G.R. No. 123462 - Lavibo vs. Court of Appeals

On December 7, 1993, Tradal Ventures and Management Corporation (“Tradal”) entered into a contract with Ofelia Lavibo to sell a townhouse unit in the Shenandoah Twinhomes, South Green Park Subdivision, ParaAaque, Metro Manila for P1,500,000.00.
The contract provided a detailed payment schedule:

A partial payment of P100,000.00 upon execution of the agreement.
A subsequent payment of P120,000.00 on or before December 21, 1993.
A full downpayment of P280,000.00 on or before December 21, 1993.
The remaining balance of one million pesos to be paid upon the release of the buyer’s loan from BPI-Family Bank.

It was explicitly agreed that the buyer would not occupy the property until the full loan release had been effected.

Notwithstanding the contractual proviso, on January 11, 1994, Tradal permitted Lavibo to occupy the townhouse unit after she issued two postdated checks totaling P330,000.00.
When the checks were eventually presented for payment, they were dishonored due to the covering account having been closed.
On September 19, 1994, Tradal demanded that Lavibo vacate the premises; however, she neither vacated nor redeemed the dishonored checks.

On October 19, 1994, Tradal filed a complaint for ejectment with the Metropolitan Trial Court (MeTC) of ParaAaque against Lavibo and Atty. Benjamin Bargas.
The defendants filed a manifestation seeking dismissal on several grounds:

The complaint failed to state a valid cause of action for ejectment.
It was essentially premised on a contract to sell rather than a contract of lease, thereby invoking alternative remedies.
The damages claimed (amounting to at least P500,000.00 for actual and moral damages) were argued to fall outside the ambit of the Summary Rules.
It was asserted that the case fell outside the jurisdiction of the court.

On February 27, 1995, the MeTC dismissed the complaint, holding that—even though the case was styled as one for ejectment—it actually sought the rescission of a Contract to Sell.
The court emphasized that ejectment could only be pursued after the said contract had been rescinded, either by notarized act or through a proper action for rescission under Articles 1380 and 1381 of the Civil Code.

The Regional Trial Court (RTC) later affirmed the dismissal of the ejectment complaint in toto.
In response, Tradal filed a petition for review on certiorari with the Court of Appeals.

On November 29, 1995, the Court of Appeals reversed the RTC’s decision, granting the petition and ordering:

Immediate vacation of the premises by the respondents, thus restoring possession to Tradal.
Payment of the unit’s fair monthly rental value (P7,000.00) starting January 11, 1994, offset against the initial P100,000.00 partial payment.

On January 9, 1996, the same appellate court denied a motion for reconsideration of its decision.
Subsequently, Lavibo and Bargas elevated the case to the Supreme Court by filing a petition for review on certiorari.

The underlying issue of whether the ejectment suit was the proper remedy was central since the parties’ Contract to Sell had not been rescinded.
The petitioners argued that jurisdiction in an ejectment action is determined by the cause of action alleged in the complaint, not by the extrinsic facts.
The Supreme Court ultimately reinstated the RTC’s dismissal of the ejectment complaint, emphasizing the necessity of correct remedy when contractual relations are at issue.

Whether the filing of an ejectment suit was premature given that the underlying Contract to Sell between the parties had not been rescinded.
Whether Tradal’s choice of ejectment as the remedy, rather than pursuing an action for rescission or specific performance, was procedurally appropriate.

Whether the court had jurisdiction to entertain an ejectment action that essentially sought rescission of a contract still presumed to be valid.
Whether the allegations in the complaint sufficiently established a cause of action justifying ejectment, as opposed to a remedy more fitting a breach of contract for rescission.

Whether the alleged non-payment and occupancy issues justified the relief of rescission or ejectment.
Whether the damages claimed, including actual, moral, and exemplary damages, were appropriately pleaded given the nature of the breach of the contract.