GR 127683; (August, 1998) (Digest)
G.R. No. 127683 August 7, 1998
LETICIA P. LIGON, petitioner, vs. COURT OF APPEALS and IGLESIA NI CRISTO, respondents.
FACTS
Petitioner Leticia P. Ligon is the mortgagee in three deeds of mortgage executed in 1988 covering two parcels of land owned by the Islamic Directorate of the Philippines (IDP), securing loans totaling P9 million. Two groups vied for control of IDP. On April 20, 1989, the Carpizo group of IDP executed a Deed of Absolute Sale over the same two lots in favor of private respondent Iglesia ni Cristo (INC). IDP failed to clear the lots of squatters, prompting INC to file a complaint for specific performance (Civil Case No. Q-90-6937). On May 30, 1991, the Tamano group of IDP filed a petition with the SEC to annul the sale to INC (SEC Case No. 4012). The SEC annulled the sale, but the Court of Appeals set aside this portion of the SEC decision in CA-G.R. SP No. 33295.
On October 31, 1991, INC filed a complaint for the annulment of the deeds of mortgage (Civil Case No. Q-91-10494), impleading Ligon, the mortgagors, and IDP as defendants. IDP filed an answer with a cross-claim against Ligon. Ligon filed an answer with counterclaim, a cross-claim against IDP, and a third-party complaint. Ligon later moved to declare INC and IDP in default for failure to answer her counterclaim and cross-claim. The trial court granted the motion and allowed Ligon to present evidence ex-parte on her cross-claim against IDP. On August 2, 1995, Ligon filed an urgent motion for rendition of partial judgment against IDP on the cross-claim for foreclosure. On October 27, 1995, the trial court rendered a partial judgment ordering IDP to pay Ligon the loan amounts with 36% interest compounded annually and directing foreclosure in case of non-payment.
INC filed a motion for reconsideration of the partial judgment, which the trial court denied on March 20, 1996, ruling that INC had no personality to seek reconsideration as it was not a party to the cross-claim, its interests were adverse to IDP, and it was a subsequent purchaser whose rights were subordinate to the registered mortgages. INC then filed a petition for certiorari with the Court of Appeals (CA-G.R. SP No. 40258). On September 11, 1996, the Court of Appeals granted INC’s petition, annulling the partial judgment and the order denying reconsideration, ruling that the trial court committed grave abuse of discretion by rendering partial judgment without giving INC an opportunity to present evidence on its complaint for annulment of the mortgages, as the issues were interrelated. Ligon’s motions for reconsideration and to recuse justices were denied on January 3, 1997. Ligon filed the instant petition.
ISSUE
Whether the Court of Appeals acted with grave abuse of discretion or without jurisdiction in annulling the trial court’s partial judgment in the cross-claim for foreclosure, given that INC was not a party to the cross-claim and IDP was not impleaded in the certiorari petition.
RULING
The Supreme Court DISMISSED the petition for lack of merit. The Court held that the Court of Appeals did not commit grave abuse of discretion. The trial court’s partial judgment, rendered after declaring IDP in default on Ligon’s cross-claim, was premature because the main action filed by INC for the annulment of the mortgages was still pending. The validity of the mortgages was the very issue in INC’s complaint. The trial court should have first resolved INC’s action before proceeding with the cross-claim for foreclosure, as the issues were intertwined. The Court of Appeals correctly ruled that the trial court deprived INC of its day in court. The Court also found that IDP was not an indispensable party in the certiorari proceeding before the Court of Appeals, as the relief sought was the nullification of the trial court’s orders, not the nullification of the contracts themselves. Furthermore, INC, as the plaintiff in the main action and a subsequent purchaser claiming the mortgages were null, had the legal standing to challenge the partial judgment. The trial court’s declaration of default against IDP did not automatically entitle Ligon to a judgment on the cross-claim while the principal action questioning the mortgages’ validity remained unresolved.