MARCELITO D. QUEVADA, PETITIONER, VS. COURT OF APPEALS AND JUANITO N. VILLAVERDE, RESPONDENTS.

Quevada versus Villaverde

The Case

This is a petition for review brought by Marcelito Quevada against Juanito Villaverde, the lessor of a residential house in Sampaloc, Manila. Villaverde sued to eject Quevada after the lease expired and Quevada refused to vacate. The case matters because it gathers in one decision the whole law of ejectment: the one-year period for unlawful detainer, the right of a mere lessor, not the titled owner, to bring the suit, the rule on builders in good faith under Article 448 of the Civil Code, and the strict proof required to establish an implied trust.

Procedural History

Villaverde filed the complaint for ejectment before the Metropolitan Trial Court of Manila, Branch 30. The trial court ruled for Villaverde, ordering Quevada to vacate, to pay reasonable compensation of 2,500 pesos monthly from May 1996 until surrender, and the costs of suit. Quevada appealed to the Regional Trial Court of Manila, Branch VII, which affirmed the trial court in full. Quevada then went up to the Court of Appeals, which likewise affirmed; his motion for reconsideration was denied. He then filed this petition for review with the Supreme Court, raising four grounds: an implied trust, reimbursement for the value of the house, the trial court's lack of jurisdiction, and the right of a non-owner to sue.

Facts

In 1994, Villaverde bought a lot in Sampaloc, Manila. Quevada had earlier built a house on that lot, finishing it in 1986, and had been living there. Quevada had wanted to buy the lot himself but could not raise the purchase price of 1,000,000 pesos. Villaverde told him to go ahead and buy it, promising to transfer title once Quevada could pay. In the meantime, the two entered into a contract of lease over a portion of the house, 96 square meters, from August 15, 1994 to August 15, 1995, at 2,500 pesos a month. They extended it from August 15, 1995 to April 15, 1996.

After the extension expired, Quevada stayed on without paying. Villaverde made several demands to vacate. The matter went to the barangay for conciliation, where Quevada agreed to vacate as of December 31, 1997, but later repudiated that agreement. On January 20, 1998, Villaverde served a written notice to vacate within fifteen days, to pay 5,000 pesos monthly from May 1996, and to pay every month thereafter. Quevada did not comply.

Quevada's defense was that the house was his, that only the land was leased, that Villaverde refused his tendered rentals, and that an implied trust existed because Villaverde bought the lot with a promise to transfer title to him. The complaint was filed on March 9, 1998.

Issues

• Whether or not the action for ejectment is proper and within the jurisdiction of the Metropolitan Trial Court.
• Whether or not the action may be brought by the private respondent although he is not the titled owner of the property.
• Whether or not the petitioner may be reimbursed for the value of the house standing on the lot.
• Whether or not an implied trust was created in favor of the petitioner.

Applicable Provisions

Section 1 of Rule 70 of the Rules of Court provides:

SECTION 1. Who may institute proceedings, and when. - Subject to the provisions of the next succeeding section, a person deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied, or the legal representatives or assigns of any such lessor, vendor, vendee, or other person, may, at any time within one (1) year after such unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial Court against the person or persons unlawfully withholding or depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with damages and costs.

This fixes both the one-year period and the class of persons who may sue, including a lessor such as Villaverde.

Section 2 of Rule 70 provides:

SEC. 2. Lessor to proceed against lessee only after demand. - Unless otherwise stipulated, such action by the lessor shall be commenced only after demand to pay or comply with the conditions of the lease and to vacate is made upon the lessee, or by serving written notice of such demand upon the person found on the premises, or by posting such notice on the premises if no person be found thereon, and the lessee fails to comply therewith after fifteen (15) days in the case of land or five (5) days in the case of buildings.

This is the demand requirement, satisfied by the written notice served on January 20, 1998.

Section 410 of the Local Government Code provides:

SECTION 410. Procedure for Amicable Settlement. - x x x (c) Suspension of prescriptive period of offenses. - While the dispute is under mediation, conciliation, or arbitration, the prescriptive periods for offenses and cause of action under existing laws shall be interrupted upon filing the complaint with the punong barangay. The prescriptive periods shall resume upon receipt by the complainant of the certificate of repudiation or of the certification to file action issued by the lupon or pangkat secretary: Provided, however, That such interruption shall not exceed sixty (60) days from the filing of the complaint with the punong barangay.

This suspends the one-year period while the dispute is under barangay conciliation.

Article 448 of the Civil Code provides:

ARTICLE 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.

This governs the builder in good faith and grounds the offset of the house's value against rentals.

Article 1450 of the Civil Code provides:

ARTICLE 1450. If the price of a sale of property is loaned or paid by one person for the benefit of another and the conveyance is made to the lender or payer to secure the payment of the debt, a trust arises by operation of law in favor of the person to whom the money is loaned or for whom it is paid. The latter may redeem the property and compel a conveyance thereof to him.

This is the resulting trust invoked by Quevada, which the Court found inapplicable.

Article 1456 of the Civil Code provides:

ARTICLE 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.

This is the constructive trust provision, which also does not apply on the facts found.

Ruling

On the first issue, the Court held the ejectment action proper and within the jurisdiction of the Metropolitan Trial Court. The complaint's allegations met Section 1 of Rule 70, and the action was filed within one year. The Court stressed that the unlawful withholding began not when the lease expired on April 15, 1996, but when the written notice to vacate was served on January 20, 1998. Possession by tolerance is lawful until the possessor refuses to vacate upon demand. The barangay conciliation suspended the one-year period under Section 410 of the Local Government Code, so the complaint filed on March 9, 1998 was timely.

On the second issue, the Court held that a mere lessor may sue for unlawful detainer even if he is not the titled owner. The action concerns physical possession, not ownership, and any finding on ownership is merely provisional.

On the third issue, the Court held that Quevada should be paid the value of the portion of the house covered by the lease, to be offset against rentals due. Although Article 448 generally covers builders who believe themselves owners, it also applies where improvements are built with the owner's consent. Good faith is presumed. It would be unfair for Villaverde to receive both the rent and the house. The Court invoked the principle against unjust enrichment, expressed in the maxim nemo cum alterius detrimento locupletari potest, meaning no one should be enriched at another's expense.

On the fourth issue, the Court held there was no implied trust. No resulting trust arose under Article 1450 because the conveyance was from the previous owner to Villaverde, not to secure a debt. No constructive trust arose under Article 1456 because there was no fraud, mistake, or abuse of confidence. The burden of proving a trust lies on the party asserting it, and the proof must be clear and trustworthy.

Doctrine

• Unlawful detainer is within the jurisdiction of the Metropolitan Trial Court and must be filed within one year, counted from the date of the demand to vacate, not from the expiration of the lease.
• Possession by tolerance is lawful at first, but becomes unlawful when the possessor refuses to vacate upon demand.
• The one-year period is interrupted by the filing of the complaint before the punong barangay and resumes upon receipt of the certificate to file action, subject to the sixty-day cap under Section 410 of the Local Government Code.
• A lessor or person entitled to the use of the property may bring ejectment even without title, because the action concerns only physical possession.
• Under Article 448 of the Civil Code, a builder in good faith is entitled to indemnity, and the value of the improvements may be offset against reasonable rent to prevent unjust enrichment.
• An implied trust must be proved clearly; it cannot rest on vague or uncertain evidence, and the burden is on the party asserting it.

Disposition

The petition was partly granted: the Court of Appeals decision was affirmed, but the case was remanded to the trial court to assess the value of the leased portion of the house, against which the reasonable rent due may be offset.

Remember This

The one line to memorize: in ejectment, the one-year period runs from the demand to vacate, and a mere lessor may sue because only physical possession is at stake. Examiners use this case for the interplay of the one-year period, barangay conciliation, Article 448 indemnity, and the strict proof of implied trusts.