THE TRIAL COURT ERRED IN HOLDING THAT THE ALLEGED FRAUD IN THE APPLICATION FOR THE REGISTRATION OF THE LAND IS THE KIND OF FRAUD CONTEMPLATED BY LAW TO WARRANT RECONVEYANCE OF THE SUBJECT PROPERTY

The settled rule is that every action must be prosecuted or defended in the name of the real party-in-interest. Where the action is allowed to be prosecuted or defended by a representative acting in a fiduciary capacity, the beneficiary must be included in the title of the case and shall be deemed to be the real party-in-interest. The name of such beneficiaries shall, likewise, be included in the complaint.

Section 4, Rule 8 of the Rules of Court further provides that facts showing the capacity of a party to sue or be sued, or the authority of a party to sue or be sued in a representative capacity must be averred in the complaint.  In order to maintain an action in a court of justice, the plaintiff must have an actual legal existence, that is, he or she or it must be a person in law and possessed of a legal entity as either a natural or an artificial person, and no suit can lawfully be prosecuted in the name of that person. The party bringing suit has the burden of proving the sufficiency of the representative character that he claims.  If a complaint is filed by one who claims to represent a party as plaintiff but who, in fact, is not authorized to do so, such complaint is not deemed filed and the court does not acquire jurisdiction over the complaint. It must be stressed that an unauthorized complaint does not produce any legal effect. Corollary, the defendant can assail the facts alleged therein through a motion to dismiss on the ground that the plaintiff has no capacity to sue under Section 1(d) of Rule 16 of the Rules of Court, that is, that he does not have the representative he claims.

Section 7, Rule 3 of the Rules of Court reads:

SEC. 7. Compulsory joinder of indispensable parties. – Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants.

Thus, the presence of all indispensable parties is a condition sine qua non for the exercise of judicial power.  It is precisely when an indispensable party is not before the court that the action should be dismissed. The plaintiff is mandated to implead all indispensable parties, and the absence of one renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties, but even as to those present. One who is a party to a case is not bound by any decision of the court; otherwise, he will be deprived of his right to due process.

The records show that when Roman Realon died intestate on April 4, 1946, he was survived by his son, Alfredo, and his nephews, who were the children of his deceased son, Buenaventura, namely, Marciano, Joaquino, Florentino, Felipe, Marcelo, Sesinando and Montano, all surnamed Realon.  On the other hand, when Alfredo died intestate, he was survived by his heirs, Ruperta Mapanso, Florentino Purificacion, Emiliano Purificacion, the son of his deceased daughter, Beatriz Realon, Serafin Purificacion and Leonedes Purificacion. Marcelo Realon was survived by his heirs, namely, Ma. Luz Librado, Santiago Realon, Isidro R. Manabo, Rufina B. Mercado and Romel Realon. Only Joaquino, Florentino, Felipe, Sesinando and Montano are still alive.

The four (4) respondents herein, who were the plaintiffs in the trial court, sought the nullification of the Contract to Sell in favor of the petitioner executed by Marciano and his brothers, as well as the Contract to Sell executed by Alfredo over the undivided shares in Lot No. 1253, the deed of sale with mortgage executed by Marciano Realon and his brothers, and the deed of sale with mortgage executed by Alfredo in favor of the petitioner.  They likewise sought to nullify OCT No. O-2348 under the name of the petitioner and the reconveyance of the said lot to the respondents, free from all liens and encumbrances on their allegation that the petitioner committed fraud in the execution of the said deeds and in receiving the said title. Hence, all the surviving signatories to the said documents, namely, Joaquino, Francisco, Felipe, Sesinando and Montano, all surnamed Realon, and the other surviving heirs of Alfredo Realon and Marciano and Marcelo, were indispensable parties as plaintiffs.  Moreover, if the trial court rendered judgment against the petitioner, ordering him to convey the property to the vendors, the latter, as the predecessor-in-interest of the vendors, would have to refund to the vendee the amount they received from the latter.  Hence, the respondents herein should have impleaded them in their complaint.  However, the only plaintiffs impleaded in the complaint were the respondents herein, namely, Francisco, Domingo and Felipe, all surnamed Realon and Emiliano Purificacion.  The surviving signatories of the assailed deeds and the other heirs of the deceased vendors were not impleaded as plaintiffs. Without the presence of all the other heirs as plaintiffs, the trial court could not validly render judgment and grant relief in favor of the respondents; it could, likewise, not rule in favor of the petitioner for the refund of his payments made to the respondents as the successors-in-interest of the vendors.  The failure of the respondents to implead the said signatories and all the other heirs as parties-plaintiffs constituted a legal obstacle to the trial court and the appellate court’s exercise of judicial power over the said case, and thereby rendered any orders or judgments made therein a nullity. To reiterate, the absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties, but even as to those present. Thus, the RTC should have ordered the dismissal of the complaint.

The Court notes that the respondents even failed to include the names of all the other heirs, including the signatories to the assailed deeds in the complaint and in the title thereof, and appending thereto a copy of any special power of attorney authorizing the respondents to sue in their respective capacity for said heirs.  Thus, the petitioner was prevented from questioning the capacity of the said heirs to sue in their respective capacity either in a motion to dismiss the complaint or in his answer to the complaint.

We note that of the four (4) plaintiffs, Domingo Realon failed to sign the certification of non-forum shopping.  On the other hand, the three other plaintiffs who signed the certification failed to append to the complaint a special power of attorney signed by all the surviving vendors and other heirs specifically authorizing them to sign the same for and in their behalf.  This is fatal to the complaint and warrants the dismissal thereof.

In sum then, the trial court should have rendered judgment dismissing the respondents’ complaint, and the Court of Appeals should have reversed the appealed decision of the RTC.

Indeed, even if the complaint of the respondents did not suffer from any substantial defects, the appellate court should still have reversed the trial court’s decision on the ground that the respondents failed to prove that the petitioner secured OCT No. O-2348 through actual or extrinsic fraud; and that the Contracts to Sell and Deeds of Sale with Mortgage were fraudulent.

As a ground for the nullification of the decision in LRC Case No. 83-15, and OCT No. O-2348 issued on the basis thereof, fraud must be extrinsic or actual, and not intrinsic.  The Court elaborated on the distinction of the two species of frauds, thus:

Fraud may also be either extrinsic or intrinsic. Fraud is regarded as intrinsic where the fraudulent acts pertain to an issue involved in the original action, or where the acts constituting the fraud were or could have been litigated therein and is regarded as extrinsic where it prevents a party from having a trial or from presenting his entire case to the court, or where it operates upon matters pertaining not to the judgment itself but to the manner in which it is procured, so that there is no fair submission of the controversy.  Extrinsic fraud is also actual fraud, but collateral to the transaction sued upon.

The distinctions are significant because only actual fraud or extrinsic fraud has been accepted as grounds for a judgment to be annulled or, as in this case, a decree of registration reopened and reviewed.  In the oft-cited Macabingkil v. People’s Homesite and Housing Corporation case, the Court drew from American jurisprudence stating that “relief has been granted on the ground that, by some fraud practiced directly upon the party seeking relief against the judgment or decree, (and) that party has been prevented from presenting all of his case to the court.” The “fraud” contemplated by the law in this case (Section 32, P.D. No. 1529) is actual and extrinsic, which includes an intentional omission of fact required by law.  For fraud to justify a review of a decree, it must be extrinsic or collateral, and the facts upon which it is based have not been controverted or resolved in the case where the judgment sought to be annulled was rendered.  Persons who were fraudulently deprived of their opportunity to be heard in the original registration case are entitled to a review of a decree or registration.

In contrast to actual fraud, constructive fraud is construed as such because of its detrimental effect upon public interests, as well as public or private confidence in the Torrens System, even though the act is not done or committed with an actual design to commit positive fraud or injury upon other persons.

The records show that in his application in LRC Case No. 83-15, the petitioner, who was the applicant, alleged that he was the owner of the property, having acquired the same based on the Contract to Sell dated July 31, 1979, executed in his favor by Alfredo and Marciano Realon.  He also alleged that the property was unoccupied and that there was no lien or encumbrance of any kind whatsoever affecting the said land, and that he had no knowledge of any person having any interest therein, legal or equitable.

The allegation that the petitioner was the owner of the property is admittedly incorrect because the deeds executed by Marciano and Alfredo Realon on July 31, 1979 were the contracts to sell, under which the petitioner, as buyer, would acquire title over the property only upon his payment of the balance of the purchase price thereof on or before May 23, 1980; or the issuance of a torrens title in the names of the vendees and the execution by the seller of a final deed of sale. Also, the property was tenanted by respondent Emiliano Purificacion.

When he filed his application on November 11, 1983, the petitioner had not yet paid the balance of the purchase price of the property.  The vendors themselves failed to file an application for the issuance of a torrens title over the property in their names.  Hence, the petitioner had not yet acquired ownership over the property when he filed his application.  However, the Court believes that there was no intention on the part of the petitioner to deceive Alfredo and Marciano Realon, and deprive them of their right to be heard on the said application because (a) the petitioner appended to his application and adduced in evidence copies of the contracts to sell in favor of the petitioner executed by Alfredo and Marciano Realon, the latter for and in his behalf, and those of this brothers; and (b) Alfredo and Marciano Realon were served with copies of the notice of hearing of the said application, even testified for the petitioner and affirmed the validity of  the said deeds.  The respondents, as successors-in-interest of the vendees, can no longer assail the admissions of Alfredo and Marciano when they testified for the petitioner in LRC Case No. 83-15.

As gleaned from the decision of the trial court, the petitioner still had a balance on the purchase price of the property due to the vendees amounting to P129,349.73.

We agree with the appellate court that the RTC erred in its decision in LRC Case No. 83-15 declaring the petitioner, who was the applicant in the RTC, to be the legal owner of the property based on the contracts to sell executed in his favor by Alfredo and his nephews.  However, there is no showing in the records that the decision was appealed to the Court of Appeals.  Indeed, the decision had become final and executory, and the court had issued a decree based on its decision.  In due course, the Register of Deeds issued OCT No. 1248 in favor of the petitioner.  Hence, even if erroneous, the decision can no longer be altered. Consequently, the respondents were barred by the decision of the RTC in Civil Case No. BCV 94-28 from impugning the deed of sale with mortgage executed in favor of the petitioner by Alfredo and his nephews on January 8, 1985.  In its decision in the said case, the RTC declared:

At the trial, Engr. Aldersen Ilaban was called to the stand who testified that he is the authorized representative of the plaintiff, having been designated as administrator of his properties (Exh. “E”). He averred that his principal bought the parcel of land in question located at Carmona, Cavite, from its former owners, Alfredo Realon, Marciano Realon, in two (2) separate deeds of sale with mortgage (Exh. “A” & “B”). He further declared that the sellers undertook to deliver to the plaintiff the title covering the subject property upon payment of the balance of the purchase price.  However, despite plaintiff’s offer to pay the entire consideration of the sale after plaintiff exerted effort to secure the torrens title over the subject lot, defendants refused to accept the same in view of their demand for a higher consideration. This prompted plaintiff to write a letter to defendants on October 15, 1993 whereby he tendered payment of the remaining balance (Exh. “C”). Four months thereafter, he again wrote defendants advising them that if they would still refuse to accept the payment, he would deposit the amount of P42,849.23 directly in open court (Exh. “D”).

Considering that the respondents, as defendants therein, failed to appeal the decision, it became final and executory and can no longer be assailed.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED.  The assailed decision of the Court of Appeals in CA-G.R. CV No. 68979, and that of the Regional Trial Court, are SET ASIDE. No costs.

SO ORDERED.

SOURCE: [ G.R. NO. 159156, January 31, 2005 ]RAMON P. ARON, PETITIONER, VS. FRANCISCO REALON, DOMINGO REALON AND FELIPE REALON, REPRESENTING THE HEIRS OF MARCIANO REALON AND ROMAN REALON, EMILIANO R. PURIFICACION, REPRESENTING THE HEIRS OF ALFREDO REALON AND ROMAN REALON, RESPONDENTS. Tags: Alcantara Alcoy moral damages Alegria actual damages Aloguinsan Argao Asturias Badian Balamban Bantayan Barili Boljoon Borbon Carmen Catmon Compostela Consolacion Cordova Daanbantayan Dumaguete Bais Sibulan Tampi Bacong Negros Bacolod Separation pay Resign Resignation Back wages Backwages Length of service pay benefit employee employer relationship Silay Kabankalan Daan Bantayan Dalaguete Dumanjug Ginatilan Liloan compensatory damages Madridejos Malabuyoc Medellin Minglanilla Moalboal Oslob Pilar Pinamungajan Poro Ronda Samboan San Fernando San Francisco San Remigio Sante Fe Santander Sibonga Sogod Tabogon Tabuelan Tuburan attorney’s fees Tudela exemplary damages Camotes General Luna Siargao Cagayan Davao Kidapawan Attorney Abogado Lawyer Architect Real Estate Broker nominal damages Sales Agent Properties for Sale Looking for Buyers Design Build House and Lot for Sale for Rent Talisay City Mandaue City Lapu Lapu Lapu-Lapu City Yncierto Sesante Villanueva Ruz Jan Edmond Marc Tim Timothy temperate damages Luz liquidated damages Kristin tct transfer certificate of title tax declaration birth certificate relocation survey surveying judicial titling administrative titling patent title denr cenro foreshore lease ecc environmental compliance certificate design build architect cebu engineer interior design designer residential commercial cebu property warehouse for rent for lease marc Christian yncierto ruz jan Edmond yncierto ruz Kristin Villanueva ruz Edmond mabalot ruz marriage certificate timber land forest land watershed agricultural lot land use conversion hearing trial illegal drugs trial lawyer business corporate lawyer labor lawyer immigration law bureau of immigration cebu 9g visa search warrant warrant of arrest motion to quash information complaint police officers buy bust physical suffering shocked horrified mental anguish fright serious anxiety besmirched reputation sleepless nights wounded feelings moral shock social humiliation similar injuries

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