G.R. No. 119337 - Bayview Hotel, Inc. vs. Court of Appeals

Petitioner, Bayview Hotel, Inc., entered into a contract of lease on May 27, 1959.
Private respondent, Club Filipino, Inc. de Cebu, was the registered owner of the parcel of land in Cebu City.
The lease granted petitioner the right to construct and operate a hotel complex (the Magellan International Hotel) for a period of thirty (30) years.
The agreement stipulated that all permanent improvements made by petitioner would transfer to private respondent upon lease expiration.
A renewal option was granted, allowing petitioner to extend the lease for an additional ten (10) years at a rent computed at five percent (5%) of the approved value of the land and improvements.

Prior to the lease expiry on December 31, 1992, petitioner indicated its intention to extend the lease but proposed a rental rate different from that originally agreed upon.
Private respondent, however, insisted on strictly enforcing the provisions of the original lease contract.
Consequently, private respondent issued a notice for petitioner to vacate the premises and demanded payment of accrued rentals, also claiming ownership of the building and improvements per the lease.

After petitioner failed to vacate, on May 18, 1993, private respondent filed a complaint for ejectment and for recovery of accrued rentals with the Metropolitan Trial Court of Cebu.
Before petitioner was served with the complaint and summons, the hotel building was destroyed by fire on May 21, 1993.
Petitioner filed its answer on June 1, 1993, raising several affirmative defenses, including:

Allegation of improper and defective service of summons, questioning the court’s jurisdiction.
Assertion that the plaintiff had no valid cause of action.
Claim that the loss of the premises by fire extinguished the complaint.
Argument that the fire had effectively ejected petitioner, rendering the ejectment action moot and academic.
Contention that the situation transformed the case into an ordinary claim for a sum of money, which exceeded the jurisdiction of the court.
Assertion that under the lease, compensation due for furnishings and equipment should serve as a set-off against the plaintiff’s claim.

Petitioner also moved for a preliminary hearing on the affirmative defenses, which was denied by the trial judge on the ground that such a motion is prohibited under the Revised Rules on Summary Procedure.

Aggrieved by the preliminary hearing denial, petitioner filed a petition for certiorari on June 24, 1993, with a prayer for a preliminary injunction against Judge Teodoro Lim and private respondent.
Private respondent argued that despite the fire, petitioner had not completely vacated the premises as evidenced by the continued presence of its guards and parked cars.
The Regional Trial Court of Cebu initially granted petitioner’s petition for certiorari, thereby ordering the Metropolitan Trial Court to dismiss the ejectment case.
On appeal, on February 16, 1995, the Court of Appeals reversed the RTC decision on several grounds:

The petitioner had submitted to the Metropolitan Trial Court’s jurisdiction by seeking affirmative relief therefrom.
Despite the physical destruction of the building, the court retained jurisdiction over the ejectment case since the issue centered on the possession of the land.
The factual question of whether petitioner had vacated the premises was to be determined by the trial court.
The petition for certiorari was deemed an impermissible pleading under the Revised Rules on Summary Procedure.

The Court rejected petitioner’s contentions that the destruction of the building automatically extinguished the lease, noting that the lease involved the land itself.
The court found that the affirmative defenses contained in the answer did not constitute a proper motion for dismissal under summary procedure.
Emphasizing the prohibition in Section 19 of the Revised Rules on Summary Procedure regarding petitions for certiorari, the court dismissed petitioner’s petition and ordered costs against petitioner.

Whether the Metropolitan Trial Court maintained jurisdiction over the ejectment case despite the total destruction of the hotel building by fire.
Whether the affirmative defenses raised in petitioner’s answer effectively amounted to a motion to dismiss, which is barred under the Revised Rules on Summary Procedure.
Whether petitioner’s filing of a petition for certiorari with the Regional Trial Court constituted a permissible pleading under the Revised Rules on Summary Procedure.