The Supreme Court ruled that a Regional Trial Court (RTC) can exercise its equity jurisdiction independently of its appellate jurisdiction in an ejectment case. This means the RTC has the authority to levy property to satisfy amounts due under lease contracts, even after the ejectment case has been dismissed, ensuring fairness and preventing unjust enrichment.

From Ejectment Dismissal to Property Levy: When Does the RTC’s Authority End?

Regulus Development, Inc. owned an apartment complex, and Antonio dela Cruz leased two units. After a dispute, Regulus filed an ejectment case against Dela Cruz, which was initially decided in Regulus’s favor by the Metropolitan Trial Court (MTC). Dela Cruz appealed to the Regional Trial Court (RTC), but while the appeal was pending, he consigned the monthly rentals to the RTC due to Regulus’s refusal to accept them. The RTC affirmed the MTC’s decision. However, the Court of Appeals (CA) reversed the lower courts’ decisions and dismissed the ejectment case, which became final and executory.

Following the dismissal, Regulus sought to withdraw the consigned rentals from the RTC. The RTC granted this motion, stating that despite the dismissal, Regulus was entitled to the rentals based on the lease contracts and principles of justice and equity. Dela Cruz’s motion for reconsideration was denied, and the RTC issued a writ of execution to enforce its order. Dela Cruz then challenged the RTC’s orders before the CA, arguing that the RTC had no jurisdiction to grant Regulus’s motion to withdraw funds. The CA dismissed Dela Cruz’s petition, and this decision was affirmed by the Supreme Court.

After these legal battles, Regulus sought to execute against the supersedeas bond posted by Dela Cruz and to withdraw the lease payments deposited. Claiming these amounts were insufficient, Regulus requested the RTC to levy Dela Cruz’s property to satisfy the outstanding judgment. The RTC granted this motion, leading to a public auction where Regulus was the highest bidder. Dela Cruz redeemed the property, but then challenged the RTC’s order to levy his property before the CA, which ruled that the RTC lacked jurisdiction to order the levy because the ejectment case had already been dismissed. Regulus then elevated the case to the Supreme Court, questioning the CA’s decision.

The Supreme Court addressed several key issues. First, it tackled the procedural question of whether the lack of a notarial seal on the Verification and Certification against Forum Shopping was fatal to Dela Cruz’s petition before the CA. The Court held that while the absence of a notarial seal was a defect, it did not automatically render the pleading fatally defective. The Court emphasized that substantial compliance with procedural rules is often sufficient, especially when the essential requirements of the verification and certification have been met.

Addressing the issue of mootness, the Supreme Court clarified that the question of jurisdiction prevented the petition from becoming moot and academic. Even though Dela Cruz had redeemed the property, the underlying question of whether the RTC had the authority to levy the property remained a justiciable controversy. Jurisdiction, the Court emphasized, is conferred by law and cannot be waived by the parties. The Court also noted that jurisdictional issues can be raised at any stage of the proceedings, even if not initially raised by the parties.

The Supreme Court then delved into the critical distinction between the RTC’s appellate jurisdiction and its equity jurisdiction. Appellate jurisdiction is conferred by law and is invoked when a party appeals a decision from a lower court. Equity jurisdiction, on the other hand, allows a court to provide complete justice when the strict application of the law would lead to an unjust outcome. The Court emphasized that the RTC’s orders allowing the withdrawal of deposited funds were issued pursuant to its equity jurisdiction, separate and distinct from its appellate jurisdiction in the ejectment case.

The Court referenced previous decisions, clarifying that the RTC’s equity jurisdiction was properly invoked to prevent unjust enrichment and ensure restitution. The dismissal of the ejectment case meant that the RTC could no longer act under its appellate jurisdiction, as there was no judgment to execute in that context. However, the RTC’s inherent power to do justice allowed it to address the issue of unpaid rentals, based on the existing lease contracts and the principles of equity.

Building on this principle, the Supreme Court held that the levy of Dela Cruz’s property was ordered by the RTC in the exercise of its equity jurisdiction, independent of the dismissed ejectment case. The Court scrutinized the RTC’s order directing the levy, noting that it was explicitly based on the need to satisfy the amounts due under the lease contracts, not on the outcome of the ejectment case itself. This distinction was crucial in understanding the scope of the RTC’s authority.

Moreover, the Supreme Court pointed to the initial writ of execution issued by the RTC, which authorized the levy on Dela Cruz’s real property if sufficient personal property could not be found. The subsequent order to levy the property was, therefore, merely an enforcement of this original writ, which was rooted in the RTC’s exercise of its equity jurisdiction. This analysis clarified that the critical question was which court had jurisdiction to order the execution of the RTC’s orders issued under its equity jurisdiction.

The Supreme Court then addressed the issue of which court had jurisdiction to execute the RTC’s orders. Citing Section 1, Rule 39 of the Rules of Court, the Court stated that execution should be applied for in the court of origin. In this case, the court of origin with respect to the RTC’s orders was the RTC itself, as it was the court that issued those orders. Therefore, the Supreme Court concluded that the RTC had the authority to order the levy of Dela Cruz’s property to enforce its orders issued under its equity jurisdiction.

This approach contrasts with a situation where the execution is based on the judgment of the MTC in the ejectment case. In that scenario, the MTC would be the proper court to order execution. However, because the RTC’s actions were based on its equity jurisdiction, independently exercised after the ejectment case was dismissed, the RTC retained the authority to enforce its own orders.

FAQs

What was the central legal question in this case?	The primary issue was whether the Regional Trial Court (RTC) had the authority to levy the respondent’s property to satisfy rental obligations after the ejectment case had been dismissed by the Court of Appeals.
What is equity jurisdiction?	Equity jurisdiction allows a court to provide complete justice when the strict application of the law would lead to an unjust outcome, preventing unjust enrichment and ensuring restitution.
How does equity jurisdiction differ from appellate jurisdiction?	Appellate jurisdiction is the power of a court to review and revise the judgment of a lower court. Equity jurisdiction is a court’s power to address fairness issues not fully resolved by law.
Why did the CA initially rule against the RTC?	The Court of Appeals (CA) initially ruled that the RTC lacked jurisdiction because the ejectment case had been dismissed, and the matter of execution should have been handled by the MTC.
What did the Supreme Court ultimately decide?	The Supreme Court reversed the CA’s decision, holding that the RTC was exercising its equity jurisdiction, separate from its appellate jurisdiction, to enforce the rental obligations.
What was the significance of the RTC’s initial writ of execution?	The initial writ of execution authorized the levy on the respondent’s property if personal property was insufficient, reinforcing the RTC’s intent to enforce rental obligations.
What is the court of origin in this context?	The court of origin is the court that issued the orders in question. In this case, it was the RTC, as it issued the orders pertaining to the withdrawal of funds and subsequent levy.
Why wasn’t the case considered moot after the property was redeemed?	The issue of jurisdiction prevented the petition from becoming moot, as the underlying question of the RTC’s authority remained a justiciable controversy.
What was the impact of the missing notarial seal?	The Supreme Court ruled that the missing notarial seal was a minor defect that did not invalidate the Verification and Certification against Forum Shopping, as there was substantial compliance.

In conclusion, the Supreme Court’s decision clarifies the scope of an RTC’s authority to exercise its equity jurisdiction independently of its appellate jurisdiction. This ruling ensures that courts can address issues of fairness and prevent unjust enrichment, even after the initial case has been resolved. The power to levy property to satisfy outstanding obligations is a critical tool in upholding justice and equity in property disputes.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Regulus Development, Inc. vs. Antonio Dela Cruz, G.R. No. 198172, January 25, 2016