The Supreme Court held that a judgment may be annulled due to extrinsic fraud and lack of jurisdiction if an indispensable party is not included in the proceedings. This decision underscores the importance of due process and the protection of property rights, ensuring that all parties with a legitimate interest in a property are given the opportunity to be heard in court. The ruling emphasizes that failing to notify a known interested party constitutes extrinsic fraud, rendering the judgment void. This guarantees fairness and prevents the circumvention of property rights through exclusion.

When a Title Isn’t Enough: The Battle for Bengzon’s Land

This case revolves around a parcel of land originally registered under the name of Rosalita G. Bengzon. Gloria A. Chico acquired the property at a tax delinquency sale and, after the redemption period lapsed, sought to consolidate the title under her name. However, Elsie Ciudadano claimed ownership of the same property based on a prior Deed of Absolute Sale executed in 1989, which was annotated on Bengzon’s title. The central legal question is whether the failure to implead Ciudadano in the proceedings for the issuance of a new title constitutes extrinsic fraud and a lack of jurisdiction, thereby warranting the annulment of the judgment.

The facts reveal that Chico filed a Petition for Issuance of a New Title, invoking Sections 75 and 107 of Presidential Decree (P.D.) No. 1529, also known as the “Property Registration Decree.” She alleged that she was the highest bidder at the tax delinquency sale and, with the lapse of the redemption period, the property should be transferred to her name. However, Ciudadano argued that she had purchased the property from Bengzon years prior, and this sale was even annotated on the original title. Despite this annotation, Chico did not include Ciudadano in her petition, leading to a judgment in Chico’s favor. Ciudadano only learned of the proceedings when a writ of possession was issued, prompting her to file a Petition for Annulment of Judgment before the Court of Appeals (CA).

The CA sided with Ciudadano, finding that she was an indispensable party who was not given notice of the proceedings. The CA emphasized that the annotation of the 1989 Deed served as constructive notice to Chico of Ciudadano’s interest in the property. Consequently, the CA ruled that the failure to include Ciudadano constituted extrinsic fraud, justifying the annulment of the RTC’s decision. This meant that the new title issued to Chico was void, and the original title under Bengzon’s name was reinstated. The CA’s decision hinged on the principle that all parties with a direct and substantial interest in a property must be given the opportunity to protect their rights in court.

Chico, in her defense, argued that Ciudadano’s Petition for Annulment of Judgment was a collateral attack on her title, which is generally prohibited under Philippine law. She also contended that Ciudadano was not a real party in interest because the annotation on the title was merely a “PROV. REGISTRATION.” However, the Supreme Court rejected these arguments, affirming the CA’s decision. The Court emphasized that an action for annulment of judgment is an extraordinary remedy available when a party has been deprived of their day in court due to extrinsic fraud or lack of jurisdiction.

The Supreme Court’s decision thoroughly examined the concept of a real party in interest, which is defined as a party who stands to be benefited or injured by the judgment in the suit. The Court cited Sec. 2, Rule 3 of the Rules of Court, highlighting that every action must be prosecuted or defended in the name of the real party in interest. In this case, Ciudadano clearly had a substantial interest in the property, not only as the current possessor but also as the claimant of ownership based on the 1989 Deed. Therefore, her exclusion from the proceedings was a violation of her right to due process.

Building on this principle, the Court elaborated on the definition of extrinsic fraud, which refers to fraudulent acts committed outside the trial that prevent a party from fully presenting their case. The Court noted that Chico’s deliberate failure to implead Ciudadano, despite having knowledge of her claim, constituted such fraud. This meant that Ciudadano was prevented from asserting her rights and defending her interest in the property. The Court emphasized that the registration of the 1989 Deed served as constructive notice to the whole world, regardless of whether the registration was provisional or not.

Furthermore, the Supreme Court addressed the issue of lack of jurisdiction, stating that the RTC never acquired jurisdiction over Ciudadano’s person because she was not properly notified of the proceedings. This lack of notice violated Ciudadano’s fundamental right to procedural due process. The Court cited Orlina v. Ventura, emphasizing that a decision issued in disregard of the fundamental right to due process is void for lack of jurisdiction. Consequently, the decisions of the RTC were deemed null and void, and the title issued to Chico was also invalidated.

Regarding Chico’s argument about collateral attack, the Court clarified that the prohibition against collateral attacks on titles does not apply when the judgment from which the title springs is null and void. In this case, the RTC’s judgment was void due to the lack of jurisdiction over Ciudadano. Therefore, the title issued to Chico was also void and subject to attack. The Court cited Macawadib v. The Philippine National Police Directorate for Personnel and Records Management, reiterating that when an indispensable party is not impleaded, the judgment rendered by the trial court is void.

In conclusion, the Supreme Court’s decision underscores the importance of impleading all indispensable parties in property-related proceedings. Failure to do so not only constitutes extrinsic fraud but also deprives the court of jurisdiction, rendering the judgment void. This ruling serves as a strong reminder to exercise due diligence in identifying and notifying all parties with a potential interest in a property, ensuring fairness and protecting the sanctity of property rights under Philippine law.

FAQs

What was the key issue in this case?	The key issue was whether the failure to implead Elsie Ciudadano, a known interested party, in the petition for issuance of a new title constituted extrinsic fraud and lack of jurisdiction. This failure potentially invalidated the judgment and the title issued to Gloria Chico.
What is extrinsic fraud?	Extrinsic fraud refers to fraudulent acts committed outside the trial that prevent a party from fully presenting their case. In this case, it was the deliberate failure to notify Ciudadano, preventing her from defending her property rights.
Who is considered a real party in interest?	A real party in interest is a party who stands to be benefited or injured by the judgment in the suit. Ciudadano was considered a real party in interest due to her claim of ownership and possession of the property.
What is an indispensable party?	An indispensable party is a party whose interest in the controversy is such that a final decree cannot be made without either affecting that interest or leaving the controversy in such a condition that its final termination may be wholly inconsistent with equity and good conscience.
Why was the lack of jurisdiction relevant in this case?	The court lacked jurisdiction over Ciudadano because she was not properly notified of the proceedings. This violated her right to procedural due process and rendered the judgment void.
What is a collateral attack on a title?	A collateral attack on a title is an attempt to challenge the validity of a title in a proceeding where the primary relief sought is something else. The court ruled that this case was not a collateral attack because the original judgment was void.
What is the significance of annotating a deed on a title?	Annotating a deed on a title serves as constructive notice to the whole world of the transaction. It alerts potential buyers or claimants about existing interests in the property.
Can a void title give rise to a valid title?	No, a void title cannot give rise to a valid title. If the original judgment is void, any subsequent title derived from that judgment is also void.
What was the effect of the Court’s decision?	The Court’s decision annulled the judgment in favor of Chico, declared her title void, and reinstated the original title under Bengzon’s name. This protected Ciudadano’s claim of ownership.

This case reinforces the judiciary’s commitment to protecting property rights and ensuring due process. It serves as a reminder that all parties with a legitimate interest in a property must be included in legal proceedings to ensure fairness and validity of judgments. The Supreme Court’s decision provides clarity on the concepts of extrinsic fraud, indispensable parties, and the limits of indefeasibility of titles.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: GLORIA A. CHICO, VS. ELSIE CIUDADANO, G.R. No. 249815, July 04, 2022