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[G.R. Nos. 135796 & 141213. March 28, 2005]
CHINA BANK vs. OLIVER
SECOND DIVISION
Sirs and Mesdames:
Quoted hereunder, for your information, is a resolution of this Court dated MAR 28 2005.
G.R. Nos. 135796 & 141213 (China Banking Corp. vs. Mercedes M. Oliver.)
R E S O L U T I O N
Before this Court is a petition for review on certiorari seeking the reversal of the decision [1] cralaw dated December 16, 1999 of the Court of Appeals (CA) in CA-G.R. CV No. 57387, which dismissed petitioner's appeal of the decision of Regional Trial Court of Muntinlupa, Branch 276 in Civil Case No. 96-219.
The facts are as follows:
On November 18, 1996, Mercedes M. Oliver filed a complaint for "Annulment of Mortgage and Cancellation of Title with Damages" against petitioner and the Register of Deeds and Deputy Register of Deeds of Makati City, namely: Attys. Mila Flores and Ferdinand Ignacio.
Oliver averred that: she is the registered owner of a parcel of land in Tunasan, Muntinlupa as evidenced by Transfer Certificate of Title (TCT) No. S-50195 of the Makati Registry of Deeds (RD); sometime in November of 1995, she learned that a real estate mortgage was constituted over her property in favor of China Banking Corporation (CBC) and that the mortgage was already annotated on the original of her title on file with the RD of Makati; aware that she never executed any mortgage in favor of anybody and that her owner's duplicate of the title has always been in her possession since 1977, she went to the RD of Makati to verify; she was told by Ignacio that there was indeed a mortgage on her property in favor of CBC; Ignacio then gave her a copy of the deed of real estate mortgage executed by a certain "Mercedes M. Oliver" who is not however plaintiff; she went to CBC and showed Mr. Roberto C. Uyquienco, Vice President, her genuine title; and in a letter to him dated November 29, 1995, she reiterated that the owner's duplicate copy in the possession of CBC was spurious and requested the bank authorities to investigate those involved in the anomaly.
Oliver then prayed for: the nullification of the real estate mortgage; cancellation of the owner's duplicate copy of TCT No. S-50195 in the possession of CBC; issuance of an owner's duplicate without the mortgage annotation; and payment of moral and exemplary damages.
CBC filed a Motion to Dismiss alleging lack of cause of action and non-joinder of indispensable parties. It argued that in order to determine who is the real owner of the property and whose owner's duplicate is genuine, the "Mercedes M. Oliver" who signed the real estate mortgage must be impleaded as an indispensable party citing Sec. 7, Rule 3 of the Revised Rules of Court failing which the complaint should be dismissed.
In an Order dated March 13, 1997, the court a quo denied the motion ruling that a valid judgment can be rendered on the basis of the allegations of the complaint; that the matters alleged in the motion to dismiss are evidentiary which petitioner may substantiate at the proper time; and that if there are other parties to petitioner, the rules provide the manner of bringing them to court.
Instead of filing an answer after its motion to dismiss was denied, CBC filed with the CA a petition for certiorari and prohibition under Rule 65 of the Rules of Court, as amended, with a prayer for the issuance of a writ of preliminary injunction, assailing the court a quo's order denying its motion to dismiss. The main issue in said petition, docketed as CA-G.R. SP No. 43836 is whether or not the "Mercedes M. Oliver" who signed the real estate mortgage is an "indispensable party" in the case a quo.
In its Resolution dated April 24, 1997, the CA required private respondent Oliver to file her Comment on the petition but did not issue an injunctive writ.
On June 1, 1998, the CA dismissed [2] cralaw CA-G.R. SP No. 43836 as well as CBC's subsequent motion for reconsideration through its resolution dated September 30, 1998.
CBC then went to this Court on a petition for review, docketed as G.R. No. 135796 which this Court denied on October 3, 2002, through Associate Justice Leonardo A. Quisumbing, [3] cralaw for lack of merit.
Meanwhile, at the lower court, Oliver filed a motion to declare defendant bank in default. This was granted after the court a quo found that CBC failed to file an answer within the reglementary period and that the filing of the petition for certiorari did not toll the running of the period. The case was then submitted for decision based on the complaint. [4] cralaw
On September 26, 1997, the court a quo rendered its decision, the dispositive portion of which reads:
Premises considered, judgment is entered for the Plaintiff and against Defendand China Banking Corporation, declaring the mortgagee (sic) using spurious and fake title as NULL and VOID. It was not executed by the true and actual owner of the property, who continued to possess and has custody of her owner's copy of the title. Plaintiff never obtained any loan over this property. The mortgage being void the Register of Deeds is accordingly directed to cancel this entry of encumbrance on the file copy of Plaintiff's title. Further the Register of Deeds of Makati is directed to reconstruct and reinstate the title of Plaintiff being Transfer Certificate of Title No. S-50195 over her parcel of land located at Tunasan, Muntinlupa City, consisting of 7,782 sq. meters, based on her true and genuine owner's duplicate copy of her title now in possession of Plaintiff.
Defendant Bank is also directed to pay Plaintiff the sum of P50,000.00
as attorney's fees and P50,000.00 actual litigation expenses and cost of
this proceedings.
It is SO ORDERED.
CBC went to the CA again, this time on appeal which was docketed as CA-G.R. CV No. 57387. The CA dismissed the appeal but modified the trial court decision by deleting the award for damages and the order to issue another owner's duplicate copy of TCT No. S-50195 to Oliver. [5] cralaw
Hence, the present petition, where it is alleged that the CA sanctioned the gross error of the trial court, as follows:
I
DECLARING THE MORTGAGOR MERCEDES M. OLIVER'S OWNER'S DUPLICATE COPY AS SPURIOUS AND THEREFORE NULL AND VOID, WITHOUT HER BEING IMPLEADED AS PARTY DEFENDANT AND GIVEN HER DAY IN COURT, IS A VIRTUAL DEPRIVATION OF HER TITLE AND OWNERSHIP OVER SAID PROPERTY WITHOUT DUE PROCESS OF LAW.
II
WITHOUT THE MORTGAGOR MERCEDES M. OLIVER, WHO IS AN INDISPENSABLE PARTY IN CIVIL CASE NO. 96-219, THE COMPLAINT CONSTITUTES AN IMPERMISSIBLE COLLATERAL ATTACK UPON HER TORRENS TITLE.
Ill
MORTGAGOR MERCEDES M. OLIVER IS AN INDISPENSABLE PARTY, WITHOUT WHOM NO FINAL DETERMINATION CAN BE HAD IN AN ACTION; HENCE, THE FAILURE TO MPLEAD HER IS A GROUND FOR THE DISMISSAL OF THE COMPLAINT IN CIVIL CASE NO. 96-219
IV
THE RULE ON JOINDER OF PARTIES (SECTION 8, RULE 3), IS NOT APPLICABLE TO CIVIL CASE NO. 96-219; INSTEAD, THE RULE ON INDISPENSABLE PARTY (SECTION 7, RULE 3) APPLIES. NEITHER MAY PETITIONER CBC BE COMPELLED TO RESORT TO THE FILING OF A THIRD-PARTY COMPLAINT TO BRING AN INDISPENSABLE PARTY TO THE JURISDICTION OF THE COURT (SECTION 11, RULE 6) WHICH IS THE BURDEN OF A PLAINTIFF TO AN ACTION
V
THE DISMISSAL/WITHDRAWAL OF THE COMPLAINT AGAINST DEFENDANTS REGISTER AND DEPUTY REGISTER OF DEEDS, ATTYS. MILA G. FLORES AND FERDINAND IGNACIO, NECESSARILY GIVES RISE TO, AND BOLSTERS, THE CONCLUSION THAT THE OWNER'S DUPLICATE COPY OF TCT NO. S-50195 OF MORTAGOR MERCEDES M. OLIVER IS GENUINE AND AUTHENTIC. [6] cralaw
A perusal of both the instant petition and the Resolution of this Court in G.R. No. 135796 shows that the issues raised herein have already been passed upon by the Court in G.R. No. 135796.
Pertinent portions of said Resolution are quoted hereunder:
For a clearer discussion of the issues in this controversy, we may state them as follows:
1. Is the mortgagor who goes by the name of Mercedes M. Oliver, herein called Oliver One, an indispensable party in Civil Case No. 96-219?
2. Should Section 7, Rule 3 of the 1997 Rules of Civil Procedure apply in this case?
3. Did the Court of Appeals err when it sustained the trial court's declaration that petitioner was in default?
4. Were the withdrawal and consequent dismissal of the complaint against the Registry of Deeds' officials indicative of the authenticity of mortgagor Oliver One's copy of TCT No. S-50195?
Petitioner Chinabank alleges that there are two owner's duplicate copies of TCT No. S-50195 involved in this case and two persons claiming to be the real "MERCEDES MARAVILLA OLIVER." One is the mortgagor, Oliver One. The other is the respondent, Oliver Two. Respondent's complaint before the trial court was one for cancellation of the transfer certificate of title in petitioner's possession (Annex "B"). According to petitioner, the issue below is the genuineness of the titles, which is intertwined with the issue of ownership. This being the case, said the petitioner, the mortgagor Oliver One must necessarily be impleaded for she is the registered owner under Annex "B." Petitioner argues that mortgagor Oliver One is in a better position to defend her title. She stands to suffer if it is declared fake. Further, petitioner claims that the validity and enforceability of the mortgage entirely depends on the validity and authenticity of Annex "B." The mortgage cannot be declared a nullity without the trial court declaring Annex "B" a nullity. Hence, mortgagor Oliver One's participation in the suit is indispensable, according to petitioner. In brief, what petitioner Chinabank is saying is that it was indispensable for respondent Oliver Two to implead mortgagor Oliver One in the case before the trial court. Failing to do that, the complaint of herein respondent Oliver Two should have been dismissed.
Petitioner's contention is far from tenable. An indispensable party is a party in interest, without whom no final determination can be had of an action. It is true that mortgagor Oliver One is a party in interest, for she will be affected by the outcome of the case. She stands to be benefited in case the mortgage is declared valid, or injured in case her title is declared fake. However, mortgagor Oliver One's absence from the case does not hamper the trial court in resolving the dispute between respondent Oliver Two and petitioner. A perusal of Oliver Two's allegations in the complaint below shows that it was for annulment of mortgage due to petitioner's negligence in not determining the actual ownership of the property, resulting in the mortgage's annotation on TCT No. S-50195 in the Registry of Deeds' custody. To support said allegations, respondent Oliver Two had to prove (1) that she is the real Mercedes M. Oliver referred to in the TCT, and (2) that she is not the same person using that name who entered into a deed of mortgage with the petitioner. This, respondent Oliver Two can do in her complaint without necessarily impleading the mortgagor Oliver One. Hence, Oliver One is not an indispensable party in the case filed by Oliver Two.
In Noceda vs. Court of Appeals, et al., 313 SCRA 504 (1999), we held that a party is not indispensable to the suit if his interest in the controversy or subject matter is distinct and divisible from the interest of the other parties and will not necessarily be prejudiced by a judgment which does complete justice to the parties in court. In this case, Chinabank has interest in the loan which, however, is distinct and divisible from the mortgagor's interest, which involves the land used as collateral for the loan.
Further, a declaration of the mortgage's nullity in this case will not necessarily prejudice mortgagor Oliver One. The bank still needs to initiate proceedings to go after the mortgagor, who in turn can raise other defenses pertinent to the two of them. A party is also not indispensable if his presence would merely permit complete relief between him and those already parties to the action, or will simply avoid multiple litigation, as in the case of Chinabank and mortgagor Oliver One. The latter's participation in this case will simply enable petitioner Chinabank to make its claim against her in this case, and hence, avoid the institution of another action. Thus, it was the bank which should have filed a third-party complaint or other action versus the mortgagor Oliver One.
As to the second issue, since mortgagor Oliver One is not an indispensable party, Section 7, Rule 3 of the 1997 Rules of Civil Procedure, which requires compulsory joinder of indispensable parties in a case, does not apply. Instead, it is Section 11, Rule 3, that applies. Non-joinder of parties is not a ground for dismissal of an action. Parties may be added by order of the court, either on its own initiative or on motion of the parties. Hence, the Court of Appeals committed no error when it found no abuse of discretion on the part of the trial court for denying Chinabank's motion to dismiss and, instead, suggested that petitioner file an appropriate action against mortgagor Oliver One. A person who is not a party to an action may be impleaded by the defendant either on the basis of liability to himself or on the ground of direct liability to the plaintiff.
Now, the third issue, did the Court of Appeals err when it sustained the trial court's ruling that petitioner Chinabank was in default? As found by the Court of Appeals, petitioner did not file its answer, although it received the March 13, 1997 order denying the motion to dismiss. Instead, petitioner filed a petition for certiorari under Rule 65 of the Rules of Court. Said petition, however, does not interrupt the course of the principal case unless a temporary restraining order or writ of preliminary injunction is issued. No such order or writ was issued in this case. Hence, Chinabank as defendant below was properly declared in default by the trial court, after the 15-day period to file its answer or other responsive pleading lapsed.
Lastly, were the withdrawal and consequent dismissal of the complaint against officials of the Registry of Deeds conclusive of the authenticity of mortgagor Oliver One's copy of TCT No. S-50195? This is a question of fact, which is not a proper subject for review in this petition. Here, we are limited only to questions of law, as a general rule. Petitioner failed to show that this case falls under any of the exceptions to this rule. We need not tarry on this issue now.
WHEREFORE, the petition is DENIED for lack of merit. The assailed decision dated June 1, 1998 and the resolution dated September 30, 1998 of the Court of Appeals in CA-G.R. SP No. 43836 are AFFIRMED. Costs against petitioner.
SO ORDERED.
Clearly therefore, without need of further elaboration, the issues raised in the present petition have already been passed upon by this Court in G.R. No. 135796.
WHEREFORE, the petition is hereby denied for having been rendered moot and academic by the Resolution of this Court promulgated on October 3, 2002 in G.R. No. 135796.
SO ORDERED.
Very truly yours,
(Sgd.) LUDICHI YASAY-NUNAG
Clerk of Court
[1] cralaw Penned by Associate Justice Wenceslao I. Agnir, Jr. and concurred in by Associate Justices Buenaventura J. Guerrero and Portia Alino-Hormachuelos.
[2] cralaw Penned by Associate Justice Romero A. Brawner and concurred in by Associate Justices Ricardo P. Galvez and Martin S. Villarama, Jr.
[3] cralaw With the concurrence of Acting Chief Justice Josue N. Bellosillo and Associate Justices Ma. Alicia Austria-Martinez and Romeo J. Callejo, Sr.; Associate Justice Vicente V. Mendoza, on leave.
[4] cralaw Rollo, pp. 42-46.
[5] cralaw Rollo, p. 52.
[6] cralaw Rollo, pp. 24-25.
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