G.R. No. 194538 ; November 27, 2013
MORETO MIRALLOSA and all persons claiming rights and interests under him, Petitioner, vs. CARMEL DEVELOPMENT INC., Respondent.

FACTS

Respondent Carmel Development Inc. was the registered owner of a property in Caloocan City. In 1973, Presidential Decree No. 293 invalidated respondent’s titles and declared the lots open for disposition to members of the Malacañang Homeowners Association, Inc. (MHAI). By virtue of this decree, petitioner’s predecessor-in-interest, a member of MHAI, occupied Lot No. 32 and built houses thereon. Respondent was constrained to allow the occupation.
In 1988, the Supreme Court in Tuason v. Register of Deeds declared P.D. 293 unconstitutional and void ab initio. The Register of Deeds subsequently cancelled the memorandum on respondent’s title, restoring its ownership. Petitioner, who had taken over the lot in 1995, refused to vacate despite respondent’s demands. Respondent thus filed an unlawful detainer case.

ISSUE

Whether petitioner is liable for unlawful detainer, considering that his initial possession was authorized by a law later declared unconstitutional, and not by the respondent’s tolerance.

RULING

Yes, petitioner is liable for unlawful detainer. The Supreme Court reinstated the MeTC decision ordering petitioner to vacate. The Court clarified that possession by tolerance exists when the owner permits another to occupy the property without any contract between them. Here, respondent’s tolerance began after the Tuason decision nullified P.D. 293 and restored its full ownership rights. Prior to that ruling, respondent had no legal capacity to give consent, as its title was deemed invalid by the operative force of the decree. Its passive allowance of occupancy under the compulsion of the law was not a voluntary act of tolerance.
However, upon the judicial declaration of P.D. 293’s unconstitutionality, the decree was considered void from the beginning. This retroactive nullity restored respondent’s title as though the decree never existed. From that moment—February 1988—petitioner’s continued possession lacked any legal basis and was merely by the sufferance of the restored owner. Respondent’s subsequent oral and written demands to vacate established that the tolerated possession had been terminated. Petitioner’s refusal to leave upon demand rendered his possession unlawful, perfecting the cause of action for ejectment. The absence of tolerance at the very start of possession is immaterial; what is crucial is that the possession became one of tolerance upon the restoration of the owner’s rights and that the owner later demanded the property’s return.