G.R. No. 182819 ; June 22, 2011
MAXIMINA A. BULAWAN, Petitioner, vs. EMERSON B. AQUENDE, Respondent.

FACTS

On March 1, 1995, petitioner Maximina A. Bulawan filed a complaint for annulment of title, reconveyance, and damages against Lourdes Yap and the Register of Deeds before the Regional Trial Court (RTC) of Legazpi City, docketed as Civil Case No. 9040. Bulawan claimed ownership of Lot No. 1634-B of Psd-153847, covered by TCT No. 13733, which she bought from the Yaptengco brothers. She alleged that Yap claimed ownership of the same property and caused the issuance of TCT No. 40292 in her name. In her Answer, Yap clarified she asserted ownership over Lot No. 1634-A of Psd-187165 and mentioned that in a prior case, Civil Case No. 5064, the RTC had declared Psd-153847 simulated and adjudged Yap Chin Cun as the rightful owner of Lot No. 1634-B, which was later sold to the Aquende family. On November 26, 1996, the RTC ruled in favor of Bulawan, declaring her the lawful owner of Lot 1634-B, ordering Yap to respect her ownership, and declaring Psd-187165 and TCT No. 40292 null and void, with an order for the Register of Deeds to cancel them. Yap’s appeal was dismissed by the Court of Appeals on July 20, 2001, and the RTC decision became final and executory on February 7, 2002. A writ of execution was issued on July 19, 2002.
Respondent Emerson B. Aquende, who was not a party to Civil Case No. 9040, learned of the writ when the Register of Deeds required him to produce his TCT No. 40067. Aquende filed a Third Party Claim, which was denied by the Clerk of Court. He then filed a Notice of Appearance with Third Party Motion and a Supplemental Motion, praying for the partial annulment of the RTC decision regarding the cancellation of Psd-187165 and related titles, arguing he was not bound by the decision as he was not a party and was deprived of due process. The RTC denied his motions on February 19, 2003, stating it had lost jurisdiction. Aquende subsequently filed a petition for annulment of judgment before the Court of Appeals on grounds of extrinsic fraud and lack of jurisdiction, alleging he was an indispensable party not impleaded, and that Bulawan failed to implead him despite knowledge of his title. The Court of Appeals granted Aquende’s petition on November 26, 2007, declaring the RTC decision void, reinstating his TCT No. 40067 and Psd-187165, and ordering the parties to abide by the decision in Civil Case No. 5064. Bulawan’s motion for reconsideration was denied on May 7, 2008, leading to this petition.

ISSUE

1. Whether the Court of Appeals erred in granting the petition for annulment of judgment under Rule 47 of the Rules of Court.
2. Whether the Court of Appeals erred in considering respondent Emerson B. Aquende as an indispensable party in Civil Case No. 9040.
3. Whether the Court of Appeals erred in overturning a final and executory decision of another Division of the Court of Appeals.

RULING

The Supreme Court denied Bulawan’s petition, affirming the Court of Appeals’ decision.
1. On the Petition for Annulment of Judgment: The Court held that a petition for annulment of judgment under Rule 47 is an equitable remedy available only in exceptional cases, such as when the judgment is void for lack of jurisdiction or obtained through extrinsic fraud. The Court of Appeals correctly entertained Aquende’s petition because the issue of him being an indispensable party was not raised or ruled upon in the prior appeal that affirmed the RTC decision. Since Aquende was not a party to the original case, he could not have raised the issue earlier, and the prior division of the Court of Appeals had no opportunity to address it. Thus, the petition was a proper recourse to challenge a void judgment that deprived him of property without due process.
2. On Aquende as an Indispensable Party: The Court ruled that Aquende was an indispensable party in Civil Case No. 9040. An indispensable party is one without whom no final determination can be had of an action, and whose interest is so substantial that it will be directly affected by the judgment. Aquende’s ownership of Lot No. 1634-B, as evidenced by TCT No. 40067 derived from the prior decision in Civil Case No. 5064, was directly and adversely affected by the RTC decision that ordered the cancellation of Psd-187165 and related titles. The RTC’s failure to implead him, despite knowledge of his claim, meant it did not acquire jurisdiction over his person, rendering the judgment void as to him. The Court cited Section 11, Rule 3 of the Rules of Court, which allows the court to add indispensable parties on its own initiative, and held that the RTC should have done so to ensure due process.
3. On Overturning a Final and Executory Decision: The Court held that the Court of Appeals did not err in annulling the RTC decision, as a void judgment can be attacked at any time, even after finality. The prior affirmation by another division of the Court of Appeals did not bar Aquende’s petition because that division did not rule on the issue of indispensability of parties, which was crucial to the judgment’s validity. Since the RTC decision was void for lack of jurisdiction over an indispensable party, it produced no legal effect and could be annulled to prevent a grave injustice. The Court emphasized that finality of judgment does not apply when the judgment is void, as in this case where Aquende’s property rights were adjudicated without his participation.
The Supreme Court affirmed that the RTC decision was void for lack of jurisdiction over Aquende, an indispensable party, and upheld the Court of Appeals’ reinstatement of his title and the directive to respect the prior decision in Civil Case No. 5064.