FIRST DIVISION
[G.R. No. 195130. August 8, 2018.]
EDDIE S. CRESCINI, petitioner, vs. E. ASPE PAWNSHOP AND/OR LILIA S. ASPE, REPRESENTED BY ELMER BOY S. ASPE, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedAugust 8, 2018which reads as follows:
"G.R. No. 195130 (Eddie S. Crescini v. E. Aspe Pawnshop and/or Lilia S. Aspe, represented by Elmer Boy S. Aspe). — This is a petition for review on certiorari1 under Rule 45 of the Rules of Court filed by petitioner Eddie S. Crescini (Crescini), seeking to nullify the Court of Appeals' (CA) September 17, 2010 Decision 2 and December 22, 2010 Resolution 3 (collectively, assailed Decision) in CA-G.R. SP No. 108768. The CA, in its assailed Decision, granted the petition for review under Rule 42 of respondents E. Aspe Pawnshop and/or Lilia S. Aspe (Aspe), represented by Elmer Boy S. Aspe, against the February 4, 2009 Decision 4 of Branch 34 of the Regional Trial Court (RTC) of Iriga City, and reinstated the July 14, 2008 Decision 5 of Branch 1 of the Municipal Trial Court in Cities (MTCC) of Iriga City in Civil Case No. 3983. 6
The dispute involves an unlawful detainer case filed by Crescini against Aspe over one commercial door of the building standing on the former's land located at San Roque, Iriga City covered by Transfer Certificate of Title (TCT) No. 1521 7 (property). Crescini acquired the land and building from its former owner Purita Lee (Lee) by virtue of a sale when he assumed and paid the latter's mortgage with the Bank of the Philippine Islands. 8 Crescini registered his ownership and was issued TCT No. 1521 on October 19, 1998. At that time, Lee had an existing six-year lease contract (1999 lease) from December 28, 1999 until December 28, 2005 with Aspe over the property. 9
With knowledge of this lease, Crescini sent a written notice to Aspe on October 19, 1998, informing the latter that the property was transferred to him, together with a copy of TCT No. 1521. 10 In a letter dated June 20, 2000, Crescini inquired from Aspe as to the status of the lease and her intention to stay on the premises. 11 Twenty seven days before the expiry of the 1999 lease, Crescini sent another letter dated December 1, 2005 where he informed Aspe that he will not renew the lease contract or grant any further extension. 12 These letters were, however, ignored.
On January 3, 2006, without the knowledge of Crescini, Aspe entered into another lease contract 13 (2006 lease) with Lee for a period of 12 months, or up to December 31, 2006. On the fifth month of this lease, Crescini sent a letter dated June 5, 2006 where he made an offer to allow Aspe to continue with the occupancy, provided they both enter into a formal lease contract for a monthly rent of P15,000.00 to be reckoned from January 1, 2006. 14 Hearing nothing, Crescini, through counsel, made a formal demand on October 12, 2006 for Aspe to vacate and pay the monthly rentals of P15,000.00 starting from January 1, 2006. 15 For Aspe's failure to comply with his demands, Crescini initiated the action for unlawful detainer.
On April 24, 2007, during the pendency of the proceedings, Aspe vacated the premises and surrendered the key to the property to the MTCC. 16 Crescini was placed in possession of the property by virtue of an Order dated May 21, 2007. 17
Subsequently, the MTCC dismissed the case for lack of cause of action. 18 It ruled that Crescini is not entitled to rents because there is no lessor-lessee relationship between him and Aspe. 19 Upon appeal, the RTC reversed the MTCC. 20 Finding that Crescini established that he is the owner of property, it ruled that Crescini has the right not only to exclude any and all persons from enjoyment, use, and disposition of the property, but also to receive the natural, industrial, and civil fruits from the occupants of the property. 21 Further, there was no evidence introduced to prove the authority of Lee to enter into the 2006 lease. 22 It also gave no credence to Aspe's claim of good faith, and noted that the 2006 lease was entered into with knowledge of Crescini's title and in contravention of the latter's explicit prohibition in the letter dated December 1, 2005. 23
The CA granted respondents' petition for review. It agreed with the MTCC that Crescini failed to prove his cause of action because: (1) there is no lease contract between him and Aspe; and (2) he is already in possession of the property, making the issue of possession de facto in the case moot and academic. 24 Necessarily, damages cannot be awarded when there is a finding of lack of cause of action. This makes the award of rentals to Crescini unwarranted. 25 Thus, the CA reinstated the MTCC Decision.
In this petition, Crescini argues that the CA erred in holding that he failed to prove his cause of action for unlawful detainer when it relied on the lack of lease contract between him and Aspe. He contends that unlawful detainer is also proper when a person who occupies the land of another at the latter's tolerance or permission fails to vacate the premises upon the owner's demand. 26 He further asserts that the issue of rentals did not become moot despite turnover of possession of the property. 27
Aspe, on the other hand, claims that the absence of a contract of lease renders the first requisite (i.e., failure to pay rent or comply with the conditions of the lease) of an unlawful detainer case missing. 28 Also, Crescini never mentioned any tolerance in the complaint. 29 Even assuming there is tolerance or permission, Aspe argues that Crescini has yet to consolidate his ownership over the property because Lee is questioning the same in a pending action for reformation of instrument, annulment of deed of sale and memorandum of agreement, reconveyance of property, injunction, and damages. 30
The issue we shall resolve here is whether Aspe is liable for rental payments or reasonable compensation to Crescini for the period of January 2006 until surrender of the property to the latter.
We grant the petition.
At the outset, we find that the MTCC and CA erred when they concluded that a lease contract is always necessary to establish a cause of action for an unlawful detainer case.
An action for unlawful detainer pertains to specific circumstances of dispossession. It refers to a situation where the current occupant's initially lawful possession became unlawful due to the expiration of the right to possess, which may be sourced from a contract, express or implied, or by mere tolerance. 31 Thus, a lease contract is not at all times necessary for a successful unlawful detainer action. An ejectment complaint based on possession by tolerance of the owner is a category of unlawful detainer cases, which may also succeed after establishing the key jurisdictional facts. 32
For an unlawful detainer action to be successful, the plaintiff must allege and establish the following key jurisdictional facts: (1) initially, possession of property by the defendant was by contract with, or by tolerance of, the plaintiff; (2) eventually, such possession became illegal upon notice by the plaintiff to the defendant of the termination of the latter's right of possession; (3) thereafter, the defendant remained in possession of the property and deprived the plaintiff of the enjoyment thereof; and (4) within one year from the last demand on the defendant to vacate the property, the plaintiff instituted the complaint for ejectment. 33
If successful, the plaintiff in an unlawful detainer case is entitled to the following reliefs: (1) restitution of the premises; (2) rental arrears or reasonable compensation for the use and occupation of the premises; and (3) attorney's fees and costs. 34
Here, Crescini alleged and established that during the existence of the 1999 lease contract between Lee and Aspe, he acquired the property and was able to register it under his name as shown by TCT No. 1521; that on several occasions, he informed Aspe of his title and the status of the lease; that after expiration of the first lease, Aspe executed another lease contract with Lee despite knowledge of Crescini's title; that Crescini sent letters to, and tried to negotiate a contract of lease with, Aspe; that Crescini sent a formal demand to vacate on October 12, 2006 to Aspe; and that Aspe remained in the property until April 24, 2007.
We find that the foregoing clearly satisfied the elements of an unlawful detainer case. The CA and MTCC thus erred in holding that Crescini failed to establish his cause of action.
To begin with, the finding that Crescini did not have a lease contract with Aspe is incorrect. When Crescini bought the land and building covered by TCT No. 1521, he was subrogated to the rights and obligations of Lee as lessor in the 1999 lease over the property as the latter's successor-in-interest. 35 Thereafter, upon expiration of the lease in 2006, Aspe's possession and occupation of the property was converted into one by mere tolerance or permission of Crescini. 36 This was evident in Crescini's letters to Aspe, allowing the latter to occupy the property with the view that they will eventually enter into a formal lease contract. Later, this tolerance ceased upon Crescini's written notice to vacate to Aspe, making Aspe's possession unlawful.
At this juncture, we refrain from ruling on the validity of Crescini's title over the property. In his favor, he has presented an existing and valid TCT No. 1521. This certificate of title is not subject to a collateral attack; it cannot be altered, modified, or cancelled, except in a direct proceeding for that purpose in accordance with law. 37 To rule on its validity would amount to a collateral attack on his title, which is beyond the power of the trial court to determine in an action for unlawful detainer. 38 Thus, in the absence of proof that TCT No. 1521 has been cancelled by a competent court, its validity stands and must be respected.
Corollarily, the ownership of Crescini over the property operates to reject Aspe's defense that she had a valid lease contract with Lee. As of the execution of the 2006 lease, Lee was no longer the registered owner of the property, and there is no showing that she had been granted authority to execute the lease. While there are instances when the lessor need not be the owner of the property being leased, he should have a right (e.g., either as a usufructuary or a lessee) or at least an authority (e.g., as an agent of the owner, usufructuary, or lessee) to lease it out. 39 Here, it does not appear that Lee had either the right or the authority to grant Aspe the lease of the property in 2006. 40 Since Lee had no property to lease out, this makes the 2006 lease void for lack of an object certain. 41 Hence, the 2006 lease between Aspe and Lee cannot be used against Crescini to legalize Aspe's possession. Where the purported lessor is bereft of any right or authority to lease out the property, then his supposed lessee does not acquire any right to the possession or enjoyment of said property. 42
The CA further committed error when it concluded that since the issue of possession de facto is mooted by the turnover of the property to Crescini, this forecloses any award of rent or reasonable compensation for the use of the property. In Asian Transmission Corporation v. Canlubang Sugar Estates, 43 it is clear that determination of the reasonable compensation for the use and occupation of the property in an unlawful detainer case can still proceed despite a finding that the surrender of the property rendered the issue of possession de facto moot and academic. 44
Besides, in doing so, the CA mistakenly equated the mootness of an issue to a finding that the case is dismissible for lack of cause of action. Mootness refers to a circumstance when a case or issue ceases to present a justiciable controversy by virtue of supervening events, so that an adjudication of the case or a declaration on the issue would be of no practical value or use. 45 In such instance, there is no actual substantial relief which a petitioner would be entitled to, and which would be negated by the dismissal of the petition. 46 On the other hand, lack of cause of action refers to a situation where the evidence does not prove the cause of action alleged in the pleading. 47 While the finding of either may both lead to a dismissal of the case, they still differ as to their nature: mootness pertains to the absence of a relief caused by supervening events, while lack of cause of action refers to the absence of a relief caused by insufficiency of evidence. Thus, while a cause of action may exist, the case may still be mooted if relief is no longer available.
In this case, a declaration on the issue of possession still has practical value. Here, Crescini asked for three reliefs: (1) restitution of the premises; (2) rental arrears or reasonable compensation for the use and occupation of the premises; and (3) moral damages, attorney's fees and costs. We note that the turnover of the possession of the property rendered only the first relief moot and fait accompli, but the second and third reliefs remain available. This is the reason why the MTCC proceeded to dispose of the remaining issues, i.e., whether the plaintiff is entitled to rentals and damages, 48 and did not dismiss the case outright when it placed Crescini in possession of the property in its Order dated May 21, 2007. It recognized that while the issue of possession de facto was rendered moot, there is still value in determining the issues on the propriety of: (1) reasonable compensation for the use and occupation of the property for that period; and (2) damages, attorney's fees and costs. Unfortunately, the MTCC incorrectly ruled that there is no lease contract between Aspe and Crescini, and that Aspe's possession finds its legitimacy under the invalid lease contract with Lee.
Considering the foregoing, we find that the MTCC and CA erred in dismissing Crescini's case for lack of cause of action. To repeat, Crescini has proven the elements of an unlawful detainer case. As such, he is entitled not only to the possession of the property, but also to the rental arrears or reasonable compensation for the use and occupation of the premises and attorney's fees and costs.
In this regard, we affirm the RTC's award of P7,000.00 per month as reasonable compensation for the use of the property. This is the amount that Aspe agreed to, and was willing to pay, Lee for the use of the property, as evidenced by the 1999 lease itself. We also affirm the RTC's award of attorney's fees and costs of suit in favor of Crescini. 49 Aspe was made aware of the transfer of ownership of the property to Crescini through the series of letters one of which included a copy of TCT No. 1521. As aptly noted by the RTC, despite being confronted with the TCT in Crescini's name, Aspe neither filed a case for interpleader nor deposited the rents to the proper court. In fact, she even entered into the 2006 lease in disregard of the request made by Crescini. Thus, we find no reason to disturb these awards.
WHEREFORE, the petition is GRANTED. The Court of Appeals' Decision dated September 17, 2010 is REVERSED and SET ASIDE. The Regional Trial Court's Decision dated February 4, 2009 is hereby REINSTATED.
Furthermore, consistent with our ruling in Nacar v. Gallery Frames: 50 (1) the amount of P7,000.00 per month representing reasonable compensation for the use of the property shall earn legal interest at the rate of 12% computed from the date of filing of the action for unlawful detainer until June 30, 2013, and an interest rate of 6% to be computed from July 1, 2013 up to the date of finality of this Resolution; and (2) the attorney's fees and costs of suits in favor of Crescini shall likewise earn legal interest at the rate of 6% from the date of finality of this Resolution. The total monetary awards shall thereafter earn interest at the rate of 6% per annum from the finality of judgment until its full satisfaction.
SO ORDERED." Leonardo-de Castro, J., designated as Acting Chairperson of the First Division per Special Order No. 2559 dated May 11, 2018; Gesmundo, J., designated as Acting Member of the First Division per Special Order No. 2560 dated May 11, 2018.
Very truly yours,
(SGD.) LIBRADA C. BUENAActing Division Clerk of Court
Footnotes
1.Rollo, pp. 3-14.
2.Id. at 18-33; penned by Associate Justice Isaias Dicdican, and concurred in by Associate Justices Stephen C. Cruz and Samuel H. Gaerlan.
3.Id. at 41-42.
4.Id. at 59-68; penned by Presiding Judge Manuel M. Rosales.
5.Id. at 54-58; penned by Presiding Judge Lorna O. Reyes.
6.Id. at 33. The dispositive portion of the CA Decision reads:
WHEREFORE, in view of the foregoing premises, the petition filed in this case is hereby GRANTED. The assailed Decision dated February 4, 2007 and the Order dated April 14, 2009 of the Regional Trial Court, Branch 34, of the Fifth Judicial Region in Iriga City, in Civil Case No. IR-3717 are hereby REVERSED and SET ASIDE. The Decision dated July 14, 2008 of the Municipal Trial Court in Cities, Branch 1, in Iriga City in Civil Case No. 3983 is hereby REINSTATED.
SO ORDERED.
7.Id. at 19-20, 43.
8.Id. at 20.
9.Id. at 19, 115-116.
10.Id. at 51.
11.Id. at 52, 60.
12.Id. at 122.
13.Id. at 46-50.
14.Id. at 52.
15.Id. at 53.
16.Id. at 21.
17.Id.
18.Rollo, p. 58.
19.Id. The dispositive portion of which states:
WHEREFORE, premises considered, this case is ordered DISMISSED for lack of cause of action.
SO ORDERED.
20.Rollo, p. 68. The dispositive portion of which states:
For all the above foregoing, the decision of the Municipal Trial Court, Branch 1 of Iriga City dated July 14, 2008 is hereby ordered to be set aside and a new judgment is hereby rendered:
a) [O]rdering the defendant-appellee E. Aspe [P]awnshop and/or its owner-proprietor jointly and severally with Lilia Aspe to pay plaintiff-appellant Eddie S. Crescini by way of unpaid rentals in the amount of Seven Thousand (P7,000.00) Pesos per month covering the period starting from, January 1, 2006 to May 22, 2007 with legal interest of 12% per annum until fully paid.
b) To reimburse and pay the attorney's fee of P20,000.00; and,
c) To pay the cost of this suit.
SO ORDERED. (Emphasis in the original.)
21.Id. at 63.
22.Id.
23.Rollo, p. 66.
24.Id. at 30.
25.Id. at 31.
26.Id. at 9.
27.Id. at 10.
28. Id. at 345.
29. Id. at 350.
30. Id. at 351.
31. Province of Camarines Sur v. Bodega Glassware, G.R. No. 194199, March 22, 2017, 821 SCRA 295, 305-306. Citations omitted.
32. See Dela Cruz v. Court of Appeals, G.R. No. 139442, December 6, 2006, 510 SCRA 103, 121.
33. Province of Camarines Sur v. Bodega Glassware, supra at 306. Citation omitted.
34. RULES OF COURT, Rule 70, Sec. 17. Judgment. — If after trial the court finds that the allegations or the complaint are true, it shall render judgment in favor of the plaintiff for the restitution of the premises, the sum justly due as arrears of rent or as reasonable compensation for the use and occupation of the premises, attorney's fees and costs. If it finds that said allegations are not true, it shall render judgment for the defendant to recover his costs. If a counterclaim is established, the court shall render judgment for the sum found in arrears from either party and award costs as justice requires.
35. Dela Cruz v. Court of Appeals, supra note 32.
36. Id. at 123. Citation omitted.
37. Esmaquel v. Coprada, G.R. No. 152423, December 15, 2010, 638 SCRA 428, 438.
38. Id. Citation omitted.
39. See Ballesteros v. Abion, G.R. No. 143361, February 9, 2006, 482 SCRA 23, 33. Citation omitted.
40. Id.
41. CIVIL CODE, Art. 1318. There is no contract unless the following requisites concur:
xxx xxx xxx
(2) Object certain which is the subject matter of the contract;
xxx xxx xxx
Art. 1409. The following contracts are inexistent and void from the beginning:
xxx xxx xxx
(3) Those whose cause or object did not exist at the time of the transaction;
xxx xxx xxx
42. Ballesteros v. Abion, supra at 34.
43. G.R. No. 142383, August 29, 2003, 410 SCRA 202.
44. Id. at 219-220.
45. See Carpio v. Court of Appeals, G.R. No. 183102, February 27, 2013, 692 SCRA 162, 174. Citation omitted.
46. Id.
47. Macaslang v. Zamora, G.R. No. 156375, May 30, 2011, 649 SCRA 92, 106-107. Citation omitted.
48. Rollo, p. 56.
49. CIVIL CODE, Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except:
xxx xxx xxx
(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;
xxx xxx xxx
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim;
xxx xxx xxx
50. G.R. No. 189871, August 13, 2013, 703 SCRA 439.