Galande vs. Espiritu-Sarenas

In an unlawful detainer case based on tolerance, the plaintiff must prove that tolerance was present right from the inception of possession and that there were overt acts indicative of such tolerance; a notice of adverse claim annotated on a certificate of title is merely a notice of a claim adverse to the registered owner, the validity of which is yet to be established in a separate proceeding, and does not by itself prove ownership or confer a better right to possess.

The subject property is a 4,606-square-meter parcel of land in Brgy. Pinili, San Jose City, Nueva Ecija, covered by Transfer Certificate of Title No. 21865 and registered in the name of Spouses Jose Salamanca and Lydia Ordanez Salamanca. Petitioner Rodrigo Galande had been the Spouses Salamanca's tenant on the property for more than 40 years and subsequently purchased it from them on an installment basis for ₱950,000.00. Respondents Flordeliza Espiritu-Sarenas and Jimmy O. Espiritu are, respectively, the daughter and grandson of the late Gertrudes Ducusin, who had annotated a notice of adverse claim on the title of the subject property in 1966, claiming ownership over one-half thereof. The Spouses Salamanca refused to recognize Gertrudes' adverse claim and denied having given respondents permission to occupy any portion of the property.

The subject property is a 4,606-square-meter parcel of land located at Brgy. Pinili, San Jose City, Nueva Ecija, covered by Transfer Certificate of Title No. 21865 and registered in the name of Spouses Jose Salamanca and Lydia Ordanez Salamanca. Petitioner Rodrigo Galande had been in actual and continuous possession of the subject property as tenant of the Spouses Salamanca for more than 40 years. After the Spouses Salamanca returned from the United States of America, petitioner purchased the subject property from them on an installment basis for a consideration of ₱950,000.00.

In May 2015, while petitioner was still paying the installments on the purchase price, he allowed respondents Flordeliza Espiritu-Sarenas and Jimmy O. Espiritu to till one-half of the subject property on the condition that they would vacate it upon demand. Respondents are the heirs of the late Gertrudes Ducusin — Flordeliza being her daughter and Jimmy her grandson. In 1966, Gertrudes had annotated a notice of adverse claim on TCT No. 21865, claiming ownership over the one-half portion of the subject property purportedly purchased from the Spouses Salamanca. Respondents asserted that from 1966 until Gertrudes' death on April 5, 2008, she had been in actual occupancy and enjoyment of the one-half portion as buyer, and that petitioner allowed them to maintain their occupancy as owners by succession without any condition of tolerance. The Spouses Salamanca, however, refused to recognize Gertrudes' notice of adverse claim and denied having given respondents permission to occupy any portion of the subject property.

When petitioner demanded that respondents vacate the portion they were tilling, respondents refused, alleging they were farming on the subject property based on the notice of adverse claim of their late mother. The parties failed to settle at the barangay conciliation proceedings. Despite repeated verbal and written demands, including a letter dated May 23, 2017 giving respondents fifteen days from receipt to vacate, respondents refused to leave and remained in possession of the property. The MTCC found that all elements of unlawful detainer were established by petitioner by preponderance of evidence, noting that petitioner was in actual and continuous possession as tenant of the Salamancas, that respondents' possession began only in May 2015 upon petitioner's permission conditioned on vacating upon demand, and that respondents refused to heed the demand to vacate. The RTC affirmed these findings.

• Jurisdictional Requirements of Unlawful Detainer: Petitioner argued that the Court of Appeals gravely erred in finding that his complaint did not satisfy the jurisdictional requirements of an unlawful detainer case, asserting that he had sufficiently proven the elements of prior physical possession and tolerance.
• Effectivity of Notice of Adverse Claim: Petitioner argued that the Court of Appeals gravely erred in ruling that a notice of adverse claim annotated on the title of a property remains effective until ordered cancelled by a court, contending that such annotation does not prove ownership and cannot serve as the basis for respondents' possession by color of title.

• Ownership by Succession: Respondents argued that they are the heirs of Gertrudes Ducusin, who purchased one-half of the subject property from the Spouses Salamanca in 1966, and that petitioner should have known of this purchase due to the adverse claim annotated on TCT No. 21865.
• Possession as Owners Without Tolerance: Respondents asserted that from 1966 until Gertrudes' death on April 5, 2008, she had been in actual occupancy and enjoyment of the one-half portion as buyer, and that petitioner allowed them to maintain their occupancy as owners by way of succession without any condition of tolerance.
• Priority of Adverse Claim Annotation: Respondents contended that the annotation of the adverse claim in 1966 was duly entered and could not be made subordinate to the subsequent transactions entered into by petitioner.
• Invalidity of Payments to Timbol: Respondents questioned the validity and binding effect of the payments on the purchase price received by Irene O. Timbol because she did not have a special power of attorney authorizing her to sell the subject property or to receive payments from petitioner.
• Knowledge of Respondents' Ownership: Respondents asserted that petitioner knew of their physical, legal, and incontrovertible ownership over the one-half portion they were occupying and tilling in the concept of owners, as they were also paying the real estate taxes due on the property.

• Cause of Action for Unlawful Detainer: Whether the Court of Appeals committed reversible error in dismissing the complaint for unlawful detainer on the ground that petitioner failed to prove the jurisdictional requisites of prior physical possession and tolerance.
• Legal Effect of a Notice of Adverse Claim: Whether a notice of adverse claim annotated on the title of a property proves ownership or confers a better right to possess, such that possession based thereon cannot be challenged in an unlawful detainer action.

• Cause of Action for Unlawful Detainer: Yes, the CA erred. Petitioner sufficiently established by preponderant evidence that respondents' possession was by mere tolerance from its inception, satisfying all jurisdictional requisites for unlawful detainer.
• Legal Effect of a Notice of Adverse Claim: No. A notice of adverse claim is merely a notice of a claim adverse to the registered owner, the validity of which is yet to be established in a separate proceeding; it does not prove ownership or confer a better right to possess.

• Cause of Action for Unlawful Detainer: The elements of unlawful detainer are: (1) initially, the defendant lawfully possessed the property by contract or by plaintiff's tolerance; (2) the plaintiff notified the defendant that his right of possession is terminated; (3) the defendant remained in possession and deprived plaintiff of its enjoyment; and (4) the complaint was filed within one year from the last demand to vacate. In a tolerance-based action, tolerance must be present right from the inception of possession, and there must be overt acts indicative of such tolerance. The Court found that petitioner had been in actual and continuous possession of the subject property for 40 years as tenant of the Spouses Salamanca and subsequently as purchaser. Respondents did not dispute this fact in their Answer, nor did they dispute that they started tilling a portion only in May 2015 upon petitioner's permission, conditioned on vacating upon demand. Petitioner's permission to till could not be construed as an agreement acknowledging respondents' ownership or as a waiver of petitioner's rights. When respondents refused to vacate despite the May 23, 2017 demand letter, their possession became illegal, giving petitioner the right to institute the unlawful detainer complaint. The CA erred in characterizing respondents' possession as by color of title rather than by tolerance.

• Legal Effect of a Notice of Adverse Claim: The annotation of a notice of adverse claim on a certificate of title is nothing but a notice of a claim adverse to the registered owner, the validity of which is yet to be established in court in a separate proceeding. The Register of Deeds has a ministerial duty to register a notice of adverse claim found sufficient in form and substance; whether the claim is valid and has basis is a different matter. Under Section 70 of Presidential Decree No. 1529, the law provides for a hearing to thresh out the validity of the adverse claim, affording the claimant an opportunity to be heard. Respondents could not rely on the adverse claim to bolster their claim of ownership and correlative right to possess. The Spouses Salamanca's refusal to recognize the adverse claim negated respondents' claims. While the sole issue in ejectment is possession de facto, when the defendant raises the defense of ownership and the question of possession cannot be resolved without deciding ownership, the issue of ownership is resolved only to determine who has the better right to possess — and such adjudication is merely provisional, not barring a separate action on title. Respondents' claim of ownership based on the adverse claim could not prevail against petitioner's proven prior physical possession, which enjoys a disputable presumption of ownership. Respondents are not precluded from filing a separate action to recover ownership.

• Unlawful Detainer Based on Tolerance — To sustain a summary action for unlawful detainer based on tolerance, the complaint must allege and the plaintiff must prove: (1) initially, the defendant lawfully possessed the property by contract or by plaintiff's tolerance; (2) the plaintiff notified the defendant that the right of possession is terminated; (3) the defendant remained in possession and deprived plaintiff of its enjoyment; and (4) the complaint was filed within one year from the last demand to vacate. Tolerance must be present right from the inception of possession, and there must be overt acts indicative of such tolerance; bare allegation of tolerance alone does not suffice. Possession initially lawful by tolerance becomes illegal from the moment a demand to vacate is made and the possessor refuses to comply. The Court applied this doctrine by finding that petitioner allowed respondents to till a portion of the property beginning May 2015 on the condition they vacate upon demand, and their refusal to vacate after the May 23, 2017 demand letter rendered their possession illegal.

• Prior Physical Possession in Ejectment — The sole issue in ejectment proceedings is physical or material possession (possession de facto), independent of any claim of ownership. Possession refers to prior physical possession, not possession de jure arising from ownership. A party who proves prior possession can recover such possession even against the owner, regardless of the character of the prior possession. Courts accord respect to persons in prior possession, as they enjoy a disputable presumption of ownership. The Court applied this doctrine by holding that petitioner's 40-year possession as tenant and subsequent possession as purchaser established his prior physical possession, which respondents admitted but could not overcome with their adverse claim-based assertion of ownership.

• Provisional Adjudication of Ownership in Ejectment — When the defendant in an ejectment case raises the defense of ownership and the question of possession cannot be resolved without deciding ownership, the issue of ownership shall be resolved only to determine the issue of possession — that is, to determine who has the better right to possess. Such adjudication is merely provisional and does not bar or prejudice an action between the same parties involving title to the property. The Court applied this doctrine by resolving respondents' claim of ownership based on the adverse claim only for purposes of determining the better right to possess, while explicitly leaving respondents free to file a separate action to recover ownership.

• Nature of a Notice of Adverse Claim — A notice of adverse claim annotated on a certificate of title is merely a notice of a claim adverse to the registered owner, the validity of which is yet to be established in court in a separate proceeding. The Register of Deeds has a ministerial duty to register a notice of adverse claim found sufficient in form and substance; whether the claim is valid and has basis is a separate matter. Under Section 70 of PD 1529, the law provides for a hearing where the validity of the adverse claim is threshed out. The Court applied this doctrine by holding that respondents could not rely on the 1966 adverse claim annotation to prove ownership or a better right to possess, as its validity had never been established in court.

• "The annotation of a notice of adverse claim on the title of the disputed property is nothing but a notice of a claim adverse to the registered owner, the validity of which is yet to be established in court in a separate proceeding." — This passage states the ratio decidendi on the legal effect of an adverse claim annotation: it is not proof of ownership but merely a notice whose validity must be separately litigated.

• "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 that he will vacate upon demand, failing which a summary action for ejectment is the proper remedy against them." — This passage articulates the canonical formulation of the tolerance doctrine in unlawful detainer, frequently cited in Philippine ejectment jurisprudence.

• "a party who can prove prior possession can recover such possession even against the owner himself. Whatever may be the character of his possession, if he has in his fervor prior possession in time, he has the security that entitles him to remain on the property until a person with a better right lawfully ejects him." — This passage, quoted from David vs. Butay which in turn cited Pajuyo vs. Court of Appeals, defines the controlling doctrine on prior physical possession in ejectment proceedings.

• GSIS vs. Espenilla, G.R. No. 203267 (Notice), October 6, 2021 — Followed as controlling authority on the elements of unlawful detainer and the nature of possession by tolerance, including the rule that possession by tolerance becomes illegal upon demand to vacate and refusal to comply.
• David vs. Butay, G.R. No. 220996, April 26, 2022 — Followed for the doctrine that the sole issue in ejectment is possession de facto and that a party who proves prior possession can recover it even against the owner, regardless of the character of possession.
• Pajuyo vs. Court of Appeals — Cited through David vs. Butay for the principle that courts will always uphold respect for prior possession and that prior possession in time entitles a possessor to remain until a person with a better right lawfully ejects him.
• Acap vs. Court of Appeals, 321 Phil. 381 (1995) — Followed for the principle that a notice of adverse claim is merely a notice of a claim adverse to the registered owner, the validity of which is yet to be established in court.
• Equatorial Realty Development, Inc. vs. Sps. Frogozo, 470 Phil. 47 (2004) — Cited for the purpose of Section 70 of PD 1529 in providing a hearing to thresh out the validity of an adverse claim.

• Section 1, Rule 70 of the Rules of Court — Defines who may institute ejectment proceedings and when, providing the jurisdictional basis for unlawful detainer actions. Applied to establish the elements petitioner needed to prove: that respondents initially possessed by tolerance, that their right was terminated by demand, that they remained in possession depriving petitioner of enjoyment, and that the complaint was filed within one year from the last demand.
• Section 70, Presidential Decree No. 1529 (Property Registration Decree) — Governs the registration and cancellation of adverse claims on certificates of title. Applied to demonstrate that an adverse claim is effective for only thirty days from registration unless its validity is upheld in a court hearing, and that the Register of Deeds' duty to register is ministerial, not determinative of the claim's validity.

Caguioa (Chairperson), Gaerlan, Dimaampao, and Singh, JJ., concurred.