G.R. No. 133564; July 10, 2007
SERGIO BARBOSA and JOVITA BARBOSA, Petitioners, vs. PILAR HERNANDEZ, LETICIA HUGHES, FELIX VILLANUEVA and NATIVIDAD SANGALANG, Respondents.

FACTS

Respondent Pilar Hernandez purchased a 100-square-meter lot in Batangas City from Felix Villanueva through his attorney-in-fact, Leticia Hughes, on August 11, 1983. Hernandez, who was working overseas, did not immediately take possession. Upon visiting in November 1987, she found petitioners Sergio and Jovita Barbosa occupying the lot and operating a motor repair shop thereon. Petitioners, who had been lessees on the larger property since 1962, were relocated to this specific lot around 1979 by subdivision developer Natividad Sangalang to make way for a road. On November 16, 1983, Hughes sold petitioners a separate 200-square-meter portion of the land, which did not include the 100-square-meter lot already sold to Hernandez. Hernandez demanded that petitioners vacate her lot, but they refused.
Hernandez filed a complaint for recovery of possession and damages in the Regional Trial Court (RTC). Petitioners, in their answer, questioned the RTC’s jurisdiction, claiming they had possessory rights for over 20 years. They also filed a third-party complaint against Hughes, Villanueva, and Sangalang, alleging a verbal promise that they would have the preferential right to purchase the lot they occupied and that they had made permanent improvements in reliance thereon. The RTC dismissed the third-party complaint and ordered petitioners to vacate, remove improvements, and pay rentals. The Court of Appeals affirmed the decision.

ISSUE

The core issues were: (1) whether the RTC had jurisdiction over Hernandez’s complaint for recovery of possession, and (2) whether petitioners could enforce the alleged verbal promise to sell or claim reimbursement for improvements.

RULING

The Supreme Court affirmed the CA decision, ruling that the RTC properly exercised jurisdiction. Jurisdiction is determined solely by the allegations in the complaint. Hernandez’s amended complaint alleged she was the owner and petitioners were unlawfully depriving her of possession, without specifying that petitioners’ possession initially derived from a contract that had expired. This characterization made the action an accion publiciana (for recovery of the better right of possession), not an unlawful detainer case which requires allegation of prior lawful possession that turned unlawful. As an accion publiciana, the case was within the RTC’s jurisdiction at the time of filing.
On the substantive claim, the Court held the alleged verbal promise to sell was unenforceable under the Statute of Frauds, which requires contracts for the sale of real property or an interest therein to be in writing to be enforceable. No such written evidence was presented. Furthermore, petitioners failed to prove by preponderant evidence that a definite and complete agreement for sale existed. Their claim for reimbursement for improvements was also without legal basis, as the improvements were built on land they did not own and without the consent of the owner, Hernandez. Thus, petitioners were mere builders in bad faith.