G.R. No. 157806 November 22, 2007
Spouses Sheikding Booc and Bily Booc, petitioners, vs. Five Star Marketing Co., Inc., respondent.

FACTS

Respondent Five Star Marketing Co., Inc. filed an unlawful detainer complaint against petitioners Spouses Booc before the MTCC of Iligan City. Five Star alleged it owned the building where the spouses occupied the third floor rent-free. It withdrew this privilege, notified the spouses of a new monthly rental of P40,000 effective April 1, 1999, and demanded they either sign a lease contract or vacate. After the spouses refused, a formal demand to vacate was sent.
The spouses contended in their Answer that Five Star had no cause of action because they were co-owners of the building, claiming petitioner Sheikding Booc and his brother owned it in common. They asserted the complaint was connected to intra-corporate disputes they had filed with the SEC against Five Star’s board. The MTCC dismissed the complaint and awarded damages to the spouses. The RTC affirmed the dismissal but modified the damages. The CA reversed, ordering the spouses to vacate and pay P40,000 monthly rental from April 1999.

ISSUE

The core issue is whether the CA correctly reversed the lower courts and ruled in favor of respondent Five Star in the unlawful detainer case.

RULING

Yes, the Supreme Court affirmed the CA’s ruling with modification on the rental amount. The Court held that the MTCC had jurisdiction over the unlawful detainer case, as the complaint sufficiently alleged a cause of action for ejectment based on the withdrawal of tolerance and the respondents’ failure to vacate upon demand. The defense of ownership raised by the petitioners did not divest the MTCC of its jurisdiction, as the issue of possession was primordial.
On the merits, the Court found the petitioners failed to substantiate their claim of co-ownership through an implied trust. Their evidence, primarily tax declarations and receipts, was insufficient to overcome the respondent’s evidence of ownership, which included the building’s original plan and permit issued in Five Star’s name. The claim of implied trust, requiring clear and convincing proof, was not established.
However, the Court modified the CA decision regarding the rental. It found the P40,000 monthly rate unsupported by evidence. Applying the principle that a reasonable rental can be awarded even without conclusive proof of the stipulated amount, and considering the premises’ location and the respondent’s own valuation for tax purposes, the Court fixed a reasonable rental at P10,000 per month from April 1999. It also imposed legal interest at 6% per annum from extra-judicial demand until finality of judgment, and 12% per annum thereafter until full payment.