G.R. No. 102696 , G.R. No. 102716, G.R. No. 108257, G.R. No. 120954; July 12, 2001
ALBERTO LOOYUKO, JUAN C. UY and ATTY. VICTORIA CUYOS, petitioners, vs. COURT OF APPEALS, F.G.U. INSURANCE CORPORATION and ANTONIO GUTANG, HEIRS and SUCCESSORS-IN-INTEREST, respondents. ( G.R. No. 102696 )

FGU INSURANCE CORPORATION, petitioner, vs. COURT OF APPEALS, ANTONIO J. GUTANG, JOSE V. GUTANG, ALBERTO LOOYUKO, JUAN C. UY, VICTORIA ALCANTARA CUYOS and JUDGE WILLIAM H. BAYHON, respondents. (G.R. No. 102716)
SCHUBERT TANUNLIONG, petitioner, vs. COURT OF APPEALS, ANTONIA GUTANG, DAVID GUTANG, ELIZABETH GUTANG-LEDESMA, ATTY. RAMON A. GONZALES, ATTY. VICTORIA S. ALCANTARA CUYOS and JUDGE RICARDO MOLINA, respondents. (G.R. No. 108257)
SCHUBERT TANUNLIONG, petitioner, vs. COURT OF APPEALS, and ANTONIA J. GUTANG, respondents. (G.R. No. 120954)

FACTS

The consolidated cases involve a dispute over a house and lot in Mandaluyong, Rizal, formerly covered by TCT No. 1702 and owned by Spouses Tomas and Linda Mendoza, contested by various creditors and an alleged assignee.
1. Looyuko and Uy’s Claim: On April 22, 1977, Alberto Looyuko and Jose Uy, through counsel Atty. Victoria Cuyos, filed a complaint against the Spouses Mendoza before the RTC of Manila (Civil Case No. 82-5792). A notice of levy on attachment was annotated on TCT No. 1702. They obtained a favorable judgment, and a writ of execution was issued on February 12, 1986. The property was sold at public auction to them as highest bidders. A new TCT No. 10107 was issued in their name on June 30, 1995.
2. Gutang’s Claim: Antonia Gutang filed a money claim against Tomas Mendoza before the RTC of Iloilo (Civil Case No. 13122). A notice of levy on execution was annotated on TCT No. 1702 on July 1, 1981. The property was sold at public auction to her on June 8, 1984. Based on a petition in LRC Case No. R-3613, the RTC of Rizal ordered the cancellation of TCT No. 1702, and TCT No. 242 was issued in the name of Antonia Gutang on December 23, 1987.
3. FGU’s Claim: On December 2, 1976, the Spouses Mendoza mortgaged the property to FGU Insurance Corporation. Upon the spouses’ default, FGU filed an action for foreclosure of mortgage before the RTC of Manila (Civil Case No. 82-9760). On January 22, 1988, the RTC rendered a decision in favor of FGU for a sum of money. Upon FGU’s motion, the court amended its decision on May 19, 1988, to include an order for the foreclosure and sale of the mortgaged property if the judgment was not paid within 90 days. This became final. A writ of execution was issued, and the property was sold at public auction to FGU on November 24, 1988. The sale was confirmed on March 2, 1989. The court ordered the cancellation of TCT No. 242 and issuance of a new title for FGU.
4. Subsequent Proceedings: The Spouses Gutang moved to intervene in Civil Case No. 82-9760, claiming to be the new registered owners. The RTC granted intervention and set aside its May 19, 1988 decision and subsequent orders. Looyuko et al. also successfully moved to intervene. FGU filed a petition for certiorari in the Court of Appeals, which was dismissed. The Supreme Court, in G.R. Nos. 102696 and 102716, affirmed the Court of Appeals’ dismissal.
5. Tanunliong’s Claim: Schubert Tanunliong claimed to be an assignee of the rights of both Looyuko/Uy and the Gutangs over the property. He filed petitions for certiorari (G.R. No. 108257 and G.R. No. 120954) challenging orders related to the execution of judgments in favor of the Gutangs and Looyuko/Uy.

ISSUE

The core legal issue, as resolved in the consolidated petitions, pertains to the propriety of the trial court’s grant of intervention to the Spouses Gutang (and later to Looyuko et al.) in FGU’s foreclosure action (Civil Case No. 82-9760) after the amended decision in that case had become final and executory.

RULING

The Supreme Court ruled that the trial court did not commit grave abuse of discretion in granting the motions for intervention. The Court held that a final and executory judgment can be set aside for lack of jurisdiction or for being void. In this case, the failure of FGU to implead the Spouses Gutang, who were already the registered owners of the property (as evidenced by TCT No. 242 issued in 1987) at the time FGU sought the amendment of its decision to one for foreclosure in 1988, was a fatal defect. A foreclosure proceeding is an action in rem, and it is mandatory to implead all persons having or claiming an interest in the property subordinate to the mortgagee’s lien. Since the Gutangs were not made parties to the foreclosure suit, the amended decision of May 19, 1988, and all proceedings emanating therefrom, were null and void as to them. Therefore, the trial court correctly set aside its void judgment and orders to afford the Gutangs due process. The Court affirmed the dismissal of FGU’s petition for certiorari. The claims of Tanunliong in G.R. Nos. 108257 and 120954 were also resolved based on the principles governing the finality of judgments and the validity of the underlying claims he purported to assign.