Chico vs. Ciudadano

A judgment in a land registration case is void for extrinsic fraud and lack of jurisdiction where the petitioner deliberately fails to implead a known real party in interest who is in possession of the property and has a registered claim of ownership, thereby preventing that party from participating in the proceedings.

Respondent Elsie Ciudadano and her husband purchased the subject parcel of land in Quezon City from the registered owner, Rosalita G. Bengzon, via a Deed of Absolute Sale executed on June 23, 1989. This deed was annotated on TCT No. 57394 (PR-11986) on June 29, 1989. Ciudadano took possession of the property in 1992 and resided there continuously. In 2010, petitioner Gloria A. Chico purchased the same property at a tax delinquency sale. After the redemption period lapsed, Chico filed a Petition for Issuance of a New Title before the Regional Trial Court (RTC) in 2012, seeking cancellation of Bengzon's title and issuance of a new one in her name. The RTC granted the petition without opposition, leading to the cancellation of TCT No. 57394 (PR-11986) and issuance of a new title to Chico. Ciudadano learned of these proceedings only in 2016 when she received an order in a separate writ of possession case filed by Chico.

• Purchase by Ciudadano: On June 23, 1989, Elsie Ciudadano and her husband purchased the subject property from registered owner Rosalita G. Bengzon via a notarized Deed of Absolute Sale. The deed was annotated on TCT No. 57394 (PR-11986) on June 29, 1989, with the inscription: "Title to be issued upon reconstitution of the original title."
• Possession by Ciudadano: Ciudadano took actual possession of the property in 1992 and continuously resided there, treating it as the family home. A 2018 Barangay Clearance confirmed her residence for at least 26 years.
• Tax Delinquency Sale to Chico: On July 8, 2010, the Quezon City Treasurer sold the property at a public auction for tax delinquency. Gloria A. Chico was the highest bidder. After the one-year redemption period expired, a Final Bill of Sale was executed in her favor on January 12, 2012.
• Chico's Petition for New Title: On April 10, 2012, Chico filed a Petition for Issuance of a New Title before the RTC, invoking Sections 75 and 107 of P.D. No. 1529. She alleged the property was registered in Bengzon's name and prayed for cancellation of the existing title and issuance of a new one in her name.
• RTC Proceedings: Notices were sent to various government offices and posted, but not to Ciudadano or Bengzon. The RTC declared a general default and, on December 10, 2012, granted the petition. An Amended Decision was issued on June 27, 2013 to correct the title number. A new title (TCT No. 004-2016005243) was issued to Chico.
• Ciudadano's Discovery and Annulment Petition: Ciudadano learned of the new title only upon receiving a November 3, 2016 order in a separate writ of possession case filed by Chico. On January 16, 2017, Ciudadano filed a Petition for Annulment of Judgment before the CA, alleging extrinsic fraud and lack of jurisdiction.
• CA Ruling: The CA granted the petition, finding Ciudadano was an indispensable party not impleaded, and that Chico's failure to notify her constituted extrinsic fraud and deprived the RTC of jurisdiction.

• Collateral Attack on Title: Petitioner Chico argued that Ciudadano's Petition for Annulment of Judgment constituted a prohibited collateral attack on her new certificate of title, which had become indefeasible.
• Ciudadano Not a Real Party in Interest: Chico maintained that Ciudadano was not a real party in interest because the annotation of the 1989 Deed on the title was merely a "PROV. REGISTRATION" (provisional registration) and did not confer ownership. As the registered owner, only Bengzon was entitled to notice.
• No Extrinsic Fraud: Chico contended that Ciudadano failed to prove any fraudulent act committed outside the trial that prevented her from presenting her case. The failure to implead Ciudadano did not amount to extrinsic fraud.

• Indispensable Party: Respondent Ciudadano countered that she was a real party in interest and an indispensable party, having purchased the property in 1989 via a notarized deed annotated on the title, and having been in continuous possession since 1992.
• Extrinsic Fraud: Ciudadano argued that Chico's deliberate failure to implead her, despite knowledge of her claim and possession, constituted extrinsic fraud—a fraudulent act committed outside the trial that prevented her from having her day in court.
• Lack of Jurisdiction: Ciudadano asserted that the RTC never acquired jurisdiction over her person because she was not impleaded and summons were not served on her, violating her right to procedural due process.

• Extrinsic Fraud: Whether the Court of Appeals erred in annulling the RTC judgment on the ground of extrinsic fraud based on Chico's failure to implead Ciudadano.
• Lack of Jurisdiction: Whether the RTC lacked jurisdiction over the person of Ciudadano, a real party in interest, warranting annulment of its judgment.
• Collateral Attack: Whether the Petition for Annulment of Judgment constitutes a prohibited collateral attack on Chico's certificate of title.

• Extrinsic Fraud: The CA correctly found extrinsic fraud. Chico had constructive notice of Ciudadano's claim via the annotated deed and actual knowledge of her possession. Deliberately failing to implead a known real party in interest constitutes extrinsic fraud, as it prevents that party from participating in the case and affects the manner in which the judgment was obtained.
• Lack of Jurisdiction: The RTC never acquired jurisdiction over Ciudadano. As an indispensable party, her presence was necessary for the court to render a valid judgment. The failure to implead and serve summons on her violated her right to due process, rendering the judgment void for lack of jurisdiction over her person.
• Collateral Attack: The argument fails. A void judgment and the title derived from it are subject to both direct and collateral attack. Because the RTC judgment was void for lack of jurisdiction and extrinsic fraud, the resulting title is void and cannot enjoy the protection of indefeasibility.

• Extrinsic Fraud in Annulment of Judgment — Extrinsic fraud refers to any fraudulent act of the prevailing party committed outside the trial that prevents the unsuccessful party from fully presenting their case. It includes the deliberate failure to implead a known real party in interest, which deprives that party of the opportunity to be heard.
• Indispensable Parties — Parties in interest without whom no final determination can be had must be joined as plaintiffs or defendants. Their presence is necessary to vest the court with jurisdiction. A judgment rendered without an indispensable party is null and void.
• Indefeasibility of Title Does Not Apply to Void Titles — The principle of indefeasibility of a Torrens title does not apply where the title was secured through fraud, misrepresentation, or pursuant to a void judgment. A void title is subject to direct or collateral attack.

• "The failure to comply with the notification requirement in the petition for the cancellation of title to Chico amounts to extrinsic fraud. Under the Property Registration Decree, all parties in interest shall be given notice." — This passage underscores the mandatory nature of notifying all interested parties in land registration proceedings.
• "A void judgment, from its inception, is a complete nullity and is without legal effect... It cannot affect, impair, or create rights, nor can any rights be based on it." — This excerpt articulates the legal consequence of a judgment rendered without jurisdiction.
• "The presence of indispensable parties is necessary to vest the court with jurisdiction, thus, without their presence to a suit or proceeding, the judgment of a court cannot attain real finality." — This statement reinforces the jurisdictional requirement of impleading indispensable parties.

• Spouses Anonuevo v. Court of Appeals, 313 Phil. 709 (1995) — Cited for the principle that a buyer who conducts an ocular inspection and sees improvements indicating adverse possession cannot claim to be an innocent purchaser.
• Philippine Trust Co. v. Court of Appeals, 378 Phil. 484 (1999) — Invoked for the rule that every possessor has a right to be respected in his possession and must be protected by legal means.
• Rodriguez v. Lim, 538 Phil. 609 (2006) — Applied for the doctrine that the indefeasibility of a Torrens title does not apply where fraud attended its issuance.
• Judge Carillo v. Court of Appeals, 534 Phil. 154 (2006) — Relied upon for the holding that the exclusion of a real party in interest can be a sufficient basis for annulment of judgment due to extrinsic fraud.
• Macawadib v. The Philippine National Police Directorate for Personnel and Records Management, 715 Phil. 484 (2013) — Cited for the rule that when an indispensable party is not impleaded, the judgment rendered is void.

• Section 75, Presidential Decree No. 1529 (Property Registration Decree) — Provides that upon expiration of the redemption period after registered land is sold on execution, the purchaser may petition the court for entry of a new certificate of title.
• Section 107, P.D. No. 1529 — Allows a party in interest to file a petition in court to compel surrender of a duplicate certificate of title or for issuance of a new certificate when the duplicate cannot be surrendered.
• Section 2, Rule 3, Rules of Court — Mandates that every action must be prosecuted or defended in the name of the real party in interest.
• Section 7, Rule 3, Rules of Court — Requires the compulsory joinder of indispensable parties.
• Section 2, Rule 47, Rules of Court — Provides that a petition for annulment of judgment may be based only on extrinsic fraud or lack of jurisdiction.

• Chief Justice Alexander G. Gesmundo (Ponente)
• Associate Justice Ramon Paul L. Hernando
• Associate Justice Rodil V. Zalameda
• Associate Justice Antonio T. Kho, Jr.
• Associate Justice Maria Filomena D. Singh