G.R. No. 168882 . January 31, 2007.
INTESTATE ESTATE OF THE LATE NIMFA SIAN, Represented by its special administratrix, CHARITO J. SIAN-PARREÑO, Petitioner, vs. PHILIPPINE NATIONAL BANK, Respondent.

FACTS

Nimfa Sian filed a petition with the Regional Trial Court (RTC) to cancel mortgage liens on three titled properties against Maybank Philippines, Inc. (formerly PNB-RB). During the proceedings, PNB filed a “Motion for Substitution and Motion to Dismiss,” claiming it acquired the properties via a dacion en pago from Maybank and was thus an indispensable party. It also sought dismissal due to the petition’s alleged lack of verification and certification against forum shopping. Nimfa opposed the motions. After Nimfa’s death, her estate, represented by Charito J. Sian-Parreño, was substituted as petitioner.
The petitioner and PNB subsequently filed a Joint Manifestation stating they would submit the pending incident for the court’s resolution without further oral argument and requested the cancellation of a scheduled hearing. The RTC, in a single Order, denied PNB’s motions, finding no supporting documents for the dacion en pago and noting the presence of a certification against forum shopping. Crucially, the same Order granted the petition to cancel the mortgage liens, effectively deciding the main case on the merits based solely on the pleadings.

ISSUE

Whether the Court of Appeals correctly annulled the RTC’s Order for having been rendered in violation of due process.

RULING

Yes, the Court of Appeals correctly annulled the judgment. The Supreme Court affirmed that while Rule 47 of the Rules of Court lists only extrinsic fraud and lack of jurisdiction as grounds for annulment of judgment, jurisprudence consistently recognizes a denial of due process as an additional, fundamental ground. A judgment rendered in violation of due process is void and can be assailed at any time.
Here, the RTC committed a grave denial of due process. The Joint Manifestation submitted by the parties pertained only to the resolution of the pending incidents—the Motion for Substitution and Motion to Dismiss. It did not constitute a submission of the entire main case for decision on the merits. By proceeding to grant the petition for cancellation of the mortgage liens without conducting a trial or receiving any evidence on the substantive issues, the RTC deprived PNB of its right to be heard and to present its evidence in an adversarial proceeding. The cancellation of a mortgage lien is a substantial adjudication of property rights that cannot be validly made based solely on pleadings and motions without affording the parties a full opportunity to prove their respective claims and defenses. Consequently, the RTC’s Order was void for having been issued in violation of constitutional due process, warranting its annulment by the Court of Appeals.