Nuñez vs. SLTEAS Phoenix Solutions, Inc.

Prior physical possession for purposes of forcible entry jurisdiction may be acquired through juridical acts—such as acquisition by deed of assignment, registration of title, and payment of real property taxes—without the need for continuous actual physical occupation of every portion. When dispossession is effected by stealth, the one-year prescriptive period under Rule 70 is counted from the time the plaintiff learned of the entry. An unrecorded lease that is unknown to the purchaser cannot defeat the latter’s right to eject, and the defendant’s mere allegation of a third person’s ownership does not divest the first-level court of its summary jurisdiction.

Respondent SLTEAS Phoenix Solutions, Inc. acquired a 635.50-square-meter parcel of land at Calle Solana, Intramuros, Manila, through a Deed of Assignment dated 4 June 1999 executed by the Spouses Ong Tiko and Emerenciana Sylianteng. The property was registered under Transfer Certificate of Title (TCT) No. 87556 in respondent’s name on 27 February 2002. Respondent left the property idle and unguarded owing to other business concerns. In October 2003, an ocular inspection disclosed that petitioner Hubert Nuñez and 21 other individuals were occupying the land without any lease agreement or possessory right.

• Acquisition and Title: Respondent acquired a 635.50-square-meter land in Intramuros, Manila, through a 4 June 1999 Deed of Assignment from Spouses Ong Tiko and Emerenciana Sylianteng. On 27 February 2002, TCT No. 87556 was issued in respondent’s name. Respondent paid real property taxes and sundry expenses related to the property but left it idle and unguarded for a period due to other business concerns.

• Discovery of Occupancy: In October 2003, respondent conducted an ocular inspection and discovered that petitioner Hubert Nuñez and twenty-one other individuals were already occupying the property. No lease agreement or possessory right in favor of the occupants existed. Respondent attributed the occupation to strategy and stealth.

• Complaint for Forcible Entry: Respondent filed a complaint, later amended on 9 January 2004, for forcible entry against petitioner and the other occupants. The amended complaint alleged that respondent, through its representatives and predecessors-in-interest, had continuously possessed the property and exercised all attributes of ownership, including payment of real property taxes; that the defendants had succeeded in occupying the premises by means of strategy and stealth; and that respondent had learned of the occupation only in October 2003. The complaint prayed for ejectment, reasonable rentals, attorney’s fees, litigation expenses, and costs.

• Defense of Lease: In his Answer, petitioner denied the material allegations and claimed that the property he occupied belonged to Maria Ysabel Potenciano Padilla Sylianteng, with whom he had a subsisting lease agreement. He asserted that respondent lacked a cause of action and that the MeTC had no jurisdiction because of the absence of a prior demand to vacate and referral to the barangay for amicable settlement. Other defendants moved to dismiss on jurisdictional grounds, but the motion was denied upon the finding that the complaint sufficiently stated a cause of action.

• MeTC Proceedings and Survey: An ocular inspection conducted on 9 June 2004 showed that the residential units were too crowded to determine the exact metes and bounds. The parties then agreed to obtain an impartial survey from the Office of the City Assessor or City Engineer but failed to do so. Respondent subsequently submitted a survey plan prepared by Geodetic Engineer Joseph Padilla, which indicated that petitioner occupied a portion of the registered property. Petitioner did not present his lessor’s title and agreed that TCT No. 87556 would be used as the basis for determining the exact measurement of the property.

• MeTC Judgment: Relying on the survey plan and the allegations in the amended complaint, the MeTC rendered a Decision on 23 November 2004, ordering all defendants to vacate the premises, each to pay ₱5,000 per month from October 2003 until vacation, ₱15,000 in attorney’s fees, and costs of suit.

• Alleged Demand Letter of 1996: During the proceedings before the RTC, petitioner sought to introduce a demand letter dated 31 July 1996, purportedly sent by respondent’s predecessors-in-interest, to show that respondent had knowledge of his occupancy well before 2003. This letter was not presented before the MeTC; it was attached only to petitioner’s reply to respondent’s comment on the motion for reconsideration of the RTC’s Order. The Court of Appeals and the Supreme Court declined to consider it, as it was raised for the first time on appeal.

• Jurisdiction: Petitioner argued that the MeTC lacked jurisdiction because the elements of forcible entry were not present. He maintained that his occupation since 1999 negated respondent’s claim of prior physical possession, that no stealth was involved because respondent’s predecessors had knowledge of his presence, and that the one-year prescriptive period had lapsed. He further contended that the case involved a question of ownership, which should have ousted the MeTC of its summary jurisdiction.

• Subsisting Lease and Article 1676: Petitioner contended that he could not be ejected because he had a valid and existing lease contract with the true owner, Maria Ysabel Potenciano Padilla Sylianteng. He faulted the Court of Appeals for not applying Article 1676 of the Civil Code, which provides that a purchaser of land under an unrecorded lease cannot terminate the lease if the purchaser knew of its existence. Petitioner claimed that the demand letter dated 31 July 1996 proved such knowledge on the part of respondent’s predecessors and, thereby, on respondent.

• Jurisdiction: Respondent maintained that the amended complaint sufficiently alleged prior physical possession acquired through juridical acts (deed of assignment, registration, payment of taxes), deprivation by strategy and stealth, and filing within one year from the discovery of the occupation in October 2003. These allegations, respondent argued, were sufficient to vest the MeTC with jurisdiction over the forcible entry case irrespective of petitioner’s contrary claims.

• Lease Defense: Respondent countered that the alleged lease was unrecorded and unknown to it at the time of acquisition; as a purchaser in good faith, it could not be bound by an unregistered lease with a third party. Respondent further argued that the 1996 demand letter was immaterial, had no binding effect on it, and was improperly raised for the first time on appeal; such letter could not cure petitioner’s failure to prove his lessor’s title or respondent’s prior knowledge of the lease.

• Jurisdiction over Forcible Entry: Whether the MeTC validly acquired jurisdiction over the forcible entry complaint despite petitioner’s claim of physical occupancy since 1999, which allegedly negated prior physical possession and placed the case beyond the one-year prescriptive period, and despite the asserted question of ownership.

• Application of Article 1676: Whether petitioner could be ejected notwithstanding his claim of a subsisting unregistered lease contract with a third-party owner, invoking Article 1676 of the Civil Code on the ground that respondent or its predecessors knew of the lease.

• Jurisdiction over Forcible Entry: The MeTC properly acquired jurisdiction. The three requisites for forcible entry—allegation of prior physical possession, deprivation by force, intimidation, threat, strategy, or stealth, and filing within one year from discovery when entry is stealthy—were all satisfied by respondent’s amended complaint. Prior physical possession need not be actual material occupation of every square inch at all times; juridical acts such as acquisition by deed of assignment, registration of title, and payment of real property taxes constitute possession with the same force as physical occupancy. Respondent had thus acquired prior possession through juridical acts, and petitioner’s subsequent material occupation did not negate it. Because the entry was effected through stealth, the one-year prescriptive period was correctly reckoned from respondent’s discovery in October 2003, not from the date of entry in 1999. Petitioner’s belated attempt to rely on a 1996 demand letter failed because points of law, theories, and evidence not raised before the trial court cannot be considered for the first time on appeal. The survey plan submitted by respondent, which petitioner failed to rebut with his own evidence after the failed agreement to secure an impartial survey, sufficiently established that the encroached premises fell within respondent’s titled property. Finally, the mere assertion of ownership or a third party’s title by a defendant in an ejectment case does not divest the first-level court of its summary jurisdiction, which is limited to the issue of possession de facto.

• Application of Article 1676: Petitioner could not invoke Article 1676 to defeat ejectment. The alleged lease was not recorded in the Registry of Property, and petitioner offered no proof that respondent had knowledge of the lease at the time of acquisition. A purchaser of land under an unrecorded lease may terminate the lease unless there is a stipulation to the contrary in the contract of sale or the purchaser knew of the lease’s existence; here, neither condition was shown. Furthermore, petitioner’s insistence on the lease effectually conceded that the occupied premises were within respondent’s property. Because ejectment proceedings are summary and do not adjudicate title, the defense of a third party’s ownership or an unregistered lease could not oust the MeTC of jurisdiction.

• Requisites for Forcible Entry Jurisdiction — For a Metropolitan Trial Court to acquire jurisdiction over a forcible entry case, the complaint must allege: (a) the plaintiff’s prior physical possession of the property; (b) deprivation of possession by force, intimidation, threat, strategy, or stealth; and (c) the filing of the action within one year from the time the plaintiff learned of the deprivation when entry was effected through stealth. The complaint need not use the exact statutory language; a recital of facts stating that dispossession occurred under any of the enumerated modes suffices.

• Prior Physical Possession Through Juridical Acts — Possession may be acquired not only by material occupation but also by juridical acts to which the law attributes the force of acts of possession, such as donations, succession, execution and registration of public instruments, and inscription of possessory information titles. A registered owner who holds a deed of assignment and pays real property taxes is considered in possession even if the property has been left idle or is physically occupied by another. Actual physical occupation of every portion of the property at all times is not required.

• Stealth Entry and Prescriptive Period — When dispossession is carried out through stealth, the one-year prescriptive period for filing an action for forcible entry is counted from the time the plaintiff learns of the dispossession, not from the date of actual entry onto the land.

• Unrecorded Lease and Bona Fide Purchaser (Article 1676, Civil Code) — A purchaser of land subject to an unrecorded lease may terminate the lease unless the contract of sale contains a stipulation to the contrary or the purchaser had knowledge of the lease’s existence at the time of acquisition. An unregistered lease unknown to the purchaser cannot bind the latter, and the lessee cannot resist ejectment on that basis.

• Summary Jurisdiction Not Ousted by Claim of Ownership — In ejectment cases, which are summary actions designed to protect possession or the right to possession, the defendant’s mere assertion of ownership or of a third party’s title does not deprive the first-level court of jurisdiction. The proceedings do not involve an adjudication of title; they focus exclusively on the issue of physical possession.

• “Because possession can also be acquired by juridical acts to which the law gives the force of acts of possession, e.g., donations, succession, execution and registration of public instruments, inscription of possessory information titles and the like, it has been held that one need not have actual or physical occupation of every square inch of the property at all times to be considered in possession.” — This passage encapsulates the core doctrinal innovation of the decision: juridical possession suffices for prior physical possession in forcible entry.

• “When the entry is through stealth, the one-year period is counted from the time the plaintiff learned thereof.” — The Court reiterated the settled exception to the general rule on the reckoning of the forcible entry prescriptive period, which is pivotal in cases where the owner has been kept unaware of the encroachment.

• “Moreover, if a defendant’s mere assertion of ownership in an ejectment case will not oust the MeTC of its summary jurisdiction, we fail to see why it should be any different in this case where petitioner merely alleged his lessor’s supposed title over the subject parcel.” — This statement reinforces the principle that summary ejectment jurisdiction remains unaffected by a defendant’s claim of a third party’s title or subordinate interest.

• De La Cruz v. Court of Appeals, G.R. No. 139442, 6 December 2006 — Established the three requisites for the MeTC’s acquisition of jurisdiction in forcible entry cases (prior physical possession, deprivation by force/intimidation/threat/strategy/stealth, and filing within one year from discovery when entry is stealthy). The Court relied on this precedent to measure the sufficiency of the amended complaint.

• Ong v. Parel, 407 Phil. 1045 (2001) — Affirmed the rule that the one-year prescriptive period for stealth entry is counted from the time the plaintiff learned of the dispossession. The Court applied this doctrine to reject petitioner’s argument that the period should have commenced in 1999.

• Habagat Grill v. DMC-Urban Property Developer, Inc., 494 Phil. 603 (2005) — Declared that possession can be acquired through juridical acts and that actual physical occupation of every inch of the property is not necessary. The decision relied on this case to support the sufficiency of respondent’s juridical possession.

• Tecson v. Gutierrez, 493 Phil. 132 (2005) — Held that a defendant’s mere assertion of ownership in an ejectment case does not oust the MeTC of its summary jurisdiction. Cited to dismiss petitioner’s claim that the raised question of ownership divested the first-level court of authority.

• Section 33, Batas Pambansa Blg. 129 (The Judiciary Reorganization Act of 1980) — Grants original and exclusive jurisdiction to Metropolitan Trial Courts over ejectment cases. The Court anchored its discussion of the MeTC’s subject-matter jurisdiction on this provision.

• Section 1, Rule 70, 1997 Rules of Civil Procedure — Governs who may institute an ejectment proceeding and prescribes the one-year period. The Court interpreted the provision to mean that stealth entry extends the prescriptive period until the plaintiff discovers the dispossession.

• Article 1676, Civil Code of the Philippines — Provides that a purchaser of land under an unrecorded lease may terminate the lease unless the contract of sale provides otherwise or the purchaser knew of the lease’s existence. The Court ruled that the provision did not aid petitioner because the lease was unregistered and unknown to respondent at the time of acquisition.

Associate Justice Antonio T. Carpio (Chairperson), Associate Justice Arturo D. Brion, Associate Justice Mariano C. Del Castillo, and Associate Justice Jose Catral Mendoza (designated additional member per Special Order No. 832).