533 Phil.

527

SECOND DIVISION
[ G.R. NO. 140798. September 19, 2006 ]
MARCELITO D. QUEVADA, PETITIONER, VS. COURT OF APPEALS
AND JUANITO N. VILLAVERDE, RESPONDENTS.
DECISION

AZCUNA, J.:

This is a petition for review[1] by Marcelito D. Quevada, assailing the Decision and Resolution
of the Court of Appeals (CA) dated September 16, 1999 and November 11, 1999, respectively,
in CA-G.R. SP No. 53209 entitled "Marcelito Quevada v. Juanito Villaverde."

The facts[2] of the case are as follows:

Before the [Metropolitan Trial Court (MeTC)], the plaintiff/respondent said that he is
the lessor of a parcel of land with a residential house in Sampaloc, Manila.
Sometime in 1994, he (as a lessor) and defendant/petitioner entered into a Contract
of Lease of a portion of the residential house (consisting of 96 square meters) which
is located on the subject property for the period from August 15, 1994 to August 15,
1995, at a monthly rental of P2,500.

After expiration of the lease, they entered into another Contract of Lease, which was
an extension of the previous date, commencing from August 15, 1995 to April 15,
1996.

After the expiration of the extended Lease, the petitioner continued possessing the
premises, but without payment of any reasonable compensation (for the use and
occupancy thereof).

[Private respondent] made several demands to the petitioner to vacate the premises
but was refused; as a matter of fact, the petitioner refused to vacate without
justifiable reason. Because of the [petitioner's] refusal to vacate the premises,
[private respondent] referred the matter to the barangay court for conciliation, only
for the former to repudiate the "agreement to vacate as of December 31, 1997."

On January 20, 1998, [private respondent] served upon the petitioner a notice to
vacate the leased property within a period of fifteen (15) days supposedly counted
from receipt thereof, to pay P5,000 rental starting May, 1996, and every month
thereafter until the premises shall have been vacated.

It was, on the other hand, the answer of the petitioner that as early as November,
[1985],[3] he already started building the house on the lot which was finished in
[1986],[4] at which time he occupied the house as his residence.

Sometime in 1994, the [private] respondent negotiated for the purchase of the lot
from the previous owner; [petitioner] similarly offered to buy the lot but was not
able to raise the amount of P1,000,000 representing the purchase price.

Herein [private] respondent in turn "advised" him that he would go ahead and buy
the lot but with an assurance that as soon as [petitioner] would be in a financial
position to do payment, [the former] will transfer the title to [the latter.] [T]hus, a
Lease Contract, in the meantime, was executed, for him to pay the rentals at P2,500
a month, but only with respect to the land, since the house belonged to him.
 On his (petitioner) part, he assured the [private] respondent that if he would not be
able to purchase the lot after a reasonable period of time, then, he was willing to
deliver possession of the house to the [private] respondent after payment of the cost,
or the sum of P500,000.

The [private] respondent did not give him a chance to pay the purchase price by
setting a deadline to do the payment; similarly, the [private] respondent refused to
accept the monthly rental of the lot for P2,500.

Because of [private respondent's refusal] to accept the rental payments, [petitioner]

opened an account "in trust" for the [private respondent] where the monthly rentals
could be deposited.

Petitioner added that there was an implied trust by virtue of the "true agreement"
whereby the purchase price of the lot would be paid by the [private] respondent and
for the latter, later on, to transfer the title after he ([private] respondent) shall have
paid the purchase price.

In its Decision dated October 27, 1998, the Metropolitan Trial Court (MeTC) of Manila, Branch
30, ruled in favor of private respondent, thus:

WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of

[private respondent] ordering [petitioner]:

a) and all persons claiming rights under him to immediately vacate and surrender to
[private respondent] the leased premises situated at 842 Vicente G. Cruz St.,
Sampaloc, Manila subject to the right of [petitioner] to remove the improvements
existing thereon;

b) to pay reasonable compensation for the continued use and occupancy of subject
lot in the amount of P2,500 monthly from May, 1996 until subject premises is finally
vacated and surrendered to [private respondent];

c) the costs of suit.

SO ORDERED.[5]

Petitioner appealed, but the Regional Trial Court (RTC) of Manila, Branch VII, affirmed the
MeTC's Decision in the following manner:

WHEREFORE and finding no reversible error in the decision of the lower court, the
same is hereby affirmed in toto.

SO ORDERED.[6]

Petitioner then went on appeal again asking for reversal of the RTC Decision. The CA rendered
its assailed Decision, the dispositive portion of which reads:

THE FOREGOING CONSIDERED, the appealed Decision is hereby AFFIRMED

SO ORDERED.[7]

Petitioner's Motion for Reconsideration of the CA Decision was denied.

Hence, this petition relying upon the following grounds:

THE COURT OF APPEALS GRIEVOUSLY ERRED WHEN IT FAILED TO

APPRECIATE THE FACT THAT AN IMPLIED TRUST WAS CREATED IN
FAVOR OF PETITIONER WHO THEREBY BECOMES THE BENEFICIAL
OWNER OF THE LOT IN QUESTION AND, THUS, ENTITLED TO
 CONTINUED POSSESSION THEREOF.

II.

AT THE VERY LEAST, PETITIONER OUGHT TO BE REIMBURSED FOR THE

VALUE OF THE HOUSE STANDING ON THE LOT.

III.

THE COURT OF APPEALS ERRED IN SUSTAINING THE JURISDICTION OF

THE [MeTC] TO HEAR THE INSTANT CASE CONSIDERING THAT THE
ALLEGED UNLAWFUL WITHHOLDING OCCURRED MORE THAN ONE
YEAR BEFORE THE FILING OF THE EJECTMENT SUIT.

IV.

THE COURT OF APPEALS ERRED IN UPHOLDING THE RIGHT OF THE

RESPONDENT TO BRING THE ACTION FOR EJECTMENT ALTHOUGH HE IS
NOT THE TITLED OWNER THEREOF.

Simply restated, the issues to be resolved are: 1) whether the action for ejectment is proper; 2)
whether such action can be brought by private respondent who is not the titled owner of the
property; 3) whether petitioner can be reimbursed for the value of the house on the property;
and 4) whether there is an implied trust.

A discussion of these issues shows that the petition is partly meritorious.

First, the action for ejectment or, more specifically, unlawful detainer or desahucio is under the
proper jurisdiction of the MeTC.

Section 1, 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. [Underscoring supplied.]

The necessary allegations in private respondent's complaint clearly meet the requirements of the
above-cited provision in filing an action for unlawful detainer.[8] Moreover, in accordance with
the 1991 Revised Rule on Summary Procedure, such action is within the jurisdiction of the
MeTC[9] and must be filed within one year.[10]

As a lessor, private respondent was unlawfully deprived possession of the residential house after
petitioner's right to its possession as lessee had expired on April 15, 1996. Despite several
demands given by the former to vacate the premises, the latter refused and even repudiated the
agreement to vacate, which was entered into on December 31, 1997 before the barangay court.

Under Section 2, Rule 70, such action by the lessor shall be commenced after demand to pay or
comply with the conditions of the lease and to vacate is made upon the lessee, thus:

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. [Underscoring supplied.]

The lease contract was not extended again after its expiration on April 15, 1996. Petitioner's
continued use and occupancy of the premises without any contract between him and private
respondent was by mere tolerance or permission of the latter. "Acts of a possessory character
performed by one who holds by mere tolerance of the owner [or lessor as in this case] are
clearly not en concepto de dueño, and such possessory acts, no matter how long so continued,
do not start the running of the period of prescription."[11]

"[P]ossession by tolerance is lawful, but such possession becomes unlawful when the possessor
by tolerance refuses to vacate upon demand made by the owner. A person who occupies the land
of another at the latter's tolerance or permission, without any contract between them, is
necessarily bound by an implied promise to vacate upon demand, failing which, a summary
action for ejectment is the proper remedy."[12] "The situation is not much different from that of
a tenant whose lease expires but who continues in occupancy by tolerance of the owner, in
which case there is deemed to be an unlawful deprivation or withholding of possession as of the
date of the demand to vacate."[13]

Aside from the fact that the lease contract had expired, petitioner also did not honor the
agreement to vacate as of December 31, 1997 before the barangay court. Consequently, private
respondent had to serve upon him on January 20, 1998 a written notice to vacate the leased
property within fifteen (15) days from its receipt.[14] This notice was not complied with. Thus,
the action for ejectment filed on March 9, 1998 was properly commenced in the MeTC,
following its referral for conciliation.[15] Its filing was within the one-year period after private
respondent had been unlawfully deprived or withheld of its possession. The unlawful
deprivation or withholding of possession started not from the date the lease contract expired, but
from the date the written notice to vacate was served. [16]

Besides, while the dispute is under conciliation, the prescriptive period for the cause of action
was interrupted upon filing of the complaint with the punong barangay and resumed to run
upon receipt by private respondent of the certificate to file action dated January 10, 1998,[17] in
accordance with Section 410(c) of the Local Government Code, which 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.

xxx

Necessarily, the prescriptive period was suspended while the case was pending before the
barangay authorities. The 60-day period under the above provision shall be deducted from the
one-year period within which to file the action for ejectment.

Even assuming that there was an agreement to pay monthly rent after April 15, 1996,[18] the
implied renewal of the expired lease contract was still for a definite period.[19] "A month-to-
month lease under Article 1687 x x x expires after the last day of any given thirty-day period,
upon proper demand and notice by the lessor to vacate."[20] Since there was proper notice given
after the thirty-day lease periods ended December 15, 1997 (prior to the agreement to vacate
made before the barangay court) and January 15, 1998 (subsequent to such agreement),
petitioner's "right to stay in the premises came to an end."[21] Indeed, private respondent's
tolerance of petitioner's possession de facto was formally withdrawn on January 20, 1998.
Continued possession by the latter had become unlawful upon his refusal to comply with the
demand to vacate. "[E]jectment of the lessee may be ordered."[22]

Second, private respondent may bring the action for unlawful detainer, even though he is not the
titled owner of the leased property.

Such action has "for its object the recovery of the physical possession"[23] or determination of
"who is entitled to possession de facto"[24] "of the leased premises (the house)[,] not the
ownership of the lot"[25] and not its "legal possession, in the sense contemplated in civil law."
[26] In fact, "any finding of the court regarding the issue of ownership is merely provisional and

not conclusive."[27] The judgment rendered "shall not bar an action between the same parties
respecting title to the land or building nor shall it be conclusive as to the facts therein found in a
case between the same parties upon a different cause of action involving possession."[28]

The Court has consistently held that the only issue to be resolved in unlawful detainer or
desahucio is the actual "physical or material possession of the property involved, independent of
any claim of ownership by any of the party litigants. Ejectment cases are designed to summarily
restore physical possession to one who has been illegally deprived of such possession, without
prejudice to the settlement of the parties' opposing claims of juridical possession in appropriate
proceedings."[29] Those in actual possession of property under any "right entitling them to the
use of the same may maintain an action for ejectment against a wrongful possessor."[30] Thus, a
mere lessor may file such action.

Petitioner should not trifle with the summary nature of an ejectment suit by the simple expedient
of asserting someone else's ownership over the leased property.[31] The proceedings are "only
intended to provide an expeditious means of protecting actual possession or right to possession
of property. Title is not involved."[32] In fact, the absence of title is not a ground "to withhold
relief from the parties x x x."[33] "It does not even matter if a party's title to the property is
questionable x x x."[34] "[N]o questions can be raised or decided incidentally tending to defeat
the title or right of possession evidenced by the documents introduced"[35] by petitioner.

"The distinction between a summary action of ejectment and a plenary action for recovery of
possession and/or ownership of the land is settled in our jurisprudence."[36] The underlying
philosophy behind the former "is to prevent breach of peace and criminal disorder and to
compel"[37] parties out of possession to respect and resort to the law alone in order to obtain
what they claim are theirs. Petitioner "is necessarily in prior lawful possession of the property,
but his possession eventually becomes unlawful upon termination or expiration of his right to
possess."[38] His prior physical possession of the leased property does not automatically entitle
him to continue in its possession and does not give him "a better right to the property."[39]

Third, petitioner should be paid for the value of the portion of the house covered by the lease, to
be offset against rentals due.

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.

The above-cited article "covers only cases in which the builders, sowers[,] or planters believe
themselves to be owners of the land or, at least, to have a claim of title thereto. It does not apply
when the interest is x x x that of x x x a mere tenant x x x."[40] However, it is also applied to
cases where a builder has "constructed improvements with the consent of the owner."[41]

Petitioner is not the owner of or claiming title to the land, but a mere tenant[42] occupying only
a portion of the house on it under the lease contract between him and private respondent. No
supporting evidence was presented showing that petitioner's construction of the house was with
the consent of the land's previous owner, but good faith should be presumed,[43] particularly
since the lease relationship was open and in plain view.

Neither is there a showing of bad faith in petitioner's refusal to vacate the land.[44] On the other
hand, there is no indication that private respondent will oblige petitioner to pay the price of the
land. In fact, the former refuses to sell it to the latter.[45] As a mere tenant, however, petitioner
must pay reasonable rent for the continued use and occupancy of the leased premises from the
time the lease contract expired until he finally vacates and surrenders it to private respondent.

It would not be fair for private respondent to receive both the rent and the portion of the house
covered by the lease. As to its valuation, there is only petitioner's assertion that it cost P500,000.
In order to satisfy the demands of substantial justice, morality, conscience, and fair dealing, and
pursuant to equity and the principle proscribing unjust enrichment, the value of the portion of
the house covered by the lease should be determined so that compensation of its value against
the rentals due can take effect.

In their exercise of rights and performance of duties, everyone must act with justice.[46]
Although he asserts that his ownership of the house is not refuted, petitioner is willing to receive
reimbursement for its value. Similarly, by insisting on ejecting petitioner, private respondent in
effect elects to appropriate the building.[47] "The fundamental doctrine of unjust enrichment is
the transfer of value without just cause or consideration."[48] Therefore, to have a just transfer of
the leased portion of the house, its value should be offset[49] against the reasonable rent due for
its continued use and occupancy until the former vacates and surrenders it to the latter. Private
respondent shall not be inequitably profited or enriched at petitioner's expense.[50] Nemo cum
alterius detrimento locupletari potest.[51]

Fourth, there is no implied trust. Petitioner fails to support his assertion that such has been
created in his favor and that the purchase of the land by private respondent is for and in his
behalf.

"A trust is defined as a 'fiduciary relationship with respect to property which involves the
existence of equitable duties imposed upon the holder of the title to the property to deal with it
for the benefit of another. A person who establishes a trust is called the trustor; one in whom
confidence is reposed as regards property for the benefit of another is known as the trustee; and
the person for whose benefit the trust has been created is referred to as the beneficiary or cestui
que trust.'"[52]

Aside from the lessor-lessee relationship between them, no other legal relationship exists that
shows the equitable ownership in the land belonging to petitioner and its legal title to private
respondent. No resulting or constructive trust has been shown to arise from the relationship of
the parties. Verily, the agreement to vacate on October 18, 1997[53] before the barangay court
negates the contention that an implied trust exists between the parties.

Article 1450 of the Civil Code does not apply,[54] to wit:

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.

The conveyance of the property was not from petitioner, but rather from its previous owner, to
private respondent. No evidence is presented to show that such conveyance was to secure
payment of a debt. Thus, there is no resulting trust. Private respondent is under no obligation in
equity to hold his legal title to the land for the benefit of petitioner.

There is no constructive trust either. Private respondent is not alleged to have obtained or held
the legal right thereto by fraud, duress, or abuse of confidence. Again, in the absence of proof
showing that private respondent has fraudulently registered the land in his name, petitioner has
no right to recover it under Article 1456 of the Civil Code, which states:

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.

"While an implied trust may be proved orally (Civil Code of the Philippines, Art. 1457), the
evidence must be trustworthy and received by the courts with extreme caution, because such
kind of evidence may be easily fabricated x x x. It cannot be made to rest on vague and
uncertain evidence or on loose, equivocal[,] or indefinite declarations x x x."[55] "[T]he burden
of proving the existence of a trust is on the party asserting its existence, and such proof must be
clear and satisfactorily show the existence of the trust and its elements."[56]

WHEREFORE, the petition is PARTLY GRANTED. The Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 53209, dated September 16, 1999 and November 11, 1999,
respectively, are hereby AFFIRMED BUT WITH THE MODIFICATION that the case is
REMANDED to the court a quo, which shall immediately conduct the appropriate proceedings
to assess the value of the leased portion of the house against which the reasonable rent due for
its continued use and occupancy, until it is vacated and surrendered to private respondent, may
be offset.

No costs.

SO ORDERED.

Puno, (Chairperson), Sandoval-Gutierrez, Corona and Garcia, JJ., concur.

[1] RULES OF COURT, Rule 45.

[2] Rollo, pp. 26-28; CA Decision, pp. 2-4.

[3] Id. at 55; Answer, p. 2.

[4] Id.

[5] Id. at 70-71; MeTC Decision, pp. 6-7.

[6] Id. at 78; RTC Decision, p. 7.

[7] Rollo, p. 39; CA Decision, p. 15.

[8]Habagat Grill v. DMC-Urban Property Developer, Inc., G.R. No. 155110, March 31, 2005,
454 SCRA 653, 662.

[9] THE 1991 REVISED RULE ON SUMMARY PROCEDURE, Sec. 1.A(1).

[10] CIVIL CODE, Art. 1147 (1).

[11]
Manila Electric Co. v. IAC, G.R. No. 71393, June 28, 1989, 174 SCRA 313, 321, quoting
Cuaycong v. Benedicto, 37 Phil. 781, 792-793 (1918).

[12] Heirs of Rafael Magpily v. De Jesus, G.R. No. 167748, November 8, 2005, 474 SCRA 366,