Llobrera vs. Fernandez

Possession by mere tolerance of the owner creates an implied promise to vacate upon demand; refusal after demand makes the occupant liable to ejectment. Consignation under Article 1256 of the Civil Code requires a valid creditor-debtor relationship between the consignor and the consignee; without a proven contract, no obligation to accept payment exists, and the consignation produces no legal effect.

Respondent Josefina V. Fernandez, a registered co-owner of a 1,849-square-meter lot covered by Transfer Certificate of Title No. 9042 in Dagupan City, sought to recover possession from multiple sets of spouses and individuals who had been occupying portions of the land. Petitioners’ occupancy began in 1945 with the permission of Gualberto de Venecia, an alleged co-owner. Petitioners claimed a lease agreement at ₱20 monthly rental per occupant and insisted they had continuously paid rentals until the de Venecia representative refused to accept payments in June 1996. In response, petitioners deposited the supposed rentals in a bank account as consignation. Respondent demanded they vacate; upon their refusal, she initiated ejectment proceedings after barangay conciliation failed.

• The Property and the Occupation: A 1,849-square-meter parcel of land in Dagupan City, covered by TCT No. 9042, is co-owned by respondent Josefina V. Fernandez and others. Petitioners comprise numerous married couples and individuals who occupied separate portions of the land. Their occupation began in 1945, by their account, with the permission of co-owner Gualberto de Venecia on condition they pay a monthly rental of ₱20.00 each.
• Alleged Lease and Consignation: Petitioners asserted they continuously paid rentals to Gualberto de Venecia, Rosita de Venecia, or their representatives, with receipts issued. They claimed these receipts were destroyed in a fire on March 19, 1996, and therefore could not be produced. Beginning June 1996, the de Venecia representative refused to accept further rental payments, prompting petitioners to open a bank account with Banco San Juan and deposit the monthly amounts as consignation in the name of respondent.
• Demand to Vacate: Respondent, as co-owner, served a written demand upon petitioners to vacate the premises within fifteen days. Petitioners refused to leave. Barangay conciliation failed, and the Barangay Captain issued a certification to file action.
• Ejectment Complaint: Respondent filed a verified complaint for ejectment and damages before the MTCC, alleging that petitioners’ possession, originally by tolerance, had become unlawful upon their refusal to vacate after demand.
• Lower Courts’ Finding of Fact: All three courts below—the MTCC, RTC, and CA—found that petitioners failed to present any written memorandum of the alleged lease. The claimed receipts were not produced, and the excuse of fire was unsubstantiated. Consequently, the courts unanimously determined petitioners’ possession was by mere tolerance, not by any contract.

• Nature of Possession: Petitioners contended their possession was founded on a lease contract with a co-owner, not mere tolerance, and that they could not be ejected without cause.
• Validity of Consignation: Petitioners argued that their consignation of rental payments to a bank account after the lessor’s refusal to accept payment was legally effective under Article 1256 of the Civil Code, thereby preserving their right to possess.
• Award of Damages: Petitioners challenged the award of monthly compensation, attorney’s fees, and litigation expenses, asserting they had not been in default and had acted in good faith by consigning the rentals.

• Possession by Tolerance: Respondent maintained that petitioners occupied the land by mere tolerance or permission, without any contract, and that their possession became unlawful upon demand to vacate and their refusal.
• Ineffectiveness of Consignation: Respondent countered that no creditor-debtor relationship existed between her and petitioners; thus, she had no obligation to accept the tendered amounts, and the consignation was invalid.
• Propriety of Damages: Respondent argued that petitioners’ unjustified refusal to surrender possession entitled her to reasonable compensation for use and occupation, as well as attorney’s fees and costs under Rule 70 of the Rules of Court.

• Nature of Possession: Whether petitioners’ possession of the subject property was by virtue of a lease contract or by mere tolerance of the owner.
• Validity of Consignation: Whether the consignation of rentals by petitioners under Article 1256 of the Civil Code was valid and effective to defeat the ejectment action.
• Award of Damages: Whether the award of reasonable compensation, attorney’s fees, and litigation expenses was proper under the circumstances.

• Nature of Possession: Petitioners’ possession was by mere tolerance. They failed to present any written memorandum or receipts to establish a lease agreement, and the consistent factual finding of the three courts below is conclusive absent any compelling reason to depart. In the absence of a contract, the occupation is by tolerance, which carries an implied obligation to vacate upon demand.
• Validity of Consignation: The consignation was legally ineffective. Article 1256 of the Civil Code presupposes a creditor-debtor relationship, which was absent here because no contractual nexus existed between respondent and petitioners. Since respondent was not a creditor with respect to the alleged ₱20.00 monthly rental, she could not be compelled to accept payment, and the bank deposit had no legal effect upon her.
• Award of Damages: The award of ₱300.00 monthly as reasonable compensation for use and occupation, ₱10,000.00 attorney’s fees, and ₱2,000.00 litigation expenses was proper. Rule 70, Section 17 of the Rules of Court expressly authorizes such awards. Petitioners unjustifiably refused to vacate despite knowing they could not prove a right to possession, justifying the grant of damages, attorney’s fees, and costs.

• Doctrine of Possession by Tolerance — A person who occupies the land of another at the latter’s tolerance or permission, without any contract, is bound by an implied promise to vacate upon demand; a summary action for ejectment is the proper remedy against him. The Court applied this doctrine to uphold the ejectment because petitioners failed to demonstrate any contractual right of possession.
• Consignation Requires a Creditor-Debtor Relationship — For consignation under Article 1256 of the Civil Code to be effective, there must be an unjust refusal by a creditor to accept payment from a debtor. If no contractual relation exists between the parties, the obligation to accept payment does not arise, and consignation produces no legal effect. The Court used this principle to reject petitioners’ defense of consignation.

• “A person who occupies the land of another at the latter’s tolerance or permission, without any contract between them, is necessarily bound by an implied promise that he will vacate upon demand, failing which, a summary action for ejectment is the proper remedy against him.” — This passage from Roxas vs. Court of Appeals crystallizes the rationale for treating tolerant possession as terminable at will.
• “Consignation based on Article 1256 of the Civil Code indispensably requires a creditor-debtor relationship between the parties, in the absence of which, the legal effects thereof cannot be availed of.” — This statement establishes the minimum condition for consignation and explains why the bank deposit did not confer any right upon petitioners.

• Roxas vs. Court of Appeals, G.R. No. 138955, October 29, 2002, 391 SCRA 351 — Followed. The Court relied on this precedent for the rule that possession by mere tolerance creates an implied promise to vacate upon demand, making ejectment the proper remedy.

• Article 1256, Civil Code — Provides that if a creditor unjustifiably refuses to accept payment, the debtor may be released from responsibility by consignation. The Court held the provision inapplicable because no creditor-debtor relationship existed between respondent and petitioners.
• Section 17, Rule 70, Rules of Court — Authorizes the trial court in an ejectment case to render judgment for restitution of the premises, arrears of rent or reasonable compensation for use and occupation, attorney’s fees, and costs. The provision supported the award of ₱300.00 monthly compensation, attorney’s fees, and litigation expenses.

Angelina Sandoval-Gutierrez, Renato C. Corona, Adolfo S. Azcuna. Associate Justice Reynato S. Puno was on leave and did not participate.