Ballesteros v. Abion
REITERATIONFacts
The Antecedents: The property in dispute, a commercial building and land, was originally owned by Ruperto Ensano, transferred to DBP, then to Dr. Rodolfo Vargas. Ownership was registered in the names of DBP and Dr. Vargas on February 21, 1996. Petitioner Paulo Ballesteros entered into a lease contract for one door of the building with Ronald Vargas, son of Dr. Vargas, on March 14, 1991, representing himself as owner. The lease was to run until April 1, 1996. On September 27, 1995, Dr. Vargas sold the property to respondent Rolando Abion, with TCT No. 949 issued to Abion on April 10, 1996. On October 30, 1995, petitioner entered into a new lease contract with Ronald Vargas, extending the term to five years from November 1, 1995, and covering the second door. Petitioner occupied the additional door and made advance payments. He attempted to register the second contract, but it was only entered in the primary book due to unpaid taxes, lack of documentary stamp, and the tax declaration not being in the lessor's name. On April 30, 1996, respondent sent a letter demanding petitioner vacate the property, which petitioner refused to do. Procedural History: Respondent filed a complaint for unlawful detainer with damages against petitioner. The Municipal Trial Court in Cities (MTCC) dismissed the complaint for failure to state a cause of action. On appeal, the Regional Trial Court (RTC) reversed the MTCC decision, ordering petitioner to vacate, pay attorney's fees of ₱50,000, and monthly rentals of ₱7,000. Petitioner's motion for reconsideration was denied. The RTC issued a writ of execution, which petitioner's wife received on December 3, 1997. Petitioner filed motions for time to vacate, which were denied. The RTC allowed the sheriff to force open the premises. The sheriff delivered possession to respondent on December 15, 1997. Petitioner appealed to the Court of Appeals (CA). The CA affirmed the RTC decision with modification, ruling that Ronald Vargas had no right to lease the property under the second contract, petitioner's possession was by tolerance, and his good faith ceased upon learning of the defect in title. The CA reduced attorney's fees to ₱20,000 and monthly rent to ₱5,000 for a specific period. Petitioner's motion for reconsideration was denied. The Petition: Petitioner filed a petition for review on certiorari with the Supreme Court, raising several issues regarding the propriety of ejectment, cause of action, jurisdiction, petitioner's knowledge of ownership, attorney's fees, the validity of the writ of execution, contempt, and the RTC's jurisdiction to issue the writ.
Issue(s)
Whether respondent could legally eject petitioner or terminate the lease. Whether respondent was able to establish a cause of action. Whether the MTCC had jurisdiction to try the case. Whether petitioner had pretended ignorance of the property's ownership (related to the validity of the lease). Whether the CA's award of attorney's fees was justified. Whether the implementation of the writ of execution was valid. Whether respondent and the sheriffs should be held in contempt of court. Whether the RTC had jurisdiction to issue a writ for the implementation of the CA's decision.
Ruling
The Supreme Court denied the petition and affirmed the Court of Appeals' decision with the modification that the award of attorney's fees be deleted. The Court held that the second lease contract was void and inexistent, petitioner's possession was by tolerance and became unlawful upon demand to vacate, and the writ of execution was validly implemented. The award of attorney's fees was deleted for lack of factual basis in the decisions.
Ratio Decidendi
On the Propriety of Ejectment and Termination of Lease: The Court ruled that the second lease contract between petitioner and Ronald Vargas was void and inexistent because Ronald Vargas was not the owner and had no authority to lease the property. The principle of relativity of contracts bound Ronald Vargas as an heir of the seller, and he was not authorized by respondent or Dr. Vargas to enter into a new lease. Therefore, petitioner acquired no right to possession under this void contract. The Court clarified that registration does not legitimize a void contract. Petitioner's claim of good faith was immaterial to the validity of the contract. On the Sufficiency of Allegations for Jurisdiction and Cause of Action: The Court held that the allegations in the complaint sufficiently conferred jurisdiction on the MTCC and established a cause of action for unlawful detainer. The complaint averred that petitioner was holding the property by virtue of an expired lease and unlawfully refused to vacate despite demands. The Court reiterated that possession by tolerance becomes unlawful from the moment the owner demands that the possessor vacate and the possessor refuses. Furthermore, petitioner was estopped from questioning the MTCC's jurisdiction as he actively participated in the proceedings and even sought affirmation of the MTCC decision in his motion for reconsideration of the RTC ruling. On the MTCC's Jurisdiction: (Covered in the previous point regarding the sufficiency of allegations for jurisdiction and cause of action.) On Petitioner's Pretended Ignorance and Good Faith: Petitioner ceased to be in good faith once he became aware of the defects in the title, particularly when he attempted to register the contract and was informed of the lessor's lack of authority. The ruling in Garcia v. Court of Appeals was distinguished as it involved a residential unit governed by BP 25, not a commercial building. On the Correctness of the Award of Attorney's Fees: The Court agreed with the petitioner that the award of attorney's fees was improper. While Article 2208(11) of the Civil Code allows attorney's fees when deemed just and equitable, the Court emphasized that this requires express findings of fact and law justifying the award. The CA correctly noted that neither the MTCC nor the RTC provided a factual basis for the award, which was only mentioned in the dispositive portion of the RTC decision. The CA's reduction of the award from ₱50,000 to ₱20,000, based on equity, was deemed insufficient without factual or legal justification. Therefore, the award of attorney's fees was deleted entirely. On the Propriety of the Issuance and Service of the Writ of Execution: The Court found the writ of execution to have been properly issued, served, and implemented. Petitioner's contention that the three-day notice period was violated was incorrect. The three-day period should be reckoned from December 3, 1997, when petitioner's wife received a copy of the writ, constituting constructive personal service. This meant the sheriff could have lawfully ejected petitioner as early as December 8, 1997. Petitioner's own motions for time to vacate acknowledged his notice of the writ. Therefore, there was substantial compliance with the notice requirement, and no basis existed to hold the sheriffs in contempt. On Contempt of Court: (Addressed in the previous point regarding the writ of execution; no basis to hold sheriffs in contempt). On the Correctness of the RTC's Order for Writ of Execution: The Court noted that the issue regarding the RTC's July 4, 2000 order was never raised before the CA, and a copy of the order was not found in the records. Consequently, the Court could not pass upon this specific issue based solely on the petitioner's bare allegations.
Main Doctrine
A lease contract entered into by a person who is not the owner of the property and has no authority to lease it is void and inexistent. Registration of a void contract does not legitimize it. Possession by tolerance becomes unlawful from the moment the owner demands that the possessor vacate the property.