GR 30173; (September, 1971) (Digest)
G.R. No. L-30173 September 30, 1971
GAVINO A. TUMALAD and GENEROSA R. TUMALAD, plaintiffs-appellees, vs. ALBERTA VICENCIO and EMILIANO SIMEON, defendants-appellants.
FACTS
Defendants-appellants executed a chattel mortgage over their house of strong materials to secure a loan from plaintiffs-appellees. Upon default, the mortgage was extrajudicially foreclosed, and the house was sold at public auction to the plaintiffs as the highest bidder. Plaintiffs then filed an ejectment case in the municipal court to recover possession of the house and collect monthly rentals from the defendants. The municipal court ruled in favor of the plaintiffs, a decision affirmed by the Court of First Instance. Defendants appealed, arguing the municipal court lacked jurisdiction because the case involved the issue of ownership, stemming from their claim that the chattel mortgage was void. They also contested their liability to pay rentals during the one-year redemption period following the foreclosure sale.
ISSUE
The core issues are: (1) whether the municipal court had jurisdiction over the ejectment case despite the defendants’ challenge to the validity of the chattel mortgage and the consequent sale; and (2) whether the defendants are obligated to pay rentals to the plaintiffs during the statutory redemption period.
RULING
The Supreme Court affirmed the lower courts’ decisions. On jurisdiction, the Court held that the municipal court properly exercised its jurisdiction over the ejectment case. The defendants’ claim of nullity of the chattel mortgage, based on alleged fraud, did not divest the municipal court of its jurisdiction over the possessory action. The determinative issue was possession, not ownership. The plaintiffs’ right to seek possession was based on their status as purchasers at the foreclosure sale, a claim of title which the defendants merely contested. In ejectment cases, the court can resolve questions of ownership preliminarily if necessary to decide the issue of possession. The defendants’ failure to present evidence to substantiate their fraud claim was fatal to their cause.
Regarding the payment of rentals, the Court ruled that the defendants were liable to pay reasonable compensation for the use and occupation of the property during the redemption period. The right to redeem does not include the right to possess the property without compensation. The purchaser at a foreclosure sale is entitled to a writ of possession and, pending redemption, to the rents and profits of the property. The defendants’ continued occupation after the sale obligated them to pay reasonable rent to the plaintiffs. The awarded monthly rental of P200.00 was deemed reasonable and in line with the parties’ own valuation as reflected in the chattel mortgage contract. Therefore, the defendants were correctly ordered to pay accrued rentals.