Roberts v. Papio
REITERATIONFacts
The Antecedents: Spouses Martin and Lucina Papio mortgaged their residential lot to secure a loan. To redeem the property, they executed a Deed of Absolute Sale on April 13, 1982, over the property in favor of Amelia Roberts for ₱85,000.00. Roberts paid ₱59,000.00 to the mortgagee and the remaining ₱26,000.00 was retained by the spouses. Subsequently, a Contract of Lease dated April 15, 1982, was executed between Roberts (lessor) and Martin Papio (lessee) for two years, effective May 1, 1982, with monthly rentals of ₱800.00. TCT No. S-44980 was cancelled and TCT No. 114478 was issued in Roberts' name. Papio paid rentals until 1985 but remained in possession for almost 13 years without paying rentals. Roberts sent demand letters for unpaid rentals and to vacate the property. Procedural History: Amelia Roberts filed a complaint for unlawful detainer and damages against Martin Papio before the Metropolitan Trial Court (MeTC). The MeTC ruled in favor of Roberts, ordering Papio to vacate, pay rentals, and attorney's fees. Papio appealed to the Regional Trial Court (RTC), which affirmed the MeTC decision with modification regarding the computation of accrued rentals. Papio then appealed to the Court of Appeals (CA), which reversed the RTC decision, declaring the Deed of Absolute Sale as an equitable mortgage and entitling Papio to possession. Roberts filed a motion for reconsideration, which the CA denied. The Petition: Roberts filed a petition for review on certiorari before the Supreme Court, assailing the CA's decision and resolution.
Issue(s)
Whether the Metropolitan Trial Court (MeTC) had jurisdiction in an unlawful detainer action to resolve the issue of ownership to determine possession. Whether the transaction between the parties under the Deed of Absolute Sale and Contract of Lease constituted an equitable mortgage. Whether Amelia Roberts is entitled to the material or de facto possession of the property.
Ruling
The Supreme Court granted the petition, reversed the Court of Appeals' decision, and affirmed the modified decision of the Regional Trial Court, which upheld the Metropolitan Trial Court's ruling in favor of Amelia Roberts. The Court ordered Martin Papio to vacate the premises and pay accrued rentals and attorney's fees.
Ratio Decidendi
On the jurisdiction of the MeTC to resolve ownership in an unlawful detainer case: The Court affirmed the CA's ruling that the MeTC has jurisdiction to make a provisional determination of ownership solely for the purpose of resolving the issue of possession in an unlawful detainer case. Section 18, Rule 70 of the Rules of Court allows the MeTC to delve into the issue of ownership when it is intertwined with and necessary to resolve the issue of possession, even if the defendant claims ownership or a right to repurchase. However, such a determination is merely provisional and does not bar a separate action to settle ownership with finality, such as the specific performance case filed by Papio. On whether the transaction was an equitable mortgage: The Court ruled that the CA erred in declaring the transaction as an equitable mortgage. The respondent, Martin Papio, consistently alleged in his pleadings that he had repurchased the property, which is antithetical to the concept of an equitable mortgage. His claim of repurchase impliedly admitted the validity of the Deed of Absolute Sale, wherein ownership was transferred to Roberts, subject to his right to repurchase. The Court emphasized that the right to repurchase must be reserved in the same instrument of sale, and a separate agreement for repurchase does not constitute an equitable mortgage. The Deed of Absolute Sale was clear and unambiguous, and the Court would not interpret it to mean something contrary to its plain import. On Amelia Roberts' entitlement to possession: The Court found that Roberts was entitled to the material or de facto possession of the property. Papio failed to adduce competent and credible evidence to prove his claim of repurchase. The Deed of Absolute Sale was absolute and unconditional, and there was no evidence that Roberts agreed to sell the property back to Papio for ₱250,000.00 or that Perlita Ventura was authorized to sell the property or receive the purchase price. The Court noted that Papio's own letters and actions, such as offering to settle back rentals, belied his claim of having already repurchased the property. Therefore, Roberts, as the registered owner, was entitled to possession.
Main Doctrine
In an unlawful detainer case, the MeTC may make a provisional determination of ownership to resolve the issue of possession, but this determination is not conclusive and does not bar a separate action to settle ownership with finality. A claim of repurchase is antithetical to an equitable mortgage, and the terms of an absolute deed of sale, if clear, must be given their literal meaning.