Case Summary (G.R. No. 214741)
Key Dates
1965–2005: Continuous lease by FCI and predecessors
Jan 1 2006–Dec 31 2008: Formal lease term under PHP 5,500/month
Nov 2007 & Dec 2008: FCI’s renewal notices
Dec 23 2008: PMO’s month-to-month proposal pending market survey
Feb–Apr 2009: PMO appraisal (PHP 20–35/sq. m.) and PHP 35/sq. m. renewal offer
Jun 3 2009: PMO’s termination demand
Jul 2009: FCI’s consignation and specific performance suit (RTC Pasay)
Dec 2009: PMO’s ejectment complaint (MeTC Manila)
May & Aug 2010: MeTC holds ejectment in abeyance
May 2012: RTC Manila grants PMO certiorari
Mar 2014 & Sep 2014: CA decision and resolution favor FCI
Jan 22 2024: Supreme Court decision
Applicable Law
1987 Philippine Constitution
Rules of Court, Rule 70, Sec. 16 (provisional resolution of ownership issues in ejectment)
Civil Code, arts. 1370 (contract interpretation), 1184 (extinction of obligations)
Doctrine on unlawful detainer jurisdiction, litis pendentia, and reasonable compensation for use and occupation
Lease Background and Renewal Clause
PMO (successor to BOL) and FCI entered a two-year lease effective Jan 1 2006, with a clause stating renewal “under such terms and conditions as may be mutually agreed upon,” conditioned on a 60-day prior written notice by the lessee.
Lease Negotiations and Termination
FCI timely expressed renewal intent (Nov 2007; clarified Dec 2008 for 2009–2011). PMO, pending a market survey, proposed month-to-month occupancy after Dec 31 2008. By Apr 2009, PMO’s final renewal offer raised rent to PHP 44,975/month; FCI countered, offering 15% increase. PMO rejected the counter-offer and, on Jun 3 2009, terminated the informal month-to-month lease, demanding vacation within 30 days.
Parallel Proceedings: Consignation and Ejectment
FCI filed for consignation and specific performance with prayer for TRO (RTC Pasay, Jul 2009). During pendency, PMO filed an unlawful detainer/ejectment suit (MeTC Manila, Dec 2009). FCI moved to dismiss ejectment for lack of jurisdiction, arguing the matter fell under exclusive RTC competence.
MeTC’s Abeyance Orders
MeTC Manila denied FCI’s dismissal motion but suspended proceedings (May 31, Aug 11 2010) pending resolution of the RTC Pasay consignation case, citing risk of inconsistent rulings on the renewal clause.
RTC’s Grant of Certiorari
PMO petitioned the RTC Manila for certiorari, alleging grave abuse of discretion by MeTC in holding ejectment in abeyance. On May 7 2012, the RTC granted certiorari, set aside both MeTC orders, and ordered ejectment proceedings to continue.
CA’s Reversal and Jurisdiction Ruling
The Court of Appeals reversed the RTC, affirming MeTC’s abeyance orders. It held that PMO’s certification against forum shopping “converted” the ejectment case into a non-pecuniary action for contract interpretation, falling under RTC original and exclusive jurisdiction.
Issues for Supreme Court Review
I. Whether MeTC had jurisdiction over the ejectment case despite PMO’s forum-shopping certification.
II. Whether pendency of FCI’s consignation suit justified suspension of ejectment proceedings.
SC’s Ruling on Unlawful Detainer Jurisdiction
First-level courts are empowered to provisionally interpret contract provisions to resolve possession issues in unlawful detainer actions. Rule 70, Sec. 16 mandates that ownership or contractual defences “essential to a complete adjudication of possession” be determined by the ejectment court. Prior decisions (Optimum Dev. Bank v. Spouses Jovellanos; Union Bank v. Maunlad Homes) confirm MeTCs’ authority to interpret and enforce lease terms for possession purposes.
SC’s Ruling on Forum Shopping Certification
PMO’s verification and certification against forum shopping did not alter the nature of its ejectment complaint. Jurisdiction is fixed by the material allegations and relief pleaded; neither the certification nor the mere pendency of another action can strip MeTC of competence over unlawful detainer.
Dismissal of Consignation Case (Litis Pendentia)
FCI’s prior consignation suit in RTC Pasay was a preemptive effort to block PMO’s ejectment. Under litis pendentia principles, both actions involved identical parties, subject matter (possession), and relief (right to occupy). The more appropriate forum for resolving contractual disputes over possession is the unlawful detainer case before MeTC. The consignation case is dismissed with prejudice.
Interpretation of Renewal Clause and Possession
The 2006–2008 lease renewal cl
Case Syllabus (G.R. No. 214741)
Facts of the Case
- Republic Act No. 1160 and Executive Order No. 60 (1954) abolished LASEDECO and created the Board of Liquidators (BOL) to administer and liquidate its assets, including Bodega 2 (1,285 sq. m.) inside the NDC compound in Sta. Mesa, Manila.
- Firestone Ceramic, Inc. (FCI) has leased Bodega 2 and its predecessors since 1965.
- Executive Order No. 471 (2005) merged the BOL into the Privatization and Management Office (PMO), transferring administration of Bodega 2 to PMO.
- On October 11, 2006, PMO and FCI entered a two-year lease (Jan 1, 2006–Dec 31, 2008) at ₱5,500/month, with a renewal clause requiring FCI to give written notice 60 days before expiration “under such terms and conditions as may be mutually agreed upon.”
- FCI notified its intent to renew on November 12, 2007 (for Jan 1, 2008–Dec 31, 2009) and clarified on December 17, 2008 (for Jan 1, 2009–Dec 31, 2011).
- PMO’s December 23, 2008 letter acknowledged FCI’s intent but said the lease would continue month-to-month pending a new contract and market survey on prevailing rates.
- PMO’s in-house appraisal (Feb 11, 2009) valued the property at ₱20/sq. m. (₱25,700/month); its April 27, 2009 offer set rent at ₱35/sq. m. (₱44,975/month) and demanded FCI’s response within 15 days, warning it would otherwise offer to third parties.
- FCI’s May 12, 2009 letter rejected the 703% rental increase as unreasonable, offered a 10–15% increase for a three-year renewal, and urged mutual agreement “in the spirit” of the lease.
- PMO’s June 3, 2009 letter deemed its April 27 offer “final,” officially terminated the month-to-month lease, and demanded that FCI vacate within 30 days or face legal action.
Procedural History
- July 6, 2009: FCI filed a Complaint for Consignation, Specific Performance with TRO and Injunction in RTC Pasay (Civil Case No. R-PSY-09-01071-CV).
- July 23, 2009: RTC Pasay denied FCI’s TRO but instructed parties to respect the “renewed lease.”
- December 3, 2009: PMO filed an unlawful detainer/ejectment complaint against FCI in MeTC Manila (Civil Case No. 186583-CV).
- March 31, 2010: FCI moved to dismiss the ejectment case for lac