Dayao vs. Shell Company of the Philippines, Ltd.

The Court held that an appellate court may admit amendments to a complaint to conform to evidence presented at trial, and may grant a writ of preliminary mandatory injunction to restore a lessor to possession during an ejectment appeal when the lessor’s appeal is prima facie meritorious, pursuant to Article 1674 of the Civil Code and Section 9, Rule 70 of the Rules of Court.

Shell Company of the Philippines leased a parcel of land in Quezon City and subleased it, together with a gasoline service station, to petitioner Jesus Dayao for an indefinite period, terminable upon ninety days’ written notice or earlier for contractual violations. After issuing a termination notice in June 1966, Shell filed an ejectment complaint alleging Dayao’s failure to vacate. Dayao answered that termination required cause, that he remained current on obligations, and that the suit was actually motivated by his failure to meet gasoline purchase quotas. During the City Court trial, Shell introduced evidence of Dayao’s alleged contractual violations, including unauthorized gasoline purchases and improper premises maintenance. The City Court dismissed the ejectment complaint.

• Shell initiated an ejectment action before the City Court of Quezon City on October 10, 1966, alleging that petitioner Dayao failed to vacate the subleased gasoline station after the expiration of a ninety-day termination notice. No copy of the sublease contract was attached to the original complaint.
• Petitioner filed an Amended Answer, asserting that termination required a material breach of the Sub-lease and Dealership Agreement, that he remained current on his financial obligations, and that the suit was retaliatory due to his failure to meet gasoline sales quotas. He prayed for moral damages and attorney’s fees.
• At trial, Shell presented testimony alleging that petitioner violated the dealership agreement by purchasing petroleum products from third-party sources, using the station for cement storage, and failing to maintain the premises. Petitioner objected to the admission of this evidence on the ground that it was not pleaded, but nonetheless presented counter-evidence contesting the allegations and highlighting the premature termination notice.
• The City Court dismissed the ejectment complaint on November 7, 1967, finding no justifiable cause for ejectment based on the original complaint’s allegations, while denying petitioner’s claim for moral damages.
• Upon appeal to the Court of First Instance, Shell moved to admit an Amended Complaint to formally incorporate the contractual violation allegations and to seek a writ of preliminary mandatory injunction to restore possession. The CFI granted both motions, requiring a P5,000.00 bond for the injunction. Petitioner’s subsequent motions for reconsideration and dissolution of the writ were denied, prompting the instant petition.

• Petitioner maintained that the Amended Complaint introduced new causes of action not pleaded at the trial court level, constituting an impermissible change of theory on appeal.
• Petitioner argued that the CFI lacked authority to issue a writ of preliminary mandatory injunction in an unlawful detainer case, relying on Section 3, Rule 70 of the Rules of Court and Article 539 of the Civil Code, which expressly limit such injunctive relief to forcible entry actions.
• Petitioner cited Piit v. de Lara and Velez and Sevilla v. de los Santos to assert that appellate courts cannot issue preliminary injunctions in ejectment cases that retain their unlawful detainer character.

• Respondent countered that the amendments merely conformed the pleadings to evidence already presented and contested at trial, which Rule 10, Section 5 expressly permits at any time, even after judgment.
• Respondent argued that the injunction was properly anchored on Section 9, Rule 70 of the Rules of Court and Article 1674 of the Civil Code, which specifically authorize appellate courts to restore lessors to possession when the lessor’s appeal is prima facie meritorious or the lessee’s appeal is frivolous or dilatory.
• Respondent emphasized that the pre-existing lessor-lessee relationship and the posting of a sufficient bond satisfied the statutory and equitable requirements for the writ.

• Procedural Issues: Whether the Court of First Instance gravely abused its discretion in admitting Shell’s Amended Complaint on appeal to conform to evidence presented at the trial court level.
• Substantive Issues: Whether Article 1674 of the Civil Code and Section 9, Rule 70 of the Rules of Court authorize an appellate court to issue a writ of preliminary mandatory injunction to restore a lessor to possession in an unlawful detainer case on appeal.

• Procedural: The Court found no grave abuse of discretion in the CFI’s admission of the Amended Complaint. Rule 10, Section 5 of the Rules of Court allows pleadings to be amended to conform to evidence tried by express or implied consent at any time, even after judgment or during an appeal. Because both parties presented evidence on contractual violations at the City Court, the issues were tried by implied consent, and formal amendment on appeal merely aligned the pleadings with the actual controversy. The appellate court retained jurisdiction to resolve these issues because appeals from City Courts at the time proceeded by trial de novo.
• Substantive: The Court ruled that Article 1674 of the Civil Code and Section 9, Rule 70 expressly authorize appellate courts to issue a writ of preliminary mandatory injunction in ejectment cases when the lessor’s appeal is prima facie meritorious. The provisions were specifically enacted to prevent lessees from unjustly retaining possession during protracted appeals. The CFI judge’s determination of prima facie merit, coupled with the required bond to answer for potential damages, satisfied statutory requirements and negated any claim of grave abuse of discretion. The cited precedents restricting injunctions to original courts in forcible entry cases were distinguished from the explicit appellate authority granted by Article 1674.

• Amendment to Conform to Evidence — Rule 10, Section 5 of the Rules of Court permits the amendment of pleadings to conform to evidence already presented by express or implied consent of the parties. The Court applied this doctrine to uphold the CFI’s admission of the Amended Complaint, holding that the amendment did not introduce new theories but merely formalized contractual violation issues that were actively litigated and met with counter-evidence at the trial court.
• Appellate Authority to Issue Mandatory Injunctions in Ejectment Appeals — Article 1674 of the Civil Code and Section 9, Rule 70 of the Rules of Court establish a statutory exception allowing appellate courts to issue preliminary mandatory injunctions to restore lessors to possession when the lessor’s appeal is prima facie meritorious. The Court applied this principle to validate the CFI’s injunctive order, clarifying that the remedy extends to unlawful detainer appeals and operates as an execution before final judgment to prevent unjust retention of possession.

• "When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects, as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment..." — The Court quoted Section 5, Rule 10 of the Rules of Court to establish that formal amendments are permissible on appeal when the substantive issues have already been fully ventilated at trial by implied consent.
• "Article 1674 of the Civil Code was designed 'to put, an end to the present state of the law which unjustly allows the lessee to continue in possession during an appeal'." — The Court invoked the Code Commission’s legislative intent to justify the appellate court’s authority to restore possession via preliminary injunction, emphasizing the statute’s purpose to balance the lessor’s property rights against dilatory appellate tactics.

• Piit v. de Lara and Velez, 58 Phil. 765 (1933) — Cited by petitioner to argue against injunctions in unlawful detainer; the Court noted the ruling remains valid for original trial courts but does not override the specific appellate authority granted by Article 1674.
• Sevilla v. de los Santos, 83 Phil. 686 (1949) — Cited by petitioner; the Court found its holding contrary to the explicit statutory framework of Article 1674 and Section 9, Rule 70, which expressly permit appellate injunctions in ejectment appeals.
• Dikit v. Ycasiano, 89 Phil. 45 (1951) — Cited to reaffirm that Justice of the Peace Courts lack jurisdiction to issue preliminary injunctions in unlawful detainer, thereby distinguishing trial-level limitations from appellate statutory powers.
• Central Bank of the Philippines v. Court of Appeals, 63 SCRA 431 (1975) — Referenced to support the principle that amendments on appeal do not constitute new questions when they merely conform to evidence already tried by the parties.
• Jalandoni v. Ledesma, 64 Phil. 1061 (1937) — Cited to establish that pleadings may be amended to conform to proofs after trial, after judgment, or during appeal.
• Pamintuan v. Tiglao, 53 Phil. 1 — Cited to affirm that a lessor may simultaneously seek rescission and ejectment in a single action when contractual conditions are violated.

• Section 5, Rule 10, Rules of Court — Governs amendments to conform to evidence; the Court applied it to permit the Amended Complaint on appeal because the parties tried contractual violations by implied consent.
• Section 3, Rule 70, Rules of Court & Article 539, Civil Code — Address preliminary injunctions in forcible entry; petitioner relied on these to oppose the writ, but the Court distinguished them as inapplicable to appellate ejectment proceedings.
• Section 9, Rule 70, Rules of Court & Article 1674, Civil Code — Authorize appellate courts to issue mandatory injunctions restoring lessors to possession when the lessor’s appeal is prima facie meritorious; the Court applied these as the controlling legal basis for the CFI’s order.