---

Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 175687               November 28, 2007

MATERRCO, INC., Petitioner,
vs.
FIRST LANDLINK ASIA DEVELOPMENT CORPORATION, Respondent.

D E C I S I O N

CARPIO MORALES, J.:

On appeal by certiorari is the September 15, 2006 Decision of the Court of Appeals in CA-G.R. SP No. 94751 dismissing the appeal filed by petitioner Materrco, Inc. (MATERRCO) from the judgment of the Regional Trial Court (RTC) of Pasay City, which affirmed in toto the Decision of the Metropolitan Trial Court (MeTC) in the ejectment case filed against it by respondent First Landlink Asia Development Corporation (FLADC).

Respondent FLADC is the owner and operator of "Masagana Citimall" located at Taft Avenue, Pasay City. Petitioner MATERRCO was the owner and operator of "Masagana Department Store and Supermarket" which occupied around half of the Masagana Citimall’s floor space that was available for lease.

FLADC and MATERRCO used to be wholly owned and controlled by David S. Tiu and Cely Y. Tiu (Tius). When FLADC, however, ran into financial difficulties, the Tius invited the group of Ong Yong, Juanita Tan Ong, Wilson T. Ong, Anna L. Ong, William T. Ong and Julia Ong Alonzo (the Ongs) to invest therein in exchange for one-half (½) of the outstanding capital stock of FLADC and 6 of the 11 seats in its Board of Directors.

The details of the Pre-Subscription Agreement entered into by the Ongs and Tius on August 15, 1994, and the break down of their erstwhile harmonious business relations not long after its execution, became the subject of another case earlier decided by this Court – Ong Yong v. Tiu¹ – the factual antecedents of which are partly reproduced hereunder as a necessary backdrop to the present case, viz:

x x x Under the Pre-Subscription Agreement they entered into, the Ongs and the Tius agreed to maintain equal shareholdings in FLADC: the Ongs were to subscribe to 1,000,000 shares at a par value of ₱100.00 each while the Tius were to subscribe to an additional 549,800 shares at ₱100.00 each in addition to their already existing subscription of 450,200 shares. Furthermore, they agreed that the Tius were entitled to nominate the Vice-President and the Treasurer plus five directors while the Ongs were entitled to nominate the President, the Secretary and six directors (including the chairman) to the board of directors of FLADC. Moreover, the Ongs were given the right to manage and operate the mall.

Accordingly, the Ongs paid ₱100 million in cash for their subscription to 1,000,000 shares of stock while the Tius committed to contribute to FLADC a four-storey building and two parcels of land respectively valued at ₱20 million (for 200,000 shares), ₱30 million (for 300,000 shares) and ₱49.8 million (for 49,800 shares) to cover their additional 549,800 stock subscription therein. The Ongs paid in another ₱70 million to FLADC and ₱20 million to the Tius over and above their ₱100 million investment, the total sum of which (₱190 million) was used to settle the ₱190 million mortgage indebtedness of FLADC to PNB.

The business harmony between the Ongs and the Tius in FLADC, however, was shortlived because the Tius, on February 23, 1996, rescinded the Pre-Subscription Agreement. The Tius accused the Ongs of (1) refusing to credit to them the FLADC shares covering their real property contributions; (2) preventing David S. Tiu and Cely Y. Tiu from assuming the positions of and performing their duties as Vice-President and Treasurer, respectively, and (3) refusing to give them the office spaces agreed upon.

x x x x

The controversy finally came to a head when [SEC Case No. 02-96-5269] was commenced by the Tius on February 27, 1996 at the Securities and Exchange Commission (SEC), seeking confirmation of their rescission of the Pre-Subscription Agreement. x x x²

It was in light of the foregoing that FLADC, now under the control of the Ongs, filed with the MeTC of Pasay City a complaint for ejectment against MATERRCO on November 29, 1996, docketed as Civil Case No. 987-96, from which the present petition originated. The complaint sought to eject MATERRCO’s "Masagana Department Store and Supermarket" from the premises of Masagana Citimall and also from the 150 square meter (sq. m.) lot covered by TCT No. 135325 in the name of FLADC which was leased to MATERRCO.

The complaint for ejectment filed by FLADC alleged that in September 1994, FLADC as lessor and MATERRCO as lessee entered into a verbal contract of lease over several commercial spaces in Masagana Citimall; that a written contract of lease was forwarded by FLADC to MATERRCO but the same was never returned; that the parties agreed, inter alia, on rental rates,³ leased areas, "aircon" and Common Usage Area (CUSA) charges; that MATERRCO also leased the 150-sq. m. parcel of land owned by FLADC beginning March 1995, at the rate of ₱10,000.00 a month; that FLADC had made several demands for MATERRCO to pay its back rentals, electricity, water and "aircon" bills and CUSA charges but the same were repeatedly ignored; and that FLADC through counsel, by letter dated September 9, 1996, demanded that MATERRCO vacate the leased premises and pay its back rentals and bills.

The complaint prayed that judgment be rendered as follows:

1. Ordering the defendant, or any person claiming right under it, to immediately vacate the leased premises;

2. Ordering the defendant to pay the plaintiff the following amounts:

a. ₱18,591,330.42 representing back rentals, electricity, water and aircon bills and CUSA charges as of November 1996.

b. starting December 1996 until the leased premises is fully vacated, the following amounts:

i) ₱200.00 per sq.m. of the 8,617.40 sq.m. space leased by defendant, or a total of ₱1,895,828.00 as monthly rental or reasonable compensation for the use of the leased premises, plus ten percent (10%) value-added tax;

ii) ₱10,000.00 a month for the 150 sq. m. land leased by defendant as monthly rental or reasonable compensation for the use of the leased premises, plus ten percent (10%) value-added tax;

iii) ₱60.00 per sq.m. of the 8,617.40 sq. m. space leased by defendant, or a total of ₱517,044.00 as CUSA charges;

iv) ₱60.00 per sq.m. of the 8,617.40 sq. m. space leased by defendant, or a total of ₱517,044.00 as aircon charges;

v) An amount depending on the proportionate share in the consumption of electricity and water by defendant starting November 1996 until the leased premises is fully vacated.

c. ₱800,000.00 as and for attorney’s fees.

d. Costs of the suit.⁴

Other reliefs just and equitable under the premises were also prayed for.

In its Answer, MATERRCO alleged that the verbal lease agreement between it and FLADC was reduced to writing through the Contract of Lease dated December 16, 1993; that the rentals and additional charges alleged by FLADC did not correspond to those agreed upon in the written contract;⁵ that MATERRCO had no unpaid accounts since all of its payments were in accord with the written contract; that the 150 sq. m. lot still belonged to the Tius, for it was supposed to be a property contribution of the Tius to FLADC in return for shares of stock, which FLADC had yet to issue; and that FLADC had no right to eject MATERRCO from either the mall or the lot.

In the meantime, SEC Case No. 02-96-5269, mentioned in the above-quoted factual backdrop to the present case wherein the validity of the Tius’ rescission of the Pre-Subscription Agreement was at issue, had been elevated to this Court by way of petition for review in the priorly mentioned case of Ong Yong v. Tiu.⁶ Pending the resolution of the said petition by this Court, the MeTC suspended the ejectment proceedings.

By Resolution of April 20, 2003 in the Ong Yong case, this Court ruled against the Tius, finding their rescission of the Pre-Subscription Agreement invalid. The MeTC thereafter proceeded with the ejectment case.

Finding that there were "serious doubts on the authenticity of the contract of lease" presented by MATERRCO, the MeTC, by Decision dated October 19, 2005, held that there was no written contract of lease between the parties and that the subject lease was on a verbal month-to-month basis pursuant to Article 1687 of the Civil Code.⁷ The MeTC, moreover, took note of the September 9, 1996 letter of FLADC terminating the lease and demanding payment of MATERRCO’s unpaid account. And it held that it may intervene in fixing the rent "as a matter of fairness and equity."⁸

The MeTC thus ruled against MATERRCO, disposing as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff [FLADC] and against the defendant [MATERRCO] as follows:

1. Ordering the defendant and all persons claiming authority under it to peaceably vacate the leased premises subject of this action;

2. Ordering the defendant to pay plaintiff the amount of Php778,036.98 representing the rental arrearages for the period starting from the filing of the complaint on November 1996 to December 1996 plus legal interest;

3. Ordering the defendant to pay plaintiff the amount of Php13,005,665.88 representing the rental arrearages for the period January 1997 to December 1997 plus legal interest;

4. Ordering the defendant to pay plaintiff the amount of Php15,789,905.64 representing the rental arrearages for the period January 1998 to December 1998 plus legal interest;

5. Ordering the defendant to pay plaintiff the amount of Php17,274,109.16 representing the rental arrearages for the period January 1999 to December 1999 plus legal interest;

6. Ordering the defendant to pay plaintiff the amount of Php20,307,293.16 representing the rental arrearages for the period January 2000 to December 2000 plus legal interest;

7. Ordering the defendant to pay plaintiff the amount of Php22,582,181.16 representing the rental arrearages for the period January 2001 to December 2001 plus legal interest;

8. Ordering the defendant to pay plaintiff the amount of Php20,025.739.80 representing the rental arrearages for the period January 2002 to December 2002 plus legal interest;

9. Ordering the defendant to pay plaintiff the amount of Php19,442,076.08 representing the rental arrearages for the period January 2003 to December 2003 plus legal interest;

10. Ordering the defendant to pay plaintiff the amount of Php18,274,748.64 representing the rental arrearages for the period January 2004 to December 2004 plus legal interest;

11. Ordering the defendant to pay plaintiff the amount of Php23,254,33.60 representing the rental arrearages for the period January 2005 to December 2005 plus legal interest;

12. Ordering the defendant to pay plaintiff the amount of Php2,843,610.00 plus 10% VAT and legal interest from November 2005 and until the defendant shall have vacated the leased premises;

13. Ordering the defendant to pay plaintiff the amount of Php10,000.00 plus 10% VAT and legal interest to be reckoned from March 1995 until the defendant shall have vacated the 150 sq. m. lot likewise subject of the instant case.

14. Ordering defendant to pay plaintiff the amount of Php20,000.00 as and by way of attorney’s fees; and

15. Ordering him to pay the cost of suit.

Defendant’s counterclaim is dismissed for lack of merit.⁹

MATERRCO appealed the MeTC Decision to the RTC, which appeal was docketed as Civil Case No. 05-1421.

In the interim, the MeTC issued a Writ of Execution in favor of FLADC. To enjoin the execution proceedings, MATERRCO filed a Petition for Certiorari, Prohibition, Injunction with Preliminary Injunction and Temporary Restraining Order with the RTC of Pasay City. The petition was denied by the RTC, prompting MATERRCO to elevate the case to the Court of Appeals via petition for certiorari.¹⁰ The Court of Appeals dismissed the petition by Decision dated April 20, 2006. MATERRCO filed a motion for reconsideration during the pendency of which it alleged that its fixtures were dismantled and its properties taken out of the subject premises by FLADC.

On March 6, 2006, the RTC promulgated its decision in Civil Case No. 05-1421 dismissing MATERRCO’s appeal from the trial court’s decision in the ejectment case. MATERRCO assailed the RTC decision via petition for review with the Court of Appeals, docketed as C.A. - G.R. SP No. 94751. The appellate court dismissed the petition, however, for lack of merit by Decision dated September 15, 2006, now the subject of the present petition. MATERRCO’s Motion for Reconsideration was denied by the Court of Appeals by the also challenged Resolution dated December 2, 2006.

Hence, the present petition for review, faulting the Court of Appeals¹¹ to have

I. . . . ERRED IN DISMISSING THE PETITION AND IN MISAPPLYING PRINCIPLES OF LAW NOT APPLICABLE TO IT; AND

II. . . . ERRED IN FINDING THAT PETITIONER HAS UNPAID RENTS AND CONSEQUENTLY ORDERING THE LATTER’S EJECTMENT.

MATTERCO adds that

III. THE ERROR OF THE COURT OF APPEALS IN FINDING THAT [IT] HAS UNPAID RENTS IS AGGRAVATED BY AWARDING RENTS EXCEEDING THE AMOUNT PRAYED FOR IN THE COMPLAINT.¹²

With respect to the first assignment of error, the "principle of law" which the appellate court allegedly misapplied refers to the doctrine that a trial court cannot be deprived of jurisdiction over an ejectment complaint merely because the defendant avers ownership of the premises subject thereof. The Court of Appeals cited this doctrine in support of its finding that the MeTC properly exercised jurisdiction over FLADC’s ejectment complaint.

MATERRCO claims that this doctrine has no application to the instant case since it never disputed FLADC’s ownership of the subject premises. The claim, however, is patently false insofar as the 150 sq.m. lot is concerned, for MATERRCO clearly disputed the ownership of FLADC thereover, claiming that it was still the property of the Tius.¹³

With regard to the Masagana Citimall premises, it is clear from the challenged Decision that the appellate court did not mistakenly believe that MATERRCO was claiming ownership over it. In fact, it explicitly stated that "MATERRCO raised in its [A]nswer the ancillary issue of its wanting to enforce a lease contract." Nonetheless, it cited the aforementioned doctrine because the principle that trial courts cannot be divested of jurisdiction over ejectment cases when the defendant claims ownership applies also to those cases where the defendant merely claims legitimate possession based on a lease contract, as in this instance.¹⁴ In both cases, the MeTC may provisionally rule on the defendant’s claim of ownership or lease of the property.

Indeed, in ejectment proceedings, trial courts may decide as an incident of the main issue of possession de facto the question of whether there is a lease contract between the parties, the period of such lease contract, and whether the lease contract has already expired.¹⁵

Consing v. Jamandre¹⁶ instructs:

x x x While it is true that the only issue in forcible entry or unlawful detainer action is the physical possession of the leased property, that is possession de facto — not possession de jure, yet the court may go beyond that if only to prove the nature of the possession. The court may receive evidence upon the question of title, or for that matter possession de jure, solely for the purpose of determining the character and extent of possession and damages for the detention. (Emphasis and underscoring supplied)

Under the same assignment of error, MATERRCO argues that the Court of Appeals Decision is incomplete and did not resolve the case in its entirety, since it failed to touch on the main ground of FLADC’s ejectment complaint for alleged non-payment of correct rentals. And in reply to FLADC’s citation of Insular Bank of Asia v. Intermediate Appellate Court¹⁷ which states that "[i]t is accepted judicial practice that Courts are not required to resolve all issues raised in the pleading unless necessary for the resolution of the case," MATERRCO counters that its alleged non-payment of correct rentals is the core issue which is the very foundation of the ejectment complaint against it. It thus asserts that the appellate court was remiss in its duty to resolve the same.

MATERRCO is evidently referring only to that aspect of the challenged decision dealing with the Masagana Citimall premises, for as to the 150 sq. m. lot also subject of the case, non-payment of rentals is not an issue, since even MATERRCO admits that it did not pay rentals therefor.

While the Court of Appeals did not discuss the specific issue of whether MATERRCO paid proper rentals on the Masagana Citimall premises, it could not be said to have been remiss in its duty as it was not necessary to discuss the same for the resolution of the case in light of the MeTC and RTC decisions.

As mentioned, the MeTC found the contract proffered by MATERRCO to be spurious and accordingly held that the subject lease was on a verbal month-to-month basis pursuant to Article 1687 of the Civil Code. Moreover, both the MeTC and RTC found that, when no agreement was reached by the parties as to the amount of rentals, CUSA, and other charges, FLADC terminated the month-to-month lease by its demand letter dated September 9, 1996. Given these premises, it follows that the validity of MATERRCO’s ejectment does not ultimately rest on its failure to pay proper rentals, but on the finding that the lease was only on a month-to-month basis and that the same had already been terminated.¹⁸

On the second assignment of error, MATERRCO claims that the Court of Appeals simply ignored and did not take into consideration the "mountain of evidence" adduced by it before the trial court that it had no back rentals.

The phrasing of its argument again reflects MATERRCO’s flawed assumption that its ejectment is being ordered primarily on the basis of its failure to pay the proper rentals, which misunderstanding has already been addressed in the preceding discussion. However, to establish its allegation that it had paid the proper rentals, MATERRCO claims that the written lease contract proffered by it was not spurious, contrary to the factual findings of the trial courts.

While acknowledging that the Supreme Court generally may not review the factual findings of the Court of Appeals, MATERRCO relies on two exceptions, namely: (1) when the findings of fact are conclusions without citation in specific evidence on which they are based, and (2) when the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted by the evidence on record.¹⁹

Neither exception applies.

While the Court of Appeals omitted discussing the specific evidence that established the spuriousness of the lease contract proffered by MATERRCO, it clearly upheld the jurisdiction of the MeTC to rule on that issue and implicitly adopted its factual findings thereon, albeit clarifying that these findings were only provisional.²⁰

Since the findings of fact of both trial courts are plainly based on substantial evidence, this Court sees no need to pass on the relative merits of the evidence adduced by the parties. As may be gleaned from their respective decisions, neither the MeTC nor the RTC disregarded the evidence proffered by MATERRCO. They simply found the preponderance of evidence to weigh in FLADC’s favor. As these factual findings have not been contradicted by the appellate court – indeed, the same were adopted, albeit implicitly – they are conclusive and should be given great weight.²¹

With respect to the third assignment of error, MATERRCO substantially asserts that the only thing that gave rise to its supposed rentals in arrears is the fact that it had been paying rentals pursuant to the written contract which provides for a 10% increase every two years, while FLADC had been claiming rentals pursuant to the alleged verbal contract which provides for 10% yearly increase. Thus, by the claim of MATERRCO, the only issue is which of the two alleged contracts reflects the real agreement between it and FLADC. Accordingly, when the lower courts determined the reasonable rentals "as a matter of fairness and equity," it decided a question which went beyond the pleadings submitted by the parties.

When, however, the lower courts ruled that the lease agreement between the parties was on a verbal month-to-month basis, it necessarily followed that neither rate of increase alleged by FLADC and MATERRCO had been firmly agreed upon by them based on the evidence, and that their only agreement was on the rental for the months preceding the termination of the lease in September 1996.

There being no agreement on the reasonable compensation that MATERRCO must pay for its continuing use and occupation of the premises after the termination of the lease, it was proper for the lower courts to determine the same.²²

That the reasonable compensation fixed by them exceeded that prayed for in the complaint is warranted under Rule 10, Section 5 of the Rules of Court which states:

SECTION 5. Amendment to conform to or authorize presentation of evidence. — When issues not raised by the pleadings are tried with the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure to amend does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so with liberality if the presentation of the merits of the action and the ends of substantial justice will be subserved thereby. The court may grant a continuance to enable the amendment to be made. (Emphasis supplied)

Clearly, FLADC was able to present during the trial documentary evidence tending to prove the reasonableness of a 10% yearly increase in rental. This is reflected in the MeTC Decision, viz:

x x x Since the existence and validity of the said contract of lease (Exhibit "1") was not proven, hence, the supposed terms and agreement embodied therein does not bind the plaintiff. Moreover, the court may intervene in fixing the rent as a matter of fairness and equity (Nieves vs. Court of Appeals, 198 SCRA 63, 71). This Court is mindful that reasonable amount of rent could not be determined by mere judicial notice but by supporting evidence (Badillo vs. Tayag, 400 SCRA 494). Thus, as sufficiently shown by plaintiff [FLADC] the rent it is imposing is reasonable and much lower as compared to its other lessees (Exhibits "X", "U", "V", "W"). Moreover, a cursory reading of the contract of lease (Exhibit "A") and the other contracts of lease executed by FLADC by David Tiu (Exhibits "X", "U", "V", "W") shows a similarity in language, structure and form. If indeed, the contract of lease purportedly relied upon by the defendant really embodied the terms and conditions of the lease, why then was it not submitted or furnished the plaintiff when the latter was asking for it?

x x x The yearly 10% escalation of the rent per area occupied is reasonable considering that the increased rates are still very much lower compared to that being charged to the other tenants of FLADC."²³ (Emphasis and underscoring supplied)

Against FLADC’s documentary evidence, MATERRCO merely argued in its petition that these cannot be considered preponderant, viz:

"The evidence presented by FLADC in justifying rental claims are:

a. Undated Contract of Lease between FLADC and Jollibee Foods Corporation for the leasing of a space with a small area of 566.70 sq. meters for a short term of 12 years (Exh. "X")

b. Contract of Lease dated November 21, 1994 between FLADC and Mr. Henry M. Lee for the leasing of a space with a small area of 20.12 sq. meters for a short term of 10 years (Exh. "U")

c. Contract of Lease dated November 21, 1994 between FLADC and Anita T. Coo for the leasing of a space with a small area of 21.48 sq. meters for a short term of 10 eyras (Exh. "V")

d. Contract of Lease dated February 15, 1995 between FLADC and Mr. Jerry Chua for the leasing of a space with a small area of 17.00 sq. meters for a short term of 10 years (Exh. "W")

"The above contracts cannot be considered preponderant because they are not comparable with the lease contract of petitioner in the following respects:

a) The area subject of petitioner’s lease includes open spaces, aisles and walkways where no merchandise are on display and are merely sued as common area for the customers; The small areas subject of Exhs. "X", "U", "V" and "W" do not include walkways and are fully occupied for commerce.

b) The subject leased premises is used as anchor store or main attraction in the area, without which, the small businesses on the mall will not survive; and

c) The rents for the subject premises already fixed by the parties, being paid by Materrco and being accepted by FLADC, cannot be effected nor altered by the subsequent leases on small spaces." ²⁴ (Emphasis supplied)

Essentially, MATERRCO is seeking a review of the lower and appellate courts’ appreciation of the evidence, which is beyond the pale of an appeal under Rule 45 of the Rules of Court. This Court sees no reason to depart from the rule enunciated in FGU Insurance Corporation v. CA,²⁵ which states:

Anent ANCO's first assignment of error, i.e., the appellate court committed error in concluding that the negligence of ANCO's representatives was the proximate cause of the loss, said issue is a question of fact assailing the lower court's appreciation of evidence on the negligence or lack thereof of the crewmembers of the D/B Lucio. As a rule, findings of fact of lower courts, particularly when affirmed by the appellate court, are deemed final and conclusive. The Supreme Court cannot review such findings on appeal, especially when they are borne out by the records or are based on substantial evidence. As held in the case of Donato v. Court of Appeals, in this jurisdiction, it is a fundamental and settled rule that findings of fact by the trial court are entitled to great weight on appeal and should not be disturbed unless for strong and cogent reasons because the trial court is in a better position to examine real evidence, as well as to observe the demeanor of the witnesses while testifying in the case.

It is not the function of this Court to analyze or weigh evidence all over again, unless there is a showing that the findings of the lower court are totally devoid of support or are glaringly erroneous as to constitute palpable error or grave abuse of discretion. (Emphasis and underscoring supplied)

As to the award of legal interest to FLADC despite the fact that the same is not prayed for in its Complaint, the MeTC is vested with discretion to award the same. Respecting awards of interest in the concept of actual or compensatory damages, Eastern Shipping Lines v. Court of Appeals²⁶ teaches, viz:

"When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date of the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount of finally adjudged." (Emphasis supplied)

Finally, as an additional ground in support of its petition, MATERRCO claims in its Supplemental Petition for Review on Certiorari dated February 5, 2007 that the MeTC did not acquire jurisdiction over the ejectment complaint on account of insufficient payment of filing fees.

That FLADC, however, paid ₱160.00 as filing fee for its ejectment complaint is alleged by MATERRCO itself. Such payment complied, even slightly exceeded, the applicable fee at the time of the filing of the Complaint in November 1996.

The filing fee then prevailing for ejectement complaints was fixed by this Court’s Administrative Circular No. 11-94,²⁷ which amended Rule 141 Section 8 to read:

"Sec. 8. CLERKS of Metropolitan and Municipal Trial Courts

(a) For each civil action or proceeding, where the value of the subject matter involved, or the amount of the demand, inclusive of interest, damages of whatever kind, attorney’s fees, litigation expenses, and costs is:

1.	Not more than ₱20,000.00 ………………………………… …………………………………………………………………	₱ 120.00
2.	More than ₱20,000.00 but not more than ₱100,000.00 ..... …………………………………………………………………	400.00
3.	More than ₱100,000.00 but not more than ₱200,000.00 ... …………………………………………………………………	850.00

In a real action, the assessed value of the property or if not declared for taxation purposes, the assessed value of the adjacent lots, or if there is none, the estimated value thereof shall be alleged by the claimant and shall be the basis in computing the fees.

(b) For initiating proceedings for the allowance of wills. Granting of letters of administration and settlement of estates of small value, where the value of the estate is:

1.	Not more than ₱20,000.00 ………………………………… .......…………………………………………………………...	₱ 200.00
2.	More than ₱20,000.00 but not more than ₱100,000.00 ... ……..……….…………………………………………………	1,100.00
3.	More than ₱100,000.00 but not more than ₱200,000.00 … …………………………………………………………………	1,550.00

x x x x

4. For each proceeding other than the allowance of wills (probate), granting of letter of administration, settlement of estates of small value, one hundred and fifty (150.00) pesos." (Emphasis and underscoring supplied)

The same amount of one hundred and fifty (₱150.00) pesos, it bears noting, was the same fee fixed by A.M. No. 00-2-01-SC²⁸ effective March 2000.

The damages prayed for in FLADC’s Complaint do not entail an increase in the prescribed fee, since the filing fee for ejectment complaints at the time the Complaint was filed²⁹ was a "straight fee" which, following Kaw v. Anunciacion, Jr.,³⁰ is not dependent on the amount of damages prayed for:

"Neither is there merit in the allegation that the amount of the monthly rental was also fixed at ₱1,500.00 to enable the [Italy Marketing Corporation] , as plaintiff in the [ejectment] case, to evade payment of the proper docket fees. The amount of damages in the form of rentals alleged in complaints for unlawful detainer cases is immaterial in determining the docket fees because the fee is a straight fee of ₱100.00." (Emphasis supplied)

WHEREFORE, the petition is DENIED.

Costs against petitioner.

SO ORDERED.

CONCHITA CARPIO MORALES
Associate Justice

WE CONCUR:

(On Official Leave)
LEONARDO A. QUISUMBING
Associate Justice
Chairperson

ANGELINA SANDOVAL-GUTIERREZ* Associate Justice	ANTONIO T. CARPIO** Associate Justice
DANTE O. TINGA Associate Justice	PRESBITERO J. VELASCO, JR. Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO
Associate Justice
Acting Chairperson

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Acting Chairperson’s Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the Court’s Division.

CONSUELO YNARES-SANTIAGO***
Acting Chief Justice

Footnotes

* On Official Leave.

** Additional Member per Administrative Circular No. 84-2007.

*** Acting Chairperson.

¹ Resolution penned by Associate Justice Renato Corona, 448 Phil. 860 (2003).

² Id. at 869-872.

³ The Complaint alleged that the rental rates agreed upon were as follows:

1. from September 1994 to August 1995 – ₱120.00 per square meter (sq. m.) for selling area and ₱80.00 per sq. m. for service area;

2. from September 1995 to August 1996 – ₱132.00 per sq. m. for selling area and ₱88.00 per sq. m. for service area; and

3. from September 1996 until the present – ₱220.00 per sq. m. for both selling and service areas. (Rollo, p. 143)

⁴ Id. at 146-147.

⁵ The Answer alleged that the rental rates agreed upon were as follows:

1. from September 1994 to August 1995 – ₱120.00 per sq. m. for selling area and ₱80.00 per sq. m. for the storage and service area;

2. from September 1995 to August 1996 – ₱120.00 per sq. m. for selling area and ₱80.00 per sq. m. for the storage and service area;

3. from September 1996 to August 1997 – ₱132.00 per sq. m. for the selling area and ₱88.00 for the storage and service area because of the 10% increase; and

4. from September 1997 to August 1998 – ₱132.00 per sq. m. for the selling area and ₱88.00 for the storage and service area because of the 10% increase. (Id. at 150)

⁶ Supra at note 1.

⁷ Art. 1687. If the period for the lease has not been fixed, it is understood to be from year to year, if the rent agreed upon is annual; from month to month, if it is monthly; from week to week, if the rent is weekly; and from day to day, if the rent is to be paid daily. However, even though a monthly rent is paid, and no period for the lease has been set, the courts may fix a longer term for the lease after the lessee has occupied the premises for over one year. If the rent is weekly, the courts may likewise determine a longer period after the lessee has been in possession for over six months. In case of a daily rent, the courts may also fix a longer period after the lessee has stayed in the place for over one month.

⁸ Citing Nieves v. CA, G.R. No. 85184, June 3, 1991, 198 SCRA 63, 71.

⁹ Rollo, pp. 303-304.

¹⁰ CA-G.R. SP No. 92977.

¹¹ The Petition listed these alleged errors under the heading "REASONS WHY THIS PETITION SHOULD BE GIVEN DUE COURSE." The Court shall treat the same as the Petition’s assignment of errors.

¹² Rollo, p. 46.

¹³ Page 5 of MATERRCO’s Answer with Counterclaim filed with the MTC, id. at 153.

¹⁴ Thus, the Court of Appeals stated in its Decision:

To enable the MTC to resolve in the ejectment case the principal issue of possession, the MTC may provisionally decide all ancillary issues such as the existence or a[b]sence of a lease contract between the parties or whether an alleged written lease agreement had been simulated or was spurious or even resolve provisionally the issue of ownership that may have been raised by the parties.

x x x x

Thus, where the resolution of the issue of possession hinges on a determination of the validity and interpretation of the document of title or any other contract on which the claim of possession is premised, the MTC may likewise pass upon these issues, albeit provisionally to be able to resolve the principal issue of possession. (Id. at 100-101; emphasis and underscoring supplied)

¹⁵ Eastern Shipping Lines v. CA , G.R. No. 136080, 424 Phil. 544, 554 (2002).

¹⁶ G.R. No. L-27674, May 12, 1975, 159-A Phil. 291, 299 (1975) (citations omitted).

¹⁷ G.R. No. L-74834, November 17, 1988, 167 SCRA 450.

¹⁸ Such a reading of the MTC and RTC decisions would explain why there is no order upon MATERRCO to pay "rent in arrears" on the Masagana Citimall premises for the period prior to September 9, 1996, when the month-to-month lease was still subsisting. The "rent in arrears," which are more accurately considered as reasonable compensation for the continued occupation and use of the premises, are reckoned only from November 1996, when the lease was already terminated.

While the same MTC Decision includes an order for MATERRCO to pay ₱10,000.00 plus 10% VAT and legal interest to be reckoned from March 1995, this pertained not to the Masagana Citimall premises but to the 150 sq. m. lot.

¹⁹ Citing Misa v. Court of Appeals, G.R. No. 97291, August 15, 1992, 212 SCRA 217.

²⁰ "MATERRCO, however, can find consolation in the fact that the ejectment case did not foreclose the petitioner MATERRCO’s right to file an independent action with the RTC which has jurisdiction to resolve with finality that issue for specific performance of the alleged lease contract since the determination by the MTC that the lease contract was simulated or spurious was only a provisional one – for purposes of being able to resolve only the principal issue of possession." (Court of Appeals Decision dated September 15, 2006; rollo, p. 23)

²¹ Chua v. People (G.R. Nos. 150926, March 6, 2006, 484 SCRA 161, 167):

"The legal aphorism is that the factual findings of the trial court, its evaluation of the testimonies of the witnesses and its assessment of their probative weight are given respect if not conclusive effect unless the trial court ignored, misconstrued, misunderstood or misinterpreted certain facts and circumstances of substance which, if considered, will alter the outcome of the case. Here, we meticulously reviewed the records of the case and found no reason to deviate from the factual findings of the trial court. Moreover, the CA affirmed these findings on appeal. It is well-settled that the factual findings of the trial court, when adopted and confirmed by the Court of Appeals, are final and conclusive and may not be reviewed on appeal to us. The Court is not a trier of facts hence, as a rule, we do not weigh anew the evidence already passed on by the trial court and affirmed by the Court of Appeals." (Emphasis supplied)

Vide Pe v. Intermediate Appellate Court (G.R. No. 74781, March 13, 1991, 195 SCRA 137, 144-145): "The Supreme Court is not a trier of facts. It leaves these matters to the lower court, which have more opportunity and facilities to examine these matters. The Supreme Court has no jurisdiction as a rule to reverse the lower court's findings. (Korean Airlines Ltd. v. Court of Appeals, G.R. No. 61418, 24 September 1987, 154 SCRA 211) As a rule, findings of fact of the Court of Appeals are final and conclusive and cannot be reviewed on appeal, provided, they are borne out by the record or are based on substantial evidence. However, this rule admits of certain exceptions, as when the findings of facts are conclusions without citation of specific evidence on which they are based; or the appellate court's findings are contrary to those of the trial court. (Sese v. Intermediate Appellate Court, G.R. No. 66168, 31 July 1987, 152 SCRA 585).

"The findings of fact of both courts are conclusions based on substantial evidence and the appellate court's findings are not in any way contrary to that of the lower court, therefore, such factual findings are conclusive and should be given great weight." (Emphasis supplied)

²² Limcay v. CA (G.R. No. 78161, October 21, 1992, 215 SCRA 1, 9): "In any event, the RTC had the authority to fix the reasonable value for such use and occupancy from the expiration of the contract of lease until the petitioner shall have vacated the premises and surrendered its possession to the private respondent. It was not bound by the stipulated rental in the contract of lease because it is settled that ‘the rental stipulated in the contract of lease that has expired or terminated may no longer be the reasonable value for the use and occupation of the premises as a result or by reason of the change or rise in values.’" (Emphasis supplied)

²³ Rollo, p. 295.

²⁴ Id. at 70-71.

²⁵ G.R. No. 137775, March 31, 2005, 454 SCRA 337, 348-349.

²⁶ G.R. No. 97412, July 12, 1994, 234 SCRA 78, 96-97.

²⁷ AMENDMENTS TO SECTION 7 (a) and (d) AND SECTION 8 (a) and (b), RULE 141, RULES OF COURT, AS LAST AMENDED ON SEPTEMBER 4, 1990, AND EFFECTIVE NOVEMBER 2, 1990, IN VIEW OF THE EXPANDED JURISDICTION OF THE LOWER COURTS UNDER REPUBLIC ACT NO. 7691.

²⁸ RESOLUTION AMENDING RULE 141 (LEGAL FEES) OF THE RULES OF COURT.

²⁹ The legal fees for ejectment cases became dependent on the amount of damages prayed for only upon the issuance of A.M. No. 04-2-04-SC, Re: Revised Upgrading Schedule of the Legal Fees in the Supreme Court and the Lower Courts Under Rule 141 of the Rules of Court, effective August 16, 2004, which amended Section 8(c) of Rule 141 to read as follows:

"(c) For forcible entry and unlawful detainer cases WHERE NO DAMAGES/COSTS ARE PRAYED FOR, FIVE HUNDRED (₱500.00) PESOS; AND

"IN CASES WHERE INTERESTS, PENALTIES, SURCHARGES, DAMAGES OF WHATEVER KIND, AND ATTORNEY’S FEES ARE PRAYED FOR, AN AMOUNT EQUIVALENT TO THAT INDICATED IN THE SCHEDULE OF PAYMENTS UNDER SUBSECTION (A) OF THIS SECTION SHALL BE COLLECTED, IN ADDITION TO THE AMOUNT OF FIVE HUNDRED (₱500.00) PESOS PROVIDED FOR IN THIS SUBSECTION."

The above-quoted revised rate was not among those suspended by the Court’s Resolution on A.M. No. 04-2-04-SC, dated September 21, 2004, as the suspension merely covered (a) Solemnization of marriage, (b) Motions; and (c) Compulsory counterclaims.

³⁰ 312 Phil. 1, 8-9 (1995).

The Lawphil Project - Arellano Law Foundation

---