SOLANDA ENTERPRISES, INC., PETITIONER, VS. COURT OF APPEALS AND LUIS MANLUTAC, RESPONDENTS.

Solanda Enterprises versus Court of Appeals

The Case

This is a petition for review on certiorari brought by Solanda Enterprises, Incorporated against the Court of Appeals and Luis Manlutac. Solanda sued Manlutac for ejectment before the Metropolitan Trial Court of Manila, and the question that reaches the Supreme Court is whether a long-standing urban tenant may defeat that ejectment suit by invoking a right of first refusal under Presidential Decree Number 1517. The case matters because it draws the precise boundaries of that preemptive right, and because it restates the settled rule that an ejectment suit settles only physical possession and is not barred by a pending action over ownership.

Procedural History

Solanda filed a complaint for ejectment against Manlutac before the Metropolitan Trial Court of Manila, pleading that the oral month-to-month lease had expired and that rentals from July to September 1992 were unpaid. Manlutac moved to admit his answer out of time, explaining that the person who received the summons did not understand its legal effect. The Metropolitan Trial Court rendered a summary judgment in favor of Solanda, ordering Manlutac and all persons claiming under him to vacate the premises, to pay rental arrearages, to pay a monthly amount for continued occupancy, plus attorney's fees and costs.

Manlutac appealed to the Regional Trial Court of Manila, which affirmed the Metropolitan Trial Court in full and later denied his motion for reconsideration. He then sought review before the Court of Appeals. That court initially denied his motion for extension to file a petition for review, and denied reconsideration, but the Supreme Court reversed the appellate court and allowed the petition to proceed. The Court of Appeals then rendered its decision granting the petition, reversing the Regional Trial Court, and dismissing the ejectment complaint. After the Court of Appeals denied reconsideration, Solanda came to the Supreme Court by petition for review on certiorari.

Facts

Luis Manlutac built a residential house on a 135-square meter portion of land at Rivera Street in Tondo, Manila, part of the Quijano estate of about 6,000 square meters. He had been a tenant or lessee of that estate for more than forty years. On April 7, 1986, the Quijano spouses sold the entire estate to Solanda Enterprises by a deed of absolute sale for Thirty Million Pesos, without giving Manlutac and the other tenants a chance to exercise any preemptive right.

Later, Ceferina Quijano offered the estate to the tenants, and in November 1989 the tenants, including Manlutac, signified acceptance at 2,000 pesos per square meter. In June 1991, however, Quijano wrote Manlutac that Solanda was already the owner and that rentals should be paid to Solanda beginning July 1, 1991. Solanda registered the land in its name in July 1991, and in August 1991 the tenants discovered the sale.

In September 1991, the tenants filed a complaint before the Regional Trial Court for annulment of sale, reconveyance, and damages. In April 1994, that court annulled the deed of sale, canceled the certificate of title, and directed compliance with the relevant sections of Presidential Decree Number 1517. That ruling, however, was still on appeal. Meanwhile, in November 1992, Solanda filed the present ejectment complaint against Manlutac.

Issues

• Whether or not the Court of Appeals had jurisdiction to review and reverse the Regional Trial Court decision, which Solanda claims had already become final.
• Whether or not the mere fact that Manlutac was a tenant on the land for more than ten years entitled him to the statutory right of first refusal under Presidential Decree Number 1517, absent a showing that the land lies within both an area of priority development and an urban land reform zone.

Applicable Provisions

Section 6 of Presidential Decree Number 1517 provides:

SECTION 6 Land Tenancy in Urban Land Reform Areas. Within the Urban Zones legitimate tenants who have resided on 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 at reasonable prices, under terms and conditions to be determined by the Urban Zone Expropriation and Land Management Committee created by Section 8 of this Decree.

This is the source of the preemptive right Manlutac invokes, and the Court must decide whether it applies to his land.

Proclamation Number 1967, which amended the earlier proclamation declaring the entire Metropolitan Manila area an urban land reform zone, provides:

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution and existing laws, and in relation to Proclamation No. 1893 declaring the entire Metropolitan Manila area as an Urban Land Reform Zone, and LOI 935, hereby amend Proclamation No. 1893 by declaring 244 sites in Metropolitan Manila as Areas for Priority Development and Urban Land Reform Zones as described in the attached annex.

This delimits where the preemptive right may be exercised, and the Court reads it to require that the land be in both an area of priority development and an urban land reform zone.

The same proclamation further provides:

The provisions of P.D. Nos. 1517, 1640 and 1642 and of LOI No. 935 shall apply only to the above-mentioned Areas of Priority Development and Urban Land Reform Zones.

The conjunctive word and in this sentence confirms that both declarations must concur.

Ruling

On the first issue, the Court held that the Regional Trial Court decision was appealed within the reglementary period, and that the matter had already been settled by the Court's earlier resolution allowing the petition for review. Manlutac filed his motion for reconsideration on the last day of the period, so under the rule governing that situation he had to perfect his appeal within the day following receipt of the denial. He received the denial on April 8, 1994, and the next days were a legal holiday and a Sunday, so he had until April 11, 1994. His motion for extension filed on that date was therefore seasonable.

On the second issue, the Court ruled in favor of Solanda. Reading Proclamation Number 1967 closely, the Court held that before a preemptive right may be exercised, the disputed land must be situated in an area declared to be both an area of priority development and an urban land reform zone. The Court stressed that the conjunctive and in the last sentence of the quoted provision confirms this intention, and that in statutory construction and implies conjunction, joinder, or union. Manlutac did not contest Solanda's allegation that the land lay outside the areas listed in the annex of the proclamation, and the list of areas in Tondo did not include Rivera Street. A certification from the Housing and Land Use Regulatory Board likewise stated that the property was outside any such area.

The Court also rejected Manlutac's other grounds. The annulment case was still on appeal and had no binding effect, and the settled rule is that ejectment suits deal only with physical possession, so the pendency of an action for annulment and reconveyance cannot abate an ejectment suit. His claimed right of possession was at best inchoate. Finally, the Manila ordinance expressing an intent to expropriate the land did not show that the land would be awarded to him, and was speculative and no bar to ejectment.

Doctrine

First, the right of first refusal under Presidential Decree Number 1517 may be exercised only where the disputed land is located within both an area of priority development and an urban land reform zone, as required by Proclamation Number 1967. The conjunction and means both must concur; one without the other will not do.

Second, an ejectment suit settles only the issue of physical possession. It is not barred by the pendency of an action for annulment of sale and reconveyance, and a tenant's expectation of eventually acquiring the land neither establishes a right to possess nor justifies dismissal of the ejectment case.

Third, a city ordinance expressing a mere intent to expropriate the land does not by itself abate an illegal detainer suit, especially where it does not show that the land will be awarded to the tenant.

Disposition

The petition was granted; the decision and resolution of the Court of Appeals were reversed and set aside, and the decision of the Regional Trial Court of Manila dated August 25, 1993 was reinstated, with no costs.

Remember This

Memorize this line: the right of first refusal under Presidential Decree Number 1517 requires land that is in both an area of priority development and an urban land reform zone. Examiners use this case to test the conjunctive requirement of Proclamation Number 1967 and the rule that ejectment suits decide only physical possession and are not abated by a pending annulment or reconveyance case.