Lajave Agricultural Management and Development Enterprises, Inc. vs. Javellana

A complaint for collection of sum of money to recover deficiency rentals that accrued prior to the demand to vacate — hence before the lessee’s possession became unlawful — may be filed independently of a pending unlawful detainer case, without offending the prohibition on splitting a single cause of action, litis pendentia, or forum shopping, where the damages sought have no direct relation to the loss of material possession and require resolution of contractual issues beyond the summary jurisdiction of the ejectment court.

Agustin Javellana co-owned sugar lands in Silay City and Talisay City, Negros Occidental, inherited from his father, the late Justice Luis Javellana. In 1998, Lajave Agricultural Management and Development Enterprises, Inc. (Lajave) leased a seven-hectare portion in Hacienda San Isidro, Silay City, under a ten-year Contract of Lease for sugarcane planting. After the death of Agustin’s father in 1993, the lease expanded informally to cover other co-owned properties. The lease expired after the 1997-1998 crop year, but Lajave continued to occupy the premises without a renewal, its occupancy merely tolerated. Disputes arose concerning the timeliness and correctness of annual compensation, leading Agustin to demand vacation in 2010 and 2012. Ejectment suits followed. Thereafter, a separate collection action was instituted for alleged underpayment of rentals for crop years 2000-2001 to 2008-2009.

• The Lease and Its Expansion: On July 7, 1987, Justice Luis Javellana transferred a 49-hectare property in Silay City to Agustin and his six siblings via Deed of Absolute Sale; the remainder passed through intestate succession upon his death in 1993. On May 13, 1998, Agustin and Lajave executed a Contract of Lease over Agustin’s seven-hectare portion in Hacienda San Isidro, Silay City, for ten crop years (1988-1989 to 1997-1998), with annual rent fixed at thirteen piculs of sugar per hectare. Lajave undertook to surrender the land peaceably upon expiration without need of demand. After the father’s death, Lajave continued leasing the Silay property and expanded its occupation to include Agustin’s shares in other inherited lands in Barangay Matab-ang, Talisay City, without executing new lease contracts.

• Holdover Period and Rental Disputes: The contract expired after crop year 1997-1998, but Lajave remained in possession without renewal or extension. Agustin asserted that occupancy was merely tolerated. Lajave paid annual compensation, but Agustin alleged that payments were often delayed and that the method of determining the rental amount was never disclosed. According to Agustin, Lajave paid a total of P928,928.27 as rentals for the Silay property from January 22, 2003 to June 25, 2010, whereas Sugar Regulatory Administration data on the composite price of sugar indicated that P1,253,423.15 should have been paid, resulting in a deficiency of P324,494.88.

• Demand to Vacate and Ejectment Suits: On March 1, 2010, Agustin sent a demand letter for Lajave to vacate the Silay City property, reiterated on March 5, 2012. A separate demand to vacate the Talisay City property was sent on March 5, 2012. Lajave refused to leave. On March 26, 2012, Agustin and his wife filed a complaint for unlawful detainer (Civil Case No. 1149-C) before the MTCC, Silay City, for the Hacienda San Isidro property. On July 16, 2012, another unlawful detainer complaint (Civil Case No. 12-925) was filed before the MTCC, Talisay City, for Hacienda Sta. Maria, Talisay City. Both ejectment cases were dismissed for lack of jurisdiction (Silay) and lack of cause of action and jurisdiction (Talisay).

• The Collection Suit: On September 24, 2012, while the ejectment cases were pending, Agustin and his wife filed a Complaint for collection of sum of money (Civil Case No. 12-41648) before the MeTC, Quezon City, Branch 38. The complaint sought to recover the deficiency in rentals paid for the period covering crop years 2000-2001 to 2008-2009 — a period preceding the demand to vacate. The claim was anchored on alleged violation by Lajave of the lease stipulations on the correct amount of rent.

• Motion to Dismiss: Lajave moved to dismiss on the grounds that (1) the complaint split a single cause of action and was barred by litis pendentia, and (2) Agustin committed forum shopping by maintaining multiple suits involving the same parties, rights, and reliefs. Lajave argued that the collection suit was in substance an action for compensation for the use and occupation of the same properties already subject of the unlawful detainer cases. Agustin opposed, contending that the damages claimed in the collection case were sustained prior to the time Lajave’s possession became unlawful and had no direct relation to loss of material possession. The MeTC dismissed the complaint, and the RTC affirmed but declared the dismissal to be without prejudice. The Court of Appeals reversed, prompting the instant petition.

• Splitting of Cause of Action and Litis Pendentia: Petitioner Lajave argued that the complaint for collection of sum of money violated the rule against splitting a single cause of action under Rule 2, Section 4 of the Rules of Court and was barred by litis pendentia. It maintained that the action, though denominated as one for collection, was actually a claim for compensation for the use and occupation of the leased premises — the very same rights and reliefs asserted in the pending unlawful detainer cases in Silay City and Talisay City. The parties, rights asserted, and reliefs sought were identical, making the second action unnecessary and vexatious.

• Forum Shopping: Petitioner contended that the filing of the collection case while the ejectment suits were pending constituted forum shopping. The multiplicity of suits involving the same parties and the same cause of action warranted outright dismissal of the collection case, a point which the Court of Appeals incorrectly overlooked.

• Recoverability of Rentals in Ejectment: Petitioner asserted that under prevailing law and settled jurisprudence on ejectment actions brought under Rule 70, arrears in rentals or compensation for use and occupation are damages that must be recovered in the unlawful detainer suit itself, not in an independent action. The Court of Appeals’ refusal to affirm dismissal thus departed from the usual course of judicial proceedings.

• Distinct Nature of Damages: Respondents counter-argued that in the unlawful detainer cases, the damages prayed for pertained to unpaid rentals and compensation for the crop years 2009-2010 and 2010-2011 onward — losses directly tied to their dispossession after Lajave refused to vacate. In contrast, the collection suit sought to recover differential payment arising from Lajave’s failure to pay the correct amount of rentals under the lease contract during the period 2000-2001 to 2008-2009.

• No Direct Relation to Loss of Possession: Respondents maintained that the cause of action in the collection case had no direct relation to their loss of material possession because the deficiency in rentals accrued before Lajave’s continued occupation became unlawful upon demand in 2010. The contractual breach was independent of the subsequent unlawful withholding.

• Absence of Litis Pendentia: Because the rights violated (contractual stipulation on correct rent vs. right to possess) and the reliefs sought (deficiency payment vs. restitution of possession plus fair rental value after demand) were different, the requisites of litis pendentia were not met, and no forum shopping occurred.

• Splitting of Cause of Action / Litis Pendentia: Whether the filing of an independent complaint for collection of sum of money for deficiency rentals accruing before the lessee’s possession became unlawful, during the pendency of unlawful detainer cases involving the same parties and properties, violates the prohibition against splitting a single cause of action and the rule on litis pendentia.

• Forum Shopping: Whether respondents committed forum shopping by instituting the collection suit while the ejectment cases were pending.

• Splitting of Cause of Action / Litis Pendentia: No violation was found. Litis pendentia requires concurrence of three elements: (a) identity of parties or interests represented; (b) identity of rights asserted and relief prayed for, founded on the same facts; and (c) such identity that judgment in one would amount to res judicata in the other. Here, the second and third requisites were absent. The unlawful detainer cases sought recovery of possession and damages directly caused by the loss of use and occupation — fair rental value from the time demand was made. The collection case, on the other hand, sought to recover deficiency rentals under the contractual terms for a period prior to the unlawful withholding of possession. This claim did not arise from dispossession but from an alleged breach of the lease agreement’s rent stipulations. The causes of action, rights violated, and reliefs prayed for were therefore distinct. A claim for deficiency in contract-based rent cannot be litigated in a summary ejectment proceeding; joinder of an ordinary collection action with a special civil action for unlawful detainer is explicitly prohibited by Section 5, Rule 2 of the Rules of Court. Because the collection case could not properly have been joined in the ejectment suit, no splitting of a single cause of action occurred. The third requisite also failed because the unlawful detainer court had no jurisdiction to award damages other than the fair rental value for use and occupation and attorney’s fees, so a judgment in the ejectment case could not constitute res judicata on the deficiency rental claim.

• Forum Shopping: No forum shopping was committed. Forum shopping exists when the elements of litis pendentia or res judicata are present. Since the causes of action in the ejectment cases and the collection case were not identical — involving different operative facts, different rights asserted, and different reliefs — there was no basis to conclude that respondents deliberately sought multiple venues for the same grievances.

• Litis Pendentia — A ground for dismissal that bars a second action where there is a pending action between the same parties for the same cause of action. Its requisites are: (a) identity of parties, or at least parties representing the same interests; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) such identity that any judgment in the pending case would amount to res judicata in the other. The doctrine rests on the policy against vexing a litigant more than once over the same subject matter and against conflicting judgments. In this case, the second and third requisites were lacking because the collection suit involved a contractual claim distinct from the possessory claim in ejectment.

• Damages Recoverable in Unlawful Detainer — In actions for forcible entry or unlawful detainer, the only damages that may be recovered are the fair rental value or reasonable compensation for the use and occupation of the property, because the sole issue is rightful possession. Damages recoverable are those the plaintiff suffered as a mere possessor — those caused by the loss of use and occupation — and not damages that have no direct relation to the loss of material possession. Compensation for use and occupation is reckoned from the time of demand to vacate, when the defendant’s possession becomes unlawful. Here, the deficiency rentals covered a period prior to the 2010 demand, hence they fell outside the ejectment court’s limited jurisdiction.

• Prohibition on Joinder of Special Civil Actions and Ordinary Actions — Under Section 5, Rule 2 of the 1997 Rules of Civil Procedure, a special civil action or an action governed by special rules shall not be joined with other causes of action. An unlawful detainer case is a special civil action governed by summary procedure; an action for collection of sum of money is an ordinary civil action requiring full-blown trial. Their joinder is expressly enjoined.

• Splitting a Single Cause of Action as Forum Shopping — Splitting a cause of action by filing multiple cases based on the same cause of action but with different prayers constitutes a form of forum shopping, the ground for dismissal being litis pendentia or res judicata. The rule is designed to prevent multiplicity of suits and the attendant costs and conflicting rulings.

• "In forcible entry or unlawful detainer cases, the only damage that can be recovered is the fair rental value or the reasonable compensation for the use and occupation of the leased property. The reason for this is that in such cases, the only issue raised in ejectment cases is that of rightful possession; hence, the damages which could be recovered are those which the plaintiff could have sustained as a mere possessor, or those caused by the loss of the use and occupation of the property, and not the damages which he may have suffered but which have no direct relation to his loss of material possession."

• "While indeed Tormil, as the victor in the unlawful detainer suit, is entitled to the fair rental value for the use and occupation of the unit in the building, such compensation should not be reckoned from the time Pro-Guard began to occupy the same, but from the time of the demand to vacate. ‘In unlawful detainer cases, the defendant is necessarily in prior lawful possession of the property but his possession eventually becomes unlawful upon termination or expiration of his right to possess.’" (Quoting Proguard Security Services Corporation v. Tormil Realty and Development Corporation, 738 Phil. 417, 425-426 (2014).)

• "The deficiency in rentals cannot be ascertained during the crop years 2000-2001 up to 2008-2009 for it was only in 2012 that petitioners discovered that respondent had a shortfall in the payment of rentals based on the data provided by the Sugar Regulatory Administration on the composite price of sugar. Before 2009, petitioner has no cause of action for illegal detainer against private respondent. Thus, We agree with the contention of petitioners that the damages recoverable in an ejectment case must have a direct relation to the loss of material possession giving rise to an action for illegal detainer." (Quoting the Court of Appeals’ ratiocination with approval.)

• Proguard Security Services Corporation v. Tormil Realty and Development Corporation, 738 Phil. 417 (2014) — Followed. Established the rule that fair rental value in unlawful detainer is recoverable only from the time of demand to vacate, not from the start of occupation.

• Marilag v. Martinez, 764 Phil. 576, 586 (2015) — Cited. Clarified that splitting a cause of action by filing multiple cases based on the same cause of action with different prayers is a mode of forum shopping, the ground for dismissal being litis pendentia or res judicata.

• Brown-Araneta v. Araneta, 719 Phil. 293, 316 (2013); Yap v. Chua, 687 Phil. 392, 400 (2012) — Cited. Enumerated the concurring requisites for litis pendentia to apply.

• Araos v. Court of Appeals, 302 Phil. 813, 819 (1994); C & S Fishfarm Corporation v. Court of Appeals, et al., 442 Phil. 279, 292 (2002); Dumo v. Espinas, 515 Phil. 685, 692 (2006) — Cited. Reiterated the long-standing rule that in ejectment cases, recoverable damages are limited to those caused by loss of use and possession.

• Section 5, Rule 2, 1997 Rules of Civil Procedure — Governs joinder of causes of action and explicitly provides that the joinder shall not include special civil actions or actions governed by special rules. Applied to preclude joinder of the ordinary collection suit with the summary unlawful detainer action.

• Section 4, Rule 2, 1997 Rules of Civil Procedure — Prohibits splitting a single cause of action. Distinguished on the ground that no single cause of action was split because the collection case rested on a distinct contractual breach.

Associate Justices Marvic M.V.F. Leonen and Ramon Paul L. Hernando concurred. Associate Justices Alexander G. Gesmundo and Jose C. Reyes, Jr. were on wellness leave.