G.R. No. 243368 - Paranaque Industry Owners Association, Inc. vs. Recio

Case Summary (G.R. No. 243368)

Factual Background

Petitioner alleged ownership of a 200-square-meter parcel of land described as Lot 5, Block 2, Champaca Extension, Light Industry Compound, UPS IV, Barangay Marcelo Green, Paranaque City, as evidenced by Transfer Certificate of Title No. (70115) 123145, and charged respondents with unlawful detainer for occupying that property. Petitioner pleaded that respondents’ predecessor-in-interest, the late Mario Recio, had been permitted to remain on the premises only as a caretaker and that Mario built a house there in 1982 but later housed his family without petitioner’s consent. Petitioner asserted that the property and an adjacent water tank posed public-safety concerns in 2009, that it issued demand letters to vacate, and that the Office of the Building Official enjoined respondents to vacate for demolition of the water tank, but respondents failed to comply. Respondents, in their Answer, disputed personal jurisdiction by asserting improper service, challenged petitioner’s title and capacity to sue on the ground that the original registered owner was Paranaque Industry Owners Association (PIOA) under SEC Reg. No. 0109189 whose registration was revoked on August 11, 2003, and contended that petitioner — incorporated only on March 6, 2012 — was a distinct entity. Respondents further asserted possessory rights as builders in good faith, alleging that Mr. Richard S. Ang, president of PIOA, had invited Mario to occupy the lot around 1978–1980 and promised that improvements would belong to Mario.

MeTC Ruling

The MeTC, in a Decision dated November 8, 2013, ruled for petitioner. The MeTC ordered respondents to vacate and surrender possession; to pay reasonable compensation for use and occupation at PHP 10,000.00 per month from July 30, 2012 until they vacated; to pay PHP 10,000.00 as attorney’s fees; and to pay costs. The MeTC found that respondents’ admissions established tolerance as the basis of their possession; that respondents became deforciant occupants upon refusal to vacate; and that as registered owner petitioner had the right to eject illegal occupants.

RTC Proceedings and Ruling

Respondents appealed to the RTC. The RTC, in a Decision dated June 13, 2014, affirmed the MeTC. The RTC held that respondents failed to adduce positive evidence of permission to occupy or of a valid claim of possession by a builder in good faith. The RTC found no reversible error in the MeTC’s conclusion that the subject property was registered in petitioner’s name and that respondents’ possession was by mere tolerance, thus upholding petitioner’s right to recover possession. The RTC denied respondents’ motion for reconsideration.

Court of Appeals Ruling

The CA reversed and set aside the RTC Decision in a Decision dated May 11, 2018 and dismissed the unlawful detainer complaint. The CA found that the registered owner of the subject property under TCT No. (70115) 123145 was PIOA and not petitioner. The CA noted that PIOA’s SEC registration, Reg. No. 0109189, had been revoked on August 11, 2003, and reasoned that revocation dissolved the corporation, requiring liquidation of corporate assets before any transfer of legal title to subsequent incorporators. The CA observed that PIOA did not file a petition to lift the revocation but that the board re-registered a new association, petitioner, under SEC Reg. No. CN201204425, creating a new juridical entity distinct from PIOA. In the CA’s view, absent a liquidation or lawful conveyance, PIOA’s properties did not pass to the newly registered entity; therefore petitioner lacked capacity to sue as real party in interest. The CA denied petitioner’s motion for reconsideration by Resolution dated November 28, 2018.

Issue Presented

The precise issue before the Supreme Court was whether the CA correctly reversed the rulings of the MeTC and the RTC, resulting in dismissal of petitioner’s unlawful detainer complaint on the ground that petitioner was not the real party in interest and lacked capacity to sue.

Supreme Court’s Assessment of the Record

The Court observed that respondents filed a Manifestation in the MeTC claiming they had vacated the premises prior to the MeTC Decision and attaching barrio certifications and Meralco billing to support lack of electrical consumption; petitioner maintained, conversely, that respondents did not surrender the property and had padlocked the premises and failed to comply with Rule 70 deposit requirements. The Court emphasized that ejectment cases, also called accion interdictal, focus on material possession rather than title, but that where ownership is raised and possession cannot be resolved without deciding ownership, trial courts and the CA may provisionally determine ownership for the limited purpose of deciding possession. The Court reiterated that the applicable evidentiary standard in civil cases is the preponderance of evidence and that the Court may revisit facts on appeal under Rule 45, Rules of Court, when the factual findings of the CA are contrary to those of the trial courts.

Supreme Court’s Legal Analysis and Reasoning

Upon independent review of the records, the Court agreed with the CA. The Court highlighted controlling facts: (a) the TCT reflected PIOA as registered owner, not petitioner; (b) PIOA was incorporated on December 29, 1982 under SEC Reg. No. 0109189; (c) that registration was revoked on August 11, 2003; (d) no liquidation of corporate assets occurred after revocation; and (e) the former board re-registered a new association on March 6, 2012 under SEC Reg. No. CN201204425, creating a distinct corporate entity. The Court turned to Section 122, Batas Pambansa Blg. 68 (The Corporation Code), which prescribes a three-year winding-up period after dissolution and addresses disposition of corporate property and trusteeship during liquidation. The Court gave significant weight to SEC-OGC Opinion No. 17-08, which reasoned that revocation of a corporation’s certificate of registration does not immediately extinguish dominion over c

Case Syllabus (G.R. No. 243368)

Parties and Posture

Paranaque Industry Owners Association, Inc., represented by Patricia Sy and Rosalinda Escobilla is the petitioner and a nonstock corporation that filed the unlawful detainer complaint in the Metropolitan Trial Court.
James Paul G. Recio, Daryl Tancinco, and Marizene R. Tancinco are the respondents who were alleged to occupy the subject 200 sqm. parcel of land in Paranaque City.
The petition is a Rule 45 Petition for Review on Certiorari assailing the Court of Appeals Decision dated May 11, 2018 and Resolution dated November 28, 2018 in CA-G.R. SP No. 137723.
The petition seeks reversal of the CA judgment that dismissed the unlawful detainer complaint for lack of capacity to sue by petitioner.

Key Facts

The subject property is described as Lot 5, Block 2, Champaca Extension, Light Industry Compound, UPS IV, Barangay Marcelo Green, Paranaque City, covered by Transfer Certificate of Title No. (70115) 123145.
Petitioner alleged exclusive ownership and asserted that respondents occupied the property without consent after respondents' predecessor, the late Mario Recio, had been allowed to stay as caretaker and later had his family live there.
Respondents asserted that the original registered owner under TCT No. (70115) 123145 was Paranaque Industry Owners Association (PIOA) with SEC Reg. No. 0109189 and that petitioner was incorporated only on March 6, 2012 under a separate SEC Reg. No. CN201204425.
The SEC revoked PIOA's registration on August 11, 2003 for noncompliance with reportorial requirements, and no liquidation of corporate assets was undertaken thereafter according to the records.
Respondents later filed a Manifestation before the MeTC stating that they had vacated the premises prior to the trial court's ejectment directive, while petitioner contended respondents never surrendered possession and had padlocked the premises.

Claims and Defenses

Petitioner claimed a right to possession as the registered owner and sought ejectment and reasonable compensation for use and occupation.
Respondents raised lack of personal jurisdiction from alleged improper summons service and challenged petitioner's status as the real party-in-interest.
Respondents also asserted the defense of possession by builder in good faith based on alleged permission from a PIOA officer for their predecessor to occupy and improve the property.

Lower Courts

The Metropolitan Trial Court (MeTC) rendered a Decision dated November 8, 2013 ordering respondents to vacate, to pay PHP 10,000.00 per month as reasonable compensation from July 30, 2012 until vacatur, to pay PHP 10,000.00 as attorney's fees, and to pay costs of s