The Supreme Court (SC) has ordered Dakak Beach Resort Corporation and Romeo G. Jalosjos to vacate a 1,602-square-meter lot within the resort in Dapitan City in Zamboanga del Norte and to turn it over to the owner.
Also, the SC -- in a decision that modified the ruling of the Court of Appeals (CA) -- ordered Dakak and Jalosjos to turn over all the improvements on the property to the owner, pay the unpaid rents, and settle P1.5 million in damages.
The decision, written by Associate Justice Alfredo Benjamin S. Caguioa, denied the petition filed by Dakak and Jalosjos against the 2018 CA decision which affirmed the 2016 ruling of the regional trial court (RTC).
Case records showed that on Dec. 1, 1987, Violeta Saguin de Luzuriaga, the owner of the land, signed a lease contract with Dakak, represented by Jalosjos, for a period of 10 years commencing from Jan. 1, 1988 to Dec. 31, 1997. The contract provided for the amount of rent and the yearly increase.
The contract of lease also provided that all permanent and fixed improvements introduced by the lessee (Dakak) shall become the property of the lessor (De Luzuriaga).
However, De Luzuriaga was not provided a copy of the lease contract despite repeated demands from Jalosjos.
Believing that the contract had expired, De Luzuriaga returned a check amounting to P4,220 as rentals from August 1992 to December 1992. She did not get any response from Dakak or Jalosjos.
In a letter dated May 24, 1994, De Luzuriaga demanded that Dakak and Jalosjos vacate her property. Her demand was ignored.
Due to her frustrations, De Luzuriaga sold the property to her daughter Pilar who is married to Jose Ma. M. Mendezona.
On Aug. 16, 1999, the Mendezona spouses sent a letter to Dakak and Jalosjos and demanded the turnover of the property. When their demand was ignored, the couple filed a complaint for recovery of possession, specific performance, rentals, and damages against Dakak and Jalosjos.
In their answer, Dakak and Jalosjos admitted that the lease contract with De Luzuriaga expired on Dec. 31, 1997.
Since the property is located inside the beach resort, Dakak and Jalosjos told the trial court that they introduced considerable improvements and complied with the terms and conditions of the lease contract.
Dakak argued that it has preferential right to acquire the property as against spouses Mendezona due to the multi-million pesos it had invested.
It cited that under Articles 1621 and 1623 of the New Civil Code, Dakak has a right of redemption over the lot, which is a rural land adjacent to the land it owned and is exercising such right by consigning the amount paid by the Spouses Mendezona for the sale of the property.
It also said it was not notified of the sale of the property, and had the right to continue as lessee for a longer period to be fixed by the court.
Dakak and Jalosjos told the trial court that if the ruling is against them, they should be reimbursed for the cost of the cottages and their loss of revenue, including moral damages.
In a decision Aug. 1, 2026, the trial court ruled in favor of the Mendezona spouses. When the CA, on June 28, 2018, affirmed with modification the trial court’s ruling, Dakak and Jalosjos elevated the case to the SC.
The SC said:
“Indeed, Dakak and Jalosjos have been benefitting from the continued use and occupation of the subject property long after the lease contract expired.
“Their outright refusal to surrender possession to the Spouses Mendezona on the excuse that they are entitled to its ownership by reason of the significant improvements made on the subject property has no basis in law.
“The amount of reasonable rent adjudged compensates for the years that the Spouses Mendezona have been deprived of the possession of their property.
“In the present case, both the RTC and CA overlooked awarding moral damages prayed for by the Spouses Mendezona in their Complaint. The Court deems it proper to correct this.
“Dakak and Jalosjos repeatedly ignored their lessor's request for a copy of the lease agreement. Dakak also completely stopped payment of the rent due to the lessor despite knowing the terms of the contract and refused to vacate the leased premises upon termination of the lease.
“When the Spouses Mendezona acquired the subject property, Dakak and Jalosjos refused to honor the rights of the new owners of the lot.
“Taking into consideration the wanton and malicious refusal to honor contractual obligations, the outright disregard of the rights of the new owners of the subject property as well as the considerable length of time that Dakak and Jalosjos have been unlawfully in possession of the subject property, the Court deems it proper to impose damages in the amount of P500,000.
“The present case, which involves a simple and straightforward lease contract, has spanned more than two decades. Dakak has been using Lot 8771-A for its own financial gain for more than 20 years at the expense of its lawful owner.
“The non-payment of rent to De Luzuriaga and Spouses Mendezona, the outright refusal to vacate the property despite several demands and dragging of a simple lease contract for years smack of utter bad faith and wanton disregard of contractual obligations.
“The act of oppression of Dakak and Jalosjos against a small landowner cannot be left unpunished. Thus, the Court awards exemplary damages of P1 million in favor of the Spouses Mendezona.
“Further, in order to ensure that Dakak and Jalosjos do not prolong their baseless claim further at the expense of the Spouses Mendezona, the Court deems it proper to have the decision immediately executory.
“Finally, Dakak and Jalosjos are also liable to pay interest for both unpaid rent and reasonable rent for use and occupancy of Lot 8771-A.
“Since these do not constitute loans or forbearances of money, the proper interest applicable is six percent per annum.”
The dispositive portion of the decision that was made public on last March 20:
“Accordingly, the present Petition is denied. The Decision dated June 28, 2018 of the Court of Appeals - Cagayan de Oro City Twenty-Second Division and Resolution dated Jan. 25, 2019 of the Court of Appeals - Cagayan de Oro City Former Twenty- Second Division in CA-G.R. CV No. 04450-MIN are affirmed with modification:
“Petitioners Dakak Beach Resort Corporation and Romeo G. Jalosjos are ordered to vacate the subject land and to return the same peacefully to respondent Spouses Jose Ma. М. Mendezona and Pilar L. Mendezona within thirty (30) days from finality of this Decision.
“The permanent and fixed improvements found on the subject property are declared owned by the Spouses Mendezona.
“Petitioners are ordered to pay the Spouses Mendezona P93,463.28, representing the unpaid rentals from August to December 1992 until Dec. 31, 1997, with interest at the rate of six percent per annum from April 2, 2003 (i.e., filing of the Complaint) until fully paid.
“Petitioners are ordered to pay the Spouses Mendezona reasonable rent of P4,000 per month for 1998 and an annual escalation of P2,000 in the monthly rental rate for the succeeding years until they vacate the property. The total amount shall earn interest at the rate of six percent per annum from April 2, 2003 (i.e., filing of the Complaint) until fully paid.
“Petitioners are ordered to pay moral damages in the amount of P500,000 and exemplary damages in the amount of P1 million to the Spouses Mendezona. The total sum of the amounts awarded herein shall further be subject to six percent legal interest, from the date of finality of this Decision until full satisfaction.
“This Decision shall be immediately executory. So ordered.”