REMEDIAL LAW | Tumagan vs. Kairuz G.R. No. 198124, September 12 2018

Tumagan vs. Kairuz 

G.R. No. 198124, September 12 2018


FACTS Respondent Mariam K. Kairuz filed an ejectment case against petitioners John Cary Tumagan, Alam Halil, and Bot Padilla, alleging that they forcibly took possession of a 5.2-hectare property in Tadiangan, Tuba, Benguet, on May 28, 2007. She claimed they conspired to gain entry with the help of armed men and padlocked the gates to the property, which excluded her from it. Petitioners, acting on behalf of Bali Irisan Resources, Inc. (BIRI), argued that they could not be liable for forcible entry as Mariam was not the sole possessor. They explained that Mariam’s husband, Laurence, and his family co-owned the property, which had been sold to BIRI following a Memorandum of Agreement (MOA). Mariam, as Laurence’s successor, was aware of BIRI’s operations and even served on its Board of Directors. The Municipal Circuit Trial Court (MCTC) dismissed Mariam's complaint for failing to implead BIRI, an indispensable party. This decision was affirmed by the RTC. However, on appeal, the CA reversed the lower courts' rulings, finding that Mariam had a right to possess the property, as a co-owner, and could file an ejectment case without impleading all other co-owners. Whether the Court of Appeals erred in reversing the MCTC and RTC decisions for failure to implead an indispensable party, BIRI and Whether the ejectment case involves an intra-corporate dispute, thus outside the MCTC’s jurisdiction.


RULING Yes. The Supreme Court ruled in favor of the petitioners and held that the Court of Appeals erred in reversing the decisions of the MCTC and RTC. The ruling emphasized two major points:


Failure to Implead an Indispensable Party (BIRI): The Court stressed that Bali Irisan Resources, Inc. (BIRI) was an indispensable party to the case. BIRI was the registered owner of the property, and the petitioners acted on its behalf. For an ejectment case to proceed, all indispensable parties must be included. Since BIRI was not impleaded, the ejectment case could not be validly decided. Without BIRI, the courts could not fully resolve the issue of possession because BIRI's interest in the property was directly affected by the dispute. Thus, the Municipal Circuit Trial Court (MCTC) and Regional Trial Court (RTC) correctly dismissed the case for lack of an indispensable party. The Court of Appeals’ reversal of these decisions was improper because it ignored the requirement to implead all necessary parties.


Jurisdictional Issue – Intra-Corporate Dispute: The Court also ruled that the dispute was not merely about physical possession of the property but involved an intra-corporate dispute between Mariam Kairuz and BIRI. Mariam was a shareholder of BIRI and had served as one of its directors. The dispute concerned not just possession but also her rights and obligations as a shareholder and director of the corporation, which affects corporate property. Intra-corporate disputes, such as conflicts between shareholders or directors over corporate assets, fall within the jurisdiction of the Regional Trial Court (RTC) as a special commercial court, not the Municipal Circuit Trial Court (MCTC). The MCTC has limited jurisdiction and cannot decide cases involving corporate disputes. Hence, the ejectment case should have been dismissed for lack of jurisdiction, as the proper forum was the RTC sitting as a commercial court.







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