Case Digest (G.R. No. 245461)
Facts:
Dakak Beach Resort Corporation and Romeo G. Jalosjos (petitioners) filed a Petition for Review on Certiorari under Rule 45 assailing the Decision of the Court of Appeals Cagayan de Oro City, Twenty-Second Division (CA) dated June 28, 2018 and its Resolution dated January 25, 2019; the Supreme Court Third Division promulgated its decision on October 21, 2024 (Caguioa, J., writing for the Court).Lot No. 8771‑A (1,602 sq.m.) in Taguilon, Dapitan City was owned by Violeta Saguin de Luzuriaga by virtue of a free patent (OCT No. P‑26943‑2). On December 1, 1987 Violeta executed a ten‑year lease (1/1/1988–12/31/1997) with Dakak, represented by Jalosjos, providing monthly rents escalating by 20% annually the first ten years and expressly stipulating that “all permanent and fixed improvements introduced by the lessee shall become the property of the lessor” upon termination. Violeta repeatedly asked for a copy of the contract and later returned checks (Aug–Dec 1992) believing the lease had expired; she demanded vacation of the lot in May 1994 but to no avail. On April 13, 1998 Violeta sold the lot and all her rights to her daughter, Pilar L. Mendezona (one of the respondents). Pilar and her spouse Jose M. M. Mendezona (collectively, the Spouses Mendezona) demanded turnover in August 1999; when ignored they filed suit on April 2, 2003 for recovery of possession, specific performance, rentals, and damages.
In their amended answer Dakak and Jalosjos admitted the lease expired in 1997, asserted extensive improvements, claimed a preferential right of redemption and/or rights as a builder in good faith entitling them to reimbursement and retention, and sought compensation for their investments. At trial the RTC, Branch 8, Dipolog City, rendered judgment on August 1, 2016 in favor of the Spouses Mendezona ordering defendants to vacate within 30 days, declaring the improvements to belong to plaintiffs, awarding unpaid rents and fixing post‑judgment monthly rent at PHP 50,000 until surrender, and other relief. Dakak and Jalosjos appealed.
The CA (Twenty‑Second Division) on June 28, 2018 affirmed the RTC with modifications: it declared the improvements owned by the Spouses Mendezona, affirmed unpaid rents for Aug–Dec 1992 through 1997 and fixed reasonable rents for 1998 onward (starting PHP 4,000 monthly with annual PHP 2,000 escalator), but struck down the PHP 50,000 monthly rate a...(Subscriber-Only)
Issues:
- Is the total rent awarded by the Court of Appeals unconscionable and contrary to law?
- Was the lease contract validly terminated?
- Are Dakak and Jalosjos “builders in good faith” entitled to retain the property until reimbursement under Articles 448 and 546 of the New Civil Code?
- Are Dakak and Jalosjos entitled to one‑half of the value of improvements under Article 1678 of the New Civil Code upon termination of the lease?
- Do Dakak and Jalosjos, as owners of adjoining rural lands, have a right of redemption over Lot No. 8771‑A...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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