Asset Privatization Trust v. Court of Appeals
REITERATIONFacts
The Antecedents: Paragon Paper Industries Inc. mortgaged its paper mill to Development Bank of the Philippines (DBP). Upon default, DBP foreclosed and sold the property at public auction. Johannesburg Packaging Corporation (JPC) won the bidding with a cash bid of P120,579,000.00, subject to Presidential approval and payment within 30 days from notice of approval. DBP granted JPC permission to enter the premises for cleaning and repairs. JPC received notice of Presidential approval on January 9, 1987. DBP rescinded the award on May 22, 1987, due to JPC's failure to pay the full bid amount despite extensions. Procedural History: JPC filed a civil case contesting DBP's rescission. JPC also offered to purchase the mill from Asset Privatization Trust (APT), to which the property was transferred, for P110,597,000.00, promising payment around August 17, 1987, but failed to do so. APT sent a demand letter on December 14, 1990, for JPC to vacate. On January 14, 1991, APT filed a complaint for unlawful detainer. The Municipal Circuit Trial Court ordered JPC to vacate. The Regional Trial Court affirmed this decision. The Court of Appeals reversed the RTC decision, dismissing the unlawful detainer complaint, ruling that summary procedure was improper due to the ownership issue raised, the complaint lacked clarity, and a TRO in another case prohibited repossession. The Petition: APT filed a petition for review on certiorari with the Supreme Court, arguing that the Court of Appeals erred in reversing the lower courts' decisions.
Issue(s)
Whether the Rule on Summary Procedure is applicable in this case. Whether the complaint filed is for unlawful detainer.
Ruling
The Supreme Court reversed and set aside the decision of the Court of Appeals. It reinstated the decision of the Regional Trial Court and made permanent the temporary restraining order issued by the Supreme Court on January 23, 1992.
Ratio Decidendi
On the applicability of the Rule on Summary Procedure: The Court held that the appellate court erred in ruling that the Rule on Summary Procedure was inapplicable. The Court reiterated the principle that the pendency of an action for annulment of sale and reconveyance cannot be pleaded in abatement of an unlawful detainer action. It emphasized that if this theory were adopted, the applicability of the Rule on Summary Procedure could be easily thwarted by the defendant filing an action in another court contesting ownership. The Court further clarified that in ejectment cases, the jurisdiction of the court is determined by the allegations of the complaint, not by the defense raised by the defendant. Moreover, the Court noted that the 1983 Rules on Summary Procedure had been revised, and the revised rules mandate that all cases of forcible entry and unlawful detainer are to be tried pursuant to the Rules on Summary Procedure, regardless of whether the issue of ownership is pleaded. This procedural law may be given retroactive effect as there are no vested rights on rules of procedure. On whether the complaint is for unlawful detainer: The Court found that the appellate court erred in characterizing the complaint as one for forcible entry instead of unlawful detainer. A careful reading of the complaint, as analyzed by the Court, indicated that the private respondent (JPC) was allowed to continue in possession of the property based on its promise to purchase it from APT. Therefore, JPC initially had lawful possession. However, JPC failed to perform its promise of payment despite demands. After the demand and its repudiation, JPC's continued possession became illegal, making the complaint for unlawful detainer the proper remedy. The Court distinguished this from forcible entry, which requires unlawful taking of possession from another.
Main Doctrine
The pendency of an action for annulment of sale and reconveyance may not be successfully pleaded in abatement of an action for unlawful detainer or forcible entry. In ejectment cases, the jurisdiction of the court is determined by the allegations of the complaint, not by the defense raised by the defendant. Furthermore, the 1983 Rules on Summary Procedure were revised to mandate that all cases of forcible entry and unlawful detainer are to be tried pursuant to the Rules on Summary Procedure, regardless of whether the issue of ownership is pleaded.