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[G.R. No. 140973.

November 11, 2004]

JUSTINO LARESMA, petitioner, vs. ANTONIO P. ABELLANA, respondent.

DECISION

CALLEJO, SR., J.:

On May 24, 1994, respondent Antonio P. Abellana filed a Complaint with the Regional Trial Court
(RTC) of Toledo, Cebu, Branch 29, against petitioner Justino Laresma, a farmer, for recovery of
possession of Lot 4-E of subdivision plan psd. 271428, a parcel of agricultural land located in Tampa-
an, Aloguinsan, Cebu. The lot had an area of 21,223 square meters covered by Transfer Certificate of
Title (TCT) No. 47171. He alleged, inter alia, that since 1985, the petitioner had been a lessee of a
certain Socorro Chiong, whose agricultural land adjoined his own; and that sometime in 1985, the
petitioner, by means of threat, strategy, and stealth, took possession of his property and deprived him
of its possession.[1] The respondent prayed that, after due proceedings, judgment be rendered in his
favor, ordering the petitioner to vacate the property and pay him actual damages, attorneys fees, and
expenses of litigation.[2] Appended to the complaint was a contract of lease[3] executed by the
petitioners wife, Praxedes Seguisabal Laresma, on March 1, 1977, over a parcel of land owned by
Socorro Chiong covered by Tax Declaration No. 05561.

To support his complaint, the respondent presented his father, Teotimo Abellana, as witness.
Teotimo testified that the petitioner married his maid, Praxedes Seguisabal, after which the couple
resided in the property of Socorro Chiong,[4] which abutted the property of the petitioner and a portion
of the property of the Spouses Vicente and Susana Paras. The petitioner thus became a tenant of
Socorro Chiong. Teotimo further narrated that sometime in 1989 and 1990, the petitioner transferred
his house to the property of his son, the respondent, in the process destroying coconut trees planted
on the property to pave the way for the construction of the barangay hall. According to the witness, he
reported the incident to the office of the chief of police and the barangay captain. However, the matter
was not acted upon.[5]

Teotimo also testified that his son, the respondent, purchased the property from his uncle,
Mariano Paras, who, in turn, bought the same from his parents, the Spouses Vicente and Susana
Paras.[6] Based on the said sale, the Register of Deeds issued TCT No. 47171 over the property
under the name of the respondent on April 2, 1980.[7] The respondent had since then declared the
property for taxation purposes,[8] and paid the realty taxes therefor.[9] Teotimo declared that he
requested Geodetic Engineer Lordeck Abella to relocate the property, and the engineer prepared a
sketch plan showing that the said lot abutted the property of Socorro Chiong on the northeast and that
of Agnes Abellana on the north.[10] He admitted that he and the respondent were informed that the
property had been placed under the Operation Land Transfer (OLT), and that they refused to
acknowledge the information.[11]

The respondents aunt, Socorro Chiong, testified that on October 14, 1972, she and Felicidad
Paras Montecillo purchased from her parents, the Spouses Vicente and Susana Paras, a 19-hectare
land in Tampa-an, Aloguinsan, Cebu, Lot 4-C of Psd. 271428 Lot 4-E, covered by Tax Declaration No.
009088.[12] Chiongs parents died in 1977. In an Order dated November 8, 1994, the Department of
Agrarian Reform (DAR) affirmed the July 11, 1988 Ruling of the DAR Regional Director that the deed
of sale over the property executed by her parents in her favor was valid; that the tenants therein,
including Justino Laresma and his wife, were bound by the said sale; and that the tenanted portion of
the property, including that portion leased to Praxedes Laresma, was outside the scope of the
OLT.[13] She confirmed that the property of the respondent abutted her property on the north. [14]

In his answer to the complaint, the petitioner averred that the dispute between him and the
respondent was agrarian in nature, within the exclusive jurisdiction of the DAR, involving as it did his
right of possession covered by Certificate of Land Transfer (CLT) No. 0-031817 issued to his wife
Praxedes. He alleged that the property titled in the name of the respondent consisted of a portion of
that property owned by the Spouses Vicente and Susana Paras covered by Original Certificate of Title
No. 780 which was placed under OLT under Presidential Decree No. 27. Being a beneficiary of the
agrarian reform program of the government, his wife was issued CLT No. 0-031817 on July 13, 1982
over a portion of the property, Lot No. 00013, with an area of 0.1700 hectares. Since then, he and his
wife became owners of the property and, as such, were entitled to the possession thereof.

The parties agreed to defer further proceedings for the conduct of an ocular inspection of the
property to determine whether Lot No. 00013 covered by CLT No. 0-031817 was, indeed, a part of Lot
4-E covered by TCT No. 47171. On January 13, 1995, the trial court issued an Order allowing the said
inspection with Socorro Chiong in attendance.[15] The parties were advised to make a report on the
same. The court designated its process server, Felix Navarro, as its representative during the
inspection.[16] The Municipal Agrarian Reform Office, for its part, designated Municipal Agrarian
Reform Technologist Alberto Epan as its representative.

On February 16, 1995, Epan inspected the property in the presence of the petitioner. The
petitioner pointed to Epan eight of the ten OLT muniments. Epan also noticed that there were
coconuts scattered on the property, that corn was planted in the plan area, and that the house of the
respondent was in the property titled to the petitioner. On February 17, 1995, the parties respective
counsels, including Navarro and Epan, inspected the property. Epan, thereafter, submitted his Report
dated February 22, 1995,[17] with a sketch at the dorsal portion showing the respective locations of the
property cultivated by the respondent, his house and the OLT muniments.[18] Navarro submitted a
separate report on March 7, 1995,[19] where it was indicated that the parties had agreed that the house
of the petitioner was located at the respondents property.

The petitioner denied being the tenant of the respondent. He testified and adduced evidence that
he and his wife were married on September 23, 1953,[20] and, thereafter, resided in the property of the
Spouses Paras[21] where he was a tenant.[22] He delivered one-half of the produce from the land to
Susana Paras and kept the rest as his share. Shortly thereafter, the Spouses Paras sold a portion of
the property to the respondent. Sometime in 1976 or 1977, the subject property was placed under the
OLT.[23] The respondent and Roque Paras protested the inclusion of the property, which was,
however, rejected.[24] The petitioner also testified that after the death of the Spouses Paras, he gave
the share of the produce to the spouses daughter, Socorro Chiong.[25]

The petitioner further testified that on July 13, 1982, his wife was issued CLT No. 0-031817 over
Lot No. 00013, the property he was cultivating. The lot had an area of 0.1700 hectares and was
located at Tampa-an, Aloguinsan, Cebu. Because of lack of funds, his wife was able to make only
partial payments of her amortizations for the property to the Land Bank of the Philippines for which
she was issued receipts.[26] After CLT No. 0-031817 was issued to his wife, he kept all the produce
from the land.

The petitioner also presented Felix Navarro and Alberto Epan who affirmed their respective
reports on the conduct of the inspection on the property.

On October 30, 1998, the trial court rendered judgment in favor of the respondent and against the
petitioner. The fallo of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff as against defendant
declaring:

1 - That plaintiff as the lawful owner in fee simple of the entire real property covered by Transfer
Certificate of Title No. 47171 [Exhibit D]; and, declaring further that plaintiff is entitled to
recover possession thereof from defendant;

2 - That the occupation, use, and possession of defendant under the latters claim as bona fide tenant of
plaintiff over the latters property is null and void ab initio in violation of aforecited provision of
the Code of Agrarian Reform, R.A. 3884;

3 - That defendant, his wife, Praxedes Laresma and their children and his agents or representative are
hereby ordered to vacate and to surrender the entire possession, use, and occupation of said real
property covered by TCT No. 47171 to and in favor of plaintiff;

4 - That defendant is hereby declared liable and ordered to pay plaintiff the sum of P70,000.00 as
actual damages, the sum of P10,000.00 as attorneys fees, and P5,000.00 as costs of suit.

SO ORDERED.[27]

The court ruled that, as evidenced by the contract of lease executed by Praxedes Laresma and
Socorro Chiong, the petitioner was the tenant of Chiong and not of the respondent. Thus, the court
had jurisdiction over the case. The court rejected the reports of Epan and Navarro, and considered
the same as barren of probative weight, considering that the said reports failed to take into account
the technical descriptions of Lot 4-C owned by Chiong, Lot 4-E covered by TCT No. 47171, and Lot
00013 covered by CLT No. 0-031817.

Hence, the present petition for review on certiorari under Rule 45 of the Rules of Court.

The petitioner points out that the property subject of the complaint is covered by a CLT issued by
the DAR in the name of his wife. The petitioner avers that although the complaint of the respondent
appeared to be one for the recovery of possession of the said property (accion publiciana), by
claiming that the petitioner was the tenant of Socorro Chiong, the respondent indirectly attacked the
said CLT. Hence, the action is within the exclusive jurisdiction of the Department of Agrarian Reform
and Adjudication Board (DARAB) under Republic Act No. 6657. The petitioner asserts that, by
declaring that the landholding was not legally possessed by him and that he was not a de jure tenant,
the trial court thereby declared him as having forfeited his rights under the CLT. He was, thus,
prevented from paying his monthly amortizations over the property to the Land Bank of the Philippines
as required by law.

The petitioner further asserts that he was the agricultural tenant of the Spouses Paras, the
original owners of the property. His right as a farmer subsisted, notwithstanding the transfer of the
property of the deceased prior to October 21, 1972, which transfer was registered with the Register of
Deeds only on December 21, 1977. He contends that since the landholding was already placed under
the scope of OLT, the respondent merely stepped into the shoes of the Spouses Paras. Moreover,
having become owners of the property on October 21, 1972, the petitioner and his wife were not
obliged to pay damages to the respondent; as such, there was no factual basis for the award of actual
damages in the amount of P70,000 in favor of the latter.

In his comment on the petition, the respondent avers that the threshold issue in this case is
factual; hence, the remedy of the petitioner was to appeal the decision of the trial court to the Court of
Appeals by a writ of error under Rule 41 of the Rules of Court. He contends that he did not, in his
complaint, attack the CLT issued to Praxedes Laresma because the property covered by it is a portion
of the property of Socorro Chiong, and not that of his property covered by TCT No. 47171. He also
posits that the said title is valid and insists that the petitioner had actual knowledge of the sale of the
property to him. The petitioner cites the ruling of this Court in Antonio v. Estrella[28] to bolster his claim.

As gleaned from the petition, the comment thereon, and the memoranda of the parties, the issues
for resolution are the following: (a) whether the action of the respondent in the trial court is in reality an
indirect attack on the validity of CLT No. 0-031817 issued to Praxedes Laresma in the guise of an
action for recovery of possession (accion publiciana) of the property covered by TCT No. 47171; (b)
whether the RTC had jurisdiction over the action of the respondent; and (c) whether the petitioner is
liable for damages in favor of the respondent.

On the first two issues, the petitioner avers that he and his wife Praxedes became owners of Lot
No. 00013 by virtue of CLT No. 0-031817 which was awarded in the latters favor. As such, they are
entitled to the possession of the lot. The petitioner contends that unless and until CLT No. 0-031817 is
nullified in a direct action for the said purpose before the DARAB, they cannot be evicted from the
said property. He posits that the action of the respondent against him in the RTC for recovery of
possession of real property is, in reality, an indirect attack on the CLT issued to his wife which is
proscribed by the ruling of this Court in Miranda v. Court of Appeals.[29] He asserts that the decision of
the trial court declaring him in illegal possession of the property and not a de jure tenant of the
respondent operates as an illegal forfeiture or cancellation of the CLT.

For his part, the respondent asserts that his complaint against the petitioner did not indirectly
assail the CLT issued to the latters wife. He contends that his action was one for the recovery of his
possession of a portion of his property Lot 4-E covered by TCT No. 47171, and not that of Lot No.
00013 covered by CLT No. 0-031817 which is a portion of Lot 4-C owned by his aunt Socorro Chiong.
He notes that the petitioner himself admits that he has never been his agricultural tenant over his
property. Consequently, the respondent concludes, the trial court correctly ruled that the dispute
between him and the petitioner is civil in nature and within its exclusive jurisdiction.

We agree with the respondent that the DARAB had no jurisdiction over his action against the
petitioner. The bone of contention of the parties and the decisive issue in the trial court was whether
or not Lot No. 00013 covered by CLT No. 0-031817 is a portion of Lot 4-E covered by TCT No. 47171
under the name of the respondent. This is the reason why the parties agreed to have Lot No. 00013
resurveyed in relation to Lot 4-C owned by Socorro Chiong and to Lot 4-E titled in the name of the
respondent. After a calibration of the evidence on record and the reports of Epan and Navarro, the
trial court ruled that Lot No. 00013 formed part of Lot 4-C owned by Socorro Chiong and not of Lot 4-
E titled in the name of the respondent:

Plaintiff unabashedly claims that defendant has never been his tenant over the formers property, Lot No. 4-E,
but defendant claims otherwise. The evidence of plaintiff tends to establish that defendant is not his or has never
been his tenant over his agricultural land, Lot 4-E, but defendant Justino Laresma is rather the tenant of Socorro
Chiong over her property, Lot 4-C. In support of this contention that defendant is not plaintiffs own tenant but
that of Socorro Chiong, plaintiff offered and adduced the contract of lease duly entered by and between Socorro
Chiong and defendant [Exhibit B] in 1977 wherein it was clearly stipulated [that] Socorro Chiong as the
agricultural lessor leased a portion of her land to defendant, in the latters capacity as agricultural lessee of Lot 4-
C with the obligation to pay Socorro Chiong rentals during the stipulated crop years.

This particular contract of lease [Exhibit B] does not show that plaintiff is a privy (sic) to it. It is (sic) goes to
show that plaintiff is [not] bound by the terms and conditions thereof.

In the order of DAR under DARRO Adm. Case No. VII-98-88 dated November 8, 1994 [Exhibit A] which is
actually a decision arising from the tenancy relationship between Socorro Chiong and defendant Justino
Laresma, the DAR had expressly ruled that defendant is the tenant of Socorro Chiong of her property but limited
to an actual area of 3.7316 hectares and excluding the area of 4.4905 [page 3, Decision] from the scope of the
operation of Operation Land Transfer. It was further ruled therein that the landholding of Socorro Chiong was a
part of the total landholding owned by her parents, Vicente N. Paras and Susana Paras, both deceased, which
was, subsequently, sold by her parents to her as evidenced by a deed of sale dated October 14, 1972 [Exhibit C].
This deed of conveyance was affirmed by the DAR as validly executed between Socorro Chiong and defendant
Justino Laresma because the latter had actual knowledge and recognition of the said transaction between
Socorro and her deceased parents. This actual transfer of ownership of said parcel of land from Socorro
Chiong[s] deceased parents to her was evidenced by the execution of the contract of lease between her and
defendant on March 10, 1977 (sic) [Exhibit B].

But in the said ruling of the DFAR (sic), defendant has been expressly declared by DAR as a bona fide tenant of
Socorro Chiong but his farmholding inside her property is limited to an actual area of 3.7316 hectares and
excluding the area of 4.4905 [page 3, Decision] from the scope of the operation of Operation Land Transfer.

If defendant were (sic) truly a tenant of plaintiff, he would have also asked plaintiff or his predecessor-in-
interest to execute that necessary contract of lease like the instrument, which Socorro Chiong executed in favor
of defendant as her tenant. In the absence of said instrument to establish his tenancy over plaintiffs landholding,
this Court cannot just presume the existence of an agricultural leasehold relationship between plaintiff and
defendant.[30]

However, this Court cannot accept these ocular reports and the accompanying sketches thereof so as to correctly
reflect the identity of defendants farmholding and to establish its exact location within the land of plaintiff in
view of the absence of pertinent technical description of said farmholding in relation to the metes and bounds of
plaintiffs land whose technical description is clearly mentioned in plaintiffs Transfer Certificate of Title No.
47171 [Exhibit D]. The said technical description of the defendants farmholding is required to clearly pinpoint
its identity with its area and boundaries in relation to the titled property of plaintiff. Without said technical
description, it is very difficult to identify defendants landholdings to be within plaintiffs real property.

In view of the absence of the above-mentioned indispensable requisites or any one of them in order to establish
the existence of an agricultural leasehold relationship between plaintiff and defendant, as earlier mentioned,
does not make defendant a de jure tenant under the Land Reform Program of the government under existing
tenancy laws. [Caballes v. DAR, ibid.].[31]

The petitioner has not assailed the aforequoted findings of the trial court in the petition at bar;
hence, he is bound by the said findings.

We agree with the ruling of the RTC that, as gleaned from the material averments of his
complaint, the action of the respondent against the petitioner is not an agrarian dispute within the
exclusive jurisdiction of the DARAB. The well-entrenched principle is that the jurisdiction of the court
over the subject matter of the action is determined by the material allegations of the complaint and the
law, irrespective of whether or not the plaintiff is entitled to recover all or some of the claims or reliefs
sought therein.[32] In Movers-Baseco Integrated Port Services, Inc. v. Cyborg Leasing
Corporation,[33] we ruled that the jurisdiction of the court over the nature of the action and the subject
matter thereof cannot be made to depend upon the defenses set up in the court or upon a motion to
dismiss for, otherwise, the question of jurisdiction would depend almost entirely on the
defendant.[34] Once jurisdiction is vested, the same is retained up to the end of the litigation. We also
held in Arcelona v. Court of Appeals[35] that, in American jurisprudence, the nullity of a decision arising
from lack of jurisdiction may be determined from the record of the case, not necessarily from the face
of the judgment only.

It must be stressed that the regular court does not lose its jurisdiction over an ejectment case by
the simple expedient of a party raising as a defense therein the alleged existence of a tenancy
relationship between the parties.[36] But it is the duty of the court to receive evidence to determine the
allegations of tenancy.[37] If, after hearing, tenancy had, in fact, been shown to be the real issue, the
court should dismiss the case for lack of jurisdiction.[38]
It is axiomatic that the nature of an action and the jurisdiction of a tribunal are determined by the
material allegations of the complaint and the law at the time the action was commenced. Jurisdiction
of the tribunal over the subject matter or nature of an action is conferred only by law and not by the
consent or waiver upon a court which, otherwise, would have no jurisdiction over the subject matter or
nature of an action.[39] Lack of jurisdiction of the court over an action or the subject matter of an action
cannot be cured by the silence, acquiescence, or even by express consent of the parties. [40] If the
court has no jurisdiction over the nature of an action, it may dismiss the same ex mero motu or motu
proprio. A decision of the court without jurisdiction is null and void; hence, it could never logically
become final and executory. Such a judgment may be attacked directly or collaterally.

We agree with the ruling of the trial court that based on the material allegations of the
respondents complaint and even on the admission of the petitioner, the latter had never been an
agricultural tenant of the respondent. In fact, the respondent claimed that based on the CLT issued to
his wife, they became the owner of the property covered therein. As such, the DARAB had no
jurisdiction over the said action. The dispute between the respondent, as plaintiff, and the petitioner,
as defendant, in the RTC involving the de jure possession of Lot 4-E covered by TCT No. 47171 is not
an agrarian dispute. Decisive of the issue is our ruling in Heirs of the Late Herman Rey Santos v.
Court of Appeals:[41]

Rule II, Section 1 of the Revised Rules of Procedure of the DARAB, provides:

Section 1. Primary, Original and Appellate Jurisdiction. The Agrarian Reform Adjudication Board shall have
primary jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes, cases,
controversies, and matters or incidents involving the implementation of the Comprehensive Agrarian Reform
Program under Republic Act No. 6657, Executive Order Nos. 229, 228, and 129-A, Republic Act No. 3844, as
amended, by Republic Act No. 6389, P.D. No. 27, and other agrarian laws and their implementing rules and
regulations. (Italics supplied)

Agrarian dispute is defined under Section 3(d) of Republic Act No. 6657 (CARP Law), as:

(d) Agrarian Dispute refers to any controversy relating to tenurial arrangements, whether leasehold, stewardship
or, otherwise, over lands devoted to agriculture, including disputes concerning farmworkers associations or
representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions
of such tenurial arrangements.

It includes any controversy relating to compensation of lands acquired under this Act and other terms and
conditions of transfer of ownership from landowners to farmworkers, tenants and other agrarian reform
beneficiaries, whether the disputants stand in the proximate relation of farm operator and beneficiary, landowner
and tenant, or lessor and lessee.

Clearly, no agrarian dispute is involved in this case. In fact, both are contending parties for the ownership of the
subject property.

In the case of Morta, Sr. v. Occidental, et al., this Court held:

For DARAB to have jurisdiction over a case, there must exist a tenancy relationship between the parties. In
order for a tenancy agreement to take hold over a dispute, it would be essential to establish all its indispensable
elements to wit: 1) that the parties are the landowner and the tenant or agricultural lessee; 2) that the subject
matter of the relationship is an agricultural land; 3) that there is consent between the parties to the relationship;
4) that the purpose of the relationship is to bring about agricultural production; 5) that there is personal
cultivation on the part of the tenant or agricultural lessee; and 6) that the harvest is shared between the
landowner and the tenant or agricultural lessee. In Vda. de Tangub v. Court of Appeals (191 SCRA 885), we
held that the jurisdiction of the Department of Agrarian Reform is limited to the following: a) adjudication of all
matters involving implementation of agrarian reform; b) resolution of agrarian conflicts and land tenure-related
problems; and c) approval and disapproval of the conversion, restructuring or readjustment of agricultural lands
into residential, commercial, industrial, and other non-agricultural uses.

Petitioners and private respondent have no tenurial, leasehold, or any agrarian relations whatsoever that could
have brought this controversy under the ambit of the agrarian reform laws. Consequently, the DARAB has no
jurisdiction over the controversy and should not have taken cognizance of private respondents petition for
injunction in the first place.[42]

However, we find and so hold that the RTC had no jurisdiction over the action of the respondent.
In this case, the respondent filed his complaint against the petitioner on May 24, 1994. Hence, the
jurisdiction of the regular court over the nature of this action is governed by Republic Act No. 7691,
which took effect on April 15, 1994. Section 3 thereof amended Section 33 of Batas Pambansa (B.P.)
Blg. 129, and reads:
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts
in Civil Cases. Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall
exercise:

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or
any interest therein where the assessed value of the property or interest therein does not exceed Twenty
Thousand Pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed
Fifty Thousand Pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorneys fees, litigation
expenses and costs: Provided, That in cases of land not declared for taxation purposes, the value of such
property shall be determined by the assessed value of the adjacent lots.

On the other hand, Section 1 of the Rule amending Section 19 of B.P. Blg. 129 reads:

SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdictions:

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the
assessed value of the property involved exceeds Twenty Thousand Pesos (P20,000.00) or for civil actions in
Metro Manila, where such value exceeds Fifty Thousand Pesos (P50,000.00) .

The actions envisaged in the aforequoted provisions are accion publiciana and reinvindicatoria.
To determine which court has jurisdiction over the action, the complaint must allege the assessed
value of the real property subject of the complaint or the interest thereon. In this case, the complaint of
the respondent against the petitioner for recovery of possession of real property (accion publiciana)
reads:

3. That plaintiff is the owner and possessor of Lot 4-E covered by TCT No. T-47171 of the Registry of Deeds of
the Province of Cebu located at Tampa-an, Aloguinsan, Cebu;

4. That defendant is the tenant of the land of Socorro P. Chiong, which adjoins the parcel of land owned by the
plaintiff as shown by a leasehold contract hereto attached as Annex A and made an integral part hereof;

5. That sometime in 1985, by means of threats, strategy, and stealth, the herein defendant took possession of the
parcel of land owned by herein plaintiff, thus effectively depriving plaintiff of the possession thereof;

6. That the defendants, while illegally occupying the land of herein plaintiff, cut trees, and harvested the fruits of
said land causing damages to the plaintiff in the amount of P50,000.00;

7. That despite demand, defendant has refused to vacate said land and return the possession thereof to herein
plaintiff, thus compelling the plaintiff to file the present action;

8. In filing the present action, the plaintiff engaged the services of counsel for P10,000.00 and expects to incur
expenses of litigation in the amount of P5,000.00.[43]

The complaint does not contain any allegation of the assessed value of Lot 4-E covered by TCT
No. 47171. There is, thus, no showing on the face of the complaint that the RTC had exclusive
jurisdiction over the action of the respondent. Moreover, as gleaned from the receipt of realty tax
payments issued to the respondent, the assessed value of the property in 1993
was P8,300.00.[44] Patently then, the Municipal Trial Court of Aloguinsan, Cebu, and not the Regional
Trial Court of Toledo City, had exclusive jurisdiction over the action of the respondent.[45] Hence, all
the proceedings in the RTC, including its decision, are null and void.

In light of the foregoing disquisitions of the court, there is no longer a need to still resolve the third
issue.

WHEREFORE, the petition is GRANTED. The assailed decision of the Regional Trial Court of
Toledo, Cebu City, Branch 29, in Civil Case No. T-466 is NULLIFIED for lack of jurisdiction of the trial
court over the action of the respondent against the petitioner. No costs.

SO ORDERED.
G.R. No. 161589 November 24, 2014

PENTA PACIFIC REALTY CORPORATION, Petitioner,


vs.
LEY CONSTRUCTION AND DEVELOPMENT CORPORATION, Respondent.

DECISION

BERSAMIN, J.:

Jurisdiction over the subject matter of an action is determined from the allegations of the initiatory
pleading.

The Case

Under review is the decision promulgated on October 9, 2003,1 whereby the Court of Appeals (CA)
affirmed the judgment rendered on June 10, 2002 by the Regional Trial Court (RTC), Branch 58, in
Makati City2 nullifying for lack of jurisdiction the decision rendered on January 12, 2000 by the
Metropolitan Trial Court (MeTC), Branch 64, in Makati City.3

Antecedents

The petitioner owned the 25th floor of the Pacific Star Building located in Makati City with an area of
1,068.67 square meters. The respondent leased 444.03 square meters of the premises (subject
property) through the petitioners authorized agent, Century Properties Management, Inc. (Century
Properties). Under the terms of the contract of lease dated January 31, 1997, the petitioner gavethe
respondent possession of the subject property under a stipulation to the effect that in case of the
respondents default in its monthly rentals, the petitioner could immediately repossess the subject
property.

On March 19, 1997, the respondent expressed the intention to purchase the entire 1,068.67 square
meters, including the subject property. The parties executed a contract to sell, denominated as a
reservation agreement, in which they set the purchase price at US$3,420,540.00, with the following
terms of payment: 20%down payment equivalent of US$684,108.00 payable within eight months; and
US$85,513.00/monthly for eight months with interestof 9.75%, commencing on the 6th month. The
80% balance was to be paid in 13 installments beginning on March 1, 1997 until March 1, 1998. The
reservation agreement contained the following cancellation or forfeiture provision, viz:

Any failure on [the respondents] part to pay the full downpayment, or deliver the post-dated checks or
pay the monthly amortization on the due date, shall entitle [the petitioner], at its option, to impose a
penalty interest at the rate of three percent (3%) per month on the outstanding balance or to cancel
this agreement without need of any court action and to forfeit, in its favor, any reservation deposits or
payments already made on the unit, without prior notice.4

After paying US$538,735.00, the respondent stopped paying the stipulated monthly amortizations. An
exchange of letters ensued between Janet C. Ley, President of the respondent, or Efren Yap,
Assistant to the President of the respondent, on one hand, and Jose B.E. Antonio, ViceChairman of
the petitioner, and the petitioners counsel, Atty. Reynaldo Dizon, on the other. In the September 23,
1997 letter,5 the respondent asked the petitioner to modify the terms of the reservation agreement to
allow it to purchase only the subject property. In the February 5, 1998 letter,6 the petitioners counsel
reminded the respondent of its US$961,546.50 liability to the petitioner under the terms of the
reservation agreement. In another letter dated February 5, 1998,7 the petitioners counsel informed
the respondent of its failure to pay its amortizations since August 1997, and demanded the payment
of US$961,564.50.

Through its letter of February 17, 1998,8 the respondent submitted the following proposals, namely:
(1) that the US$538,735.00 paid under the reservation agreement be applied asrental payments for
the use and occupation of the subject property in the period from March 1997 to February 28, 1998;
(2) that the balance of US$417,355.45 after deducting the rental payments from March 1997 to
February 28, 1998 should be returned to it; and (3) that the respondent be allowed to lease the
subject property beginning March 1998.

The petitioner, through its counsels letter of March 9, 1998, 9 rejected the respondents proposals, and
demanded the payment of US$3,310,568.00, representing the respondents unpaid balance (as of
March 2, 1998) under the reservation agreement. The petitioner further evinced its intention to cancel
the contract to sell, and to charge the respondent for the rentals of the subject property corresponding
to the period from August 1997 to March 1998, during which no amortization payments were made.

In the letter dated February 4, 1999,10 the petitioners counsel informed the respondent of the
cancellation of the reservation agreement and the forfeiture of the respondents payments; and
demanded that respondent pay the rentals of P9,782,226.50 and vacate the subject property.

In its letter of May 25, 1999,11 the petitioners counsel wrote to the respondent thuswise:

We write in behalf of our client, Penta Pacific Realty Corporation, regarding the Reservation
Agreement and/or sale between you and our client over the latters unit located at the 25th Floor,
Pacific Star Building, Sen. Gil Puyat Avenue corner Makati Avenue, Makati City.

We regret to inform you that inview of your continued refusal and/or failure to pay to our client the
balance of the agreed-upon purchase price of the office unit you are currently occupying, our client is
constrained to make a notarial cancellation of the Reservation Agreement and/or sale of the above-
mentioned unit and to forfeit the payments you made in favor of our client.

In this connection, there is no more valid reason for you to continue occupying the subject premises.
Hence, final and formal demand is hereby made upon you to peacefully and quietly vacate the same
within ten (10) days from receipt hereof. Otherwise, we shall be constrained to file the appropriate
legal action to protect our clients interests.

Lastly, we would like to inform you that our client will also be constrained to charge you the amount
of P9,782,226.50 corresponding to reasonable rentals and other charges as of January 22, 1999.

Trusting that you are guided accordingly.

On July 9, 1999, the petitioner filed the complaint for ejectment in the MeTC following the
respondents failure to comply with the demands to pay and vacate.

The respondent resisted the complaint,12 arguing that the contract of lease dated January 31, 1997
had been simulated or, in the alternative, had been repealed, negated, extinguished and/or novated
by the reservation agreement; that the petitioner had failed to observe its undertaking to allow the
respondent to collect rentals from the other lessees of the subject property; that the petitioner had
unjustifiably refused to renegotiate or to amend the reservation agreement; and that the petitioner had
violated the rule on non-forum shopping considering the pendency of another case between the
parties in Branch 57 of the RTC in Makati City.13

Decision of the MeTC

On January 12, 2000, the MeTC, ruling in favor of the petitioner, found that the respondents lawful
possession of the property had been by virtue of the contract of lease, but had become unlawful when
the respondent had failed to comply with its obligation to pay the monthly rentals for the subject
property; and that, in any event, the reservation agreement proved that the petitioner had held the
better right to possess the subject property as the owner thereof. The MeTC disposed:

WHEREFORE, judgment is rendered ordering defendant Ley Construction and Development


Corporation and all persons claiming rights under it to vacate and surrender the possession of the
Property to the plaintiff; to pay the sum of P32,456,953.06 representing unpaid rentals and other
charges as of June 23, 1999; the further amount of P443,741.38 starting July, 1999, and the same
amount every month thereafter as reasonable compensation for the continued and illegal use and
occupancy of the Property, until finally restituted to the plaintiff; the sum of P100,000.00 for as (sic)
attorneysfees plus cost of suit.14

The respondent appealed to the RTC.

In the meantime, on November 6, 2001, the respondent turned over the possession of the leased
premises to the petitioner.

Judgment of the RTC

On June 10, 2002, the RTC rendered its judgment nullifying the MeTCs decision on the ground of
lackof jurisdiction, holding that the appropriate action was either accion publiciana or accion
reivindicatoria over which the MeTC had no jurisdiction. It found that the basis of recovery of
possession by the petitioner was the respondents failure to pay the amortizations arising from the
violations of the reservation agreement; that the complaint did not specifically aver facts constitutive of
unlawful detainer, i.e., it did not show how entry had been effected and how the dispossession had
started; and that the requirement of formal demand had not been complied with by the petitioner.

Decision of the CA

The petitioner appealed to the CA.

By its decision promulgated on October 9, 2003, the CA affirmed the judgment of the RTC, 15 declaring
that the respondents possession was not by virtue of the contract of lease but pursuant to the
reservation agreement, which was more of a "contract of sale." 16 It concluded that the petitioners
action was not unlawful detainer, but another kind of action for the recovery of possession.17

Not in agreement with the decision of the CA, the petitioner filed the present petition.

Issue

The decisive question is whether the complaint was for unlawful detainer, or accion publiciana, or
accion reivindicatoria.

The petitioner submits that the MeTC had jurisdiction because its complaint made out a clear case of
unlawful detainer, emphasizing that the basis of the complaint was the failure of the respondent to pay
the stipulated monthly rentals under the revived contract of lease; that even if the cause of action was
upon the nonpayment of the purchase price under the reservation agreement, the MeTC still had
jurisdiction over the action because an unlawful detainer case could also arise from a vendor-vendee
relationship; and that, accordingly, the nonpayment ofrentals or of the purchase price sufficiently
established its better right to possess the subject property.

In contrast, the respondent maintains that it had not violated any existing contract of lease with the
petitioner because the contract of lease dated January 31, 1997 was based on the agreement
between the respondent and Century Properties; that it had entered into the possession of the subject
property as the buyer-owner pursuant tothe reservation agreement; and that the recovery of
possession should have been by accion publiciana or accion reivindicatoria, not unlawful detainer.

Ruling

The appeal has merit.

1. Kinds of Possessory Actions

There are three kinds of real actions affecting title to or possession of real property, or interest therein,
namely: accion de reivindicacion, accion publiciana and accion interdictal. The first seeks the recovery
of ownership as well as possession of realty.18 The second proposes to recover the right to possess
and is a plenary action in an ordinary civil proceeding.19 The third refers to the recovery of physical or
actual possession only (through a special civil action either for forcible entry or unlawful detainer).

If the dispossession is not alleged totake place by any of the means provided by Section 1,20 Rule 70,
Rules of Court, or, if the dispossession allegedly took place by any of such means but the action is not
brought within one year from deprivation ofpossession, the action is properly a plenary action of
accion publiciana or accion de reivindicacion. The explanation is simply that the disturbance of the
peace and quiet of the local community due to the dispossession did not materialize; hence, the
possessor thus deprived has no need for the summary proceeding of accion interdictal under Rule 70.

The Municipal Trial Court (MTC) has exclusive original jurisdiction over accion interdictal. Until April
15, 1994, the MTC had no original jurisdiction over the other possessory actions. By such date, its
jurisdiction was expanded to vest it with exclusive original jurisdiction over the other possessory
actions ofaccion publiciana and accion de reivindicacion where the assessed value of the realty
involved did not exceed P20,000.00, or, if the realty involved was in Metro Manila, such value did not
exceed P50,000.00. The expansion of jurisdiction was by virtue of the amendment by Section 1 of
Republic Act No. 769121 to make Section 19 of Batas Pambansa Blg. 129 pertinently provide thusly:

Section 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original
jurisdiction:

xxxx

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein,
where the assessed value of the property involved exceeds Twenty thousand pesos (P20,000.00) or,
for civil actions in Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00) except
actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over
which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit
Trial Courts;

xxxx

Section 3 of Republic Act No. 7691 similarly revised Section 33 of Batas Pambansa Blg. 129 (the
provision defining the exclusive original jurisdiction of the MTC over civil actions) to make the latter
provision state, pertinently, thus:

Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts in Civil Cases. Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial
Courts shall exercise:

xxxx

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real
property, or any interest therein where the assessed value of the property or interest therein does not
exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such
assessed value does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages of
whatever kind, attorney's fees, litigation expenses and costs: Provided, That in cases of land not
declared for taxation purposes, the value of such property shall be determined by the assessed value
of the adjacent lots.

xxxx

As can be seen, the amendments have made the assessed value of the property whose possession
or ownership is in issue, or the assessed value of the adjacent lots if the disputed land is not declared
for taxation purposes determinative of jurisdiction. The allegation of the assessed value of the realty
must be found in the complaint, if the action (other than forcible entry or unlawful detainer) involves
title to or possession of the realty, including quieting of title of the realty. If the assessed value is not
found in the complaint, the action should be dismissed for lack of jurisdiction because the trial court is
not thereby afforded the means of determining from the allegations of the basic pleading whether
jurisdiction over the subject matter of the action pertains to it or to another court. Courts cannot take
judicial notice of the assessed or market value of the realty.22

2. MeTC had jurisdiction over

the complaint of the petitioner

The settled rule is that the nature of the action as appearing from the averments in the complaint or
other initiatory pleading determines the jurisdiction of a court; hence, such averments and the
character of the relief sought are to be consulted.23 The court must interpret and apply the law on
jurisdiction in relation to the averments of ultimate facts in the complaint or other initiatory pleading
regardless ofwhether or not the plaintiff or petitioner is entitled to recover upon all or some of the
claims asserted therein.24 The reliefs to which the plaintiff or petitioner is entitled based on the facts
averred, although not the reliefs demanded, determine the nature of the action.25 The defense
contained in the answer of the defendant is generally not determinant.26

Is this present action onefor unlawful detainer?

A suit for unlawful detainer is premised on Section 1, Rule 70, 1997 Rules of Civil Procedure, of which
there are two kinds, namely: (1) that filed against a tenant, and (2) that brought against a vendee or
vendor, or other person unlawfully withholding possession of any land or building after the expiration
or termination of the rightto hold possession by virtue of any contract, express or implied.

"In an action for forcible entry or unlawful detainer, the main issue is possession de facto,
independently of any claim of ownership or possession de jurethat either party may set forth in his
pleading."27 The plaintiff must prove that it was in prior physical possession of the premises until it was
deprived thereof by the defendant.28 The principal issue must be possession de facto, or actual
possession, and ownership is merely ancillary to such issue. The summary character of the
proceedings is designed to quicken the determination of possession de factoin the interest of
preserving the peace of the community, but the summary proceedings may not be proper to resolve
ownership of the property. Consequently, any issue on ownership arising in forcible entry or unlawful
detainer is resolved only provisionally for the purpose of determining the principal issue of
possession.29 On the other hand, regardless of the actual condition of the title to the property and
whatever may be the character of the plaintiffs prior possession, if it has in its favor priority in time, it
has the security that entitles it to remain on the property until it is lawfully ejected through an accion
publiciana or accion reivindicatoria by another having a better right.30

In unlawful detainer, the complaint must allege the cause of action according to the manner set forth
in Section 1, Rule 70 of the Rules of Court, to wit:

Section 1. Who may institute proceedings, and when. Subject to the provisions of the next
succeeding section, a person deprived of the possession of any land or building by force, intimidation,
threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession
of any land or building is unlawfully withheld after the expiration or termination of the rightto hold
possession, by virtue of any contract, express or implied, or the legal representatives or assigns of
any such lessor, vendor, vendee, or other person, may, at any time within one (1) year after such
unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial Court
against the person or persons unlawfully withholding or depriving of possession, or any person or
persons claiming under them, for the restitution of such possession, together with damages and costs.
(Emphasis supplied)

The complaint must further allege the plaintiffs compliance with the jurisdictional requirement of
demand as prescribed by Section 2, Rule 70 of the Rules of Court, viz:

Section 2. Lessor to proceed against lessee only after demand. Unless otherwise stipulated,
suchaction by the lessor shall be commenced only after demand to pay orcomply with the conditions
of the lease and to vacate is made upon the lessee, or by serving written notice of such demand upon
the person found on the premises, or by posting such notice on the premises if no person be found
thereon, and the lessee fails to comply therewith after fifteen (15) days in the case of land or five (5)
days in the case of buildings.

For the action to come under the exclusive original jurisdiction of the MTC, therefore, the complaint
must allege that: (a) the defendant originally had lawful possession of the property, either by virtue of
a contract or by tolerance of the plaintiff; (b) the defendants possession of the property eventually
became illegal or unlawful upon notice by the plaintiff to the defendant of the expiration or the
termination of the defendants right of possession; (c) the defendant thereafter remained in
possession of the property and thereby deprived the plaintiff the enjoyment thereof; and (d) the
plaintiff instituted the action within one year from the unlawful deprivation or withholding of
possession.31

The complaint herein sufficientlyalleged all the foregoing requisites for unlawful detainer, to wit: x x x x

3. On January 31, 1997, the defendant and the plaintiffs authorized agent, Century Properties
Management Inc. (CPMI), a corporation duly organized and existing under and by virtue of the laws of
the x x x Philippines x x x entered into a Contract of Lease whereby the latter leased from the former a
portion of the 25th Floor of the PSB (hereinafter referred to as the PROPERTY). x x x.

4. On March 19, 1997, the defendant decided to purchase from the plaintiff the 25th Floor of the PSB
by virtue of a Reservation Agreement of the same date. x x x.

5. However, on August 1997, the defendant started to default in its amortization payments on the
above-mentioned purchase. x x x.

xxxx

8. Sometime in March 1999, the defendant requested from the plaintiff and CPMI that the Reservation
Agreement be cancelled and in lieu thereof, the above-mentioned Contract of Lease be revived. The
plaintiff and CPMI acceded to such request x x x.

9. However, contrary to the express provisions of the Contract of Lease, the defendant failed to pay to
the plaintiff the rentals for the use of the PROPERTY when they fell due.

10. x x x the plaintiff also formally made a notarial cancellation of the aforementioned purchase and
demanded that defendant peacefully vacate the PROPERTY. x x x.

11. However, despite such demand, the defendant has failed and/or refused and continues to refuse
and fail to peacefully vacate the PROPERTY. x x x.32

As earlier shown, the final letter dated May 25, 1999 of the petitioners counsel demanded that the
respondent vacate the subject property,33 to wit:
In this connection, there is no more valid reason for you to continue occupying the subject
premises.1wphi1 Hence,final and formal demand is hereby made upon you to peacefully and quietly
vacate the same within ten (10) days from receipt hereof. Otherwise, we shall be constrained to file
the appropriate legal action to protect our clients interests.

Lastly, we would like to inform you that our client will also be constrained to charge you the amount
of P9,782,226.50 corresponding to reasonable rentals and other charges as of January 22, 1999.

After the demand went unheeded, the petitioner initiated this suit in the MeTC on July 9, 1999, well
within the one-year period from the date of the last demand.

The aforequoted allegations of the complaint made out a case of unlawful detainer, vesting the MeTC
with exclusive original jurisdiction over the complaint. As alleged therein,the cause of action of the
petitioner was to recover possession of the subject property from the respondent upon the latters
failure to comply with the formers demand tovacate the subject property after the latters right to
remain thereon terminated by virtue of the demand to vacate. Indeed, the possession of the latter,
although lawful at its commencement, became unlawful upon its non-compliance with the formers
demand to vacate.

The jurisdiction of the MeTC was not ousted by the fact that what was ultimately proved as to how
entry by the respondent had been made or when the dispossession had started might have departed
from that alleged in the complaint. As earlier stated, jurisdiction over the subject matter was
determined from the allegations of the complaint, which clearly set forth a cause of action for unlawful
detainer.34

The MeTC correctly exercised its authority in finding for the petitioner as the plaintiff. In unlawful
detainer, the possession was originally lawful but became unlawful by the expiration or termination of
the right to possess; hence, the issue of rightful possession is decisive for, in the action, the defendant
is in actual possession and the plaintiffs cause of action is the termination of the defendant's right to
continue in possession.35

A defendant's claim of possession de Jure or his averment of ownership does not render the
ejectment suit either accion publiciana or accion reivindicatoria. The suit remains an accion interdictal,
a summary proceeding that can proceed independently of any claim of ownership.36 Even when the
question of possession cannot be resolved without deciding the issue of ownership, the issue of
ownership is to be resolved only to determine the issue of possession.37

WHEREFORE, we REVERSE and SET ASIDE the decision promulgated on October 9, 2003 by the
Court of Appeals affirming the decision rendered on June 10, 2002 by the Regional Trial Court of
Makati City, Branch 58; REINSTATE the decision rendered on January 12, 2000 by the Metropolitan
Trial Court, Branch 64, of Makati City; and ORDER the respondent to pay the costs of suit.

SO ORDERED.
20
Section 1. Who may institute proceedings, and when. Subject to the provisions of the
next succeeding section, a person deprived of the possessionof any land or building by force,
intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against
whom the possession of any land or building is unlawfully withheld after the expiration or
termination of the right to hold possession, by virtue of any contract, express or implied, or the
legal representatives or assigns of any such lessor, vendor, vendee, or other person, may, at
any time within one (1) year after such unlawful deprivation or withholding of possession, bring
an action in the proper Municipal Trial Court against the person or persons unlawfully
withholding or depriving of possession, or any person or persons claiming under
[G.R. No. 156187. November 11, 2004]

JIMMY T. GO, petitioner, vs. UNITED COCONUT PLANTERS BANK, ANGELO V. MANAHAN,
FRANCISCO C. ZARATE, PERLITA A. URBANO and ATTY. EDWARD
MARTIN, respondents.

DECISION

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari[1] assailing the Decision[2] dated 31 July 2002 of
the Court of Appeals in CA-G.R. SP No. 62625, the decretal portion of which reads:

WHEREFORE, the petition is GRANTED and the assailed orders dated June 7, 2000, August 9, 2000 and
November 8, 2000 are SET ASIDE.

Respondent judge is directed to DISMISS Civil Case No. 67878 on the ground of improper venue.[3]

Petitioner Jimmy T. Go and Alberto T. Looyuko are co-owners of Noahs Ark International, Noahs
Ark Sugar Carriers, Noahs Ark Sugar Truckers, Noahs Ark Sugar Repacker, Noahs Ark Sugar
Insurers, Noahs Ark Sugar Terminal, Noahs Ark Sugar Building, and Noahs Ark Sugar Refinery. [4]

Sometime in August 1996, petitioner Jimmy T. Go and Alberto T. Looyuko applied for an
Omnibus Line accommodation with respondent United Coconut Planters Bank (UCPB) in the amount
of Nine Hundred Million (P900,000,000) Pesos,[5] and was favorably acted upon by the latter.

The transaction was secured by Real Estate Mortgages over parcels of land, covered by Transfer
Certificate of Title (TCT) No. 64070, located at Mandaluyong City with an area of 24,837 square
meters, and registered in the name of Mr. Looyuko; and TCT No. 3325, also located at Mandaluyong
City with an area of 14,271 square meters, registered in the name of Noahs Ark Sugar Refinery.

On 21 July 1997, the approved Omnibus Line accommodation granted to petitioner was
subsequently cancelled[6] by respondent UCPB. As a consequence, petitioner Jimmy T. Go
demanded from UCPB the return of the two (2) TCTs (No. 64070 and No. 3325) covered by Real
Estate Mortgages earlier executed. UCPB refused to return the same and proceeded to have the two
(2) pre-signed Real Estate Mortgages notarized on 22 July 1997 and caused the registration thereof
before the Registry of Deeds of Mandaluyong City on 02 September 1997.

On 15 June 1999, respondent UCPB filed with the Office of the Clerk of Court and Ex-Officio
Sheriff of Mandaluyong City an extrajudicial foreclosure of real estate mortgage [7] covered by TCT No.
64070, for nonpayment of the obligation secured by said mortgage. As a result, the public auction sale
of the mortgaged property was set on 11 April 2000 and 03 May 2000.

To protect his interest, petitioner Jimmy T. Go filed a complaint for Cancellation of Real Estate
Mortgage and damages, with prayer for temporary restraining order and/or writ of preliminary
injunction, against respondent bank and its officers, namely, Angelo V. Manahan, Francisco C.
Zarate, Perlita A. Urbano and Atty. Edward E. Martin, together with Ex-Officio Sheriff Lydia G. San
Juan and Sheriff IV Helder A. Dyangco, with the Regional Trial Court of Pasig City, Branch 266,
docketed as Civil Case No. 67878. The complaint was subsequently amended[8] on 22 May 2000. The
amended complaint alleged, among other things, the following: that petitioner Jimmy T. Go is a co-
owner of the property covered by TCT No. 64070, although the title is registered only in the name of
Looyuko; that respondent bank was aware that he is a co-owner as he was asked to sign two deeds
of real estate mortgage covering the subject property; that the approved omnibus credit line applied
for by him and Looyuko did not materialize and was cancelled by respondent bank on 21 July 1997,
so that the pre-signed real estate mortgages were likewise cancelled; that he demanded from
respondent bank that TCTs No. 64070 and No. 3325 be returned to him, but respondent bank refused
to do so; that despite the cancellation of the omnibus credit line on 21 July 1997, respondent bank
had the two deeds of real estate mortgage dated and notarized on 22 July 1997 and caused the
extrajudicial foreclosure of mortgage constituted on TCT No. 64070; that the auction sale scheduled
on 11 April 2000 and 03 May 2000 be enjoined; that the two real estate mortgages be cancelled and
TCTs No. 64070 and No. 3325 be returned to him; and that respondent bank and its officers be
ordered to pay him moral and exemplary damages and attorneys fees.

On 07 June 2000, respondent bank, instead of filing an answer, filed a motion to dismiss [9] based
on the following grounds: 1) that the court has no jurisdiction over the case due to nonpayment of the
proper filing and docket fees; 2) that the complaint was filed in the wrong venue; 3) an indispensable
party/real party in interest was not impleaded and, therefore, the complaint states no cause of action;
4) that the complaint was improperly verified; and 5) that petitioner is guilty of forum shopping and
submitted an insufficient and false certification of non-forum shopping.

On 07 June 2000, the trial court issued an order[10] granting petitioners application for a writ of
preliminary injunction. Correspondingly, the auction sale, scheduled on 11 April 2000 and 03 May
2000, was enjoined.

On 09 August 2000, the trial court denied[11] respondent banks motion to dismiss Civil Case No.
67878. A motion for reconsideration[12] was filed, but the same was likewise denied in an
Order[13] dated 08 November 2000.

Respondent bank questioned said orders before the Court of Appeals via a petition
for certiorari[14] dated 03 January 2001, alleging that the trial court acted without or in excess of
jurisdiction or with grave abuse of discretion in issuing an order denying the motion to dismiss and the
motion for reconsideration thereof.

On 31 July 2002, the Court of Appeals[15] set aside the Orders dated 07 June 2000, 09 August
2000 and 08 November 2000 issued by the trial court and directed the trial court to dismiss Civil Case
No. 67878 on the ground of improper venue.

A motion for reconsideration was filed by petitioner,[16] which was denied in an order dated 14
November 2002.[17]

Hence, this petition for review on certiorari.[18]

On 16 June 2003, the Court gave due course to the petition, and required[19] the parties to file
their respective memoranda. Respondents filed their Joint Memorandum on 27 August 2003, while
petitioner filed his on 25 September 2003 upon prior leave of court for extension. With leave of this
Court, private respondents filed their reply to petitioners memorandum.

In his memorandum, petitioner raised a lone issue:

WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR


WHEN IT FAILED TO APPLY THE LAW AND ESTABLISHED JURISPRUDENCE ON THE
MATTER BY ISSUING THE QUESTIONED RESOLUTIONS FINDING THAT THE CASE A QUO
IS A REAL ACTION.

Simply put, the issue to be resolved in this case is whether petitioners complaint for cancellation
of real estate mortgage is a personal or real action for the purpose of determining venue.

In a real action, the plaintiff seeks the recovery of real property, or as provided for in Section 1,
Rule 4,[20] a real action is an action affecting title to or possession of real property, or interest therein.
These include partition or condemnation of, or foreclosure of mortgage on, real property. The venue
for real actions is the same for regional trial courts and municipal trial courts -- the court which has
territorial jurisdiction over the area where the real property or any part thereof lies.[21]

Personal action is one brought for the recovery of personal property, for the enforcement of some
contract or recovery of damages for its breach, or for the recovery of damages for the commission of
an injury to the person or property.[22] The venue for personal actions is likewise the same for the
regional and municipal trial courts -- the court of the place where the plaintiff or any of the principal
plaintiffs resides, or where the defendant or any of the principal defendants resides, at the election of
the plaintiff, as indicated in Section 2 of Rule 4.[23]

It is quite clear then that the controlling factor in determining venue for cases of the above nature
is the primary objective for which said cases are filed. Thus:

1. In Commodities Storage & Ice Plant Corp. v. Court of Appeals,[24] this Court ruled that an
action to redeem by the mortgage debtor affects his title to the foreclosed property. If the
action is seasonably made, it seeks to erase from the title of the judgment or mortgage
debtor the lien created by registration of the mortgage and sale. If not made seasonably, it
may seek to recover ownership to the land since the purchasers inchoate title to the
property becomes consolidated after [the] expiration of the redemption period. Either way,
redemption involves the title to the foreclosed property. It is a real action.

2. In Fortune Motors, (Phils.), Inc., v. Court of Appeals,[25] this Court quoting the decision of
the Court of Appeals ruled that since an extrajudicial foreclosure of real property results in
a conveyance of the title of the property sold to the highest bidder at the sale, an action to
annul the foreclosure sale is necessarily an action affecting the title of the property sold. It
is therefore a real action which should be commenced and tried in the province where the
property or part thereof lies.

3. In Punsalan, Jr. v. Vda. de Lacsamana,[26] this court ruled that while it is true that
petitioner does not directly seek the recovery . . . of the property in question, his action for
annulment of sale and his claim for damages are closely intertwined with the issue of
ownership of the building which, under the law, is considered immovable property, the
recovery of which is petitioners primary objective. The prevalent doctrine is that an action
for the annulment or rescission of a sale of real property does not operate to efface the
fundamental and prime objective and nature of the case, which is to recover said real
property. It is a real action. Respondent Court, therefore, did not err in dismissing the case
on the ground of improper venue which was timely raised.

4. In Ruiz v. J. M. Tuason Co., Inc., et al.,[27] the court ruled that although [a] complaint is
entitled to be one for specific performance, yet the fact that [complainant] asked that a
deed of sale of a parcel of land . . . be issued in his favor and that a transfer certificate of
title covering said land be issued to him, shows that the primary objective and nature of
the action is to recover the parcel of land itself because to execute in favor of complainant
the conveyance requested there is need to make a finding that he is the owner of the land
which in the last analysis resolves itself into an issue of ownership. Hence, the action
must be commenced in the province where the property is situated . . . ."

5. In Dr. Antonio A. Lizares, Inc. v. Hon. Hermogenes Caluag,[28] this Court ruled that an
action praying that defendant be ordered `to accept the payment being made by plaintiff
for the lot which the latter contracted to buy on installment basis from the former, to pay
plaintiff compensatory damages and attorneys fees and to enjoin defendant and his
agents from repossessing the lot in question, is one that affects title to the land under
Section 3 of Rule 5, of the Rules of Court, and shall be commenced and tried in the
province where the property or any part thereof lies, because, although the immediate
remedy is to compel the defendant to accept the tender of payment allegedly made, it is
obvious that this relief is merely the first step to establish plaintiffs title to [the] real
property.

6. In Land Tenure Administration, et al. v. The Honorable Higinio B. Macadaeg and


Alejandro T. Lim,[29] this Court ruled that where the lessee seeks to establish an interest in
an hacienda that runs with the land and one that must be respected by the purchaser of
the land even if the latter is not a party to the original lease contract, the question of
whether or not the standing crop is immovable property become[s] irrelevant, for venue is
determined by the nature of the principal claim. Since the lessee is primarily interested in
establishing his right to recover possession of the land for the purpose of enabling him to
gather his share of the crops, his action is real and must be brought in the locality where
the land is situated.

7. In Espineli & Mojica v. Hon. Santiago and Vda. de Ramirez,[30] the court ruled that
although the main relief sought in the case at bar was the delivery of the certificate of title,
said relief, in turn, entirely depended upon who, between the parties, has a better right to
the lot in question. As it is not possible for the court to decide the main relief, without
passing upon the claim of the parties with respect to the title to and possession of the lot
in question, the claim shall be determined x x x in the province where [the] said property
or any part thereof lies.

The case of Carandang v. Court of Appeals,[31] is more particularly instructive. There, we held that
an action for nullification of the mortgage documents and foreclosure of the mortgaged property is a
real action that affects the title to the property. Thus, venue of the real action is before the court
having jurisdiction over the territory in which the property lies, which is the Court of First Instance of
Laguna.

Petitioner in this case contends that a case for cancellation of mortgage is a personal action and
since he resides at Pasig City, venue was properly laid therein. He tries to make a point by alluding to
the case of Francisco S. Hernandez v. Rural Bank of Lucena.[32]

Petitioners reliance in the case of Francisco S. Hernandez v. Rural Bank of Lucena[33] is


misplaced. Firstly, said case was primarily an action to compel the mortgagee bank to accept
payment of the mortgage debt and to release the mortgage. That action, which is not expressly
included in the enumeration found in Section 2(a) of Rule 4 of the Old Civil Procedure and now under
Section 1, Rule 4 of the 1997 Rules of Civil Procedure, does not involve titles to the mortgaged lots. It
is a personal action and not a real action. The mortgagee has not foreclosed the mortgage. The
plaintiffs title is not in question. They are in possession of the mortgaged lots. Hence, the venue of the
plaintiffs personal action is the place where the defendant or any of the defendants resides or may be
found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. In the case at
bar, the action for cancellation of real estate mortgage filed by herein petitioner was primarily an
action to compel private respondent bank to return to him the properties covered by TCTs No. 64070
and No. 3325 over which the bank had already initiated foreclosure proceedings because of the
cancellation by the said respondent bank of the omnibus credit line on 21 July 1997. The prime
objective is to recover said real properties. Secondly, Carandang distinctly articulated that the ruling
in Hernandez does not apply where the mortgaged property had already been foreclosed. Here, and
as correctly pointed out by the appellate court, respondent bank had already initiated extrajudicial
foreclosure proceedings, and were it not for the timely issuance of a restraining order secured by
petitioner Go in the lower court, the same would have already been sold at a public auction.

In a relatively recent case, Asset Privatization Trust v. Court of Appeals,[34] it was succinctly
stated that the prayer for the nullification of the mortgage is a prayer affecting real property, hence, is
a real action.

In sum, the cancellation of the real estate mortgage, subject of the instant petition, is a real
action, considering that a real estate mortgage is a real right and a real property by itself.[35]An action
for cancellation of real estate mortgage is necessarily an action affecting the title to the property. It is,
therefore, a real action which should be commenced and tried in Mandaluyong City, the place where
the subject property lies.

WHEREFORE, the instant petition is DENIED for lack of merit. The assailed decision dated 31
July 2002 and the Order dated 14 November 2002 denying the motion for reconsideration are hereby
AFFIRMED. With costs.

SO ORDERED.
HEIRS OF GENEROSO SEBE, G.R. No. 174497
AURELIA CENSERO SEBE
and LYDIA SEBE,
Petitioners, Present:
Quisumbing, J., Chairperson,
- versus - Carpio Morales,
Nachura,*
Brion, and
Abad, JJ.
HEIRS OF VERONICO SEVILLA and
TECHNOLOGY AND LIVELIHOOD
RESOURCE CENTER, Promulgated:
Respondents.
October 12, 2009
x ---------------------------------------------------------------------------------------- x

This case concerns the jurisdiction of Municipal Trial Courts over actions involving real properties with
assessed values of less than P20,000.00.
The Facts and the Case

In this petition for review on certiorari[1] petitioners seek to reverse the Order[2] dated August 8, 2006,
of the Regional Trial Court (RTC) of Dipolog City, Branch 9, in Civil Case 5435, for annulment of documents,
reconveyance and recovery of possession with damages. The trial court dismissed the complaint for lack of
jurisdiction over an action where the assessed value of the properties is less than P20,000.00. Petitioners asked
for reconsideration[3] but the court denied it.[4]
On August 10, 1999 plaintiff spouses Generoso and Aurelia Sebe and their daughter, Lydia Sebe, (the Sebes)
filed with the RTC of Dipolog City[5] a complaint against defendants Veronico Sevilla and Technology and
Livelihood Resources Center for Annulment of Document, Reconveyance and Recovery of Possession of two
lots, which had a total assessed value of P9,910.00, plus damages.[6] On November 25, 1999 they amended their
complaint[7] to address a deed of confirmation of sale that surfaced in defendant Sevillas Answer [8] to the
complaint. The Sebes claimed that they owned the subject lots but, through fraud, defendant Sevilla got them to
sign documents conveying the lots to him. In his Answer[9] Sevilla insisted that he bought the lots from the
Sebes in a regular manner.

While the case was pending before the RTC, plaintiff Generoso Sebe died so his wife and children
substituted him.[10] Parenthetically, with defendant Veronico Sevillas death in 2006, his heirs substituted him as
respondents in this case.[11]

On August 8, 2006 the RTC dismissed the case for lack of jurisdiction over the subject matter
considering that the ultimate relief that the Sebes sought was the reconveyance of title and possession over two
lots that had a total assessed value of less than P20,000.00. Under the law,[12] said the RTC, it has jurisdiction
over such actions when the assessed value of the property exceeds P20,000.00,[13] otherwise, jurisdiction shall be
with the first level courts.[14] The RTC concluded that the Sebes should have filed their action with the
Municipal Trial Court (MTC) of Dipolog City.

On August 22, 2006 the Sebes filed a motion for reconsideration.[15] They pointed out that the RTC
mistakenly classified their action as one involving title to or possession of real property when, in fact, it was a
case for the annulment of the documents and titles that defendant Sevilla got. Since such an action for
annulment was incapable of pecuniary estimation, it squarely fell within the jurisdiction of the RTC as provided
in Section 19 of Batas Pambansa 129, as amended.

To illustrate their point, the Sebes drew parallelisms between their case and the cases of De Rivera v.
Halili[16] and Copioso v. Copioso.[17]

The De Rivera involved the possession of a fishpond. The Supreme Court there said that, since it also
had to resolve the issue of the validity of the contracts of lease on which the opposing parties based their rights
of possession, the case had been transformed from a mere detainer suit to one that was incapable of pecuniary
estimation. Under Republic Act 296 or the Judiciary Act of 1948, as amended, civil actions, which were
incapable of pecuniary estimation, came under the original jurisdiction of the Court of First Instance (now the
RTC).[18] The Sebes pointed out that, like De Rivera, the subject of their case was incapable of pecuniary
estimation since they asked the court, not only to resolve the dispute over possession of the lots, but also to rule
on the validity of the affidavits of quitclaim, the deeds of confirmation of sale, and the titles over the
properties.[19]Thus, the RTC should try the case.
The Copioso, on the other hand, involves the reconveyance of land the assessed value of which was
allegedly P3,770.00. The Supreme Court ruled that the case comprehended more than just the title to, possession
of, or any interest in the real property. It sought the annulment of contracts, reconveyance or specific
performance, and a claim for damages. In other words, there had been a joinder of causes of action, some of
which were incapable of pecuniary estimation. Consequently, the case properly fell within the jurisdiction of the
RTC. Here, petitioners argued that their case had the same causes of actions and reliefs as those involved
in Copioso. Thus, the RTC had jurisdiction over their case.

On August 31, 2006 the RTC denied the Sebess motion for reconsideration, pointing out that
the Copioso ruling had already been overturned by Spouses Huguete v. Spouses Embudo.[20] Before the Huguete,
cancellation of titles, declaration of deeds of sale as null and void and partition were actions incapable of
pecuniary estimation. Now, however, the jurisdiction over actions of this nature, said the RTC, depended on the
valuation of the properties. In this case, the MTC had jurisdiction because the assessed value of the lots did not
exceed P20,000.00.

The Issue

The issue in this case is whether or not the Sebess action involving the two lots valued at less
than P20,000.00 falls within the jurisdiction of the RTC.

The Courts Ruling

Whether a court has jurisdiction over the subject matter of a particular action is determined by the
plaintiffs allegations in the complaint and the principal relief he seeks in the light of the law that apportions the
jurisdiction of courts.[21]

The gist of the Sebess complaint is that they had been the owner for over 40 years of two unregistered
lots[22] in Dampalan, San Jose, Dipolog City, covered by Tax Declaration 012-239, with a total assessed value
of P9,910.00.[23] On June 3, 1991 defendant Sevilla caused the Sebes to sign documents entitled affidavits of
quitclaim.[24] Being illiterate, they relied on Sevillas explanation that what they signed were deeds of real estate
mortgage covering a loan that they got from him.[25] And, although the documents which turned out to be deeds
conveying ownership over the two lots to Sevilla for P10,000.00[26] were notarized, the Sebes did not appear
before any notary public.[27] Using the affidavits of quitclaim, defendant Sevilla applied for[28] and obtained free
patent titles covering the two lots on September 23, 1991.[29] Subsequently, he mortgaged the lots to defendant
Technology and Livelihood Resource Center for P869,555.00.[30]

On December 24, 1991 the Sebes signed deeds of confirmation of sale covering the two lots. [31] Upon
closer examination, however, their signatures had apparently been forged.[32] The Sebes were perplexed with the
reason for making them sign such documents to confirm the sale of the lots when defendant Sevilla already got
titles to them as early as September.[33] At any rate, in 1992, defendant Sevilla declared the lots for tax purposes
under his name.[34] Then, using force and intimidation, he seized possession of the lots from their tenants [35] and
harvested that planting seasons yield[36] of coconut and palay worth P20,000.00.[37]

Despite demands by the Sebes, defendant Sevilla refused to return the lots, forcing them to hire a
lawyer[38] and incur expenses of litigation.[39] Further the Sebes suffered loss of earnings over the years.[40] They
were also entitled to moral[41] and exemplary damages.[42] They thus asked the RTC a) to declare void the
affidavits of quitclaim and the deeds of confirmation of sale in the case; b) to declare the Sebes as lawful owners
of the two lots; c) to restore possession to them; and d) to order defendant Sevilla to pay them P140,000.00 in
lost produce from June 3, 1991 to the date of the filing of the complaint, P30,000.00 in moral
damages, P100,000.00 in attorneys fee, P30,000.00 in litigation expenses, and such amount of exemplary
damages as the RTC might fix.[43]

Based on the above allegations and prayers of the Sebess complaint, the law that applies to the action
is Batas Pambansa 129, as amended. If this case were decided under the original text of Batas Pambansa 129 or
even under its predecessor, Republic Act 296, determination of the nature of the case as a real action would have
ended the controversy. Both real actions and actions incapable of pecuniary estimation fell within the exclusive
original jurisdiction of the RTC.

But, with the amendment of Batas Pambansa 129 by Republic Act 7601, the distinction between these
two kinds of actions has become pivotal. The amendment expanded the exclusive original jurisdiction of the
first level courts to include real actions involving property with an assessed value of less than P20,000.00.[44]

The power of the RTC under Section 19 of Batas Pambansa 129,[45] as amended,[46] to hear actions
involving title to, or possession of, real property or any interest in it now covers only real properties with
assessed value in excess of P20,000.00. But the RTC retained the exclusive power to hear actions the subject
matter of which is not capable of pecuniary estimation. Thus

SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive original
jurisdiction:

(1) In all civil actions in which the subject of the litigations is incapable of pecuniary
estimation.

(2) In all civil actions which involve the title to, or possession of, real property, or any
interest therein, where the assessed value of the property involved exceeds Twenty thousand
pesos (P20,000.00) or for civil actions in Metro Manila, where such value exceeds Fifty
thousand pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of
lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial
Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts; x x x.

Section 33, on the other hand provides that, if the assessed value of the real property outside Metro
Manila involved in the suit is P20,000.00 and below, as in this case, jurisdiction over the action lies in the first
level courts. Thus

SEC. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts in Civil Cases -- Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts shall exercise:

xxxx

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of,
real property, or any interest therein where the assessed value of the property or interest therein
does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila,
where such assessed value does not exceed Fifty thousand pesos (P50,000.00) x x x.

But was the Sebess action one involving title to, or possession of, real property or any interest in it or
one the subject of which is incapable of pecuniary estimation?

The Sebes claim that their action is, first, for the declaration of nullity of the documents of conveyance
that defendant Sevilla tricked them into signing and, second, for the reconveyance of the certificate of title for
the two lots that Sevilla succeeded in getting. The subject of their action is, they conclude, incapable of
pecuniary estimation.

An action involving title to real property means that the plaintiffs cause of action is based on a claim
that he owns such property or that he has the legal rights to have exclusive control, possession, enjoyment, or
disposition of the same.[47] Title is the legal link between (1) a person who owns property and (2) the property
itself.[48]

Title is different from a certificate of title which is the document of ownership under
the Torrens system of registration issued by the government through the Register of Deeds. [49] While title is the
claim, right or interest in real property, a certificate of title is the evidence of such claim.

Another way of looking at it is that, while title gives the owner the right to demand or be issued a
certificate of title, the holder of a certificate of title does not necessarily possess valid title to the real
property. The issuance of a certificate of title does not give the owner any better title than what he actually has
in law.[50] Thus, a plaintiffs action for cancellation or nullification of a certificate of title may only be a
necessary consequence of the defendants lack of title to real property. Further, although the certificate of title
may have been lost, burned, or destroyed and later on reconstituted, title subsists and remains unaffected unless
it is transferred or conveyed to another or subjected to a lien or encumbrance.[51]

Nestled between what distinguishes a title from a certificate of title is the present controversy between
the Sebes and defendant Sevilla. Which of them has valid title to the two lots and would thus be legally entitled
to the certificates of title covering them?

The Sebes claim ownership because according to them, they never transferred ownership of the same to
anyone. Such title, they insist, has remained with them untouched throughout the years, excepting only that in
1991 they constituted a real estate mortgage over it in defendant Sevillas favor. The Sebes alleged that defendant
Sevilla violated their right of ownership by tricking them into signing documents of absolute sale, rather than
just a real estate mortgage to secure the loan that they got from him.
Assuming that the Sebes can prove that they have title to or a rightful claim of ownership over the two
lots, they would then be entitled, first, to secure evidence of ownership or certificates of title covering the same
and, second, to possess and enjoy them. The court, in this situation, may in the exercise of its equity jurisdiction
and without ordering the cancellation of the Torrens titles issued to defendant Sevilla, direct the latter to
reconvey the two lots and their corresponding Torrens titles to them as true owners.[52]

The present action is, therefore, not about the declaration of the nullity of the documents or the reconveyance to
the Sebes of the certificates of title covering the two lots. These would merely follow after the trial court shall
have first resolved the issue of which between the contending parties is the lawful owner of such lots, the one
also entitled to their possession. Based on the pleadings, the ultimate issue is whether or not defendant Sevilla
defrauded the Sebes of their property by making them sign documents of conveyance rather than just a deed of
real mortgage to secure their debt to him. The action is, therefore, about ascertaining which of these parties is
the lawful owner of the subject lots, jurisdiction over which is determined by the assessed value of such lots.

Here, the total assessed value of the two lots subject of the suit is P9,910.00. Clearly, this amount does
not exceed the jurisdictional threshold value of P20,000.00 fixed by law. The other damages that the Sebes
claim are merely incidental to their main action and, therefore, are excluded in the computation of the
jurisdictional amount.

WHEREFORE, premises considered, the petition is DISMISSED. The Order dated August 8, 2006,
of the Regional Trial Court of Dipolog City, Branch 9, in Civil Case 5435, is AFFIRMED.

SO ORDERED.
[13]
B.P. 129, Sec. 19. Jurisdiction in civil cases Regional Trial Courts shall exercise exclusive original
jurisdiction: x x x (2) In all civil actions which involve the title to or possession of real property or any interest
therein where the assessed value of the property exceeds Twenty Thousand Pesos (P20,000.00) x x x.
[14]
Id., Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts in Civil Cases Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts
shall exercise: x x x (3) Exclusive original jurisdiction in all civil actions which involve title to or possession of
real property or any interest therein where the assessed value of the property or any interest therein does not
exceed Twenty Thousand Pesos (P20,000.00) x x x.
[17]
439 Phil. 936, 943 (2002): x x x the issue of title, ownership and/or possession thereof is intertwined with the
issue of annulment of sale and reconveyance hence within the ambit of the jurisdiction of the RTC. The assessed
value of the parcels of land thus becomes merely an incidental matter to be dealt with by the court, when
necessary, in the resolution of the case but is not determinative of its jurisdiction.
[18]
THE JUDICIARY ACT OF 1948, Sec. 44. Original jurisdiction. Courts of First Instance shall have original
jurisdiction: (a) In all civil actions in which the subject of the litigation is not capable of pecuniary estimation; x
x x (June 17, 1948).
BANK OF COMMERCE, G.R. No. 167848
Petitioner,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
- versus - CALLEJO, SR.,
CHICO-NAZARIO, and
NACHURA, JJ.

SPS. PRUDENCIO SAN PABLO, JR., and Promulgated:


NATIVIDAD O. SAN PABLO,
Respondents. April 27, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court, filed by petitioner Bank of Commerce seeking to reverse and set aside the Decision[1] of the Court of
Appeals dated 10 September 2004, and its Resolution[2] dated 10 March 2005. The Court of Appeals, in its
assailed Decision and Resolution reversed the Decision[3] of the Regional Trial Court (RTC) of Mandaue City,
Branch 56 dated 25 June 2002, which affirmed the Decision,[4] of the Municipal Trial Court (MTC)
of Mandaue City, Branch 2, dismissing for lack of merit the complaint against Melencio Santos (Santos) and the
Bank of Commerce filed by the respondent Spouses Prudencio (Prudencio) and Natividad (Natividad) San Pablo
for the declaration of nullity of the Special Power of Attorney (SPA) and cancellation of Real Estate Mortgage.
The dispositiveportion of the Court of Appeals Decision reads:

WHEREFORE, the Petition for review is GRANTED and the assailed Decision and Order of the Regional
Trial Court, Branch 56, Mandaue City, Cebu, in Civil Case 4135-A must be as they are hereby, SET ASIDE. We
therefore declare the so-called Special Power of Attorney, the Deed of Real Estate Mortgage and the
Foreclosure proceedings to be NULL and VOID ab initio. And, in the meantime, if the subject Lot No. 1882-C-1-
A covered by Transfer Certificate of Title No. (26469)-7561 has been sold and a new transfer certificate of title
had been issued, let the Registry of deeds of Mandaue City cancel the new title and issue a new one in favor
of Natividad O. San Pablo, unless the new title holder is a purchaser in good faith and for value. In the latter
case, respondent Bank of Commerce and respondent Melencio G. Santos are hereby held jointly and severally
liable to petitioners for the fair market value of the property as of the date of finality of this decision.
Moreover, private respondents are likewise held jointly and severally liable to petitioners P50,000.00 as moral
damages, P25,000.00 as exemplary damages, P25,000.00 plus P1,000.00 per count appearance as attorneys
fees and P10,000.00 as litigation expenses. No costs.

The antecedent factual and procedural facts of this case are as follows:

On 20 December 1994, Santos obtained a loan from Direct Funders Management and Consultancy Inc.,
(Direct Funders) in the amount of P1,064,000.40.[5]

As a security for the loan obligation, Natividad executed a SPA[6] in favor of Santos, authorizing the
latter to mortgage to Direct Funders a paraphernal real property registered under her name and covered by
Transfer Certificate of Title (TCT) No. (26469)-7561[7] (subject property).

In the Deed of Real Estate Mortgage[8] executed in favor of Direct Funders, Natividad and her
husband, Prudencio, signed as the co-mortgagors of Santos. It was, however, clear between the parties that
the loan obligation was for the sole benefit of Santos and the spouses San Pablo merely signed the deed in
order to accommodate the former.

The aforesaid accommodation transaction was made possible because Prudencio and Santos were
close friends and business associates. Indeed, Prudencio was an incorporator and a member of the Board of
Directors of Intergems Fashion Jewelries Corporation (Intergems), a domestic corporation in
which Santos acted as the President.
Sometime in June 1995, the spouses San Pablo received a letter from Direct Funders informing them
that Santos failed to pay his loan obligation with the latter. When confronted with the
matter, Santos promised to promptly settle his obligation with Direct Funders, which he actually did the
following month.

Upon learning that Santos debt with Direct Funders had been fully settled, the spouses San Pablo then
demanded from Santos to turn over to them the TCT of the subject property but the latter failed to do so
despite repeated demands. Such refusal prompted the spouses San Pablo to inquire as to the status of the TCT
of the subject property with the Register of Deeds of Mandaue City and to their surprise, they discovered that
the property was again used by Santos as collateral for another loan obligation he secured from the Bank of
Commerce.

As shown in the annotation stamped at the back of the title, the spouses San Pablo purportedly
authorized Santos to mortgage the subject property to the Bank of Commerce, as evidenced by the SPA
allegedly signed by Natividad on 29 March 1995. It was further shown from the annotation at the back of the
title that the spouses San Pablosigned a Deed of Real Estate Mortgage over the subject property in favor of
Bank of Commerce, which they never did.[9]

In order to free the subject property from unauthorized encumbrances, the spouses San Pablo, on 22
December 1995, filed a Complaint seeking for the Quieting of Title and Nullification of the SPA and the deed of
real estate mortgage with the prayer for damages against Santos and the Bank of Commerce before the MTC
of Mandaue City, Branch 2.

In their complaint, the spouses San Pablo claimed that their signatures on the SPA and the Deed of
Real Estate Mortgage allegedly executed to secure a loan with the Bank of Commerce were forged. They
claimed that while the loan with the Direct Funders was obtained with their consent and direct participation,
they never authorized the subsequent loan obligation with the Bank of Commerce.

During the pendency of the case, the Bank of Commerce, for non-payment of the loan, initiated the
foreclosure proceedings on the strength of the contested Deed of Real Estate Mortgage. During the auction
sale, the Bank of Commerce emerged as the highest bidder and thus a Certificate of Sale was issued under its
name. Accordingly, the spouses San Pablo amended their complaint to include the prayer for annulment of the
foreclosure sale.[10]

In his Answer,[11] Santos countered that the loan with the Bank of Commerce was deliberately resorted
to with the consent, knowledge and direct participation of the spousesSan Pablo in order to pay off the
obligation with Direct Funders. In fact, it was Prudencio who caused the preparation of the SPA and together
with Santos, they went to the Bank of Commerce, Cebu City Branch to apply for the loan. In
addition, Santos averred that the spouses San Pablo were receiving consideration from Intergems for
extending accommodation transactions in favor of the latter.

For its part, Bank of Commerce filed an Answer with Compulsory Counterclaim,[12] alleging that the
spouses San Pablo, represented by their attorney-in-fact, Santos, together with Intergems, obtained a loan in
the amount of P1,218,000.00. It denied the allegation advanced by the spouses San Pablo that the SPA and the
Deed of Real Estate Mortgage were spurious. Since the loan already became due and demandable, the Bank of
Commerce sought the foreclosure of the subject property.

After the Pre-Trial Conference, trial on the merits ensued.

During the trial, Anastacio Barbarona, Jr., the Manager of the Bank of Commerce, Cebu City Branch,
testified that the spouses San Pablo personally signed the Deed of Real Estate Mortgage in his presence. [13] The
testimony of a document examiner and a handwriting expert, however, belied this claim. The expert witness,
after carefully examining the loan documents with the Bank of Commerce, attested that the signatures of the
spouses San Pablo on the SPA and the Deed of Real Estate Mortgage were forged.[14]

On 10 July 2001, the MTC rendered a Decision,[15] dismissing the complaint for lack of merit. The MTC
declared that while it was proven that the signatures of the spouses San Pablo on the loan documents were
forged, the Bank of Commerce was nevertheless in good faith. The dispositive portion of the decision reads:

WHEREFORE, foregoing considered, the instant complaint is hereby ordered


DISMISSED for lack of merit. The dismissal of this case is without prejudice to the filing of the
appropriate criminal action against those responsible for the falsification of the questioned
special power of attorney and deed of real estate mortgage.

Aggrieved, the spouses San Pablo appealed the adverse decision to the RTC of Mandaue City, Branch
56, which, in turn, affirmed the unfavorable ruling of the MTC in its Decision[16] promulgated on 25 June 2002.
The decretal part of the said decision reads:

WHEREFORE, in view of the foregoing, the Court hereby resolves to affirm the assailed Decision.

Similarly ill-fated was the Motion for Reconsideration filed by the spouses San Pablo which was denied
by the RTC for lack of merit.[17]

Unyielding, the spouses San Pablo elevated the matter before the Court of Appeals through a Petition
for Review under Rule 42 of the Revised Rules of Court,[18]assailing the adverse decisions of the MTC and RTC.

In a Decision[19] dated 10 September 2004, the appellate court granted the petition filed by the
spouses San Pablo and reversed the decisions of the MTC and RTC. In setting aside the rulings of the lower
courts, the Court of Appeals ruled that since it was duly proven that the signatures of the spouses San Pablo on
the loan documents were forged, then such spurious documents could never become a valid source of
title. The mortgage contract executed by Santos over the subject property in favor of Bank of Commerce,
without the authority of the spouses San Pablo, was therefore unenforceable, unless ratified.

The Bank of Commerce is now before this Court assailing the adverse decision rendered by the Court
of Appeals.[20] For the resolution of this Court are the following issues:

I.WHETHER OR NOT THE MTC HAS JURISDICTION TO HEAR THE CASE FILED BY THE SPOUSES SAN
PABLO.

II.WHETHER OR NOT THE FORGED SPA AND SPECIAL POWER OF ATTORNEY COULD
BECOME A VALID SOURCE OF A RIGHT TO FORECLOSE A PROPERTY.

III.WHETHER OR NOT THE AWARDS OF DAMAGES, ATTRONEYS FEES AND LITIGATION


EXPENSES ARE PROPER IN THE INSTANT CASE.

In questioning the adverse ruling of the appellate court, the Bank of Commerce, for the first time
in more than 10 years of pendency of the instant case, raises the issue of jurisdiction. It asseverates that
since the subject matter of the case is incapable of pecuniary estimation, the complaint for quieting of title
and annulment of the SPA, the Deed of Real Estate Mortgage, and foreclosure proceedings should have
been originally filed with the RTC and not with the MTC. The decision rendered by the MTC, which did not
acquire jurisdiction over the subject matter of the case, is therefore void from the very
beginning. Necessarily, the Court of Appeals erred in giving due course to the petition when the tribunal
originally trying the case had no authority to try the issue.

We do not agree.

Upon cursory reading of the records, we gathered that the case filed by the spouses San Pablo before
the MTC was an action for quieting of title, and nullification of the SPA, Deed of Real Estate Mortgage, and
foreclosure proceedings. While the body of the complaint consists mainly of allegations of forgery, however,
the primary object of the spouses San Pablo in filing the same was to effectively free the title from any
unauthorized lien imposed upon it.

Clearly, the crux of the controversy before the MTC chiefly hinges on the question of who has the better
title over the subject property. Is it the spouses San Pablo who claim that their signatures on the loan
document were forged? Or is it the Bank of Commerce which maintains that the SPA and the Deed of Real
Estate Mortgage were duly executed and, therefore, a valid source of its right to foreclose the subject property
for non-payment of loan?

An action for quieting of title is a common law remedy for the removal of any cloud upon or doubt or
uncertainty with respect to title to real property. As clarified by this Court in Baricuatro, Jr. v. Court of
Appeals[21]:

x x x Originating in equity jurisprudence, its purpose is to secure an adjudication that a claim of


title to or an interest in property, adverse to that of the complainant, is invalid, so that the
complainant and those claiming under him may be forever afterward free from any danger or hostile
claim. In an action for quieting of title, the competent court is tasked to determine the respective
rights of the complainant and other claimants, not only to place things in their proper place, to make
the one who has no rights to said immovable respect and not disturb the other, but also for the benefit
of both, so that he who has the right would see every cloud of doubt over the property dissipated, and
he could afterwards without fear introduce the improvements he may desire, to use, and even to
abuse the property as he deems best (citation omitted). Such remedy may be availed of under the
circumstances enumerated in the Civil Code:

ART. 476. Whenever there is a cloud on title to real property or any interest therein, by
reason of any instrument, record, claim, encumbrance or proceedingwhich is apparently
valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable,
and may be prejudicial to said title, an action may be brought to remove such cloud or to
quiet the title,

An action may also be brought to prevent a cloud from being cast upon title to real
property or any interest therein.

The mortgage of the subject property to the Bank of Commerce, annotated on the Spouses San Pablos
TCT, constitutes a cloud on their title to the subject property, which may, at first, appear valid and effective,
but is allegedly invalid or voidable for having been made without their knowledge and authority as registered
owners. We thus have established that the case filed by the spouses San Pablo before the MTC is actually an
action for quieting of title, a real action, the jurisdiction over which is determined by the assessed value of the
property.[22] The assessed value of the subject property located in Mandaue City, as alleged in the complaint,
is P4,900.00, which aptly falls within the jurisdiction of the MTC.

According to Section 33 of Batas Pambansa Blg. 129, as amended, otherwise known as The Judiciary
Reorganization Act of 1980:

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts in Civil Cases. Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall
exercise:

xxxx

(3) Exclusive original jurisdiction in all civil actions which involve title to, or
possession of, real property, or any interest therein where the assessed value of the
property or interest therein does not exceed twenty thousand pesos (P20,000.00) or, in civil
actions in Metro Manila, where such assessed value does not exceed Fifty thousand pesos
(P50,000.0) exclusive of interest, damages of whatever kind, attorneys fees litigation expenses
and costs: Provided, That in cases of land not declared for taxation purposes, the value of such
property shall be determined by the assessed value of the adjacent lots. (As amended, R.A. No.
7691.)

Even granting for the sake of argument that the MTC did not have jurisdiction over the case, the Bank
of Commerce is nevertheless estopped from repudiating the authority of the court to try and decide the case
after having actively participated in the proceedings before it and invoking its jurisdiction by seeking an
affirmative relief therefrom.

As we have explained quite frequently, a party may be barred from raising questions of jurisdiction
when estoppel by laches has set in. Estoppel by laches is failure or neglect for unreasonable and unexplained
length of time to do what, by exercising due diligence, ought to have been done earlier, warranting the
presumption that the party entitled to assert it has either abandoned it or has acquiesced to the correctness or
fairness of its resolution. This doctrine is based on grounds of public policy which, for the peace of the society,
requires the discouragement of stale claims, and, unlike the statute of limitations, is not a mere question of
time but is principally an issue of inequity or unfairness in permitting a right or claim to be enforced or
espoused.[23]

In Soliven v. Fastforms Philippines, Inc., we thus ruled:

While it is true that jurisdiction may be raised at any time, this rule presupposes that estoppel has not
supervened. In the instant case, respondent actively participated in all stages of the proceedings before the
trial court and invoked its authority by asking for an affirmative relief. Clearly, respondent is estopped from
challenging the trial courts jurisdiction, especially when the adverse judgment is rendered.[24]
Participation in all stages before the trial court, that included invoking its authority in asking for affirmative
relief, effectively bars the party by estoppel from challenging the courts jurisdiction.[25] The Court frowns upon
the undesirable practice of a party participating in the proceedings and submitting his case for decision and
then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction when adverse.[26]

We now proceed to resolve the issue of whether a forged SPA or Deed of Real Estate Mortgage could be a
source of a valid title. Settled is the fact, as found by the MTC and as affirmed by both the RTC and the Court of
Appeals, that the SPA and the Deed of Real Estate Mortgage had been forged. Such fact is no longer disputed
by the parties. Thus, the only issue remaining to be threshed out in the instant petition is whether the Bank of
Commerce is a mortgagee in good faith. The MTC and the RTC held that the Bank of Commerce acted in good
faith in entering into the loan transaction with Santos, while the Court of Appeals, on the other
hand, ruled otherwise.

The Bank of Commerce posits that it is a mortgagee in good faith and therefore entitled to protection under the
law. It strenuously asserts that it is an innocent party who had no knowledge that the right of Santos to mortgage
the subject property was merely simulated.

In Cavite Development Bank v. Spouses Lim, [27] the Court explained the doctrine of mortgagee in good faith,
thus:

There is, however, a situation where, despite the fact that the mortgagor is not the owner of the mortgaged
property, his title being fraudulent, the mortgage contract and any foreclosure sale arising there from are
given effect by reason of public policy. This is the doctrine of the mortgagee in good faith based on the rule
that all persons dealing with property covered by the Torrens Certificates of Title, as buyers or mortgagees, are
not required to go beyond what appears on the face of the title. The public interest in upholding the
indefeasibility of a certificate of title, as evidence of lawful ownership of the land or of any encumbrance
thereon, protects a buyer or mortgagee who, in good faith, relied upon what appears on the face of the
certificate of title.

Indeed, a mortgagee has a right to rely in good faith on the certificate of title of the mortgagor
of the property given as security, and in the absence of any sign that might
arouse suspicion, the mortgagee has no obligation to undertake further investigation. This
doctrine pre-supposes, however, that the mortgagor, who is not the rightful owner of the
property, has already succeeded in obtaining Torrens title over the property in his name and
that, after obtaining the said title, he succeeds in mortgaging the property to another who
relies on what appears on the title. This is not the situation in the case at bar since Santos was
not the registered owner for he merely represented himself to be the attorney-in-fact of the
spouses San Pablo.

In cases where the mortgagee does not directly deal with the registered owner of real property, the law
requires that a higher degree of prudence be exercised by the mortgagee. As we have enunciated in the case
of Abad v. Guimba:[28]

x x x While one who buys from the registered owner does not need to look behind the certificate of title, one
who buys from one who is not a registered owner is expected to examine not only the certificate of title but all
the factual circumstances necessary for [one] to determine if there are any flaws in the title of the transferor, or
in [the] capacity to transfer the land. Although the instant case does not involve a sale but only a mortgage, the
same rule applies inasmuch as the law itself includes a mortgagee in the term purchaser.

This principle is applied more strenuously when the mortgagee is a bank or a banking institution. In
the case of Cruz v. Bancom Finance Corporation, We ruled:

Respondent, however, is not an ordinary mortgagee; it is a mortgagee-bank. As such,


unlike private individuals, it is expected to exercise greater care and prudence in its dealings,
including those involving registered lands. A banking institution is expected to exercise due
diligence before entering into a mortgage contract. The ascertainment of the status or
condition of a property offered to it as security for a loan must be a standard and
indispensable part of its operations.[29]

We never fail to stress the remarkable significance of a banking institution to commercial transactions,
in particular, and to the countrys economy in general. The banking system is an indispensable institution in the
modern world and plays a vital role in the economic life of every civilized nation. Whether as mere passive
entities for the safekeeping and saving of money or as active instruments of business and commerce, banks
have become an ubiquitous presence among the people, who have come to regard them with respect and
even gratitude and, most of all, confidence.[30] Consequently, the highest degree of diligence is expected, and
high standards of integrity and performance are even required, of it. [31]

The Bank of Commerce clearly failed to observe the required degree of caution in ascertaining the
genuineness and extent of the authority of Santos to mortgage the subject property. It should not have simply
relied on the face of the documents submitted by Santos, as its undertaking to lend a considerable amount of
money required of it a greater degree of diligence. That the person applying for the loan is other than the
registered owner of the real property being mortgaged should have already raised a red flag and which should
have induced the Bank of Commerce to make inquiries into and confirm Santos authority to mortgage the
Spouses San Pablos property. A person who deliberately ignores a significant fact that could create suspicion in
an otherwise reasonable person is not an innocent purchaser for value.[32]

Having laid that the bank of Commerce is not in good faith necessitates us to award moral damages,
exemplary damages, attorneys fees and costs of litigation in favor of the spouses San Pablo. Moral damages
are not awarded to penalize the defendant but to compensate the plaintiff for the injuries he may have
suffered.[33] Willful injury to property may be a legal ground for awarding moral damages if the court should
find that, under the circumstances, such damages are justly due.[34] In the instant case, we find that the award
of moral damages is proper. The Bank of Commerce, in allowing Santos to secure a loan out of the property
belonging to the spouses San Pablo, without taking the necessary precaution demanded by the circumstances
owing to the public policy imbued in the banking business, caused injury to the latter which calls for the
imposition of moral damages. As for the award of exemplary damages, we deem that the same is proper for
the Bank of Commerce was remiss in its obligation to inquire into the veracity of Santos authority to mortgage
the subject property, causing damage to the spouses San Pablo.[35] Finally, we rule that the award of attorneys
fees and litigation expenses is valid since the spouses San Pablo were compelled to litigate and thus
incur expenses in order to protect its rights over the subject property.[36]

Prescinding from the above, we thus rule that the forged SPA and Deed of Real Estate Mortgage is
void ab initio. Consequently, the foreclosure proceedings conducted on the strength of the said SPA and Deed
of Real Estate Mortgage, is likewise void ab initio. Since the Bank of Commerce is not a mortgagee in good faith
or an innocent purchaser for value on the auction sale, it is not entitled to the protection of its rights to the
subject property. Considering further that it was not shown that the Bank of Commerce has already
transferred the subject property to a third person who is an innocent purchaser for value (since no
intervention or third-party claim was interposed during the pendency of this case), it is but proper that the
subject property should be retained by the Spouses San Pablo.

WHEREFORE, in view of the foregoing, the instant petition is DENIED. The Decision dated 10
September 2004 rendered by the Court of Appeals in CA-G.R. SP No. 76562, is hereby AFFIRMED. The SPA, the
Deed of Real Estate Mortgage, and the Foreclosure Proceedings conducted in pursuant to said deed, are
hereby declared VOID AB INITIO. The Register of Deeds of Mandaue City is hereby DIRECTED to cancel Entry
Nos. 9089-V.9-D.B and 9084-V.9-D.B annotated on TCT No.-(26469)-7561 in the name
of Natividad Opolontesima San Pablo. The Bank of Commerce is hereby ORDERED to pay the spouses San
Pablo P50,000.00 as moral damages, P25,000.00 as exemplary damages, P20,000.00 as attorneys fees
and P20,000.00 as litigation expenses. Cost against the petitioner.

SO ORDERED.
G.R. No. 181622 November 20, 2013

GENESIS INVESTMENT, INC., CEBU JAYA REALTY INC., and SPOUSES RHODORA and
LAMBERT LIM,Petitioners,
vs.
HEIRS of CEFERINO EBARASABAL,* NAMELY: ROGELIO EBARASABAL, SPOUSES LIGAYA
E. GULIMLIM AND JOSE GULIMLIM, SPOUSES VISITACION E. CONEJOS and ELIAS
CONEJOS, BEN TEJERO, POCAS TEJERO, GERTRUDES TEJERO, BANING HAYO, LACIO
EBARASABAL and JULIETA EBARASABAL; HEIRS OF FLORO EBARASABAL, namely: SOFIA
ABELONG, PEPITO EBARASABAL AND ELPIDIO EBARASABAL; HEIRS OF LEONA
EBARASABAL- APOLLO, namely: SILVESTRA A. MOJELLO and MARCELINO APOLLO; HEIRS
OF PEDRO EBARASABAL, namely: BONIFACIO EBARASABAL, SERGIO EBARASABAL and
JAIME EBARASABAL; HEIRS of ISIDRO EBARASABAL, NAMELY: SPOUSES CARLOSA E.
NUEVO and FORTUNATO NUEVA;** HEIRS of BENITO EBARASABAL, namely: PAULO
BAGAAN, SPOUSES CATALINA A. MARIBAO and RENE MARIBAO, VICENTE ABRINICA and
PATRON EBARASABAL; HEIRS of JULIAN EBARASABAL, NAMELY: ALFREDO BAGAAN,
JUAN BAGAAN, AVELINO BAGAAN, FERDINAND BAGAAN, MAURO BAGAAN, SPOUSES
ROWENA B. LASACA and FRANCISCO LACASA,*** SPOUSES MARIA B. CABAG and EMILIO
CABAG and ESTELITA BAGAAN, all being represented herein by VICTOR MOJELLO,
FEDERICO BAGAAN and PAULINO EBARASABAL, as their Attorneys-in-Fact, Respondents.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
reverse and set aside the Decision1 and Resolution,2 dated July 11, 2007 and January 10, 2008,
respectively, of the Court of Appeals (CA) in CA-G.R. CEB-SP No. 01017.

The antecedents of the case are as follows:

On November 12, 2003, herein respondents filed against herein petitioners a Complaint 3 for
Declaration of Nullity of Documents, Recovery of Shares, Partition, Damages and Attorney's Fees.
The Complaint was filed with the Regional Trial Court (RTC) of Barili, Cebu.

On August 5, 2004, herein petitioners filed a Motion to Dismiss4 contending, among others, that the
RTC has no jurisdiction to try the case on the ground that, as the case involves title to or possession
of real property or any interest therein and since the assessed value of the subject property does not
exceed P20,000.00 (the same being only P11,990.00), the action falls within the jurisdiction of the
Municipal Trial Court (MTC).5

In its Order6 dated September 29, 2004, the RTC granted petitioners' Motion to Dismiss, holding as
follows:

xxxx

And while the prayer of the plaintiffs for the annulment of documents qualified the case as one
incapable of pecuniary estimation thus, rendering it cognizable supposedly by the second level courts
but considering that Republic Act No. 7691 expressly provides to cover "all civil actions" which phrase
understandably is to include those incapable of pecuniary estimation, like the case at bar, this Court is
of the view that said law really finds application here more so that the same case also "involves title
to, or possession of, real property, or any interest therein." For being so, the assessed value of the
real property involved is determinative of which court has jurisdiction over the case. And the plaintiffs
admitting that the assessed value of the litigated area is less than P20,000.00, the defendants are
correct in arguing that the case is beyond this Court's jurisdiction.7

Respondents filed a Motion for Partial Reconsideration,8 arguing that their complaint consists of
several causes of action, including one for annulment of documents, which is incapable of pecuniary
estimation and, as such, falls within the jurisdiction of the RTC.9

On March 17, 2005, the RTC issued an Order granting respondents' Motion for Partial
Reconsideration and reversing its earlier Order dated September 29, 2004. The RTC ruled, thus:

On the issue of want of jurisdiction, this court likewise finds to be with merit the contention of the
movants as indeed the main case or the primary relief prayed for by the movants is for the declaration
of nullity or annulment of documents which unquestionably is incapable of pecuniary estimation and
thus within the exclusive original jurisdiction of this court to try although in the process of resolving the
controversy, claims of title or possession of the property in question is involved which together with all
the other remaining reliefs prayed for are but purely incidental to or as a consequence of the foregoing
principal relief sought.10

Petitioners filed a Motion for Reconsideration,11 but the RTC denied it in its Order dated June 23,
2005.

Aggrieved, petitioners filed a petition for certiorari with the CA. However, the CA dismissed the petition
via its assailed Decision dated July 11, 2007, holding that the subject matter of respondents'
complaint is incapable of pecuniary estimation and, therefore, within the jurisdiction of the RTC,
considering that the main purpose in filing the action is to declare null and void the documents
assailed therein.12

Petitioners' Motion for Reconsideration was, subsequently, denied in the CA Resolution dated
January 10, 2008.

Hence, the instant petition for review on certiorari raising the sole issue, to wit:

Whether or not the Honorable Court of Appeals gravely erred in concluding that the Regional Trial
Court, Branch 60 of Barili, Cebu has jurisdiction over the instant case when the ALLEGATIONS IN
THE COMPLAINT clearly shows that the main cause of action of the respondents is for the Recovery
of their Title, Interest, and Share over a Parcel of Land, which has an assessed value of P11,990.00
and thus, within the jurisdiction of the Municipal Trial Court.13

The petition lacks merit.

For a clearer understanding of the case, this Court, like the CA, finds it proper to quote pertinent
portions of respondents' Complaint, to wit:

xxxx

1. Plaintiffs are all Filipino, of legal age, surviving descendants either as grandchildren or great
grandchildren and heirs and successors-in-interest of deceased Roman Ebarsabal, who died on 07
September 1952 x x x

xxxx

8. During the lifetime of Roman Ebarsabal, he acquired a parcel of land situated in Basdaku,
Saavedra, Moalboal, Cebu, x x x.

xxxx

with a total assessed value of P2,890.00 x x x. However, for the year 2002, the property was already
having (sic) a total assessed value of P11,990.00 x x x.

9. Upon the death of said Roman Ebarsabal, his eight (8) children named in par. 7 above, became co-
owners of his above-described property by hereditary succession; taking peaceful possession and
enjoyment of the same in fee simple pro indiviso, paying the real estate taxes thereon and did not
partition the said property among themselves until all of them likewise died, leaving, however, their
respective children and descendants and/or surviving heirs and successors-in-interest, and who are
now the above-named plaintiffs herein;

10. The plaintiffs who are mostly residents in (sic) Mindanao and Manila, have just recently uncovered
the fact that on 28th January 1997, the children and descendants of deceased Gil Ebarsabal, namely:
Pelagio, Hipolito, Precela, Fructuosa, Roberta, Florentino, Erlinda, Sebastian, Cirilo, all surnamed
Ebarsabal, have executed among themselves a Deed of Extrajudicial Settlement with Sale of Roman
Ebarsabal's entire property described above, by virtue of which they allegedly extrajudicially settled
the same and, for P2,600,000.00 although only the sum of P950,000.00 was reflected in their Deed
of Sale for reason only known to them, they sold the whole property to defendants Genesis
Investment Inc. represented by co-defendant Rhodora B. Lim, the wife of Lambert Lim, without the
knowledge, permission and consent of the plaintiffs who are the vendors' co-owners of the lot in
question, x x x.

11. Surprisingly, however, the defendant Genesis managed to have the Tax Declaration of the
property issued in the name of co-defendant Cebu Jaya Realty Incorporated, a firm which, as already
intimated above, is also owned by Spouses Lambert and Rhodora B. Lim, instead of in the name of
Genesis Investment, Incorporated, which is actually the vendee firm of the lot in question.
xxxx

Hence, the reason why Cebu Jaya Realty, Incorporated is joined and impleaded herein as a co-
defendant.

12. Without the participation of the plaintiffs who are co-owners of the lot in question in the
proceedings, the aforementioned extrajudicial settlement with sale cannot be binding upon the
plaintiff-co-owners.

13. Further, where as in this case, the other heirs who are the plaintiffs herein, did not consent to the
sale of their ideal shares in the inherited property, the sale was only to be limited to the pro indiviso
share of the selling heirs.

xxxx

14. By representation, the plaintiffs, are therefore, by law, entitled to their rightful shares from the
estate of the deceased Roman Ebarsabal consisting of seven (7) shares that would have been due as
the shares of seven (7) other children of Roman Ebarsabal who are also now deceased, namely:
Ceferino, Floro, Leona, Pedro, Isidoro, Julian and Benito, all surnamed Ebarsabal.

15. The defendants who had prior knowledge of the existence of the other heirs who are co-owners of
the vendors of the property they purchased, had unlawfully acted in bad faith in insisting to buy the
whole property in co-ownership, only from the heirs and successors-in-interest of deceased Gil
Ebarsabal, who is only one (1) of the eight (8) children of deceased Roman Ebarsabal, and without
notifying thereof in whatever manner the plaintiffs who are the heirs and successors-in-interest of the
other co-owners of the property-in-question; thus, have compelled the plaintiffs herein to file this
instant case in court to protect their interests, x x x.

xxxx

PRAYER

WHEREFORE, in view of all the foregoing, it is most respectfully prayed of this Honorable Court that,
after due notice and hearing, judgment shall be rendered in favor of the plaintiffs, as follows, to wit:

1 Declaring as null and void and not binding upon the plaintiffs, the following documents to wit:

(a) Deed of Extrajudicial Settlement with Sale executed by and between the heirs of
deceased Gil Ebarsabal headed by Pedro Ebarsabal, and Genesis Investment, Inc.,
represented by Rhodora Lim, dated 28th of January, 1997, marked as Annex-A;

(b) Memorandum of Agreement executed between Pedro Ebarsabal and Genesis


Investment, Inc., represented by Rhodora Lim dated 27 January, which document is
notarized;

(c) Tax Declaration of Real Property issued to Cebu Jaya Realty, Inc., marked as
Annex-D;

2 Ordering the defendants to make partition of the property in litigation with the plaintiffs into eight
(8) equal shares; to get one (1) share thereof, which is the only extent of what they allegedly acquired
by purchase as mentioned above, and to transfer, restore or reconvey and deliver to the plaintiffs,
seven (7) shares thereof, as pertaining to and due for the latter as the heirs and successors-in-interest
of the seven (7) brothers and sister of deceased Gil Ebarsabal already named earlier in this
complaint;

xxxx

Further reliefs and remedies just and equitable in the premises are also herein prayed for.

x x x x14

It is true that one of the causes of action of respondents pertains to the title, possession and interest
of each of the contending parties over the contested property, the assessed value of which falls within
the jurisdiction of the MTC. However, a complete reading of the complaint would readily show that,
based on the nature of the suit, the allegations therein, and the reliefs prayed for, the action is within
the jurisdiction of the RTC.
As stated above, it is clear from the records that respondents' complaint was for "Declaration of Nullity
of Documents, Recovery of Shares, Partition, Damages and Attorney's Fees." In filing their Complaint
with the RTC, respondents sought to recover ownership and possession of their shares in the
disputed parcel of land by questioning the due execution and validity of the Deed of Extrajudicial
Settlement with Sale as well as the Memorandum of Agreement entered into by and between some of
their co-heirs and herein petitioners. Aside from praying that the RTC render judgment declaring as
null and void the said Deed of Extrajudicial Settlement with Sale and Memorandum of Agreement,
respondents likewise sought the following: (1) nullification of the Tax Declarations subsequently
issued in the name of petitioner Cebu Jaya Realty, Inc.; (2) partition of the property in litigation; (3)
reconveyance of their respective shares; and (3) payment of moral and exemplary damages, as well
as attorney's fees, plus appearance fees.1wphi1

Clearly, this is a case of joinder of causes of action which comprehends more than the issue of
partition of or recovery of shares or interest over the real property in question but includes an action
for declaration of nullity of contracts and documents which is incapable of pecuniary estimation.15

As cited by the CA, this Court, in the case of Singson v. Isabela Sawmill,16 held that:

In determining whether an action is one the subject matter of which is not capable of pecuniary
estimation, this Court has adopted the criterion of first ascertaining the nature of the principal action or
remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of
pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first
instance would depend on the amount of the claim. However, where the basic issue is something
other than the right to recover a sum of money, where the money claim is purely incidental to, or a
consequence of, the principal relief sought, this Court has considered such actions as cases where
the subject of the litigation may not be estimated in terms of money, and are cognizable by courts of
first instance [now Regional Trial Courts].17

This rule was reiterated in Russell v. Vestil18 and Social Security System v. Atlantic Gulf and Pacific
Company of Manila Inc.19

Contrary to petitioners contention, the principal relief sought by petitioners is the nullification of the
subject Extrajudicial Settlement with Sale entered into by and between some of their co-heirs and
respondents, insofar as their individual shares in the subject property are concerned. Thus, the
recovery of their undivided shares or interest over the disputed lot, which were included in the sale,
simply becomes a necessary consequence if the above deed is nullified. Hence, since the principal
action sought in respondents Complaint is something other than the recovery of a sum of money, the
action is incapable of pecuniary estimation and, thus, cognizable by the RTC.20 Well entrenched is the
rule that jurisdiction over the subject matter of a case is conferred by law and is determined by the
allegations in the complaint and the character of the relief sought, irrespective of whether the party is
entitled to all or some of the claims asserted.21

Moreover, it is provided under Section 5 (c), Rule 2 of the Rules of Court that where the causes of
action are between the same parties but pertain to different venues or jurisdictions, the joinder may be
allowed in the RTC provided one of the causes of action falls within the jurisdiction of said court and
the venue lies therein. Thus, as shown above, respondents complaint clearly falls within the
jurisdiction of the RTC.

WHEREFORE, the petition is DENIED. The Decision and Resolution dated July 11, 2007 and January
10, 2008, respectively, of the Court of Appeals in CA-G.R. CEB-SP No. 01017 are AFFIRMED.
5
Under Section 33(3) of Batas Pambansa Blg. 129 (B.P. 129), as amended by Republic Act
No. 7691 (R.A. 7691), Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit
Trial Courts shall exercise exclusive original jurisdiction in all civil actions which involve title to,
or possession of, real property, or any interest therein where the assessed value of the
property or interest therein does not exceed Twenty Thousand Pesos (P20,000.00) or, in civil
actions in Metro Manila, where such assessed value does not exceed Fifty Thousand Pesos
(P50,000.00) exclusive of interest, damages of whatever kind, attorney's fees, litigation
expenses and costs: Provided, That in cases of land not declared for taxation purposes, the
9
Under Section 19 (1) of B.P. 129, as amended by R.A. 7691, Regional Trial Courts shall
exercise exclusive original jurisdiction in all civil actions in which the subject of the litigation is
incapable of pecuniary estimation.