De Vera vs. Santiago

A Regional Trial Court has appellate jurisdiction to decide a case on the merits under the second paragraph of Section 8, Rule 40 of the Rules of Court even when the Municipal Trial Court that originally heard the case lacked subject-matter jurisdiction over it, provided the RTC itself has original jurisdiction over the action. The appellate jurisdiction of the RTC under Section 22 of Batas Pambansa Blg. 129, as amended, extends to all cases decided by Municipal Trial Courts regardless of the amount involved.

Petitioners claimed ownership of subdivided portions of Lot No. 7303, Cad. 559-D, Bolinao Cadastre, located in Barangay Patar, Bolinao, Pangasinan, with a total area of approximately 265,342 square meters. They alleged continuous possession since 1967. Respondents obtained Free Patent Original Certificates of Title over the same land, which petitioners claimed were acquired through manipulation, misrepresentation, fraud, and deceit. The combined assessed value of the property, as reflected in the tax declarations attached to the complaint, totaled ₱54,370.00.

• Nature of the Action: Petitioners filed a complaint for reconveyance of ownership or possession with damages, claiming ownership of subdivided portions of Lot No. 7303, Cad. 559-D, Bolinao Cadastre, a parcel of land with an area of approximately 265,342 square meters located in Barangay Patar, Bolinao, Pangasinan.

• Petitioners' Claim: Petitioners, along with their predecessors-in-interest, alleged actual, continuous, and exclusive possession and occupation of their respective portions of the land since 1967 without disturbance. They asserted that their open, continuous, and exclusive possession for at least thirty years prior to the issuance of the Free Patent Titles had ipso jure converted the land into private property, rendering the Bureau of Lands without jurisdiction to issue the titles. Petitioners attached copies of their tax declarations to the complaint. They prayed for a declaration of absolute ownership, reconveyance of the entire area, and an award of actual, moral, and exemplary damages plus litigation expenses.

• Respondents' Defense: Respondents specifically denied the material allegations and claimed ownership of Lot No. 7303 through Free Patent Titles issued as early as 1996, supported by tax declarations. They traced their acquisition to Deeds of Sale from Eugenio Santiago, Sr., registered with the Register of Deeds of Alaminos, Pangasinan in 1991 and 1992. Respondents characterized petitioners' tax declarations as inferior, having been issued as "new" in 1990 without proof of acquisition. They raised the affirmative defense that the MTC lacked jurisdiction because the combined assessed value of the land exceeded ₱20,000.00, placing the case within the exclusive original jurisdiction of the RTC under Section 19(2) of B.P. Blg. 129, as amended. Respondents counterclaimed for attorney's fees, appearance fees, litigation expenses, and moral and exemplary damages.

• Assessed Value of the Property: The tax declarations attached to the complaint revealed that the disputed land had a total assessed value of ₱54,370.00, an amount exceeding ₱20,000.00.

• MTC Decision: The MTC tried the case on the merits upon issues agreed by the parties: (1) who has a better right to the disputed land; (2) who are the lawful owners of Lot No. 7303; (3) whether respondents are guilty of fraud, deceit, and misrepresentation in obtaining their free patents; (4) who between the parties are in prior continuous and actual possession; and (5) whether the parties are entitled to damages. The MTC dismissed the complaint, declared respondents the lawful owners and possessors, and ordered petitioners to pay ₱50,000.00 as attorney's fees and litigation expenses plus costs.

• RTC Decision on Appeal: The RTC reversed the MTC in toto, declared respondents' Free Patent Titles void and without legal effect, ordered reconveyance of the entire area to petitioners, directed petitioners to divide the reconveyed land commensurate with their respective lost areas, and ordered respondents to pay moral damages of ₱20,000.00 each, exemplary damages of ₱20,000.00 each, and actual damages of ₱5,000.00 each.

• CA Decision: The Court of Appeals annulled both the MTC and RTC Decisions solely on the ground of lack of jurisdiction. It declined to resolve the other factual issues raised, deeming them moot and academic. The CA also stated, arguendo, that even if the RTC had jurisdiction, it had no authority to declare the Free Patent Titles null and void because the titles had been issued four years prior to the filing of the complaint and had attained indefeasibility.

• Jurisdiction on Appeal: Petitioners conceded that the MTC lacked jurisdiction over the action for reconveyance involving land with an assessed value exceeding ₱20,000.00, but maintained that the RTC correctly assumed jurisdiction on appeal pursuant to Section 8, Rule 40 of the Rules of Court. They argued that nullifying the RTC Decision due to the MTC's lack of jurisdiction would result in a multiplicity of suits, as any subsequent refiling would merely repeat the work competently performed by the RTC.

• Remedy of Reconveyance: Petitioners argued that an action for reconveyance remained an available remedy because the disputed land had not passed to an innocent purchaser for value. They contended that the rule on incontrovertibility of a certificate of title after one year from entry of the decree of registration does not apply when the action seeks cancellation of a free patent title issued over private property.

• Private Character of the Land: Petitioners asserted that a free patent issued over private land is null and void and produces no legal effects. They argued that their open, continuous, exclusive, and notorious possession of the land for more than thirty years sufficed to strip the property of its public character. Since both parties claimed possession exceeding thirty years, the only remaining question was who adequately proved their claim. Petitioners submitted that the RTC correctly found their evidence more persuasive.

• Direct Attack on Titles: Petitioners maintained that their action for reconveyance of ownership and possession with damages constituted an appropriate direct proceeding to assail the Free Patent Titles, not a prohibited collateral attack.

• Non-Applicability of Rule 40, Section 8: Respondents countered that Section 8, Rule 40 applies only to cases where the MTC dismissed a case without trial on the merits and an appeal was taken from the order of dismissal. They argued that since the MTC tried the case on the merits before dismissing it, the provision was inapplicable.

• Proper Remedy in the RTC: Respondents maintained that if petitioners were unlawfully deprived of their real right of possession and ownership, they should have filed an accion publiciana or reivindicatoria directly with the RTC, not with the MTC.

• Indefeasibility of Titles: Respondents insisted that the RTC had no jurisdiction to declare the Free Patent Titles null and void because of the principle of indefeasibility and incontrovertibility of Torrens titles after the lapse of one year from the issuance of a decree of registration.

• Jurisdiction of the RTC on Appeal: Whether the Court of Appeals gravely erred in annulling the RTC Decision for lack of jurisdiction, given that Section 8, Rule 40 of the Rules of Court authorizes the RTC to decide a case on the merits when the MTC tried it without subject-matter jurisdiction.

• Scope of Review under Rule 45: Whether the Supreme Court could resolve the factual issues raised in respondents' petition for review before the Court of Appeals, considering that only questions of law may be raised in a petition for review on certiorari under Rule 45.

• Jurisdiction of the RTC on Appeal: The Court of Appeals committed reversible error in annulling the RTC Decision for lack of jurisdiction. While the MTC indeed lacked subject-matter jurisdiction over the action for reconveyance because the assessed value of the property exceeded ₱20,000.00 — placing it within the exclusive original jurisdiction of the RTC under Section 19(2) of B.P. Blg. 129, as amended — the RTC possessed appellate jurisdiction over the case under Section 8, Rule 40 of the Rules of Court. The second paragraph of Section 8 expressly governs situations where the MTC tried a case on the merits despite lacking jurisdiction: the RTC, on appeal, shall not dismiss the case if it has original jurisdiction but shall decide it in accordance with the preceding section, without prejudice to the admission of amended pleadings and additional evidence in the interest of justice. The interpretation in Serrano v. Spouses Gutierrez was controlling — the second paragraph of Section 8, Rule 40 addresses appeals from dismissals where the case was tried on the merits, refuting respondents' contention that the provision applies solely to dismissals without trial. Moreover, Section 22 of B.P. Blg. 129, as amended, vests the RTC with appellate jurisdiction over all cases decided by MTCs within their territorial jurisdictions regardless of the amount involved. The RTC Decision was therefore promulgated in the valid exercise of appellate jurisdiction, and the CA erred in declaring the factual issues raised in respondents' petition moot and academic without resolving them.

• Scope of Review under Rule 45: The factual issues raised in respondents' petition for review before the Court of Appeals could not be resolved by the Supreme Court. Under Section 1, Rule 45 of the Rules of Court, only questions of law may be raised in a petition for review on certiorari. The sole issue raised by petitioners — whether the CA erred in annulling the RTC Decision for lack of jurisdiction — was purely a question of law, requiring only a determination of what the law provides on the given set of facts. The unresolved issues before the CA (whether the Free Patent Titles were void for fraud, whether the tax declarations were valid, whether damages were properly awarded, and whether the RTC correctly reversed the MTC) were all questions of fact. None of the recognized exceptions permitting the Supreme Court to review factual findings was shown to exist. The proper remedy was to remand the case to the Court of Appeals for the prompt resolution of those factual issues.

• Jurisdiction Determined by Allegations in the Complaint — Jurisdiction over the subject matter of a case is conferred by law and determined by the allegations in the complaint, which constitute a concise statement of the ultimate facts constituting the plaintiff's cause of action. The nature of an action and which court has jurisdiction over it are determined based on the allegations in the complaint, irrespective of whether the plaintiff is entitled to recover upon all or some of the claims asserted. The averments in the complaint and the character of the relief sought are the controlling considerations. Once vested by the allegations in the complaint, jurisdiction remains vested irrespective of recovery on the merits. This principle was applied to determine that the MTC lacked jurisdiction because the total assessed value of the property, as reflected in the tax declarations attached to the complaint, was ₱54,370.00 — exceeding the ₱20,000.00 threshold under Section 33(3) of B.P. Blg. 129.

• Dual Jurisdiction of the RTC under B.P. Blg. 129 — The RTC exercises both original and appellate jurisdiction over civil actions: (a) exclusive original jurisdiction under Section 19(2) of B.P. Blg. 129 over actions involving title to or possession of real property where the assessed value exceeds ₱20,000.00 (outside Metro Manila); and (b) appellate jurisdiction under Section 22 of B.P. Blg. 129 over all cases decided by MTCs in their territorial jurisdictions, regardless of the amount involved. The appellate jurisdiction is not contingent on the amount in controversy.

• Section 8, Rule 40 — RTC's Power to Decide Cases Tried by MTC Without Jurisdiction — Under the second paragraph of Section 8, Rule 40 of the Rules of Court, when a case is tried on the merits by the MTC without jurisdiction over the subject matter, the RTC on appeal shall not dismiss the case if it has original jurisdiction over it, but shall decide the case in accordance with the preceding section. This provision recognizes two distinct scenarios: (1) dismissal without trial on the merits (first paragraph), where the RTC may affirm or reverse, and if it affirms on the ground of lack of jurisdiction, it shall try the case as if originally filed with it; and (2) trial on the merits despite lack of jurisdiction (second paragraph), where the RTC shall decide the case on appeal without dismissing it. The provision prevents the waste of judicial resources and protects parties from the need to re-litigate matters already tried.

• Scope of Review under Rule 45 — Questions of Law Distinguished from Questions of Fact — A question of law exists when the doubt or difference arises as to what the law is on a certain state of facts and does not call for an examination of the probative value of the evidence presented. A question of fact exists when the doubt or difference arises as to the truth or falsehood of alleged facts, or when the inquiry invites calibration of the whole evidence, considering the credibility of witnesses, the existence and relevancy of surrounding circumstances, their relation to each other and to the whole, and the probabilities of the situation. The Supreme Court is not a trier of facts under Rule 45; it may review factual issues only when one of the recognized exceptions is present.

• "Jurisdiction over the subject matter of a case is conferred by law and determined by the allegations in the complaint which comprise a concise statement of the ultimate facts constituting the plaintiff's cause of action. The nature of an action, as well as which court or body has jurisdiction over it, is determined based on the allegations contained in the complaint of the plaintiff, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. The averments in the complaint and the character of the relief sought are the ones to be consulted. Once vested by the allegations in the complaint, jurisdiction also remains vested irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein." — This passage articulates the foundational principle for determining subject-matter jurisdiction and was cited from Padlan v. Dinglasan.

• "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 second paragraph of Section 8, Rule 40, which the Court treated as dispositive of the appeal.

• "The above-quoted provision vests upon the RTC the exercise of appellate jurisdiction over all cases decided by the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts in their respective territorial jurisdictions. Clearly then, the amount involved is immaterial for purposes of the RTC's appellate jurisdiction; all cases decided by the MTC are generally appealable to the RTC irrespective of the amount involved." — This passage, drawn from Serrano v. Spouses Gutierrez, reinforces the breadth of the RTC's appellate jurisdiction under Section 22 of B.P. Blg. 129.

• Serrano v. Spouses Gutierrez, 537 Phil. 187 (2006) — Followed as controlling precedent. The Court relied on this case for the interpretation of Section 8, Rule 40, specifically the distinction between the first paragraph (dismissal without trial) and the second paragraph (trial on the merits despite lack of jurisdiction), and for the principle that the RTC's appellate jurisdiction extends to all MTC cases regardless of the amount involved.

• Padlan v. Dinglasan, G.R. No. 180321, March 20, 2013 — Cited for the well-settled rule that jurisdiction over the subject matter is determined by the allegations in the complaint and the character of the relief sought.

• Spouses Andrada v. Pilhino Sales Corporation, 659 Phil. 71 (2011) — Cited for the enumeration of exceptions allowing the Supreme Court to review factual issues in a Rule 45 petition.

• Section 19(2), Batas Pambansa Blg. 129 (Judiciary Reorganization Act of 1980), as amended by Republic Act No. 7691 — Confers upon Regional Trial Courts exclusive original jurisdiction over all civil actions involving title to or possession of real property where the assessed value exceeds ₱20,000.00 (or ₱50,000.00 in Metro Manila). Applied to establish that the RTC, not the MTC, had exclusive original jurisdiction over the action for reconveyance because the land's assessed value was ₱54,370.00.

• Section 33(3), Batas Pambansa Blg. 129, as amended — Confers upon Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts exclusive original jurisdiction over civil actions involving title to or possession of real property where the assessed value does not exceed ₱20,000.00. Applied to confirm that the MTC lacked jurisdiction.

• Section 22, Batas Pambansa Blg. 129, as amended — Vests the RTC with appellate jurisdiction over all cases decided by Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts in their respective territorial jurisdictions. Applied to establish that the RTC validly exercised appellate jurisdiction irrespective of the amount involved.

• Section 8, Rule 40, Rules of Court — Governs appeals from orders dismissing cases without trial and from decisions on the merits rendered without jurisdiction. The second paragraph was directly applied: where the MTC tried the case on the merits without subject-matter jurisdiction, the RTC shall not dismiss the case if it has original jurisdiction, but shall decide it on the merits. This provision formed the basis for holding that the RTC Decision was not void for lack of jurisdiction.

• Section 1, Rule 45, Rules of Court — Restricts petitions for review on certiorari to questions of law. Applied to preclude Supreme Court review of the unresolved factual issues in the CA, necessitating remand.

Associate Justice Presbitero J. Velasco, Jr. (Chairperson), Associate Justice Jose Portugal Perez (Acting Member in lieu of Associate Justice Martin S. Villarama, Jr.), Associate Justice Bienvenido L. Reyes, and Associate Justice Francis H. Jardeleza concurred. No separate concurring opinions were noted.

N/A — The decision was unanimous.