G.R. No. 180394, September 29, 2008
MARJORIE B. CADIMAS, by her Attorney-In-Fact, VENANCIO Z. ROSALES, Petitioner, vs. MARITES CARRION and GEMMA HUGO, Respondents.

FACTS

Petitioner Marjorie B. Cadimas, through her attorney-in-fact Venancio Z. Rosales, filed a complaint for accion reivindicatoria and damages against respondents Marites Carrion and Gemma Hugo before the Regional Trial Court (RTC) of Quezon City. The complaint alleged that petitioner, as owner of a townhouse in West Fairview Park Subdivision, Quezon City, entered into a Contract to Sell with respondent Carrion on August 4, 2003. Paragraph 8 of the contract prohibited Carrion from selling, mortgaging, or transferring her rights without petitioner’s written consent. Petitioner claimed that Carrion violated this provision by transferring ownership to respondent Hugo under the guise of a Special Power of Attorney authorizing Hugo to manage the property. After Carrion ignored petitioner’s written demand for an explanation, petitioner sent a final demand to vacate and cancelled the contract. Carrion failed to file an answer, prompting petitioner to move for a declaration of default. Respondent Hugo filed a Motion to Dismiss on behalf of herself and Carrion, arguing that the Housing and Land Use Regulatory Board (HLURB), not the RTC, had jurisdiction because the case involved unsound real estate business practices by petitioner as subdivision owner/developer. Hugo also contested the service of summons on Carrion, a non-resident.
The RTC issued an Omnibus Order on March 21, 2005, denying the motion to dismiss. It held that jurisdiction is determined by the allegations in the complaint, not by defenses in a motion, and found summons properly served. The RTC declared Carrion in default, allowed ex-parte presentation of evidence against her, and ordered Hugo to file an answer. Hugo filed an answer with a compulsory counterclaim for damages. Subsequently, the RTC, in an Order dated January 17, 2007, lifted the default order for substantial justice and set pre-trial. Respondents challenged the RTC’s orders via a certiorari petition before the Court of Appeals.

ISSUE

Whether the Regional Trial Court (RTC) has jurisdiction over the complaint for accion reivindicatoria and damages, or whether jurisdiction lies with the Housing and Land Use Regulatory Board (HLURB).

RULING

The Supreme Court REVERSED the Court of Appeals and REINSTATED the RTC’s orders, holding that the RTC has jurisdiction over the case.
The Court emphasized that jurisdiction is determined by the material allegations in the complaint and the law at the time of filing, not by defenses raised in an answer or motion to dismiss. Examining the complaint, the Court found that petitioner sought to recover ownership and possession of the property based on an alleged violation of the Contract to Sell’s prohibition against unauthorized transfer. The core reliefs were reversion of title and recovery of possession, which are inherently judicial matters involving title to real property. The Court distinguished this from cases falling under HLURB’s jurisdiction under P.D. No. 1344, which pertains to claims by subdivision lot or condominium unit buyers against developers for unsound business practices. Here, the complaint was filed by the seller/developer against the buyer and her alleged transferee for violating contractual terms, not a claim by a buyer against a developer. Thus, the subject matter—an action for reconveyance and damages based on contract violation—is within the general jurisdiction of the RTC under Section 19(2) of Batas Pambansa Blg. 129, as amended.
The Court further noted that respondents, by filing an answer with a compulsory counterclaim for damages, voluntarily submitted to the RTC’s jurisdiction. A compulsory counterclaim, being ancillary to the main action, constitutes recognition of the court’s authority to adjudicate the entire controversy. This act cured any prior defect in the service of summons. Consequently, the Court of Appeals erred in granting the certiorari petition, as the RTC correctly assumed jurisdiction.