G.R. No. 151212 - Ten Forty Realty and Development Corp. vs. Cruz

Petitioner Ten Forty Realty and Development Corporation filed a complaint for ejectment against respondent Marina Cruz.
The complaint alleged that petitioner was the true and absolute owner of a residential lot and house located at #71 18th Street, E.B.B., Olongapo City, described in detail with its boundaries and taxation declarations.
Petitioner claimed that it acquired the property on December 5, 1996 from Barbara Galino by virtue of a Deed of Absolute Sale, with all requirements such as payment of capital gains tax evidenced by a Certification Authorizing Registration from the BIR.

Petitioner contended that after acquiring the property, it learned that Barbara Galino had sold the property on April 24, 1998 to respondent Cristina Marina Cruz, who immediately occupied the premises.
The occupation by respondent was allegedly tolerated by petitioner until petitioner eventually sent a demand letter on April 12, 1999, urging respondent to vacate the property and pay reasonable rental.
Subsequent to the demand, a complaint for ejectment was filed and various pleadings advanced the claim of ownership by petitioner versus the right of possession by respondent.

The case was initially filed before the Municipal Trial Court in Cities (MTCC) in Olongapo City, which on October 30, 2000, ordered respondent to vacate the property and awarded damages and attorney’s fees.
On appeal, the Regional Trial Court (RTC) of Olongapo City (Branch 72) reversed the MTCC ruling, holding that a Deed of Sale without the actual delivery of possession did not transfer ownership.
The Court of Appeals (CA) upheld the RTC decision, determining that petitioner’s cause of action, though crafted as unlawful detainer, was in substance a disguised action for forcible entry which had already prescribed.

Both parties claimed the right to possess the disputed property on the ground of their alleged ownership.
Petitioner argued that respondent’s occupation was merely by tolerance and that a proper ejectment suit for unlawful detainer should have been maintained.
The factual record revealed that no express contract of tolerance was established and that respondent had actually taken physical possession, indicating that the possession was unlawful from the inception.

Petitioner contended that as the first purchaser (December 5, 1996) it had superior title over respondent despite respondent acquiring possession later.
The issue was further complicated by the fact that actual possession of the property had not been transferred to petitioner, as delivery or actual control was never effected after the execution of the Deed of Sale.
Additionally, the classification of the property as alienable and disposable public land was raised, leading to a constitutional concern regarding the ability of a private corporation to acquire public land, as provided under Section 3 of Article XII of the Constitution.

Whether respondent’s occupation of the property was merely by tolerance or whether such occupation was inherently illegal from the start.

This issue turns on whether the alleged toleration of possession by petitioner existed from the beginning, a requisite for an unlawful detainer action.

Whether the action filed by petitioner should have been characterized as an unlawful detainer or a forcible entry case.

The distinction is critical as unlawful detainer requires possession initially legal, whereas forcible entry concerns a possession that was illegal from the outset—together with the applicable one-year prescriptive period for a forcible entry action.

Whether the determination of ownership may be made in an ejectment suit solely for the purpose of establishing who is entitled to possession de facto.

This involves whether the CA exceeded its bounds by considering the issue of ownership when both parties solely based their claim on possession, not on the incontrovertible transfer of title.

Whether petitioner, as a corporation, is disqualified from acquiring the property, given its status as alienable and disposable public land under the Constitution.

The issue addresses the constitutional prohibition on private corporations acquiring public lands except by lease under stringent conditions.