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78 - Wee vs. De Castro 562 SCRA 695

G.R. No. 176405 August 20, 2008

LEO WEE, petitioner,

vs.
GEORGE DE CASTRO (on his behalf and as attorney-in-fact of ANNIE DE CASTRO and FELOMINA
UBAN) and MARTINIANA DE CASTRO, respondents.

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Revised Rules of Court filed
by petitioner Leo Wee, seeking the reversal and setting aside of the Decision2 dated 19 September 2006
and the Resolution3 dated 25 January 2007 of the Court of Appeals in CA-G.R. SP No. 90906. The
appellate court, in its assailed Decision, reversed the dismissal of Civil Case. No. 1990, an action for
ejectment instituted by respondent George de Castro, on his own behalf and on behalf of Annie de
Castro, Felomina de Castro Uban and Jesus de Castro 4 against petitioner, by the Municipal Trial Court
(MTC) of Alaminos City, which was affirmed by the Regional Trial Court (RTC), Branch 54, Alaminos City,
Pangasinan; and, ruling in favor of the respondents, ordered the petitioner to vacate the subject property.
In its assailed Resolution dated 25 January 2007, the Court of Appeals refused to reconsider its earlier
Decision of 19 September 2006.

In their Complaint5 filed on 1 July 2002 with the MTC of Alaminos City, docketed as Civil Case No. 1990,
respondents alleged that they are the registered owners of the subject property, a two-storey building
erected on a parcel of land registered under Transfer Certificate of Title (TCT) No. 16193 in the Registry
of Deeds of Pangasinan, described and bounded as follows:

A parcel of land (Lot 13033-D-2, Psd-01550-022319, being a portion of Lot 13033-D, Psd-
018529, LRC Rec. No. ____) situated in Pob., Alaminos City; bounded on the NW. along line 1-2
by Lot 13035-D-1 of the subdivision plan; on the NE. along line 2-3 by Vericiano St.; on the SE.
along line 3-4 by Lot 13033-D-2 of the subdivision plan; on the SW. along line 4-1 by Lot 575,
Numeriano Rabago. It is coverd by TCT No. 16193 of the Register of Deeds of Pangasinan
(Alaminos City) and declared for taxation purposes per T.D. No. 2075, and assessed in the sum
of P93,400.00.6

Respondents rented out the subject property to petitioner on a month to month basis for P9,000.00 per
month.7 Both parties agreed that effective 1 October 2001, the rental payment shall be increased
from P9,000.00 to P15,000.00. Petitioner, however, failed or refused to pay the corresponding increase
on rent when his rental obligation for the month of 1 October 2001 became due. The rental dispute was
brought to the Lupon Tagapagpamayapa of Poblacion, Alaminos, Pangasinan, in an attempt to amicably
settle the matter but the parties failed to reach an agreement, resulting in the issuance by
the Barangay Lupon of a Certification to file action in court on 18 January 2002. On 10 June 2002,
respondent George de Castro sent a letter to petitioner terminating their lease agreement and demanding
that the latter vacate and turn over the subject property to respondents. Since petitioner stubbornly
refused to comply with said demand letter, respondent George de Castro, together with his siblings and
co-respondents, Annie de Castro, Felomina de Castro Uban and Jesus de Castro, filed the Complaint for
ejectment before the MTC.

It must be noted, at this point, that although the Complaint stated that it was being filed by all of the
respondents, the Verification and the Certificate of Non-Forum Shopping were signed by respondent
George de Castro alone. He would subsequently attach to his position paper filed before the MTC on 28
October 2002 the Special Powers of Attorney (SPAs) executed by his sisters Annie de Castro and
Felomina de Castro Uban dated 7 February 2002 and 14 March 2002 respectively, authorizing him to
institute the ejectment case against petitioner.
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Petitioner, on the other hand, countered that there was no agreement between the parties to increase the
monthly rentals and respondents' demand for an increase was exorbitant. The agreed monthly rental was
only for the amount of P9,000.00 and he was religiously paying the same every month. Petitioner then
argued that respondents failed to comply with the jurisdictional requirement of conciliation before
the Barangay Lupon prior to the filing of Civil Case. No. 1990, meriting the dismissal of their Complaint
therein. The Certification to file action issued by the Barangay Lupon appended to the respondents'
Complaint merely referred to the issue of rental increase and not the matter of ejectment. Petitioner
asserted further that the MTC lacked jurisdiction over the ejectment suit, since respondents' Complaint
was devoid of any allegation that there was an "unlawful withholding" of the subject property by the
petitioner.8

During the Pre-Trial Conference9 held before the MTC, the parties stipulated that in May 2002, petitioner
tendered to respondents the sum of P9,000.00 as rental payment for the month of January 2002;
petitioner paid rentals for the months of October 2001 to January 2002 but only in the amount
of P9,000.00 per month; respondents, thru counsel, sent a letter to petitioner on 10 June 2002 terminating
their lease agreement which petitioner ignored; and the Barangay Lupon did issue a Certification to file
action after the parties failed to reach an agreement before it.

After the submission of the parties of their respective Position Papers, the MTC, on 21 November 2002,
rendered a Decision10 dismissing respondents' Complaint in Civil Case No. 1990 for failure to comply with
the prior conciliation requirement before the Barangay Lupon. The decretal portion of the MTC Decision
reads:

WHEREFORE, premised considered, judgment is hereby rendered ordering the dismissal of this
case. Costs against the [herein respondents].

On appeal, docketed as Civil Case No. A-2835, the RTC of Alaminos, Pangasinan, Branch 54,
promulgated its Decision11 dated 27 June 2005 affirming the dismissal of respondents' Complaint for
ejectment after finding that the appealed MTC Decision was based on facts and law on the matter. The
RTC declared that since the original agreement entered into by the parties was for petitioner to pay only
the sum of P9.000.00 per month for the rent of the subject property, and no concession was reached by
the parties to increase such amount to P15.000.00, petitioner cannot be faulted for paying only the
originally agreed upon monthly rentals. Adopting petitioner's position, the RTC declared that respondents'
failure to refer the matter to the Barangay court for conciliation process barred the ejectment case,
conciliation before the Lupon being a condition sine qua non in the filing of ejectment suits. The RTC
likewise agreed with petitioner in ruling that the allegation in the Complaint was flawed, since respondents
failed to allege that there was an "unlawful withholding" of possession of the subject property, taking out
Civil Case No. 1990 from the purview of an action for unlawful detainer. Finally, the RTC decreed that
respondents' Complaint failed to comply with the rule that a co-owner could not maintain an action without
joining all the other co-owners. Thus, according to the dispositive portion of the RTC Decision:

WHEREFORE the appellate Court finds no cogent reason to disturb the findings of the court a
quo. The Decision dated November 21, 2002 appealed from is hereby AFFIRMED IN TOTO. 12

Undaunted, respondents filed a Petition for Review on Certiorari13 with the Court of Appeals where it was
docketed as CA-G.R. SP No. 90906. Respondents argued in their Petition that the RTC gravely erred in
ruling that their failure to comply with the conciliation process was fatal to their Complaint, since it is only
respondent George de Castro who resides in Alaminos City, Pangasinan, while respondent Annie de
Castro resides in Pennsylvania, United States of America (USA); respondent Felomina de Castro Uban,
in California, USA; and respondent Jesus de Castro, now substituted by his wife, Martiniana, resides in
Manila. Respondents further claimed that the MTC was not divested of jurisdiction over their Complaint
for ejectment because of the mere absence therein of the term "unlawful withholding" of their subject
property, considering that they had sufficiently alleged the same in their Complaint, albeit worded
differently. Finally, respondents posited that the fact that only respondent George de Castro signed the
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Verification and the Certificate of Non-Forum Shopping attached to the Complaint was irrelevant since the
other respondents already executed Special Powers of Attorney (SPAs) authorizing him to act as their
attorney-in-fact in the institution of the ejectment suit against the petitioner.

On 19 September 2006, the Court of Appeals rendered a Decision granting the respondents' Petition and
ordering petitioner to vacate the subject property and turn over the same to respondents. The Court of
Appeals decreed:

WHEREFORE, premises considered, the instant petition is GRANTED. The assailed Decision
dated June 27, 2005 issued by the RTC of Alaminos City, Pangasinan, Branch 54, is REVERSED
and SET ASIDE. A new one is hereby rendered ordering [herein petitioner] Leo Wee to
SURRENDER and VACATE the leased premises in question as well as to pay the sum of
P15,000.00 per month reckoned from March, 2002 until he shall have actually turned over the
possession thereof to petitioners plus the rental arrearages of P30,000.00 representing unpaid
increase in rent for the period from October, 2001 to February, 2002, with legal interest at 6% per
annum to be computed from June 7, 2002 until finality of this decision and 12% thereafter until full
payment thereof. Respondent is likewise hereby ordered to pay petitioners the amount
of P20,000.00 as and for attorney's fees and the costs of suit.14

In a Resolution dated 25 January 2007, the appellate court denied the Motion for Reconsideration
interposed by petitioner for lack of merit.

Petitioner is now before this Court via the Petition at bar, making the following assignment of errors:

I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT

CONCILIATION PROCESS IS NOT A JURISDICTIONAL REQUIREMENT THAT NON-
COMPLIANCE THEREWITH DOES NOT AFFECT THE JURISDICTION IN EJECTMENT CASE;

II.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE

SUFFICIENCY OF THE ALLEGATIONS IN THE COMPLAINT FOR EJECTMENT DESPITE THE
WANT OF ALLEGATION OF "UNLAWFUL WITHOLDING PREMISES" (sic) QUESTIONED BY
PETITIONER;

III.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE FILING
OF THE COMPLAINT OF RESPONDENT GEORGE DE CASTRO WITHOUT JOINING ALL HIS
OTHER CO-OWNERS OVER THE SUBJECT PROPERTY IS PROPER;

IV.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT APPLYING SUPREME

COURT CIRCULAR NO. 10 WHICH DIRECTS A PLEADER TO INDICATE IN HIS PLEADINGS
HIS OFFICIAL RECEIPT OF HIS PAYMENT OF HIS IBP DUES.15

Petitioner avers that respondents failed to go through the conciliation process before the Barangay
Lupon, a jurisdictional defect that bars the legal action for ejectment. The Certification to file action dated
18 January 2002 issued by the Barangay Lupon, appended by the respondents to their Complaint in Civil
Case No. 1990, is of no moment, for it attested only that there was confrontation between the parties on
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78 - Wee vs. De Castro 562 SCRA 695

the matter of rental increase but not on unlawful detainer of the subject property by the petitioner. If it was
the intention of the respondents from the very beginning to eject petitioner from the subject property, they
should have brought up the alleged unlawful stay of the petitioner on the subject property for conciliation
before the Barangay Lupon.

The barangay justice system was established primarily as a means of easing up the congestion of cases
in the judicial courts. This could be accomplished through a proceeding before the barangay courts which,
according to the one who conceived of the system, the late Chief Justice Fred Ruiz Castro, is essentially
arbitration in character; and to make it truly effective, it should also be compulsory. With this primary
objective of the barangay justice system in mind, it would be wholly in keeping with the underlying
philosophy of Presidential Decree No. 1508 (Katarungang Pambarangay Law), which would be better
served if an out-of-court settlement of the case is reached voluntarily by the parties. 16 To ensure this
objective, Section 6 of Presidential Decree No. 1508 requires the parties to undergo a conciliation
process before the Lupon Chairman or the Pangkat ng Tagapagkasundo as a precondition to filing a
complaint in court subject to certain exceptions. The said section has been declared compulsory in
nature.17

Presidential Decree No. 1508 is now incorporated in Republic Act No. 7160 (The Local Government
Code), which took effect on 1 January 1992.

The pertinent provisions of the Local Government Code making conciliation a precondition to the filing of
complaints in court are reproduced below:

SEC. 412. Conciliation.- (a) Pre-condition to filing of complaint in court. - No complaint, petition,
action, or proceeding involving any matter within the authority of the lupon shall be filed or
instituted directly in court or any other government office for adjudication, unless there has been a
confrontation between the parties before the lupon chairman or the pangkat, and that no
conciliation or settlement has been reached as certified by the lupon secretary or pangkat
secretary as attested to by the lupon or pangkat chairman or unless the settlement has been
repudiated by the parties thereto.

(b) Where parties may go directly to court. - The parties may go directly to court in the following
instances:

(1) Where the accused is under detention;

(2) Where a person has otherwise been deprived of personal liberty calling for habeas
corpus proceedings;

(3) Where actions are coupled with provisional remedies such as preliminary injunction,
attachment, delivery of personal property, and support pendente lite; and

(4) Where the action may otherwise be barred by the statute of limitations.

(c) Conciliation among members of indigenous cultural communities. - The customs and traditions
of indigenous cultural communities shall be applied in settling disputes between members of the
cultural communities.

SEC. 408. Subject Matter for Amicable Settlement; Exception Thereto. - The lupon of each
barangay shall have authority to bring together the parties actually residing in the same city or
municipality for amicable settlement of all disputes except:

(a) Where one party is the government or any subdivision or instrumentality thereof;
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78 - Wee vs. De Castro 562 SCRA 695

(b) Where one party is a public officer or employee, and the dispute relates to the performance of
his official functions;

(c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding Five
thousand pesos (P5,000.00);

(d) Offenses where there is no private offended party;

(e) Where the dispute involves real properties located in different cities or municipalities unless
the parties thereto agree to submit their differences to amicable settlement by an appropriate
lupon;

(f) Disputes involving parties who actually reside in barangays of different cities or municipalities,
except where such barangay units adjoin each other and the parties thereto agree to submit their
differences to amicable settlement by an appropriate lupon;

(g) Such other classes of disputes which the President may determine in the interest of justice or
upon the recommendation of the Secretary of Justice.

There is no question that the parties to this case appeared before the Barangay Lupon for conciliation
proceedings. There is also no dispute that the only matter referred to the Barangay Lupon for conciliation
was the rental increase, and not the ejectment of petitioner from the subject property. This is apparent
from a perusal of the Certification to file action in court issued by the Barangay Lupon on 18 January
2002, to wit:

CERTIFICATION TO FILE COMPLAINTS

This is to certify that:

1. There was personal confrontation between parties before the barangay Lupon regarding
rental increase of a commercial building but conciliation failed;

2. Therefore, the corresponding dispute of the above-entitled case may now be filed in
Court/Government Office.18 (Emphasis ours.)

The question now to be resolved by this Court is whether the Certification dated 18 January 2002 issued
by the Barangay Lupon stating that no settlement was reached by the parties on the matter of rental
increase sufficient to comply with the prior conciliation requirement under the Katarungang
Pambarangay Law to authorize the respondents to institute the ejectment suit against petitioner.

The Court rules affirmatively.

While it is true that the Certification to file action dated 18 January 2002 of the Barangay Lupon refers
only to rental increase and not to the ejectment of petitioner from the subject property, the submission of
the same for conciliation before the Barangay Lupon constitutes sufficient compliance with the provisions
of the Katarungang Pambarangay Law. 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.

We now proceed to discuss the meat of the controversy.

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The contract of lease between the parties did not stipulate a fixed period. Hence, the parties agreed to the
payment of rentals on a monthly basis. On this score, Article 1687 of the Civil Code provides:

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 daily rent, the courts may also fix a longer period after
the lessee has stayed in the place for over one month. (Emphasis supplied.)

The rentals being paid monthly, the period of such lease is deemed terminated at the end of each month.
Thus, respondents have every right to demand the ejectment of petitioners at the end of each month, the
contract having expired by operation of law. Without a lease contract, petitioner has no right of
possession to the subject property and must vacate the same. Respondents, thus, should be allowed to
resort to an action for ejectment before the MTC to recover possession of the subject property from
petitioner.

Corollarily, petitioner's ejectment, in this case, is only the reasonable consequence of his unrelenting
refusal to comply with the respondents' demand for the payment of rental increase agreed upon by both
parties. Verily, the lessor's right to rescind the contract of lease for non-payment of the demanded
increased rental was recognized by this Court in Chua v. Victorio19:

The right of rescission is statutorily recognized in reciprocal obligations, such as contracts of

lease. In addition to the general remedy of rescission granted under Article 1191 of the Civil
Code, there is an independent provision granting the remedy of rescission for breach of any of
the lessor or lessee's statutory obligations. Under Article 1659 of the Civil Code, the aggrieved
party may, at his option, ask for (1) the rescission of the contract; (2) rescission and
indemnification for damages; or (3) only indemnification for damages, allowing the contract to
remain in force.

Payment of the rent is one of a lessee's statutory obligations, and, upon non-payment by
petitioners of the increased rental in September 1994, the lessor acquired the right to avail
of any of the three remedies outlined above. (Emphasis supplied.)

Petitioner next argues that respondent George de Castro cannot maintain an action for ejectment against
petitioner, without joining all his co-owners.

Article 487 of the New Civil Code is explicit on this point:

ART. 487. Any one of the co-owners may bring an action in ejectment.

This article covers all kinds of action for the recovery of possession, i.e., forcible entry and unlawful
detainer (accion interdictal), recovery of possession (accion publiciana), and recovery of ownership
(accion de reivindicacion). As explained by the renowned civilist, Professor Arturo M. Tolentino 20:
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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. If
the action is for the benefit of the plaintiff alone, such that he claims possession for himself and
not for the co-ownership, the action will not prosper. (Emphasis added.)

In the more recent case of Carandang v. Heirs of De Guzman,21 this Court declared that a co-owner is not
even a necessary party to an action for ejectment, for complete relief can be afforded even in his
absence, thus:

In sum, in suits to recover properties, all co-owners are real parties in interest. However, pursuant
to Article 487 of the Civil Code and the relevant jurisprudence, any one of them may bring an
action, any kind of action for the recovery of co-owned properties. Therefore, only one of the co-
owners, namely the co-owner who filed the suit for the recovery of the co-owned property, is an
indispensable party thereto. The other co-owners are not indispensable parties. They are not
even necessary parties, for a complete relief can be afforded in the suit even without their
participation, since the suit is presumed to have been filed for the benefit of all co-owners.

Moreover, respondents Annie de Castro and Felomina de Castro Uban each executed a Special Power of
Attorney, giving respondent George de Castro the authority to initiate Civil Case No. 1990.

A power of attorney is an instrument in writing by which one person, as principal, appoints another as his
agent and confers upon him the authority to perform certain specified acts or kinds of acts on behalf of
the principal. The written authorization itself is the power of attorney, and this is clearly indicated by the
fact that it has also been called a "letter of attorney."22

Even then, the Court views the SPAs as mere surplusage, such that the lack thereof does not in any way
affect the validity of the action for ejectment instituted by respondent George de Castro. This also
disposes of petitioner's contention that respondent George de Castro lacked the authority to sign the
Verification and the Certificate of Non-Forum Shopping. As the Court ruled in Mendoza v. Coronel23:

We likewise hold that the execution of the certification against forum shopping by the
attorney-in-fact in the case at bar is not a violation of the requirement that the parties must
personally sign the same. The attorney-in-fact, who has authority to file, and who actually filed
the complaint as the representative of the plaintiff co-owner, pursuant to a Special Power of
Attorney, is a party to the ejectment suit. In fact, Section 1, Rule 70 of the Rules of Court includes
the representative of the owner in an ejectment suit as one of the parties authorized to institute
the proceedings. (Emphasis supplied.)

Failure by respondent George de Castro to attach the said SPAs to the Complaint is innocuous, since it is
undisputed that he was granted by his sisters the authority to file the action for ejectment against
petitioner prior to the institution of Civil Case No. 1990. The SPAs in his favor were respectively executed
by respondents Annie de Castro and Felomina de Castro Uban on 7 February 2002 and 14 March 2002;
while Civil Case No. 1990 was filed by respondent George de Castro on his own behalf and on behalf of
his siblings only on 1 July 2002, or way after he was given by his siblings the authority to file said action.
The Court quotes with approval the following disquisition of the Court of Appeals:

Moreover, records show that [herein respondent] George de Castro was indeed authorized by his
sisters Annie de Castro and Felomina de Castro Uban, to prosecute the case in their behalf as
shown by the Special Power of Attorney dated February 7, 2002 and March 14, 2002. That these
documents were appended only to [respondent George de Castro's] position paper is of no
moment considering that the authority conferred therein was given prior to the institution of the
complaint in July, 2002. x x x.24
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Respondent deceased Jesus de Castro's failure to sign the Verification and Certificate of Non-Forum
Shopping may be excused since he already executed an Affidavit25 with respondent George de Castro
that he had personal knowledge of the filing of Civil Case No. 1990. In Torres v. Specialized Packaging
Development Corporation,26 the Court ruled that the personal signing of the verification requirement was
deemed substantially complied with when, as in the instant case, two out of 25 real parties-in-interest,
who undoubtedly have sufficient knowledge and belief to swear to the truth of the allegations in the
petition, signed the verification attached to it.

In the same vein, this Court is not persuaded by petitioner's assertion that respondents' failure to allege
the jurisdictional fact that there was "unlawful withholding" of the subject property was fatal to their cause
of action.

It is apodictic that what determines the nature of an action as well as which court has jurisdiction over it
are the allegations in the complaint and the character of the relief sought. In an unlawful detainer case,
the defendant's possession was originally lawful but ceased to be so upon the expiration of his right to
possess. Hence, the phrase "unlawful withholding" has been held to imply possession on the part of
defendant, which was legal in the beginning, having no other source than a contract, express or implied,
and which later expired as a right and is being withheld by defendant. 27

In Barba v. Court of Appeals,28 the Court held that although the phrase "unlawfully withholding" was not
actually used by therein petitioner in her complaint, the Court held that her allegations, nonetheless,
amounted to an unlawful withholding of the subject property by therein private respondents, because they
continuously refused to vacate the premises even after notice and demand.

In the Petition at bar, respondents alleged in their Complaint that they are the registered owners of the
subject property; the subject property was being occupied by the petitioner pursuant to a monthly lease
contract; petitioner refused to accede to respondents' demand for rental increase; the respondents sent
petitioner a letter terminating the lease agreement and demanding that petitioner vacate and turn over the
possession of the subject property to respondents; and despite such demand, petitioner failed to
surrender the subject property to respondents.29 The Complaint sufficiently alleges the unlawful
withholding of the subject property by petitioner, constitutive of unlawful detainer, although the exact
words "unlawful withholding" were not used. 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.30

Petitioner's averment that the Court of Appeals should have dismissed respondents' Petition in light of the
failure of their counsel to attach the Official Receipt of his updated payment of Integrated Bar of the
Philippines (IBP) dues is now moot and academic, since respondents' counsel has already duly complied
therewith. It must be stressed that judicial cases do not come and go through the portals of a court of law
by the mere mandate of technicalities.31 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. 32

Finally, we agree in the ruling of the Court of Appeals that petitioner is liable for the payment of back
rentals, attorney's fees and cost of the suit. Respondents must be duly indemnified for the loss of income
from the subject property on account of petitioner's refusal to vacate the leased premises.

WHEREFORE, premises considered, the instant Petition is DENIED. The Decision dated 19 September
2006 and Resolution dated 25 January 2007 of the Court of Appeals in CA-G.R. SP No. 90906 are
hereby AFFIRMED in toto. Costs against petitioner.

SO ORDERED.