G.R. No. 50151 . March 21, 1984.
CO CHUAN SENG, GEORGE TAN, TEODORA TAN ONG, ROSA TAN, ROSITA TAN and MAURO UMALI TAN, Petitioners, vs. HON. COURT OF APPEALS, HON. CELESTINO C. JUAN, in his capacity as Presiding Judge of Branch X of the CFI of Manila; and SPOUSES MARTIN DY and D. ANNIE TAN, Respondents.

FACTS

The property in question, originally mortgaged to China Banking Corporation, was foreclosed and later repurchased by the heirs of the mortgagor. Private respondent D. Annie Tan claimed she solely financed the repurchase, leading her to file a separate action for reconveyance (Civil Case No. 97656) against her siblings, the petitioner Tans, to assert sole ownership. While that case was pending, Annie Tan filed an ejectment case (Civil Case No. 102043) against lessee Co Chuan Seng. In that ejectment suit, the parties entered a compromise agreeing that accrued rentals deposited in court would be disposed of in favor of whoever prevails in the reconveyance case as the rightful owner(s).
The trial court in the ejectment case rendered a judgment ordering, among other things, the Clerk of Court to immediately release the deposited rentals to Annie Tan. Without seeking reconsideration, petitioner Co filed a petition for certiorari and prohibition with the Court of Appeals to enjoin this order. The appellate court dismissed the petition, ruling that certiorari was improper as appeal was the adequate remedy. Meanwhile, a decision was rendered in the main reconveyance case, dismissing Annie Tan’s claim for sole ownership but ordering her siblings to reimburse her for their shares of the repurchase price, indicating co-ownership.

ISSUE

Whether the Court of Appeals erred in dismissing the petition for certiorari, thereby upholding the trial court’s order for the immediate release of the deposited rentals to Annie Tan despite the pending resolution of ownership in the reconveyance case.

RULING

The Supreme Court reversed the Court of Appeals and granted the petition. The legal logic centers on the propriety of certiorari and the substantive error in the trial court’s order. While the general rule is that certiorari cannot substitute for a lost appeal, an exception exists when a patent and gross error is committed, equivalent to acting without or in excess of jurisdiction. Here, the trial judge’s order directing the immediate release of the deposits to Annie Tan constituted grave abuse of discretion.
The compromise agreement in the ejectment case explicitly stipulated that the deposited rentals were to be disposed of in favor of the prevailing party in the reconveyance case. This agreement created a condition precedent, making the release contingent upon the final determination of ownership. By ordering the immediate release while the reconveyance case was still pending (and later appealed), the trial judge disregarded this binding stipulation and prejudged the issue of ownership, which was the very subject of another pending litigation. This act was so arbitrary as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law. Therefore, certiorari was the proper remedy to correct this jurisdictional error. The Supreme Court set aside the appellate decision and permanently enjoined the enforcement of the release order, directing that the rentals be released only to the party/parties prevailing in the final outcome of the reconveyance case.