G.R. No. 97637 - Wilmon Auto Supply Corp. vs. Court of Appeals

Case Digest (G.R. No. 97637)
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Facts:

Parties and property involved

Wilmon Auto Supply Corporation, Iloilo Multi Parts Supply Corporation, Virgilio Ang, Henry Tan, Southern Sales Corporation, and Chang Liang, Jr. were lessees of a commercial building and bodegas standing on registered land in Iloilo City.
The registered land was owned in common by Lucy A. Solinap, Fr. Jerry R. Locsin, Lourdes C. Locsin, Manuel C. Locsin, and Ester L. Jarantilla.
Star Group Resources and Development Inc. (Star Group) later became the buyer of the leased property.

Lease contracts and their relevant stipulations

The leases were embodied in uniformly worded deeds executed by the petitioners as lessees and by Lourdes C. Locsin representing the lessors co-owners.
The lease contracts stipulated a fixed term from September 1, 1987 to August 30, 1989.
The leases provided for a deposit equal to two months rents.
The leases provided that the lessee must give the lessor thirty days prior written notice of intention to terminate or renew, and if no written notice was given, the lessor would consider the contract terminated on expiration of the term.
The leases contained a Reservation of rights clause: lessors reserved rights to sell, mortgage, hypothecate, or encumber the property so long as such sale or encumbrance required the purchasers or mortgage creditors to respect the terms of the lease contract; lessee would be duly informed about lessor’s plan to sell the property.

Sale of the leased premises to Star Group

After the expiration of the fixed term, on September 18, 1989, the lessors executed a Deed of Absolute Sale selling the leased property to Star Group.
The deed provided, inter alia, that the vendee would thereafter deal with the lessees and occupants without any further warranty or obligation on the part of the vendors.

Actions in the Municipal Trial Court for Cities of Iloilo

On November 22, 1989, Star Group brought separate actions of unlawful detainer in the Municipal Trial Court In Cities of Iloilo City against the lessees.
The unlawful detainer cases were docketed as follows:

Civil Case No. 227 (89) against Virgilio Ang, assigned to Branch 3.
Civil Case No. 230 (89) against Chang Liang, Jr., raffled to Branch 2.
Civil Case No. 232 (89) against Henry Tan and Southern Sales Corporation, assigned to Branch 2.
Civil Case No. 233 against Ramon Que (for premises occupied by Wilmon Auto Supply Corporation), assigned to Branch 2.
Civil Case No. 234 against Ramon Que (for premises occupied by Iloilo Multi Parts Supply Corporation), raffled to Branch 2.

Lessees’ defenses and counterclaims in ejectment

The lessees refused to concede Star Group’s right to eject them.
The lessees argued that the lessors and their buyer violated leasehold rights because:

the lessees were not accorded the right of preemption;
the buyer was not required to honor the leases; and
the lessees were denied the option to renew their leases upon expiration.

These propositions were set forth as grounds and causes in their answers with counterclaims in the unlawful detainer actions.

Separate RTC action for declaration and enforcement of alleged rights

On December 1, 1989, some lessees filed in the Regional Trial Court of Iloilo a complaint docketed as Civil Case No. 18931.
The complaint was raffled to Branch 28.
The plaintiffs in Civil Case No. 18931 included Wilmon Auto Supply Corporation (represented by Ramon Que), Iloilo Multi Parts, Virgilio Ang (doing business as Iloilo Rightway Marketing), Southern Sales, and Chang Liang, Jr. (doing business as Iloilo Bright Construction Supply), among others referenced as co-plaintiffs.
The complaint included other tenants as co-plaintiffs: Vic Imperial Sales Corporation, Joaquin Kua (doing business as “New Center Radio and Electrical Supply”), and Tung Ah Hua & Company (doing business as “Victory Auto Supply”).
Star Group Resources and Development, Inc. and its President, Juanito Sio alias Juanito Sio Soy Liong, were impleaded as defendants, together with the co-owners-vendors Lucy A. Solinap, Lourdes C. Locsin, Manuel C. Locsin, Ester Locsin Jarantila, and Fr. Jerry R. Locsin as Administrator of the Estate of the deceased Jose C. Locsin.

Reliefs prayed for in RTC

The plaintiffs chiefly prayed that the sale of the buildings, bodegas, and the land be declared null and void ab initio.
They sought to be allowed to exercise the right of pre-emption or redemption and to recover the two-month deposits.
They sought conveyance of the titles to the properties to them.
They prayed for damages: moral damages of PHP 1.5 million, exemplary damages of PHP 10,000.00, and attorney’s fees of PHP 200,000.00.

Proceedings on summary procedure in the unlawful detainer cases

The municipal trial court required position papers on whether the unlawful detainer actions were covered by the rules of summary procedure.
The municipal trial court ruled:

Cases numbered 227 (against Virgilio Ang), 230 (against Chang Liang, Jr.), and 234 (against Iloilo Multi Parts Supply Corporation) had to be tried under summary procedure.
Civil Cases numbered 232 (against Henry Tan and Southern Sales Corporation) and 233 (against Wilmon Auto Supply Corporation) were not subject to summary procedure.

Motions for reconsideration and certiorari to the Supreme Court

The lessees moved for reconsideration and also prayed for dismissal of the ejectment suits based on litis pendentia (referring to Civil Case No. 18931) and lack of jurisdiction over the nature of the actions.
The municipal trial court denied the motions.
Three lessees—Ramon Que, Southern Sales Corporation, and Henry T. Tan—filed petitions for certiorari in the Supreme Court to annul and set aside the municipal trial court orders, docketed as G.R. Nos. 94855 and 94856.
Another lessee, Antonio Chua, filed a similar certiorari action docketed as G.R. No. 95371.
The Supreme Court refused to take cognizance of the petitions.
G.R. No. 95371 was referred to the Court of Appeals by Resolution of the Second Division dated October 15, 1990.
G.R. Nos. 94855 and 94856 were referred to the Regional Trial Court of Iloilo City where the lessees should have sought relief in the first place.
In the RTC, the cases were docketed as Civil Cases numbered 19420 (Ramon Que v. Hon. Honrado, etc., et al.) and 19421 (Southern Sales Corporation and Henry T. Tan v. Hon. Honrado, etc., et al.).
The Executive Judge (Hon. Ricardo M. Ilarde) issued a restraining order dated October 18, 1990 enjoining proceedings in the unlawful detainer cases.
On March 11, 1991, Judge Ilarde promulgated judgment dismissing the petitions and dissolving the preliminary injunction of October 18, 1990.
Judge Ilarde held that the unlawful detainer cases fell within the jurisdiction of the Municipal Trial Court in Cities of Iloilo City.
Judge Ilarde held that the pendency of Civil Case No. 18931 did not warrant suspension, because the ejectment cases concerned physical possession (possession de facto) and the RTC case concerned ownership, and settled rule held that a pending case involving ownership and annulment of sale does not stay ejectment proceedings.

Appeal docketed as G.R. No. 98700-01

The lessees moved for reconsideration, but Judge Ilarde denied it by Order dated April 22, 1991.
From the March 11, 1991 decision, Ramon Que, Southern Sales Corporation, and Henry Tan appealed to the Supreme Court.
The appeal was docketed as G.R. Nos. 98700-01.
The legal issue was whether Judge Ilarde erred in finding that the Municipal Trial Court did not abuse its discre...(Subscriber-Only)

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