Macaslang vs. Zamora

An RTC exercising appellate jurisdiction over an MTC decision is not limited to the errors assigned in the appeal memorandum but may decide the case based on the entire record of the proceedings had in the court of origin and such memoranda as are filed.

Respondent spouses Zamora purchased a residential property from petitioner Macaslang, who requested to remain in the house and promised to vacate upon finding a new residence. After a year, the respondents demanded that the petitioner vacate, which she refused, prompting the filing of an unlawful detainer complaint. The petitioner claimed the deed of sale was procured through fraud and that the true agreement was a loan secured by mortgage.

• The Sale and Tolerance: On September 10, 1997, petitioner Macaslang sold a residential property to respondents Zamora for ₱100,000. Macaslang requested to stay in the house, promising to vacate once she found a new residence.
• Demand to Vacate: After a year, respondents demanded Macaslang vacate. When she refused, respondents sought barangay conciliation, which failed.
• MTCC Proceedings: Respondents filed an unlawful detainer complaint in the MTCC. Macaslang did not answer; the MTCC declared her in default upon respondents' motion, received oral testimony, and ruled for respondents, ordering her to vacate and pay rentals and attorney's fees.
• RTC Appeal: Macaslang appealed to the RTC, assigning errors regarding extrinsic fraud and the nullity of the deed of sale. The RTC dismissed the complaint, finding that the respondents' demand letters (exhibits C and E) demanded payment of large sums (₱1,101,089.90 and ₱1,600,000.00), contradicting the sale and indicating an equitable mortgage. The RTC also found no valid demand to pay rent and vacate.
• CA Reversal: The CA reversed the RTC, ruling that the RTC committed grave abuse of discretion by resolving issues not raised in the appeal memorandum. The CA held the complaint stated a cause of action because it alleged a demand to vacate.

• Scope of Appellate Review: Petitioner argued that the RTC, in its appellate jurisdiction, is not limited to assigned errors but may decide based on the entire record pursuant to Section 7, Rule 40 of the 1997 Rules of Civil Procedure.
• Absence of Valid Demand: Petitioner maintained that no prior demand to vacate and comply with lease conditions was made, negating a valid cause of action for unlawful detainer.
• Violation of Summary Procedure: Petitioner contended that the CA sanctioned a gross departure from judicial proceedings by affirming the MTCC decision, which was tried in violation of the Rules on Summary Procedure.

• Limitation to Assigned Errors: Respondents countered that the RTC committed grave abuse of discretion by ruling on issues not raised or assigned in the appeal memorandum, violating their right to due process.
• Sufficiency of the Complaint: Respondents argued that the complaint sufficiently stated a cause of action because it explicitly alleged that a demand to vacate was made.
• Validity of the Sale: Respondents maintained that the deed of absolute sale was valid and that they were the rightful owners entitled to possession.

• Scope of RTC Appellate Review: Whether the CA correctly found that the RTC committed reversible error in ruling on issues not raised by the petitioner in her appeal.
• Sufficiency of the Complaint: Whether the CA correctly found that the complaint stated a valid cause of action.
• Validity of Demand: Whether the CA erred in finding that a valid demand to vacate was made.
• Defense of Ownership: Whether the petitioner's defense of ownership was meritorious.

• Scope of RTC Appellate Review: The CA's finding was incorrect. Under Section 7 of Rule 40 and Section 22 of Batas Pambansa Blg. 129, the RTC is mandated to decide appeals from the MTC based on the entire record and submitted memoranda, not merely the assigned errors. Even under the general rule limiting review to assigned errors (Sec. 8, Rule 51), exceptions exist, such as when the unassigned matter is necessary for a just decision or is closely related to an assigned error.
• Sufficiency of the Complaint: The complaint stated a cause of action for unlawful detainer. It alleged the essential elements: initial possession by tolerance, termination of the right of possession through demand, continued unlawful possession, and filing within one year from the last demand. However, the RTC and CA erroneously confused "failure to state a cause of action" (insufficiency of the pleading) with "lack of cause of action" (insufficiency of the evidence). While the pleading was sufficient, the evidence revealed a lack of cause of action.
• Validity of Demand: A valid demand to vacate was made. The word "vacate" is not talismanic; the respondents' letter (Exhibit D) demanding that they take over the occupancy of the property constituted a valid demand to vacate. Furthermore, because the possession was based on tolerance rather than a contract of lease, a demand to pay rent and vacate was unnecessary; a mere demand to vacate sufficed.
• Defense of Ownership: The defense of ownership was meritorious. The evidence—specifically the inadequate purchase price (₱100,000.00 compared to a later demand of ₱1,600,000.00), the vendor's continued possession, the demands for payment of large sums, a prior pacto de retro, and partial payments—established badges of an equitable mortgage under Article 1602 of the Civil Code. Because the respondents were not the true owners but merely mortgagees, they had no right to eject the petitioner.
• Procedural Lapses of the MTCC: The MTCC committed procedural errors by granting a prohibited motion to declare the defendant in default and by receiving oral testimony instead of affidavits. The proper procedure under Rule 70 is for the court to render judgment as warranted by the complaint upon failure to answer, and to rely on affidavits and position statements rather than oral testimony.

• Appellate Jurisdiction of the RTC over MTCs — The RTC, in exercising appellate jurisdiction over cases decided by the MTC, is not limited to the errors assigned in the appeal memorandum. Pursuant to Section 7, Rule 40 of the Rules of Court and Section 22 of B.P. 129, the RTC shall decide the case on the basis of the entire record of the proceedings had in the court of origin and such memoranda or briefs as may be submitted.
• Failure to State a Cause of Action vs. Lack of Cause of Action — Failure to state a cause of action refers to the insufficiency of the pleading itself, determinable from the allegations therein, and is a ground for dismissal under Rule 16. Lack of cause of action refers to the insufficiency of the evidence to prove the cause of action alleged in the pleading, which may be raised after questions of fact have been resolved.
• Equitable Mortgage — A contract, regardless of its nomenclature, is presumed to be an equitable mortgage when the circumstances indicate that the real intention of the parties is to secure the payment of a debt or the performance of an obligation. Badges of equitable mortgage include an unusually inadequate price, the vendor remaining in possession, and the purchaser demanding payment of sums far exceeding the purchase price.
• Demand to Vacate in Unlawful Detainer — The word "vacate" is not a talismanic word required in all notices. A notice that clearly conveys the demand to yield possession suffices. Where possession is based on tolerance, a demand to pay rent and vacate is unnecessary; a simple demand to vacate is sufficient.

• "The Regional Trial Court is not limited in its review of the decision of the Municipal Trial Court (MTC) to the issues assigned by the appellant, but can decide on the basis of the entire records of the proceedings of the trial court and such memoranda or briefs as may be submitted by the parties or required by the RTC."
• "Failure to state a cause of action refers to the insufficiency of the pleading, and is a ground for dismissal under Rule 16 of the Rules of Court. On the other hand, lack of cause action refers to a situation where the evidence does not prove the cause of action alleged in the pleading."
• "The word vacate, according to Golden Gate Realty Corporation v. Intermediate Appellate Court, is not a talismanic word that must be employed in all notices to vacate."

• Comilang v. Burcena, G.R. No. 146853, February 13, 2006 — Cited for the exceptions to the rule that only assigned errors may be considered on appeal, such as when the question affects jurisdiction or is necessary for a just decision.
• Golden Gate Realty Corporation v. Intermediate Appellate Court, No. L-4289, July 31, 1987 — Cited for the doctrine that the word "vacate" is not a talismanic word required in all notices to vacate; the import of the notice is what controls.
• Cabrera v. Getaruela, G.R. No. 164213, April 21, 2009 — Cited for the elements a complaint must allege to sufficiently state a cause of action for unlawful detainer.

• Section 7, Rule 40, 1997 Rules of Civil Procedure — Governs the procedure in the RTC on appeal from the MTC, mandating that the RTC shall decide the case on the basis of the entire record of the proceedings had in the court of origin and such memoranda as are filed. Applied to justify the RTC's consideration of issues beyond those assigned in the appeal memorandum.
• Section 22, Batas Pambansa Blg. 129 (The Judiciary Reorganization Act of 1980) — Provides that cases decided by MTCs on appeal to the RTC shall be decided on the basis of the entire record and such memoranda or briefs as may be submitted. Applied as the statutory basis for the procedural rule.
• Article 1602, Civil Code — Enumerates the instances when a contract is presumed to be an equitable mortgage. Applied to determine that the deed of sale was actually an equitable mortgage due to inadequate price, vendor remaining in possession, and demands for payment of large sums.
• Section 16, Rule 70, Rules of Court — Provides that when the defense of ownership is raised in an ejectment suit, the issue of ownership shall be resolved only to determine the issue of possession. Applied to clarify that the finding of ownership in favor of the petitioner is not conclusive on title but determinative of possession.
• Section 13, Rule 70, Rules of Court — Prohibits motions to declare the defendant in default in ejectment cases. Applied to reprimand the MTCC for granting such a prohibited motion.

Conchita Carpio Morales, Arturo D. Brion, Martin S. Villarama, Jr., Maria Lourdes P. A. Sereno.