G.R. No. 176405 - Wee vs. De Castro

Case Summary (G.R. No. 176405)

Factual Background

Respondents were registered owners of a two-storey building covered by TCT No. 16193 in Alaminos City. The parties entered a month-to-month lease under which petitioner paid P9,000.00 per month. The parties agreed that effective October 1, 2001 the rent would increase to P15,000.00, but petitioner continued paying P9,000.00 and declined to pay the increased amount. The rental dispute was brought before the Barangay Lupon for conciliation; on January 18, 2002 the Lupon issued a Certification to file action stating that conciliation failed with respect to the rental increase. On June 10, 2002 respondent George de Castro sent a letter terminating the lease and demanding surrender of possession. When petitioner did not vacate, respondents filed an ejectment complaint on July 1, 2002.

Trial Court Proceedings

The MTC of Alaminos City conducted pretrial and considered the parties’ stipulations that petitioner paid P9,000.00 for the months of October 2001 to January 2002 and that the Lupon had issued a Certification to file action. On November 21, 2002 the MTC dismissed the complaint for failure to comply with the conciliation requirement under the Katarungang Pambarangay Law. The dismissal was appealed to the RTC.

RTC Ruling and Rationale

The RTC, in Decision dated June 27, 2005, affirmed the MTC dismissal. The RTC found that the original agreement fixed rent at P9,000.00 per month and no valid agreement existed to increase the rent to P15,000.00; respondents therefore could not fault petitioner for paying the original amount. The RTC also held that respondents failed to comply with the prior conciliation requirement and that the complaint lacked the allegation of “unlawful withholding” necessary for unlawful detainer. The RTC further concluded that a co-owner could not maintain an action without joining all other co-owners.

Petition to the Court of Appeals and Respondents’ Contentions

Respondents petitioned the Court of Appeals, arguing that conciliation before the Lupon had been satisfied because respondent George de Castro resided in Alaminos while his co-owners lived elsewhere; that the MTC was not divested of jurisdiction despite the absence of the precise phrase “unlawful withholding” because the allegations otherwise alleged an unlawful detainer; and that the failure of co-owners to sign verification and certificate of non-forum shopping was immaterial because they had executed Special Powers of Attorney (SPAs) authorizing George de Castro to prosecute the ejectment suit.

Court of Appeals Disposition

The Court of Appeals granted respondents’ petition and reversed the RTC. It ordered petitioner to surrender and vacate the premises and to pay P15,000.00 per month from March 2002 until actual turnover, plus rental arrearages of P30,000.00 for October 2001 to February 2002, with legal interest and increased post-judgment interest, and awarded P20,000.00 as attorney’s fees and costs. The Court of Appeals later denied petitioner’s motion for reconsideration.

Issues Presented to the Supreme Court

Petitioner urged the Supreme Court to set aside the Court of Appeals judgment on four grounds: (1) that conciliation before the Lupon was jurisdictional and respondents failed to comply; (2) that the complaint failed to allege “unlawful withholding”; (3) that a co-owner may not sue without joining all co-owners; and (4) that counsel failed to attach the Official Receipt for IBP dues as required by Supreme Court Circular No. 10.

Supreme Court’s Holdings — Conciliation Requirement

The Court held that the Barangay Lupon Certification dated January 18, 2002, although expressly referring only to the rental increase, constituted sufficient compliance with the prior conciliation requirement under the Katarungang Pambarangay Law and Sec. 412, RA 7160. The Court reasoned that where the parties submitted the dispute over rental increase to the Lupon, the conciliation logically and reasonably encompassed related issues of possession, the lease agreement, and alleged violations of its terms. The Court recognized that conciliation is a condition precedent to filing court actions but found that the certification before the Lupon met that precondition in the circumstances of this case.

Supreme Court’s Holdings — Nature of the Lease and Remedy of Ejectment

The Court found that the lease lacked a fixed term and was therefore month-to-month under Art. 1687, Civil Code. A monthly tenancy terminates at the end of each month, entitling the lessor to demand possession at each month’s end. The Court held that respondents could institute unlawful detainer proceedings to recover possession after termination of the month-to-month tenancy. The Court also held that nonpayment of the increased rent entitled the lessor to rescind the lease or pursue other remedies under Art. 1659 and related jurisprudence, including Chua v. Victorio.

Supreme Court’s Holdings — Co-ownership and Representation

The Court rejected petitioner’s contention that the action was defective for failure to join all co-owners. Relying on Art. 487, Civil Code, and recent authority including Carandang v. Heirs of De Guzman, the Court held that any one co-owner may bring an action for recovery of possession and that other co-owners are not indispensable parties because relief can be afforded in the suit for the benefit of all. The Court further held that the SPAs executed by Annie de Castro and Felomina de Castro Uban in February and March 2002 authorized respondent George de Castro to institute the ejectment suit and that their absence from the original complaint was harmless.

Supreme Court’s Holdings — Verification, Forum Shopping, and Pleading Defects

The Court concluded that the failure of some co-owners to sign the Verification and Certificate of Non-Forum Shopping was not fatal. The Court treated the SPAs and an affidavit from the deceased co-owner as curing any procedural infirmity. The Court also held that the complaint’s omission of the exact phrase “unlawful withholding” did not defeat the action where the allegations — ownership, month-to-month lease, demand for incr

Case Syllabus (G.R. No. 176405)

Parties and Procedural Posture

Petitioner Leo Wee was the lessee of a two-storey building on land covered by TCT No. 16193 who was sued in ejectment by the respondents.
Respondent George de Castro filed Civil Case No. 1990 on 1 July 2002 on his own behalf and on behalf of Annie de Castro, Felomina de Castro Uban, and Jesus de Castro, with Martiniana de Castro later substituted for the deceased Jesus de Castro.
The Municipal Trial Court of Alaminos City dismissed the Complaint for failure to comply with the prior conciliation requirement before the Barangay Lupon.
The Regional Trial Court, Branch 54, Alaminos City, affirmed the MTC Decision on appeal and dismissed respondents’ ejectment action.
The Court of Appeals in CA-G.R. SP No. 90906 reversed the RTC and ordered petitioner to vacate the premises and to pay arrears, interest, attorney’s fees, and costs.
Petitioner filed a Petition for Review on Certiorari under Rule 45 seeking reversal of the Court of Appeals Decision and Resolution, which this Court denied and affirmed the Court of Appeals in toto.

Key Factual Allegations

Respondents alleged ownership of the subject parcel described in TCT No. 16193 and alleged that the subject two-storey building was rented to petitioner on a month-to-month basis for P9,000.00 per month.
The parties agreed that effective 1 October 2001 the monthly rent would increase to P15,000.00, and petitioner failed or refused to pay the increased rent when due.
The parties brought the rental dispute to the Barangay Lupon for conciliation, which issued a Certification to file action on 18 January 2002 referring to a failed conciliation on the rental increase.
Respondent George de Castro sent a termination and demand letter on 10 June 2002 requiring petitioner to vacate the premises, and the ejectment Complaint was filed on 1 July 2002.
Special Powers of Attorney dated 7 February 2002 and 14 March 2002 were later produced by respondent George de Castro showing authority from Annie de Castro and Felomina de Castro Uban to institute the action.
The parties stipulated at pre-trial that petitioner paid P9,000.00 monthly for October 2001 to January 2002, that the Barangay Lupon issued certification, and that respondents’ counsel had terminated the lease by letter of 10 June 2002.

Issues Presented

Whether noncompliance with the Barangay conciliation requirement divested the MTC of jurisdiction to entertain the ejectment action.
Whether the Complaint failed for want of the allegation of “unlawful withholding” of the premises.
Whether respondent George de Castro could properly file the ejectment suit without joining all co-owners.
Whether the failure to attach the counsel’s IBP official receipt warranted dismissal under Supreme Court Circular No. 10.

Contentions of the Parties

Petitioner contended that the Certification to file action addressed only rental increase and not ejectment, that conciliation was therefore incomplete and jurisdictional, that the Complaint lacked the allegation of “unlawful withholding,” that not all co-owners were joined, and that counsel failed to attach his IBP receipt.
Respondents contended that the conciliation requirement was satisfied despite the Certification’s focus on rental increase, that the Complaint sufficiently alleged facts equivalent to “unlawful withholding,” that George de Castro was authorized to sue by SPAs and thus proper to institute the action, and that residency of co-owners abroa