G.R. No. 107293 March 2, 1994
MARIANO TORIO, MARIA BAUTISTA, FLORENTINA BAUTISTA AND RENATO BAUTISTA, petitioners, vs. THE COURT OF APPEALS and MEDEL COMPOUND TENANTS ASSOCIATION, INC., respondents.

FACTS

In 1986, the tenants of Medel Compound in Mandaluyong, desiring to own the land they were leasing, organized the Medel Compound Tenants Association, Inc., registered with the SEC. Petitioners Mariano Torio, Maria Bautista, Florentina Bautista, and Renato Bautista were among the original members and incorporators. With government assistance, the Association acquired the land in February 1989, and it was subdivided among members. The Association demanded that petitioners vacate their respective lots (Nos. 135, 145, and 147) in October 1989, alleging that petitioners never became active members, refused to participate in the acquisition, and did not pay membership dues, assessments, the downpayment for their lots, or rentals despite demands. When petitioners refused to vacate, the Association filed complaints for unlawful detainer. Petitioners defended that they never relinquished membership but could not immediately pay their obligations, and when ready, the Association ignored them; they also claimed they did not receive formal notices as they were often staying in Baras, Rizal. The Metropolitan Trial Court ruled for the Association, ordering petitioners to vacate, a decision affirmed by the Regional Trial Court and the Court of Appeals.

ISSUE

1. Whether the Metropolitan Trial Court had jurisdiction over the unlawful detainer case or if jurisdiction belonged to the Securities and Exchange Commission pursuant to P.D. 902-A.
2. Whether the ejectment of petitioners was valid based on the expiration of the lease period.
3. Whether the prohibition against ejectment under P.D. 1517 and P.D. 2016 applied to protect petitioners.

RULING

1. The Metropolitan Trial Court had jurisdiction. The Supreme Court cited Viray vs. Court of Appeals, stating that not every conflict between a corporation and its stockholders involves corporate matters exclusive to the SEC. Jurisdiction is determined by considering both the relationship of the parties and the nature of the controversy. The complaint was for unlawful detainer (a possessory action), which falls under the jurisdiction of the regular courts.
2. The ejectment was valid. The lease was on a month-to-month basis under Article 1687 of the Civil Code. The Court of Appeals, citing Rivera vs. Florendo, held that Article 1687 (allowing judicial fixing of the lease period) remained applicable, as B.P. Blg. 25 (and later B.P. Blg. 877) suspended only Article 1673 on grounds for ejectment, not Article 1687. Petitioners’ argument that their contract was a sale on installment, based on a pro-forma Lease/Purchase Agreement, was rejected because the document was not presented in the trial court, its genuineness was not established, and it was bare of essential facts like the lessor’s name and terms. Even assuming such an agreement existed, petitioners defaulted on payments, justifying ejectment under its terms.
3. The prohibitions under P.D. 1517 (right of first refusal) and P.D. 2016 (prohibition against eviction in priority development areas) did not apply. The Court affirmed the lower courts’ reasoning that P.D. 1517 prohibits the owner from selling to third parties without offering the right of first refusal to tenants. Here, the Medels sold the property directly to the tenants’ association, so no violation occurred. Furthermore, the Court of Appeals noted petitioners were not bona fide occupants as they resided mostly in Baras, Rizal, and were renting out their houses to others.