GENERAL MILLING CORPORATION, PETITIONER, VS. TIRSO UYTENGSU III, KATHLEEN UYTENGSU-TAN AND BARBARA UYTENGSU-TAN, RESPONDENTS.[]

General Milling versus Uytengsu

The Case

This is a petition for review brought by General Milling Corporation against Tirso Uytengsu the Third, Kathleen Uytengsu-Tan and Barbara Uytengsu-Tan. The respondents sued in the Regional Trial Court of General Santos City for the recovery of possession of duplicate original copies of two certificates of title, and General Milling was later impleaded as a defendant on the allegation that it held those titles. General Milling moved to dismiss on the ground that the complaint failed to allege the assessed value of the property, which it claimed was a jurisdictional fact. The case matters because it fixes the test for jurisdiction over actions incapable of pecuniary estimation, and it reminds every examinee that jurisdiction is read from the allegations of the complaint and the relief sought, never from the defendant's defenses.

Procedural History

The respondents filed their complaint for recovery of possession of the duplicate original copies of the certificates of title against Luis Wee, George Young and the Registrar of Deeds of General Santos City. General Milling was impleaded as a defendant in a second amended complaint, and after it answered, the respondents filed a third amended complaint alleging that General Milling fraudulently obtained the titles and refused to surrender them. General Milling then moved to dismiss the third amended complaint for lack of jurisdiction, arguing that the assessed value of the property had not been alleged. The trial court, the Regional Trial Court of General Santos City, denied the motion to dismiss, and it also denied the motion for reconsideration.

General Milling went up to the Court of Appeals on a petition for certiorari, insisting that the trial court had acted with grave abuse of discretion. The Court of Appeals disagreed and found that the question was whether General Milling had the legal right to hold on to the certificates of title, an issue clearly incapable of pecuniary estimation. It denied the motion for reconsideration. General Milling then came to the Supreme Court by petition for review under Rule 45.

Facts

The respondents, Tirso Uytengsu the Third, Kathleen Uytengsu-Tan and Barbara Uytengsu-Tan, were the owners named in two certificates of title. They brought an action in the Regional Trial Court of General Santos City for the recovery of possession of the duplicate original copies of those titles, which were in the hands of other parties.

General Milling Corporation was impleaded as a defendant in a second amended complaint, which alleged that General Milling had possession of the certificates of title. After General Milling filed its answer, the respondents filed a third amended complaint stating that General Milling fraudulently obtained the titles, and that its refusal to surrender them caused great damage and prejudice to the respondents.

General Milling moved to dismiss the third amended complaint for lack of jurisdiction. It argued that the action involved title to or possession of real property, and that the complaint had failed to allege the assessed value of the property, which it said was the jurisdictional fact required. The trial court denied the motion, and the Court of Appeals refused to disturb that denial.

Issues

• Whether or not the Regional Trial Court had jurisdiction over the complaint for recovery of possession of the duplicate original copies of the certificates of title, absent an allegation of the assessed value of the property.
• Whether or not the Court of Appeals erred in finding no grave abuse of discretion on the part of the trial court in denying the motion to dismiss.

Applicable Provisions

Article 476 of the New Civil Code provides:

Under Article 476 of the New Civil Code, the remedy may be availed of only when, by reason of any instrument, record, claim, encumbrance or proceeding, which appears valid but is, in fact, invalid, ineffective, voidable or unenforceable, a cloud is thereby casts on the complainant's title to real property or any interest therein.

This is the provision on quieting of title, and the Court used it to show that the complaint alleged no cloud on the respondents' title, so the action was not one for quieting of title.

Republic Act Number 7691, amending the Judiciary Reorganization Act of 1980, provides:

The failure to allege such jurisdictional fact is fatal because absent the amount of the assessed value there is no way the court can acquire jurisdiction over the amended complaint.

This is the argument General Milling pressed in its motion to dismiss, and the Court rejected it because the action was not a real action requiring an allegation of assessed value.

Ruling

On the first issue, the Court held that the Regional Trial Court had jurisdiction. The case was, no doubt, one for recovery of possession of the certificates of title, because the respondents merely sought that General Milling be required to deliver the owner's copy of their duplicate certificates. General Milling was hasty in assuming that the case was an action for quieting of title, since the trial court and the Court of Appeals found no allegation of a cloud on the title. The Court restated the settled rule that the jurisdiction of the court is determined by the relevant allegations in the complaint and the character of the relief sought, and it cannot be made to depend on the defenses raised in an answer or a motion to dismiss. If such were the rule, the question of jurisdiction would depend almost entirely on the defendant.

Because the complaint based its cause of action on General Milling's refusal to surrender the certificates and sought their delivery as the primary relief, the subject matter was not a real action requiring an allegation of assessed value, but one incapable of pecuniary estimation. The Court adopted this criterion:

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. ... Where the basic issue is something other than the right to recover a sum of money ... 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 the regional trial courts.

On the second issue, the Court held that the denial of the motion to dismiss rested on a correct appreciation of the allegations in the complaint, and that General Milling failed to establish a whimsical or capricious exercise of judgment on the part of the trial court. There was therefore no grave abuse of discretion to justify the extraordinary writ of certiorari.

Doctrine

Jurisdiction over the subject matter is determined by the allegations of the complaint and the character of the relief sought, not by the defenses set up in the answer or in a motion to dismiss. An action is incapable of pecuniary estimation when the basic issue is something other than the right to recover a sum of money, and such an action is cognizable by the Regional Trial Court without any allegation of assessed value. An action for the recovery of possession of duplicate original certificates of title, where the primary relief sought is their delivery, is one incapable of pecuniary estimation and is not a real action governed by the assessed value requirement. Quieting of title under Article 476 of the New Civil Code requires an allegation that a cloud has been cast on the complainant's title, and absent such an allegation the action cannot be treated as one for quieting of title.

Disposition

The petition was denied, the decision and resolution of the Court of Appeals were affirmed, costs were taxed against General Milling, and the trial court was directed to continue the proceedings with dispatch.

Remember This

Memorize the line that jurisdiction is determined by the allegations of the complaint and the nature of the principal relief sought, never by the defendant's defenses. Examiners use this case to test whether a student can classify an action as one incapable of pecuniary estimation, and to catch those who confuse a suit for delivery of certificates of title with a real action or with quieting of title.