G.R. No. 211078 . July 08, 2020
LETICIA ELIZONDO EUPENA, PETITIONER, VS. LUIS G. BOBIER, RESPONDENT.

FACTS

Petitioner Leticia Elizondo Eupena filed a Complaint for unlawful detainer against respondent Luis G. Bobier before the Municipal Trial Court (MTC). Eupena claimed ownership of a parcel of land in Taytay, Rizal, evidenced by Transfer Certificate of Title (TCT) No. 698957, and alleged she leased it to Bobier under a Contract of Lease dated November 22, 2005, with a monthly rent of P3,000.00. The written contract was not renewed but extended monthly. Eupena alleged Bobier defaulted on rent payments starting May 2010 and, despite a demand letter, refused to pay arrears of P27,000.00 and vacate.
Bobier denied Eupena’s ownership. He averred he purchased the land from Extraordinary Development Corporation (EDC) in 1995 under a lease-to-own arrangement. Due to financial difficulties, he defaulted on amortizations. Fearing cancellation, he and his wife approached Eupena (his wife’s co-worker and kumadre) for a loan. On September 6, 2004, Bobier executed a Special Power of Attorney (SPA) authorizing Eupena to claim the title in his name from EDC upon full payment of his outstanding obligation, to serve as collateral for the loan. Bobier alleged he only discovered Eupena had transferred the title to her name upon receiving the complaint, accusing her of automatic appropriation of the property. He claimed the lease contract was signed with the understanding rentals would serve as loan payments.
The MTC ruled in favor of Eupena, ordering Bobier to vacate and pay rental arrears and attorney’s fees. The RTC affirmed the MTC decision, ruling no pactum commissorium was present in the SPA and that the lease contract was clear. The Court of Appeals (CA) reversed, finding elements of pactum commissorium present as the title was transferred to Eupena just over a year after the SPA, concluding she appropriated the property upon loan default. The CA provisionally declared Eupena’s title void and dismissed the unlawful detainer complaint. Eupena filed a Petition for Review, arguing Bobier’s defense was a collateral attack on her title and he was estopped from denying her ownership due to the lease contract.

ISSUE

Whether the Court of Appeals erred in dismissing the unlawful detainer complaint by ruling on the issue of ownership and finding the existence of a pactum commissorium, thereby invalidating the lease contract and Eupena’s title for purposes of determining possession.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals Decision. The ruling is summarized as follows:
1. On Determining Ownership in Unlawful Detainer: An action for unlawful detainer is summary and aims to recover physical possession (de facto). However, when the defendant raises the defense of ownership and possession cannot be resolved without addressing ownership, the court may make a provisional determination of ownership solely to decide the issue of possession. Such a determination does not constitute a collateral attack on the plaintiff’s title.
2. On the Existence of a Lessor-Lessee Relationship and Conclusive Presumption: For the conclusive presumption under Section 2(b), Rule 131 of the Rules of Court (that a tenant cannot deny the landlord’s title) to apply, the existence of a true lessor-lessee relationship must first be proven. The mere existence of a lease agreement is not sufficient proof if the circumstances cast doubt on its validity.
3. On the Validity of the Lease Agreement and Pactum Commissorium: The undisputed facts and Bobier’s unrefuted allegations revealed a factual backdrop that made the validity of the lease agreement suspect. The sequence of events—Bobier’s initial purchase from EDC, his loan from Eupena, the SPA stating the title would be collateral, the transfer of title to Eupena shortly after, and the subsequent execution of a lease contract—coupled with Eupena’s failure to rebut allegations of concealing a loan agreement and deed of sale, showed that Eupena possibly obtained the title through a pactum commissorium. This is prohibited under Article 2088 of the Civil Code, which voids any stipulation allowing a creditor to appropriate mortgaged property.
4. Final Disposition: Since the circumstances indicated the lease agreement was void (as a contract with an object or purpose contrary to law under Article 1409(1) of the Civil Code, stemming from an illegal pactum commissorium), no true lessor-lessee relationship was established. Consequently, the conclusive presumption favoring Eupena’s title did not apply. Without a valid basis for her claim of possession as a lessor, Eupena failed to prove a cause of action for unlawful detainer. The CA correctly dismissed the complaint.