Metropolitan Bank & Trust Company vs Hon Floro Alejo, in his capacity as Presiding Judge

of Branch 172 of RTC Valenzuela and Sy Tan Se, represented by his Atty in fact, Sian Suat
Ngo

Date: Sept 10,2001

Ponente: J. Panganiban

Nature: Petition for Review on Certiorari under Rule 45 of CA Resolution

BUOD: May loan si SPS na Mortgaged yung property nila pero sa isang case na annul
yung TCT na hawak nila so nung nag default sila tapos na foreclosed yung property, hindi
na pala sa kanila yung property kasi annulled na nga.. So pano na?

Facts:
 Nov 21, 1995 and Jan 30 1996 – Sps Raul and Cristina Acampado obtained loans
from Metrobank (P) in the amounts of 5M pesos and 2M pesos respectively
o As security, Real estate mortgage property in Valenzuela where the contracts
were also registered on Nov 20 1995 and Jan 23 1996 respectively
 June 30 1996 –Sy Tan Se filed a complaint for Declaration of Nullity of TCT of said
property against Sps Acampado (ANNULMENT CASE) (RTC VALENZUELA)
o Metrobank (P) was not informed or included as a party in the case despite
the case involved was the mortgaged property
 Sps defaulted on the payment and extrajudicial proceedings were initiated
(MORTAGE CASE) on the said property (STILL IN RTC VALEZUELA BUT SILENT IF SAME
BRANCH SO PROBABLY DIFF BRANCH )
o Sheriff Valenzuala conducted auction and P became highest bidder
o Certificate of sale was then issued
o Sale was entered in the registry of Deeds in Valenzuela
 When redemption period lapsed exactly a year after, P executed an affidavit of
Consolidation of Ownership to enable the Register of Deeds of Valenzuela to issue
a new TCT in its name
o Upon presentation to the Reg of Deeds, P was informed of the RTC decision
filed by Sy Tan Se annulling the TCT of Sps for obtaining TCT from an
illegitimate source
 P now files before CA a petition for annulment of RTC decision
 CA decision
o Insufficient in form and substance = dismissed
o Should have been a petition for relief from judgement or an action for
quieting of title
Issue: WON failure to implead metronbank in annulment case is tantamount to want of
authority to decide the annulment case and said decision is now void (yes)

Held:
 PROPER REMEDY
Rule 38 sec 1 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.” (
 o Petition for relief from judgement under Rule 38 is not applicable as P was not
even a party in the annulment case
 Applies only when the one deprived is a party to the case
 Lagula et al v Casimiro et al – relative to a motion for relief on the
ground of fraud, accident, mistake, or excusable negligence – Rule 38
of ROC “only applies when the one deprived is a party to the case”
 Since P was never a party to the case or even summoned to appear
therein, then the remedy of relief from judgment under rule 38 was not
proper
o Action for quieting of title not applicable in this case
 P was not given an opportunity to be heard
 This action will not remedy the disregard of due process
 Only applicable when there is a cloud on title to real property or any
interest therein
 Definition of “cloud” – semblance of title which appers in some
legal form but which is in fact unfounded
 This case does not even have a semblance of being a title
 Would have to modify or interfere with judgement of a co-equal
court
o Action for intervention is dependent upon the knowledge of P but it was
emphatically denied by P that it did not know
o Petition for annulment before CA for purposely concealing the case to P
even if P is an indispensible party
 The decision of the Annulment case entailed enforcement against P
even if he is not party to the case
 Hence, annulment of judgement was the proper remedy
 Extrinsic Fraud fully substantiated
 Unavailability of other remedies
 LACK OF JURISDICTION
o Although Mortgage affects the land itself and not merely the TCT covering it
 The cancellation of the TCT and mortgage annotation exposed P to
real prejudice because the rights over the mortgaged property would
no longer be known and respected by 3rd parties
 Thus, the nullification of the Annulment case, affected its property
rights, considering that a real mortgage is a real right and a real
property by itself
 WITHIN THE DEFINITION1 OF INDISPENSIBLE PARTY and should have
been impleaded in the annulment case
o Joinder of indispensible parties (Rule 3 sec 7)
 “SEC. 7. Compulsory joinder of indispensable parties.—Parties in interest

1An 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 effective, complete, or equitable. Further, an indispensable party is one who must be included 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 of the
other parties, so that it will not necessarily be directly or injuriously affected by a decree which does complete justice between them.
 without whom no final determination can be had of an action shall be
joined either as plaintiffs or defendants.”
 From jurisprudence
 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.”
 It is clear that presence of indispensible 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”
 Absence of indispensible parties renders all subsequent
actuations of the court null and void
o Want of authority to act not only as to absent parties but
even to those present
 AS APPLIED
 In Seno v Mangubat
o It is well known rule in this jurisdiction that a person has a
right to rely upon the face of the TCT except when the
party concerned has actual knowledge of facts and
circumstances that would impel a reasonably cautious
man to make such inquiry
o Preemptory disregard to this is a violation of due process
which is unjust and iniquitous
 It was the trial court’s duty to order P inclusion as a party to the
annukment case
 Neither the court nor R bothered to implead
 Thus TC has no authotiy on the case as null and void due to lack
of Jurisdiction over an indispensible party
o Dispositive GRANTED CA REVERSE