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

RULING

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.