QUERICO DELA CRUZ AND EUGENIA BALAJADIA, PETITIONERS, VS. HON. COURT OF APPEALS AND MARIA DE JESUS, RESPONDENTS.

Challenged in this petition for review on certiorari is
the validity of the August 3, 1988 decision of the Court of Appeals* in CA-G.R. CV No. 02957 entitled “Querico De la Cruz, et al. vs. Maria De Jesus” which
affirmed the decision of the Court of First Instance (now Regional Trial
Court), of Nueva Ecija,
Branch VII, Cabanatuan City** in Civil
Case No. 4844 between the same parties for ‘ownership, quieting of title and
damages’.

Petitioners are the plaintiffs in Civil Case No. 4844 while
private respondent is the defendant.

The summary of the facts and evidences narrated by the trial
court which was quoted by the Intermediate Appellate Court, now Court of
Appeals, is as follows:

“Plaintiffs’ evidence tends to establish that they caused the
construction of the house in question on or about October 7, 1962 through his brother-in-law Perfecto Balajadia and two helpers, Gavino
Reyes and Pedro Antonio.  They secured a building permit dated October 3, 1962 (Exh.
‘A‘).  The main
house was finished in two weeks at the cost of P500.00.  They made additional constructions thereafter
and the house was completely finished in 1968. 
They lost all the receipts for the materials used in the initial
construction of the house in 1962 but he was able to save some of the receipts
for the materials used in the additional construction (Exhs.
D, D-1, D-2, D-3, D-4, D-5, Dd-6 & D?8).  Sometime in 1963, Querico
dela Cruz caused the construction of a shed through
his brother-in-law Perfecto in front of the house and another shed at the back
by the defendant as a transient ‘visitor’.

“Before the construction of the house in question, plaintiffs
were residing in another house on a lot leased by them from the Manila Railroad
Company.  This house was razed to the
ground by the fire in the vicinity of the MRR
lots and the lot they were leasing was thereafter occupied by the Luzon
Bus Line (Now Philippine National Railway Motor Service).  Plaintiffs looked for another lot so that
they could build a new house.  The defendant
sold her rights to the plaintiffs over the lot on lease to her by MRR.  The agreement, however, was only verbal.  The house in question was declared for
taxation purposes in the name of Eugenia Balajadia on
September 10, 1964 (Exh. B) and they paid taxes
thereon (Exhs. C, C-1 & C-2).  It is admitted that they were sued for Unlawful
Detainer by the defendant on May 26, 1964 before the
Municipal Court (now City Court) of Cabanatuan in
Civil Case No. 3355 (Exh. 19).  After they received the complaint in said
case, they still made improvements and constructed additional parts on the
house in question.

“On the other hand, defendant’s evidence tends to establish
that after her first house erected on the same lot leased to her by the MRR was
burned down by the fire she caused the construction of the house in question
within the month after she secured a building permit on March 9, 1962 (Exh. ‘A’).  The house was
finished in two weeks time by the carpenters Vicente Robles and Salvador
Catalan.  Immediately after the
construction, plaintiffs requested that they be allowed to rent a portion of
her house by putting a partition at the rate of P30.00 a month.  Six days after, plaintiffs transferred to her
house with only one (1) sewing machine of Eugenia Balajadia
who is a seamstress.  The lot on which
the house in question stands is leased to her by the MRR at P100.00 a year (Exh. 2).  Plaintiffs
paid rentals in the sum of P30.00 for the first month and thereafter, payments
were irregularly made at P1.00 to P2.00 for a total of five months.  After her husband died, the rental payments
stopped.  Plaintiffs likewise constructed
against her will a shed (‘sibi‘) in front of the
house near the street when they expanded their sewing business and added five
(5) more sewing
machines to the original one (1) sewing machine when they first
transferred to her house.  Plaintiffs
spent for this shed and for other additional constructions made against her
will which they occupied in addition to the original portion of her house which
they were renting from her.  She demanded
payments for the rentals in arrears but plaintiffs repeatedly
refused to pay and was even driving her away.  She consulted a lawyer who sent demand letter
to plaintiff to vacate the house in question (Exhs.
17, 18 and 18-A).  Thereafter, she filed
Civil Case No. 3355 for Unlawful Detainer in the
Municipal Court of Cabanatuan (Exh.
19) and a decision was rendered in her favor (Exh.
21) ordering the plaintiffs to vacate the premises and to pay the rentals in
arrears.  Plaintiffs were evicted as per
Sheriff’s return of service (Exh. 29) but plaintiffs
returned the next day with their belongings. 
A Criminal Case was filed against plaintiff Querico
dela Cruz when he attempted to stab her when
defendant wanted to enter her house. 
Being a
childless old widow, with no other companion in the house, she was
forced to reside in another place at del Pilar Street.” (Rollo, pp. 165-167)

On November 16, 1979,
the trial court rendered its decision, rejecting petitioners’ right over the
house in controversy, the dispositive portion of
which reads:

“WHEREFORE, in view of all the foregoing, judgment is hereby
rendered, ordering the plaintiffs as follows:

1.            
To vacate the house in question;

2.            
To pay rentals in arrears from the filing of
this case until they vacate the house at P30.00 a month;

3.            
To pay defendant the sum of P5,000.00 as
exemplary and moral damages;

4.            
To pay defendant the sum of P2,000.00 for
attorney’s fees; and

5.            
To pay the costs.

SO ORDERED.” (Ibid.,
pp. 69-73).

On appeal to the Court of Appeals, petitioners moved to present
certain pieces of evidence which were not brought before the court a quo
but which the appellate court denied, it appearing that said documents could
have been presented in the lower court, but were not, and therefore not
considered newly-discovered evidence (Ibid., p. 172).

On October 29, 1984, while pending appeal in the Court of
Appeals, respondent Maria De Jesus died in Cabanatuan
City as shown by a Death Certificate (Ibid., p. 154) and prior to her
death she ceded her rights to lease the lot owned by the PNR to Jose Bagaybagayan of Cabanatuan City
for and in consideration of the sum of P1.00 and other valuable considerations
as shown in a deed of Transfer of Rights dated June 13, 1980 (Ibid., p. 151).  Counsel for respondent moved for substitution
of parties which was opposed by the petitioners.

On August 3, 1988,
the Court of Appeals rendered its decision affirming the trial court’s judgment
with the modification that Maria De Jesus, the deceased defendant, was ordered
substituted by Jose Bagaybagayan and Mercedes Bagaybagayan who were transferees pendente lite under
Section 20, Rule 3 of the Rules of Court (Ibid.,
pp. 173-174).  Petitioners’ motion
for reconsideration of aforesaid decision was denied in the resolution of October 6, 1988 (Ibid., p. 188).

Hence, the instant petition.

After the required pleadings were filed, the petition was given
due course and the parties were required to file simultaneous memoranda in the
Resolution of May 15, 1989
(Rollo, p. 220). 
The petitioners’ memorandum was filed on June 26, 1989 (Rollo, p. 222)
while private respondents’ memorandum was submitted on August 22, 1989 (Rollo,
p. 252).

The pivotal issue in this case as to who of the contending
parties is the legitimate possessor of the lot and owner of the house in
dispute, is a question of fact resting mainly on the credibility of witnesses.

It is a basic legal precept that factual issues may not be
reviewed by the Supreme Court under Rule 45 of the Rules of Court (Amurao v. Court of Appeals, et al., 168 SCRA 737 [1988]). 
The Supreme Court is not a trier of
facts.  The conclusions and findings of
fact by the trial court are entitled to great weight on appeal and should not
be disturbed unless for strong and cogent reasons.  The fact that the appellate
court adopted the findings of the trial court make the same binding upon
the Supreme Court for the factual findings of the appellate court are generally
binding on the Supreme Court.  The
findings of the Court of Appeals when supported by substantial evidence are almost
beyond the power of review by the Supreme Court (Sabena Belgian World Airlines
v. Court of Appeals, G.R. No. 82068, March 31, 1989).

As found by both the trial court and the Intermediate Appellate
Court, respondent De Jesus is the lessee of the lot situated at Cabanatuan City owned
by the PNR, as early as 1954 and built a house thereon in March 1962, right
after her first house had been razed to the ground in the same year, and that
petitioners are occupying the house in dispute as mere lessees.

On the other hand, petitioners’ alleged right to occupy the lot
leased to the respondent as having sprang from a verbal contract of sale of
right to lease the lot remained unestablished,
unsubstantiated and self-serving.

Verily, petitioners’ claim that there was a verbal contract of
sale of right to lease between them and respondent is inconceivable, it
appearing that: (a) prior demands to pay lease rentals in arrears were given
upon them by respondent’s counsel in March 1964; (b) they were sued for
unlawful detainer by respondent in May 1964 before
the Municipal Court of Cabanatuan City; (c) aforesaid
court rendered its judgment in December 1966,
ordering petitioners’ eviction from the house in controversy for non–payment of rentals; (d) subsequent
eviction of petitioners in execution of the said decision; and (e) admissions
by petitioners that they were sued for unlawful detainer
and that they introduced additional constructions on the controversial house
despite protestations of the respondent during and after the proceedings in the
unlawful detainer case.

Moreover, respondent’s alleged sale of right to lease is in the
nature of an assignment of lease, a prohibited and illegal practice without the
consent of the lessor, unless there is a stipulation
to the contrary enunciated under Article 1649 of the New Civil Code (Dakudao v. Consolacion, 122 SCRA
881 [1983]).

As aforestated, the right to lease PNR’s subject lot over which the subject house was built
belonged to respondent as far back as 1954 while petitioners’ additional
evidence submitted before the Court of Appeals tends to show that they became
lessees of PNR of the lot only
in January 14, 1982 (Rollo, p. 141) that is, 28 years
after and rentals for the lot were paid
only in 1977 (Ibid., p.
139), which is about 23 years, both reckoned from respondent’s lease contract with PNR.

Consideration of petitioners’ forgotten evidence, i.e., temporary
building permit (1977), rental payments (1977), lease contract (1982) and tax
declarations, which were not presented before the court a quo
would not alter the findings of fact in the case at bar as they merely
corroborate and add up to petitioners’ existing evidence on record.

The decision in the ejectment case
which had already attained finality operates as the ‘law of the case’ as to who
between the parties has the right of possession over the subject house but not res judicata with
respect to the issue of ownership since the municipal court’s jurisdiction is
confined to issues involving physical possession of the property, under Section
88, Judiciary Act of 1948 (now Section 33(2), Judiciary Reorganization Act of
1980).

The less familiar concept or less terminological usage of res judicata as a
rule on conclusiveness of judgment refers to the situation where the judgment
in the prior action operates as an estoppel only as
to the matters actually determined therein or which were necessarily included
therein (Machoca v. Carriaga,
G.R. No. 75109-10, June 28, 1989).

In addition, the substitution of party on the basis of the
“Transfer of Rights” executed by respondent De Jesus in favor of Jose
Bagaybagayan covering the lot was not proper and
erroneously allowed for the following reasons: (1) the transfer pendente lite of
the right to lease the lot admittedly owned
by the PNR has no bearing on the
main case since the property litigated concerns only the house located
at PNR’s land; (2) what was transferred by respondent
unto Bagaybagayan was the right to lease the PNR’s lot, which, as heretofore discussed, is a prohibited act without the owner’s
consent.  The right to choose one’s
lessee is a prerogative of PNR being owner of the leased lot; and (3) the
instrument itself does not speak of transfer/cession/assignment of the house
subject of the suit, but only of rights and interests over the lot.

PREMISES CONSIDERED, the petition for review is
hereby DENIED for lack of merit and the assailed decision of the Intermediate
Appellate Court is hereby AFFIRMED but MODIFIED to disallow the improper
substitution of Jose Bagaybagayan as party in this
case in lieu of Maria de Jesus.

SO ORDERED.

Melencio-Herrera, (Chairman),
Padilla, Sarmiento, and
Regalado, JJ., concur.

* Penned by Justice Bonifacio A. Cacdac, Jr. and
concurred in by Justices Floreliana Castro-Bartolome and Ricardo L. Pronove,
Jr.

** Penned by
Judge Leticia P. Morales.