Laqui, Sr. vs. Sagun

A judgment on the pleadings is improper where the answer raises an affirmative defense, but it may be treated as a summary judgment if the defense does not present a genuine issue; no pretrial is required before a judgment on the pleadings or summary judgment; and a lessee is estopped from denying the lessor's title at the commencement of the lease absent a subsequent change in the nature of that title.

Sagun et al. are the heirs of Remedios E. Sagun, and Laqui was the lessee of the lot apportioned to them from the estate of Gregorio Espejo. The governing statutory backdrop includes Article 1436 of the Civil Code and Rule 131, Section 2(b) of the Rules of Court, which embody the rule that a lessee or tenant is estopped from denying the lessor's or landlord's title at the commencement of the lease. The procedural setting involves Rules 34 and 35 of the Rules of Court on judgment on the pleadings and summary judgment.

Gregorio Espejo died intestate and left a 1,000 square meter property covered by Original Certificate of Title No. 201800169. Under a Memorandum of Agreement dated October 7, 2013, the heirs of Gregorio Espejo agreed to subdivide the property into five equal lots of 200 square meters each and to apportion each lot to the five siblings and/or immediate heirs of Gregorio and Flora Espejo. Lot 1, situated at No. 54 Manuel Roxas Street, Teacher's Camp, Baguio City, was given to Sagun et al. as heirs of Remedios E. Sagun.

Sagun et al. alleged that on April 15, 2002, Remedios and Laqui entered into an Agreement of Lease over the subject property for a term of two years and for a monthly rental of PHP 6,000.00, which was extended for another two years for a monthly rental of PHP 6,500.00. After the lease agreement expired, the parties did not execute a new contract; instead, it was impliedly renewed on a month-to-month basis. On March 19, 2019, Sagun et al. demanded that Laqui vacate the premises. Their demand unheeded, Sagun et al. filed a complaint for ejectment, Barangay Case No. 05, Series of 2019, before barangay Manuel Roxas in Baguio City. Laqui received the Summons dated September 16, 2019 issued by the barangay.

On September 24, 2019, an Amicable Settlement was reached before the Lupong Tagapamayapa of the barangay. Under that settlement, Laqui was willing to vacate the area owned by the Sagun Family; he was given six months from September 2019 until March 2020; and during his stay he was to pay rental of PHP 5,300.00 every end of the month. Laqui failed to comply with the agreement to vacate after the lapse of six months from the date of settlement. Sagun et al. then filed a Complaint for enforcement of the Amicable Settlement before the MTCC, docketed as Civil Case No. 20-20-CV-MTCC.

In his Answer, Laqui denied all the allegations against him, except those pertaining to the personal circumstances of Sagun et al., for lack of knowledge or information sufficient to form a belief as to the truth of the material averments. As an affirmative defense, Laqui averred that he cannot be ejected from the subject property, which he claims is part of the Estate of Acopiado, since it was assigned to him by the Estate's administrator, Daniel Franieza, by virtue of a Deed of Assignment dated October 30, 2019. When the case was due for pretrial conference, Sagun et al. filed a Motion for Judgment on the Pleadings claiming that Laqui's Answer failed to deny the material allegations in their Complaint. In Laqui's Comment, he argued that since he raised an affirmative defense, a judgment on the pleadings is improper because the affirmative defense must still be tried.

The RTC found that Laqui failed to prove the authenticity of the Deed of Assignment and failed to establish Franieza's authority to assign the subject property; no authentic copies of the court proceedings or orders cited in the Deed were presented. The RTC also found that there was no change in the nature of the respondents' title subsequent to the commencement of the lease, and that Laqui's claim that the property was owned by Gregorio and Acopiado as early as 1972 was a denial of the respondents' title at the commencement of the lessor-lessee relationship.

• Pretrial: Petitioner argued that a pretrial conference should have been conducted first before a judgment on the pleadings could be rendered.
• Affirmative Defense: Petitioner argued that since he raised an affirmative defense, a judgment on the pleadings was improper because the affirmative defense must still be tried.
• Estoppel and Change in Title: Petitioner argued that he is not estopped from denying the title of respondents since there was a change in the nature of the title of respondents; he alleged that this change was made known to him only after the signing of the amicable settlement, which he was forced to sign.

• Pretrial Before Judgment on the Pleadings/Summary Judgment: Whether the CA erred in affirming the RTC Decision holding that the judgment on the pleadings was properly rendered even without a pretrial conference.
• Denial of Affirmative Defense/Estoppel: Whether the CA erred in affirming the RTC when the latter denied the affirmative defense of petitioner.

• Pretrial Before Judgment on the Pleadings/Summary Judgment: Partly. The judgment on the pleadings was improper because Laqui raised an affirmative defense, but it may be treated as a summary judgment; no pretrial is required before a judgment on the pleadings or summary judgment.
• Denial of Affirmative Defense/Estoppel: No. Laqui is estopped from denying Sagun et al.'s title as lessors under Article 1436 of the Civil Code and Rule 131, Section 2(b) of the Rules of Court; his claimed Deed of Assignment did not establish a subsequent change in the nature of that title.

• Pretrial Before Judgment on the Pleadings/Summary Judgment: The SC began by distinguishing a judgment on the pleadings from a summary judgment. Under Rule 34, a judgment on the pleadings is proper when the answer fails to tender an issue or otherwise admits the material allegations of the adverse party's pleading. Under Rule 35, summary judgment is proper when the pleadings appear to raise issues but those issues are sham, fictitious, or not genuine, as shown by affidavits, depositions, or admissions. The SC cited Narra Integrated Corporation vs. Court of Appeals, Wood Technology Corporation vs. Equitable Banking Corporation, and Iloilo Jar Corporation vs. Comglasco Corporation/Aguila Glass. Because Laqui's Answer raised an affirmative defense—that the property had been assigned to him by Franieza as administrator of the Estate of Acopiado—the MTCC should not have rendered judgment on the pleadings. The SC nevertheless treated the judgment as a summary judgment because the affirmative defense did not present a genuine issue: Laqui was estopped from denying the respondents' title as lessors under Article 1436 and Rule 131, Section 2(b), and the right to recover possession had been resolved in the barangay amicable settlement, which has the effect and authority of res judicata even if not judicially approved. On the pretrial question, the SC relied on Spouses Pascual vs. First Consolidated Rural Bank (Bohol) Inc. and held that Rule 18, Section 2(g) only states that pretrial may be the occasion for considering the propriety of judgment on the pleadings or summary judgment; Rules 34 and 35 are the legal bases and do not require pretrial. Since pretrial is meant to simplify issues, it is unnecessary where there are no issues or no genuine issue, and Rule 18, Section 10 does not make pretrial a condition for judgment. The SC thus held that no pretrial was required.
• Denial of Affirmative Defense/Estoppel: Laqui's argument that he was not estopped because there was a change in the nature of the respondents' title was a question of fact, and Rule 45 allows only questions of law absent any of the recognized exceptions, none of which was present. Even on the merits, the SC held the argument unmeritorious. Under Santos vs. National Statistics Office, which quoted Borre vs. Court of Appeals, a tenant is estopped from denying the landlord's title at the commencement of the landlord-tenant relation, but the estoppel does not apply if the landlord's title has expired, been conveyed to another, or been defeated by a title paramount subsequent to the commencement of the relationship. Here, there was no change in the nature of the respondents' title after the lease began in 2002. Laqui's claim that the property was owned by Gregorio and Acopiado as early as 1972 was a denial of the respondents' title at the commencement of the lease, which is precisely what the estoppel rule forbids. The Deed of Assignment dated October 30, 2019 did not establish a subsequent change: the RTC found that Laqui failed to prove its authenticity and failed to establish Franieza's authority to assign the property. An administrator's power extends only to acts of administration; an assignment is an act of strict dominion requiring authorization from the probate court, and no authentic copies of the cited court proceedings or orders were presented. Even assuming the Deed and court orders were established, the Deed proceeded from the Acopiados' alleged title and could not be invoked to deny the respondents' title because Laqui was estopped.

• Judgment on the pleadings vs. summary judgment — A judgment on the pleadings is proper when the answer fails to tender an issue or admits the material allegations of the adverse party's pleading; there is no ostensible issue. A summary judgment is proper when issues apparently exist but are sham, fictitious, or not genuine, as shown by affidavits, depositions, or admissions. The SC applied this by holding that Laqui's affirmative defense made judgment on the pleadings improper, but the judgment was sustained as a summary judgment because the defense raised no genuine issue.
• No pretrial prerequisite for judgment on the pleadings or summary judgment — Rules 34 and 35 are the legal bases for these judgments, and neither requires a prior pretrial. Rule 18, Section 2(g) merely allows the court to consider their propriety at pretrial. If there are no issues or no genuine issue, pretrial is unnecessary. Applied to reject Laqui's argument.
• Tenant estoppel — A lessee or tenant is estopped from denying the lessor's or landlord's title at the commencement of the lease under Article 1436 of the Civil Code and Rule 131, Section 2(b) of the Rules of Court. The estoppel does not apply if the landlord's title has expired, been conveyed to another, or been defeated by a title paramount subsequent to the commencement of the relationship. Applied: Laqui's claim denied the title at commencement; the Deed of Assignment did not prove a subsequent change.
• Amicable settlement as res judicata — An amicable settlement is a compromise agreement with the effect and authority of res judicata even if not judicially approved. Applied: the right to recover possession was resolved by the September 24, 2019 settlement.
• Administrator's limited powers — An administrator may perform acts of administration, but acts of strict dominion such as an assignment require authorization from the probate court. Applied: Laqui failed to prove Franieza's authority and the cited court orders.
• Genuine issue — A genuine issue is an issue of fact calling for the presentation of evidence, as distinguished from a fictitious, contrived, or patently unsubstantial issue. Applied: Laqui's affirmative defense was not genuine because of estoppel and res judicata.
• Rule 45 limited to questions of law — Only questions of law may be raised in a Rule 45 petition absent recognized exceptions. Applied: Laqui's change-in-title argument was factual and no exception was present.

• "The existence or appearance of ostensible issues in the pleadings, on the one hand, and their sham or fictitious character, on the other, are what distinguish a proper case for summary judgment from one for a judgment on the pleadings. In a proper case for judgment on the pleadings, there is no ostensible issue at all because of the failure of the defending party's answer to raise an issue." — The SC used this distinction to explain why Laqui's affirmative defense made judgment on the pleadings improper but allowed treatment as summary judgment.
• "If the answer fails to tender an issue, or otherwise admits the material allegations of the adverse party's pleading, or does not raise a genuine issue, then a court can render a judgment on the pleadings pursuant to Rule 34 or summary judgment pursuant to Rule 35, as the case may be, even before and without pretrial since a pretrial in this circumstance would be devoid of any practical significance as there would no longer be issues to be tried by virtue of the admission or the fact that the issues raised are either sham, fictitious, contrived, or set up in bad faith and are patently unsubstantial." — The SC relied on this to hold that no pretrial was required where the answer raises no genuine issue.
• "The rule on estoppel against tenants is subject to a qualification. It does not apply if the landlord's title has expired, or has been conveyed to another, or has been defeated by a title paramount, subsequent to the commencement of lessor-lessee relationship. In other words, if there was a change in the nature of the title of the landlord during the subsistence of the lease, then the presumption does not apply. Otherwise, if the nature of the landlord's title remains as it was during the commencement of the relation of landlord and tenant, then estoppel lies against the tenant." — The SC quoted this qualification but held it did not apply because Laqui did not show a subsequent change in the nature of the landlord's title.
• "An amicable settlement is in the nature of a compromise agreement which has the effect and authority of res judicata even if not judicially approved." — The SC used this to hold that the barangay settlement barred Laqui from relitigating the right to possession.

• Wood Technology Corporation vs. Equitable Banking Corporation, 492 Phil. 106 (2005) — Relied on to treat a judgment on the pleadings as a summary judgment where the defendant interposed an affirmative defense.
• Iloilo Jar Corporation vs. Comglasco Corporation/Aguila Glass, 803 Phil. 567 (2017) — Relied on for the same correction and for the inquiry whether affirmative defenses raise genuine issues of fact.
• Narra Integrated Corporation vs. Court of Appeals, 398 Phil. 733 (2000) — Relied on for the distinction between judgment on the pleadings and summary judgment.
• Spouses Pascual vs. First Consolidated Rural Bank (Bohol) Inc., 805 Phil. 488 (2017) — Relied on to hold that a pretrial is not a prerequisite to judgment on the pleadings or summary judgment.
• Santos vs. National Statistics Office, 662 Phil. 708 (2011) — Cited by Laqui and distinguished; the SC held its exception to tenant estoppel did not apply because there was no subsequent change in the nature of the landlord's title.
• Sanchez vs. Court of Appeals, 345 Phil. 155 (1997) — Relied on for the rule that an amicable settlement has the effect and authority of res judicata even if not judicially approved.
• Gorospe vs. Santos, 161 Phil. 258 (1976) — Relied on for the purpose of summary judgment: to eliminate trial where there is no genuine issue of fact.
• Basbas vs. Sayson, 671 Phil. 662 (2011) — Relied on for the definition of a genuine issue as one calling for the presentation of evidence.

• Article 1436, Civil Code — A lessee or bailee is estopped from asserting title to the thing leased or received against the lessor or bailor. Applied to bar Laqui from denying Sagun et al.'s title.
• Rule 131, Section 2(b), Rules of Court — Conclusive presumption that a tenant is not permitted to deny the title of the landlord at the commencement of the landlord-tenant relation. Applied to Laqui.
• Rule 34, Rules of Court — Judgment on the pleadings where the answer fails to tender an issue or admits the material allegations. Applied: improper because Laqui's Answer raised an affirmative defense.
• Rule 35, Rules of Court — Summary judgment where the pleadings, affidavits, depositions, and admissions show no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Applied: the MTCC judgment was treated as a summary judgment.
• Rule 18, Sections 2(g), 7, and 10, Rules of Court — Pretrial is mandatory and may consider the propriety of judgment on the pleadings or summary judgment; after pretrial, judgment may be rendered if there are no controverted facts or genuine issues. Applied: pretrial is not a prerequisite to judgment on the pleadings or summary judgment.
• Rule 45, Rules of Court — Only questions of law may be raised in a petition for review on certiorari. Applied: Laqui's change-in-title argument was factual and no exception was present.
• Rule 8, Sections 8 and 10, Rules of Court — Specific denial and the effect of failure to specifically deny material averments. Applied in the discussion of when an answer fails to tender an issue.
• Rule 84, Sections 1 to 3, and Rule 89, Section 7, Rules of Court — Powers and duties of executors/administrators and the need for court authority to sell, mortgage, or otherwise encumber estate property. Applied: an administrator's assignment required probate court authorization.
• Rule 1, Section 6, Rules of Court — Rules shall be liberally construed to promote a just, speedy, and inexpensive disposition of every action. Applied to reject Laqui's pretrial argument as needlessly protracting litigation.