De Mesa vs. Pulutan

A registered owner does not automatically prevail in unlawful detainer where the deed of sale is provisionally determined to be an equitable mortgage and prior possession by tolerance is not proven, because possession de facto turns on the jurisdictional facts of tolerance, demand, and withholding, with ownership decided only provisionally to resolve possession.

Petitioner Marlene D. De Mesa asserted ownership of a house and lot in Barangay Sta. Maria Magdalena, San Pablo City, previously covered by Transfer Certificate of Title No. T-61656 in the name of Amelia D. Pulutan, mother of respondents Rudy D. Pulutan and Medy P. Bundalian. According to petitioner, she purchased the realty from Amelia under a notarized deed of sale, causing cancellation of TCT No. T-61656 and issuance of TCT No. T-75686 in her name. Prior to issuance of the new title in 2008, petitioner and Amelia entered into a contract of lease over the same property from October 2006 to September 2007 at P2,000.00 per month, and Amelia continued to occupy the house and lot together with Rudy and his family.

Thereafter, petitioner alleged nonpayment of rent and asked Amelia to vacate, but Amelia instead requested to be allowed to repurchase the property until 30 December 2009 in an agreement made before the Sangguniang Barangay. Before barangay conciliation, petitioner discovered a Notice of Levy on the realty issued by the Regional Trial Court of San Pablo City, Branch 29 in Civil Case No. SP-6217, prompting her to file a third-party claim against the Spouses Ruby and Rolando Dimaisip and to pay them P270,000.00 under a compromise agreement to retain ownership. When Amelia failed to repurchase within the stipulated period, petitioner again demanded vacatur but allowed Amelia to stay out of pity because she was old and sickly.

Upon Amelia's death on 24 October 2016, petitioner required Rudy to leave, but he refused upon Medy's advice. Barangay referral failed, and after an unheeded demand letter to vacate, petitioner filed the unlawful detainer case. Respondents, for their part, maintained that the contract was actually a real estate mortgage and not a sale, as evidenced by Amelia's continued possession until death, and that she remained owner because the transaction was akin to an equitable mortgage. The Municipal Trial Court in Cities credited petitioner's sale theory and registered title, while the Regional Trial Court affirmed with reduced rentals, both treating respondents' equitable-mortgage assertion as an ownership claim not to be resolved in ejectment.

• Ownership by Redemption: Petitioner argued that she is owner of the property by way of a Deed of Redemption executed by the Spouses Dimaisip, as elaborated in the petition with certified copies of TCT No. T-61656, Notice of Levy, and Certificate of Sale.
• Preferential Right of Registered Owner: Petitioner maintained that the Court of Appeals failed to give preferential rights to the registered owner on who has the better right to physical possession, she having been registered owner since 2008.
• Collateral Attack on Title: Petitioner argued that giving credence to respondents' postulation constitutes an impermissible collateral attack on her transfer certificate of title.
• Multiplicity of Suits: Petitioner asserted that sustaining the Court of Appeals' judgment would be tantamount to multiplicity of suits because she would be forced to relitigate the issues in the case.

• Sale vs. Equitable Mortgage: Respondents posited that the contract between Amelia and petitioner was actually a real estate mortgage and not a sale, as evidenced by Amelia's continued possession until death, and that she remained owner since the contract was akin to an equitable mortgage.
• Change of Theory: Respondents submitted that petitioner changed her theory when she argued ownership by way of a Deed of Redemption in the petition, which was impermissible since it requires presentation of new evidence, was never alleged in the complaint nor raised before the trial court, and its supporting annexes were never mentioned in the complaint nor identified and marked during preliminary conference.

• Change of Theory on Appeal: Whether petitioner may raise for the first time on appeal a new theory of ownership based on a Deed of Redemption requiring new evidence.
• Unlawful Detainer and Equitable Mortgage: Whether the Court of Appeals erred in reversing the lower courts and dismissing the unlawful detainer suit after provisionally finding the deed of sale to be an equitable mortgage and tolerance unproven.
• Collateral Attack on Title: Whether provisional resolution of ownership in ejectment constitutes an impermissible collateral attack on petitioner's transfer certificate of title.
• Multiplicity of Suits: Whether affirming the dismissal will cause improper multiplicity of suits by forcing petitioner to relitigate the issues.

• Change of Theory on Appeal: No. A new theory requiring new evidence and not alleged in the complaint nor raised below cannot generally be raised for the first time on appeal, and none of the recognized exceptions was available.
• Unlawful Detainer and Equitable Mortgage: No. The dismissal was correct, the transaction having been provisionally found an equitable mortgage and mere tolerance not proved, so better right to possession was not established.
• Collateral Attack on Title: No. Provisional resolution of ownership to determine possession does not alter, modify, or cancel the certificate and is not a proscribed collateral attack.
• Multiplicity of Suits: No. Ejectment and recovery of ownership have different causes of action and reliefs, and the ejectment ruling on ownership is not final and does not bar a title action.

• Change of Theory on Appeal: An issue not alleged in the complaint nor raised before the trial court generally cannot be raised for the first time on appeal, consistent with fair play, justice, and due process, and need not be discussed if first raised before the Supreme Court. Applied here, ownership anchored on the supposed contract of sale with Amelia was replaced by ownership based on the Deed of Redemption from the Spouses Dimaisip, supported by annexes never pleaded nor marked below, with no exception for jurisdictional issues, interests of justice without need for further evidence, or issues already raised below shown to apply.
• Unlawful Detainer and Equitable Mortgage: Unlawful detainer concerns only physical possession or possession de facto through summary proceedings, although Section 16, Rule 70 allows provisional resolution of ownership when possession cannot be resolved without it, with judgment conclusive only on possession under Section 18. Although Torrens title carries the attribute of possession, ejectment still requires proof that initial possession was by contract or tolerance, that it became illegal upon termination, that defendant remained and deprived plaintiff of enjoyment, and that suit was filed within one year from last demand. Here, Amelia's undisputed continued possession as lessee satisfied a badge under Article 1602, paragraphs (2) and (3) were found present including an extended redemption period to 30 December 2009, even one circumstance suffices to presume equitable mortgage, doubts favor the lesser transmission of rights, and petitioner as mere mortgagee failed to prove tolerance or better possession, consistent with Corpuz vs. Spouses Agustin and Iglesia De Jesucristo Jerusalem Nueva of Manila, Philippines, Inc. vs. Dela Cruz.
• Collateral Attack on Title: Under Section 48 of Presidential Decree No. 1529, a certificate of title may not be collaterally attacked, but resolution of ownership in ejectment on a provisional basis only to determine possession effects no alteration, modification, or cancellation of title. Following Heirs of Cullado vs. Gutierrez, the question of direct versus collateral attack is immaterial in forcible entry and unlawful detainer because Sections 16 and 18, Rule 70 expressly permit the provisional determination, which never imperils the certificate.
• Multiplicity of Suits: Unlawful detainer involves only material possession while accion reivindicatoria involves ownership including possession, so identity of parties and subject matter does not create identity of cause of action or relief and forum shopping is absent under Spouses Tobias vs. Gonzales. The ruling was expressly limited to better right to possession and is not a final determination of ownership barring the parties or third persons from filing a title action.

• Nature of unlawful detainer — Unlawful detainer is a summary action filed only to recover physical possession or possession de facto, providing a speedy means to prevent unjust continuation of possession while ownership or possession de jure is litigated separately. It was applied to confine the case to who had better physical possession rather than final ownership.
• Provisional resolution of ownership under Section 16, Rule 70 of the Rules of Court — When defendant raises ownership and possession cannot be resolved without deciding ownership, ownership shall be resolved only to determine possession. It was applied to allow the Court of Appeals to examine whether the deed was a sale or equitable mortgage solely to decide possession.
• Judgment conclusive only on possession under Section 18, Rule 70 — Judgment in forcible entry or detainer is conclusive only on possession and does not bind title or bar a later action on title between the same parties. It was applied to reject multiplicity concerns and preserve a future ownership action.
• Ejectment not necessarily decided for the registered owner — Although Torrens title carries the attribute of possession, the plaintiff must still aver and prove the jurisdictional facts: initial possession by contract or tolerance, termination rendering possession illegal, continued withholding, and filing within one year from last demand. Failure to prove mere tolerance, as in Corpuz vs. Spouses Agustin and Iglesia De Jesucristo Jerusalem Nueva of Manila, Philippines, Inc. vs. Dela Cruz, warranted dismissal despite registration.
• Equitable mortgage under Article 1602 of the Civil Code — The contract is presumed an equitable mortgage when, among others, the vendor remains in possession as lessee or otherwise, a new redemption period is granted upon or after expiry, or the real intention was to secure a debt; presence of even one circumstance suffices, and doubts favor equitable mortgage as the lesser transmission of rights. It was applied to treat petitioner as mere mortgagee where Amelia remained as lessee and received an extended repurchase period.
• Bar against change of theory on appeal — Issues not pleaded nor raised below generally cannot be raised for the first time on appeal, save for jurisdiction, interests of justice where no further evidence is needed, or questions already within the issues tried. It was applied to disregard petitioner's new Deed of Redemption theory and annexes never offered below.
• No collateral attack in ejectment per Heirs of Cullado vs. Gutierrez — Provisional ownership findings in ejectment do not constitute a real direct or collateral attack under Section 48 of Presidential Decree No. 1529 because they cannot alter, modify, or cancel the certificate. It was applied to uphold the Court of Appeals' reliance on title without imperiling it.
• Distinction between ejectment and accion reivindicatoria — Unlawful detainer concerns possession de facto while accion reivindicatoria concerns ownership including possession, so differing causes of action and reliefs defeat forum shopping and multiplicity objections. It was applied per Spouses Tobias vs. Gonzales to allow a subsequent title suit.

• "an ejectment case will not necessarily be decided in favor of one who has presented proof of ownership of the subject property. Key jurisdictional facts constitutive of the particular ejectment case filed must be averred in the complaint and sufficiently proven." — States the controlling limitation on registered owners in ejectment, requiring proof of tolerance, demand, and timely filing rather than title alone.
• "When the defendant raises the defense of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the issue of possession." — Recites Section 16, Rule 70 to justify provisional inquiry into whether the deed was a sale or equitable mortgage.
• "A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law." — Quotes the Property Registration Decree rule invoked by petitioner, which was held inapplicable because the ejectment ruling does not alter the certificate.
• "As a final note, we stress that our ruling in this case is limited only to the issue of determining who between the parties has a better right to possession." — Emphasizes the limited binding effect of the decision, preserving a future action to finally determine ownership.

• Nabo vs. Buenviaje, G.R. No. 224906, 7 October 2020 — Followed as authority that Torrens title includes possession but ejectment still requires jurisdictional facts to be averred and proved.
• Corpuz vs. Spouses Agustin, 679 Phil. 352 (2012) — Followed as example dismissing unlawful detainer against a registered owner where mere tolerance and continuous owner-like possession for decades were not proved except by allegation.
• Iglesia De Jesucristo Jerusalem Nueva of Manila, Philippines, Inc. vs. Dela Cruz, 830 Phil. 547 (2018) — Reiterated to support dismissal where tolerance of possession was unsubstantiated.
• Heirs of Cullado vs. Gutierrez, G.R. No. 212938, 30 July 2019, 911 SCRA 557 — Followed en banc to hold provisional ownership resolution in ejectment is not a collateral attack on title.
• Spouses Tobias vs. Gonzales, G.R. No. 232176, 17 February 2021 — Followed to distinguish unlawful detainer from accion reivindicatoria and reject forum shopping and multiplicity objections.
• Spouses Sy vs. De Vera-Navarro, G.R. No. 239088, 3 April 2019, 900 SCRA 243, 257 — Cited for the rule that presence of even one Article 1602 circumstance converts a purported sale into an equitable mortgage and doubts favor mortgage construction.
• Dacquel vs. Spouses Sotelo, G.R. No. 203946, 4 August 2021 — Cited for the consequence that a party to an equitable mortgage is a mere mortgagee, not owner.

• Article 1602, Civil Code — Presumes an equitable mortgage where, among others, the vendor remains in possession as lessee or otherwise or a new redemption period is granted; applied to find paragraphs (2) and (3) present from Amelia's lease-possession and extended repurchase period.
• Section 16, Rule 70, Rules of Court — Directs resolution of ownership only to determine possession when possession cannot be resolved without it; applied to permit provisional treatment of the sale-versus-mortgage dispute.
• Section 18, Rule 70, Rules of Court — Makes ejectment judgment conclusive only on possession without binding title; applied to preserve a later ownership action and deny multiplicity.
• Section 48, Presidential Decree No. 1529 — Prohibits collateral attack on certificates of title; held not violated because the provisional ejectment finding cannot alter, modify, or cancel title.

Caguioa (Chairperson), Inting, M. Lopez, and Gaerlan, JJ., concur. Associate Justice Maria Filomena D. Singh recused due to prior participation in the Court of Appeals, with Associate Justice Mario V. Lopez designated as additional Member per Raffle dated 26 July 2022.