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SPS. ERNESTO v. DORIS HAO

FACTS:

The pertinent facts of the case are as follows:

Aniana Galang leased a three-storey building to the Bank of the Philippine Islands (BPI), and BPI subleased the ground floor to respondent Doris Hao. Galang and respondent also executed a lease agreement for the second and third floors of the building. On August 15, 1986, petitioner spouses purchased the property from Galang.

After the expiration of the lease agreements, petitioner spouses sent demand letters to respondent to vacate the building, but she did not comply. Petitioner spouses filed two complaints for ejectment against respondent. In response, respondent filed an action for injunction to stop the ejectment cases.

The cases for annulment of sale and injunction were consolidated before the Regional Trial Court (RTC) of Makati, which granted the injunction and annulled the contract of sale. The Court of Appeals, however, reversed the decision of the RTC, and the complaints in the annulment case and injunction case were dismissed. Respondent elevated the case to the Supreme Court, but the petition was denied.

After the reversal of the injunction case, the Metropolitan Trial Court (MeTC) of Parañaque proceeded with the trial of the ejectment cases. The MeTC rendered a decision ordering respondent to vacate the premises and pay monthly rent and attorney's fees.

Petitioners filed a motion for clarificatory or amended judgment, claiming that the rent and attorney's fees were only awarded for the use of the ground floor and not the entire property. The MeTC issued an order clarifying the decision, stating the rent and attorney's fees for each floor.

Petitioners sought reconsideration of the order, requesting higher rent for each floor. Meanwhile, respondent filed a notice of appeal. Instead of resolving the motion for reconsideration, the MeTC elevated the case to the RTC.

The RTC modified the MeTC's decision by increasing the rent for the ground floor.

The petitioner, Aniana Galang and Bank of the Philippine Islands (BPI), entered into lease contracts with respondent Rosalinda Haruna for the occupancy of the first, second, and third floors of a building. After the expiration of the lease contracts, the petitioners sought to enforce their right of ownership over the property and evicted the respondent. However, the issue of the amount of monthly rentals to be paid by the respondent for the nearly ten-year period remained unresolved. The petitioners argued for the reinstatement of the regional trial court's decision, which fixed the monthly rentals at a total of P40,000.00, while the respondent insisted on the lower rental rates set by the Metropolitan Trial Court and affirmed by the Court of Appeals. It was emphasized that there was no consensual lessor-lessee relationship between the parties, but rather a forced lessor-lessee relationship as the respondent was in unlawful possession of the property.

The petitioners are the owners of a property located along Quirino Avenue in Barangay Baclaran, Parañaque, Metro Manila. They filed an ejectment case against the respondent, who was the lessee of the first, second, and third floors of the property. The contract between the former owner and the respondent had already expired.

The petitioners sought damages for their loss of use and possession of the premises. They argued that the rental rates of P8,000 for the first floor and P5,000 for each of the second and third floors were inadequate. They claimed that the fair rental value should be increased to P40,000.

The Regional Trial Court (RTC) ruled in favor of the petitioners, stating that the amount of rentals in the previous order was inadequate and unreasonable. The court justified its decision by considering the nature of the property, its location in a developed commercial area along a main thoroughfare, and the business practice in the vicinity.

The Court of Appeals affirmed the RTC's decision, prompting the respondent to elevate the case to the Supreme Court for review.

ISSUES:

  1. What constitutes the fair rental value in the case?

  2. Can the court take judicial notice of the general increase in rentals of real estate?

  3. Can the Motion for Reconsideration be treated as a Notice of Appeal in ejectment cases?

  4. Was the case governed by the Rules on Summary Procedure?

  5. The issue in this case is the determination of the proper amount of damages to be awarded to the respondent.

RULING:

  1. The fair rental value in the case is determined based on the location and commercial viability of the property. In this case, the Regional Trial Court (RTC) ruled that the reasonable rentals for the use and occupation of the premises should be P20,000.00 a month for the ground floor and P10,000.00 a month each for the second floor and third floor, or a total of P40,000.00 monthly rentals.

  2. Yes, the court can take judicial notice of the general increase in rentals of real estate, especially business establishments. In this case, the RTC correctly applied and construed the legal concept of judicial notice, considering the testimonies of witnesses and the nature of the leased property based on its location in a commercial area.

  3. The Motion for Reconsideration can be treated as a Notice of Appeal in ejectment cases. The peculiar circumstances of the case warrant a departure from the entrenched procedure that a party who has not appealed cannot obtain affirmative relief from the appellate court. The increase in damages/rentals awarded by the MTC was a valid issue that the RTC could resolve. It is evident that the respondent spouse was not satisfied with the clarificatory order and assailed it in their motion for reconsideration.

  4. The case was not governed by the Rules on Summary Procedure. The filing of a motion for reconsideration in an ejectment case is allowable under the ordinary rules, contrary to respondent's argument that it is a prohibited pleading and cannot replace the required notice of appeal.

  5. The Court affirmed the rulings of the lower courts and declared that the proper amount of damages awarded to the respondent includes the principal sum of P100,000.00, legal interest of twelve percent (12%) per annum from the date of notice of demand on 27 September 1988 until fully paid, attorney's fees amounting to P20,000.00, and costs of suit.

PRINCIPLES:

  • The fair rental value is determined based on the location and commercial viability of the property.

  • The court can take judicial notice of the general increase in rentals of real estate, especially business establishments.

  • The burden of proof to show that the rental demanded is unconscionable or exorbitant rests upon the lessee.

  • A party's active participation in the proceedings before a court without jurisdiction will estop such party from assailing lack of jurisdiction.

  • Denying a petition on a mere technicality would result in injustice.

  • A party who has not appealed cannot obtain affirmative relief from the appellate court, except in peculiar circumstances, such as in ejectment cases where departure from the general rule is warranted.

  • The filing of a motion for reconsideration in an ejectment case is allowable under the ordinary rules, as long as the case is not governed by the Rules on Summary Procedure.

  • The award of damages should be commensurate with the injury suffered by the aggrieved party.

  • Legal interest may be awarded on the principal sum from the date of notice of demand until full payment.

  • Attorney's fees may be awarded if there is a stipulation to that effect or when the court deems it just and equitable under the circumstances.

  • The prevailing party is entitled to costs of suit.