relief sought.

  • In an unlawful detainer case, an allegation that the defendant is unlawfully withholding possession from the plaintiff is sufficient, even without using the specific terminology of "unlawful withholding."

  • Technicalities should be disregarded if they will result in a manifest failure or miscarriage of justice.