Case Summary (G.R. No. 187872)
Construction and Lease of Residential Building
Respondents built the house on CCC-leased premises (15-year term). They occupied it until 1985, then appointed their uncle Josefino as caretaker. In June 1993, petitioner’s president, Dr. Manglicmot, leased the building (excluding Josefino’s portion) from Lourdes Castro, paying ₱6,000/month, later increased to ₱10,000 when full possession was obtained.
Transfer and Acquisition by Adoracion Cloma
Tomas Cloma bought only the land parcels (exclusive of improvements) at Union Bank’s auction (July 1993) and leased them to petitioner. He later sold the parcels to his daughter, Adoracion. Petitioner maintains this chain included the residential building, a contention challenged by respondents.
Civil Case No. 3700: Claims and Defenses
Respondents filed for ownership declaration, recovery of possession, unpaid rents (from August 1995), and damages. Petitioner denied respondents’ ownership, asserting Adoracion held title over both land and building through prior purchases.
RTC Ruling and Disposition
The RTC of Cabanatuan City (Branch 28) declared respondents absolute owners of the building and ordered petitioner to pay ₱672,000 in unpaid rentals. Claims for moral damages and attorney’s fees were dismissed.
CA Decision and Final Petition to the Supreme Court
The Court of Appeals affirmed the RTC decision. Petitioner then elevated the case to the Supreme Court, contesting the award of rentals and challenging respondents’ ownership of the building.
Existence of Lease and Estoppel Principle
The Supreme Court recognized the lease’s existence (supported by petitioner’s cash vouchers) and applied Rule 131, Sec. 2(b): a tenant may not deny the landlord’s title at lease commencement. Having leased the building from respondents’ mother with full knowledge of their claim, petitioner is estopped from disputing respondents’ ownership.
Effect of Mortgage and Accessibility of Improvements
Under Civil Code Art. 2127, only improvements owned by the mortgagor form part of a mortgage. In Castro, Jr. v. CA (1995), the Court held that the residential building was not CCC’s property and thus not subject to foreclosure. That final judgment binds parties and successors.
Binding Effect of Final Judgment in Castro, Jr. v. CA
The holding in Castro, Jr. established respondents’ ownership of the building as final. Petitioner cannot relitigate this issue, as Nemo dat quod non habet prohi
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Facts
- The petitioner, Midway Maritime and Technological Foundation, leases two parcels of land in Cabanatuan City from Adoracion Cloma, the registered owner under TCT Nos. T-71321 and T-71322; its president, Dr. Sabino M. Manglicmot, is Adoracion’s husband.
- The land was originally owned by Louis Castro, Sr., president of Cabanatuan City Colleges (CCC), who mortgaged it to Bancom Development Corporation in 1974.
- During the mortgage term, CCC’s board of directors leased a portion of the mortgaged land to the respondents (Castro children) for 15 years, expiring in 1992; the respondents thereafter built the residential house in dispute.
- Bancom foreclosed in 1979, acquired the property at public auction, then assigned its credit to Union Bank, which consolidated ownership in 1984 after CCC failed to redeem.
- In Castro, Jr. v. CA (G.R. No. 97401, Dec. 6, 1995), the Supreme Court excluded the respondents’ residential house from the writ of possession granted to Union Bank, ruling CCC did not own the improvements.
- Tomas Cloma (Adoracion’s father) bought the two parcels at auction from Union Bank on July 13, 1993, leased them to the petitioner, and subsequently sold them to Adoracion.
- The respondents filed Civil Case No. 3700 (AF) on April 19, 2000, seeking declaration of ownership of the residential building, recovery of possession, unpaid rentals (P6,000.00 monthly from August 1995 and P10,000.00 from October 1995), and damages.
- The petitioner denied respondents’ ownership of the building, claiming Adoracion acquired it along with the land in 1993.
Procedural History
- 1979: Bancom acquires property by foreclosure and auctions it to itself, later assigning credit to Union Bank.
- 1993: Union Bank auctions the mortgaged land (without the respondents’ residential house) to Tomas Cloma; Cloma leases to petitioner and sells to Adoracion.
- 1995: Supreme Court in Castro, Jr. v. CA holds the respondents’ house excluded from CCC’s mortgage.
- 2001: RTC Branch 28 of Cabanatuan City renders judgment in Civil Case No. 3700, dec