Spouses Manila v. Spouses Manzo, G.R. No. 163602, September 7, 2011

Summary: June 30, 1982, Ederlinda Gallardo leased 2 parcels of land to Eulogia Manila for a period of 10 years. They also agreed that the lessee shall have the option to buy the property within 2 years from the date of execution of the contract of lease.

The contract of lease expired on July 1, 1992 but the lessee continued in possession of the property despite a formal demand letter to vacate the same. 

Sps Gallardo-Manzo, eventually, filed an action for ejectment against the Sps Ramon and Eulogia Manila, before the MeTC Las Pias City.

MeTC ruled in favor of Sps Gallardo-Manzo ordering the defendants to vacate the subject parcels.

Sps Manila appealed to the RTC Makati City.

RTC Makati reversed the MeTC. and ordered Sps Gallardo-Manzo to execute a deed of absolute sale over that parcel of land after full payment of Sps Manila of the purchase price of P150k.

Sps Manila filed a MR. 

RTC denied the motion for having been filed beyond the 15-day period. Consequently, the decision of the RTC became final and executory.

Sps Manila then filed a petition for annulment of the RTC decision in the CA.

CA granted the petition, annulled RTC decision and reinstated  MeTC decision. 

- the main action before the MeTC is one for ejectment grounded on the expiration of the parties contract of lease. What RTC should have done in the exercise of its appellate jurisdiction, was to confine itself to the issue of whether or not Sps Gallrdo-Manzo have a valid cause of action for ejectment against the Sps Manila. Unfortunately, in its decision, the RTC went further than what is required of it as an appellate court when it ordered the Sps Gallardo-Manzo to sell their properties to the Sps Manila. In a very real sense, the RTC materially changed the nature of petitioners' cause of action by deciding the question of ownership even as the appealed case involves only the issue of prior physical possession.

With the denial of their MR, Sps Manila filed a petition for review on certiorari under Rule 45.

-CA committed a grave error in annulling the RTC judgment as (1)  the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies were already lost through the fault of the Sps Gallardo-Manzo; and (2) in re its lack of jurisdiction: it has not been shown that the RTC Makati had no jurisdiction over the person of the Sps Gallardo-Manzo or the subject matter of the claim.

SC set aside the Decision and Resolution of the CA, and dismissed the petition for annulment of judgment filed by Sps Gallardo-Manzo.

- A petition for annulment of judgments or final orders of a RTC in civil actions can only be availed of where the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner. It is a remedy granted only under exceptional circumstances and such action is never resorted to as a substitute for a party's own neglect in not promptly availing of the ordinary or other appropriate remedies. The only grounds provided in Sec. 2, Rule 47 are extrinsic fraud and lack of jurisdiction.

- In this case, Sps' asseveration is not persuasive. They could have directly followed up the status of their case with the RTC especially during the period of Atty. Atienza's hospital confinement. As party litigants, they should have constantly monitored the progress of their case.

Negligence of counsel is binding on the client, especially when the latter offered no plausible explanation for his own inaction. 

- true, RTC acted in excess of its jurisdiction in deciding the appeal of Sps Gallardo-Manzo, however, such erroneous grant of relief to Sps Manila on appeal is but an exercise of jurisdiction by the RTC. Jurisdiction is not the same as the exercise of jurisdiction. As distinguished from the exercise of jurisdiction, jurisdiction is the authority to decide a cause, and not the decision rendered therein. The ground for annulment of the decision is absence of, or no, jurisdiction; that is, the court should not have taken cognizance of the petition because the law does not vest it with jurisdiction over the subject matter. Thus, while Sps Gallardo-Manzo assailed the content of the RTC decision, they failed to show that the RTC did not have the authority to decide the case on appeal. 

Ponente: VILLARAMA, JR., J.

A petition for review on certiorari under Rule 45

Facts:

June 30, 1982, Ederlinda Gallardo leased 2 parcels of land situated along Real St., Manuyo, Las Pias, Metro Manila, to Eulogia Manila for a period of 10 years at a monthly rental(s) of P2,000.00 for the first two years, and thereafter an increase of 10% every after two years. They also agreed that the lessee shall have the option to buy the property within 2 years from the date of execution of the contract of lease at a fair market value of P150k.

The contract of lease expired on July 1, 1992 but the lessee continued in possession of the property despite a formal demand letter dated August 8, 1992, to vacate the same and pay the rental arrearages. 

In her letter reply, Eulogia claimed that no rental fee is due because she allegedly became the owner of the property at the time she communicated to Gallardo her desire to exercise the option to buy the said property.

Their disagreement was later brought to the Barangay for conciliation but the parties failed to reach a compromise.

Sps Gallardo-Manzo, hence, filed an action for ejectment against the Sps Ramon and Eulogia Manila, before the MeTC Las Pias City.

MeTC ruled in favor of Sps Gallardo-Manzo ordering the defendants:

1)      To vacate the subject parcels of land and surrender possession thereof upon the payment by Sps Gallardo-Manzo of one-half of the value of the building constructed by the lessee. Should the lessor refuse to reimburse the aforesaid amount, the lessee shall have the option to exercise her right under Article 1678 of the New Civil Code;

2)      To pay rental arrearages up to July 1, 1992 in the amount of P228,044.80;

3)      To pay, as reasonable compensation for their continued withholding of possession of the subject lots, the sum of P3,221 every month; and

4)      To pay plaintiffs attorneys fees + cost

Sps Manila appealed to the RTC Makati City.

RTC Makati reversed the MeTC. and ordered Sps Gallardo-Manzo to execute a deed of absolute sale over that parcel of land after full payment of Sps Manila of the purchase price of P150k.

- Sps Manila have in fact exercised their option to buy the leased property but the Sps Gallardo-Manzo refused to honor the same. Sps Gallardo-Manzo even informed the Sps Manila about foreclosure proceedings on their property, whereupon the Sps Manila tried to intervene by tendering rental payments but the Sps Gallardo-Manzo advised them to withhold such payments until their (Sps Gallardo-Manzo's) appeal in the case they filed against the Rural Bank of Bombon (Camarines Sur), Inc. is resolved.

- It should also be noted that the Sps Gallrdo-Manzo's intention to sell the lot to Sps Manila is confirmed by the fact that the former allowed the latter to construct a building of strong materials on the premises.

Sps Manila filed a MR. 

RTC denied the motion for having been filed beyond the 15-day period. Consequently, the decision of the RTC became final and executory.

Sps Manila then filed a petition for annulment of the RTC decision in the CA.

CA granted the petition, annulled RTC decision and reinstated  MeTC decision. 

- the main action before the MeTC is one for ejectment grounded on the expiration of the parties contract of lease. What RTC should have done in the exercise of its appellate jurisdiction, was to confine itself to the issue of whether or not Sps Gallrdo-Manzo have a valid cause of action for ejectment against the Sps Manila. Unfortunately, in the decision herein sought to be annulled, the RTC went further than what is required of it as an appellate court when it ordered the Sps Gallardo-Manzo to sell their properties to the Sps Manila. In a very real sense, the RTC materially changed the nature of petitioners' cause of action by deciding the question of ownership even as the appealed case involves only the issue of prior physical possession.

With the denial of their MR, Sps Manila filed the present petition.

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Sps Manila's Contention: 

- CA committed a grave error in annulling the RTC judgment as (1)  the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies were already lost through the fault of the Sps Gallardo-Manzo; and (2) in re its lack of jurisdiction: it has not been shown that the RTC Makati had no jurisdiction over the person of the Sps Gallardo-Manzo or the subject matter of the claim.

Sps Gallardo-Manzo's Contention:

- the loss of remedies against the RTC decision was attributable to their former counsel's late filing of their MR and failure to file any proper petition to set aside the said decision. They had been constantly following up the status of the case with their counsel, Atty. Jose Atienza, who repeatedly assured them he was on top of the situation and would even get angry if repeatedly asked about the case. Out of their long and close relationship with Atty. Atienza and due regard for his poor health due to his numerous and chronic illnesses which required frequent prolonged confinement at the hospital, they likewise desisted from hiring the services of another lawyer to assist Atty. Atienza, until the latter's death on Sept 10, 1998. Thus, it was only on Nov 1998 that they engaged the services of their new counsel who filed the petition for annulment of judgment in the CA.

- CA, being a higher court, has the power to adopt, reverse or modify the findings of the RTC in this case. CA in the exercise of its sound discretion found the RTC's findings unsupported by the evidence on record which also indicated that the loss of ordinary remedies of appeal, new trial and petition for review was not due to their fault.

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WON the CA committed a grave error in annulling the judgment by the RTC Makati City 

Held: Yes

(1) A petition for annulment of judgments or final orders of a RTC in civil actions can only be availed of where the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner. It is a remedy granted only under exceptional circumstances and such action is never resorted to as a substitute for a party's own neglect in not promptly availing of the ordinary or other appropriate remedies. The only grounds provided in Sec. 2, Rule 47 are extrinsic fraud and lack of jurisdiction.

We are not persuaded by respondents' asseveration. They could have directly followed up the status of their case with the RTC especially during the period of Atty. Atienza's hospital confinement. As party litigants, they should have constantly monitored the progress of their case. Having completely entrusted their case to their former counsel and believing his word that everything is alright, they have no one to blame but themselves when it turned out that their opportunity to appeal and other remedies from the adverse ruling of the RTC could no longer be availed of due to their counsel's neglect. That Sps Gallardo-Manzo continued to rely on the services of their counsel notwithstanding his chronic ailments that had him confined for long periods at the hospital is unthinkable. Such negligence of counsel is binding on the client, especially when the latter offered no plausible explanation for his own inaction. The Court has held that when a party retains the services of a lawyer, he is bound by his counsels actions and decisions regarding the conduct of the case. This is true especially where he does not complain against the manner his counsel handles the suit.

The oft-repeated principle is that an action for annulment of judgment cannot and is not a substitute for the lost remedy of appeal.

(2) In any event, the petition for annulment was based not on fraudulent assurances or negligent acts of their counsel, but on lack of jurisdiction.

Lack of jurisdiction as a ground for annulment of judgment refers to either lack of jurisdiction over the person of the defending party or over the subject matter of the claim.[ In a petition for annulment of judgment based on lack of jurisdiction, petitioner must show not merely an abuse of jurisdictional discretion but an absolute lack of jurisdiction. Lack of jurisdiction means absence of or no jurisdiction, that is, the court should not have taken cognizance of the petition because the law does not vest it with jurisdiction over the subject matter. Jurisdiction over the nature of the action or subject matter is conferred by law.

There is no dispute that the RTC is vested with appellate jurisdiction over ejectment cases decided by the MeTC, MTC or MCTC. Sps Manila's attack on the validity of the RTC decision pertains to a relief erroneously granted on appeal, and beyond the scope of judgment provided in Section 6 (now Section 17) of Rule 70. While the court in an ejectment case may delve on the issue of ownership or possession de jure solely for the purpose of resolving the issue of possession de facto, it has no jurisdiction to settle with finality the issue of ownership and any pronouncement made by it on the question of ownership is provisional in nature. A judgment in a forcible entry or detainer case disposes of no other issue than possession and establishes only who has the right of possession, but by no means constitutes a bar to an action for determination of who has the right or title of ownership. It was held that although it was proper for the RTC, on appeal in the ejectment suit, to delve on the issue of ownership and receive evidence on possession de jure, it cannot adjudicate with semblance of finality the ownership of the property to either party by ordering the cancellation of the TCT.

In this case, the RTC acted in excess of its jurisdiction in deciding the appeal of Sps Gallardo-Manzo when, instead of simply dismissing the complaint and awarding any counterclaim for costs due to Sps Manila, it ordered the Sps Gallardo-Manzo to execute a deed of absolute sale in favor of Sps Manila, on the basis of its own interpretation of the Contract of Lease. This cannot be done in an ejectment case where the only issue for resolution is who between the parties is entitled to the physical possession of the property.

Such erroneous grant of relief to Sps Manila on appeal, however, is but an exercise of jurisdiction by the RTC. Jurisdiction is not the same as the exercise of jurisdiction. As distinguished from the exercise of jurisdiction, jurisdiction is the authority to decide a cause, and not the decision rendered therein. The ground for annulment of the decision is absence of, or no, jurisdiction; that is, the court should not have taken cognizance of the petition because the law does not vest it with jurisdiction over the subject matter.

Thus, while Sps Gallardo-Manzo assailed the content of the RTC decision, they failed to show that the RTC did not have the authority to decide the case on appeal. As we held in Ybaez v. Court of Appeals:

xxx when the RTC took cognizance of petitioner's appeal from the adverse decision of the MTC in the ejectment suit, it (RTC) was unquestionably exercising its appellate jurisdiction as mandated by law. Perforce, its decision may not be annulled on the basis of lack of jurisdiction as it has, beyond cavil, jurisdiction to decide the appeal.

The CA therefore erred in annulling RTC decision on the ground of lack of jurisdiction as said court had jurisdiction to take cognizance of petitioners appeal.

(3) On the timeliness of the petition for annulment of judgment filed with the CA, Section 3, Rule 47 of the Rules of Court provides that a petition for annulment of judgment based on extrinsic fraud must be filed within four years from its discovery; and if based on lack of jurisdiction, before it is barred by laches or estoppel. The principle of laches or stale demands ordains that the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earliernegligence or omission to assert a right within a reasonable time, warrants a presumption that the party entitled to assert it has abandoned it or declined to assert it. There is no absolute rule as to what constitutes laches or staleness of demand; each case is to be determined according to its particular circumstances.

Here, Sps Gallardo-Manzo's failure to assail the RTC ruling in a petition for review or certiorari before the CA, rendered the same final and executory. Having lost these remedies due to their lethargy for three and a half years, they cannot now be permitted to assail anew the said ruling rendered by the RTC in the exercise of its appellate jurisdiction. Their inaction and neglect to pursue available remedies to set aside the RTC decision for such length of time, without any acceptable explanation other than the word of a former counsel who already passed away, constitutes unreasonable delay warranting the presumption that they have declined to assert their right over the leased premises which continued to be in the possession of the petitioners. Clearly, respondents petition to annul the final RTC decision is barred under the equitable doctrine of laches.

WHEREFORE, the petition for review on certiorari is GRANTED. The Decision and Resolution of the CA are SET ASIDE. The petition for annulment of judgment filed by Sps Gallardo-Manzo is DISMISSED.