ANTONIO SONZA,CARMELITA SONZA, JUANITO SICAT AND LETLET SICAT, PETITIONERS, VS. HEIRS OF EDMUNDO A. REYES & JUSTICE JOSE B.L. REYES, RESPONDENTS.

Sonza versus Heirs of Reyes

The Case

This is a petition for review brought by Antonio Sonza, Carmencita Sonza, Juanito Sicat, and Letlet Sicat against the Heirs of Edmundo A. Reyes and Justice Jose B.L. Reyes. The Reyes heirs sued to eject the petitioners from a parcel of land in Caloocan City which the petitioners had occupied after a fire razed the area, without the consent of the owners and without paying rent. The petitioners lost before the Metropolitan Trial Court and again before the Regional Trial Court, and now ask the Supreme Court to reverse. The case matters because it gathers in one decision four recurring bar topics: the best evidence of payment, the necessity of a demand to vacate, the right of first refusal of legitimate urban tenants under Presidential Decree Number 1517, and the barangay conciliation requirement under the Local Government Code.

Procedural History

The Reyes heirs, represented by Leonor Reyes Garmsen, filed an action for ejectment before the Metropolitan Trial Court of Caloocan City, Branch 49. The trial court rendered judgment for the plaintiffs, ordering the defendants to vacate the premises, to pay their respective rental arrears and monthly compensation, to pay attorney's fees of 20,000 pesos, and to pay the costs of suit. The petitioners appealed to the Regional Trial Court of Caloocan City, Branch 128. That court, in a decision dated 27 October 2003, affirmed the decision of the Metropolitan Trial Court in its entirety, and in an order dated 18 February 2004 denied the petitioners' motion for reconsideration. The petitioners then came to the Supreme Court by petition for review.

Facts

Jose B.L. Reyes and Edmundo A. Reyes were the registered owners in fee simple of a parcel of land in Marulas, Grace Park, Caloocan City, covered by a transfer certificate of title. The Reyes heirs acquired the property by inheritance upon the death of Edmundo in September 1987 and the death of Jose in December 1994. The lot had been leased to several persons when the houses on it were gutted by fire in December 1993.

Immediately after the fire, the petitioners occupied the premises without the prior consent of the plaintiffs, and they stayed through the mere tolerance of the plaintiffs, paying no rent. In letters dated 3 July 2000, counsel for the plaintiffs demanded that the petitioners pay rent retroactively from January 2000, settle their unpaid rentals, and vacate within fifteen days. The Sonza spouses were asked for 164 pesos and 50 centavos a month plus arrears of 4,680 pesos for July 1992 to December 1998 and 987 pesos for January to June 2000. The Sicat spouses were asked for 119 pesos a month plus arrears of 3,909 pesos. The petitioners refused to comply.

Before the trial court, the petitioners claimed they had paid by depositing amounts with the plaintiffs' bank in July 2000, producing bank deposit slips as evidence. They also claimed they were never served a demand to vacate, that they were entitled to a right of first refusal to buy the land, and that the complaint should be dismissed for lack of barangay conciliation.

Issues

• Whether or not the petitioners were in arrears of rent, their bank deposits not being sufficient proof of payment.
• Whether or not there was a prior demand to vacate the premises before the complaint was filed.
• Whether or not the petitioners are entitled to the right of first refusal to purchase the land under Section 6 of Presidential Decree Number 1517.
• Whether or not the case should be dismissed for failure to comply with the barangay conciliation requirement under Section 412 of the Local Government Code.

Applicable Provisions

Section 6 of Presidential Decree Number 1517, on land tenancy in urban land reform areas, provides:

Section 6. Land Tenancy in Urban Land Reform Areas. Within the Urban Zones legitimate tenants who have resided in the land for ten years or more who have built their homes on the land and residents who have legally occupied the lands by contract, continuously for the last ten years shall not be dispossessed of the land and shall be allowed the right of first refusal to purchase the same within a reasonable time and reasonable prices under the terms and conditions to be determined by the Urban Zone Expropriation and Land Management Committee enacted by Section 8 of the Decree.

The Court held that this benefit belongs only to legitimate tenants, a status the petitioners failed to establish.

Section 412 of the Local Government Code, on conciliation, provides:

Section 412 Conciliation. (a) Pre-condition to filing of complaint In Court. No complaint, petition, action or proceeding involving any matter within the authority of the lupon shall be filed or instituted directly in court or any government office for adjudication, unless there has been a confrontation between the parties before the lupon chairman or the pangkat, and that no conciliation or settlement has been reached as certified by the lupon secretary or pangkat secretary as attested by the lupon or pangkat chairman or unless the settlement has been repudiated by the parties thereto.

The Court read this together with Section 408 of the same Code, which confers authority on the lupon only over parties actually residing in the same city or municipality.

Ruling

On the first issue, the Court held that the petitioners remained in arrears. The best proof of payment is the receipt, and the bank deposit slips did not show that the deposits were made as rental payments, with the knowledge of the plaintiffs, or for which period. The deposits were never receipted as rentals, and the proper practice was to present them to the plaintiffs' representatives, who would issue the corresponding official receipt. The Court quoted with approval the rule that it is the cardinal rule in the law on evidence that the best proof of payment is the receipt.

On the second issue, the Court held that demand to vacate was in fact made, through the letters dated 3 July 2000 addressed to both the Sicat spouses and the Sonza spouses. The petitioners' claim that no demand was served ran counter to the evidence on record.

On the third issue, the Court held that the right of first refusal does not apply. The decree limits its benefits to legitimate tenants, and the petitioners failed to overturn the finding that they were not legitimate tenants, nor did they present sufficient evidence that they fell within the ambit of Section 6. Lacking the required preponderance of evidence, their claim had to be rejected.

On the fourth issue, the Court held that barangay conciliation was not required. Section 412 must be correlated with Section 408, which limits the lupon's authority to parties actually residing in the same city or municipality. The respondents resided in San Juan City while the petitioners resided in Caloocan City, so the requirement did not apply.

Doctrine

• The best proof of payment is the receipt. A bank deposit slip, without proof that the deposit was made as payment of rent and with the knowledge of the creditor, does not establish payment.
• In ejectment, a demand to vacate is a jurisdictional precondition, and it is satisfied by a written demand actually received by the occupant.
• The right of first refusal under Section 6 of Presidential Decree Number 1517 belongs only to legitimate tenants who have resided on the land for ten years or more and have built their homes there. A party claiming it must prove that status by preponderance of evidence.
• The barangay conciliation requirement under Section 412 of the Local Government Code applies only where the parties actually reside in the same city or municipality, as required by Section 408. Residents of different cities need not undergo conciliation.
• Factual findings of the trial court, affirmed by the Regional Trial Court, are generally binding on the Supreme Court absent a showing that the court overlooked, misapplied, or misunderstood facts and circumstances.

Disposition

The Supreme Court denied the petition for lack of merit and affirmed in its entirety the decision and order of the Regional Trial Court, which had affirmed the judgment of the Metropolitan Trial Court ejecting the petitioners and ordering them to pay their arrears, monthly compensation, attorney's fees, and costs.

Remember This

Remember the line that the best proof of payment is the receipt, and that the right of first refusal under Presidential Decree Number 1517 belongs only to legitimate tenants. Examiners use this case to test the receipt rule in ejectment, the demand requirement, and the residence requirement for barangay conciliation.