Pajuyo vs. Court of Appeals

The principle of pari delicto does not apply to ejectment cases between squatters; courts have jurisdiction to resolve issues of physical possession even if both parties lack legal title to the property, and the party with prior possession is entitled to remain on the property until lawfully ejected by one with a better right.

The case arose from a dispute over a 250-square meter lot in Barrio Payatas, Quezon City, which was part of public land set aside for socialized housing under Proclamation No. 137. Both parties were squatters occupying the land without legal title, with Pajuyo having acquired rights from another squatter in 1979 and subsequently allowing Guevarra to occupy the house through a written agreement (Kasunduan) in 1985.

• In June 1979, petitioner Colito T. Pajuyo paid P400.00 to Pedro Perez for rights over a 250-square meter lot in Barrio Payatas, Quezon City, and constructed a house made of light materials where he lived with his family from 1979 to 7 December 1985.
• On 8 December 1985, Pajuyo and private respondent Eddie Guevarra executed a Kasunduan (agreement) where Pajuyo, as owner of the house, allowed Guevarra to live in the house for free provided Guevarra maintained cleanliness and orderliness, and promised to vacate voluntarily upon Pajuyo's demand.
• In September 1994, Pajuyo informed Guevarra of his need for the house and demanded that Guevarra vacate, but Guevarra refused.
• The lot in question is within the 150 hectares set aside by Proclamation No. 137 for socialized housing, and neither party had valid title to the lot.
• Guevarra occupied the property from December 1985 to the time of the case, while Pajuyo did not show up or communicate with him from 1985 to 1994.
• The Metropolitan Trial Court and Regional Trial Court both ruled in favor of Pajuyo, finding that the Kasunduan created a landlord-tenant relationship and ordering Guevarra to vacate.
• The Court of Appeals reversed, finding both parties were squatters in pari delicto, ruling the Kasunduan was a commodatum rather than a lease, and holding that Guevarra had priority rights under Proclamation No. 137 as the actual occupant.

• The Court of Appeals erred in granting Guevarra's Motion for Extension of thirty days to file petition for review when there was no more period to extend as the RTC decision had already become final and executory.
• The Court of Appeals erred in giving due course to the petition for review even though the certification against forum-shopping was signed only by counsel instead of by Guevarra himself.
• The Court of Appeals erred in ruling that the Kasunduan was a commodatum instead of a contract of lease as found by the lower courts, and in holding that the ejectment case was without legal and factual basis.
• The Court of Appeals erred in reversing the RTC decision and holding that the parties are in pari delicto being both squatters, therefore illegal occupants.
• The Court of Appeals erred in deciding the unlawful detainer case based on the Code of Policies of the National Government Center Housing Project instead of deciding the same under the Kasunduan voluntarily executed by the parties.

• Guevarra claimed that Pajuyo had no valid title or right of possession over the lot because it is within the 150 hectares set aside by Proclamation No. 137 for socialized housing.
• Guevarra insisted that neither he nor Pajuyo has valid title to the lot, and that from December 1985 to September 1994, Pajuyo did not communicate with him.
• Guevarra contended that there is a pernicious evil sought to be avoided, which is allowing an absentee squatter to make a profit out of his illegal act, and that the actual occupant or caretaker should have priority as beneficiary under Proclamation No. 137.

• Procedural:
  • Whether the Court of Appeals gravely abused its discretion in granting Guevarra's motion for extension of time to file petition for review when the RTC decision had allegedly become final and executory.
  • Whether the Court of Appeals erred in giving due course to the petition for review despite the certification against forum-shopping having been signed by counsel only and not by Guevarra himself.
• Substantive Issues:
  • Whether the principle of pari delicto applies to ejectment cases between squatters.
  • Whether courts have jurisdiction to resolve ejectment cases where both parties are squatters occupying public land.
  • Whether the Kasunduan between Pajuyo and Guevarra constitutes a contract of commodatum or a lease contract (or relationship of tolerance akin to landlord-tenant).
  • Whether Guevarra has priority rights as beneficiary under Proclamation No. 137 over Pajuyo.

• Procedural:
  • The Court of Appeals did not commit grave abuse of discretion in granting the motion for extension. The motion was filed on 13 December 1996, one day before the expiry of the reglementary period on 14 December 1996, as evidenced by the stamp of the Supreme Court's Receiving Clerk.
  • The filing of the motion for extension with the Supreme Court (which has concurrent jurisdiction with the Court of Appeals over decisions of RTC in the exercise of appellate jurisdiction) tolled the running of the period to appeal.
  • The issue regarding the certification against forum-shopping being signed by counsel only was raised too late in the proceedings and was merely an afterthought, as Pajuyo did not raise this issue in his Comment but only in his motion for reconsideration after an adverse decision.
  • Moreover, the requirement on verification is a formal and not a jurisdictional requisite, and the certification of counsel renders the petition defective but not fatal if not raised at the earliest opportunity.
• Substantive:
  • The principle of pari delicto does not apply to ejectment cases between squatters. To apply pari delicto would violate well-established public policy against breach of peace and would invite mayhem and lawlessness, as squatters would be emboldened to oust each other by force knowing courts would leave them where they are.
  • Courts have jurisdiction to resolve ejectment cases even if both parties are squatters on public land. The absence of title over the contested lot is not a ground for courts to withhold relief. The only issue for resolution is physical or material possession (possession de facto), not ownership (possession de jure).
  • The party who can prove prior possession can recover such possession even against the owner himself. Prior physical possession enjoys legal protection against other private claimants.
  • The Kasunduan is not a commodatum but creates a relationship akin to landlord-tenant based on tolerance. Even if treated as commodatum, Guevarra as bailee had the duty to return the property to Pajuyo the bailor.
  • Guevarra failed to prove that the contested lot is within the coverage of Proclamation No. 137 or that he actually availed of its benefits. Even assuming coverage, courts should limit their jurisdiction to the issue of physical possession and not preempt the administrative agency mandated to determine beneficiary qualifications.
  • Pajuyo is entitled to physical possession based on prior possession and the Kasunduan which Guevarra violated by refusing to vacate upon demand.
  • The award of attorney's fees is deleted as there was no justification provided, but the P300 monthly rental is sustained from the date of last demand (16 February 1995).

• Pari Delicto — The principle that the law will not aid either party to an illegal agreement and leaves them where it finds them. The Court held that this principle is not absolute and has exceptions where application would violate public policy. In ejectment cases between squatters, pari delicto does not apply because it would encourage lawlessness and breach of peace.
• Prior Possession — The doctrine that prior physical possession entitles the possessor to remain on the property until lawfully ejected by one with a better right. A party who can prove prior possession can recover such possession even against the owner himself.
• Jurisdiction over Ejectment Cases Involving Public Land — Courts have jurisdiction to entertain ejectment suits even before resolution of applications for public land, limited to determining physical possession only. The adjudication on ownership is provisional and does not bar subsequent actions involving title.
• Unlawful Detainer vs. Forcible Entry — In unlawful detainer, prior physical possession is not required; the defendant unlawfully withholds possession after the expiration or termination of his right to possess under any contract, express or implied. In forcible entry, the plaintiff must allege and prove prior possession.
• Commodatum — A contract where one party delivers to another something not consumable so that the latter may use the same for a certain time and return it; essentially gratuitous. The Court held the Kasunduan was not a commodatum because it imposed an obligation to maintain the property, and even if it were, the bailor could demand return for urgent need.

• "Guevarra should know that there must be honor even between squatters." — Emphasizing that parties are bound by their agreements even if involving property they do not legally own.
• "To shut out relief to squatters on the ground of pari delicto would openly invite mayhem and lawlessness. A squatter would oust another squatter from possession of the lot that the latter had illegally occupied, emboldened by the knowledge that the courts would leave them where they are." — Explaining why pari delicto does not apply to ejectment cases.
• "The only question that the courts must resolve in ejectment proceedings is - who is entitled to the physical possession of the premises, that is, to the possession de facto and not to the possession de jure." — Defining the limited scope of ejectment cases.
• "Whatever may be the character of his possession, if he has in his favor 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." — On the protection accorded to prior possession.
• "Courts must not abdicate their jurisdiction to resolve the issue of physical possession because of the public need to preserve the basic policy behind the summary actions of forcible entry and unlawful detainer." — On the duty of courts to resolve possession disputes.

• Pitargue v. Sorilla, 92 Phil. 5 (1952) — Controlling precedent establishing that courts have jurisdiction over possessory actions involving public lands to determine physical possession only, and that priority of physical possession enjoys legal protection against other private claimants.
• Lacsamana v. Second Special Cases Division of the Intermediate Appellate Court, 227 Phil. 606 (1986) — Cited for the rule that the Court of Appeals could grant extension of time in appeals by petition for review.
• Liboro v. Court of Appeals, G.R. No. 101132, 218 SCRA 193 (1993) — Clarified that prohibition against granting extension of time applies only to ordinary appeals perfected by notice of appeal, not to petitions for review which require verification.
• Drilon v. Gaurana, G.R. No. L-35482, 149 SCRA 342 (1987) — Reiterated the basic policy behind summary actions of forcible entry and unlawful detainer regarding protection of peaceable possession.
• Dizon v. Court of Appeals, 332 Phil. 429 (1996) — Cited for the rule that defendant's claim of ownership will not divest inferior court of jurisdiction over ejectment case.
• Arcal v. Court of Appeals, 348 Phil. 813 (1998) — Cited for the principle that where plaintiff allows defendant to use property by tolerance without contract, defendant is bound by implied promise to vacate on demand.
• Commissioner of Internal Revenue v. Court of Appeals, G.R. No. 110003, 351 SCRA 436 (2001) — Held that extension of time for filing petitions for review should be limited to fifteen days save in exceptionally meritorious cases.

• Article 1411 and 1412 of the Civil Code — Provisions embodying the principle of pari delicto; cited to explain that the rule is not absolute and has exceptions where application would violate public policy.
• Article 1933 of the Civil Code — Definition of commodatum; cited to distinguish the Kasunduan from a commodatum contract.
• Article 1946 of the Civil Code — Rule that bailor cannot demand return of thing loaned until after expiration of period stipulated; cited to explain that even if Kasunduan were a commodatum, Pajuyo could demand return for urgent need.
• Article 1947 of the Civil Code — Definition of precarium as a kind of commodatum where use is merely tolerated; cited to characterize the relationship between the parties.
• Article 2208 of the Civil Code — Enumeration of instances when attorney's fees may be awarded; cited to justify deletion of attorney's fees award as the case did not fall under any of the enumerated instances.
• Section 2, Rule 41 of the 1997 Rules of Civil Procedure — Modes of appeal from RTC decisions; cited to explain that decisions involving questions of fact or mixed questions are appealable to CA, while pure questions of law are appealable to SC.
• Section 1, Rule 70 of the 1964 Rules of Court (now Section 1, Rule 70 of the 1997 Rules of Civil Procedure) — Definition of unlawful detainer; cited to establish that Guevarra's refusal to vacate after demand made his possession unlawful.
• Section 16, Rule 70 of the 1997 Rules of Civil Procedure — Provision that evidence of title is banned in ejectment cases except to prove nature of possession; cited to emphasize limited scope of ejectment proceedings.
• Proclamation No. 137 — Presidential proclamation setting aside land for socialized housing; cited regarding Guevarra's claim of priority rights as actual occupant.