G.R. No. 147956 - Longino vs. General

Case Summary (G.R. No. 147956)

Factual Background

On March 1, 1988, the PNR executed Contract of Lease No. 10320 with Julian Estrella over PNR property in Polo, Valenzuela, Bulacan with an area of 1,000 square meters. The lease period ran up to March 1, 1990, with an annual rental of P20,000.00. Although Estrella had unpaid rentals of P100,000.00, the lease was renewed until December 31, 1992. Estrella constructed a house on the leased land.

On April 6, 1992, Estrella applied for an additional 848 square meters to construct a commercial apartment building. The PNR did not act on the application. In November 1992, Estrella and Serrano entered into a verbal lease arrangement under which Serrano would lease one of the apartment units still to be constructed, at P5,000.00 per month with an advance rental of P10,000.00. Estrella assured Serrano that he had renewed his long-term PNR lease and would later deliver the renewed contract. Estrella failed to construct the planned 12-door apartment.

Serrano’s earlier business lease had expired. She therefore constructed, at her own expense, a one-door commercial apartment on part of the PNR property that she believed was covered by Estrella’s supposed PNR lease renewal. She later agreed with Estrella that she would construct a second commercial apartment beside the first, based on Estrella’s assurance that the portion where the second apartment would be built would be leased to her for ten years. Serrano also supplied construction materials on credit. In September 1993, Serrano discovered that after Estrella’s contract with the PNR expired in December 1992, Estrella no longer had any existing PNR lease contract. PNR officials told her that Estrella had no right to lease any portion of the property to third persons and advised her not to pay rentals to Estrella.

Regular Court Action and Its Effects

On January 13, 1994, Serrano filed a complaint for damages against Estrella with the RTC of Valenzuela City, docketed as Civil Case No. 4287-L-94. Estrella was declared in default, and Serrano presented evidence ex parte. On September 28, 1995, the RTC rendered judgment in Serrano’s favor, awarding P113,652.00 as actual damages, P110,000.00 as moral damages, P20,000.00 as attorneys fees, P10,000.00 as litigation expenses, and the costs of suit.

Meanwhile, on March 31, 1995, the PNR and Serrano entered into a lease contract over the portion where Serrano’s commercial building stood, effective until December 31, 1995. On January 22, 1996, they executed Lease Contract No. R-12666 over a portion of the PNR property with an area of 111.11 square meters, to expire on December 31, 1996. Serrano then constructed additional structures, including a barber shop and barbecue stand. The RTC decision became final and executory because Estrella failed to pay the adjudged amounts. Eventually, the sheriff sold Estrella’s house at auction to Serrano on May 5, 1997, and the sheriff turned over possession to Serrano on September 23, 1998.

Serrano’s Efforts to Lease, and Longino’s Application

Serrano desired to renew her lease with the PNR. On August 4, 1998, she and her close friend Longino executed an Agreement under which Serrano allowed Longino to occupy part of the property without paying rental, in exchange for Longino’s promise to help Serrano secure a lease over a property with an area of 146 square meters. Serrano applied for a lease, but the PNR could not act on her application due to the suspension of its lease contracts as part of its North Rail Project. Serrano also had unpaid back rentals.

Despite that arrangement, on August 6, 1998 Longino filed an application with the PNR for a lease of the property she occupied with an area of 146.30 square meters for a period of two months. When Serrano learned of the application, she wrote the PNR on September 26, 1998 and invoked the RTC decision and the fact that she had purchased Estrella’s house at public auction. She also cited her agreement with Longino and claimed that the property applied for by Longino was part of the property connected to Estrella’s former house location and that Longino was occupying on her sufferance.

On November 10, 1998, Director Divina Gracia Dantes of the PNR Real Estate Department recommended approval of Serrano’s application and denial of Longino’s application. Dantes considered proximity between the proposed leased portions and the location of Serrano’s acquired house. However, on January 19, 1999 the PNR Board of Directors adopted Resolution No. 99-03, directing PNR Management to desist from disposing of properties needed for the right-of-way of its North Rail Project.

Despite that resolution, the PNR General Manager directed Dantes to prepare a lease contract for Longino and transmit it for signature. On January 26, 1999, the PNR and Longino executed a lease contract over a portion near Serrano’s former house location with an area of 146 square meters for three months up to April 26, 1999 for annual rental of P13,684.00. Longino paid the rentals and secured building permits. She constructed a barber shop after demolishing Serrano’s then-existing barber shop and barbecue stand. Longino then continued construction.

COSLAP Proceedings and the Issuance of Orders

On February 25, 1999, Serrano filed a handwritten complaint before the COSLAP, demanding that the PNR lease the property to her and seek eviction of Longino on the theory that Serrano had a preferential right to lease. Serrano alleged that the house she purchased from Estrella at public auction was located on the PNR property in question and that Longino occupied it under Serrano’s August 4, 1998 agreement. She also alleged that Longino and her workers demolished Serrano’s structures and were about to build on the disputed property.

Upon Serrano’s request, COSLAP issued a status quo order on February 26, 1999. COSLAP assumed jurisdiction over the complaint, issued summons, and on March 4, 1999 ordered the PNR Real Estate Department to implement the status quo order. Longino moved to quash for lack of jurisdiction; COSLAP denied the motion. Longino’s answer asserted that the 146.30-square-meter portion she occupied was outside the 111.11-square-meter portion previously leased to Estrella. She also asserted that Serrano was indebted to the PNR for back rentals, allegedly disqualifying Serrano from leasing. Longino maintained that the issues between Serrano and herself involved her and Serrano’s rights to lease and possession, which she argued were for regular courts.

An ocular inspection report dated March 12, 1999 found that Serrano had been in possession since 1992 and that Longino was constructing a building. While the COSLAP case was pending, the PNR and Longino executed a Contract of Lease on May 5, 1999 for a property lease to expire July 26, 1999, revocable within fifteen days if the Northeast Project started in the area. On August 9, 1999, Dantes informed Serrano that she could reapply for a lease of the property only after settling back rentals totaling P154,945.02 as of July 31, 1999. On September 17, 1999, the PNR and Serrano reached an agreement for leasing the property where Serrano’s structures were, subject to prior payment of back rentals; Serrano failed to pay. On October 27, 1999, the PNR executed Lease Contract No. R-12904 with Longino over the property, to expire January 26, 2000, and Longino paid the agreed rentals. The lease was not renewed due to implementation of the North Rail Project.

COSLAP Resolution and Longino’s Challenge in the CA

On December 16, 1999, COSLAP rendered a Resolution in favor of Serrano and against Longino, declaring Serrano as the lawful possessor with a preferential right to lease. COSLAP recommended cancellation and/or non-renewal of Longino’s lease, and after cancellation/non-renewal, ordered Longino to vacate the premises in favor of Serrano. COSLAP cited Banaga v. COSLAP and held that it had jurisdiction. It also found that Longino acted in bad faith and contrary to Article 19 of the New Civil Code, because despite Longino’s August 4, 1998 agreement with Serrano’s claim of rights, she applied for and secured a lease. COSLAP also treated the court decision in Civil Case No. 4287-V-94 as evidence that Serrano had been allowed to occupy the house of Estrella.

Longino received the Resolution on December 30, 1999 but did not appeal. Instead, on January 19, 2000 she wrote the PNR General Manager urging disregard of the resolution for being partially irregular. COSLAP then issued a Writ of Execution on February 8, 2000, and upon COSLAP’s request the RTC issued an order on March 2, 2000 ordering the sheriff to implement the writ. On March 31, 2000 the sheriff served Longino a notice to vacate, but she refused. Serrano sought demolition of Longino’s structures during the pendency of the matter, and COSLAP granted it and issued a writ of demolition.

Longino filed a petition for prohibition before the CA, docketed as CA-G.R. SP No. 57613, assailing COSLAP’s December 16, 1999 Resolution and its February 8, 2000 writ of demolition, and seeking injunctive relief. She argued that COSLAP acted without jurisdiction in taking cognizance of Serrano’s complaint and committed grave abuse of discretion in issuing its resolutions. She maintained that COSLAP had no jurisdiction to review lease contracts entered into between her and the PNR and that she had preferential right to the property.

Serrano countered that the COSLAP Resolution had become final and executory, that Longino was estopped from assailing COSLAP’s jurisdiction, and that COSLAP’s resolution conformed with law and evidence. COSLAP argued that Serrano had no reason to be ousted and that Longino had no right to the property since her possession was merely by Serrano’s sufferance. COSLAP maintained that because the assailed Resolution was already final and executory, its enforcement could no longer be enjoined.

Ruling of the Court of Appeals and Issues Raised

On April 17, 2001, the CA dismissed Lon

Case Syllabus (G.R. No. 147956)

Parties and Procedural Posture

Esperanza S. Longino filed a petition for review on certiorari assailing a Court of Appeals decision dated April 17, 2001.
The respondents included Atty. Lina A. General, Atty. Noel A. Galarosa, Atty. Luz Sarmiento, all of COSLAP, Judge Jaime F. Bautista of the Regional Trial Court (RTC), Branch 75, Valenzuela City, and Elsa P. Serrano.
Longino earlier filed a petition for prohibition with the Court of Appeals (CA-G.R. SP No. 57613) to nullify the COSLAP Resolution dated December 16, 1999 and the COSLAP writs issued on February 8, 2000 and demolition processes implemented through the RTC.
The Court of Appeals dismissed Longino’s petition, holding that COSLAP had jurisdiction, the Resolution had become final and executory, and the case was moot and academic.
In the present proceeding, Longino raised issues on COSLAP’s jurisdiction, the proper remedy under Rule 65, her claimed preferential right to lease, and whether COSLAP acted with grave abuse of discretion.

Key Factual Allegations

The Philippine National Railways (PNR) executed Contract of Lease No. 10320 on March 1, 1988 in favor of Julian Estrella over a 1,000 square meter property in Polo, Valenzuela, Bulacan, with a term until March 1, 1990 and annual rental of P20,000.00.
Although Estrella had unpaid rentals totaling P100,000.00 on the initial agreement, the lease was renewed until December 31, 1992, and Estrella constructed a house on the leased property.
On April 6, 1992, Estrella applied for an additional 848 square meters to construct a 12-door commercial apartment, but PNR did not act on the application.
Sometime in November 1992, Estrella and Elsa Serrano entered into a verbal lease for a unit to be constructed, with monthly rental of P5,000.00 and advance rental of P10,000.00.
Serrano discovered in September 1993 that Estrella’s PNR lease had expired in December 1992, and PNR officials advised her not to pay rentals to Estrella and stated that Estrella had no right to lease a portion of PNR property.
On January 13, 1994, Serrano filed a Complaint for Damages against Estrella in the RTC (Civil Case No. 4287-L-94), and Estrella was declared in default.
The RTC rendered judgment on September 28, 1995 in Serrano’s favor, awarding actual damages (P113,652.00), moral damages (P110,000.00), attorneys fees (P20,000.00), litigation expenses (P10,000.00), and costs of suit.
Serrano and PNR later executed Lease Contract No. R-12666 on January 22, 1996 over a portion of 111.11 square meters effective until December 31, 1996, and Serrano constructed a barber shop and barbecue stand.
After Serrano purchased Estrella’s house at public auction on May 5, 1997, Serrano obtained possession, and the Sheriff turned over the house to her on September 23, 1998.
Serrano and Longino executed an Agreement on August 4, 1998 under which Serrano allowed Longino to occupy a portion of the property without rental in exchange for Longino’s promise to help Serrano secure a lease over a property of about 146 square meters.
On August 6, 1998, Longino applied to PNR for a lease over the area occupied by her of 146.30 square meters for two months, despite Serrano’s agreement with Longino and Serrano’s pending concerns.
Dantes recommended approval of Serrano’s application and denial of Longino’s on November 10, 1998, considering the proximity of the disputed areas to Serrano’s acquired house.
The PNR Board of Directors issued Resolution No. 99-03 on January 19, 1999 directing PNR Management to desist from selling or leasing properties needed for the right-of-way of its North Rail Project.
Despite Resolution No. 99-03, PNR’s General Manager directed Dantes to prepare a lease for Longino, and on January 26, 1999 PNR executed a lease in favor of Longino over 146 square meters for three months until April 26, 1999 with annual rental of P13,684.00, which Longino paid.
After demolishing Serrano’s structures, Longino constructed a barber shop on the leased area and began further construction.
On February 25, 1999, Serrano filed a handwritten complaint with COSLAP seeking that PNR lease the property to her and evict Longino, asserting Serrano’s preferential right to lease because her purchased house was located near the PNR property and Longino occupied the property on Serrano’s sufferance.
The COSLAP issued a status quo order on February 26, 1999, assumed jurisdiction, issued summons, and ordered the PNR Real Estate Department to implement the order.
Longino opposed the complaint, arguing that COSLAP lacked jurisdiction, that the disputed area was outside her predecessor’s PNR-lease area, and that the conflict involved issues reserved for regular courts, including the effect of the August 4, 1998 agreement.
An ocular inspection report dated March 12, 1999 indicated Serrano had been in possession since 1992 and Longino was constructing a building.
On December 16, 1999, COSLAP issued a Resolution declaring Serrano the lawful possessor and stating she had a preferential right to lease, recommending cancellation or non-renewal of Longino’s lease, and ordering Longino to vacate.
Longino received the Resolution on December 30, 1999 and failed to appeal; she instead sent a letter to the General Manager on January 19, 2000 urging disregard of the COSLAP Resolution as partially irregular.
COSLAP issued a Writ of Execution on February 8, 2000, and the RTC ordered the Sheriff to implement it on March 2, 2000.
The Sheriff served notice to vacate on March 31, 2000; Longino refused, and COSLAP granted Serrano’s motion for demolition of Longino’s structures and issued an order to execute it.
Longino’s petition for prohibition before the Court of Appeals sought nullification of the COSLAP’s Resolution and writ actions due to alleged lack of jurisdiction and grave abuse of discretion.

Statutory Framework

Rule 65, Section 2, Rules of Court provides the requisites for a petition for prohibition: action without or in excess of jurisdiction or with grave abuse of discretion, and absence of appeal or other plain, speedy, and adequate remedy.
The Court characterized prohibition as preventing encroachment, excess, usurpation, or assumption of jurisdiction, and as an instrument to avoid oppressive or vindictive use of authority.
The Court also set doctrinal standards for grave abuse of discretion requiring arbitrary and despotic action in a patent and gross manner amounting to an evasion of duty or refusal to act in contemplation of law.
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