Philippine Supreme Court Jurisprudence > Year 2019 > September 2019 Decisions > G.R. No. 237871 - MARGARITA FERNANDO, FELIX FERNANDO AND MANUEL FERNANDO, SUBSTITUTED BY HIS LEGAL HEIRS, NAMELY: JOSEFINA FERNANDO ANDAYA AND MARIA CONSOLACION FERNANDO PARASO, PETITIONERS, v. ROSALINDA RAMOS PAGUYO; HEIRS OF LEONARDO RAMOS, NAMELY: EDNA RAMOS DIMLA, ANDREA RAMOS MIRASOL, AND ERMINIA RAMOS SAUL; VIRGILIO RAMOS REPRESENTED BY CHARLIE RAMOS ALZATE; TEODORICO RAMOS; AURORA RAMOS DELA CRUZ; VIRGINIA RAMOS PADILLA; RODOLFO RAMOS; AND ROSITA RAMOS FLORES, RESPONDENTS:

Before the Court is a Petition for Review on Certiorari¹ (Petition) under Rule 45 of the Rules of Court filed by petitioners Margarita Fernando (Margarita), Felix Fernando (Felix) and Manuel Fernando (Manuel) (collectively the petitioners Fernandos) against respondents Rosalinda Ramos Paguyo (Rosalinda); the Heirs of Leonardo Ramos, namely: Edna Ramos Dimla (Edna), Andrea Ramos Mirasol (Andrea) and Erminia Ramos Saul (Erminia) (collectively the Heirs of Leonardo); Virgilio Ramos (Virgilio), represented by Charlie Ramos Alzate (Charlie); Teodorico Ramos (Teodorico); Aurora Ramos Dela Cruz (Aurora); Virginia Ramos Padilla (Virginia); Rodolfo Ramos (Rodolfo); and Rosita Ramos Flores (Rosita) (collectively the respondents), assailing the Decision² dated May 17, 2017 (assailed Decision) and Resolution³ dated February 28, 2018 (assailed Resolution) rendered by the Court of Appeals (CA) in CA-G.R. SP No. 95641.

The Facts and Antecedent Proceedings

As narrated by the CA in its assailed Decision and as culled from the records of the instant case, the essential facts and antecedent proceedings of the case are as follows:

[The respondents and] x x x Lucena Ramos [(Lucena)] are the nine (9) children and heirs of the spouses Dominador Ramos and Damiana Porciuncula ("spouses Ramos"). On the other hand, [petitioners Margarita, Felix, and] Remigia Fernando [(Remigia)] are the collateral heirs of Tomas Fernando [(Tomas)].

The spouses Ramos owned a piece of agricultural land located at Barrio, Agricultura (now Licaong) Munoz, Nueva Ecija with a total area of 3.1541 hectares covered by Transfer Certificate of Title ("TCT") No. NT-1889 [(the subject property)]. The Ramoses both died intestate in the year 1945.

Thereafter, on October 30, 1952, [Lucena unilaterally] executed a Declaration of Heirship declaring that she is the sole heir of the spouses Ramos. Hence, Lucena was able to transfer the ownership of the [subject property] in her name and as a result, TCT No. NT-12647 was issued in her favor.

[Subsequently, Lucena sold to Tomas the subject property through a pacto de retro sale dated August 14, 1955 for P8,800.00, with Lucena having been granted the right to redeem the subject property within three years from the date of the sale.]

Aggrieved [by Lucena's unilateral act of executing a Declaration of Heirship], [in 1955, the respondents] filed a complaint docketed as Civil Case No. 2146 against [the] spouses [Lucena] and Alfredo Mateo [(Alfredo)] before the then Court of First Instance ("CFI") of Nueva Ecija. In its Decision dated January 25, 1961, the CFI disposed of the complaint as follows:

"WHEREFORE, the judgment appealed from is hereby modified as follows[:] (1) ordering the cancellation of T.C.T. No. NT-12647 in the name of [Lucena], and the issuance of a new title covering the land described in the complaint in favor of all the legal heirs of [Spouses Ramos], namely Lucena; Leonardo; Virgilio; Teodorico; Aurora (sic) Virginia; Rodolfo; Rosalia and Rosita, all surnamed Ramos; (2) ordering the partition of the property aforesaid among the above-mentioned heirs in the proportion of 1/9 each; (3) sentencing cross-defendant [Lucena] to pay cross-complainant [Tomas] the sum of P8,800.00 with legal interest thereon from August 15, 1955 until fully paid, and as security for the payment of such amounts the appertaining to Lucena; Leonardo; Virgilio and Teodorico, surnamed Ramos, shall be subject, among others, to the lien of equitable mortgage in favor of [Tomas]. Costs are against defendant [Lucena]."

On appeal, the Court of Appeals affirmed the Decision dated January 25, 1961 in Civil Case No. 2146 and the same became final and executory on February 18, 1961 as per Entry of Judgment docketed as CA-G.R. No. 20833-R.

[The respondents then alleged that as a consequence of the final and executory Decision in Civil Case No. 2146, the subject property was subdivided by and among the heirs of the spouses Ramos, who are in open, continuous, exclusive, adverse, and notorious possession in the concept of owners.]⁴

Sometime in 1993, [the petitioners Fernandos] learned of the Decision dated January 25, 1961 in Civil Case No. 2146 which is embodied in the Entry of Judgment dated February 18, 1961 issued by the Court of Appeals. Thus, [petitioner] Margarita went to the residence of spouses [Lucena] and [Alfredo] to demand that the latter comply with the said Decision. [An alleged] verbal agreement was entered into between the [petitioners] Fernandos and spouses [Lucena] and [Alfredo] wherein the latter were given more time to pay or surrender the title of the subject property to the [petitioners] Fernandos. During this time, the spouses [Lucena] and [Alfredo] were in possession of the 2-hectare portion of the subject property while [one] Vicente Tobias was in possession of the remaining 1 hectare.

Four years thereafter or sometime in 1997, the [petitioners] Fernandos again demanded that the spouses [Lucena] and [Alfredo] comply with their verbal agreement. However, the spouses refused to pay nor surrender the title of the subject property to the [petitioners] Fernandos. Hence, on May 8, 1997, [the petitioners Fernandos] filed a complaint for specific performance and damages [to enforce the oral agreement covering the entire subject property] against [the] spouses [Lucena] and [Alfredo] before the [Regional Trial Court of Baloc, Sto. Domingo, Nueva Ecija, Branch 37 (RTC)] which was docketed as Civil Case No. 31-SD(97). The [petitioners Fernandos] alleged that sometime in 1993, spouses [Lucena] and [Alfredo] entered into an [oral] agreement with the [petitioners] Fernandos with the following terms and conditions:

a). That the [spouses Lucena and Alfredo] will abide by the Decision in CA-G.R. No. 20833-R (2146 of NuevaEcija);

b). That the [spouses Lucena and Alfredo] allowed the [petitioners Fernando] to take possession and control of the Owner's Copy of TCT No. NT-12647;

c). That the [spouses Lucena and Alfredo] will remain in control of the land covered by TCT No. NT-12647 except VICENTE TOBIAS who has already recognized the [petitioners Fernandos] as the landowner of the land in question;

d). That by the first month of 1997, the [spouses Lucena and Alfredo] will execute the necessary documents over the land covered by TCT No. NT-12647 in favor of the [petitioners Fernandos] in order that the Decision in Civil Case No. 2146 in favor of [TOMAS] may be completely satisfied and transfer possession of said land to the [petitioners Fernandos];

On September 21, 2001, the RTC rendered its Decision,⁵ the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered:

1. Declaring and confirming consolidation of ownership in [Tomas] of the real property covered by Transfer Certificate of Title No. NT-12647 and ordering the proper Registry of Deeds to issue another title in lieu thereof in the name of said [Tomas] upon payment of the fees due therefor; and

2. Ordering the defendant-spouses, [Lucena] and [Alfredo], to pay [petitioners Fernandos] the sum of Twenty Thousand Pesos (P20,000.00) as and for reasonable attorney's fees plus the costs of suit.⁶

[The aforementioned Decision of the RTC in Civil Case No. 31-SD(97) was appealed by the Spouses Lucena and Alfredo before the Court of Appeals in CA G.R. No. CV 72875. On December 9, 2002, a Resolution was issued by the CA dismissing the Spouses Lucena and Alfredo's appeal due to their failure to file an appellants' brief within the prescribed period. An Entry of Judgment was then issued, certifying that the aforesaid Resolution became final and executory on November 13, 2003.]⁷

As a result thereof, TCT No. N-32644 was [subsequently] issued in the name of [Tomas]. Consequently, the title over the subject property was transferred to [the petitioners Fernandos] as collateral heirs of [Tomas]. TCT No. 34698 was then issued in their names in lieu of TCT No. N-32644.

x x x x

Hence, on August 11, 2006, [the respondents] filed this Petition [for Annulment of Decision and Damages⁸ (Petition for Annulment of Decision)] under Rule 47 of the Rules of Court [before the CA] praying for the annulment of the Decision dated September 21, 2001 in Civil Case No. 31-SD(97). x x x The [respondents] prayed for the following:

WHEREFORE, it is most respectfully prayed that after notice and hearing an order shall be issued enjoining the [petitioners] "FERNANDO'S" from taking the land in question and enjoining the public respondent the Honorable Santiago M. Arenas from further hearing of Civil Case No. SD (05)-452 and for this Honorable Court of Appeals to annul the decision in Civil Case No. 21-SD (97) dated September 21, 2001 for being rendered with grave abuse of discretion amounting to lack or in excess of jurisdiction and ordering further the cancellation of Transfer Certificate of Title No. N-34698 registered in the name of [petitioners] "FERNANDO'S and in lieu thereof ordering the Register of Deeds of Talavera, Nueva Ecija who issued the said title to issue a new one in favor of the [respondents].

Ordering further the [petitioner Fernandos] to pay:

1. Attorneys Fee in the amount of Thirty thousand (P30,000.00) plus Five Thousand (P5,000.00) as appearance fee;

2. Moral damages in the total amount of ONE HUNDRED SIXTY THOUSAND (P160,000.00) and Exemplary Damages in the total amount of not less than ONE HUNDRED THOUSAND (P100,000.00) Pesos.

[The respondents maintained that the complaint in Civil Case No. 31-SD(97) sought to recover only the shares of spouses Lucena and Alfredo over the subject property and did not cover the shares which pertained to the other heirs. Moreover, the respondents alleged that they were not impleaded as defendants in Civil Case No. 31-SD(97) and the spouses Lucena and Alfredo did not have any authority to enter into a verbal agreement with the petitioners Fernandos with respect to the other co-heirs' shares over the subject property.]

Thereafter, on October 24, 2010, a Resolution was issued by the [CA] declaring [the] spouses [Lucena] and [Alfredo] in default for failure to submit the required Answer to the instant Petition for Annulment of Decision and Damages despite receipt of the notices therein. Furthermore, the case was remanded to the Executive Judge of the RTC x x x for reception of evidence.⁹ (Emphasis supplied)

In the assailed Decision, the CA found merit in the Petition for Annulment of Decision. The dispositive portion of the assailed Decision reads:

WHEREFORE, the instant petition is GRANTED. The assailed Decision dated September 21, 2001 of the Regional Trial Court, Branch 37 of Baloc, Sto. Domingo, Nueva Ecija in Civil Case No. 31-SD(97) is hereby ANNULLED and SET ASIDE for lack of jurisdiction.

SO ORDERED.¹⁰

In sum, the CA held that the RTC lacked jurisdiction over Civil Case No. 31-SD(97) because of the undisputed fact that the respondents, who are indispensable parties, were not impleaded in the said case:

Petitioners are rightfully co-owners of the subject property, without whom no relief is available and without whom the court can render no valid judgment. Section 7, Rule 3 of the Revised Rules of Court provides for the compulsory joinder of indispensable parties without whom no final determination can be had of an action. It is the duty of the [petitioners] Fernandos to implead all the necessary or indispensable parties for the complete determination of the action. Considering that [petitioners] knew that TCT No. NT-12647 in the name of [Lucena] was ordered canceled by the x x x RTC in Civil Case No. 2146 and that the subject property was partitioned among the nine heirs of spouses [Ramos] yet they did not implead them as indispensable defendants in Civil Case No. 31-SD (97). [Petitioners] Fernandos have only themselves to blame. In other words, the judgment ordering the cancellation of TCT No. NT-12647 and the issuance of another title in the name of [Tomas] is not binding on the [respondents] being co-owners of the subject property, who were not impleaded as defendants in Civil Case No. 31-SD (97). A person not included as a party to a case cannot be bound by the decision made by a court. As explained by the Supreme Court in the case of Sepulveda, Sr. v. Pelaez:

Section 7, Rule 3 of the Rules of Court reads:

SEC. 7. Compulsory joinder of indispensable parties. � Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants.

Indeed, the presence of all indispensable parties is a condition sine qua non for the exercise of judicial power. It is precisely when an indispensable party is not before the court that the action should be dismissed. Thus, the plaintiff is mandated to implead all the indispensable parties, considering that the absence of one such party renders all subsequent actions 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. One who is a party to a case is not bound by any decision of the court, otherwise, he will be deprived of his right to due process. Without the presence of all the other heirs as plaintiffs, the trial court could not validly render judgment and grant relief in favor of the private respondent. The failure of the private respondent to implead the other heirs as parties-plaintiffs constituted a legal obstacle to the trial court and the appellate court's exercise of judicial power over the said case, and rendered any orders or judgments rendered therein a nullity. [Emphasis supplied.]

The absence of [the respondents] as indispensable parties to Civil Case No. 31-SD(97) effectively rendered all subsequent actions 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. [The respondents] are all co-heirs and persons having an interest in the subject property as indispensable parties. To reiterate, [the petitioners] Fernandos even alleged in their complaint that spouses [Lucena] and [Alfredo] should abide by the Decision dated January 25, 1961. Consequently, [the petitioners Fernandos] knew of the existence of [respondents] as co-heirs of [Lucena] over the subject property as stated in the Decision dated January 25, 1961.¹¹

Feeling aggrieved, the petitioners Fernandos filed their Motion for Reconsideration¹² on June 13, 2017, which was denied by the CA in the assailed Resolution.

Hence, the instant appeal before the Court.

On August 20, 2018, the petitioners Fernandos filed their Comment to the Petitioners' Petition for Review.¹³

On February 27, 2019, the petitioners Fernandos filed a Notice o Death, Motion for Substitution, and Entry of Appearance,¹⁴ informing the Court that petitioner Manuel passed away as evidenced by his Certificate of Death¹⁵ and praying that petitioner Manuel be substituted by his legal heirs.

Issue

In the instant Petition, the petitioners Fernandos raise the sole issue of whether the CA "gravely erred in giving due course to the Complaint for Annulment of Decision filed by the respondents and declaring the Decision of the Regional Trial Court in Civil Case No. 31-SD(97) annulled and set aside for lack of jurisdiction."¹⁶

The Court's Ruling

To reiterate the essential facts of the instant case, it is not disputed that through the CFI of Nueva Ecija's final and executory Decision dated January 25, 1961 in Civil Case No. 2146, the respondents were recognized as the co-owners of the subject property, being the co-heirs of the intestate estate of the spouses Ramos. The Declaration of Heirship unilaterally executed by Lucena, which adjudicated the subject property unto the latter alone, was nullified. As a result, the subject property was partitioned among all the heirs in the proportion of 1/9 each.

Despite full knowledge of the foregoing, the petitioners Fernandos entered into a supposed verbal agreement with the spouses Lucena and Alfredo, asking the latter to execute all the necessary documents to facilitate the complete transfer of possession and control of the subject property to the petitioners Fernandos on the basis of the pacto de retro sale entered into by their predecessor-in-interest Tomas with the spouses Lucena and Alfredo.

The petitioners Fernandos subsequently filed an action for specific performance for the execution of the alleged oral contract covering the subject property in Civil Case No. 31-SD(97). It is not disputed whatsoever that the petitioners Fernandos, despite knowing fully well that the respondents were adjudged to be the co-owners of the subject property, failed to implead the latter.

Eventually, in Civil Case No. 31-SD(97), the RTC rendered its Decision dated September 21, 2001 in favor of the petitioners Fernandos. Not having been impleaded, the respondents naturally did not file an appeal and the aforesaid Decision in Civil Case No. 31-SD(97) became final and executory, thus compelling the respondents to file their Petition for Annulment of Decision under Rule 47 of the Rules of Court before the CA, which was granted by the latter in the assailed Decision and Resolution.

Upon exhaustive review of the facts and the law surrounding the instant case, the Court finds that the CA did not err in granting the respondents' Petition for Annulment of Decision. The instant Petition is unmeritorious.

Under Rule 47 of the Rules of Court, the remedy of annulment of decision "is resorted to in cases where the ordinary remedies of new trial, appeal, petition for relief from judgment, or other appropriate remedies are no longer available through no fault of the petitioner, and is based on only two grounds: extrinsic fraud, and lack of jurisdiction or denial of due process."¹⁷ According to Section 3 of Rule 47, if based on extrinsic fraud, the action must be filed within four (4) years from its discovery; and if based on lack of jurisdiction, before it is barred by laches or estoppel.

The Court held in Dr. Orbeta v. Sendiong,¹⁸ that a petition for annulment grounded on lack of jurisdiction, owing to the failure to implead the indispensable parties, "is ample basis for annulment of judgment. We have long held that the joinder of all indispensable parties is a condition sine qua non of the exercise of judicial power. The absence of an indispensable party renders all subsequent actions 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."¹⁹

In the instant case, it goes without saying that in an action for specific performance compelling the transfer of the subject property co-owned by nine heirs who have already been adjudged by a final and executory decision as co-owners of the subject property, the latter are indispensable parties in such an action. Jurisprudence has indubitably held that in a suit involving co-owned property, all the co-owners of such property are indispensable parties.²⁰

The petitioners Fernandos cannot feign ignorance of the fact that the respondents have been declared with finality as the co-owners of the subject property, being the co-heirs of the original owners of the subject property, i.e., the spouses Ramos. In fact, the petitioners Fernandos themselves alleged that in the very verbal agreement they sought to enforce, they agreed that the parties should "abide by the decision in CA-G.R. No. 20833-R (2146 of Nueva Ecija)" and that "the decision in Civil Case No. 2146 x x x may be completely satisfied."²¹

Therefore, with the joinder of all indispensable parties being a condition sine qua non to the exercise of judicial power, the petitioners Fernandos' assertion that the RTC validly acquired jurisdiction in Civil Case No. 31-SD(97) fails to convince.

As their central argument, the petitioners Fernandos allege that the respondents have no more right over the subject property because of prescription and laches, arguing that the "respondents can no longer assert their right based on a judgment which was never enforced nor implemented for a period of more than 30 long years, then they can no longer be considered as indispensable parties. They have no more interest over the subject matter considering that they failed to have the judgment enforced. As such, they have no more right over the property."²²

The factual allegation that the respondents never enforced or implemented the final and executory Decision in Civil Case No. 2146 is not well-taken. The respondents assert that the subject property was subdivided among the siblings at the proportion of 1/9 each.²³ As likewise noted by the CA, the respondents maintain that "all the annexes appended to the [P]etition [for Annulment of Decision] were admitted by the [petitioners Fernandos] except for the Special Power of Attorney which was executed by [Virgilio] in favor of [Charlie], and the Subdivision Plan which was approved on June 18, 1984 partitioning the subject property in accordance with the Decision dated January 25, 1961 in Civil Case No. 2146 x x x [and that the respondents] had already established their respective occupations before the conduct and approval of the subdivision plan."²⁴

The petitioners Fernandos do not offer any serious refutation that the respondents had already subdivided the subject property in the proportion of 1/9 each in accordance with the Decision dated January 25, 1961 in Civil Case No. 2146. Hence, it cannot be said that the respondents slept on their rights and failed to enforce the Decision dated January 25, 1961.

The petitioners Fernandos likewise assert that the CA erred in granting the respondents' Petition for Annulment of Decision because the said Petition is not a substitute for a lost appeal.²⁵

According to jurisprudence, an annulment of decision may not be invoked (1) where the party has availed himself of the remedy of new trial, appeal, petition for relief, or other appropriate remedy and lost; or (2) where he has failed to avail himself of those remedies through his own fault or negligence.²⁶

It must be stressed that the respondents were not able to avail at all of the remedy of new trial, appeal, petition for relief or any other remedy against the RTC's Decision in Civil Case No. 31-SD(97), not due to their own fault or negligence, but precisely because they were not impleaded by the petitioners Fernandos.

Hence, considering the foregoing, the CA did not err in granting the respondents' Petition for Annulment of Judgment, annulling the RTC's Decision dated September 21, 2001 in Civil Case No. 31-SD(97) for lack of jurisdiction. Necessarily, TCT No. N-32644, which was issued in the name of Tomas in accordance with the null and void Decision of the RTC in Civil Case No. 31-SD(97), which was eventually transferred in the names of the petitioners Fernandos under TCT No. N-34698, must be cancelled.

WHEREFORE, the instant Petition is DENIED. The Decision dated May 17, 2017 and Resolution dated February 28, 2018 rendered by the Court of Appeals in CA-G.R. SP No. 95641 are hereby AFFIRMED. Consequently, the Register of Deeds is hereby ordered to CANCEL Transfer Certificate of Title No. N-34698 and any certificate of title derived therefrom, if any.

SO ORDERED.

Carpio,^*Acting C. J., (Chairperson), J. Reyes, Jr., Lazaro-Javier, and Zalameda, JJ., concur.

Endnotes:

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^* Designated as Acting Chief Justice per Special Order No. 2703 dated September 10, 2019.

¹Rollo, pp. 11-31.

² Id. at 32-42. Penned by Associate Justice Ramon Paul L. Hernando (now a member of this Court) with Associate Justices Stephen C. Cruz and Jhosep Y. Lopez, concurring.

³ Id. at 44-46.

⁴ Id. at 63-64.

⁵ Id. at 51-58. Penned by Judge Lauro G. Sandoval.

⁶ Id. at 57-58.

⁷ Id. at 59.

⁸ Id. at 60-73.

⁹ Id. at 33-37.

¹⁰ Id. at 42.

¹¹ Id. at 39-40.

¹² Id. at 74-77.

¹³ Id. at 91-96.

¹⁴ Id. at 99-101.

¹⁵ Id. at 102.

¹⁶ Id. at 14.

¹⁷Alaban v. Court of Appeals, 507 Phil. 682, 694 (2005).

¹⁸ 501 Phil. 478 (2005).

¹⁹ Id. at 489-490; emphasis and underscoring supplied.

²⁰Quilatan v. Heirs of Lorenzo Quilatan, 614 Phil. 162, 167 (2009), citing Arcelona v. CA, 345 Phil. 250 268-269 (1997).

²¹Rollo, p. 51.

²² Id. at 23.

²³ Id. at 92.

²⁴ Id. at 38.

²⁵ Id. at 18-19.

²⁶Heirs of Maura So v. Obliosca, 566 Phil. 397, 406 (2008).