GENERAL INSURANCE AND SURETY CORPORATION, PLAINTIFF-APPELLANT, VS. LEANDRO E. CASTELO AND JOSEFA PAYUMO CASTELO, DEFENDANTS-APPELLEES.

On October 22, 1950, the
plaintiff-appellant, General Insurance and Surety Corporation, filed with the
Municipal Court of Quezon City an ejectment suit against the herein appellees, spouses Leandro E.
Castelo and Josefa Payumo Castelo. The complaint
alleged that the plaintiff was the owner of a lot located at Quezon City, known as No. 34 Bulusan, Quezon City” and that the
defendants were persisting in occupying the said property without paying for the
corresponding rentals therefor despite the plaintiff’s
repeated demands. On October 29,
1959, the
defendants’ spouses filed a motion to dismiss the above complaint on the grounds
that the same did not state a cause of action and that the
Municipal Court of Queznl1 City had no jurisdiction over the
case. On November 3,
1959,
however, the said motion was denied on the explanation that “this court
(Municipal Court of Quezon City) finds that the
complaint against the defendant has a cause of action.”

On November 9,
1959, the
defendants filed their “Answer with Counterclaims” to the aforementioned
complaint. In their answer, the defendants specifically denied the plaintiff’s
claim of ownership over the lot in dispute. They claimed that the “plaintiff
never acquired ownership over the lot in question, and it (the plaintiff) is
holding the title if ever one is issued in its name, as trustee and for the
benefit of the defendants, who are owners thereof.” The same answer likewise
specifically alleged that contrary to the plaintiff’s assertion, they, the
defendants, “are the owners of the lot in question.” On November 14,
1959, the
plaintiff filed its”Rep1y and answer to Counterclaim.”

With the issues thus joined, the
parties entered into trial and in due time, the lower court rendered a decision
dismissing the complaint “for lack of jurisdiction to determine the same.” In
support of its dismissal on the above ground, the said court ruled that the
issue presented by the pleadings and at the trial “hinges on a question of
ownership and for that reason is not cognizable by an inferior
court.”

Thereupon, the plaintiff appealed
the above decision to the Court of First Instance of Quezon City where it was docketed as Civil Case No. Q-5126. Once more, the defendants moved for the dismissal of
.the appealed case on the ground that the said court had no jurisdiction over
the suit by virtue of the express provision of Section 11 of Rule 40 of the
Rules of Court. To this motion, the plaintiff-appellant filed an opposition
which argued for the said Court of First Instance’s jurisdiction “either by way
of appeal or under its original jurisdiction.” After two postponements of the
hearing on the above motion, the same was finally denied by the above court “for
lack of merit and for failure of the movant to
appear.”

The defendants-appellees then filed a timely motion for reconsideration of
the above order. Again, the plaintiff-appellant filed an opposition thereto.
Instead of scheduling a hearing on the said motion for reconsideration, however,
the Court of First Instance set the case for a pre-trial conference or hearing
on September 1,
1960.
Unfortunately, the pre-trial proceedings did not bring the parties to any
agreeable understanding so that on October 14, 1960, the trial court issued an
order setting the case for hearing on the merits for October 21, 1960, at 2:80
in the afternoon. This same order denied the defendants’ motion for
reconsideration “for lack of merit.”

On October 19,
1960, the
defendants filed a “Petition to Suspend Trial” on the ground that there was
another civil case between the same parties involving the question of ownership
of the lot in dispute. This was opposed by the
plaintiff-appellant.

Without ruling on the above
petition, the Court of First Instance of Quezon City
rendered a decision on February 2, 1961 dismissing the complaint on the ground
that “after carefully going over the records of the instant case and examining
the, memoranda submitted by both parties, this Court concludes that this case
should be dismissed because of the insistent objection to the exercise of
original jurisdiction registered by the defendants from the very beginning.”
From this decision, the plaintiff-appellant perfected an appeal to the Court of
Appeals which, however, certified the case to this Court.

Both the appellant and the appellees recite in their respective briefs what they allege
to be the “facts” of this case. The appellant adverts to various incidents and
documents tending to establish its ownership of the lot in question. More
specifically, the appellant points to an instrument purporting to be a deed of
sale with a right of repurchase in its favor as well as to the alleged title
over the disputed realty issued in its name. On the other hand, the appellees insist that the above-mentioned deed of sale was
in fact a mere equitable mortgage land by no means, an instrument which conveyed
title over the lot in question to the appellant.

It must be stated in connection
with the above dispute as to the “facts” of this case, however, that there has
not been any finding on them by the court below, the Court of First Instance of
Quezon City, since no trial or hearing on the merits
was ever held therein. The decision under appeal pertains solely to the ruling
of the said court that it lacks the jurisdiction to try the
case.

It is evident and conclusive upon
the pleadings filed in this case that the dispute between the parties hereto
extends beyond the ordinary issues raised in ejectment
cases. For, as earlier pointed out, both the appellant and the appellees assert ownership over the lot in question. In the
complaint filed by the plaintiff-appellant, the latter categorically claims
ownership of the disputed property. So do the defendants in the answers they
filed with both the Municipal Court and the Court of First instance of
Quezon
City. The Municipal Court, therefore,
was perfectly correct in ruling that the resolution of the dispute “hinges on a
question of ownership and for that reason is not cognizable by an inferior
court.” (Rivera vs. Balili, G. R.
No. L-15159, September 30,
1963).

It only remains, therefore, to
determine whether the Court of First Instance of Quezon City could have acquired jurisdiction over the case
at bar either upon its appellate or original jurisdiction.

Under Section 11 of Rule 40 of
the Rules of Court, it is provided that:

“Sec.
11. Lack
of Jurisdiction.-A case tried by an inferior court without jurisdiction over
the subject matter shall be dismissed on appeal by the Court of First Instance.
But instead of dismissing the case, the Court of First Instance in the exercise
of original jurisdiction, may try the case on the merits if the parties therein
file their pleadings and go to the trial without any objection to such
jurisdiction” (Italics supplied)

In the case under consideration,
the inferior court (Municipal Court of Quezon City)
which originally tried the complaint for ejectment
dismissed the same on the ground of lack of jurisdiction. The said court found
that the litigation involved not merely the question of possession but also the
issue of ownership over the disputed parcel of land. Beyond
any doubt, though only implicitly, the Court of First Instance concurred with
the above ruling of the said inferior court when the case was elevated to it on
appeal. Consequently, under the above-mentioned rule, The Court of First
Instance of Quezon City could have assumed
jurisdiction over the said case only in the exercise of its original
jurisdiction and not on its appellate jurisdiction. Furthermore, it could have
done so only had the parties herein filed their pleadings and gone to trial
without any objection to such exercise of the Court of First Instance’s original
jurisdiction.

It should be recalled, however,
that the above requisite to the effect that neither party must object to the
exercise of the Court of First Instance’s original jurisdiction never obtained in this instance. The pleadings and records
bear out the fact that the defendants have been most vigorous and insistent in
their objection to such exercise of jurisdiction by the Court of First Instance.
Upon the elevation of the case from the inferior court, the defendants forthwith
filed a motion to dismiss questioning the jurisdiction of the Court of First
Instance to try the same. When this-motion was denied, they filed a timely
motion for reconsideration. These are recorded evidence of the defendants’
objection to the Court of First Instance’s exercise of original jurisdiction.
Quite rightly, therefore, the said Court of First Instance had no alternative
but to dismiss the case as it did.

In the above-cited case of Rivera
vs. Halili, supra, this Court had already explained
the operation of Section 11 of Rule 40 when it said:

“Pursuant to
the above rule (See. 11, Rule 40), therefore, the
Court of First Instance of Bulacan could have tried
the case on the merits only had the parties therein filed their pleadings and
gone ‘to trial without any objection lo such jurisdiction.’ That was, however, a
condition which could not have been met for the reason that a party thereto has
precisely ‘objected to such jurisdiction.’ “

IN VIEW OF ALL THE
FOREGOING, the
decision appealed from is hereby affirmed in full, with costs against the
appellant. This decision is without prejudice to the filing by the appellant of
whatever claims it may have under the controverted
deed of sale.

Bengzon, C.J., Bautista Angelo,
Concepcion, Paredes, Makalintal, Bengzon, J.P. and Zaldivar, JJ., concur.
Dizon, J., separate concurring opinion.