G.R. No. 192893 - Manila Electric Co. vs. Heirs of Spouses Deloy

Respondents are the heirs of Spouses Dionisio Deloy and Praxedes Martonito-Deloy, represented by Policarpio Deloy, who inherited an 8,550-square meter parcel of land in Trece Martires City.
A 680-square meter portion of the property (the “subject land”) was donated by Dionisio Deloy to the Communications and Electricity Development Authority (CEDA) on November 12, 1965, to facilitate the provision of affordable electricity in Cavite.

In 1985, CEDA entered into a memorandum of agreement (MOA) with Manila Electric Company (MERALCO) and subsequently executed a Deed of Absolute Sale on June 28, 1985, transferring rights related to its electric distribution system.
Following the sale, MERALCO occupied the subject land even though the deed did not expressly include a transfer of the land but only the rights concerning electrical distribution facilities.
On October 11, 1985, MERALCO’s Assistant Vice President and Head of Legal, Atty. L.D. Torres, sent a letter to Dionisio requesting permission to continue using the subject land as a substation site, thereby implicitly acknowledging Dionisio’s superior right of possession.
An internal memorandum dated December 16, 1985, from L.G. De La Paz further reinforced MERALCO’s acknowledgment of Dionisio’s ownership, noting difficulties in reaching a lease agreement due to family and estate issues.

On July 8, 2003, respondents filed a Complaint for Unlawful Detainer against MERALCO before the Municipal Trial Court in Cities of Trece Martires (MTCC) after their offer to sell the subject land to MERALCO was rejected.
The MTCC rendered a decision on September 15, 2005, dismissing the complaint on the ground that the case required interpretation of the deed of donation, a matter “not capable of pecuniary estimation,” but opined that MERALCO was entitled to possession pending revocation of the deed of donation or nullification of the deed of sale.
The Regional Trial Court (RTC) subsequently upheld the MTCC ruling in its May 4, 2006 Resolution, asserting that the only issue in an unlawful detainer case was possession, not ownership.
Respondents’ motion for reconsideration was denied by the RTC in its September 27, 2006 Order.

Respondents elevated the case to the CA via a petition for review under Rule 42 of the Rules of Court.
The CA, in its November 9, 2009 Decision, set aside the RTC ruling and partially granted MERALCO’s Complaint for Unlawful Detainer by ordering respondents to vacate the subject property and to pay monthly rental and attorney’s fees.
The CA highlighted that an ejectment case based on possession by tolerance falls under unlawful detainer and that the physical possession was the sole issue for resolution, irrespective of questions on ownership.
MERALCO then moved for reconsideration before the CA, but its motion was denied in the July 5, 2010 Resolution, ultimately leading to the petition for review before the Supreme Court.

Whether or not the respondents’ complaint adequately states a cause of action for unlawful detainer.

Examination of whether the complaint raises an issue of possession rather than a subjective claim of ownership.

Whether extrinsic evidence—specifically, the letters dated October 11, 1985, and December 16, 1985, which seemingly acknowledge Dionisio’s superior right of possession—can prevail over the terms of the deed of absolute sale.

Consideration of whether such evidence, admitted by MERALCO itself, can alter the interpretation of the parties’ rights as set forth in the written instruments.

Whether title to the subject land, as donated to CEDA and subsequently sold to MERALCO, was validly transferred.

Whether the sale of the property to MERALCO violated or effectively revoked the donation made to CEDA.