G.R. No. L-19330 April 30, 1965
GENERAL INSURANCE AND SURETY CORPORATION, plaintiff-appellant, vs. LEANDRO E. CASTELO and JOSEFA PAYUMO CASTELO, defendants-appellees.

FACTS

On October 22, 1959, General Insurance and Surety Corporation filed an ejectment suit against spouses Leandro E. Castelo and Josefa Payumo Castelo in the Municipal Court of Quezon City, alleging it was the owner of a lot at No. 34 Bulusan, Quezon City, and that the defendants were occupying it without paying rentals. The defendants moved to dismiss, claiming the complaint stated no cause of action and the court lacked jurisdiction. The Municipal Court denied the motion. In their Answer, the defendants specifically denied the plaintiff’s ownership, claiming the plaintiff held the title, if any, as a trustee for the defendants who were the true owners. The Municipal Court, after trial, dismissed the complaint for lack of jurisdiction, ruling the issue “hinges on a question of ownership” not cognizable by an inferior court. The plaintiff appealed to the Court of First Instance (CFI) of Quezon City. The defendants moved to dismiss the appealed case, citing Section 11, Rule 40 of the Rules of Court, arguing the CFI had no jurisdiction. The CFI initially denied this motion. The defendants filed a motion for reconsideration. The CFI later denied the motion for reconsideration and set the case for hearing on the merits. Before the hearing, the defendants filed a petition to suspend trial, citing another pending case involving the ownership of the same lot. Without ruling on this petition or holding a trial on the merits, the CFI rendered a decision dismissing the complaint because of the defendants’ persistent objection to the court’s exercise of original jurisdiction. The plaintiff appealed to the Court of Appeals, which certified the case to the Supreme Court. The pleadings show both parties assert ownership over the disputed lot, with the plaintiff pointing to a deed of sale with right of repurchase and a title in its name, and the defendants insisting the deed was merely an equitable mortgage.

ISSUE

Whether the Court of First Instance of Quezon City could acquire jurisdiction over the ejectment case, either on appeal or in the exercise of its original jurisdiction, given that the core issue involved a question of ownership and the defendants consistently objected to the CFI’s exercise of original jurisdiction.

RULING

The Supreme Court affirmed the decision of the Court of First Instance dismissing the complaint. The Municipal Court correctly dismissed the ejectment suit because the resolution of the dispute hinged on a question of ownership, which is beyond the jurisdiction of an inferior court. Under Section 11, Rule 40 of the Rules of Court, when a case is tried by an inferior court without jurisdiction over the subject matter, it shall be dismissed on appeal by the CFI. However, the CFI may, in the exercise of its original jurisdiction, try the case on the merits if the parties filed their pleadings and went to trial without any objection to such jurisdiction. In this case, the requisite condition was not met because the defendants were “most vigorous and insistent” in objecting to the CFI’s exercise of original jurisdiction, as evidenced by their immediate motion to dismiss upon the case’s elevation and their subsequent motion for reconsideration. Consequently, the CFI had no alternative but to dismiss the case. The Supreme Court held the dismissal was proper, without prejudice to the plaintiff filing whatever claims it may have under the controverted deed of sale.