CONGRESSIONAL COMMERCIAL CORPORATION AND BIENVENIDO LIM, PETITIONERS VS. COURT OF APPEALS, COURT OF FIRST INSTANCE OF RIZAL

Congressional Commercial Corporation versus Court of Appeals

The Case

This is a petition brought by Congressional Commercial Corporation and its president, Bienvenido Lim, against the Court of Appeals and the Court of First Instance of Rizal, arising from a lease of two adjoining lots along Epifanio de los Santos Avenue in Cubao, Quezon City, on which the lessee built and operated a movie house. The lessors, the spouses Higino Francisco and Norberta Gana, sued for an upward adjustment of the monthly rental under a clause tied to the price of admission tickets. The case matters because it fixes the procedural rules on finality of judgment, on the inherent power of a court to clarify its own decision after it has become final, and on estoppel by voluntary execution, and because it treats inflation as a fact of common knowledge rather than one that only the Central Bank may officially declare.

Procedural History

The Francisco spouses filed a petition for declaratory relief before the Court of First Instance of Rizal. At the pre-trial, only the Franciscos appeared, and on their motion the trial court declared the lessee and Lim as in default and allowed the Franciscos to present evidence ex parte. The trial court rendered judgment in favor of the Franciscos, ordering adjusted monthly rentals. The lessee and Lim filed a verified petition for relief from the order of default and from the decision, which the trial court denied. They then appealed to the Court of Appeals, which affirmed the trial court with a modification dispensing with the observance of paragraph 3 of the lease contract, and clarified that only the lessee corporation, and not its president, could be held liable. The Court of Appeals later denied the lessee's motions for extension of time to file a motion for reconsideration, declared its decision final and executory, and ordered entry of judgment. When a dispute arose over the computation of rentals during execution, the Court of Appeals issued a resolution clarifying the computation, and later denied the lessee's motion for reconsideration of that clarification. The lessee and Lim then came to the Supreme Court through a petition styled both as an appeal by certiorari and as an original petition for certiorari, and the Supreme Court issued a temporary restraining order enjoining execution.

Facts

The spouses Higino Francisco and Norberta Gana owned two adjoining lots in Cubao, Quezon City. On October 20, 1970, they entered into a lease contract over those lots with Congressional Commercial Corporation, through its president Bienvenido Lim. The lease was for twenty years beginning August 31, 1971, at a staggered monthly rental: 2,300 pesos for the first to the fifth year, 2,800 pesos for the sixth to the tenth year, 3,300 pesos for the eleventh to the fifteenth year, and 3,500 pesos for the sixteenth to the twentieth year. Under paragraph 6, the parties agreed that in case of any official inflation or deflation which the Central Bank of the Philippines might in the future declare regarding the exchange value of the Philippine peso to the United States dollar, the monthly rental would be based on the changes in the entrance price per ticket to the lessee's movie house, with the present orchestra entrance price fixed at 1.75 pesos per individual. The lessee then constructed and operated the Cubao Cinema on the lots.

On January 9, 1973, Higino Francisco wrote to Bienvenido Lim requesting an upward adjustment of the rentals, noting that the peso had gone down in value against the dollar, the yen, and the pound sterling, and that the lessee had from the beginning been charging 2.00 pesos per orchestra seat rather than the agreed 1.75 pesos. He asked for an adjusted monthly rental of 2,950 pesos effective January 1973. The lessee refused, on the ground that the Central Bank had not officially declared inflation or deflation. Francisco then wrote the Director of the Central Bank's Legal Department for an opinion, and the Director replied that under Central Bank Circular Number 289 the free market rate was not administratively fixed but determined through transactions in the foreign exchange market on a day-to-day basis, and that the official exchange rate of the peso to the dollar in October 1970 was 3.90 pesos to one dollar as fixed by Executive Order Number 195.

On September 20, 1976, the Francisco spouses filed the petition for declaratory relief, alleging that orchestra tickets had been increased to 2.25 pesos and by 1975 to 3.00 pesos, and that the rental remained pegged at a low 2,800 pesos a month. They prayed for adjusted rentals proportionate to the increases in admission prices. The lessee and Lim answered that the contract reflected the true intention of the parties and that no adjustment was due absent an official declaration by the Central Bank. Because they failed to appear at pre-trial, they were declared in default, and judgment was rendered against them.

Issues

• Whether or not the decision of the Court of Appeals had already become final and executory when the petitioners filed their petition in the Supreme Court.
• Whether or not the Court of Appeals, by taking cognizance of the motion for clarification after entry of judgment, revived the case or merely exercised its inherent power to clarify its own decision.
• Whether or not the petitioners are estopped from appealing the decision by reason of their voluntary consignment of a sum in satisfaction of the judgment.
• Whether or not the remedy of certiorari is available to the petitioners where the remedy of appeal had been lost.

Applicable Provisions

Section 5 of Rule 18 of the Rules of Court, cited by the Court of Appeals in limiting the judgment against a party in default, provides:

A judgment entered against a party in default shall not exceed the amount or be different in kind from that prayed for.

This provision bears on the case because it bounded the rental adjustment that could be awarded against the defaulted lessee to what the Franciscos had prayed for.

Ruling

On the first issue, the Court held that the decision of the Court of Appeals had long become final and executory. The decision was promulgated on December 8, 1980; after the petitioners failed to file their motion for reconsideration despite two extensions granted, the decision was declared final and executory on February 20, 1981, entry of judgment was made the same day, and the records were remanded to the lower court on February 23, 1981. When the petitioners filed their appeal on December 28, 1981, the decision sought to be reviewed had long become final.

On the second issue, the Court held that by taking cognizance of the motion for clarification, the Court of Appeals did not revive the case. It merely exercised its inherent power to clarify its own decision, in the same manner that it may order an accounting after the complete adjudication and determination of the rights and obligations of the parties, so long as the order is only incidental to its judgment and does not affect its final character.

On the third issue, the Court held that under the principle of estoppel the petitioners were precluded from appealing. Estoppel set in on November 26, 1981, when they consigned to the lower court the amount of 41,958 pesos payable to Higino Francisco in satisfaction of the judgment. By that act they recognized the private respondents' entitlement to an increase in rentals, subject only to the reservation that the increase should have been based on the actual admission price to the orchestra section of their own movie house. The Court stated the rule thus:

A party who voluntarily executes, either partially or in toto a judgment rendered for or against him, or who voluntarily acquiesces in or ratifies, either partially or in toto, the execution of that judgment is not permitted to appeal from it.

On the fourth issue, the Court held that the remedy of certiorari was not available, because it does not lie where the remedy of appeal has been lost and cannot take the place of an appeal. Even if the petition were treated as directed against the resolution denying reconsideration, the result was the same, since the new matters raised were defenses that should have been raised earlier, and the denial was neither erroneous nor tainted with grave abuse of discretion.

Doctrine

A decision that has become final and executory may no longer be appealed; the losing party's remedy is lost, and certiorari cannot substitute for the appeal that was lost through the party's own failure. A court retains the inherent power to clarify its own decision even after judgment has become final, provided the clarification is merely incidental to the judgment and does not affect its final character. A party who voluntarily executes or acquiesces in a judgment, in whole or in part, is estopped from appealing from it. And a judgment against a party in default may not exceed the amount or be different in kind from that prayed for, as Section 5 of Rule 18 provides.

Disposition

The petition was denied, the temporary restraining order was lifted, and the decisions and resolutions of the courts below were upheld, with the petitioners bearing the consequences of their own failure to timely contest the claim.

Remember This

Memorize the rule that a party who voluntarily executes a judgment, even partially, is estopped from appealing it, and that a court may still clarify a final judgment without reviving the case. Examiners use this case on finality of judgment, on certiorari as no substitute for a lost appeal, and on estoppel by voluntary execution.