EIGHTEENTH (18th) DIVISION ROCKY HILLS VILLAGE ASSOCIATION, INC., PETITIONER, VS. SPOUSES RODOLFO CUENCO AND CRISTETA CUENCO, RESPONDENTS.

Rocky Hills Village Association versus Cuenco

The Case

This is the story of Rocky Hills Village Association, Incorporated, suing the spouses Rodolfo Cuenco and Cristeta Cuenco for ejectment over two subdivision lots in Tisa, Labangon, Cebu City. Rocky Hills holds Torrens titles to the lots; the Cuencos claim to have bought them years earlier from the Galanto spouses, who in turn bought from the Madarang spouses before Rocky Hills registered its own purchase. The case matters because it is a compact review of three examinable points: the jurisdictional allegations required in forcible entry, the power of the Regional Trial Court on appeal to convert a case tried without jurisdiction into an action for recovery of ownership, and the rule on double sale under the Civil Code, together with the requisites for awarding attorney's fees.

Procedural History

Rocky Hills filed a complaint for ejectment before the Municipal Trial Court of Cebu City, Branch 6. On July 4, 2008, the Municipal Trial Court dismissed the complaint for insufficiency of the cause of action, holding that the complaint recited forcible entry but failed to allege prior physical possession, and ordered Rocky Hills to pay 20,000 pesos as attorney's fees and 10,000 pesos as litigation expenses. Rocky Hills appealed by notice of appeal filed on December 12, 2008.

On October 22, 2009, the Regional Trial Court, Branch 7, set aside the Municipal Trial Court decision. Treating the appeal as an action for recovery of ownership, it declared the Cuencos the owners of the two lots, directed Rocky Hills to deliver the titles to them free from all liens and encumbrances, and ordered payment of attorney's fees, litigation expenses, and costs. The Regional Trial Court denied Rocky Hills' motion for reconsideration on February 22, 2010.

Rocky Hills then filed a petition for review under Rule 42 of the 1997 Rules of Civil Procedure, which is how the case reached the Supreme Court. Meanwhile, the Cuencos had earlier filed, on November 8, 2007, a separate complaint for quieting of title, reconveyance, and damages before the Regional Trial Court, Branch 10, and that court suspended its hearings to await the outcome of this petition.

Facts

Rocky Hills owned a parcel of land in Tisa, Labangon, Cebu City, covered by a Torrens title, which it subdivided into smaller lots, including the two lots in dispute. Before the subdivision, the Madarang spouses had sold portions of the land to the Galanto spouses in November 1989, but that sale was never registered. Rocky Hills later bought the property from the Madarang spouses in May 1990, registered the sale, and obtained a new title in its own name, knowing of the earlier sale to the Galantos, whom it recognized as owners and bona fide members of the association.

In October 1991, the Galantos sold the two lots to the Cuencos, who allowed the Galantos to remain in possession under a memorandum of agreement. When the Galantos failed to vacate, the Cuencos sued them for ejectment and obtained a judgment in April 2006 ordering the Galantos to turn over possession. From October 2006, the Cuencos occupied the lots physically and demanded that Rocky Hills surrender the titles to them, but Rocky Hills refused.

In October 2006, Rocky Hills alleged that the Cuencos clandestinely entered and took possession of the lots. Rocky Hills made a formal written demand on November 21, 2006, which the Cuencos ignored, and then filed its complaint for ejectment in December 2006. The Cuencos answered, claiming ownership by virtue of their purchase from the Galantos.

Issues

• Whether or not the Municipal Trial Court had jurisdiction over the complaint for ejectment, given that the complaint failed to allege prior physical possession and the means by which possession was disturbed.
• Whether or not the Regional Trial Court, Branch 7, correctly treated the appeal as an action for recovery of ownership under the second paragraph of Section 8, Rule 40 of the 1997 Rules of Civil Procedure.
• Whether or not the Regional Trial Court, Branch 7, could validly declare the Cuencos the owners of the lots, considering that the Regional Trial Court, Branch 10, had first acquired jurisdiction over the question of ownership.
• Whether or not the award of attorney's fees and litigation expenses in favor of the Cuencos was proper.

Applicable Provisions

Section 8, Rule 40 of the 1997 Rules of Civil Procedure provides:

SECTION 8. Appeal from orders dismissing case without trial; lack of jurisdiction. — If an appeal is taken from an order of the lower court dismissing the case without a trial on the merits, the Regional Trial Court may affirm or reverse it, as the case may be. In case of affirmance and the ground of dismissal is lack of jurisdiction over the subject matter, the Regional Trial Court, if it has jurisdiction thereover, shall try the case on the merits as if the case was originally filed with it. In case of reversal, the case shall be remanded for further proceedings. If the case was tried on the merits by the lower court without jurisdiction over the subject matter, the Regional Trial Court on appeal shall not dismiss the case if it has original jurisdiction thereof, but shall decide the case in accordance with the preceding section, without prejudice to the admission of amended pleadings and additional evidence in the interest of justice.

This is the provision that empowered the Regional Trial Court, Branch 7, to decide the case on the merits as an action for recovery of ownership instead of dismissing it, because the Municipal Trial Court had tried the case on the merits without jurisdiction.

Article 2208 of the Civil Code provides:

Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (1) When exemplary damages are awarded; (2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; (3) In criminal cases of malicious prosecution against the plaintiff; (4) In case of a clearly unfounded civil action or proceeding against the plaintiff; (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim; (6) In actions for legal support; (7) In actions for the recovery of wages of household helpers, laborers and skilled workers; (8) In actions for indemnity under workmen's compensation and employer's liability laws; (9) In a separate civil action to recover civil liability arising from a crime; (10) When at least double judicial costs are awarded; (11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered. In all cases, the attorney's fees and expenses of litigation must be reasonable.

This is the provision the Court used to test the award of attorney's fees and litigation expenses, which it sustained under the second and eleventh exceptions.

Ruling

On the first issue, the Court held that the Municipal Trial Court had no jurisdiction. In forcible entry, two allegations are mandatory: the plaintiff must allege prior physical possession, and must allege that he was deprived of it by force, intimidation, threats, strategy, or stealth. Rocky Hills alleged only that it was the registered owner, that the Cuencos clandestinely took possession in October 2006, and that they refused to vacate despite demands. A bare allegation that the plaintiff was deprived of possession is insufficient.

On the second issue, the Court held that the Regional Trial Court, Branch 7, correctly applied the second paragraph of Section 8, Rule 40, because the Municipal Trial Court had tried the case on the merits despite lacking jurisdiction. The Regional Trial Court could decide the case on the evidence elevated to it without retrying the case on the merits, subject to the admission of amended pleadings and additional evidence in the interest of justice. It was therefore not error to consider the evidence from the summary procedure below.

On the third issue, the Court held that the Regional Trial Court, Branch 7, could not validly award ownership to the Cuencos. The Cuencos had filed their complaint for quieting of title, reconveyance, and damages before the Regional Trial Court, Branch 10, on November 8, 2007, while the appeal reached Branch 7 only on December 12, 2008. Branch 10 therefore first acquired jurisdiction over the question of ownership. When several courts have concurrent jurisdiction, the first to acquire jurisdiction retains it to the exclusion of the others. The award of ownership by Branch 7 was thus ineffectual, and all questions of ownership must be left to Branch 10.

On the fourth issue, the Court sustained the award. Attorney's fees are the exception rather than the general rule, and must fall within the instances enumerated in Article 2208 of the Civil Code, with findings of fact and law to justify the award, which must in all cases be reasonable. Here, the Cuencos were compelled to litigate and incur expenses to protect their interest, and Rocky Hills acted in bad faith when it registered the second sale in its favor despite knowledge of the first sale to the Galantos.

Doctrine

First, in forcible entry, the complaint must allege prior physical possession and deprivation by force, intimidation, threats, strategy, or stealth; a bare allegation of deprivation is insufficient to confer jurisdiction on the municipal court.

Second, under the second paragraph of Section 8, Rule 40 of the 1997 Rules of Civil Procedure, if the case was tried on the merits by the lower court without jurisdiction, the Regional Trial Court on appeal shall not dismiss the case if it has original jurisdiction, but shall decide it on the evidence, without prejudice to amended pleadings and additional evidence in the interest of justice.

Third, when several courts have concurrent jurisdiction, the first court to acquire jurisdiction retains it to the exclusion of the others; a judgment on ownership rendered by a co-equal court that acquired jurisdiction later is ineffectual.

Fourth, attorney's fees are awarded only in the instances enumerated in Article 2208 of the Civil Code, must rest on findings of fact and law, and must be reasonable.

Disposition

The petition was partially granted: the decision of the Regional Trial Court, Branch 7, and its order denying reconsideration were set aside, the complaint for ejectment was dismissed, and Rocky Hills was ordered to pay the Cuencos 20,000 pesos as attorney's fees and 10,000 pesos as litigation expenses.

Remember This

Memorize this line: a bare allegation that the plaintiff was deprived of possession does not make out forcible entry, but the Regional Trial Court on appeal may still decide the case on the merits under Section 8, Rule 40, provided it has original jurisdiction. Examiners use this case for the jurisdictional allegations in ejectment, the first-to-acquire rule among co-equal courts, and the restrictive award of attorney's fees under Article 2208.