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125172-1997-Legarda v. Court of Appeals

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    EN BANC [G.R. No. 94457. October 16, 1997.] VICTORIA LEGARDA ,  petitioner  , vs . THE HONORABLE COURTOF APPEALS, NEW CATHAY HOUSE, INC., THE HONORABLEREGIONAL TRIAL COURT OF QUEZON CITY, BRANCH 94 , respondents . Singson, Valdez & Associates for petitioner. Ceferino Padua Law Office for Cabrera.  Jesus M. Bautista for Nancy Saw Cheung. SYNOPSIS  The parties hereto entered into a lease agreement over a certain property ownedby petitioner Victoria Legarda. Legarda, however, refused to sign a contractalthough respondent New Cathay House already made a deposit and a downpayment of rentals. Cathay, therefore, filed a complaint against Legarda forspecific performance with preliminary injunction and damages. The court a quo issued an injunction. Legarda's counsel (Atty. Coronel) failed to file an answer,thereby prompting the court to declare her in default. Cathay was allowed topresent evidence ex-parte  and a judgment by default was reached by the trialcourt ordering Legarda to execute the lease contract in favor of Cathay. When the judgment became final and executory, the trial court issued a writ of executionand a public auction was held where Cathay's Manager, Roberto V. Cabrera, Jr.was the highest bidder. The sheriff issued a Certificate of Sale. Upon failure of Legarda to redeem her property within the one-year redemption period, a finalDeed of Sale was issued by the sheriff which was registered by Cabrera with theRegister of Deeds. Legarda's Transfer Certificate of Title was cancelled with theissuance of a new TCT in favor of Cabrera. Atty. Coronel did not inform Legarda of all these developments. He then filed a petition for annulment of judgmentbefore the Court of Appeals. The appellate court affirmed the decision of the trialcourt by dismissing the petition for annulment of judgment and holding Legardabound by the negligence of her counsel. Legarda then hired a new lawyer for thepurpose of elevating her case to the Supreme Court. The Supreme Court'sdecision reversed the decision of the Court of Appeals and declared that Atty.Coronel committed reckless, inexcusable and gross negligence which deprived hisclient of her property without due process of law. Aggrieved, Cathay filed theinstant motion for reconsideration alleging that the reconveyance would not bepossible because its owner Cabrera, even prior to the promulgation of thedecision, had already sold the subject property. cdasia  The motion for reconsideration of respondent New Cathay House, Inc. wasgranted. A new judgment was entered dismissing petition for review and CD Technologies Asia, Inc. ©  affirming the decision of the Court of Appeals. What was clear from the recordsof the case was that the auction sale was conducted regularly. The certificate of sale and the final deed of sale were properly issued to Cabrera that allowed himto consolidate his ownership over the subject property, register it and obtain atitle in his own name and sell it to an innocent purchaser for value. Therefore,since the property was already sold to an innocent purchaser for value, Cabrera,much less by Cathay can no longer return it to its srcinal owner. Justice Kapunan issued a separate, concurring and dissenting opinion while Justice Hermosisima wrote a dissenting opinion. cCAIDS SYLLABUS 1. CIVIL LAW; LAND REGISTRATION; TORRENS SYSTEM; AS A RULE, ONE WHODEALS WITH PROPERTY REGISTERED THEREIN NEED NOT GO BEYOND SUCHREGISTRATION BUT ONLY HAS TO RELY ON THE TITLE; APPLICATION IN CASE ATBAR. — We do not have to belabor the fact that all the successors-in-interest of Cabrera to the subject lot were transferees for value and in good faith, havingrelied as they did on the clean titles of their predecessors. The successive ownerswere each armed with their own indefeasible titles which automatically broughtthem under the aegis of the Torrens System. As the Court declared in Sandovalvs. Court of Appeals, 260 SCRA 283 (1996), (i)t is settled doctrine that one whodeals with property registered under the Torrens system need not go beyond thesame, but only has to rely on the title. He is charged with notice only of suchburdens and claims as are annotated on the title. In the case at bar, it is notdisputed that no notice of lis pendens  was ever annotated on any of the titles of the subsequent owners. And even if there were such a notice, it would not havecreated a lien over the property because the main office of a lien is to warnprospective buyers that the property they intend to purchase is the subject of apending litigation. Therefore, since the property is already in the hands of Luminlun, an innocent purchaser for value, it can no longer be returned to itssrcinal owner by Cabrera, much less by Cathay itself.2. REMEDIAL LAW; JURISDICTION OVER PARTY-RESPONDENT; WHEN ACQUIRED;NOT APPLICABLE IN CASE AT BAR. — Though not raised as an issue in this case,the fact is that Cabrera was impleaded as a party-respondent only on August 12,1991, after the promulgation of the Gancayco  decision. The dispositive portionordered Cathay, instead of Cabrera, to reconvey the property to Legarda. Cabrerawas never a party to this case, either as plaintiff-appellee below or as respondentin the present action. Neither did he ever act as Cathay's representative. As weheld in the recent case of National Power Corporation vs. NLRC,   et. al. , G.R. Nos.90933-61, May 29, 1997, (j)urisdiction over a party is acquired by his voluntaryappearance or submission to the court or by the coercive process issued by thecourt to him, generally by service of summons. In other words, until Cabrerawas impleaded as party respondent and ordered to file a comment in the August12 1991 resolution, the Court never obtained jurisdiction over him, and tocommand his principal to reconvey a piece of property which used to be HISwould not only be inappropriate but would also constitute a real deprivation of one's property without due process of law.3. CIVIL LAW; LAND REGISTRATION; WHEN THE ORDER OF RECONVEYANCE MAY CD Technologies Asia, Inc. ©  NOT BE AVAILED OF; CASE AT BAR. — Under the Gancayco ruling, the order of reconveyance was premised on the alleged gross negligence of Legarda's counselwhich should not be allowed to bind her as she was deprived of her property without due process of law. It is, however, basic that as long as a party wasgiven the opportunity to defend her interests in due course, she cannot be said tohave been denied due process of law, for this opportunity to be heard is the veryessence of due process. The chronology of events shows that the case took itsregular course in the trial and appellate courts but Legarda's counsel failed to actas any ordinary counsel should have acted, his negligence every step of the wayamounting to abandonment, in the words of the Gancayco  decision. Yet, itcannot be denied that the proceedings which led to the filing of this case werenot attended by any irregularity. The judgment by default was valid, so was theensuing sale at public auction. If Cabrera was adjudged highest bidder in saidauction sale, it was not through any machination on his part. All of his actuationsthat led to the final registration of the title in his name were aboveboard,untainted by any irregularity. The fact that Cabrera is an officer of Cathay doesnot make him a purchaser in bad faith. His act in representing the company wasnever questioned nor disputed by Legarda. And while it is true that he won in thebidding, it is likewise true that said bidding was conducted by the book. There isno call to be alarmed in case an official of the company emerges as the winningbidder since in some cases, the judgment creditor himself personally participatesin the bidding.4. REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENT; DEFINED. — A judgmentmay be broadly defined as the decision or sentence of the law given by a court orother tribunal as the result of proceedings instituted therein. It is a judicial actwhich settles the issues, fixes the rights and liabilities of the parties, anddetermines the proceeding, and it is regarded as the sentence of the lawpronounced by the court on the action or question before it. 5. ID.; ID.; ID.; EFFECT OF FINALITY. — In our jurisdiction, a judgment becomes ipso facto final when no appeal is perfected or the reglementary period to appealtherefrom expires. The necessity of giving finality to judgments that are notvoid is self-evident. The interests of society impose it. The opposite view mightmake litigations more unendurable than the wrongs (they are) intended toredress. It would create doubt, real or imaginary, and controversy wouldconstantly arise as to what the judgment or order was. Public policy and soundpractice demand that, at the risk of occasional errors, judgments of courts shouldbecome final at some definite date fixed by law. The very object for which courtswere instituted was to put an end to controversies. When judgments of lowercourts gain finality they, too, become inviolable, impervious to modification. They may, then, no longer be reviewed, or in any way modified directly orindirectly, by a higher court, not even by the Supreme Court. In other words,once a judgment becomes final, the only errors that may be corrected are thosewhich are clerical.6. ID.; ID.; ID.; WHEN VOIDED; NOT APPLICABLE IN CASE AT BAR. — Void judgments may be classified into two groups: those rendered by a court without jurisdiction to do so and those obtained by fraud or collusion. This case must betested in light of the guidelines governing the latter class of judgments. In thisregard, an action to annul a judgment on the ground of fraud will not lie unlessthe fraud is extrinsic or collateral and facts upon which it is based (have) not CD Technologies Asia, Inc. ©  been controverted or resolved in the case where (the) judgment was rendered. It must be noted that, aside from the fact that no extrinsic fraud attended thetrial and resolution of this case, the jurisdiction of the court a quo over theparties and the subject matter was never raised as an issue by Legarda. Suchbeing the case, the decision of the trial court cannot be nullified. Errors of  judgment, if any, can only be reviewed on appeal, failing which the decisionbecomes final and executory, valid and binding upon the parties in the case andtheir successors in interest.  7. CONSTITUTIONAL LAW; SUPREME COURT; THIS COURT RENDERS DECISIONSNOT ON THE BASIS OF EMOTIONS BUT ON ITS SOUND JUDGMENT. — NeitherCathay nor Cabrera should he made to suffer for the gross negligence of Legarda's counsel. If she may be said to be innocent because she was ignorantof the acts of negligence of her counsel, with more reason are respondents truly innocent. As between two parties who may lose due to the negligence orincompetence of the counsel of one, the party who was responsible for making ithappen should suffer the consequences. This reflects the basic common lawmaxim, so succinctly stated by Justice J.B.L. Reyes, that . . . (B)etween twoinnocent parties, the one who made it possible for the wrong to be done shouldbe the one to bear the resulting loss. In this case, it was not respondents, butLegarda, who misjudged and hired the services of the lawyer who practicallyabandoned her case and who continued to retain him even after his provenapathy and negligence. The Gancayco decision makes much of the fact thatLegarda is now consigned to penury and, therefore, this Court must come tothe aid of the distraught client. It must be remembered that this Court rendersdecisions, not on the basis of emotions but on its sound judgment, applying therelevant, appropriate law. Much as it may pity Legarda, or any losing litigant forthat matter, it cannot play the role of a knight in shining armor coming to theaid of someone, who through her weakness, ignorance or misjudgment mayhave been bested in a legal joust which complied with all the rules of legalproceedings. In Vales vs. Villa , 35 Phil. 769, this Court warned against the dangerof jumping to the aid of a litigant who commits serious error or judgmentresulting in his own loss: . . . Courts operate not because one person has beendefeated or overcome by another, but because he has been defeated or overcomeillegally. Men may do foolish things, make ridiculous contracts, use miserable judgment, and lose money by them — indeed, all they have in the world; but notfor that alone can the law intervene and restore. There must be, in addition, aviolation of law, the commission of what the law knows as an actionable wrong,before the courts are authorized to lay hold of the situation and remedy it. Respondents should not be penalized for Legarda's mistake. If the subjectproperty was at all sold, it was only after the decisions of the trial and appellatecourts had gained finality. These twin judgments, which were nullified by the Gancayco decision, should be respected and allowed to stand by this Court forhaving become final and executory.KAPUNAN,  J., separate and dissenting opinion : 1. LEGAL ETHICS; LAWYERS; CLIENTS ARE BOUND BY THE MISTAKE OF THEIRCOUNSEL; EXCEPTION. — The rule is that a client is bound by the acts, evenmistakes, of his counsel in the realm of procedural technique. The exception to CD Technologies Asia, Inc. ©
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