Wee vs. De Castro

A barangay conciliation certification covering a rental-increase dispute is sufficient to satisfy the prior-conciliation precondition for filing an ejectment suit, because the conciliation proceedings on the amount of monthly rental logically and reasonably include the matter of possession of the property subject of the lease, the lease agreement, and the violation of its terms.

Respondents George de Castro, Annie de Castro, Felomina de Castro Uban, and Jesus de Castro (later substituted by his widow Martiniana de Castro) are the registered co-owners of a two-storey commercial building erected on a parcel of land covered by Transfer Certificate of Title No. 16193 in the Registry of Deeds of Pangasinan, located in Poblacion, Alaminos City. They leased the property to petitioner Leo Wee on a month-to-month basis at ₱9,000 per month. Both parties subsequently agreed to increase the rental to ₱15,000 per month effective October 1, 2001, but petitioner refused to pay the increase, precipitating a dispute that traversed the barangay conciliation system and three tiers of the judiciary.

Respondents George de Castro, Annie de Castro, Felomina de Castro Uban, and Jesus de Castro are the registered co-owners of a two-storey commercial building situated on a parcel of land in Poblacion, Alaminos City, Pangasinan, covered by Transfer Certificate of Title No. 16193 and assessed at ₱93,400.00 for taxation purposes. They leased the property to petitioner Leo Wee on a month-to-month basis at ₱9,000.00 per month. Both parties subsequently agreed to increase the monthly rental to ₱15,000.00 effective October 1, 2001. Petitioner, however, refused to pay the increase, continuing to tender only ₱9,000.00 per month for October 2001 through January 2002.

The rental dispute was brought before the Lupon Tagapagpamayapa of Poblacion, Alaminos, Pangasinan, for conciliation, but the parties failed to reach an agreement. The Barangay Lupon issued a Certification to File Action on January 18, 2002, stating that there was personal confrontation between the parties regarding "rental increase of a commercial building" but conciliation failed. On June 10, 2002, respondent George de Castro sent petitioner a letter terminating the lease agreement and demanding that he vacate and turn over the subject property. Petitioner ignored the demand.

On July 1, 2002, respondents filed a Complaint for ejectment (Civil Case No. 1990) with the MTC of Alaminos City. The Verification and Certificate of Non-Forum Shopping were signed by George de Castro alone. He later attached to his position paper Special Powers of Attorney executed by Annie de Castro on February 7, 2002, and by Felomina de Castro Uban on March 14, 2002, authorizing him to institute the ejectment case. During the proceedings, Jesus de Castro died and was substituted by his widow, Martiniana de Castro. At the pre-trial conference, the parties stipulated that petitioner had tendered ₱9,000.00 as rental for January 2002, had paid only ₱9,000.00 per month for October 2001 to January 2002, that respondents' counsel sent the termination letter on June 10, 2002 which petitioner ignored, and that the Barangay Lupon had issued the Certification to File Action.

The MTC dismissed the complaint on November 21, 2002, finding that respondents had failed to comply with the prior conciliation requirement, as the barangay certification covered only the rental increase and not ejectment. The RTC affirmed this dismissal on June 27, 2005, additionally ruling that the complaint failed to allege "unlawful withholding" and that a co-owner could not maintain an action without joining all other co-owners. The Court of Appeals reversed on September 19, 2006, ordering petitioner to vacate and pay back rentals, attorney's fees, and costs, and denied reconsideration on January 25, 2007.

• Conciliation Requirement: Petitioner argued that respondents failed to go through the conciliation process before the Barangay Lupon on the matter of ejectment, a jurisdictional defect barring the action. The Certification to File Action dated January 18, 2002 attested only to a confrontation on the matter of rental increase, not on unlawful detainer, and if respondents intended to eject petitioner from the start, they should have raised the alleged unlawful stay before the Barangay Lupon.
• Sufficiency of Allegations: Petitioner asserted that the MTC lacked jurisdiction over the ejectment suit because the complaint was devoid of any allegation that there was "unlawful withholding" of the subject property, which he characterized as a jurisdictional requisite for unlawful detainer.
• Co-ownership and Authority: Petitioner argued that respondent George de Castro could not maintain an action for ejectment without joining all his other co-owners as co-plaintiffs, and that George de Castro lacked authority to sign the Verification and Certificate of Non-Forum Shopping on behalf of the other respondents.
• IBP Dues Compliance: Petitioner contended that the Court of Appeals should have dismissed respondents' petition because their counsel failed to attach the Official Receipt evidencing payment of Integrated Bar of the Philippines dues, as required by Supreme Court Circular No. 10.

• Conciliation Compliance: Respondents argued that the RTC erred in ruling that their failure to comply with the conciliation process was fatal to their complaint, since only George de Castro resides in Alaminos City, while Annie de Castro resides in Pennsylvania, USA; Felomina de Castro Uban resides in California, USA; and Jesus de Castro resides in Manila.
• Sufficiency of Allegations: Respondents claimed that the MTC was not divested of jurisdiction because the absence of the exact term "unlawful withholding" was not fatal, as they had sufficiently alleged the same in their complaint, albeit worded differently.
• Authority to File: Respondents posited that the fact that only George de Castro signed the Verification and Certificate of Non-Forum Shopping was irrelevant, since the other respondents had already executed Special Powers of Attorney authorizing him to act as their attorney-in-fact in instituting the ejectment suit.

• Barangay Conciliation: Whether the Certification to File Action issued by the Barangay Lupon, which referred only to the rental increase and not to ejectment, is sufficient to comply with the prior conciliation requirement under the Katarungang Pambarangay Law to authorize the institution of an ejectment suit.
• Unlawful Detainer Allegation: Whether the complaint sufficiently alleges unlawful detainer despite the absence of the exact phrase "unlawful withholding."
• Co-ownership: Whether respondent George de Castro may maintain an action for ejectment without joining all other co-owners of the subject property.
• IBP Dues: Whether the failure of respondents' counsel to attach the Official Receipt of his IBP dues payment warrants dismissal of the petition.

• Barangay Conciliation: Yes. The conciliation proceedings on the rental increase logically and reasonably included the matter of possession of the property subject of the lease, the lease agreement, and the violation of its terms, thus satisfying the Katarungang Pambarangay Law precondition.
• Unlawful Detainer Allegation: Yes. The complaint sufficiently alleged unlawful withholding by petitioner, constitutive of unlawful detainer, even though the exact words "unlawful withholding" were not used; an allegation that the defendant is unlawfully withholding possession is deemed sufficient without necessarily employing the terminology of the law.
• Co-ownership: Yes. Under Article 487 of the Civil Code, any one of the co-owners may bring an action in ejectment without joining all other co-owners, the suit being deemed instituted for the benefit of all; the other co-owners are not even necessary parties.
• IBP Dues: Moot. The issue is moot and academic since respondents' counsel had already duly complied with the requirement; technicalities should be disregarded where their rigid application would result in a manifest failure or miscarriage of justice.

• Barangay Conciliation: The Katarungang Pambarangay Law, originally Presidential Decree No. 1508 and now incorporated in Republic Act No. 7160 (Local Government Code), requires parties to undergo conciliation before the Lupon Chairman or the Pangkat as a precondition to filing a complaint in court, subject to certain exceptions. Section 412(a) provides that no complaint involving any matter within the authority of the Lupon shall be filed directly in court unless there has been a confrontation before the Lupon and no settlement was reached as certified. It was undisputed that the parties appeared before the Barangay Lupon and that the only matter referred was the rental increase. However, given the particular circumstances, the conciliation proceedings for the amount of monthly rental should logically and reasonably include the matter of possession of the property subject of the rental, the lease agreement, and the violation of its terms. The certification, though referring only to rental increase, thus constituted sufficient compliance.

• Unlawful Detainer Allegation: What determines the nature of an action and which court has jurisdiction are the allegations in the complaint and the character of the relief sought. In unlawful detainer, the defendant's possession was originally lawful but ceased to be so upon the expiration of his right to possess; "unlawful withholding" implies possession that was legal in the beginning, having no other source than a contract, and which later expired as a right and is being withheld. In Barba vs. Court of Appeals, the Court held that although the phrase "unlawfully withholding" was not actually used, the allegations amounted to unlawful withholding because the defendants continuously refused to vacate even after notice and demand. Here, respondents alleged they are the registered owners, the property was occupied pursuant to a monthly lease, petitioner refused the demand for rental increase, respondents sent a letter terminating the lease and demanding vacation, and petitioner failed to surrender the property. These allegations sufficiently constitute unlawful detainer without the exact statutory phrase.

• Co-ownership: Article 487 of the Civil Code provides that any one of the co-owners may bring an action in ejectment, covering all kinds of action for recovery of possession. As explained by Professor Tolentino, a co-owner may bring such an action without joining all other co-owners as co-plaintiffs because the suit is deemed instituted for the benefit of all, unless the action is for the benefit of the plaintiff alone. In Carandang vs. Heirs of De Guzman, the Court declared that a co-owner is not even a necessary party to an ejectment action, for complete relief can be afforded even in his absence, the suit being presumed filed for the benefit of all co-owners. Moreover, Annie de Castro and Felomina de Castro Uban each executed Special Powers of Attorney authorizing George de Castro to initiate the case, and these were executed before the filing of the complaint. The SPAs were viewed as mere surplusage, their absence not affecting the validity of the action. George de Castro's signing of the Verification and Certificate of Non-Forum Shopping was likewise upheld, as the attorney-in-fact who has authority to file and actually filed the complaint is a party to the suit under Section 1, Rule 70 of the Rules of Court. Jesus de Castro's failure to sign was excused since he executed an affidavit attesting to his personal knowledge of the filing, and in Torres vs. Specialized Packaging Development Corporation, the Court ruled that personal signing of the verification was deemed substantially complied with when some of the real parties-in-interest with sufficient knowledge signed it.

• IBP Dues: The issue is moot and academic because respondents' counsel had already duly complied with the requirement. The Court stressed that judicial cases should not be resolved by the mere mandate of technicalities, and where rigid application of the rules would result in a manifest failure or miscarriage of justice, technicalities should be disregarded to resolve the case.

• Katarungang Pambarangay Law — Conciliation as Precondition — Under Section 412(a) of the Local Government Code (Republic Act No. 7160), no complaint involving any matter within the authority of the Lupon shall be filed directly in court unless there has been a confrontation before the Lupon Chairman or the Pangkat and no settlement was reached as certified. This requirement is compulsory in nature. The Court applied it by holding that a conciliation certification covering a rental-increase dispute logically and reasonably includes the matter of possession and ejectment, because the rental dispute is inseparable from the lease agreement and its violation.

• Article 1687 — Lease Without Fixed Period — If the period for the lease has not been fixed, it is understood to be from month to month if the rent is monthly. The Court applied this to hold that the lease, being monthly, was deemed terminated at the end of each month, giving respondents the right to demand ejectment upon the contract's expiration by operation of law.

• Article 487 — Co-owner's Right to Bring Ejectment — Any one of the co-owners may bring an action in ejectment, covering forcible entry, unlawful detainer, accion publiciana, and accion de reivindicacion. The suit is deemed instituted for the benefit of all co-owners. The other co-owners are not indispensable parties and are not even necessary parties, since complete relief can be afforded without their participation. The Court applied this to uphold George de Castro's standing to file the ejectment suit alone.

• Unlawful Detainer — Substance Over Form in Pleading — In an action for unlawful detainer, an allegation that the defendant is unlawfully withholding possession is deemed sufficient without necessarily employing the exact terminology of the law. What determines the nature of the action and the court's jurisdiction are the allegations in the complaint and the character of the relief sought, not the use of specific statutory phrases.

• Right to Rescind Lease for Non-Payment — Under Article 1191 (general rescission of reciprocal obligations) and Article 1659 (independent remedy for breach of lessor or lessee's statutory obligations) of the Civil Code, the aggrieved party may ask for rescission of the contract, rescission with indemnification, or indemnification alone. Non-payment of the demanded increased rental gives the lessor the right to rescind the lease.

• "Given the particular circumstances of the case at bar, the conciliation proceedings for the amount of monthly rental should logically and reasonably include also the matter of the possession of the property subject of the rental, the lease agreement, and the violation of the terms thereof." — This passage articulates the ratio decidendi on the barangay conciliation issue, establishing that a conciliation certification on rental increase suffices for an ejectment suit because the rental dispute is inseparable from the possessory issue.

• "In an action for unlawful detainer, an allegation that the defendant is unlawfully withholding possession from the plaintiff is deemed sufficient, without necessarily employing the terminology of the law." — This defines the controlling doctrine on the sufficiency of allegations in unlawful detainer complaints, holding that substance prevails over the use of exact statutory language.

• "A co-owner may bring such an action, without the necessity of joining all the other co-owners as co-plaintiffs, because the suit is deemed to be instituted for the benefit of all." — This is the canonical formulation of the Article 487 doctrine as explained by Professor Tolentino, relied upon to uphold a single co-owner's standing in ejectment.

• "Where a rigid application of the rules will result in a manifest failure or miscarriage of justice, technicalities should be disregarded in order to resolve the case." — This states the Court's rationale for disregarding the IBP dues procedural defect, reflecting the broader principle that technicalities must yield to substantial justice.

• Chua vs. Victorio, G.R. No. 157568, 18 May 2004, 428 SCRA 447 — Followed. The Court relied on this case to recognize the lessor's right to rescind the contract of lease for non-payment of the demanded increased rental, under Articles 1191 and 1659 of the Civil Code.
• Carandang vs. Heirs of De Guzman, G.R. No. 160347, 29 November 2006, 508 SCRA 469 — Followed. The Court cited this case for the proposition that a co-owner is not even a necessary party to an ejectment action, since complete relief can be afforded without the other co-owners' participation, the suit being presumed filed for the benefit of all.
• Mendoza vs. Coronel, G.R. No. 156402, 13 February 2006, 482 SCRA 353 — Followed. The Court relied on this case to uphold the attorney-in-fact's signing of the Certification against Forum Shopping, holding that such execution is not a violation of the requirement that parties personally sign, and that the attorney-in-fact is a party to the ejectment suit under Section 1, Rule 70 of the Rules of Court.
• Torres vs. Specialized Packaging Development Corporation, G.R. No. 149634, 6 July 2004, 433 SCRA 455 — Followed. The Court cited this case to excuse Jesus de Castro's failure to sign the Verification, holding that personal signing was deemed substantially complied with when some real parties-in-interest with sufficient knowledge signed it.
• Barba vs. Court of Appeals, 426 Phil. 598 (2002) — Followed. The Court relied on this case to hold that although the phrase "unlawfully withholding" was not used, the allegations in the complaint amounted to unlawful withholding because petitioner continuously refused to vacate even after notice and demand.
• Javelosa vs. Court of Appeals, 333 Phil. 331 (1996) — Followed. The Court cited this case for the rule that in unlawful detainer, an allegation that the defendant is unlawfully withholding possession is sufficient without necessarily employing the terminology of the law.
• Umpoc vs. Mercado, G.R. No. 158166, 21 January 2005, 449 SCRA 220 — Followed. The Court cited this case for the definition of "unlawful withholding" as possession that was legal in the beginning, having no other source than a contract, and which later expired as a right and is being withheld by the defendant.

• Article 1687, Civil Code of the Philippines — Provides that if the period for the lease has not been fixed, it is understood to be from month to month if the rent is monthly. Applied to hold that the monthly lease was deemed terminated at the end of each month, giving respondents the right to demand ejectment upon expiration by operation of law.
• Article 487, Civil Code of the Philippines — Provides that any one of the co-owners may bring an action in ejectment. Applied to uphold George de Castro's standing to file the ejectment suit without joining all other co-owners, the suit being deemed instituted for the benefit of all.
• Article 1191, Civil Code of the Philippines — Recognizes the right of rescission in reciprocal obligations. Applied in conjunction with Article 1659 to recognize the lessor's right to rescind the lease for the lessee's non-payment of the agreed rental increase.
• Article 1659, Civil Code of the Philippines — Grants the aggrieved party in a lease the option to ask for rescission of the contract, rescission with indemnification, or indemnification alone. Applied to support respondents' right to terminate the lease and seek ejectment upon petitioner's refusal to pay the increased rental.
• Section 412(a), Republic Act No. 7160 (Local Government Code) — Provides that no complaint involving any matter within the authority of the Lupon shall be filed directly in court unless there has been a confrontation before the Lupon and no settlement was reached as certified. Applied to evaluate the sufficiency of the barangay conciliation certification, which the Court held was satisfied by the proceedings on the rental increase.
• Section 408, Republic Act No. 7160 (Local Government Code) — Enumerates the subject matters for amicable settlement before the Lupon and exceptions thereto. Cited as part of the Katarungang Pambarangay framework governing the conciliation requirement.
• Section 1, Rule 70, Rules of Court — Includes the representative of the owner as one of the parties authorized to institute ejectment proceedings. Applied to uphold George de Castro's capacity to file the suit as attorney-in-fact of his co-owner siblings.
• Presidential Decree No. 1508 (Katarungang Pambarangay Law) — The original statute establishing the barangay justice system, now incorporated in Republic Act No. 7160. Cited as the legal foundation for the compulsory conciliation requirement.

Ynares-Santiago (Chairperson), Austria-Martinez, Nachura, and Reyes, JJ., concurred.