Ceroferr Realty Corporation vs. Court of Appeals

A complaint for damages and injunction states a sufficient cause of action and falls within the general jurisdiction of the Regional Trial Court even if it requires resolving conflicting claims over property boundaries, provided the complaint alleges the three essential elements of a cause of action and the boundary determination does not constitute a collateral attack on a Torrens title.

Ceroferr Realty Corporation owned Lot 68 of the Tala Estate Subdivision, utilizing a vacant portion as a jeepney terminal. Ernesto D. Santiago owned the adjacent Lot 90, covered by a judicially reconstituted title. Santiago claimed the terminal area fell within his property, secured a fencing permit, and prevented Ceroferr's agents from entering the premises under threat of harm.

• Conflicting Claims of Ownership: Ceroferr filed a complaint alleging ownership of Lot 68 (TCT No. RT-90200) and use of a vacant portion as a jeepney terminal. Santiago answered claiming the terminal was within his Lot 90 (TCT No. RT-78110) and asserted his right to fence it, asserting that Ceroferr had no color of right over Lot 90.
• Surveys and Identity of the Lot: Verification and relocation surveys were conducted, indicating the vacant lot was inside Lot 68. Santiago objected, presenting a geodetic engineer's report stating the disputed portion was inside Lot 90, separate and distinct from Lot 68 and divided by a concrete fence.
• Motion to Dismiss: Santiago moved to dismiss, arguing that resolving the damages claim required passing upon the validity of his title, which could not be done in a collateral attack. The RTC granted the motion, concluding it could not decide the injunction and damages claim without determining the validity of Santiago's title and the identity of the land, which would amount to a collateral attack on a Torrens certificate of title.

• Sufficiency of Cause of Action: Petitioner maintained that the complaint stated a valid cause of action determinable from the face thereof.
• Jurisdiction of the RTC: Petitioner argued that the trial court could proceed to try and decide the case because there is no substantial distinction between the general jurisdiction vested in a regional trial court and its limited jurisdiction when acting as a land registration court, citing Ignacio v. Court of Appeals.

• Collateral Attack on Title: Respondent countered that the complaint effectively impugned his Torrens title, which cannot be challenged in a collateral proceeding but only through a direct action.
• Lack of Jurisdiction: Respondent argued that the trial court lacked jurisdiction because adjudicating the damages claim would depend on determining the validity of his title and the identity of the land, matters outside the scope of a simple action for damages and injunction.

• Cause of Action: Whether the complaint states a sufficient cause of action.
• Jurisdiction: Whether the trial court has jurisdiction to determine the identity and location of the vacant lot involved in the case.

• Cause of Action: The complaint states a sufficient cause of action. The three indispensable elements are present: (1) a right in favor of the plaintiff (ownership of Lot 68); (2) an obligation on the part of the defendant to respect such right; and (3) an act or omission violative of that right (encroachment and fencing). A motion to dismiss based on lack of cause of action hypothetically admits the truth of these averments; if the allegations furnish sufficient basis to maintain the complaint, dismissal is improper regardless of the defenses assessed.
• Jurisdiction: The trial court has jurisdiction to determine the identity and location of the vacant lot. Jurisdiction over the subject matter is determined by the allegations of the complaint and cannot depend on the defenses in the answer. Furthermore, respondent is estopped from questioning jurisdiction because he actively participated in the proceedings, including the surveys, and only objected when the survey results became adverse. After original registration, contests concerning boundary lines are actions in personam that must be instituted before an ordinary court of general jurisdiction, not the land registration court.

• Cause of Action — Defined by three indispensable elements: (1) a right in favor of the plaintiff; (2) an obligation on the part of the named defendant to respect or not violate such right; and (3) an act or omission on the part of such defendant violative of the right of plaintiff or constituting a breach of the obligation. The Court applied this to find that the complaint's allegations of ownership, duty, and encroachment sufficiently stated a cause of action.
• Hypothetical Admission on Motion to Dismiss — A defendant who moves to dismiss a complaint on the ground of lack of cause of action hypothetically admits all the averments thereof, including relevant and material facts well pleaded and inferences fairly deducible therefrom. The Court relied on this to hold that petitioner's allegations of ownership and violation must be taken as true for purposes of the motion.
• Jurisdiction Determined by Complaint — Jurisdiction over the subject matter is conferred by law and determined by the allegations of the complaint irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein; it cannot be made to depend upon the defenses set up in the answer. The Court applied this to rule that the RTC had jurisdiction despite the defense raising the validity of a Torrens title.
• Estoppel by Participation — A party raising the question of lack of jurisdiction may be estopped if they actively took part in the very proceedings they question and only object because the subsequent judgment or order is adverse. The Court found respondent estopped because he actively participated in the surveys and only moved to dismiss after the second survey yielded adverse results.
• Jurisdiction over Boundary Disputes Post-Registration — After land has been originally registered, the Court of Land Registration ceases to have jurisdiction over contests concerning the location of boundary lines; such actions in personam must be instituted before an ordinary court of general jurisdiction. The Court applied this to affirm the RTC's general jurisdiction to determine the precise identity and location of the disputed lot.

• "A defendant who moves to dismiss the complaint on the ground of lack of cause of action... hypothetically admits all the averments thereof. The test of sufficiency of the facts found in a complaint as constituting a cause of action is whether or not admitting the facts alleged the court can render a valid judgement upon the same in accordance with the prayer thereof."
• "The jurisdiction of a court over the subject matter is determined by the allegations of the complaint and cannot be made to depend upon the defenses set up in the answer or pleadings filed by the defendant."
• "After the land has been originally registered, the Court of Land Registration ceases to have jurisdiction over contests concerning the location of boundary lines. In such case, the action in personam has to be instituted before an ordinary court of general jurisdiction."

• Ignacio v. Court of Appeals, 246 SCRA 242 (1995) — Cited by petitioner to argue that no substantial distinction exists between the general jurisdiction of the RTC and its limited jurisdiction as a land registration court.
• Aguilar v. Chiu, 195 Phil. 613 (1981) — Followed for the proposition that contests concerning boundary lines after original registration are actions in personam that must be instituted before an ordinary court of general jurisdiction.

• Rule 45, Revised Rules of Court — Governs the mode of appeal via certiorari to the Supreme Court, under which the petition was filed and given due course.

Davide, Jr., C.J. (Chairman), Puno, Kapunan, and Ynares-Santiago, JJ.