G.R. No. 249134 - Philippine Rabbit Bus Lines, Inc. vs. Bumagat

Petitioner Lily S. Villamil (substituted by her heirs) filed on February 6, 2003, a complaint for recovery of possession and damages against respondents spouses Juanito and Mila Erguiza before the MTCC of Dagupan City.
The subject is Lot 3371-C, Psd-111002, Pantal, Dagupan City, 191 sqm, covered by TCT No. 31225 (assessed at ₱2,290.00).

Originally under TCT No. 23988 registered in multiple co-owners’ names (Villamil family).
On September 29, 1972, petitioner (with co-owners) and Juanito Erguiza executed a contract to sell for ₱5,157.00, with a ₱2,657.00 down payment and ₱2,500.00 balance due upon court approval of sale of minor owners’ shares; failure to secure approval would treat the down payment as rent for 20 years.
Subsequent quitclaim and deed of sale among co-owners consolidated title in petitioner’s name under TCT No. 31125; real estate taxes paid by petitioner.

Respondents occupied the property since agreement, built a house with petitioner’s permission; paid no rent.
Petitioner demanded return of possession after 20-year “lease” in 1992 (informal) and by letter dated December 18, 2001 (received January 11, 2002). Respondents refused.
Barangay conciliation failed; certification to file action issued and complaint filed.

MTCC dismissed complaint (October 14, 2004) for lack of jurisdiction (action deemed contractual interpretation).
RTC reversed MTCC, remanded for lack of jurisdiction error (assessed value
MTCC (November 15, 2006) ruled for petitioner: found contract converted into 20-year lease, down payment as rent, lessees to vacate after December 2001; awarded use and occupation, attorney’s fees, costs.
RTC Branch 44 (October 2, 2008) affirmed MTCC decision (deleted attorney’s fees). Motion for reconsideration denied (May 18, 2009) for lack of notice.
CA (June 29, 2010) reversed RTC/MTCC: held agreement was contract to sell under suspensive condition, seller prevented its fulfillment, respondents retain possession pending consummation; denied costs.
CA denied petitioner’s motion for reconsideration (February 2, 2011).
Petitioner filed petition for review on certiorari before the Supreme Court.

Whether the RTC decision became final and executory because respondents’ motion for reconsideration was defective (no notice of hearing) and thus did not toll the reglementary period to appeal.
Whether the CA abused its discretion by giving due course to respondents’ petition despite alleged defective motion for reconsideration.

Whether the CA erred in reversing the RTC’s finding that petitioner had the better right to possess the property after respondents’ down payment converted into rent for 20 years (1972–1992) and after respondents allegedly failed to pay the balance of the purchase price.