Philippine Feeds Milling Co., Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: Sy Tian Peng, the registered owner of a three-storey commercial apartment building, leased units to various tenants, including Philippine Feeds Milling Co., Inc. (petitioner) and Uy Bun Tiong (private respondent). Sy Tian Peng offered to sell the building to the tenants. Petitioner expressed its intention to buy and subsequently negotiated the sale, agreeing on a price of P800,000. Petitioner paid the down payment and the balance, receiving a deed of sale and a new Transfer Certificate of Title (TCT No. 1755564) in its name. Petitioner then informed Uy Bun Tiong that it needed the premises for its own use and requested a conference. Later, petitioner sent a telegram terminating Uy Bun Tiong's lease agreement and demanding vacation of the premises. Procedural History: Uy Bun Tiong and other tenants filed a case for specific performance and damages, seeking to annul the sale to petitioner and compel Sy Tian Peng to sell to them. Subsequently, they filed a complaint for consignation of rentals, alleging refusal of acceptance by the defendants. Meanwhile, petitioner filed an unlawful detainer case against Uy Bun Tiong for non-payment of rentals and unauthorized subleasing. The Metropolitan Trial Court (MTC) ruled in favor of petitioner, ordering Uy Bun Tiong to vacate and pay rentals. Upon appeal, the Regional Trial Court (RTC) reversed the MTC decision, dismissing the ejectment complaint, holding that the issue of title was necessarily involved and that the MTC lacked jurisdiction. The Court of Appeals affirmed the RTC's decision. The Petition: Petitioner assails the decision of the Court of Appeals, arguing that the RTC and CA erred in holding that the MTC lacked jurisdiction over the ejectment case.
Issue(s)
Whether the Metropolitan Trial Court (MTC) had jurisdiction over the ejectment case despite the filing of a separate case questioning the ownership and the option to buy the property. Whether the payment of rentals by the lessee to the new owner constitutes recognition of the latter's title. Whether the authority to sublease, granted by the previous owner, could be rescinded by the new owner.
Ruling
The petition for certiorari is granted. The decisions of the Court of Appeals and the Regional Trial Court are set aside, and the decision of the Metropolitan Trial Court in the ejectment case is reinstated.
Ratio Decidendi
On the jurisdiction of the Metropolitan Trial Court: The Supreme Court held that the filing of a separate case questioning the option to purchase and the ownership of the property did not divest the MTC of its jurisdiction over the ejectment case. The Court emphasized that jurisdiction is determined by the allegations in the complaint, which in this case sufficiently averred that the petitioner owned the property and sought to recover possession from an overstaying lessee. The lessee's assertion of ownership in the ejectment case does not oust the inferior court of its jurisdiction. The issue in the separate case was the option to purchase, which had expired, and not the ownership itself as claimed by the plaintiffs therein. The Court reiterated that in ejectment cases, a defendant cannot divest the inferior court of its jurisdiction by merely claiming ownership. On the recognition of ownership through payment of rentals: The Court found that the payment by Uy Bun Tiong to petitioner of rentals for eight months (July 1983 to February 1984) was tantamount to a recognition of petitioner's ownership of the property. As a lessee, Uy Bun Tiong is estopped from denying the title of his landlord. His act of paying rent to the new owner acknowledged the petitioner's status as the new landlord, thereby validating the petitioner's right to demand possession. This recognition of title precluded his suit to annul petitioner's title from preempting the latter's recourse to the summary action of ejectment. On the rescission of sublease authority: Even if Uy Bun Tiong's subleasing of the premises had been authorized by the previous owner, Sy Tian Peng, and even if rentals were fully paid or deposited, such authority could be rescinded by the new owner, Philippine Feeds Milling Co., Inc. This is because neither the lease nor the sublease was recorded on the title, making them subject to the new owner's rights. The new owner-lessor could terminate the lease for causes provided under Article 1673 of the Civil Code. Furthermore, the property being commercial and the rent exceeding the limit set by B.P. Blg. 25, the lessee was not protected by that law, allowing the lessor to terminate the lease.
Main Doctrine
The assertion of ownership by a lessee in an ejectment case does not divest the Metropolitan Trial Court of its jurisdiction, as jurisdiction is determined by the allegations in the complaint, not by the defenses raised in the answer. Payment of rentals to the new owner by the lessee constitutes recognition of the latter's title.