EN BANC
[ G.R. No. 94457, October 16, 1997 ]
VICTORIA LEGARDA, PETITIONER, VS. THE HONORABLE COURT OF APPEALS, NEW CATHAY HOUSE, INC., THE HONORABLE REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH 94, RESPONDENTS.
DISSENTING OPINION
HERMOSISIMA, JR., J.:
I regret I cannot join the majority in ruling against petitioner Victoria Legarda.
The facts, as culled from the records, are not controverted.
It appears that petitioner Victoria Legarda was the owner of a parcel of land and the improvements thereon, located at 123 West Avenue, Quezon City. Sometime in November, 1984, petitioner agreed to lease unto private respondent New Cathay House, Inc. one of her two houses in said address. A serious disagreement having arisen between the parties as to the terms of the lease, private respondent, on January 21, 1985, filed a complaint against the petitioner for specific performance with preliminary injunction and damages with the Regional Trial Court of Quezon City, Branch XCIV, alleging, inter alia, that: (1) petitioner entered into a lease agreement with the private respondent through the latter’s representative, Roberto V. Cabrera, Jr., of the aforestated property of petitioner effective January 1, 1985 until December 31, 1989 or a period of five (5) years; (2) the agreed rental is P12,000.00 per month with 5% escalation per year; (3) on November 23, 1984, the parties consummated their agreement upon private respondent’s payment to petitioner of P72,000.00 as deposit and downpayment of rentals; (4) private respondent drew up the written contract and sent it to petitioner but the latter failed and refused to execute and sign the same despite repeated demands of respondent; and (5) that respondent suffered damages due to the delay in the renovation and opening of its restaurant business due to the efforts of the petitioner aimed at stopping the works and renovations being done by respondent’s workers.
The private respondent prayed that pending the resolution of the case, a restraining order be issued against petitioner or her agents enjoining them from stopping the renovation and use of the premises by the respondent. It was also prayed that after due hearing the petitioner be ordered to execute the lease contract; to pay actual, compensatory, exemplary and other damages in such amount as may be proved during the trial including P30,000.00 attorney’s fees plus P300.00 per appearance of counsel, and to pay the expenses of litigation.1
Petitioner engaged the services of the late Dean Antonio Coronel to handle her case. Said counsel filed his appearance with an urgent motion for extension of time to file petitioner’s answer to the complaint within 10 (ten) days from February 6, 1985,2 which motion was granted by the trial court giving petitioner until February 20, 1985 to file her answer. Petitioner’s counsel, however, inexplicably failed to file her answer within the extended period given by the court, prompting private respondent to move that she be declared in default. The court granted the motion and private respondent was allowed to present evidence ex-parte. Thereafter, on March 25, 1985, the trial court rendered judgment by default against petitioner, the dispositive portion of which reads:
"WHEREFORE, judgment is hereby rendered ordering defendant Victoria G. Legarda to execute and sign Exhibit “D” the lease contract for the premises at 123 West Avenue, Quezon City. Accordingly, the preliminary injunction earlier issued on January 31, 1985 is hereby made permanent.
Judgment is likewise rendered ordering defendant to pay exemplary damages in the sum of P100,000.00 to serve as example and deterrent for others, and actual and compensatory damages as follows:
1. For lost and destroyed goodwill and reputation in the amount of P100,000.00;
2. The sum of P61,704.40 as adjustments in the costs of labor and materials for the renovation of the premises;
3. The sum of P50,000.00 as unearned income for the delay of plaintiff’s operations from January 1, 1985 up to February 25, 1985 or a period of almost two (2) months;
4. The sum of P16,635.57 and P50,424 as additional compensatory damages incurred by plaintiff for the extension of the lease of its premises at Makati and salaries of idle employees, respectively;
5. The sum of P10,000.00 as and by way of attorney’s fees; and
6. The costs of suit.
SO ORDERED."3
Copy of said decision was duly served on counsel for the petitioner on April 9, 1985 but counsel did not take any action. Consequently, the judgment became final and executory. On may 8, 1985, upon motion of private respondent, a writ of execution was issued by the trial court.
At public auction, the sheriff sold the subject property of the petitioner to Roberto V. Cabrera, Jr., Director and General Manager of private respondent corporation, as the highest bidder, for the sum of P376,500.00 to satisfy the judgment debt. The sheriff issued a Certificate of Sale dated June 27, 19854 covering the said property. Uninformed by her counsel of these proceedings on execution, petitioner failed to redeem her property within the one-year redemption period, as a result of which, ownership over the same was consolidated in the name of Roberto V. Cabrera, Jr. The sheriff issued a Final Deed of Sale5 on July 8, 1986 in his favor. Cabrera registered the deed in the office of the Register of Deeds on July 11, 1986.
Upon learning of this unfortunate turn of events, petitioner prevailed upon her counsel to seek the appropriate relief. On October 23, 1986, Atty. Coronel filed a petition before the respondent Court of Appeals, which upon order of said court, was amended on February 4, 1987, for the annulment of judgment rendered by the trial court on two grounds, viz:
"1. The decision was obtained by private respondent through fraud.
2. The decision is not supported by the allegations in the pleadings not by the evidence submitted."6
The petition prayed that a preliminary mandatory injunction issue ordering the private respondent to surrender the property to petitioner and to enjoin the former from further harassing and threatening the peaceful possession and enjoyment thereof by petitioner; that after hearing, the decision of the trial court in Civil Case No. Q-43811 and the sheriff’s certificate of sale be annulled; and that private respondent be adjudged to pay petitioner not less than P500,000.00 actual and moral damages, as well as exemplary damages and attorney’s fees in the amount of P50,000.00 plus the costs of the suit.7
On November 29, 1989, a decision was rendered by the respondent Court of Appeals. The court a quo made a following pertinent observations:
"x x x x [p]etitioner’s above allegation of fraud supposedly practiced upon her Roberto V. Cabrera, Jr. is so improbable as to inspire belief. For the Coronel Law Office had already entered its appearance as petitioner’s counsel by then, so that if it were true that Cabrera had already agreed to the conditions imposed by petitioner, said law office would have asked plaintiff to file the proper motion to dismiss or withdraw complaint with the Court, and if plaintiff had refused to do so, it would have filed defendant’s answer anyway so that she would not declared in default. Or said law office would have prepared a compromise agreement embodying the conditions imposed by their client in the lease contract in question which plaintiff had allegedly already accepted, so that the same could have been submitted to the Court and judgment on a compromise could be entered. All these, any conscientious lawyer of lesser stature than the Coronel Law Office, headed by no less than a former law Dean Antonio Coronel, or even a new member of the bar, would normally have done under the circumstances to protect the interests of their client, instead of leaving it to the initiative of plaintiff to withdraw its complaint against defendant, as it had allegedly promised the latter. Thus, it is our belief that this case is one of pure and simple negligence on the part of defendant’s counsel, who simply failed to file the answer in behalf of defendant. But counsel’s negligence does not stop here. For after it had been furnished with copy of the decision by default against defendant, it should then have appealed therefrom or filed a petition from relief from the order declaring their client in default or from the judgment by default. Again, counsel negligently failed to do either. x x x x x x."8
In view of these findings, the appellate court dismissed the petition for annulment of judgment, with costs against the petitioner, holding the latter bound by the negligent acts of her counsel. A copy of the said judgment appears to have been served on counsel for the petitioner. Counsel for the petitioner, however, did not, in any manner, attempt to file a motion for reconsideration or appeal therefrom, and so the appellate court’s decision became final on December 21, 1989.9
It was only sometime in March, 1990, that petitioner was informed of the adverse decision of the court a quo, not by her counsel but by the latter’s secretary, after persistent telephone inquiries by the petitioner.
Desperately aggrieved, petitioner secured the services of another lawyer who filed the instant petition for certiorari under Rule 65 wherein it was prayed that the judgment of the Regional Trial Court of Quezon City in Civil Case No. Q-43811, the decision of the Court of Appeals in CA-G.R. No. 10487, as well as the sheriff’s sale at public auction of the property in question be annulled, considering that her loss was attributable to the gross negligence and inefficiency of her counsel, whose blunder cannot bind her as she was unduly deprived of the due process she deserves. It was further prayed that private respondent New Cathay House, Inc. be ordered to reconvey to petitioner the property covered by TCT No. 270814, which was sold at public auction to Roberto V. Cabrera, Jr. and in whose favor its ownership was thereafter consolidated.
On March 18, 1991, this Court, thru Justice Emilio A. Gancayco (now retired), rendered judgment10 granting the petition with the following ratiocinations:
"x x x x x x x x x
Judged by the actuations of said counsel in this case, he has miserably failed in his duty to exercise his utmost learning and ability in maintaining his client’s cause. It is not only a case of simple negligence as found by the appellate court, but of reckless and gross negligence, so much as that his client was deprived of her property without due process of law.
x x x x x x x x x
In its questioned decision dated November 19, 1989 the Court of Appeals found, in no uncertain terms, the negligence of the then counsel for petitioner when he failed to file the proper motion to dismiss or to draw a compromise agreement if it was true that they agreed on a settlement of the case; or in simply filing an answer; and that after having been furnished a copy of the decision by the court he failed to appeal therefrom or to file a petition for relief from the order declaring petitioner in default. In all these instances the appellate court found said counsel negligent but his acts were held to bind his client, petitioner herein, nevertheless.
The Court disagrees and finds that the negligence of counsel in this case appears to be so gross and inexcusable. This was compounded by the fact, that after petitioner gave said counsel another chance to make up for his omissions by asking him file a petition for annulment of the judgment in the appellate court, again counsel abandoned the case of petitioner in that he received a copy of the adverse judgment of the appellate court, he did not do anything to save the situation or inform his client of the judgment. He allowed the judgment to lapse and become final. Such reckless and gross negligence should not be allowed to bind the petitioner. Petitioner was thereby effectively deprived of her day in court.
Thus, We have before Us a case where to enforce an alleged lease agreement of the property of petitioner, private respondent went to court, and that because of the gross negligence of the counsel for the petitioner, she lost the case as well as the title and ownership of the property, which is worth millions. The mere lessee then now became the owner of the property. Its true owner then, the petitioner, now is consigned to penury all because her lawyer appear to have abandoned her case not once but repeatedly.
The Court cannot allow such a grave injustice to prevail. It cannot tolerate such unjust enrichment of the private respondent at the expense of the petitioner. The situation is aggravated by the fact that said counsel is a well-known practicing lawyer and the dean of a law school as the Court at the beginning of this discourse observed. His competence should be beyond cavil. Thus, there appears to be no cogent excuse for his repeated negligence and inaction. His lack of devotion to duty is so gross and palpable that this Court must come to the aid of his distraught client, the petitioner herein,"11
Thereupon, we ordered:
"WHEREFORE, the petition is GRANTED and the questioned decision of the Regional Trial Court of Quezon City dated March 25, 1985 in Civil Case No. Q-43811; the decision of the Court of Appeals dated November 29, 1989 in CA-G.R. No. SP-10487; the Sheriff’s Certificate of Sale dated June 27, 1985 of the property in question; and the subsequent final deed of sale covering the same property, are all hereby declared null and void. Private respondent New Cathay House, Inc. is directed to reconvey said property to the petitioner, and the Register of Deeds is ordered to cancel the registration of said property in the name of private respondent and to issue a new name of petitioner. Costs against private respondent. Said counsel for petitioner is hereby required to show cause within ten (10) days from notice why he should not be held administratively liable for his acts and omissions hereinabove described in this decision.
SO ORDERED."12
Private respondent filed a motion to reconsider the aforesaid decision averring, inter alia, that respondent is no longer in a position to reconvey the property to petitioner since, prior to the promulgation of the High Tribunal’s decision on March 18, 1991, Roberto V. Cabrera, Jr., the purchaser at the public auction sale, had already sold the questioned property to one Nancy Saw for P4 million on March 21, 1990 and the Deed of Sale in her favor was duly registered by the Register of Deeds of Quezon City,13 after payment of the corresponding capital gains tax, documentary stamps and other fees thereof. Nancy Saw, after being impleaded, in her Comment,14 alleges that she is an innocent purchaser for value, since, at the time she bought the property from Mr. Cabrera, Jr., she never knew of the existence of the case between the petitioner and New Cathay House, Inc., and that, at the time of the sale, there were no existing encumbrance found at the back of Transfer Certificate of Title No. 350892 in the name of Cabrera. Neither was there any notice of lis pendens annotated thereto.
Alarmed by this development, this Court, thru the First Division, came out with a Resolution, dated August 12, 1991, viz:
"G.R. No. 94457 (Victoria Legarda vs. Court of Appeals, et al). The opposition to private respondent’s motion for reconsideration of the decision of March 18, 1991, filed by petitioner is NOTED. After due deliberation the Court resolved to require private respondent to submit to the Court within ten (10) days from notice a certified true copy of the certificate of sale and return of the deputy sheriff Angelito Mendoza relating to the execution sale of the subject property on June 27, 1985, as well as a certified true copy of the deed of sale of said property by Roberto V. Cabrera, Jr. in favor of Nancy Saw in March, 1990 and the proof of registration of the sale and transfer of title to Nancy Saw.
Let Roberto V. Cabrera, Jr. and Nancy Saw be IMPLEADED as party respondents in this case to be served with this resolution through counsel for private respondent, who is hereby directed to serve copies thereof on said respondents, and said respondents are directed to submit their COMMENT to the petition and decision within ten (10) days from notice. Let a TEMPORARY RESTRAINING ORDER be issued on the private respondent Nancy Saw enjoining her from selling, transferring, encumbering or otherwise disposing of the property in litigation, until further orders of the Court. The Register of Deeds of Quezon City is hereby DIRECTED not to allow the registration of any sale, transfer, encumbrance or other disposition of the property subject of this suit which was previously covered by Transfer Certificate of Title No. 27014 in the name of petitioner Victoria Legarda which was allegedly sold to Roberto V. Cabrera, Jr. and who in turn sold the same to Nancy Saw."15
It appears, however, that on August 7, 1990 or more than one (1) year prior to the issuance of the above TRO, Nancy Saw, for her part, had also sold the subject property to one Lily Tanlo Sy Chua for P4.5 million which sale was registered by the Register of Deeds of Quezon City on August 8, 1990.16 Like Nancy Saw, Chua, as intervenor, maintains that she is a buyer in good faith and for value, considering that she only came to know of the alleged defect or flaw in the title when she tried to sell the property sometime in June, 1992 and was told by the Register of Deeds in Quezon City of the pendency of this petition and the temporary restraining order issued by this Court on August 12, 1991. Chua argues that being a subsequent innocent buyer for value from one who has equally an innocent purchaser for value (referring to Nancy Saw), her title become even more indefeasible than her predecessors-in-interest.17
To further complicate matters, intervenor Lily Sy Chua and her husband, Victor Sy Chua, on April 3, 1992 executed a Contract to Sell18 over the property in litigation to a certain Janet Chong Luminmun. A Deed of Absolute Sale was subsequently entered into by the parties, and on November 24, 1993, the Register of Deeds of Quezon City issued Transfer Certificate of Title No. 99143 in the name of Janet Chong Luminlun.
Thereafter, petitioner filed before us on March 23, 1994 an Omnibus Motion19 bringing to our attention this latest development and praying that:
"WHEREFORE, premises considered, it is most respectfully prayed of this Honorable Court, that:
a) Lily T Chua, Victor Sy Chua and Samuel Cleofe, the Register of Deeds of Quezon City be ordered to explain why they should not be cited for contempt of court for ignoring its Order and for acts which tend to impede or obstruct the administration of justices;
b) Samuel Cleofe, the Register of Deeds of Quezon City, be adjudged guilty of dereliction of duty and for the imposition of appropriate sanctions therefor;
c) The ‘sale’ to Janet C. Luminlun be declared null and void for being sham and/or having been done in direct violation of the order of this Honorable Court and Transfer Certificate of Title No. 99143 be ordered cancelled.ℒαwρhi৷
Petitioner prays for such other reliefs as are just and equitable under the premises.
Manila, March 23, 1994."20
I vote to grant the motion for reconsideration in part.ℒαwρhi৷
It is crucial to note that, when the First Division of this Court rendered its Decision on March 18, 1991, declaring null and void the March 25, 1985 judgment by default of the trial court in Civil Case No. Q-43811 and ordering the private respondent to reconvey said property to petitioner, Transfer Certificate of Title No. 270814 previously in the name of Legarda had already been cancelled and a new one, TCT No. 350892,21 had already been issued on October 17, 1986 in the name of the highest bidder, Mr. Roberto V. Cabrera, Jr. This was a clean title bereft of any lien or encumbrance, adverse to the interest of Cabrera, Jr., annotated at the back thereof nor of any notice of lis pendens to apprise any prospective buyer of the pendency of this litigation. It was this later title which became the subject of a Deed of Absolute Sale22 executed between Mr. Cabrera and Nancy Saw on March 21, 1990 for the price of P4 million. Thereupon, TCT No. 350892, in the name of Cabrera, Jr., was cancelled by the Register of Deeds of Quezon City and, after payment of the required fees, a new title, TCT No. 31672, was issued on April 3, 1990 in the name of Nancy Saw.23 This title likewise contained no notice of any adverse claim from third parties. Relying on this clean title, Lily Sy Chua bought the subject property on August 7, 1990 from Saw, which Deed of Sale was duly registered at the back of Saw’s title. Thereafter, TCT No. 31672, in the name of Saw, was cancelled and TCT No. 31673,24 in the name of Chua, was issued on August 8, 1990 by the Register of Deeds of Quezon City. Like its predecessor titles, TCT No. 31673 was a clean title. The property in dispute was, therefore, in the hands of Lily Sy Chua, when this Court came out with the Decision on March 18, 1991 in G.R. No. 94457 granting Legarda’s petition and ordering the reconveyance of the property back to Legarda.
I would reconsider this order of reconveyance.
Initially, it must be stressed that we are here dealing with a property registered under the Torrens System. This Court had, on more than one occasion, stated and hence must continuously state, as long as cases like the one at bench involving titled lands subsist, that the primary and fundamental purpose of the Torrens System of Land Registration is to quiet title to land; to put a stop forever to any question of the legality of the title, except claims which were noted at the time of registration in the certificate or which may arise subsequent thereto. That being the purpose of the law, once a title is registered, the owner may rest secure, without the necessity of waiting in the portals of the court, or sitting in the “mirador su casa,” to avoid the possibility of losing his land.25
Thus, where innocent third persons relying on the correctness of the certificate of title thus issued, acquire rights over the property, the court cannot disregard such rights and order the total cancellation of the certificate. The effect of such an outright cancellation would be to impair public confidence in the certificate of title, for everyone dealing property registered under the Torrens System would have to inquire in every instance as to whether the title has been regularly or irregularly issued by the court.26 Indeed, this is contrary to the evident purpose of the law. Every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go beyond the certificate to determine the condition of the property.27
The subsequent transfers from Cabrera to Saw to Chua and, finally, to Janet Chong Luminlun all involve clean titles without any encumbrance or lien annotated thereto nor of any notice of lis pendens found at the back thereof. In fact, even if petitioner Legarda managed to have a lis pendens notice inscribed on these titles (which she was not able to do), this would not have the effect of establishing a lien or encumbrance on the property affected. As its name suggests, the only purpose of a notice of lis pendens is to give notice to third persons and to the whole world that any interest they might acquire in the property pending litigation would be subject to the result of the suit.28 If the notice is effective, a third person who acquires the property affected by the lis pendens takes the same subject to the incidents and results of the pending litigation. But when the adverse right fails in such litigation, the lis pendens loses its efficacy.29 This is the only import of a lis pendens notice which did not even find its way in any of the titles issued covering the subject property. Hence, it can be said without fear of contradiction that Saw, Chua, and Luminlun are innocent purchasers for value because they bought the subject real property covered by clean titles.
Petitioner, however, would like to disqualify Saw, Chua and Luminlun as innocent purchasers for value based on alleged suspicious circumstances surrounding the sales in their favor. These circumstances, according to her, point to the fact that these vendees bought the questioned property at less than its actual fair market value at the time of the respective sales. First, Saw allegedly bought the property from Cabrera at P4 million when the same property, at the time, could have been sold at P12,115,000.00. Likewise, the sale between Saw and Chua was merely simulated considering that the purchase price was only P4,500,000.00 when the property could have been valued at more than P12 million. The last buyer, Luminlun, could not be considered a purchaser in good faith, according to petitioner, because at the time the sale between Chua and Luminlun was executed on April 3, 1992, the parties were already charged with knowledge of the March 18, 1991 Decision of the Supreme Court as well as the August 12, 1991 temporary restraining order issued by the High Tribunal.
I do not agree.
A purchaser in good faith is one who buys property of another, without notice that some other person has a right to, or interest in, such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property. Good faith consists in an honest intention to abstain from taking any unconscientious advantage of another.30
Measured by this yardstick, Saw, Chua and Luminlun are purchasers in good faith and for value. They bought the subject property from their respective sellers free from any lien or encumbrance or any notice of adverse claim annotated thereto. They were presented with clean titles already in the name of their sellers, and there were no indications from the records that, at the time of these sales, the property was in possession of a party or parties other than their respective sellers. In other words, there were no circumstances in these sales sufficient to put the buyers on inquiry as to the real status of their sellers’ titles. From all indications, the titles presented to them were not defective titles. Thus, they have every right to rely on the correctness of these aforesaid certificates of title. If a person purchases a piece of land on the assurance that the seller’s title thereto is valid, she should not run the risk of being told later that her acquisition was ineffectual after all. If we were to void a sale of property covered by a clean and unencumbered torrens title, public confidence in the Torrens System would be eroded and land transactions would have to be attended by complicated and inclusive investigations and uncertain proof of ownership. The consequence would be that land conflicts could proliferate and become more abrasive, if not violent.31
As to the averment of the petitioner that the subsequent transferees of the property from Cabrera are not good faith buyers due to the low purchase prices at which they acquired the property, suffice it to state that this fact alone is not sufficient to strip them of their being good faith purchasers for value. Good faith, or the lack of it, is in its last analysis a question of intention; but in ascertaining the intention by which one is actuated on a given occasion, we are necessarily controlled by the evidence as to the conduct and outward acts by which alone the inward motive may, with safety, be determined. Truly, good faith is not visible, tangible fact that can be seen or touched, but rather a state or condition of mind which can only be judged by actual or fancied tokens or signs.32 Otherwise stated, good faith is the opposite of fraud and it refers to the state of mind which is manifested by the acts of the individual concerned.33 Here, other than the fact that, to the mind of petitioner, the prices at which the property was sold in a series of transactions were allegedly less than its fair market value, there certainly is no direct proof to establish that these buyers were in cabal with their sellers to deliberately defraud the petitioner. Neither is there any proof to show that these purchasers knew the petitioner beforehand nor of the litigation the questioned property is involved in at the time they bought the property. Indeed, they merely relied on the certificates of title in the name if their respective sellers without any knowledge of facts and circumstances which should have put them such investigation, as might be necessary, to acquaint them with any possible defects in the titles of their vendors, which were clean titles to begin with.
Of special significance to be declared an innocent purchase for value, however, is Janet Chong Luminlun, the last transferee of the property who is now in possession of the realty with Transfer Certificate of Title No. 99143 registered in her name.
It is true that when Luminlun bought the property from Chua on November 18, 1993, our March 18, 1991 Decision ordering reconveyance of the property to Legarda already came out, followed by the issuance of our August 12, 1991 temporary restraining order. While, even considering arguendo that, Chua may have already known these developments even before she transacted the sale of the property to Luminlun, there is no iota of evidence that Luminlun, herself, was aware of these. In fact, petitioner Legarda in her Omnibus Motion, informing us of the Chua-Luminlun transaction, does not even make any asseveration to this effect. What is clear from the records is that the time the Deed of Absolute Sale was signed between the Chua spouses and Luminlun, the subject property was already titled under the name o the seller Lily Sy Chua. Whether or not had any malicious motive in effecting the transfer is of no moment. What is material is that the buyer Luminlun was presented with a clean title in the name of her seller, unencumbered and without any notice of adverse claim from any third party nor of any lis pendens notice inscribed thereto. There is likewise no indication that the seller Chua was not the one in possession of the property. Clearly, Luminlun had every right to rely on the transfer certificate of title already in the name of her seller. She was obliged to go beyond the title that was shown to her considering that there were no circumstances surrounding the sale sufficient to put her on inquiry. If the rule were otherwise, the efficacy and conclusive of Torrens Certificate of Titles would be futile and nugatory.
Insofar, as Mr. Cabrera is concerned, however, his good faith or bad faith in buying the property at the auction sale is no longer material considering that the judgment by default upon which the auction sale was based is declared null and void by our March 18, 1991 Decision, for being rendered without due process of law. Thus, the title issued in the name of Cabrera has no more leg to stand on, and must, of necessity, be likewise struck down.
What is the basis of this nullity?
The gross negligence of the late Dean Antonio Coronel in handling, nay mishandling, petitioner’s case, docketed as Civil Case No. Q-43811 in the court a quo, is actually beyond question as this Court had declared in a per curiam Resolution dated June 10, 1992,34 where Coronel was meted a six (6)-month suspension from the practice of law, which suspension order was renewed for another six (6) months in another Resolution dated March 31, 1993.35 In fact, the majority even concedes this.36 Oddly though, while the majority acknowledges Coronel’s gross negligence, it refuses to grant Legarda any relief arguing that as “between two innocent parties (referring to Legarda on the one hand and Cathay and Cabrera on the other hand), the one who made it possible for the wrong to be done should be the one to bear the resulting loss (referring to Legarda).” According to the majority, since it was Legarda who hired the services of the lawyer who practically abandoned her case, then it is just logically that she suffer the loss and not Cathay nor Cabrera.
With hue regard to the majority, this is not just a case of she who made possible the loss should suffer its consequences. It is true that the basic general rule that the negligence of counsel binds the client. Hence, if counsel commits a mistake in the course of litigation, thereby resulting in his losing the case, his client must perforce suffer the consequences of the mistake. The reason for the rule is to avoid the act of every losing party to raise the negligence of his or her counsel to escape an adverse decision of the court to the detriment of our justice system as no party will ever accept a losing verdict. This general rule, pertains only to simple negligence of the lawyer. Where the negligence of counsel, on the other hand, is one that is so gross, palpable, pervasive, reckless and inexcusable, such as in this case, this type of negligence does not bind the client, since in such a case, the client is effectively deprived of his or her day in court. However, the majority opinion, in effect, would remove the distinction between simple negligence and gross negligence of counsel insofar as they bind the client. It cannot overemphasized that any judgment rendered where there was gross negligence on the part of counsel of one of the parties is one rendered without due process of law and, thus, void.37
But what is the effect of a void judgment? Gomez v. Concepcion38 and Heirs of Mayor Nemencio Galvez v. Court of Appeals, et al.39 provide the answer:
"xxx A void judgment is in legal effect no judgment. By it no rights are divested. From it no rights can be obtained. Being worthless in itself, all proceedings founded upon it are equally worthless. It neither binds nor bars any one, All acts performed under it all claims flowing out of it are void. The parties attempting to enforce it may be responsible as trespassers. The purchaser at a sale by virtue of its authority finds himself without title and without redress."
Thus, the judgment by default in Civil Case No. Q-43811 being void, all acts and incidents arising therefrom must necessarily be void since nothing can arise from a void judgment. Inevitably, the writ of execution, the levy in the property of Legarda to satisfy the void judgment award, the subsequent public auction sale, the Deed of Sale issued in favor of the highest bidder Cabrera, as well as the title issued in the name of Cabrera ought to be struck down for they all arose from the judgment in Civil Case No. Q-43811, which is void judgment. Needless to state, these incidents have no leg to stand on. Reconveyance, therefore, of the Leagarda property by Cabrera, the purchaser at the auction sale, would have been in order had the property not been transferred to innocent purchasers for value beginning with Nancy Saw. Consequently, the only thing that Cabrera can return now to Legarda is the money he received from the first innocent purchaser of the property worth P4 million with legal interest to be counted from the time the judgment by default of the respondent trial court was rendered on March 25, 1985. Respondent New Cathay House, Inc., Cabrera’s Corporation, must return to him the auction price in the amount of P376,500 with legal interest bidded by him at the void auction sale.
WHEREFORE, I vote to partly grant the Motion for Reconsideration. Our March 18, 1991 Decision (Gancayco Decision) is hereby MODIFIED insofar as we ordered the reconveyance of the property back to Legarda. In lieu thereof, Mr. Roberto V. Cabrera, Jr. is hereby ordered to return to petitioner Victoria Legarda the amount of money he received from Nancy Saw worth Four Million Pesos (P4,000,000.00) plus legal interest counted from the time the judgment by default of the respondent trial court was rendered on March 25, 1985. Respondent New Cathay House, Inc., for its part, is hereby ordered to return to Cabrera the amount of P376,500.00 with legal interest paid by him at the auction sale as the highest bidder.
SO ORDERED.
Footnotes
1 Rollo, pp. 32-34.
2 Annex “B”; Rollo, pp. 41-42.
3 Decision, p.3; Rollo, p. 46.
4 Annex “F”; Rollo. Pp. 49-50.
5 Rollo, pp. 281-283.
6 Amended Petition, p. 9; Rollo, p. 77.
7 Amended Petition, pp. 22-23; Rollo, pp. 90-91.
8 Decision , pp. 6-7; Rollo, pp. 139-140.
9 Rollo, p. 169
10 Unanimously concurred in by Justices Andres R. Narvasa [now Chief Justice], Isagani A. Cruz, Carolina C. Griño-Aquino, and Leo D. Medialdea.
11 Decision, pp. 10-13; Rollo pp. 207-210.
12 Decision, p. 14; Rollo, p. 211.
13 Annex “A-1”; Rollo, p. 268.
14 Rollo, pp. 261-265.
15 Rollo, p. 235.
16 Annex “A-g”; Rollo, p. 268 [back page].
17 Rollo, pp. 410-417.
18 Annex “B”; Rollo, pp. 577-579.
19 Rollo, pp. 568-575.
20 Omnibus Motion, pp. 7-8; Rollo, pp. 574-574.
21 Annex “A”; Rollo, pp. 267-268.
22 Annex “B”; Rollo, pp. 269-270.
23 Annex “G”; Rollo, pp. 349-350.
24 Annex “E”; Rollo, p. 732.
25 Reyes and Nadres v. Borbon and Director of Lands, 50 Phil. 791, 796 [ 1927 ]; Ching v Court Appeals, 181 SCRA 9, 18 [ 1990 ], citing National Grains Authority v. IAC, 157 SCRA 388 [ 1988 ].
26 Tenio-Obsequio v. Court of Appeals, 230 SCRA 550, 557 [ 1994 ].
27 Pino v. Court of Appeals, 198 SCRA 434, 445 [ 1991 ], citing Duran v. Intermediate Appellate Court, 138 SCRA 489, 494-495; Lopez v. Court of Appeals, 169 SCRA 271 [ 1989 ]; Director of Lands v. Abache, 73 Phil. 606 [ 1942 ].
28 Agricultural and Home Extension Development Group v. Court of Appeals, 213 SCRA 563, 566 [ 1992 ].
29 Tirado v. Sevilla, 188 SCRA 321-326 [ 1990 ].
30 Fule v. De Legare, 7 SCRA 351, 356 [ 1963 ], citing Cui and Joven v. Henson, 51 Phil. 606.
31 Tenio-Obsequio, supra, citing Republic y. Umali, 171 SCRA 647 [ 1989 ].
32 Leung Yee v. F.L. Strong Machinery Co. and Williamson, 37 Phil. 644, 651-652 [ 1918 ], citing Wilder vs. Gilman, 55 Vt., 504, 505; Cf. Cardenas vs. Miller, 108 Cal., 250; Breaux-Renoudet, Cypress Lumber Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromley, 119 Mich., 8, 10, 17.
33 Duran, supra.
34 Rollo, p. 403.
35 Rollo, pp. 512-513.
36 decision, p. 10
37 See Escudero v. Dulay, 158 SCRA 69 [ 1988 ].
38 47 Phil. 717, 722-723 [ 1925 ].
39 G.R. No. 119193, 29 March 1996, p. 18.
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