MELCHOR HILADO, CESAR ARAL, ADELA ARAL, ARTURO VILLARENA, TARCELO MIRANO, ROBERTO PEDUHAN, ANTONIO SOLITO, MANUEL CANIENDO, FELIX ORTEGA, ANTONIO BALLENTOS, SALVADOR MIRANO, VIC…

Hilado versus Perpetual Help Development and Realty Corporation

The Case

This is a petition for review on certiorari brought by Melchor Hilado and nineteen other farmer-occupants against Perpetual Help Development and Realty Corporation, the registered owner of a large agricultural landholding in Kabankalan, Negros Occidental. The corporation had filed a complaint for unlawful detainer against the farmers before the Municipal Trial Court in Cities, which ruled in its favor and ordered them to vacate. The farmers did not appeal that judgment; instead they went to the Regional Trial Court seeking annulment of the municipal court's decision on the ground that the dispute is agrarian and therefore outside that court's jurisdiction. The case matters because it fixes the dividing line between the ejectment jurisdiction of first-level courts and the exclusive agrarian jurisdiction of the Department of Agrarian Reform Adjudication Board, and because it teaches the proper remedy of a party aggrieved by a Regional Trial Court decision rendered in the exercise of its original jurisdiction.

Procedural History

The corporation filed a complaint for unlawful detainer against the twenty farmers with the Municipal Trial Court in Cities of Kabankalan City. The farmers answered and incorporated a motion to dismiss on the ground of lack of jurisdiction over the subject matter, invoking the exclusive jurisdiction of the Department of Agrarian Reform Adjudication Board. The municipal court applied the Rules of Summary Procedure, directed the parties to file position papers, and rendered judgment ordering the farmers to vacate the portions they occupied and to turn over possession to the corporation, while dismissing the corporation's claims for litigation expenses, attorney's fees and exemplary damages. The farmers filed a notice of appeal, but the municipal court disapproved it because the appellate docket and other lawful fees had not been paid within the reglementary period, declared its decision final and executory, and issued writs of execution.

Instead of assailing that order, the farmers filed a petition with the Regional Trial Court of Kabankalan City for the annulment of the municipal court's decision, alleging that they were agricultural tenants and patentees and that the municipal court had no jurisdiction over what was an agrarian dispute. The Regional Trial Court dismissed the petition, holding that the municipal court had exclusive jurisdiction over the unlawful detainer action and over the persons of the defendants, and that the farmers were estopped from assailing jurisdiction because they had participated in the proceedings below. The farmers moved for reconsideration, which was denied. Rather than appealing to the Court of Appeals by writ of error, they filed a petition for review on certiorari with the Supreme Court under Rule 45, raising only questions of law. The Supreme Court gave due course to the petition.

Facts

Celso Zayco owned a large parcel of agricultural land in Kabankalan, Negros Occidental, covered by a transfer certificate of title, and portions of it were occupied and cultivated by tenants. Zayco mortgaged the property to Pacific Banking Corporation, which foreclosed the mortgage when he failed to pay. The bank was the highest bidder at the public auction, Zayco did not redeem, and the bank consolidated its title in 1980. In December 1984 the bank sold the property to Julieta Salgado, the chairman of the board of the respondent corporation, and a new title was issued in the corporation's name in January 1985. No lien, encumbrance or notice that the property had been placed under the agrarian reform laws was annotated on the title.

Subsequently, the Department of Agrarian Reform granted Emancipation Patents to the twenty tenants on the property between April 1988 and July 1988, and titles were issued in their favor from September 1988 to August 1990. In February 1996, however, the Sangguniang Bayan of Kabankalan approved a resolution reclassifying the property partly for light industry and the rest as residential.

In August 1997 the corporation filed a complaint for unlawful detainer against the twenty farmer-occupants. It alleged that it had discovered the emancipation patents only in May 1997, but insisted that the farmers were not agricultural tenants because they entered the property without its consent and paid no consideration, and because the property had been reclassified in 1996. The farmers countered that the landholding had long been placed under Operation Land Transfer under Presidential Decree Number 27, that they were bona fide tenant-tillers installed by the original landowner, that they had been issued emancipation patents, and that no conversion order had been issued by the Secretary of Agrarian Reform. The municipal court nonetheless ruled for the corporation and ordered the farmers to vacate.

Issues

• Whether or not it was proper for the petitioners to file a petition for review under Rule 45 with the Supreme Court directly from the decision of the Regional Trial Court.
• Whether or not the Municipal Trial Court in Cities had exclusive jurisdiction over the unlawful detainer action of the respondent.
• Whether or not the decision of the Municipal Trial Court in Cities is null and void for lack of jurisdiction.

Applicable Provisions

Section 1 of the DARAB Rules of Procedure, on the primary and exclusive original and appellate jurisdiction of the Board, provides:

SECTION 1. Primary And Exclusive Original and Appellate Jurisdiction. The Board shall have primary and exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes involving the implementation of the Comprehensive Agrarian Reform Program (CARP) under Republic Act No. 6657, Executive Order Nos. 228, and 129-A, Republic Act No. 3844 as amended by Republic Act No. 6389, Presidential Decree No. 27 and other agrarian laws and their implementing rules and regulations.

This provision bears on the case because it marks the boundary of the municipal court's authority: if the dispute is agrarian, jurisdiction lies exclusively with the Board and not with the ejectment court.

The same Section 1, in its specific enumeration, further provides:

f) Those involving the issuance, correction and cancellation of Certificates of Land Ownership Award (CLOAs) and Emancipation Patents (EPs) which are registered with the Land Registration Authority;

This bears on the case because the farmers' emancipation patents, registered with the Register of Deeds, place their claim squarely within the Board's enumerated jurisdiction.

Ruling

On the first issue, the Court agreed with the respondent that the remedy of a party aggrieved by a decision of the Regional Trial Court in the exercise of its original jurisdiction is to appeal by writ of error to the Court of Appeals under Rule 41, where questions of fact and of law may be raised. However, under Section 2(c) of Rule 41, where only questions of law are raised or involved, the appeal shall be to the Supreme Court by petition for review on certiorari under Rule 45. The Court held that the issues before the Regional Trial Court were legal: whether the municipal court had properly exercised jurisdiction over the subject matter based on the material allegations of the complaint and the relevant pleadings, and whether the petitioners were estopped from assailing the decision for lack of jurisdiction. The Court nevertheless stressed that even if only questions of law are raised, the appeal should be made to the Court of Appeals and not to the Supreme Court, unless there are compelling reasons to allow such appeal. Finding the issues cogent and substantial, and noting that suits would otherwise likely be refiled, the Court gave due course to the petition.

On the second issue, the Court held that under Section 33, paragraph 2 of Batas Pambansa Blg. 129, as amended by Section 3 of Republic Act Number 7691, the Municipal Trial Court, the Municipal Circuit Trial Court and the Metropolitan Trial Court have exclusive original jurisdiction over cases for unlawful detainer, and that ejectment proceedings are covered by Rule 70 and the Rules on Summary Procedure. However, such courts have no original jurisdiction to determine and adjudicate agrarian disputes under Republic Act Number 6657, as amended, and the DARAB Rules, which fall within the exclusive original and appellate jurisdiction of the Board. The Court noted that the petitioners' emancipation patents were issued and registered long before the detainer complaint was filed, and that the issue of the validity of those patents was decisive of the jurisdictional question.

On the third issue, the Court held that the municipal court's decision was null and void for lack of jurisdiction over the subject matter, the action being an agrarian dispute cognizable exclusively by the Board.

Doctrine

First, the remedy of a party aggrieved by a decision of the Regional Trial Court rendered in the exercise of its original jurisdiction is an appeal by writ of error to the Court of Appeals under Rule 41, where questions of fact and of law may be raised; only where solely questions of law are involved may the appeal be taken to the Supreme Court by petition for review on certiorari under Rule 45, and even then the appeal should go to the Court of Appeals absent compelling reasons.

Second, a question of law exists when the doubt or difference arises as to what the law is on a certain set of facts, while a question of fact exists when the doubt arises as to the truth or falsity of alleged facts; for a question to be one of law, it must involve no examination of the probative value of the evidence.

Third, municipal trial courts, municipal circuit trial courts and metropolitan trial courts have exclusive original jurisdiction over unlawful detainer cases, but they have no jurisdiction to determine and adjudicate agrarian disputes, which fall within the exclusive original and appellate jurisdiction of the Department of Agrarian Reform Adjudication Board under Section 1 of its Rules of Procedure, including cases involving the issuance, correction and cancellation of emancipation patents registered with the Land Registration Authority. A judgment rendered by a court without jurisdiction over the subject matter is null and void.

Disposition

The Supreme Court granted the petition, set aside the decision of the Regional Trial Court, and declared the decision of the Municipal Trial Court in Cities null and void for lack of jurisdiction over the subject matter, the dispute being agrarian and within the exclusive jurisdiction of the Department of Agrarian Reform Adjudication Board.

Remember This

Memorize this line: an ejectment court has jurisdiction over unlawful detainer but none over an agrarian dispute, and a judgment rendered without jurisdiction over the subject matter is void. Examiners use this case to test the boundary between the summary jurisdiction of first-level courts and the exclusive agrarian jurisdiction of the DARAB, and to test the correct remedy from a Regional Trial Court decision in the exercise of original jurisdiction.