Case Summary (G.R. No. 127395)
Facts and Antecedent Proceedings
The property in question is 1,602 square meters and was subject to a lease agreement with specific terms regarding rental rates and improvements. Despite Violeta's requests for a copy of the lease contract, she did not receive one. By 1993, she had returned rental payments, believing the lease had expired. After Violeta sold the property to her daughter Pilar in 1998 due to ongoing stress, the Spouses Mendezona attempted to recover possession from Dakak and Jalosjos but were ignored, prompting them to file a complaint in 2003 for recovery of possession, rental payments, and damages.
Ruling of the Regional Trial Court (RTC)
The RTC, in its decision on August 1, 2016, granted the Spouses Mendezona's complaint, ordering Dakak and Jalosjos to vacate the property, return possession, and pay unpaid rents totaling PHP 4,401,309.68, along with future rents at PHP 50,000 per month. The RTC ruled that all improvements made by Dakak during the lease period belonged to the lessor due to explicit lease terms, and emphasized that Articles 1621 and 1623 of the New Civil Code regarding redemption were inapplicable due to the commercial nature of the property.
Ruling of the Court of Appeals (CA)
On June 28, 2018, the CA affirmed the RTC's decision with modifications. It approved the order to vacate the property and return possession to the Spouses Mendezona, while also ruling that the total unpaid rent due had increased to PHP 5,865,309.68, reflecting both previous dues and newly calculated rentals. The CA corrected how it classified the nature of the property, confirming that, despite its commercial usage, it was still agricultural land under the law.
Supreme Court’s Resolution
The Supreme Court upheld the CA's ruling, focusing on the legal arguments relating to the lease, claims for reimbursement of improvement costs, and the right of redemption. Dakak and Jalosjos failed to present new arguments warranting a reversal, as their claims to reimbursement and retention based on good faith improvements were found inapplicable due to prior explicit stipulations in the lease contract. The Court clarified that Article 1678 concerning lessee’s reimbursements does not apply when ownership of improvements is explicitly given to the lessor upon termination.
Claims of Right of Redemption
Dakak and Jalosjos’ argument regarding the right of redemption under Articles 1621 and 1623 was rejected. The Court affirmed that the properties were used for commercial purposes, thus disqualifying the lot from the protection intended for agricultural lands under the aforementioned articles.
Computation of Unpaid Rental Payments
The Supreme Court identified miscalculations in the initial total of unpaid rent, asserting that the correct amount due was PHP 93,463.28, which more accurately reflected the agreed rental rates from 1992 to 1997. Dakak and Jalosjos were held responsible for rental payments and were subjected to a mandated increase over successive years.
Imposition of Damages
The Supreme Court determined that
...continue readingCase Syllabus (G.R. No. 127395)
Background and Parties Involved
- Petitioners: Dakak Beach Resort Corporation (also referred to as Dakak Park and Beach Resort Corporation) and Romeo G. Jalosjos.
- Respondents: Spouses Jose Ma. M. Mendezona and Pilar L. Mendezona (also referred as Ma. Pilar L. Mendezona).
- The case involves a dispute over the possession, lease, and ownership rights concerning Lot No. 8771-A, a 1,602-square-meter property in Taguilon, Dapitan City.
Lease Agreement Details
- Original owner of Lot No. 8771-A was Violeta Saguin de Luzuriaga who obtained the property through Free Patent No. (IX-8)2977.
- On December 1, 1987, Violeta entered into a lease contract with Dakak, represented by Jalosjos, for 10 years (January 1, 1988, to December 31, 1997), renewable for another 5 years upon mutual agreement.
- Monthly rent started at PHP 500 for the first two years and increased 20% annually thereafter, culminating at PHP 2,000 for the 10th year.
- The lease contract expressly states that all permanent and fixed improvements by the lessee shall become the property of the lessor upon lease termination.
- Violeta was never provided a copy of the lease despite repeated requests.
Events Leading to Litigation
- Violeta stopped accepting rental payments in August 1992 due to believed expiration of the lease and demanded Dakak and Jalosjos vacate the property in 1994; these demands were ignored.
- Violeta sold the property to her daughter Pilar in 1998.
- Pilar demanded Dakak to vacate the property in 1999; this was likewise ignored.
- In 2003, the Spouses Mendezona filed a complaint for recovery of possession, specific performance, rentals, and damages against Dakak and Jalosjos.
- Dakak and Jalosjos admitted the lease expired in 1997 but claimed rights based on improvements and preferential acquisition, including right of redemption.
Trial Court (RTC) Decision
- The RTC ordered Dakak and Jalosjos to:
- Vacate the property within 30 days from finality of the decision.
- Return possession and enjoyment to the Spouses Mendezona.
- Pay unpaid rentals totaling PHP 4,401,309.68 with 6% annual interest.
- Pay PHP 50,000 monthly rent after finality until surrender of possession.
- Acknowledged improvements on the lot belong to the lessor (Spouses Mendezona) per lease contract.
- RTC rejected application of Articles 1621 and 1623 (right of redemption) and denied reimbursement or retention rights of Dakak based on Article 1678, since the lease contract stipulated improvements become lessor’s property upon termination.
Court of Appeals (CA) Ruling
- Affirmed with modification:
- Confirmed vacating of property and returning possession with