SEN PO EK MARKETING CORPORATION, REPRESENTED BY ITS PRESIDENT AND MANAGER, CONSORCIO L. YUSIONG, PETITIONER, VS. COURT OF APPEALS, REGIONAL TRIAL COURT OF LEYTE, BRANCH 7, TACLO…

Does an action for annulment of sale affecting leased premises
filed in the Regional Trial Court by the lessee claiming that it has the right
of first preference operate to abate or suspend ejectment proceedings before
the Municipal Trial Court? This is the
ultimate issue raised in this petition for review on certiorari.

The antecedents: Adjoining lots 50 and 106 of the Tacloban Cadastre, with a combined area
of 313 square meters, were originally owned by Sofia Martinez. In 1961, Sofia leased the two (2) lots to
petitioner Sen Po Ek Corporation with the agreement that petitioner would
construct a commercial building thereon, which it complied with. After a series of renewals of the lease, the
ownership of the building became vested in Sofia, the lessor.

In 1985, Sofia sold the leased premises to her daughter Teodora
P. Martinez who, in turn, sold the same on January 12, 1990, to private
respondents Juanito, Jr., Nelson and Leoncio, all surnamed Tiu Uyping for
P800,000.00. Transfer Certificate of
Title No. T-32339 was then issued to the vendees. On February 21, 1990, the Tiu Uypings wrote petitioner demanding
that it vacate the leased property. The
petitioner refused to vacate. Consequently, Tiu Uypings filed an action against petitioner for
unlawful detainer and damages in the Municipal Trial Court in Cities, Branch 2,
Tacloban City.^[1]

Petitioner countered by filing an action against the Tiu Uypings
in the Regional Trial Court of Palo, Leyte, Branch 8, for “declaration of
nullity and annulment of deeds of absolute sale dated November 1979, November
1985 and June 12, 1990.”^[2]

Meanwhile, on April 24, 1991, in the unlawful detainer case, the
Municipal Trial Court ruled in favor of the Tiu Uyping brothers, which decision
was affirmed on appeal on July 5, 1991, by the Regional Trial Court of Palo,
Leyte, Branch 7.^[3]
Thus, petitioner Sen Po Ek Marketing Corporation was ordered to vacate the
subject premises immediately and to pay the Tiu Uypings P10,000.00 a month as
rental from February 1990, until it actually vacates the property, plus
attorney’s fees.^[4]

Petitioner elevated this case to the Court of Appeals which on
September 25, 1991, sustained the courts a quo.^[5]

In this instant recourse, petitioner claims that the Court of
Appeals erred in (a) sustaining the application by the inferior court of the
Rule on Summary Procedure; (b) holding that petitioner corporation did not have
an existing contract of lease over the property, which must be respected by the
Tiu Uyping brothers as the new registered owners thereof; and, (c) not holding
that the complaint for ejectment should be dismissed because of the pendency of
another action between the same parties for the same cause in another court,
specifically in the Regional Trial Court of Palo, Leyte, Branch 8.

Petitioner likewise prays that the decisions of the Municipal
Trial Court in Cities, Branch 2, Tacloban City, and of the Regional Trial
Court, Branch 7, Palo, Leyte, be set aside.

Private respondents filed their comment to the petition, while
petitioner, its reply to the comment. Attached to the reply is a certified true copy of the decision dated
February 27, 1992, of the Regional Trial Court, Branch 8, Palo, Leyte, in the
annulment case, which rescinded the deed of sale executed on January 12, 1990,
between Teodora Martinez and the Tiu Uyping brothers; declared that petitioner
corporation had the first preference to buy Lots 50 and 106 of the Tacloban
Cadastre as well as the building erected thereon, hence, Teodora was ordered to
sell the aforementioned property to it; and, ordered Teodora to return to the
Tiu Uypings the sum of P800,000.00 as total selling price of the property, and
to pay attorney’s fees of P10,000.00 and litigation expenses of P3,000.00.^[6]

In their rejoinder, private respondents noted that said decision
of the trial court in the annulment case was not yet final in view of their
appeal to the Court of Appeals.

In the instant petition, We rule for private respondents.

As to the first issue, it must be observed that the appellate
court made no ruling on the applicability of the Rule on Summary Procedure
because it was not raised before it. What petitioner contended was that the Municipal Trial Court was devoid
of legal authority over the ejectment case considering that the amount of
rentals demanded by respondents amounted to more than P300,000.00. As correctly held by the Court of Appeals,
Sec. 33 of BP 129 vests in municipal trial courts exclusive original
jurisdiction over forcible entry and unlawful detainer cases. It is not the amount of rentals demanded in
the complaint that determines the jurisdiction of said inferior courts but the
nature of the action.^[7] Whether the 1983 Rule on Summary Procedure
was properly applied in the Municipal Trial Court of Tacloban City will not
divest it of its jurisdiction already conferred by BP 129.

Petitioner’s submission that there was a validly existing lease
contract at the time petitioner was sued for eviction is bereft of merit. As par. 1 of the lease contract provides –

“x x x this CONTRACT
OF LEASE shall take effect and become binding between the parties herein as of
January 01, 1982 and shall continue to be valid and in full force for a period
of five (5) years thereafter, which said CONTRACT shall be renewable on a year
to year basis, subject to the mutual agreement of the parties herein as of the
time of renewal.”

As the Court of Appeals noted, the lease contract was renewable
on a year-to-year basis but only if the parties mutually agreed and came to
terms regarding a renewal. But, as
admitted by petitioner itself, there was no subsequent written reinstatement of
the 1982 contract such that upon its stipulated expiration on January 1, 1987,
the lease relationship between Teodora and petitioner became a month?to-month
arrangement, terminable at the end of each month, pursuant to Art. 1687 of the
Civil Code, it appearing that rentals were paid on a monthly basis.^[8]

The third controverted point, which is crucial in the case before
Us, is, incidentally, already a settled issue in a litany of recent decisions
which rules that pendency of action for annulment of sale as in the instant
case, may not be successfully pleaded in abatement of an action for unlawful
detainer.^[9]
However, with the decision of the Regional Trial Court, Branch 8, rendering
null and void the sale of the leased property to the Tiu Uypings, it would now
appear that a different twist has been added to an otherwise predictable
conclusion.

While the pendency of a suit for declaration of the inefficacy of
a deed of sale does not constitute a compelling reason to delay termination of
an ejectment case, a judgment of annulment may be a ground for ordering
reconveyance of the disputed property to the original lessees.

At this point, one factor strongly militates against the case for
petitioner. The supervening decision of
the Regional Trial Court in favor of petitioner will not constitute an
effective bar to the eviction of petitioner since it has not yet assumed
finality by reason of the still unresolved appeal timely filed by private
respondents and Teodora Martinez. For
the present, there is yet no final adjudication on the validity of the contract
of sale of January 12, 1990.

As explained in Galgala vs. Benguet Consolidated, Inc.,^[10]
“(t)he pendency of Civil Case No. 3656 x x x gives rise merely to an
expectancy that the documents assailed therein may be nullified and the subject
properties may be ordered reconveyed to petitioners, as compared to the clear
actual and existing legal right of respondent corporation to possession of the
subject properties as the registered owners” (emphasis supplied).

WHEREFORE, finding the challenged decision of the Court of
Appeals as well as those of the Municipal Trial Court in Cities, Branch 2,
Tacloban City, and Regional Trial Court, Branch 7, Palo, Leyte, to be entirely
in accord with law and jurisprudence, the same are AFFIRMED. Consequently, for lack of merit, the instant
petition is DISMISSED.

SO ORDERED.

Cruz, (Chairman), Griño-Aquino, and
Medialdea, JJ., concur.

^[1]
Civil Case No. R-5484.

^[2]
Civil Case No. 90-01-004, where petitioner contends that the deed of sale by Sofia
Martinez in favor of her daughter Teodora was executed in 1979 but notarized
only on November 5, 1985.

^[3]
Rollo, p. 108.

^[4]
Civil Case No. 91-05-78, Rollo, p. 129.

^[5]
CA- G. R. SP No. 25463, Rollo, p. 163.

^[6]
Rollo, p. 210.

^[7]
Commander Realty, Inc. vs. Court of Appeals, G.R. No. 77227, May 9,
1988; 161 SCRA 264.

^[8]
Rollo, p. 86.

^[9]
Drilon vs. Gaurana, No. L-35482, April 30, 1987,149 SCRA 342; Ang Ping vs.
Regional Trial Court of Manila, Br. 40, G.R. No. 75860, September 17, 1987, 154
SCRA 77; Spouses Dante vs. Sison, G. R. No. 82761, June 29, 1989, 174
SCRA 517; Galgala vs. Benguet Consolidated, Inc., G.R. No. 75206,
September 5, 1989, 177 SCRA 288; Demamay vs. Court of Appeals, G.R. No.
87263, June 18, 1990, 186 SCRA 608; Wilmon Auto Supply Corp., et al. vs.
Court of Appeals, et al., G.R. No. 97637, April 10, 1992.

^[10]
Supra at 293.