Crisologo vs. JEWM Agro-Industrial Corporation

Persons whose liens are annotated on a certificate of title are indispensable parties in any action for the cancellation of those liens; failure to implead them renders all court proceedings on the matter null and void for want of authority to act.

The controversy originated from several collection cases filed against So Keng Kok, the original owner of two parcels of land. Various creditors, including the petitioners Spouses Crisologo and the respondent JEWM's predecessor-in-interest, had their respective levies annotated on the titles of these properties. JEWM's predecessor acquired the properties through a compromise agreement and subsequently sold them to JEWM. When JEWM obtained new titles, the annotations in favor of other creditors, including the Spouses Crisologo, remained.

• Petitioners Spouses Crisologo won a collection case against So Keng Kok, leading to the annotation of their liens on two of his properties.
• Respondent JEWM became the owner of these properties through a series of sales originating from a compromise agreement in a separate collection case against the same debtor.
• JEWM's new Transfer Certificates of Title (TCTs) continued to bear the annotated liens in favor of the Spouses Crisologo.
• After the Spouses Crisologo obtained a writ of execution to sell the properties to satisfy their judgment credit, JEWM filed a separate case for cancellation of lien before RTC-Br. 14.
• In its complaint, JEWM impleaded the Register of Deeds, the Sheriff, and generic "John and Jane Does," but did not specifically name the Spouses Crisologo.
• The Spouses Crisologo appeared before RTC-Br. 14, asserting they were the "John and Jane Does" and indispensable parties, but the court refused to recognize their standing and denied their motions.
• RTC-Br. 14 proceeded with the case, granted a preliminary injunction for JEWM, and eventually rendered a decision ordering the cancellation of all existing liens, including those of the Spouses Crisologo.

• The action for cancellation of annotations could not proceed without impleading them, as they were the parties who caused the annotations and were thus indispensable parties.
• The failure to implead them was a clear violation of the rule on joinder of parties and their constitutional right to due process.
• The trial court had a duty to order their inclusion in the case, regardless of whether they filed a formal motion to intervene.
• The Court of Appeals erred in ruling that the RTC's void decision had mooted the issues they raised, as a void judgment has no legal effect.
• A petition for certiorari under Rule 65 was the proper remedy because they were not parties to the original case and could not file an appeal, and the trial court's refusal to recognize them constituted grave abuse of discretion.

• The Spouses Crisologo's failure to file a formal motion to intervene under Rule 19 barred their participation in the case.
• The petitioners lacked the legal standing to file a Rule 65 petition because they were not impleaded as parties in the RTC proceedings.
• The petitioners had other plain, speedy, and adequate remedies, such as appeal or annulment of judgment, which they failed to use.
• The case before the Court of Appeals became moot and academic after the RTC's decision became final and executory.
• The petitioners' rights over the properties had already been rendered ineffective by the final and executory decision in the case of JEWM's predecessor-in-interest.

• Procedural Issues:
• Whether the Court of Appeals erred in holding that a motion to intervene is the exclusive means for a real party in interest to participate in a case.
• Whether a petition for certiorari under Rule 65 is a proper remedy for an indispensable party who was not impleaded in the trial court proceedings.
• Whether the Court of Appeals erred in ruling that the issues raised by the petitioners were mooted by the finality of the RTC's decision.
• Substantive Issues:
• Whether persons whose liens are annotated on a certificate of title are indispensable parties to an action for the cancellation of such annotations.

• Procedural:
• Yes, the Court of Appeals erred. A petition for certiorari under Rule 65 is the appropriate remedy for an indispensable party who was not impleaded, as they have no standing to file an appeal. While intervention is an available remedy, the court has a mandatory duty to order the joinder of indispensable parties. The Court relaxed the technical rule on legal standing for a Rule 65 petition, reasoning that to do otherwise would prolong the denial of due process and lead to a multiplicity of suits. The issue was not moot because a judgment rendered without impleading indispensable parties is null and void and can never become final.
• Substantive:
• Yes, persons whose liens are annotated on a certificate of title are indispensable parties. Under Section 108 of P.D. No. 1529 and Section 7, Rule 3 of the Rules of Court, no final determination can be had in an action for cancellation of lien without the presence of the lienholders. The trial court's failure to implead the Spouses Crisologo, despite their repeated pleas, was a manifest disregard of basic rules that constituted grave abuse of discretion, rendering its decision and all related orders null and void for lack of jurisdiction.

• Compulsory Joinder of Indispensable Parties — An indispensable party is a party in interest without whom no final determination can be had of an action. The Court applied this by ruling that the Spouses Crisologo, as lienholders whose rights were directly affected by the cancellation, were indispensable parties who must be joined as defendants pursuant to Section 7, Rule 3 of the Rules of Court.
• Due Process in Cancellation of Lien — Section 108 of Presidential Decree No. 1529 requires that notice be given to all parties in interest before a court may hear and determine a petition for the cancellation of annotations on a title. The Court held that the RTC violated this provision and the petitioners' right to due process by proceeding with the cancellation without their participation.
• Grave Abuse of Discretion — This is defined as an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, amounting to a lack of jurisdiction. The Court found the trial judge guilty of grave abuse of discretion for his "obstinate disregard of basic and established rule of law or procedure" in refusing to recognize the petitioners as indispensable parties.
• Liberal Interpretation of Procedural Rules — The Court held that technical rules of procedure should be used to promote, not frustrate, justice. This principle was applied to allow the petitioners' Rule 65 petition despite their technical lack of legal standing as parties in the lower court, in order to rectify a void judgment and prevent a miscarriage of justice.

• "Time and again, the Court has ruled that 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 to those present. Consequently, the proceedings before RTC-Br. 14 were null and void including the assailed orders, which may be 'ignored wherever and whenever it exhibits its head.'"

• Southwestern University v. Laurente — Cited to support the principle that the cancellation of an annotation of an encumbrance cannot be ordered without giving notice to the parties whose liens were annotated on the certificate of title.
• Sps. Crisologo v. Judge George E. Omelio — A related administrative case where the Supreme Court found the same trial judge guilty of gross ignorance of the law for the same act of refusing to recognize the Spouses Crisologo as indispensable parties, reinforcing the finding of grave abuse of discretion in the present case.
• DBP v. COA — Referenced to state the general rule that a petition for certiorari under Rule 65 is only available to one who was a party in the proceedings below. The Court then carved out an exception for this case based on the need to dispense substantial justice.

• Section 108, Presidential Decree No. 1529 (Property Registration Decree) — This section requires notice to all parties in interest for any amendment or alteration of a certificate of title, including the cancellation of a memorandum thereon. It was the statutory basis for requiring the petitioners' inclusion.
• Section 7, Rule 3, Rules of Court — This rule mandates the compulsory joinder of indispensable parties, defined as those without whom no final determination of an action can be had. The Court cited this to establish the trial court's duty to implead the petitioners.
• Rule 65, Rules of Court — This rule on Certiorari, Prohibition, and Mandamus was the procedural vehicle used by the petitioners. The Court affirmed its applicability, holding it is the proper remedy against an interlocutory order rendered with grave abuse of discretion, especially when appeal is unavailable.
• Rule 19, Rules of Court — This rule on Intervention was cited by the respondent as the proper but unused remedy. The Court clarified that while available, the failure to intervene does not excuse the trial court's primary duty to order the joinder of indispensable parties.