PHILIPPINE FEEDS MILLING CO., INC., PETITIONER, VS. HON. COURT OF APPEALS & HON. EDILBERTO G. SANDOVAL, AS JUDGE OF THE REGIONAL TRIAL COURT OF MANILA, BR. 9, AND UY BUN TIONG, …

A three-story commercial apartment building was owned by Sy Tian Peng,
the registered owner under Transfer Certificate of Title No. 115954 of the
Manila Registry of Deeds (p. 91, Rollo), and leased
to a number of tenants.  The Philippine Feeds
Milling Co., Inc., was one of the several tenants of
the building.  Another tenant was the
private respondent Uy Bun Tiong
who paid rent of P1,434.57 per month for a commercial apartment unit which he
subleased to the Eternal Glassware Enterprises for a monthly rent of P2,000 (p.
81, Rollo). 
The lease contract between Sy Tian Peng and Uy
Bun Tiong was only verbal (p. 60, Rollo).

On June 21,
1982, Sy Tian Peng “formally offered to the tenants if they are interested to buy the said 3-storey building under a ‘first option to buy’”
(p. 98, Rollo).

The next day, June 22,
1982, the petitioner, Philippine Feeds Milling Co., Inc., through its
president, Jose Y. Tolentino,
notified Sy Tian Peng “in
writing of its intention to buy the property and requested for the terms and
conditions of the sale for negotiation” (pp. 106-107, Rollo).

The other tenants made no
offers to buy the property.  Nevertheless
on May 24, 1983 (nearly one year after he made his first offer to sell) Sy Tian Peng
gave them a final period of “7 days from May 24, 1983” (p. 107, Rollo) to come forward with definitive proposals to
purchase his property, otherwise, he would offer it to other interested
parties.

Meanwhile, Philippine
Feeds Milling Co., Inc. pursued its manifested intention
to buy the property. 
On May 25, 1983,
petitioner and Sy Tian Peng agreed on the sale price of P800,000, with a down payment of P100,000 and the balance of P700,000 payable on or before the end of June, 1983.  The down payment of P100,000
was paid by the petitioner.  On June 30,
1983, it paid the balance of the purchase
price and received the deed of sale (pp. 41, 92, 107, Rollo).  On
July 22, 1983, the sale was registered and TCT No. 1755564
was issued to it (pp. 100, 108, Rollo).

On October 18, 1983,
Philippine Feeds Milling Co., Inc. wrote a letter to private respondent Uy Bun Tiong informing him that it “needs the
premises for its own use” (Exh.
E).

“October 18, 1983

“Mr. Uy
Bun Tiong

917 Tetuan St

Manila

Dear Sir:

“As you have already known, our client, the PHILIPPINE FEEDS MILLING CO., INC., is the new
registered owner of the premises you are occupying.  As you also know,
our client needs the premises for its own use.

“In this
connection, you are requested to attend a conference to be held at our office at Suites
803-804 Associate Bank Building, Quintin Paredes St., Manila, on October 28, 1983 at 6:00 P. M.

“Please be guided accordingly.

“Very truly
yours,

PHILIPPINE
FEEDS MILLING CO., INC.

By:

(SGD)
DEOGRACIAS G. EUFEMIO

Corporate
Secretary”

(Exh.
E, p. 63, Record.)

Six months later, on April
18, 1984, plaintiff
sent a telegram to the defendant stating:

“4/l8/84

“Uy-Bun
Tiong

948
Espeleta

Sta. Cruz, Manila

“Your
leased (sic) agreement on premises
917 Tetuan, Manila is hereby terminated stop
15 days from receipt vacate leased premises stop avoid judicial eviction.

“ATTY.
FLORIANO R. PAR

Counsel for
Phil. Feeds Milling Corp

1520 Bambang, Sta. Cruz, Manila“

(p. 42, Rollo.)

According to Uy Bun Tiong, he came to know
that the ownership of the building had been transferred to the petitioner only
after he received the letter of October 18, 1983. 
Since she had not been paying the rent to the previous owner, he
purchased on November 17, 1983 from the Metro Bank, Sta. Cruz Branch, a
cashier’s check P7,172.85 payable to the order of Jose
Y. Tolentino, president and general manager of the
petitioner, to cover rentals for the months of July, August, September, October
and November, 1983 (Exhibit F). 
Likewise, on December 29, 1983, Uy Bun Tiong purchased a cashier’s check for P1,434.57
from the Metro Bank, Sta. Cruz Branch, in favor of Tolentino
to pay the rental for December 1983.  The
rentals for January and February 1984 were paid in the same manner (p. 61, Rollo).

On March
20, 1984, Uy Bun Tiong and four other
tenants named Rufina Pineda Vda.
de Lu, Juliana Sy, Lily
Chan, and Chiok Long, stopped paying their rentals
and filed an action for specific performance and damages with preliminary
injunction against Sy Tian Peng, Philippine Feeds Milling Co., Inc., and Jose Y. Tolentino in the Regional Trial Court of Manila where it
was docketed as Civil Case No. 84-23437 (p. 90, Rollo).

On May 8, 1984, they
filed a complaint for consignation of rentals in the Metropolitan Trial Court
of Manila against Sy Tian Peng, Philippine
Feeds Milling Co., Inc. and Jose Y. Tolentino (Civil
Case No. 099300, entitled “Rufina Pineda, et al.
vs. Sy Tian Peng, et al.”) (p. 81, Rollo).  They
alleged that the rentals for March, April and May were “unjustifiably
refused acceptance by said defendants” (p. 82, Rollo).  All subsequent rentals were then deposited in
Court.

On June 4,
1984, Philippine
Feeds Milling Co., Inc. filed Civil Case No. 100120 for unlawful detainer against Uy Bun Tiong in the Metropolitan Trial Court of Manila (p. 43, Rollo) for non-payment of rentals for March and April 1984
and for subleasing the premises without the owner’s consent (p. 43, Rollo).

The Metropolitan Trial Court rendered judgment on June 25, 1987,
ordering Uy Bun Tiong
and all persons claiming rights under
him to vacate the premises, pay Philippine Feeds Milling Co., Inc. P2,869.14 monthly for March and April 1984, and P5,738.28
monthly effective May 1984 as reasonable compensation for his use and occupancy
of the premises until he vacates and restores its possession to the
plaintiff.  He was further ordered to pay
the plaintiff P3,000 as attorney’s fees, and
costs.  His counterclaim was dismissed.

Uy Bun Tiong
appealed to the Regional Trial Court which reversed the Metropolitan Trial
Court’s decision and dismissed the ejectment
complaint on the ground that the Metropolitan Trial Court lacked jurisdiction
over the case because “the question
of title and ownership is so necessarily
involved that it would be implausible (sic) to decide the case involving only the issue of possession.” It
observed that “the issue of whether defendant herein can properly and
validly exercise the option to buy the premises in question from Sy Tian Peng,
the person from whom the plaintiff allegedly purchased the same, is at stake in
Civil Case No. 84-23437 and any resolution thereto (sic) would necessarily
affect any right of possession plaintiff asserts it is entitled to.” (p. 58, Rollo.) It held, moreover,
that the plaintiff could not eject the
defendant on the grounds of non-payment of rentals, unauthorized subleasing,
and termination of the lease, because the rentals were fully paid, the
subleasing had been authorized by the previous owner, Sy
Tian Peng, and the demand
to vacate was inadequate (pp. 60-63, Rollo).

That decision was affirmed by the Court of Appeals upon the elevation of the case to it for review.

The petitioner has come
to Us assailing
the decision of the Court of Appeals.

We find merit in the petition for review.

The fact that the private
respondent (defendant in the ejectment suit) and four
other tenants had anticipated the petitioner’s action for ejectment
by filing Civil Case No. 84-23437 on March 20, 1984 in the Regional Trial Court
against Sy Tian Peng, Philippine
Feeds Milling Co., Inc and Jose Y.
Tolentino, to annul the sale of the
property to the petitioner and compel Sy Tian Peng to sell it to them, did not
divest the Metropolitan Trial
Court of its jurisdiction over the ejectment case. 
The option to purchase,
not the ownership, was the issue in Civil Case No. 84-23437 for the plaintiffs
therein (Rufina Pineda, et al.) did not claim to be the owners or purchasers of the property
in question.  They only sought to exercise their option to purchase
it although that option expired “seven days after May 24, 1983“ or on May 31, 1983.  They
had not purchased the property nor paid anything for it yet.  The property had been sold to Philippine
Feeds Milling Co., Inc. on June 30, 1983.  As
the new registered owner, Philippine Feeds Milling Co., Inc. had a right to terminate the month-to-month leases of the tenants of its building, including that of Uy Bun Tiong, at the end of any month, for, as stated in its letter
to him, it “needs the premises for its own use.” (Exh. E.)

As the ejectment
complaint sufficiently averred that Philippine Feeds Milling
Co., Inc. owns the property and seeks to recover
possession from the overstaying lessee, Uy Bun Tiong, the Metropolitan Trial Court had jurisdiction over
the case (Lucas Caparras vs. Court of Appeals, G.R. No.
56803, February 28, 1989, citing Alvir vs. Vera, 130 SCRA 357).  The lessee’s assertion of ownership in the ejectment case does not oust the municipal trial court from
its jurisdiction over the case, for its jurisdiction is determined by the
allegations of the complaint, not by the defenses in the answer (Ramirez vs. Chit, L-22022, Dec. 26, 1967, 21 SCRA 1364).

“In ejectment cases, the
defendant may not divest the interior court of its jurisdiction by merely
claiming ownership of the
property involved (Dehesa vs. Macalalag, 81 SCRA 543).” (Nogoy vs. Mendoza, Jr., 101 SCRA 203).

The Court of Appeals
failed to properly appreciate the fact that payment by Uy Bun Tiong to the petitioner of his rentals for the months of July 1983 up to February 1984 (8 months)
was tantamount to a recognition of the petitioner’s ownership of the
property.  As lessee, Uy Bun Tiong is not permitted to deny the title of his landlord much less claim title
in himself (Sec 3[b], Rule 131, Rules of Court; Reyes vs. Villaflor, 2 SCRA 247).  Therefore, neither should his suit to annul petitioner’s title be
allowed to pre-empt the latter’s recourse to the summary action of ejectment as a means to regain possession of its property.

Even if Uy Bun Tiong’s rentals
were fully paid/deposited in court, and even if his subleasing of the
premises to the Eternal Glassware Enterprises had been authorized by the previous owner, Sy Tian Peng,
that authority could be rescinded by the new owner for neither the lease nor
the sublease was recorded on the title (Art. 1648, Civil Code).  The new owner lessor may terminate the lease for any of the
causes in Art. 1678 of the Civil Code.  The property being commercial, and the rent
more than the limit set in B.P. Blg. 25, the lessee is not protected by that law.

WHEREFORE, the petition for certiorari is
granted.  The decisions dated May 24,
1988 of tie Court of
Appeals in CA?G.R. SP No. 13307 and of the Regional Trial Court in Civil Case No. 87-51500 are set aside
and that of the Metropolitan Trial Court in Civil Case No. 100130-CV is
reinstated.  Costs
against the private respondent.

SO ORDERED.

Narvasa, (Chairman), Cruz, Gancayco, and Medialdea, JJ., concur.