Jurisdiction over the subject matter, distinguished from exercise of jurisdiction

G.R. No. 163602 Sps. Manila v. Sps. Manzo

Villarama, J.

Ejectment case. MeTC ordered the respondents (lessees) to vacate the subject property. On appeal, RTC reversed the
MeTC and ordered petitioners (lessors) to execute an absolute deed of sale to respondents.
CA annulled the judgment of the RTC because it didnt have the jurisdiction to order the sale (it being only an ejectment
case). SC reversed the CA, ruling that the RTC still had jurisdiction over the subject matter, and its error was limited to an
error in the exercise of its jurisdiction.

DOCTRINE
Jurisdiction is not the same as the exercise of jurisdiction.
1. Jurisdiction is the authority to decide a cause.
2. Exercise of jurisdiction refers to the decision actually rendered.
The ground for annulling a decision is absence of jurisdiction (#1). In such case, the court without jurisdiction should not
take cognizance of a petition at all because the law does not vest it with jurisdiction over the subject matter.
In this case, the RTC had jurisdiction over the subject matter as the MTC decision appealed to it fell under its appellate
jurisdiction. However, its exercise of such jurisdiction (#2) was erroneous because it decided the issue of ownership in an
ejectment suit.

IMPORTANT PEOPLE
Sps. Manzo lessors; petitioners in the ejectment case
Sps. Manila lessees; respondents in the ejectment case

FACTS
1. 1982: Petitioners leased 2 parcels of land to respondents in Las Pias City, for a period of 10 years, with monthly
rentals of P2000 for the first 2 years, and an increase of 10% for every 2 years thereafter.
The respondents were also given the option to buy the property within 2 years from execution of the contract
of lease, at fair market value of P150,000.00.
2. 1992: The contract of lease expired, but the respondents remained in possession of the property despite formal
demand letters from petitioners to vacate it and pay the rent.
Respondents averred in a letter-reply to petitioners that no rent is due because they automatically became the
owners of the property from the time they told petitioners they would exercise their option to buy it.
The parties tried to bring the matter to the Barangay for conciliation, but failed to reach a compromise.
3. Petitioners filed an action for ejectment before MeTC Las Pias against respondents. It ruled for petitioners,
ordering respondents to vacate the property upon their payment of rent and petitioners to pay of the value of a
building that respondents had already constructed on the property.
4. Respondents appealed to RTC Makati. It reversed the MeTC, finding that respondents tried to exercise their option
to buy the property but petitioners refused to honor the same.
RTC ordered petitioners to execute a deed of absolute sale in favor of respondents upon full payment
of the purchase price.
5. Petitioners filed an MR, which was denied for being filed beyond the 15-day reglementary period.
6. Petitioners then filed a petition for annulment of the RTC decision before the CA.
They argued that the RTC should not have ordered them to sell the property to respondents, because the
RTCs appellate jurisdiction is limited to determining who is entitled to the possession of the property (the
original case being an action for ejectment).
According to petitioners, the RTC may only order the sale of real property in a case for specific performance
falling under its original exclusive jurisdiction, and not on appeal from the MeTC.
They also averred that the petition for annulment is the only remedy available to them, the ordinary remedies
no longer being available through no fault of their own.
7. CA granted the petition, reinstating the MeTC decision.
It ruled that the RTC materially changed the cause of action of petitioners by deciding on the question of
ownership, even though the case only involved the issue of prior physical possession as an ejectment suit.
Thus, RTC had acted without jurisdiction.
8. Respondents now appeal to the SC.

1
ISSUE with HOLDING
1. W/N the CA committed GAoD in annulling the RTC judgment for the latters lack of jurisdiction Yes.
Sec. 2, Rule 47, ROC: A petition for annulment of judgments or final orders by an RTC in a civil action may
only be availed of under two grounds extrinsic fraud and lack of jurisdiction.
Lack of jurisdiction as a ground for annulment of judgment refers to either lack of jurisdiction over the person
of the defending party or over the subject matter of the claim.
- In a petition for annulment of judgment based on lack of jurisdiction, petitioner must show not merely
an abuse of jurisdictional discretion, but an absolute lack of jurisdiction.
- Lack of jurisdiction means absence of or no jurisdiction, that is, the court should not have
taken cognizance of the petition because the law does not vest it with jurisdiction over the
subject matter.
The RTC is clearly vested with appellate jurisdiction over ejectment cases decided by the MeTC, MTC, or
MCTC.
- However, it had no authority to delve with finality into the issue of ownership, since ejectment cases
only concern the issue of physical possession of the property. Thus, ordering petitioners to sell the
property to the respondents is outside the scope
This error is only in the exercise of jurisdiction by the RTC, and does not pertain to lack of jurisdiction
over the subject matter. (see Doctrine for the difference between jurisdiction and the exercise of jurisdiction).
- Petitioners must have shown that the RTC did not have the authority to decide the ejectment case on
appeal from the MeTC. This they failed to do.

2. W/N petitioners were barred from availing of the remedy of annulment of RTC judgment in the CA Yes.
A petition for annulment of judgments or final orders of an RTC can only be availed of where the ordinary
remedies of new trial, appeal, petition for relief, and others are no longer available through no fault of the
petitioner. (See Sec. 2, Rule 47 in issue #1)
Petitioners claimed that their failure to avail of the ordinary remedies was because their counsel assured he
was on top of the situation, and would even get angry if repeatedly asked about the case. Their counsel was
also hospitalized for long periods of time, and died soon after. Thus, they were only able to file the petition for
annulment of judgment more than 3 years after the RTC decision became final and executory (with a new
counsel).
- SC is not persuaded. The petitioners should have followed up personally with the RTC, even during
the time their counsel was sick.
- Negligence of the counsel is binding on their client. At the same time, petitioners should have looked
for another lawyer once it was clear that their counsel was going to be hospitalized for long periods of
time.
Sec. 3, Rule 47: If petition for annulment is based on lack of jurisdiction, it must be brought before it is barred
by laches or estoppel.
- The principle of laches ordains that the failure or neglect, for an unreasonable and unexplained length
of time, to do that which by exercising due diligence could or should have been done earlier
negligence or omission to assert a right within a reasonable time, warrants a presumption that the
party entitled to assert it has abandoned it or declined to assert it.
Petitioners are now barred by laches. Having lost these remedies due to their lethargy for three and a half
years, they cannot now be permitted to assail anew the said ruling rendered by the RTC in the exercise of its
appellate jurisdiction.
- Their inaction and neglect to pursue available remedies to set aside the RTC decision for such length
of time, without any acceptable explanation other than the word of a former counsel who already
passed away, constitutes unreasonable delay warranting the presumption that they have declined to
assert their right over the leased premises

DISPOSITIVE PORTION
CA decision reversed and set aside; petition for annulment filed by petitioners is dismissed.

DIGESTER: Cristelle Elaine Collera