G.R. No. 117250 - Sandel vs. Court of Appeals

Patricia Sandel, the petitioner and absolute owner of a parcel of land covered by Transfer Certificate of Title No. C-8844, entered into a lease agreement with private respondent Roberto Y. Martinez.
The lease was executed on February 27, 1984, agreeing to a seven-year term from April 1984 to March 1991, wherein Martinez was to construct a commercial building on the leased premises.
The lease agreement contained specific provisions regarding the term, purpose of the lease, construction period, monthly rentals, responsibility for real estate taxes, transfer of ownership upon lease termination, and other conditions (notably, paragraph 7 provided that ownership of the building would automatically transfer to Sandel upon the termination of the contract).

On June 13, 1991, after the expiration of the lease term and following alleged non-payment of real property taxes on the constructed building (from January 1988 to March 1991), Sandel filed a complaint for unlawful detainer in the Metropolitan Trial Court (MTC) of Kalookan City, Branch 53.
Sandel’s complaint sought several reliefs, including:

Recovery of possession of the leased premises (both lot and building).
Payment of unpaid real property taxes or reimbursement thereof.
Payment of attorney’s fees and monthly charges for the continued occupation of the premises.
Other ancillary costs and reliefs deemed just and equitable.

Martinez filed an answer and subsequently raised a motion to dismiss on the ground that the Metropolitan Trial Court lacked jurisdiction because the issues involved matters of ownership—specifically the validity of paragraph 7 of the lease agreement—which were claimed to be beyond the court’s competence and not capable of pecuniary estimation.
Despite the motion to dismiss, on August 27, 1991, the Kalookan City MTC denied Martinez’s motion, a decision which was reaffirmed upon Martinez’s motion for reconsideration on January 9, 1992.
Martinez then sought relief by filing a petition for certiorari and prohibition with the Regional Trial Court (RTC) of Kalookan City, Civil Case No. C-266, which resulted in an order enjoining the MTC from proceeding further until the petition was resolved.

On September 3, 1992, the RTC granted Martinez’s petition, declaring the orders of the Kalookan City MTC null and void based on a jurisdictional defect.
Sandel subsequently filed an appeal via a petition for review to the Court of Appeals. On September 22, 1994, the appellate court affirmed the RTC’s decision, essentially upholding that the MTC did not have jurisdiction in the case because the resolution of certain key issues (notably, the interpretation of paragraph 7 of the lease) entailed questions regarding ownership, which were deemed not capable of pecuniary estimation.

The court erred in holding that the MTC lacked jurisdiction due to the need to resolve issues on the validity of paragraph 7 of the lease agreement.
The court erred in upholding the writs of certiorari and prohibition issued against the MTC.

Private respondent Martinez contended that the subject matter of the case—by involving disputed issues of ownership—fell within the exclusive original jurisdiction of the RTC, as actions not capable of pecuniary estimation are beyond the mandate of the MTC.
Martinez also emphasized that the allegations in the complaint invoked issues regarding property titles and ownership, referencing prior cases (such as De Rivera vs. Halili and Dy Sun vs. Brillante) to support the contention that the MTC lacked jurisdiction.

Whether the Metropolitan Trial Court (MTC) has jurisdiction over an unlawful detainer action when the complaint includes allegations that invoke questions on the validity of lease provisions—specifically paragraph 7 regarding the automatic transfer of ownership—which could potentially affect the determination of ownership.
Whether it is proper to grant writs of certiorari and prohibition against the MTC on the basis that the issues presented by the defendant (Martinez) necessitate a resolution of ownership disputes that, according to him, are the exclusive province of the Regional Trial Court.