In an ejectment case, where both parties claim ownership, the court determines who has the right to possess the property, though this determination is not a final judgment on ownership. This decision clarifies that while a Torrens title offers strong evidence of ownership, courts may provisionally assess ownership to resolve possession disputes. Ultimately, Five Star Marketing Co., Inc. was deemed to have the right to possess the property, based on its certificate of title and tax declarations, but this determination does not prevent a separate action to definitively settle the title.

Possession vs. Ownership: Who Gets to Stay While Ownership Is Disputed?

The case of Spouses Sheikding Booc and Bily Booc v. Five Star Marketing Co., Inc. revolves around a dispute over the possession of a property in Iligan City. Five Star Marketing Co., Inc. filed an unlawful detainer case against the spouses Booc, who claimed to be the actual owners of the portion of the building they occupied. The central legal question is whether the courts, in an ejectment case, can make a determination of ownership, and if so, how that determination affects the rights of the parties involved.

The spouses Booc argued that they had been allowed to live on the premises rent-free but were later asked to pay a monthly rental of P40,000.00, which they refused, leading to the unlawful detainer complaint. They further asserted their claim as co-owners, stating they had financed the construction. The Municipal Trial Court in Cities (MTCC) and the Regional Trial Court (RTC) initially ruled in favor of the spouses, but the Court of Appeals (CA) reversed these decisions, ordering the spouses to vacate the premises and pay monthly rentals.

The Supreme Court (SC) partly affirmed the CA’s decision, clarifying that while the primary issue in an unlawful detainer case is physical possession, courts can provisionally determine ownership to resolve the issue of possession. A certificate of title is a conclusive evidence of ownership. It noted that the burden of proving the existence of a trust rests on the party asserting it, and in this case, the spouses Booc failed to provide sufficient evidence to support their claim of co-ownership. Five Star, on the other hand, presented a Transfer Certificate of Title (TCT) and tax declarations in its name, establishing a stronger claim to ownership for the purpose of the ejectment case.

Building on this principle, the Court addressed the issue of rental payments. The CA had awarded a monthly rental of P40,000.00 based on Five Star’s claim. The SC found this amount unsubstantiated by evidence. The Court referenced Section 17, Rule 70 of the 1997 Rules of Civil Procedure and ruled a reasonable amount must be based on presented evidence.

Section 17, Rule 70 of the 1997 Rules of Civil Procedure: The trial court is empowered to award reasonable compensation for the use and occupation of the premises sought to be recovered in a forcible entry or unlawful detainer case only if the claim is true.

Considering the previous rental rate for a similar portion of the building, the SC reduced the monthly rental to P10,000.00. This amount would incur interest following the guidelines set in Eastern Shipping Lines, Inc. v. Court of Appeals, establishing a 6% per annum interest from the date of extrajudicial demand until the judgment becomes final, and 12% thereafter until full payment.

Moreover, this decision has significant practical implications for property disputes in the Philippines. While ownership is generally proven with a Torrens Title, possession can be decided based on a preliminary assessment of evidence, allowing for swift resolution of ejectment cases. The Court also emphasized that such a determination of ownership is not final and does not bar a separate action for quieting of title.

FAQs

What was the key issue in this case?	The key issue was determining who had the right to possess the property in question, considering both parties claimed ownership. The court needed to determine if an ejectment case could involve assessing ownership.
What is an unlawful detainer case?	An unlawful detainer case is a legal action filed to recover possession of a property from someone who initially had the right to possess it but whose right has expired or been terminated. It is a type of ejectment suit.
What is a Torrens title?	A Torrens title is a certificate of title issued under the Torrens system of land registration, which is a conclusive evidence of ownership. It provides a high degree of security and simplifies land transactions.
What does “preponderance of evidence” mean?	Preponderance of evidence means that the evidence presented by one party is more convincing than the evidence presented by the other party. It’s the standard of proof in civil cases.
Can a court determine ownership in an ejectment case?	Yes, but only provisionally. The court can make an initial determination of ownership to resolve the issue of possession, but this determination is not final and does not prevent a separate action to quiet title.
What is a trust, and who has the burden of proving it?	A trust is a legal arrangement where one party (the trustee) holds property for the benefit of another (the beneficiary). The burden of proving the existence of a trust lies with the party asserting its existence.
How did the Supreme Court determine the rental amount?	The Supreme Court reduced the rental amount to P10,000.00 per month, considering the previous rental rate for a similar portion of the building. It considered prevailing market conditions and business practices to establish a fair rental value.
What is the significance of tax declarations in proving ownership?	While tax declarations are not conclusive evidence of ownership, they are good indicia of possession in the concept of owner. They show that the holder has a claim of title over the property.

In summary, this case highlights the importance of holding proper documentation of property ownership. This decision also shows that in property disputes, the legal nuances of ownership claims and the evidence presented are important to the outcome. The court aims to strike a balance between protecting property rights and ensuring fair compensation for the use of property.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Spouses Sheikding Booc and Bily Booc, vs. Five Star Marketing Co., Inc., G.R. No. 157806, November 22, 2007