Metropolitan Bank V Alejo
Metropolitan Bank V Alejo
Metropolitan Bank V Alejo
* THIRD DIVISION.
813
Same; Actions; An action for quieting of title is filed only when there is
a cloud on title to real property or any interest therein.Equally
important, an action for quieting of title is filed only when there is a
cloud on title to real property or any interest therein. As defined, a
cloud on title is a semblance of title which appears in some legal form
but which is in fact unfounded. In this case, the subject judgment
cannot be considered as a cloud on petitioners title or interest over
the real property covered by TCT No. V-41319, which does not even
have a semblance of being a title.
Same; Same; Parties; The absence of indispensable parties renders all
subsequent actuations of the court null and void.It is clear that the
presence of indispensable parties is necessary to vest the court with
jurisdiction, which is the authority to hear and determine a cause, the
right to act in a case. We stress that the absence of indispensable
parties renders all subsequent actuations of the court null and void,
because of that courts want of authority to act, not only as to the
absent parties but even as to those present.
Civil Law; Property; Mortgages; A real mortgage is a real right and a
real property by itself.Although a mortgage affects the land itself and
not merely the TCT covering it, the cancellation of the TCT and the
mortgage annotation exposed petitioner to real prejudice, because its
rights over the mortgaged property would no longer be known and
respected by third parties. Necessarily, therefore, the nullification of
TCT No. V-41319 adversely affected its property rights, considering
that a real mortgage is a real right and a real property by itself.
PETITION for review on certiorari of a decision of Court of Appeals.
The facts are stated in the opinion of the Court.
Santiago, Corpuz & Ejercito for petitioner.
Cea & Associates Law Office for private respondents.
PANGANIBAN, J.:
814
SUPREME COURT REPORTS ANNOTATED
Metropolitan Bank & Trust Company vs. Alejo
judgment, because the non-joinder of the mortgagee deprived the
court of jurisdiction to pass upon the controversy.
The Case
Before this Court is a Petition for Review on Certiorari1 under Rule 45
of the Rules of Court, assailing the March 25, 1999 Resolution of the
Court of Appeals (CA) in CA-GR SP No. 50638, which states in full:
This resolves the petition for annulment of judgment based on
external (sic) fraud filed by petitioner Metropolitan Bank and Trust
Company seeking to annul the Decision dated August 12, 1998
rendered by respondent judge, Honorable Flora T. Alejo, Presiding
Judge of the Regional Trial Court, Branch 172, Valenzuela, Metro Manila,
in Civil Case No. 4930-V-96 entitled Sy Tan Se, represented by his
attorney-in-fact Sian Suat Ngo v. Raul Acampado, et al.
This Court has observed that petitioner knew of the questioned
Decision sometime [i]n October 1998 (Petition, Rollo, p. 3). This being
the case, petitioner should have first sought recourse by way of
petition for relief from judgment under Rule 38 of the 1997 Rules of
Civil Procedure. Accordingly, the petition for annulment of judgment is
DENIED DUE COURSE and DISMISSED outright for being insufficient in
form and substance (Section 2, Rule 47, 1997 Rules of Civil
Procedure).
5 Id.,pp. 25-28.
6 Id.,pp. 29-30.
7 Id., p. 47.
8 Records, p. 56.
9 Petition, p. 6; Rollo, p. 13.
10 Records, p. 50.
11 Ibid.
816
816
SUPREME COURT REPORTS ANNOTATED
Metropolitan Bank & Trust Company vs. Alejo
tence of the August 12, 1998 RTC Decision in Civil Case No. 4930-V-96,
annulling TCT No. V-41319. The dispositive portion of the Decision12
stated:
WHEREFORE, judgment is hereby rendered declaring as null and void
Transfer Certificate of Title No. V-41319 in the name of defendant Raul
Acampado for having proceeded from an illegitimate source. With costs
against the defendant.
SO ORDERED.
On January 27, 1999, petitioner filed with the Court of Appeals a
Petition for Annulment of the RTC Decision.
Ruling of the Court of Appeals
For being insufficient in form and substance, the Petition for Annulment
was outrightly dismissed by the CA. It ruled that petitioner ought to
have filed, instead, a petition for relief from judgment or an action for
quieting of title.
Hence, this Petition.13
Issues
In its Memorandum, petitioner presents the following issues:
I
II
x x x [W]hether or not the judgment of the trial court in Civil Case No.
4930-V-96 should be annulled.14
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We are not persuaded. First, a petition for relief, the remedy pointed to
by the Court of Appeals, was not available to petitioner. Section 1, Rule
38 of the Rules of Court, states:
Petition for relief from judgment, order, or other proceedings.When
a judgment or final order is entered, or any other proceeding is
thereafter taken against a party in any court through fraud, accident,
mistake, or excusable negligence, he may file a petition in such court
and in the same case praying that the judgment, order or proceeding
be set aside. (Italics supplied)
It must be emphasized that petitioner was never a party to Civil Case
No. 4930-V-96. In Lagula, et al. v. Casimiro, et al.15 the Court held that
relative to a motion for relief on the ground of fraud, accident,
mistake, or excusable negligenceRule 38 of the Rules of Court only
applies when the one deprived of his right is a party to the case. Since
petitioner was never a party to the case or even summoned to appear
therein, then the remedy of relief from judgment under Rule 38 of the
Rules of Court was not proper. This is plainly provided in the italicized
words of the present provision just quoted.
Second, in denying petitioners Motion for Reconsideration of the
Decision dismissing the Petition for Annulment of Judgment, the Court
of Appeals reasoned that another remedy, an action for quieting of
title, was also available to petitioner.
We do not agree. It should be stressed that this case was instituted to
ask for relief from the peremptory declaration of nullity of
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818
SUPREME COURT REPORTS ANNOTATED
Although a mortgage affects the land itself and not merely the TCT
covering it, the cancellation of the TCT and the mortgage annotation
exposed petitioner to real prejudice, because its rights over the
mortgaged property would no longer be known and respected by third
parties. Necessarily, therefore, the nullification of TCT No. V-41319
adversely affected its property rights, considering that a real mortgage
is a real right and a real property by itself.19
Evidently, petitioner is encompassed within the definition of an
indispensable party; thus, it should have been impleaded as a
defendant in Civil Case No. 4930-V-96.
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SUPREME COURT REPORTS ANNOTATED
Metropolitan Bank & Trust Company vs. Alejo
An indispensable party is a party who has such an interest in the
controversy or subject matter that a final adjudication cannot be made,
in his absence, without injuring or affecting that interest[;] a party who
has not only an interest in the subject matter of the controversy, but
also has an interest of such nature that a final decree cannot be made
without affecting his interest or leaving the controversy in such a
condition that its final determination may be wholly inconsistent with
equity and good conscience. It has also been considered that an
indispensable party is a person in whose absence there cannot be a
determination between the parties already before the court which is
821
Metropolitan Bank & Trust Company vs. Alejo
x x x. Without the presence of indispensable parties to a suit or
proceeding, a judgment of a Court cannot attain real finality.22
Whenever it appears to the court in the course of a proceeding that an
indispensable party has not been joined, it is the duty of the court to
stop the trial and to order the inclusion of such party. (The Revised
Rules of Court, Annotated & Commented by Senator Vicente J.
Francisco, Vol. I, p. 271, 1973 ed., See also Cortez vs. Avila, 101 Phil.
705.) Such an order is unavoidable, for the general rule with reference
to the making of parties in a civil action requires the joinder of all
necessary parties wherever possible, and the joinder of all
indispensable parties under any and all conditions, the presence of
those latter parties being a sine qua non of the exercise of judicial
power, (Borlasa vs. Polistico, 47 Phil. 345, at p. 347.) It is precisely
when an indispensable party is not before the court (that) the action
should be dismissed, (People vs. Rodriguez, 106 Phil. 325. at p. 327.)
The absence of an indispensable party renders all subsequent
actuations of the court null and void, for want of authority to act, not
only as to the absent parties but even as to those present.23
(emphasis supplied)
The evident aim and intent of the Rules regarding the joinder of
indispensable and necessary parties is a complete determination of all
possible issues, not only between the parties themselves but also as
regards to other persons who may be affected by the judgment. A valid
judgment cannot even be rendered where there is want of
indispensable parties.24
From the above, it is clear that the presence of indispensable parties is
necessary to vest the court with jurisdiction, which is the authority to
hear and determine a cause, the right to act in a case25 We stress
that the absence of indispensable parties renders all subsequent
actuations of the court null and void, because of
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SUPREME COURT REPORTS ANNOTATED
Metropolitan Bank & Trust Company vs. Alejo
that courts want of authority to act, not only as to the absent parties
but even as to those present.
It is argued that petitioner cannot possibly be an indispensable party,
since the mortgage may not even be valid because of the possible
absence of compliance with the requirement26 that the mortgagor be
the absolute owner of the thing mortgaged. It should be emphasized,
however, that at the time the mortgage was constituted, there was an
existing TCT (No. V-41319), which named the mortgagors, the
Acampado spouses, as the registered owners of the property. In Seno v.
Mangubat27 this Court held as follows:
The well-known rule in this jurisdiction is that a person dealing with a
registered land has a right to rely upon the face of the Torrens
xxx
xxx
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29 Supra. [Metropolitan Bank & Trust Company vs. Alejo, 364 SCRA
812(2001)]