COLITO PAJUYO, petitioner vs. CA and EDDIE GUEVARRA, respondents.

(2004)
CARPIO, J.

NATURE:
Petition for Review before the SC of CA decision.

SUMMARY:
On 8 December 1985, Pajuyo and Guevarra executed a Kasunduan whereby the former allowed the
latter to live in his house in Bo. Payatas for free. Guevarra was under the obligation to: 1) maintain
the cleanliness and orderliness of the house; and 2) vacate the house upon Pajuyo’s demand. In
September 1994, Pajuyo demanded Guevarra to vacate the house; however, the latter refused.
Pajuyo filed an ejectment case before MTC QC, which ruled in his favor. On appeal, the RTC affirmed
the MTC. Guevarra then filed an Motion for Extenstion before the SC and subsequently filed his
appeal. The SC certified the case to the CA. The CA reversed the RTC and held that they are in pari
delicto. It also held that the agreement between the parties was not a lease, but a commodatum.
Hence, the instant appeal to the SC. The SC held that the agreement was not commodatum as it was
not gratuitous. Moreover, Pajuyo had better right to the physical possession of the property.

DOCTRINE:
 Jurisprudence has treated relationship based on tolerance as one that is akin to a landlord-
tenant relationship, not commodatum. The withdrawal of permission would result in the
termination of the lease.

FACTS:
 In June 1979, Petitioner Pajuyo paid ₱ 400 to a certain Pedro Perez for the rights over a 250
sqm lot in Barrio Payatas, QC. He then constructed a house made of light materials on the lot.
He and his familty lived in the house from 1979 to 7 December 1985.
 On 8 December 1985, Pajuyo and Respondent Guevarra executed a Kasunduan whereby
Pajuyo, as owner of the house, allowed Guevarra to live the house for free, provided that the
latter would maintain the cleanliness and orderliness of the house.
o Guevarra promised that he would voluntarily vacate the house upon Pajuyo’s
demand.
 In September 1994, Pajuyo informed Guevarra of his need of the house, demanding the latte
to vacate the house. However, Guevarra refused.
o This prompted Pajuyo to file an ejectment case before MTC QC.
 In his Answer, Guevarra contended that Pajuyo had no valid title or right of possession over
the lot where the house stands because said lot is within the 150 hectares set aside by
Proclamation 137 for socialized housing.
o Guevarra also pointed out that from December 1985 to September 1994, Pajuyo did
not show up or communicate with him.
 On 15 December 1995, the MTC ruled in favor of Pajuyo.
o The subject of the agreement is the house and not the lot. Pajuyo is the owner of the
house and he allowed Guevarra to use the house only by tolerance. Thus, Guevarra’s
refusal to vacate despite demand made his continued possession illegal.
o It ordered Guevarra to 1) vacate the house; 2) pay ₱ 300 monthly rental as reasonable
compensation for the use of the premises starting from the last demand; 3) pay ₱ 3
000 as attorney’s fees; and 4 pay costs of the suit.
 Guevarra appealed to RTC QC, which affirmed the MTC decision in toto.
o It upheld the Kasunduan, which established a landlord-tenant relationship between
Pajuyo and Guevarra. The terms of said agreement bound Guevarra to return
possession of the house on demand.
o It rejected Guevarra’s claim of a better right under Proclamation 137, Revised
National Government Center Housing Project Code of Policies, and other pertinent
 laws, because in an ejectment suit, the RTC has no power to decide his rights under
said laws. In an ejectment case, the only issue for resolution is material or physical
possession, not ownership.
 Instead of filing an appeal with the CA, Guevarra filed a “Motion for Extension of Time to File
Appeal by Certiorari Based on Rule 42” with the SC, theorizing that it raised pure questions
of law.
o The Receiving Clerk of the SC received the Motion on 13 December 1996, one day
before the right to appeal expired.
o On 3 January 1997, Guevarra filed a Petition for Review before the SC.
 On 8 January 1997, the 1st Division referred the Motion for Extension to the CA, which has
concurrent jurisdiction over the case.
o On 28 January 1997, the CA granted the Motion. On 11 April 1997 Pajuyo filed his
Comment.
 On 21 June 2000, the CA reversed and set aside the RTC.
o It declared that Pajuyo and Guevarra are informal settlers, thus they illegally occupied
the contested lot, which is owned by the Government.
o Perez, from whom Pajuyo acquired his title, was also an informal settler.
o Thus, the assignment of rights between Perez and Pajuyo, and the Kasunduan between
Pajuyo and Guevarra, did not have any legal effect. Pajuyo and Guevarra are in pari
delicto.
o The Kasunduan is not a lease contract but a commodatum because the agreement is
for a price certain.
o Guevarra has a better right over the property under Proclamation 137. When the
Proclamation was issued, Guevarra was in physical possession of the property. Under
Art. VI of the Code of Policies Beneficiary Selection and Disposition of Homelots and
Structures in the National Housing Project, the actual occupant or caretaker of the lot
shall have first priority as beneficiary of the project.
 Pajuyo filed an MR, which was denied by the CA.
o Guevarra filed the Motion for Extension on time.
o Pajuyo cannot seek the dismissal of the case, on the ground that it was Guevarra’s
counsel who signed the certification against forum shopping, after he had extensively
argued on the merits of the case.
 Pajuyo appealed the case to the SC.

ISSUE:
Whether or not Pajuyo is entitled to the physical possession of the subject lot (YES)

RATIO:
There is unlawful detainer
 The Kasunduan provides:
o “Ako, si COLITO PAJUYO, may-ari ng bahay at lote sa Bo. Payatas, Quezon City, ay
nagbibigay pahintulot kay G. Eddie Guevarra, na pansamantalang manirahan sa
nasabing bahay at lote ng “walang bayad.”
Kaugnay nito, kailangang panatilihin nila ang kalinisan at kaayusan ng bahay at lote.
Sa sandaling kailangan na namin ang bahay at lote, sila’y kusang aalis ng walang
reklamo.”
 Based on the agreement, Pajuyo permitted Guevarra to reside in the house and lot free of rent,
under the obligation to maintain the premises in good condition. Guevarra also promised to
vacate the premises upon Pajuyo’s demand. When Guevarra failed to vacate despite demand,
he was guilty of unlawful detainer.
o Unlawful detainer: withholding by a person from another of the possession of real
property to which the latter is entitled after the expiration or termination of the
former’s right to hold possession under a contract, express or implied.
 Arcal v. CA: Where the plaintiff allows the defendant to use his property by tolerance without
any contract, the defendant is necessarily bound by an implied promise that he will vacate on
demand, failing which, an action for unlawful detainer will lie.
o The status of the defendant in such a case is similar to that of a lessee or tenant whose
term of lease has expired by whose occupancy continues by tolerance of the owner.
o The SC holds that this principle should apply with greater force in cases where a
contract embodies the permission or tolerance to use the property.

The Kasunduan is not commodatum

 The Kasunduan reveals that the accommodation accorded by Pajuyo was not essentially
gratuitous.
o While Guevarra was not required to pay rent, it obligated him to maintain the
property in good condition. The imposition of this obligation makes the agreement a
contract different from a commodatum.
 The effects of the Kasunduan are also different from that of a commodatum.
o Jurisprudence has treated relationship based on tolerance as one that is akin to a
landlord-tenant relationship where the withdrawal of permission would result in the
termination of the lease. The tenant’s withholding of the property would then be
unlawful.
 Even assuming that their relationship is that of commodatum, Guevarra as bailee would still
have the duty to turn over possession of the property to Pajuyo, the bailor.
o US v. Camara: The obligation to deliver or to return the thing received attaches to
contracts for safekeeping, or contracts of commission, administration and
commodatum.

The Kasunduan is not void for purposes of determining who ha a right to physical possession
 Guevarra refused to honor the agreement on the sole ground that Pajuyo is also an informal
settler like him. He argues that informal settlers cannot enter into a contract involving he land
they illegally occupy; thus, the contract is void.
 The SC held that, “Guevarra should know that there must be honor even between squatters.
Guevarra freely entered into the Kasunduan. [He] cannot now impugn the [same] after he had
benefited from it. The Kasunduan binds Guevarra.”
 The Kasunduan is not void for purposes of determining who between the two has a right to
the physical possession of the contested property.
o The Kasunduan is the undeniable evidence of Guevarra’s recognition of Pajuyo’s
better right of physical possession.
o Guevarra is clearly a possessor in bad faith. The absence of a contract would not yield
a different result, as there would still be an implied promise to vacate.

DISPOSITION:
Petition granted; CA decision set aside; RTC decision reinstated with modification (attorney’s fees
are deleted).