Sec. 7, Rule 3, Rubs of Court | Compulsory Joinder of indispensable Parties METROPOLITAN BANK & TRUST COMPANY v. RTC JUDGE ALEJO GR 141970 | Sept. 10, 2001 CIVPRO DOCTRINE: Ina suit to nulliy an existing TCTin which a real estate mortgage is annotated, the mortgagee is an indispensable party. In such suit, a decision canceling the TCT and the mortgage annotation is subject to nulification as a void judgment, ‘because the nonoinder of the mortgagee deprivedtthe court of jurisdiction to pass upon the controversy. FACTS: On Noy, 21, 1995 and Jan. 30, 1996, Spouses Raul and Cristina Acampado (Sps. Acampado) obtained loans from Petitioner Metropolitan Bank (Metrobank) in the amounts of PSM and P2M, respectively. As security for the payment of these credit accommodations, Sps. Acampados executed, in favor of Metrobank, a Real Estate Mortgage and an Amendment of Real Estate Mortgage over a parcel of land registered in their names. The land was covered by the subject TCT in the Registry of Deeds of Valenzuela, where the contracts were also registered, ‘On June 8, 1996, a Complaint for Declaration of Nulty of the subject TCT was fied by Respondent Sy Tan Se against Sps,Acampado nthe RTC of Valera, & was docketed as vl case the Predocessor of he present controversy. fo.be annulled, Metrobank we il Because the Sps. Acampado defauted in the payment of her oan, extracel ‘oats procaotings over the mortgaged property were initiated on April 19, 1997. On June 17, 1997, the sheriff of Valenzuela conducted ‘an auction sale of the property, during which Metrobank submitted the highest and winning bid. On July 15, 1997, a Certificate of Sale was issued in its favor. This sale was entered in the Registry of Deeds of Valenzuela ‘on July 28, 1997, When the redemption period lapsed exactly a year after, on July 28, 1998, Metrobank. ‘executed an Affidavit of Consolidation of Ownership to enable the Registry of Deeds of Valenzuela to issue a new TCT in its name. Upon presentation to the Register of Deeds of the Affidavit of Consolidation of Ownership, Metrobank was informed of the existence of the August 12, 1998 RTC Decision in the civil case, nullifying TCT No. V41319 found in the name of Raul Acampado, for having proceeded from an illegitimate source. Thus, Metrobank filed with the CA a Petition for Annulment of the RTC Decision. However, such petition was denied ‘due course and was dismissed for being insufficient in form and substance. Hence, this Petition. ISSUE: WIN the RTC Decision, nulfying the Sps. Acampado's TCT, should be declared null and void. HELD: YES. Its clear that the presence of indispensable parties is necessary to vest the court with jurisdiction (Le. 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 acluations 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, Itis undisputed that the property covered by the TCT was mortgaged to petitioner, and that the mortgage was annotated on such TCT before the institution of the civil case. It is also undisputed that all subsequent proceedings pertaining to the foreclosure of the mortgage were entered in the Registry of Deeds. The nlification and cancellation of the TCT carried with it the nulification and cancellation of the mortgage annotation. Thus, although a mortgage affects the land itself and not merely the TCT covering it, the cancellation of the TCT and the mortgage annotation exposed Metrobank 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 the TCT adversely affected its property rights, considering that a real mortgage is areal right and a real property by itself Evidently, Metrobank is encompassed within the definition ofan indispensable party; thus, it should have been impleaded as a defendant in the civil case. Anindispensable 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Sec. 7, Rule 3, Rubs of Court | Compulsory Joinder of indispensable Parties Cr affecting that interest; a party who has not only an interest inthe subject matter of the controversy, but also has an interest of such nature thet a final decree cannot be made without affecting his interest or leaving the controversy in such a condition that is final determination may be wholly inconsistent with equity and good Conscience, Ithas also been considered that aninalspensable party fs a person in whose absence there cannot bbe a determination between the partes already before the court which is effective, complete, or equitable Further, an indispensable party is one who must beincluded in an action before it may properly go forward. A person is not an indispensable party, however, if his interest in the controversy or subject matter is separable from the interest ofthe other parties, so that it wil nt necessarily be directly or hiurously affected by a decree which does complete justice between them. ‘The joinder of indispensable partes to an action is mandated by Section 7, Rule Sof the Revised Rules of Givi Procedures, which provide that: “parties in interest without whom no final detesrinationcan be had of an action shall be oined either as plaints or defendants" Aside from the above provision, jurisprudence requires ‘SUCH joinder, stating that: ndispensable parties must always bejoined ether as plants or defendants, for the court cannot proceed without them. Indispensable parties are those with such an interest inthe controversy that a final decree would necessarily affect their rights, so that the courts cannot proceed without their presence. Without the presence of indispensable partes toa suitor proceeding, a judgment of a Court cannot attain real finality. "Whenever it ance. tothe cout in the course of a proceeding shal an ndspensabie party has not been joined, it is the the trial anc rr the inch ‘Such an order is unavoidable, for regain feferene to the making of partes in end octane ‘conditions, the cial tis Pressly hat an feenensable par oath ta feacion sha iecaas [epee an indispensable party i 3f the court null and void, for want of: Sci not only oo the absent partes but even Ss ese present The eget a and tat othe ues regarding thejoinder of in. and.n i f mination ofall possible not only between the parties themselves but also as regards to other persons who may be affected by the judgment, A valid judament cannot even be rendered where there is want of indispensable parties, Itis argued that petitioner cannot possibly be an indispensable party, singe the mortgage may not even be valid because Of the possible absence of compliance with the requirement 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, ‘hich named the mortgagos, the Acampado spouses, as the registered owners of the property. The well-known rule in this jurisciction is that a person dealing with a registered land has a right to rely upon the face of the TCTand to dispense vith the need of inquiring further, except when the party concemed has actual knowledge of facts and circumstances that would impel a reasonably cautious ran to make such inury. Thus, where innocent third persons relying on the ‘correctness of the certficate of tle issued, acquire rights over the property, the court cannot disregard such rights and ‘order the total canoalation of the certiticate for that would impair public confidence in the certificate of tile; otherwise, ‘everyone dealing with property registered under the Torrens system would have to inquire in every instance as to whether the ttle has been regularly or iregulerly issued by thecour. Indeed, this is contrary tothe evident purpose of the law. The peremptory disregard of the annotations registered and entered in the TCT constituted a deprivation of private property ‘without due process of law and was therefore unquestionably unjust andiniquitous. This, we cannot countenance. Clearly, it was the trial courts duty to order petitioners inclusion as a party to the civil case. This was not done. Neither the court norprivate respondent Sy Tan Se bothered to implead Metrobank as a party to the case. In the absence of Metrobank, an indispensable party, the trial court had no authority to act on the case. Its judgment therein was null and void due to lack of jurisdiction over an indispensable party. ‘Avoid judgment for want of jurisdiction is no judgment at all It cannot be the source of any right nor the creator of any obligation. All acts performed pursuant to it and all claims emanating from it haveno legal effect. Hence, it can never become final and any writ of execution based on it is void: it may be said to be a lawless thing ‘which can be treated as an outlaw and slain at sight, or ignored wherever and whenever it exhibits its head,