Gustilo v. Gustilo

G.R. No. 175497 (October 19, 2011)

SC upholds Mary Joy Anne's Hacienda Imelda claim, allowing her case to proceed in RTC.

Facts:

Petitioner Mary Joy Anne Gustilo and respondent Jose Vicente Gustilo III are siblings and heirs of their father, the late Atty. Armando Gustilo, who was the president of A.G. Agro-Industrial Corporation (A.G. Agro) and owned several properties, including Hacienda Imelda. Following their father's death on August 31, 1993, Mary Joy and Jose Vicente entered into a Memorandum of Agreement (MOA) that adjudicated their father's properties, assigning Hacienda Imelda to Mary Joy. However, the title to the hacienda remained under A.G. Agro's name.

Mary Joy took possession of the hacienda through her mother, Mila Barco, and began cultivating sugarcane. In 1997, Jose Vicente, acting as president of A.G. Agro, leased the hacienda and its farm implements to Teresita Young (also known as Tita Sy Young) for five agricultural crop years. This lease caused distress to Mary Joy and her mother, who were financially struggling and saw Young taking over the land.

As the lease was nearing expiration, Mary Joy sought to reclaim possession of the hacienda, but Young refused to vacate the property. Consequently, Mary Joy filed a complaint against Jose Vicente and Young in the Regional Trial Court (RTC) of Cadiz City for recovery of possession, cancellation of the lease contract, and damages. Jose Vicente filed a motion to dismiss, arguing that the RTC lacked jurisdiction over intra-corporate disputes, which should be heard in a specially designated commercial court.

On June 15, 2004, the RTC granted the motion to dismiss, citing lack of jurisdiction, and this decision was affirmed by the Court of Appeals on August 11, 2006. Mary Joy subsequently filed a petition for review.

Legal Issues:

The primary legal issue in this case is whether Mary Joy's action constitutes an intra-corporate dispute that falls under the jurisdiction of a specially designated commercial court.

Arguments:

  • Petitioners' Argument (Mary Joy): Mary Joy contended that her complaint was primarily for recovery of possession of the hacienda, which she had been cultivating since the execution of the MOA. She argued that her prior possession entitled her to reclaim the property, regardless of the title being in A.G. Agro's name. She maintained that the RTC had jurisdiction to hear her case as it was a civil action for recovery of possession.

  • Respondents' Argument (Jose Vicente and Young): Jose Vicente and Young argued that since the property was titled under A.G. Agro, the dispute was inherently intra-corporate, and thus, the RTC lacked jurisdiction. They asserted that the proper forum for such disputes was a specially designated commercial court.

Court's Decision and Legal Reasoning:

The Supreme Court ruled in favor of Mary Joy, granting her petition and reversing the Court of Appeals' decision. The Court emphasized that jurisdiction over the subject matter is determined by the allegations in the complaint. It noted that Mary Joy's case was fundamentally about recovering possession of the hacienda, which she had occupied since the MOA was executed.

The Court highlighted that a party in peaceable possession cannot be forcibly removed from the property, and that prior possession is a valid basis for recovery, even against the owner. The Court clarified that while the issue of ownership may arise, the primary focus of the case was on possession, which is a separate and distinct matter. The Court also stated that any intra-corporate issues could be addressed in a separate proceeding in the appropriate commercial court.

Significant Legal Principles Established:

  1. Jurisdiction Determined by Allegations: The jurisdiction of a court is determined by the allegations in the complaint, not merely by the title of the property involved.

  2. Possession vs. Ownership: A party in prior possession has the right to recover possession, even against the owner, and the resolution of possession issues does not preclude subsequent actions regarding ownership.

  3. Separation of Issues: Intra-corporate disputes can be addressed in separate proceedings, allowing for the resolution of possession issues in ordinary civil courts.