G.R. No. 27780, January 24, 1928
Government of the Philippine Islands, plaintiff-appellee, vs. Arsenio Mendoza, defendant-appellant.

Ponente: VILLA-REAL, J.

FACTS

The Government of the Philippine Islands filed an action for the foreclosure of a mortgage against Arsenio Mendoza. The Court of First Instance of Manila rendered a judgment on December 15, 1926, ordering Mendoza to pay the Government a sum of money, with the alternative of the mortgaged properties being sold at public auction if he failed to pay. After the court approved Mendoza’s bill of exceptions for his appeal, Mendoza filed a motion on March 26, 1927. He prayed that the plaintiff be ordered to amend its complaint to include Ramon M. Villa-Juan as a defendant, alleging that Villa-Juan had purchased the mortgaged properties from him on January 21, 1920. It was not shown that this sale was registered in the Registry of Deeds. The trial court denied the motion in an order dated June 4, 1927.

ISSUE

Whether the trial court erred in denying the motion to include the purchaser of the mortgaged property, Ramon M. Villa-Juan, as a defendant in the foreclosure action.

RULING

No, the trial court did not err. The order denying the motion is affirmed.

The Supreme Court held that Villa-Juan was not a necessary party to the foreclosure action for two principal reasons:
1. Lack of Binding Effect Against the Mortgagee: The transfer of the mortgaged property from Mendoza to Villa-Juan was not registered in the Registry of Deeds. Under the applicable law (referencing the Land Registration Act), an unregistered sale has no binding effect against the mortgagee, the Government of the Philippine Islands. Therefore, the purchaser is not a necessary party to the foreclosure suit. The Court further noted that even if the sale were registered, Villa-Juan would still not be a necessary party because the transfer was made after the judgment was rendered. A person who acquires an interest in the subject of litigation only after judgment is rendered cannot be considered a necessary party.
2. Loss of Jurisdiction: The motion to include Villa-Juan was filed after the trial court had already approved Mendoza’s bill of exceptions. Upon approval of the bill of exceptions, the trial court loses jurisdiction over the case, except for matters related to the preservation of the rights of the parties pending appeal. Consequently, the trial court no longer had the authority to act on the motion.

The Supreme Court deemed the appeal frivolous, as the principle that a post-judgment transferee is not a necessary party is elementary. It affirmed the trial court’s order and imposed double costs against the appellant, Arsenio Mendoza.