MABELLE J.

ARELLANO
Lo2

Metropolitan Bank & Trust Company vs. Hon. Floro T. Alejo

G.R. No. 141970
September 10, 2001

FACTS

On November 21, 1995 and January 30, 1996, spouses Raul and Christina
Acampado obtained loans from petitioner in the amounts of P5,000,000.00 and
P2,000,000.00, respectively. As security for the payment of these credit accomodations,
the spouses executed in favor of petitioner 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 TCT No. V-41319 in the Registry of Deeds of Valenzuela City. On June 3, 1996,
Complaint for Declaration of Nullity of TCT No. V-41319 was filed by respondent Sy Tan
Se against the spouses. It was docketed as Civil Case No. 4930-V-96 in the Regional Trial
Court (RTC) of Valenzuela. Despite being the registered mortgagee of the real property
covered by the title sought to be annulled, petitioner was not made a party to the case nor
was she notified of its existence. The spouses defaulted in the payment of their loan and
extrajudicial foreclosure proceedings were initiated wherein the petitioner submitted the
highest and winning bid. A Certificate of Sale was issued in their favor. Upon presentation
to the Register of Deeds of the Affidavit of Consolidation of Ownership, petitioner was
informed of the decision in the aforementioned civil case (complaint for declaration of
nullity of TCT) declaring the spouses’ TCT null and void. The petitioner filed with the CA
a petition for annulment of the RTC Decision. The CA dismissed their petition and ruled
that the bank should have filed a petition for relief from judgment or an action of quieting
of title.

ISSUES

1. Whether or not a petition for annulment of judgment is the proper remedy of the
petitioner
2. Whether or not the judgment of the trial court in Civil Case No. 4930-V-96 should
be annulled

HELD

1. YES. Petition for annulment of judgment was the proper remedy of the petitioner.
It precisely alleged that private respondent purposely concealed the case by
excluding petitioner as a defendant to the civil case even if he was an indispensable
party. This deprived the petitioner of its duly registered property without due
process of law. The allegation of extrinsic fraud may be the basis for annulling a
judgment. Petition for relief (what the CA recommended) was not available to the
petitioner since it was never a party to the civil case. An action for quieting of title
is also not available to the petitioner. An action for quieting of title is filed only
when there is a cloud on title to real property or any interest therein. The subject
judgment cannot be considered as a cloud on petitioner’s title or interest over real
property covered by TCT, which does not even have a semblance of being a title.
Moreover, the petitioner cannot intervene to a case to which he has no knowledge
of.

2. YES. The judgement of the trial court should also be declared null and void because
the petitioner, who is an indispensable party, was not impleaded in the civil case.
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.