Huguete vs. Embudo

The nature of an action is determined by the allegations of the complaint and the character of the relief sought, not by the caption; where the ultimate objective is to obtain title to real property, the action falls under the jurisdiction of the court having competence over the assessed value of the property involved, not the Regional Trial Court's jurisdiction over actions incapable of pecuniary estimation.

Petitioner spouses Jorge and Yolanda Huguete are the parents-in-law of respondent Teofredo Amarillo Embudo, who is married to their daughter Marites Huguete-Embudo. Teofredo had acquired a 150-square meter parcel of land, Lot No. 1920-F-2, in San Isidro, Talisay, Cebu, from Ma. Lourdes Villaber-Padillo by virtue of a deed of sale, after which Transfer Certificate of Title No. 99694 was issued solely in his name. The dispute arose from an alleged sale of a 50-square meter portion of that lot by Teofredo to the petitioners, which sale was never formalized in a deed.

Petitioner spouses Jorge and Yolanda Huguete alleged that sometime in 1995, their son-in-law, respondent Teofredo Amarillo Embudo, offered to sell them a 50-square meter portion of Lot No. 1920-F-2, situated in San Isidro, Talisay, Cebu — a 150-square meter parcel that Teofredo had purchased on installment basis from Ma. Lourdes Villaber-Padillo. Desirous of living near their daughter and grandchildren, the petitioners accepted the offer and paid Teofredo the sum of P15,000.00 as full consideration for the 50-square meter portion, at a price of P300.00 per square meter. The petitioners then built a house on the portion they had purchased, which was adjacent to Teofredo's house, and were issued Tax Declaration No. 53170 for the house.

Despite repeated demands for the execution of a deed of sale, Teofredo led the petitioners to believe that the necessary document of conveyance could not yet be executed because he had not fully paid his obligation to Villaber-Padillo. The petitioners later discovered that Teofredo had already obtained a deed of sale over the entire lot, dated December 28, 1995, in which he appeared as the sole buyer, thereby consolidating ownership of the entire lot to the exclusion of the petitioners. On the basis of that deed of sale, Teofredo secured the issuance of Transfer Certificate of Title No. T-99694 solely in his name, without the petitioners' knowledge.

Since considerable time had elapsed without any document of conveyance being executed, the petitioners demanded the partition of the lot to segregate the portion on which their residential house stood. Teofredo refused. On March 2, 2000, the petitioners filed a complaint against respondent spouses Teofredo and Marites Huguete-Embudo for "Annulment of TCT No. 99694, Tax Declaration No. 46493, and Deed of Sale, Partition, Damages and Attorney's Fees" before the Regional Trial Court of Cebu City, Branch 7. In their prayer, they sought the partition and segregation of the 50-square meter portion, the annulment and cancellation of the deed of sale between Teofredo and Villaber-Padillo, the cancellation of TCT No. 99694 and issuance of separate titles for the 50-square meter portion in their favor and the remaining 100-square meter portion in respondents' favor, and the cancellation of Tax Declaration No. 46493 with corresponding new tax declarations issued to each party.

On March 15, 2001, respondents filed a Motion to Dismiss on the ground of lack of jurisdiction over the subject matter, arguing that the total assessed value of the subject land was only P15,000.00, which falls within the exclusive jurisdiction of the Municipal Trial Court pursuant to Section 33(3) of Batas Pambansa Blg. 129, as amended by Republic Act No. 7691. The petitioners opposed, contending that the subject matter of the action was incapable of pecuniary estimation and therefore cognizable by the Regional Trial Court under Section 19(1) of B.P. 129, as amended. The trial court dismissed the complaint for lack of jurisdiction, and the petitioners' Motion for Reconsideration was denied.

• Nature of the Action — Incapable of Pecuniary Estimation: Petitioners maintained that the complaint was for annulment of deed of sale and partition, and was thus incapable of pecuniary estimation, making it cognizable by the Regional Trial Court under Section 19(1) of B.P. 129, as amended.
• Misapplication of Precedent: Petitioners argued that the trial court erroneously applied Section 33(3) of B.P. 129 and disregarded Section 19(1) of the same law, as well as settled jurisprudence in Russell vs. Vestil, which petitioners claimed was taken out of context.
• Estoppel by Seeking Affirmative Relief: Petitioners argued that respondents, who sought affirmative relief and thereby invoked the authority of the court in their counterclaim, were estopped from denying the jurisdiction of the Regional Trial Court.

• Jurisdiction Based on Assessed Value: Respondents insisted that the action was one for annulment of title and, since the assessed value of the property as stated in the complaint was P15,000.00, it fell within the exclusive jurisdiction of the Municipal Trial Court under Section 33(3) of B.P. 129, as amended by R.A. No. 7691.

• Jurisdiction — Nature of the Action: Whether the complaint for annulment of deed of sale, annulment of title, partition, and damages is an action incapable of pecuniary estimation cognizable by the Regional Trial Court, or an action involving title to real property cognizable by the Municipal Trial Court based on assessed value.
• Estoppel to Question Jurisdiction: Whether respondents are estopped from denying the RTC's jurisdiction by reason of having sought affirmative relief in their counterclaim.

• Jurisdiction — Nature of the Action: No. The action is one involving title to real property, not an action incapable of pecuniary estimation; because the assessed value of P15,000.00 falls within the MTC's exclusive original jurisdiction under Section 33(3) of B.P. 129, as amended, the RTC correctly dismissed the complaint.
• Estoppel to Question Jurisdiction: N/A. The decision did not separately address this issue in its reasoning; the petition was denied on the jurisdiction ground alone.

• Jurisdiction — Nature of the Action: The nature of an action and the court's jurisdiction over it are determined by the allegations of the complaint and the character of the relief sought, not by the caption. Applying the criterion from Singsong vs. Isabela Sawill, where the basic issue is something other than the right to recover a sum of money, the action is considered incapable of pecuniary estimation; but where the principal action or remedy sought is primarily for the recovery of a sum of money, the claim is capable of pecuniary estimation. In this case, the principal purpose of the petitioners was to secure title to the 50-square meter portion they purchased from respondents. Their cause of action was based on their right as purchaser, and they prayed to be declared owners of the property sold. The annulment of the deed of sale between Villaber-Padillo and respondents, as well as of TCT No. 99694, were sought only because they were necessary before the lot could be partitioned and the 50-square meter portion conveyed to petitioners. Because the ultimate objective was to obtain title to real property with an assessed value of P15,000.00, the action fell within the MTC's exclusive jurisdiction. Petitioners' reliance on Russell vs. Vestil was misplaced, as that case involved an action for annulment of a "Declaration of Heirs and Deed of Confirmation of Previous Oral Partition" where the primary issue was the recognition of petitioners as heirs, making the annulment of title and partition merely incidental; the Court in Russell itself acknowledged that actions under Section 33(3) of B.P. 129, while also incapable of pecuniary estimation, are specifically cognizable by the MTC, METC, or MCTC where the assessed value does not exceed the statutory thresholds.
• Estoppel to Question Jurisdiction: N/A.

• Determination of the nature of an action and jurisdiction — The nature of an action, and consequently which court has jurisdiction over it, are determined by the allegations of the complaint and the character of the relief sought, not by the caption of the complaint. Where the ultimate objective of the plaintiff is to obtain title to real property, the action is one involving title to real property and must be filed in the court having jurisdiction over the assessed value of the property, regardless of ancillary prayers for annulment of documents or partition.

• Criterion for actions incapable of pecuniary estimation — Where the basic issue is something other than the right to recover a sum of money, and where the money claim is purely incidental to or a consequence of the principal relief sought, the action is considered incapable of pecuniary estimation and cognizable exclusively by the Regional Trial Courts. However, where the principal action is primarily for the recovery of a sum of money, the claim is capable of pecuniary estimation, and jurisdiction depends on the amount of the claim. Actions involving title to or possession of real property, while also incapable of pecuniary estimation in a general sense, are specifically cognizable by the MTC, METC, or MCTC where the assessed value does not exceed P20,000.00 (Metro Manila) or P50,000.00 (elsewhere), pursuant to Section 33(3) of B.P. 129, as amended by R.A. No. 7691.

• "what determines the nature of an action as well as which court has jurisdiction over it are the allegations of the complaint and the character of the relief sought." — This passage states the controlling rule for determining jurisdiction based on the complaint's allegations and the relief sought, rather than the caption or labels used by the parties.

• "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. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether the jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, 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 exclusively by courts of first instance (now Regional Trial Courts)." — This is the canonical formulation of the criterion for distinguishing actions capable of pecuniary estimation from those incapable thereof, as quoted from Singsong vs. Isabela Sawill.

• "The nature of an action is not determined by what is stated in the caption of the complaint but by the allegations of the complaint and the reliefs prayed for. Where, as in this case, the ultimate objective of the plaintiffs is to obtain title to real property, it should be filed in the proper court having jurisdiction over the assessed value of the property subject thereof." — This passage articulates the ratio decidendi: the ultimate objective of obtaining title to real property determines that the action is governed by the assessed-value jurisdiction rule, not the incapable-of-pecuniary-estimation rule.

• Cañiza vs. Court of Appeals, G.R. No. 110427, 24 February 1997, 268 SCRA 640 — Cited for the rule that the nature of an action and the court's jurisdiction over it are determined by the allegations of the complaint and the character of the relief sought.
• Singsong vs. Isabela Sawill, 88 SCRA 623 (1979) — Cited for the criterion distinguishing actions capable of pecuniary estimation from those incapable thereof, based on whether the principal action is for recovery of money or whether the money claim is merely incidental to the principal relief sought.
• Russell vs. Vestil, 364 Phil. 392 (1999) — Distinguished. Petitioners' reliance was deemed misplaced because Russell involved annulment of a declaration of heirs where the primary issue was recognition as heirs, making annulment of title and partition merely incidental. The Court noted that Russell itself acknowledged that actions under Section 33(3) of B.P. 129 are cognizable by the MTC based on assessed value.

• Section 33(3), Batas Pambansa Blg. 129, as amended by Republic Act No. 7691 — Grants Municipal Trial Courts, Metropolitan Trial Courts, and Municipal Circuit Trial Courts exclusive original jurisdiction over civil actions involving title to, or possession of, real property or any interest therein where the assessed value does not exceed P20,000.00 (Metro Manila) or P50,000.00 (elsewhere). Applied to hold that the action, involving title to real property assessed at P15,000.00, fell within the MTC's exclusive jurisdiction.
• Section 19(1), Batas Pambansa Blg. 129, as amended — Grants Regional Trial Courts exclusive original jurisdiction over civil actions in which the subject of the litigation is incapable of pecuniary estimation. Petitioners invoked this provision, but the Court held it inapplicable because the action's principal objective was to obtain title to real property, not to seek relief incapable of pecuniary estimation.

Davide, Jr., C.J., Vitug, Carpio, and Azcuna, JJ., concurred.