G.R. No. 134986 ; March 17, 2000
CAMPO ASSETS CORPORATION, petitioner, vs. CLUB X. O. COMPANY, represented by CHAN YORK GUI (ALLAN), respondent.

FACTS

Alma Arambulo operated a business on premises leased by Campo Assets from the owner, under a Memorandum of Agreement (MOA) requiring her to pay a guaranteed monthly income. In June 1994, Arambulo entered a partnership with Chan York Gui (Allan), forming Club X. O. Company, which then operated the business and introduced improvements. Campo Assets alleged that Arambulo failed to pay the guaranteed income and abandoned the premises. On January 13, 1996, Campo Assets took physical possession of the premises, invoking Paragraph VI of the MOA, which authorized it to enter and retake the premises by force if deserted or vacated.
Club X. O. filed a forcible entry case. The Metropolitan Trial Court (MeTC) dismissed the complaint, finding no privity of contract between Club X. O. and Campo Assets, and that Arambulo had violated and abandoned the agreement, making Campo’s takeover pursuant to the MOA valid. The Regional Trial Court (RTC) affirmed. The Court of Appeals (CA) reversed, holding that Club X. O.’s prior possession, established by the MeTC, gave it a cause of action for forcible entry. The CA declared Paragraph VI void as against public order and ordered possession restored to Club X. O.

ISSUE

Whether Paragraph VI of the Memorandum of Agreement, allowing Campo Assets to retake the premises by force upon desertion or vacation, is void for being against public order.

RULING

The Supreme Court REVERSED the Court of Appeals and REINSTATED the decisions of the lower courts, upholding the validity of Paragraph VI. The legal logic is anchored on the principle of contractual autonomy and the nature of forcible entry. Contracts are respected as the law between parties, provided stipulations are not contrary to law, morals, good customs, public policy, or public order. The Court cited Viray vs. Intermediate Appellate Court, which upheld a similar stipulation allowing a lessor to enter and take possession without judicial action upon the lessee’s breach, characterizing it as a resolutory condition that is not prohibited.
The Court distinguished the factual scenario from a typical forcible entry. The MeTC made a factual finding, affirmed by the RTC, that Arambulo had indeed abandoned the premises. Abandonment implies the voluntary relinquishment of possession. Consequently, when Campo Assets retook possession, it did not oust a prior physical possessor; it entered premises that were already deserted. Forcible entry requires that possession be lost through force, intimidation, threat, strategy, or stealth. Since the premises were abandoned, no force was employed against a current possessor. Therefore, Club X. O., which derived its rights from Arambulo, had no right to maintain the forcible entry action. The stipulation was a valid contractual resolutory condition that took effect upon the breach and abandonment, not an illegal clause sanctioning violence against a lawful possessor.