Gardner v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioners Ruby H. Gardner and Frank Gardner, Jr. (GARDNERS) were the registered owners of two agricultural lots, entering into an agreement with spouses Ariosto C. Santos and Cirila Serrano (SANTOSES) for subdivision, with the SANTOSES advancing P93,000.00. Documents executed included an Absolute Deed of Sale in favor of the SANTOSES, a Subdivision Joint Venture Agreement, and a Supplemental Agreement, with the GARDNERS remaining owners and Ariosto Santos designated as broker, indicating the sale was 'in trust' for the protection of the SANTOSES' advances. New titles were issued to the SANTOSES, who subsequently transferred Lot No. 1426-New to Jose Cuenca, married to Amanda Relova (JOSE CUENCAS), and Lot No. 4748-New to Juan Cuenca, married to Soledad Advincula (JUAN CUENCAS) (Second Transfer). Upon learning of this, Ruby Gardner inscribed an Adverse Claim on the CUENCAS' titles. The JUAN CUENCAS and JOSE CUENCAS then transferred the lots to Michael C. Verroya (VERROYA), an office assistant of Ariosto Santos (Third Transfer), who mortgaged the lots in favor of Anita Nolasco and Rosario Dalina. Thereafter, Verroya transferred the properties to respondents Deogracias Natividad, married to Juanita Sanchez (NATIVIDADS) (Fourth Transfer), who finally transferred the lots to Ignacio Bautista and Encarnacion de los Santos (BAUTISTAS) (Fifth Transfer). Throughout these successive transfers, spanning approximately six years, the adverse claim of the GARDNERS remained annotated on the titles, and the GARDNERS continued to possess and cultivate the disputed properties. Procedural History: The GARDNERS filed a suit for "Declaration of Nullity, Rescission and Damages" against the transferees and mortgagees, seeking to nullify the five transfers, alleging they were simulated and fictitious. The trial court ruled in favor of the GARDNERS, declaring the transfers void, rescinding agreements, ordering reimbursement of advances, cancellation of titles, deletion of mortgage, and awarding damages. The NATIVIDADS appealed to the Court of Appeals (CA), which initially affirmed the trial court's decision. However, the NATIVIDADS filed a motion for reconsideration, then a second motion for reconsideration. The CA, in a resolution dated April 24, 1980, reconsidered its denial and admitted the second motion. Subsequently, on December 24, 1980, the CA issued a resolution reversing its earlier decision and declaring the sale to the NATIVIDADS valid. The GARDNERS sought to set aside these resolutions, arguing the CA had lost jurisdiction as the January 11, 1979 decision had become final and executory. The Petition: Petitioners seek to set aside the CA's Resolutions of April 24, 1980, and December 24, 1980, arguing that the CA erred in acting on the second motion for reconsideration when its decision had already become final and executory, and further erred in reversing its original findings regarding the NATIVIDADS' status as buyers in good faith and the nullity of the sales.
Issue(s)
Whether the Court of Appeals erred in promulgating its resolutions of April 24, 1980, and December 24, 1980, after its decision of January 11, 1979, had already become final and executory. Whether the Court of Appeals erred in holding that the second motion for reconsideration filed by the NATIVIDADS was not pro-forma and thus suspended the reglementary period. Whether the Court of Appeals erred in reversing its findings that Deogracias Natividad was not a buyer in good faith and for value, and whether the sales of the questioned properties were null and void ab initio. Whether the Court of Appeals erred in considering the second motion for reconsideration on the ground that Deogracias Natividad was allegedly abandoned by his counsel. Whether the Court of Appeals erred regarding the nature of adverse claims and the credibility of Ariosto Santos' testimony.
Ruling
The Supreme Court reversed and set aside the assailed Resolutions of the Court of Appeals dated April 24, 1980, and December 24, 1980, and reinstated its Decision dated January 11, 1979, which affirmed the judgment of the Court of First Instance of Laguna. The Court held that the Court of Appeals lost jurisdiction to act on the second motion for reconsideration as the decision had already become final and executory.
Ratio Decidendi
On the Court of Appeals' loss of jurisdiction: The Supreme Court held that the Court of Appeals erred in promulgating its resolutions of April 24, 1980, and December 24, 1980, because its Decision of January 11, 1979, had already become final and executory. The chronological data showed that the private respondents received the decision on January 16, 1979. They filed a motion for reconsideration on March 2, 1979, after obtaining an extension. This motion was denied on November 7, 1979. A second motion for reconsideration was filed on December 28, 1979, after a motion for leave to file was denied on the same date. However, under Section 1, Rule 52 of the Rules of Court, a second motion for reconsideration must be filed within fifteen days from notice of the order or judgment, deducting the time the first motion was pending. In this case, the entire fifteen days were used up by the first motion. Therefore, the decision became final on March 3, 1979, and the Court of Appeals lost jurisdiction to act on any subsequent motions, including the second motion for reconsideration. It is a well-settled principle that once a decision becomes final and executory, it is beyond the power of the court that rendered it to alter, amend, or revoke it. The subsequent filing of a motion for reconsideration cannot disturb the finality of the judgment nor restore jurisdiction to the court. On the validity of the second motion for reconsideration: The Court found that the second motion for reconsideration was filed beyond the reglementary period. The NATIVIDADS erroneously believed they had another 15-day period from the denial of their first motion for reconsideration. However, the applicable rule requires the deduction of the time the first motion was pending. Since all fifteen days were consumed by the first motion, the decision attained finality on March 3, 1979. Consequently, the Court of Appeals had no jurisdiction to entertain the "Very Urgent Motion for Leave to File Second Motion for Reconsideration" filed on November 28, 1979, much less to grant it. The Court emphasized that while the granting or denial of a motion for reconsideration involves discretion, this discretion must be exercised prudently and in conformity with law, justice, reason, and equity, not whimsically or arbitrarily. On the reversal of the original decision and the status of the NATIVIDADS as buyers in good faith: The Supreme Court found reversible error in the Court of Appeals' reversal of its original decision. The CA's reasoning that the adverse claim did not make the buyer a purchaser in bad faith until its validity was judicially determined was contradicted by the essence of adverse claims. The Court reiterated the findings of the trial court and its original appellate decision that all five transfers were simulated and fictitious, and therefore void ab initio. The first transfer to the SANTOSES was without consideration, intended only as protection for advances. The second transfer to the CUENCAS was also fictitious, done to conceal Santos' ownership. The adverse claim, registered on their titles, served as notice to subsequent buyers. The third transfer to VERROYA was without consideration, intended to facilitate a loan. The fourth transfer to the NATIVIDADS was also without consideration, with the amount stated in the deed not actually paid, and Verroya was coerced into signing. The fifth transfer to the BAUTISTAS was similarly simulated and without consideration. The mortgagees were not innocent mortgagees for value as the mortgage was executed after the adverse claim was inscribed. The continued possession of the properties by the GARDNERS further evidenced the fictitious nature of the transfers. On the consideration of the second motion for reconsideration: The Court addressed the issue of considering the second motion for reconsideration, focusing on the procedural aspects and the discretion of the court. It emphasized that while the granting or denial of a motion for reconsideration involves discretion, this discretion must be exercised prudently and in conformity with law, justice, reason, and equity, not whimsically or arbitrarily. On the nature of adverse claims and the credibility of Ariosto Santos' testimony: The Court emphasized that the CA's statement that an adverse claim cannot be considered a flaw until judicially determined contradicts the purpose of adverse claims. An adverse claim serves as a notice and warning to third parties that someone claims an interest in the property. A subsequent sale cannot prevail over a previously annotated adverse claim. While a buyer need not look behind a certificate of title, they are bound by annotated liens and encumbrances. Failure to check the vendor's title carries inherent risks. The Court also addressed the CA's discrediting of Ariosto Santos' testimony for being at variance with his Answer. The Supreme Court clarified that while pleadings can be admissions, an Answer is not evidence in itself. Santos' repudiation of his Answer's defenses in open court, against his own interest, lent weight and credence to his testimony. Both the trial court and the appellate court found him credible, and the Supreme Court saw no reason to overturn this finding.
Main Doctrine
A motion for reconsideration filed beyond the reglementary period, even if admitted by the court, does not suspend the finality of the judgment. Once a decision becomes final and executory, the court loses jurisdiction to alter or amend it. Furthermore, an adverse claim annotated on a title serves as notice to third parties and subsequent transferees, and a sale cannot prevail over a previously annotated adverse claim.