G.R. No. 123479 April 14, 1999
SOLANDA ENTERPRISES, INC., petitioner vs. COURT OF APPEALS and LUIS MANLUTAC, respondents.

FACTS

Private respondent Luis Manlutac was a long-term tenant of a parcel of land in Tondo, Manila, owned by the Quijano spouses. On April 7, 1986, the Quijanos sold the property to petitioner Solanda Enterprises, Inc. without offering it first to the tenants. Manlutac and other tenants subsequently filed an action for annulment of the sale and reconveyance (Civil Case No. 91-58568) before the Regional Trial Court (RTC), invoking their right of first refusal under P.D. No. 1517 (The Urban Land Reform Law). On April 19, 1994, the RTC in that case annulled the deed of sale and ordered compliance with P.D. 1517.
Meanwhile, on November 6, 1992, Solanda filed an ejectment complaint against Manlutac before the Metropolitan Trial Court (MTC) for non-payment of rentals and expiration of the lease. The MTC ruled in favor of Solanda, a decision affirmed by the RTC. On appeal, the Court of Appeals reversed the lower courts and dismissed the ejectment case, citing the pendency and eventual favorable outcome of the annulment case, and the intent of the City of Manila to expropriate the land.

ISSUE

The primary issue is whether the ejectment suit was properly dismissed by the Court of Appeals based on: (1) the pendency and outcome of the action for annulment of sale; (2) the tenant’s right of first refusal under P.D. 1517; and (3) a city ordinance expressing intent to expropriate.

RULING

The Supreme Court reversed the Court of Appeals and reinstated the MTC’s ejectment decision. First, ejectment cases are designed to resolve the simple issue of physical possession (possession de facto) independently of claims over ownership. The pendency or even the favorable resolution of an action for annulment of sale and reconveyance does not bar an ejectment suit. The two actions involve different causes of action and can proceed separately.
Second, the right of first refusal under P.D. 1517 is not self-executing. For it to apply, the tenant must prove the land is within both an “urban land reform zone” and an officially declared “area for priority development” as required by Proclamation No. 1967. Private respondent Manlutac failed to present such proof. The mere allegation that the land is in an urbanized area is insufficient to invoke the law’s protective mantle against ejectment.
Third, a city ordinance merely expressing an intent to expropriate the property in the future does not automatically suspend or abate an ejectment proceeding. Such an intent does not immediately affect the present possessory rights of the parties. Therefore, the ejectment case should proceed based on the merits of possession and lease expiration, which were established in favor of Solanda Enterprises.