Crisologo vs. JEWM Agro-Industrial Corporation

Parties whose liens appear as annotations on certificates of title are indispensable parties in an action for cancellation of such annotations and must be joined as defendants pursuant to Section 7, Rule 3 of the Rules of Court and given notice under Section 108 of P.D. No. 1529; their exclusion constitutes grave abuse of discretion amounting to lack of jurisdiction that justifies certiorari under Rule 65 even if they lack technical legal standing as non-parties, and any judgment rendered without them is void and cannot attain finality.

The controversy arose from multiple collection suits against So Keng Kok involving properties that were transferred through a compromise agreement to Sy Sen Ben, then to Nilda Lam, and finally to JEWM. Despite the transfers, the certificates of title retained annotations of liens in favor of various creditors including Spouses Crisologo, whose claims arose from separate collection cases.

• Filed in RTC-Br. 14, Davao City — JEWM filed Civil Case No. 33,551-2010 (action for Cancellation of Lien with prayer for preliminary injunction) against the Registry of Deeds, Sheriff Robert Medialdea, and "John & Jane Does"
• September 27, 2010 — RTC-Br. 14 denied Spouses Crisologo's Omnibus Motion to be recognized as parties and granted JEWM's application for preliminary injunction
• October 7, 2010 — RTC-Br. 14 denied Spouses Crisologo's Very Urgent Omnibus Motion for lack of legal standing (failure to file formal notice of appearance)
• November 9, 2010 — RTC-Br. 14 denied reconsideration of the October 7, 2010 order
• January 10, 2011 — RTC-Br. 14 rendered judgment in favor of JEWM, making the preliminary injunction permanent and ordering the cancellation of all liens on TCT Nos. 325675 and 325676
• Filed in CA — Spouses Crisologo filed petition for certiorari under Rule 65 (CA-G.R. SP No. 03896-MIN) assailing the September 27, 2010, October 7, 2010, and November 9, 2010 orders of RTC-Br. 14
• May 6, 2011 — CA denied the petition for lack of merit, ruling that the writ of preliminary injunction was already fait accompli and that failure to file a motion to intervene under Rule 19 rendered certiorari improper
• Elevated to SC — Spouses Crisologo filed petition for review on certiorari under Rule 45

• Spouses Crisologo were plaintiffs in Civil Case Nos. 26,810-98 and 26,811-98 before RTC-Br. 15, Davao City, against Robert Limso and So Keng Kok, et al.
• JEWM was successor-in-interest of Sy Sen Ben, plaintiff in Civil Case No. 26,513-98 before RTC-Br. 8 against the same defendants
• On October 19, 1998, RTC-Br. 8 rendered a decision based on a compromise agreement directing defendants to transfer subject properties (covered by TCT Nos. 292597 and 292600) to Sy Sen Ben
• Sy Sen Ben sold the properties to Nilda Lam, who sold them to JEWM on June 1, 2000; TCT Nos. 325675 and 325676 were issued in JEWM's name, both bearing the same annotations of liens and notice of lis pendens from the pending cases against So Keng Kok
• On July 1, 1999, Spouses Crisologo prevailed in RTC-Br. 15 and were awarded judgment; the decision became final and executory
• On June 15, 2010, a writ of execution was issued; the Branch Sheriff scheduled a public auction on August 26, 2010, including the subject properties now registered in JEWM's name
• JEWM filed an Affidavit of Third Party Claim and Urgent Motion Ad Cautelam in the execution proceedings, which was denied on August 26, 2010
• JEWM then filed the separate action for cancellation of lien before RTC-Br. 14, impleading the Registry of Deeds, Sheriff, and "John & Jane Does" (referring to persons claiming liens on the properties)
• Spouses Crisologo appeared in RTC-Br. 14 and filed a Very Urgent Manifestation questioning the court's authority to restrain the execution proceedings; they subsequently filed an Omnibus Motion praying for denial of the preliminary injunction application and recognition as parties (claiming they were the "John & Jane Does" named in the complaint)
• RTC-Br. 14 denied all motions by Spouses Crisologo, granted preliminary injunction to JEWM, and eventually rendered judgment on January 10, 2011, canceling the liens

• Spouses Crisologo are indispensable parties whose liens appear as annotations on the certificates of title, and therefore must be given notice under Section 108 of P.D. No. 1529 before any cancellation
• The RTC-Br. 14 gravely abused discretion in failing to recognize them as indispensable parties and in requiring them to file a motion to intervene under Rule 19 instead of simply joining them as defendants under Section 7, Rule 3
• They were deprived of due process when excluded from the cancellation proceedings despite their obvious interest as annotated lien holders
• The CA erred in ruling that the issues were mooted by the January 10, 2011 decision, as said decision was void for failure to implead indispensable parties and therefore could not attain finality
• They had legal standing to file certiorari as they were the "John & Jane Does" named in the complaint

• Spouses Crisologo failed to file a motion to intervene under Rule 19, which was the proper remedy, making certiorari under Rule 65 improper since it is not a substitute for lost remedies
• Spouses Crisologo lacked legal standing to file a Rule 65 petition since they were not impleaded in the RTC-Br. 14 proceedings
• Spouses Crisologo were not indispensable parties because their rights were rendered ineffective by the final October 19, 1998 decision of RTC-Br. 8 which disposed of the properties unconditionally in favor of JEWM's predecessor-in-interest
• Even if Section 108 of P.D. No. 1529 applies, no notice was required because Spouses Crisologo were not real parties-in-interest, or if they were, their non-participation was due to their own failure to intervene
• The RTC-Br. 14 decision became final and executory because no appeal was perfected, rendering the CA petition moot and academic

• Procedural Issues:
  • Whether Spouses Crisologo had legal standing to file a petition for certiorari under Rule 65 despite not being impleaded as parties in the RTC-Br. 14 proceedings
  • Whether the petition for certiorari was rendered moot and academic by the rendition of the final judgment in RTC-Br. 14 on January 10, 2011
  • Whether Spouses Crisologo should have been required to file a motion to intervene under Rule 19 rather than being recognized as indispensable parties
• Substantive Issues:
  • Whether Spouses Crisologo are indispensable parties in an action for cancellation of annotations on certificates of title where their liens appear as annotations
  • Whether the RTC-Br. 14 committed grave abuse of discretion in denying Spouses Crisologo's participation in the proceedings

• Procedural:
  • Standing: While normally only parties to proceedings may file certiorari, the SC applied liberality and recognized Spouses Crisologo's standing because the exclusion of indispensable parties renders all proceedings null and void; technical rules should not frustrate substantial justice
  • Mootness: The petition was not moot despite the final judgment because the judgment was void ab initio for failure to implead indispensable parties; a void judgment cannot attain finality or render issues moot
  • Intervention vs. Joinder: The RTC erred in requiring a motion to intervene; as indispensable parties, Spouses Crisologo should have been joined as defendants under Section 7, Rule 3 without need for motion to intervene
  • Availability of Certiorari: Certiorari was proper because no plain, speedy, and adequate remedy existed—appeal was unavailable to non-parties, intervention was improperly required, and annulment of judgment requires a final judgment (which was void)
• Substantive:
  • Indispensable Parties: Spouses Crisologo are indispensable parties because their liens appear as annotations on the certificates of title; they stand to be benefited or injured by any order canceling such annotations
  • Grave Abuse of Discretion: The RTC-Br. 14 committed grave abuse of discretion amounting to lack of jurisdiction in refusing to recognize Spouses Crisologo as indispensable parties despite their annotated liens being apparent on the face of the titles; this constituted "obstinate disregard of basic and established rule of law"

• Indispensable Parties (Section 7, Rule 3, Rules of Court) — Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants. The SC applied this to hold that lien holders annotated on certificates of title are indispensable parties in cancellation proceedings because the complete determination of all possible issues requires their presence.
• Section 108 of P.D. No. 1529 (Property Registration Decree) — Before a court may hear and determine a petition for cancellation of annotations on certificates of title, notice must be given to all parties in interest. The SC held that persons whose liens appear as annotations are "parties in interest" entitled to notice, and cancellation without such notice violates due process.
• Grave Abuse of Discretion — Defined as "evasion of a positive duty or to a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law." The SC found the RTC committed this by disregarding the mandatory joinder of indispensable parties despite clear evidence on the titles.
• Exception to Standing in Certiorari — While DBP v. COA requires that only parties to proceedings may file certiorari, the SC carved an exception: when indispensable parties are excluded and proceedings are void, technical lack of standing should not bar relief to prevent multiplicity of suits and denial of due process.
• Void Judgments — A judgment rendered without jurisdiction (due to absence of indispensable parties) is void and may be "ignored wherever and whenever it exhibits its head"; it cannot attain finality or be the basis of mootness.

• "In an action for the cancellation of memorandum annotated at the back of a certificate of title, the persons considered as indispensable include those whose liens appear as annotations pursuant to Section 108 of P.D. No. 1529."
• "As indispensable parties, Spouses Crisologo should have been joined as defendants in the case pursuant to Section 7, Rule 3 of the Rules of Court."
• "Rules of procedure are tools designed not to thwart but to facilitate the attainment of justice; thus, their strict and rigid application may, for good and deserving reasons, have to give way to, and be subordinated by, the need to aptly dispense substantial justice in the normal cause."
• "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."
• "This manifest disregard of the basic rules and procedures constitutes a grave abuse of discretion."

• Gonzales v. Judge Bersamin — Cited by Spouses Crisologo and followed by SC; established that Section 108 of P.D. No. 1529 requires notice to all parties in interest before cancellation of annotations
• Southwestern University v. Laurente — Held that cancellation of annotation of encumbrance cannot be ordered without notice to parties annotated in the certificate of title
• Sps. Crisologo v. Judge George E. Omelio — Related administrative case where the same judge was found guilty of gross ignorance of law for failing to recognize Spouses Crisologo as indispensable parties in the same case
• State Prosecutors II Comilang and Lagman v. Judge Medel Belen — Defined grave abuse of discretion as inexcusable abuse of authority and obstinate disregard of basic rules
• DBP v. COA — Cited by JEWM for the rule that certiorari is only available to parties in the proceedings; distinguished by SC as inapplicable in this exceptional case involving exclusion of indispensable parties

• Section 7, Rule 3 of the Rules of Court — Compulsory joinder of indispensable parties; mandates that parties without whom no final determination can be had must be joined as plaintiffs or defendants
• Section 108 of P.D. No. 1529 (Property Registration Decree) — Requires notice to all parties in interest before court may hear and determine petition for cancellation of annotations on certificates of title
• Rule 19 of the Rules of Court — Intervention; SC held this was improperly required when joinder of indispensable parties was the proper procedure
• Rule 65 of the Rules of Court — Certiorari; SC held this was proper remedy when no appeal or other adequate remedy existed and RTC acted with grave abuse of discretion