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VOL. 415, NOVEMBER 10, 2003 33

Villena vs. Chavez

*
G.R. No. 148126. November 10, 2003.

GEORGE T. VILLENA, CARLOS N. VILLENA, AURORA M.

BONDOC and RONNIE C. FERNANDEZ, and their Respective
Spouses, petitioners, vs. Spouses ANTONIO C. CHAVEZ and
NOEMI MARCOS-CHAVEZ and CARLITA C. CHAVEZ,
respondents.

Courts; Jurisdiction; Contracts; Ejectment; Rescission; Where the

basic issue is not possession but interpretation, enforcement and/or
rescission of the contract, the same is a matter beyond the jurisdiction of the
Municipal Trial Court to hear and determine.Petitioners, on the other
hand, denied any breach on their part and argued that the principal issue was
one of interpretation, enforcement and/or rescission of the contract. Under
these circumstances, proof of violation of the provisions of the contract is a
condition precedent to resolution or rescission. The contract can be declared
rescinded only when its nature has been claried and the eventual violation
thereof, if any, has been established. Upon such rescission, in turn, hinges a
pronouncement that the possession of the realty has become unlawful. Thus,
the basic issue is not possession but interpretation, enforcement and/or
rescission of the contract a matter that is beyond the jurisdiction of the
Municipal Trial Court to hear and determine.
Same; Same; Same; Same; Same; The rescission of contract is a power
vested in the Regional Trial Courts, not in Municipal Trial Courts.An
allegation of a violation of a contract or agreement in a detainer suit may be
proved by the presentation of competent evidence, upon which an MTC
judge might make a nding to that effect. But certainly, that court cannot
declare and hold that the contract is rescinded, as such power is vested in the
RTC. The rescission of the contract is the basis of, and therefore a condition
precedent for, the illegality of a partys possession of a piece of realty.
Without judicial intervention and determination, even a stipulation entitling
one party to take possession of the land and building in case the other party
violates the contract cannot confer upon the former the right to take
possession thereof, if that move is objected to.
Same; Judgments; Stare Decisis; Words and Phrases; When a court
has laid down a principle of law as applicable to certain state of facts, it
will adhere to that principle and apply it to all future cases in which the
facts are substantially the same; Stare decisis simply means that for the sake
of certainty, a conclusion reached in one case should be applied to those

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that follow if the facts are substantially the same, even though the parties
may be different.We stress that when a court has laid down a

_______________

* THIRD DIVISION.

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34 SUPREME COURT REPORTS ANNOTATED

Villena vs. Chavez

principle of law as applicable to a certain state of facts, it will adhere to that

principle and apply it to all future cases in which the facts are substantially
the same. Stare decisis et non quieta movere. Stand by the decisions and
disturb not what is settled. Stare decisis simply means that for the sake of
certainty, a conclusion reached in one case should be applied to those that
follow if the facts are substantially the same, even though the parties may be
different. It proceeds from the rst principle of justice that, absent any
powerful countervailing considerations, like cases ought to be decided alike.

PETITION for review on certiorari of a decision of the Court of

Appeals.

The facts are stated in the opinion of the Court.

Willie B. Rivera for petitioners.
Avelino L. Liangco for respondents.

PANGANIBAN, J.:

Stare decisis simply means that a judgment reached in one case

should be applied to successive ones in which the facts are
substantially identical, even though the parties may be different.
Like cases ought to be decided alike.

The Case
1
Before this Court is a Petition for Review under 2 Rule 45 of the
Rules of Court, assailing the May 9, 2001 Decision of the Court of
Appeals (CA) in CA-GR SP No. 58329. The decretal portion of the
Decision reads as follows:

WHEREFORE, the judgment dated March 29, 2000 of Branch 56 of the

RTC of Angeles City is hereby REVERSED and SET ASIDE, and a new
judgment entered in favor of the petitioners, ordering the respondents and
all persons claiming rights under them to vacate from the subject lots and to
3
remove their houses and/or any other structures or constructions thereon.

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1 Rollo, pp. 20-33.

2 Id., pp. 36-44. Penned by Justice Delilah Vidallon-Magtolis (Division chair) and
concurred in by Justices Teodoro P. Regino and Josena Guevara-Salonga (members).
3 CA Decision, p. 9; Id., p. 44.

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VOL. 415, NOVEMBER 10, 2003 35

Villena vs. Chavez

The overturned Decision4 of the Regional Trial Court (RTC) of

Angeles City, Branch 56, afrmed 5
in toto the Municipal Trial Court
(MTC of Angeles City, Branch II.

The Facts

The facts of the case are summarized by the CA in this wise:

In a Complaint for Illegal Detainer with Damages led on October 15,

1998, the [respondents] alleged that they are the owners of four (4) parcels
of land designated as Lot Nos. 164, 165, 166, and 167 of the Cadastral
Survey of Angeles City, and covered, respectively, by Transfer Certicates
of Title Nos. 83247, 83246, 83248 and 83249, all issued by the Register of
Deeds of Angeles City. These four (4) parcels of land have been
consolidated and subdivided into several blocks and lots, and are now
collectively designated as Bagong Silang Phase III-C. By mere permission
and tolerance of the [respondents], the [petitioners] have occupied and
erected their homes on four (4) of the said lots, as follows:
George T. Villena and wife = Block 5, Lot 14
Carlos N. Villena and wife = Block 5, Lot 13
Aurora M. Bondoc and husband = Block 2, Lot 4
Ronnie C. Hernandez and wife = Block 3, Lot 5
All the [petitioners] are members of the Bagong Silang Phase III-C
Homeowners Association, Inc., with ofce address at Cutud, Angeles City.
The [respondents] allowed the [petitioners] and other members of the said
homeowners association to continue occupying the subject lots and
ultimately to acquire ownership of the lots occupied, in consideration of a
certain amount to be paid to the [respondents] as equity.
The [respondents] further alleged that the other members of the said
homeowners association paid to the [respondents] their respective equity
for their right to continue occupying and ultimately acquiring ownership of
the occupied lots. However, notwithstanding repeated demands made upon
the [petitioners], they have refused and failed without any justiable ground
to pay their respective equity. In view of such failure to pay, the [petitioners]
have forfeited their right to continue occupying the lots in question. Formal
demand letters were then sent by registered mail to the [petitioners],
wherein they were given a period of thirty (30) days from receipt within
which to vacate and remove their houses from the subject lots. The period
given to the [petitioners] lapsed on April 11, 1998,

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4 RTC Decision dated March 29, 2000; CA Rollo, pp. 96-99.

5 MTC Decision dated September 15, 1999; Id., pp. 87-93.

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but up to the present time, the [petitioners] refused and failed without any
justiable reason or ground to vacate and remove their houses from the said
lots.
The [respondents] then prayed in their Complaint that the [petitioners]
be ordered to vacate and remove their houses from the lots currently
occupied; that each of the [petitioners] be ordered to pay the [respondents]
P1,000.00 a month as reasonable rental for the use and occupation of the
lots starting from April 11, 1998 until they have nally vacated and
removed their houses from said lots; and that the [petitioners] jointly and
severally pay the [respondents] P25,000.00 as actual and compensatory
damages, P2,000.00 as appearance fee per hearing, exemplary damages, and
the costs of the suit.
In their answer with compulsory counter-claim led on November 3,
1998, the [petitioners] countered that the [respondents] have no cause of
action to institute the present action, considering that the properties in
question are under the community mortgage program implemented by the
National Home Mortgage Finance Corporation. Moreover, the [petitioners]
claimed that they are lawful tenants of the premises, and that they have,
been paying their equity to their originator, the Urban Land and
Development Foundation[,] Inc. However, they were not issued the
corresponding receipts evidencing payment and a copy of their contract. The
[petitioners] further averred that they were willing to continue paying their
equity until the same shall have been fully paid, but their originator, without
justiable reason, refused to accept the tender of payment made by them.
The [petitioners] subsequently agreed with their originator that the payment
of equity should be continued only upon the release of a Purchase
Commitment Line (PCL).
In addition, the [petitioners] alleged that they are qualied beneciaries
under Republic Act No. 7279, otherwise known as the Urban Development
and Housing Act of 1992; hence, they cannot be summarily evicted and
their dwelling houses demolished unless and until they have been relocated.
According to the [petitioners], they are also builders in good faith and
should be indemnied for the improvements they constructed on the
properties in question.
The [petitioners] prayed in their answer that the complaint be
dismissed; that they be declared lawful tenants and qualied beneciaries
under R.A. 7279; that the [respondents] be ordered to sell the lots in
question to them, and to pay attorneys fees and the costs of suit.
After the pre-trial conference, both parties submitted their position
papers. On September 15, 1999, MTC Branch II of Angeles City rendered a
decision dismissing both the [respondents] complaint and the [petitioners]
counter-claim, on the ground that the ling of an ejectment case based on
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the alleged violation of the parties agreement which has not yet been
rescinded is premature, and that it is beyond the competence of the

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Villena vs. Chavez

said court to act on the case, as rescission or specic performance is beyond

the jurisdiction of the said court.
The [respondents] appealed such adverse judgment to the RTC of
Angeles City, which appeal was rafed to Branch 56 of the said court. On
March 29, 2000, RTC Branch 56 of Angeles City rendered a decision
6
afrming in toto the MTC judgment.

Ruling of the Court of Appeals

The CA held that the right of petitioners to continue occupying the

subject properties7 hinged on their continued payment of the agreed
amount as equity. Even after formal letters of demand to vacate the
premises had been sent to them, however, they still did not make any
effort to pay their equity to protect their right to continue occupying
those lots. Thus, the appellate court ruled that their failure to pay
made their occupancy unlawful, in consequence of which they
became subject to an ejectment suit.
The CA rejected the contention of petitioners that they were
protected by RA 7279. According to the appellate court, there was
no express declaration by the local government unit that the parcels
of land owned by respondents were to be used for socialized
housing. Neither was there proof of the allegation that they had
applied therefor under the Community Mortgage Program of the
National Home Mortgage Finance Corporation under Section 31 of
RA 7279. Besides, even granting that petitioners were protected
under RA 7279, they were still liable to pay amortization or face
eviction.
Likewise debunked was the allegation of petitioners that
respondents were not the real parties in interest. Being the owners of
the lots occupied by the former, the latter had a material interest in
the suit and stood to be beneted or injured by any judgment
affecting those parcels of
8
land.
Hence, this Petition.

_______________

6 CA Decision, pp. 1-3; Rollo, pp. 36-38.

7 Id., pp. 6 & 41.
8 The case was deemed submitted for decision on June 26, 2002, upon this Courts
receipt of the Memorandum for both petitioners and respondents. Petitioners
Memorandum was signed by Atty. Willie B. Rivera of Rivera, Perico & David Law
Ofces; respondents Memorandum was signed by Atty. Avelino L. Liangco.

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Villena vs. Chavez

The Issues

Petitioners raise the following issues for our consideration:

I. Whether or not the Honorable Court of Appeals committed

grave abuse of discretion amounting to lack or excess of
jurisdiction in reversing and setting aside the Decisions of
the Municipal Trial Court, Branch II and of the Regional
Trial Court, Branch 56 both of Angeles City[;]
II. Whether or not the Honorable Municipal Trial Court has
jurisdiction over the case;
III. Whether or not the non-inclusion of the Bagong Silang
Homeowners Association Inc., is fatal to respondents[]
cause of action[;]
IV. Whether or not ejectment is proper in the case at bar;
V. Whether or not the absence of contractual relations]
between the respondents and the petitioners bar[s] the ling
9
of any action by the respondents against the petitioner.

The primordial issue to be resolved is whether unlawful detainer is

the proper action to resolve this case. If it is, then the MTC indeed
had jurisdiction over the case, and the CA was correct in overturning
the RTCs ruling that the MTC had no jurisdiction over the case.

The Courts Ruling

The Petition is meritorious.

Main Issue:
Propriety of Unlawful Detainer

The CA ruled that petitioners possession or occupancy of the

subject premises was by mere tolerance of respondents. Hence, once
petitioners failed to pay the agreed amount as equity, their right to
continue occupying the lots was lost.
We disagree. Contradictory were the statements of the appellate
court that, on the one hand, there was no contract between the

_______________

9 Petitioners Memorandum, p. 6; Rollo, p. 96. Original in upper case.

39

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Villena vs. Chavez

parties; and yet, on the other, that petitioners failed to pay the agreed
equity. The fact that the CA found that there was failure to pay the
equity was an indication of an agreement. To be sure, petitioners
possession of the subject premises was not by mere tolerance of
respondents. 10
In the Complaint of respondents, led before Branch II of the
Municipal Trial Court of Angeles City, they themselves alleged the
presence of an agreement between the parties as follows:

10. That in consideration of a certain amount to be paid to the

[respondents] by each of the [petitioners] as equity for their right to continue
occupying and ultimately acquire ownership of the lots that they occupy, the
said homeowners association has made arrangements with the
[respondents] to allow the [petitioners] and other members of the said
homeowners association to continue occupying and ultimately acquire
11
ownership of the lots that they occupy[.]
12
Further, in the Special Power of Attorney annexed to their
Complaint, they constituted and appointed Teodorico B. Sanchez
and/or Arturo M. Yadan as their attorneys-in-fact to do, among
others, the following:

1. To collect and receive any amount or amounts as equity for the sale
thereof to them from the occupants or any other interested buyer or buyers
of any portion or portions of the following-described parcels of land:
x x x x x x x x x
of which we are the absolute and exclusive owners, and which comprise
the parcels of land being acquired by the members or beneciaries of the
BAGONG SILANG PHASE III-C HOMEOWNERS ASSOCIATION, at
13
Brgy. Cutud, Angeles City[.]

Based on the admissions of respondents themselves, they entered

into an agreement with petitioners. Necessarily, the latters
occupancy of the lots in question was not based merely on the
formers tolerance or permission. Thus, petitioners were not neces-

_______________

10 Annex D of the CA Petition for Review; CA Rollo, pp. 34-42.

11 Complaint dated October 15, 1998, p. 4; Id., p. 37.
12 Annex A of the Complaint; Id., pp. 43-44.
13 Id., pp. 1-2 & 43-43-A.

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sarily bound by an implied promise to vacate upon demand, failing

which, a summary action for ejectment would have become proper.
The MTCs ndings of fact on this point are instructive:

About the only thing that the parties have met on a common ground is that:
[Respondents] have entered into an arrangement/agreement with Bagong
Silang Homeowners Association, Inc. that called for the payment of certain
amounts as equity for [petitioners] right to continue occupying the lots with
the end in view of eventually becoming the owners thereof, that pursuant to
such agreement [petitioners] have paid certain amounts as acquisition fees
or as equity but later discontinued making payments in view of the non-
issuance of the so-called purchase commitment line/loan, and as a
consequence, [respondents] are now accusing [petitioners] for violating the
agreement and on the basis of such breach of the agreement by [petitioners],
14
demands for the latter to vacate the lots were made by [respondents].

When respondents alleged that the Bagong Silang Phase III-C

Homeowners Association made arrangements with them to allow
petitioners and other members of the association to continue to
occupy and ultimately to acquire ownership of the lots in question,
respondents explicitly admitted that a contract had indeed been
entered into. The eventual transfer of ownership of real property
evidenced that obligation. What is clear is that in their Complaint,
respondents alleged that petitioners had violated the stipulations of
their agreement as follows:

11. That the other members of the Ba[g]ong Silang Phase III-C
Homeowners Association, Inc., paid to the [respondents] their respective
equity for their right to continue occupying and ultimately acquire
ownership of the lots that they occupy, but notwithstanding repeated
demands made on them, up to the present time, the [petitioners] have
refused and failed without any justiable ground or reason to pay their
respective equity to the [respondents], and, in view of such refusal and
failure, the [petitioners] have forfeited their right to continue occupying and
15
ultimately acquire ownership of the lots that they occupy[.]

Petitioners, on the other hand, denied any breach on their part and
argued that the principal issue was one of interpretation,
enforcement and/or rescission of the contract. Under these circum-

_______________

14 MTC Decision, p. 5; CA Rollo, p. 91.

15 Complaint dated October 15, 1998, pp. 4-5; CA Rollo, pp. 37-38.

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Villena vs. Chavez

stances, proof of violation of the provisions 16of the contract is a

condition precedent to resolution or rescission. The contract can be

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declared rescinded only when its nature has been claried and the
eventual violation thereof, if any, has been established. Upon such
rescission, in turn, hinges a pronouncement that the possession of
the realty has become unlawful. Thus, the basic issue is not
possession but interpretation, enforcement and/or rescission of the
contract a matter that is beyond the jurisdiction of the Municipal
Trial Court to hear and determine.
An allegation of a violation of a contract or agreement in a
detainer suit may be proved by the presentation of competent
evidence, upon which an MTC judge might make a nding to that
effect. But certainly, that court cannot declare and hold 17
that the
contract is rescinded, as such power is vested in the RTC.
The rescission of the contract is the basis of, and therefore a
condition precedent
18
for, the illegality of a partys possession of a
piece of realty. Without judicial intervention and determination,
even a stipulation entitling one party to take possession of the land
and building in case the other party violates the contract cannot
confer upon the former
19
the right to take possession thereof, if that
move is objected to.
To be sure, the jurisdiction
20
of a court is determined by the
allegations in the complaint. Thus, in ascertaining whether or not
an action is one for unlawful detainer falling within the exclusive
jurisdiction of the inferior courts, the averments of the complaint
and the character of the relief sought should be examined.
Also, as correctly pleaded by petitioners, a similar case had been
decided by the CA in CA-GR SP No. 58679, in which it ruled that
the proper action should have been a complaint for rescission or

_______________

16 Zulueta v. Hon. Mariano, 197 Phil. 195; 11 SCRA 206, January 30, 1982; Nera
v. Vacante, 113 Phil. 491; 3 SCRA 505, November 29, 1961.
17 Lavibo v. Court of Appeals, 337 Phil. 591; 271 SCRA 143, April 10, 1997,
Spouses De Leon v. Court of Appeals, 350 Phil. 535; 287 SCRA 94, March 6, 1998.
18 Zulueta v. Mariano, supra; Nera v. Vacante, supra.
19 Ibid.
20 Spouses Tirona v. Hon. Alejo, 419 Phil. 285; 365 SCRA 17, October 10, 2001;
Oronce v. Court of Appeals, 358 Phil. 616; 298 SCRA 133, October 19, 1998; Lavibo
v. Court of Appeals, supra.

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Villena vs. Chavez

specic performance, not for illegal detainer. In that case, the same
plaintiffs led the same charges against a different but similarly
situated set of defendants.
The appellate court ruled therein that there was an existing
agreement or 21
contract that determined the nature of the parties
relationship. Thus, it held that the proper action should have been

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for rescission
22
of contract or specic performance, not unlawful
detainer. When the CA Decision was elevated, this Court denied
the appeal for failure to show that a reversible error had been
committed by the appellate court. Thereafter, the Decision became
23
nal and executory on April 23, 2002.
Said the appellate court in the previous case:

Inasmuch as the relationship existing between the parties is not a lessor-

lessee relationship but one that emanated from the agreement between
appellants and the Urban Land and Development Foundation, Inc., the so-
called originator of the Bagong Silang Homeowners Association, Inc., the
relief being sought then by appellants appears to be improper. If ever there
was no payment of equity as provided for under the said agreement, the
same cannot be considered as non-payment of rentals. Thus, it cannot be a
sufcient basis for ling an ejectment case against appellees, the proper
24
remedy being an action for rescission of contract or specic performance.

We stress that when a court has laid down a principle of law as

applicable to a certain state of facts, it will adhere to that principle
and apply
25
it to all future cases in which the facts are substantially the
same. Stare decisis et non quieta movere. Stand by the decisions
and disturb not what is settled. Stare decisis simply means that for
the sake of certainty, a conclusion reached in one case

_______________

21 CA Decision in CA-G.R. SP No. 58679 dated January 25, 2002, p. 8; Rollo, p.

116. It must be noted that the respondents therein belong to the same association as
herein respondents.
22 Id., pp. 9 & 117.
23 See Entry of judgment for G.R. No. 151905.
24 CA Decision in CA-G.R. SP No. 58679 dated January 25, 2002, p. 9; Rollo, p.
117; penned by Justice Josena Guevara-Salonga and concurred in by Justices
Godardo A. Jacinto and Eloy R. Bello Jr.
25 Tala Realty Services Corp. v. Banco Filipino, 412 Phil. 50; 359 SCRA 469, June
25, 2001; De la Cruz v. Court of Appeals, 364 Phil. 786; 305 SCRA 303, March 25,
1999.

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VOL. 415, NOVEMBER 10, 2003 43

Villena vs. Chavez

should be applied to those that follow if the facts are26substantially

the same, even though the parties may be different. It proceeds
from the rst principle of justice that, absent any powerful 27
countervailing considerations, like cases ought to be decided alike.
Having ruled that the MTC had indeed no jurisdiction to take
cognizance of this case in the rst place, we see no more need to
address the other issues raised by petitioners.
WHEREFORE, the Petition is hereby GRANTED and the
assailed Decision of the Court of Appeals is OVERTURNED.
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Consequently, the Decisions of the MTC and the RTC of Angeles

City are REINSTATED. No pronouncement as to costs.
SO ORDERED.

Puno (Chairman), Sandoval-Gutierrez, Corona and Carpio-

Morales, JJ., concur.

Petition granted, judgment reversed. That of the lower courts

reinstated.

Notes.Once a case has been decided one way, then another

case involving exactly the same point at issue should be decided in
the same manner. (Tay Chun Suy vs. Court of Appeals, 229 SCRA
151 [1994])
It is the better practice that when a court has laid down the
principle of law as applicable to a certain state of facts, it will adhere
to that principle and apply it to all future cases where the facts are
substantially the same. (Tala Realty Services Corp. vs. Banco
Filipino Savings and Mortgaged Bank, 334 SCRA 114 [2000])

o0o

_______________

26 Tala Realty Services Corp. v. Banco Filipino, supra.

27 Ayala Corporation v. Rosa-Diana Realty and Development Corporation, 346
SCRA 663, December 1, 2000.

44

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