Case Summary (G.R. No. 243368)
Procedural History
In a complaint filed on November 15, 2012 before the Metropolitan Trial Court (MeTC) of Parañaque City for unlawful detainer, the petitioner alleged ownership and sought to eject respondents from illegal occupation. The MeTC ruled in favor of petitioner on November 8, 2013, ordering respondents to vacate and pay monthly compensation. The Regional Trial Court (RTC) affirmed on June 13, 2014. Respondents appealed to the Court of Appeals (CA), which reversed the RTC and MeTC decisions on May 11, 2018, dismissing the complaint due to the petitioner's lack of legal capacity as the real party in interest. The CA's denial of reconsideration on November 28, 2018 led to the present petition for review before the Supreme Court.
Facts
Petitioner claims outright ownership of the subject property supported by TCT No. (70115) 123145. It alleges that only respondents’ predecessor-in-interest, the late Mario Recio, was allowed to stay on the property as caretaker, without the right to reside with his family. Due to safety issues regarding a water tank on the land and petitioner’s intended use as its office, petitioner demanded respondents to vacate. Respondents refused, prompting the unlawful detainer action. Respondents contested jurisdiction, questioned the validity of petitioner’s title to the property, and argued that the original registered owner was Parañaque Industry Owners Association (PIOA), a corporation whose Securities and Exchange Commission (SEC) registration was revoked in 2003. Respondents also asserted possessory rights based on good faith improvements with supposed permission from PIOA's former officials.
Issues on Ownership and Real Party in Interest
The core dispute identifies whether petitioner holds true ownership of the property and if it is the proper party to prosecute the unlawful detainer case. The respondents pointed out that PIOA, not petitioner, is the registered owner by TCT No. (70115) 123145, but PIOA’s SEC registration was revoked in 2003 due to non-compliance. The petitioner was incorporated only in 2012 as a distinct entity with a new SEC registration number. Petitioner claimed continuity or succession to PIOA’s rights over the property, which respondents denied.
Trial Court Findings
The MeTC and RTC found petitioner as registered owner with legal right to eject respondents, basing this on possession by tolerance and lack of evidence showing respondents’ legal right to the property. They ruled that respondents’ occupancy became unlawful upon failure to heed vacation demands. The courts rejected respondents’ claims of ownership, good faith possession, or the invalidity of petitioner’s title.
Court of Appeals Ruling
The CA reversed, holding that petitioner is not the registered owner but a new, different corporation from the original PIOA. Since PIOA’s SEC registration was revoked in 2003 and no liquidation of its assets was undertaken, title to the corporate properties had not been legally transferred to petitioner. The CA stressed that under the Corporation Code (Batas Pambansa Blg. 68), a corporation whose registration is revoked ceases to conduct business and enters into a three-year winding-up period to dispose of its assets. Because the assets were not liquidated or transferred, petitioner, as a newly-formed entity, does not own the property. Consequently, petitioner is not the real party in interest and lacks capacity to sue, mandating dismissal of the unlawful detainer suit.
Legal Principles and Statutory Framework Applied
The Court relied on Section 122 of the Corporation Code, providing that a dissolved corporation continues only to wind up its affairs and dispose of property within three years. Absent liquidation or transfer of assets, the defunct corporation retains ownership of its properties. Only trustees or duly authorized representatives of the defunct corporation may institute or continue legal actions involving corporate assets. SEC-Office of the General Counsel Opinion No. 17-08 was accorded great weight, affirming that a re-registered corporation is a separate and distinct juridical entity from a dissolved predecessor. The Court emphasized the doctrine of corporate personality and held that the piercing of the corporate veil is unwarranted here as there was no evidence of fraud or abuse. Furthermore, the Court reviewed the doctrine of real party in interest under Rule 3, Section 2 of the Rules of Court, which requires that actions be prosecuted by the party who stands to benefit or be injured by the judgment and who holds a present substantial interest in the subject matter.
Assessment of Possession Versus Ownership in Ejectment Case
While ejectment cases generally resolve possession irrespective of ownership, the issue of ownership may be incidentally adjudicated when possession cannot be determined without reference to ownership claims. The Court noted that this case involves a conflict on title that affects possession, justifying factual assessment b
...continue readingCase Syllabus (G.R. No. 243368)
Nature of the Case and Procedural History
- This case involves a Petition for Review on Certiorari under Rule 45 of the Rules of Court contesting the May 11, 2018 Decision and November 28, 2018 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 137723.
- The CA reversed and set aside the June 13, 2014 Decision of the Regional Trial Court (RTC) of Paraaque City, Branch 196, which had affirmed the decision of the Metropolitan Trial Court (MeTC), Branch 77.
- The MeTC had ordered respondents James Paul G. Recio, Daryl Tancinco, and Marizene Tancinco to vacate the subject property and pay reasonable compensation for its use and occupation.
- Petitioner, a nonstock corporation, filed the original Complaint for unlawful detainer on November 15, 2012, alleging illegal occupation of a 200 sqm. parcel of land covered by Transfer Certificate of Title (TCT) No. (70115) 123145.
- The case revolves around possession, ownership, and the legitimacy of the petitioner as the real party in interest.
Factual Background
- Petitioner claims ownership of the subject property located at Lot 5, Block 2, Champaca Extension, Light Industry Compound, UPS IV, Barangay Marcelo Green, Paraaque City, evidenced by the TCT.
- Respondents occupy the property and are alleged to have been originally allowed occupancy only as caretakers through their predecessor-in-interest, the late Mario Recio.
- Mario Recio built a house in 1982 and lived there with his family without petitioner’s consent.
- Petitioner, intending to use the land as its office and after declaring the water tank on site dangerous, sent demand letters and a letter from the Office of the Building Official ordering respondents to vacate.
- Despite these demands, respondents did not vacate, prompting the filing of the unlawful detainer complaint.
Respondents’ Defenses and Claims
- Respondents contended improper service of summons depriving MeTC of jurisdiction over their persons.
- They challenged petitioner’s capacity to sue, asserting petitioner is not the real owner; rather, ownership rests with Paraaque Industry Owners Association (PIOA), whose SEC registration was revoked in 2003 for noncompliance.
- PIOA’s TCT was issued in 1983, predating petitioner’s incorporation in 2012.
- Respondents claimed a better right to possession as possessors and builders in good faith authorized by Mr. Richard S. Ang, CEO of Cherith Manufacturing and PIOA president, who allegedly allowed Mario and family to occupy the property and retain improvements.
- They invoked Article 546 of the Civil Code to assert their possessory rights.
Decisions of the Lower Courts
- MeTC ruled in favor of petitioner ordering respondents’ vacation, payment of PHP 10,000 per month for use and occupation, attorney’s fees, and costs.
- MeTC found that respondents’ possession was tolerated based on admissions and, upon refusal to vacate, they became deforciant occupants.
- Respondents filed a Manifestation admitting they had vacated by 2013, h