FEDERICA M. SERRANO, LUCILA M. RAZON, ARMANDO M. LAYUG AND ROMEO MORALES, PETITIONERS, VS. SPOUSES ANSELMO GUTIERREZ AND CARMELITA GUTIERREZ,RESPONDENTS.

Serrano versus Gutierrez

The Case

This is a petition for review brought by Federica Serrano, Lucila Razon, Armando Layug, and Romeo Morales against the spouses Anselmo and Carmelita Gutierrez. The Gutierrezes sued the petitioners for forcible entry over an agricultural parcel of land in Lubao, Pampanga, and the case wound its way through the Metropolitan Trial Court, the Regional Trial Court, and the Court of Appeals before reaching the Supreme Court. The case matters because it settles two practical questions every bar candidate must know: first, that a first-level court hearing an ejectment case may resolve the question of ownership when that question is necessary to decide possession; and second, that the Regional Trial Court's appellate jurisdiction over decisions of first-level courts does not depend on the amount involved. It also reminds us that attorney's fees cannot be awarded in the dispositive portion alone, without any stated justification.

Procedural History

The spouses Gutierrez filed a complaint for forcible entry, with an application for a writ of preliminary mandatory and prohibitory injunction, a temporary restraining order, and damages, before the Metropolitan Trial Court of Lubao, Pampanga. That court dismissed the case for lack of jurisdiction, reasoning that the real issue was ownership and not mere possession de facto. The Gutierrezes appealed to the Regional Trial Court of Guagua, Pampanga, Branch 53, which reversed the dismissal and ordered the petitioners to vacate the premises and surrender possession to the respondents, invoking the second paragraph of Section 8 of Rule 40. The petitioners then filed a petition for review before the Court of Appeals, questioning the jurisdiction of the Regional Trial Court and the adjudication of ownership in a mere ejectment case. The Court of Appeals affirmed the Regional Trial Court in a decision promulgated in May 2003, and denied the petitioners' motion for reconsideration in February 2004. The petitioners then came to the Supreme Court by petition for review, raising once more an alleged jurisdictional defect and questioning the award of attorney's fees.

Facts

The respondents, the spouses Anselmo and Carmelita Gutierrez, are the registered owners of an untenanted parcel of agricultural land situated at San Roque Dau I, Lubao, Pampanga, containing an area of 11,780 square meters and covered by Transfer Certificate of Title No. 468395-R of the Register of Deeds of Pampanga. In February 2000 or thereabouts, the petitioners, acting without any right and as landgrabbers, entered the premises by strategy and stealth, constructed concrete structures, and dumped truckloads of filling materials on the land, without the knowledge and consent of the respondents. The respondents confronted them and demanded that they vacate, demolish the structures, and remove the filling materials, but the petitioners refused.

On 22 March 2000, the respondents filed their complaint for forcible entry before the Metropolitan Trial Court of Lubao. In their Answer, the petitioners denied the allegations and claimed by way of affirmative defenses that the land was a portion of the estate of Albino Morales, of whom they are heirs, and that as heirs they were in actual, adverse, continuous, and physical possession of the property. Both sides then submitted their position papers and evidence. The respondents presented the original certificate of title, a deed of absolute sale, and a transfer certificate of title in the name of Carmelita Gutierrez, among others. The petitioners, for their part, presented tax declarations and official receipts of tax payments.

The Metropolitan Trial Court dismissed the case for lack of jurisdiction, finding that the real issue was ownership. On appeal, the Regional Trial Court ruled for the respondents, holding that the Torrens title in their name outweighed the petitioners' tax declarations and receipts. The Court of Appeals affirmed, holding that the Metropolitan Trial Court had jurisdiction over the ejectment case even if the issue of ownership was involved, and that a remand to the Metropolitan Trial Court was no longer necessary since the parties had already presented their evidence on the merits.

Issues

• Whether or not the Metropolitan Trial Court had jurisdiction to resolve the question of ownership in an ejectment case when that question was necessary to decide the issue of possession.
• Whether or not the Regional Trial Court, in the exercise of its appellate jurisdiction, could decide the case on the merits despite the assessed value of the property being below 20,000 pesos.
• Whether or not the award of attorney's fees was proper.

Applicable Provisions

Section 33 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, provides:

(2) Exclusive original jurisdiction over cases of forcible entry and unlawful detainer: Provided, That when, in such cases, the defendant raises the question of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the issue of possession.

This provision is the core of the case: it empowers the first-level court to resolve ownership, but only for the limited purpose of determining possession.

Section 16 of Rule 70 of the Rules of Court provides:

Section 16. Resolving defense of ownership. When the defendant raises the defense of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the issue of possession.

This Rule affirms the provisional determination of ownership in ejectment cases.

Section 8 of Rule 40 of the Rules of Court 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.

The Court held this provision inapplicable, because the Metropolitan Trial Court did have jurisdiction over the ejectment case.

Section 19 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, provides:

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

The Court clarified that this provision speaks only of the Regional Trial Court's original jurisdiction, not its appellate jurisdiction.

Section 22 of the same Act provides:

Section 22. Appellate jurisdiction. Regional Trial Courts shall exercise appellate jurisdiction over all cases decided by Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts in their respective territorial jurisdictions. Such cases shall be decided on the basis of the entire record of the proceedings had in the court of origin such memoranda and/or briefs as may be submitted by the parties or required by the Regional Trial Courts. The decision of the Regional Trial Courts in such cases shall be appealable by petition for review to the Court of Appeals which may give it due course only when the petition shows prima facie that the lower court has committed an error of fact or law that will warrant a reversal or modification of the decision or judgment sought to be reviewed.

This provision vests appellate jurisdiction over all cases decided by first-level courts, regardless of the amount involved.

Ruling

On the first issue, the Court held that the Metropolitan Trial Court clearly erred in dismissing the case for lack of jurisdiction. As the law now stands, inferior courts have jurisdiction to resolve questions of ownership whenever it is necessary to decide the question of possession in an ejectment case. The Court also held that the Regional Trial Court erred in applying Section 8 of Rule 40, since that provision contemplates a dismissal for lack of jurisdiction, and here the Metropolitan Trial Court had jurisdiction over the ejectment case.

On the second issue, the Court held that the Regional Trial Court had appellate jurisdiction over the case, and its decision should be deemed promulgated in the exercise of that jurisdiction. The assessed value of the property is immaterial for purposes of appellate jurisdiction. All cases decided by the Metropolitan Trial Court are generally appealable to the Regional Trial Court irrespective of the amount involved. The Court also held that a remand to the Metropolitan Trial Court had become inefficacious, and that the Regional Trial Court could resolve the case on the merits given the sufficiency of the evidence presented before it. On the merits, the Court sustained the finding that the respondents had established by preponderance of evidence their claim of ownership, since a certificate of title is the best proof of ownership of a piece of land, and cannot be defeated by tax declarations and receipts.

On the third issue, the Court held the award of attorney's fees improper. The trial court must state the factual, legal, or equitable justification for awarding the same, bearing in mind that the award of attorney's fees is the exception, not the general rule, and it is not sound public policy to place a penalty on the right to litigate. As the Court put it:

The matter of attorney's fees cannot be dealt with only in the dispositive portion of the decision. The text of the decision must state the reason behind the award of attorney's fees. Otherwise, its award is totally unjustified.

Doctrine

First, a first-level court hearing an ejectment case has jurisdiction to resolve the question of ownership when the defendant raises it in the pleadings and the question of possession cannot be resolved without deciding it, but the issue of ownership shall be resolved only to determine the issue of possession. This is the rule of Section 33 of Batas Pambansa Blg. 129, as amended, and Section 16 of Rule 70.

Second, the Regional Trial Court's appellate jurisdiction over all cases decided by first-level courts does not depend on the amount involved. Section 19 of Batas Pambansa Blg. 129, as amended, governs only original jurisdiction; Section 22 governs appellate jurisdiction.

Third, a certificate of title is the best proof of ownership of a piece of land, and cannot be defeated by tax declarations, realty tax payments, or a designation as owner in the records of an agency.

Fourth, attorney's fees cannot be awarded in the dispositive portion alone; the text of the decision must state the reason behind the award, since the award of attorney's fees is the exception, not the general rule.

Disposition

The petition was denied, and the decision of the Court of Appeals was affirmed with modification, deleting the award of attorney's fees, with costs against the petitioners.

Remember This

Memorize this line: the first-level court may resolve ownership in an ejectment case, but only to determine possession, and the Regional Trial Court's appellate jurisdiction does not depend on the amount involved. Examiners like to use this case to test the distinction between original and appellate jurisdiction, and the rule that attorney's fees must be justified in the text of the decision, not merely in the dispositive portion.