Dare Adventure Farm Corporation vs. Court of Appeals

A person who was not impleaded as a party in a civil action is not bound by the judgment rendered therein and cannot, for that reason, avail of the remedy of annulment of judgment under Rule 47 of the Rules of Court, which is extended only to a party in whose favor the ordinary remedies of new trial, reconsideration, appeal, or petition for relief are no longer available through no fault of his own.

Dare Adventure Farm Corporation is a corporation that acquired a 65,100-square-meter parcel of land situated in San Roque, Lilo-an, Metro Cebu and known as lot 7531-part, from the Goc-ong family. The Goc-ongs had earlier constituted a mortgage over the same property in favor of the spouses Felix and Nenita Ng and the spouses Martin and Azucena Ng to secure an obligation of ₱648,000.00, under terms that would vest ownership in the Ngs upon the Goc-ongs' failure to pay the stipulated installments. The dispute reached the Supreme Court through a petition for review of a Court of Appeals resolution dismissing an action for annulment of judgment, a remedy governed by Rule 47 of the 1997 Rules of Civil Procedure and available only on the grounds of lack of jurisdiction or extrinsic fraud, with the effect of judgments defined by Section 47(b) of Rule 39.

On July 28, 1994, Dare Adventure Farm Corporation acquired from Agripina R. Goc-ong, Porferio Goc-ong, Diosdado Goc-ong, Crisostomo Goc-ong, Tranquilino Goc-ong, Naciancena Goc-ong, and Avelino Goc-ong, as vendors, a parcel of land containing 65,100 square meters situated in San Roque, Lilo-an, Metro Cebu and known as lot 7531-part. The deed of absolute sale was executed on that date, with the corporation appearing as vendee.

The corporation later discovered that on June 19, 1990, the Goc-ongs had executed a joint affidavit declaring themselves the owners of the property and mortgaging it to Felix Ng, married to Nenita N. Ng, and Martin T. Ng, married to Azucena S. Ng, to secure an obligation amounting to ₱648,000.00. Under the affidavit, the Goc-ongs bound themselves to pay the obligation in thirty-six monthly installments, subject to the condition that should they fail to pay, the Ngs would automatically become the owners of the property.

With the Goc-ongs apparently failing to pay their obligation as stipulated, the Ngs brought on January 16, 1997 a complaint for the recovery of a sum of money or, in the alternative, for the foreclosure of the mortgage, in the Regional Trial Court, Branch 56, Mandaue City. The complaint, docketed as Civil Case No. MAN-2838, named only Agripina R. Goc-ong as defendant. Agripina failed to file her answer and was declared in default. On October 16, 1997, the trial court rendered judgment declaring the Ngs the owners of lot 7531-part and directing Agripina to pay ₱10,000.00 as attorney's fees and ₱10,000.00 as litigation expenses.

In 2001, the corporation commenced in the Court of Appeals an action for the annulment of the October 16, 1997 decision. On June 19, 2001, the Court of Appeals dismissed the petition outright under Rule 47 of the 1997 Rules of Civil Procedure, observing that nowhere in the petition was there an allegation explaining why the ordinary remedies of new trial, appeal, petition for relief, or other appropriate remedies were no longer available through no fault of the petitioner. The corporation moved for reconsideration, but the Court of Appeals denied the motion on October 24, 2003, on the basis that no such explanation had been shown.

The corporation was never impleaded in Civil Case No. MAN-2838, and the trial court's judgment in that case rested on Agripina's default. It was the trial court's declaration of the Ngs as owners of lot 7531-part, rendered in a proceeding to which the corporation was a stranger, that prompted the corporation to seek annulment of the judgment.

• Failure to Allege Unavailability of Ordinary Remedies: Petitioner ascribed to the Court of Appeals the error of ruling that it had failed to explain why it did not avail itself of the other remedies enumerated under Section 1, Rule 47 of the 1997 Rules of Civil Procedure.
• Availability of Other Recourses: Petitioner ascribed to the Court of Appeals the error of ruling that it could have assailed the deed of sale, questioned the foreclosure proceedings, or sought the quieting of title to the subject property.

• Propriety of Annulment of Judgment: Whether the action for annulment of judgment under Rule 47 was a proper recourse for the petitioner to set aside the decision rendered in Civil Case No. MAN-2838.
• Sufficiency of the Allegation on Unavailability of Ordinary Remedies: Whether the Court of Appeals erred in ruling that the petitioner failed to explain why it did not avail of the other remedies enumerated under Section 1, Rule 47 of the 1997 Rules of Civil Procedure.
• Availability of Other Recourses: Whether the Court of Appeals erred in ruling that the petitioner could have assailed the deed of sale and questioned the foreclosure proceedings or sought the quieting of title to the subject property.

• Propriety of Annulment of Judgment: No. Annulment of judgment under Rule 47 is an exceptional remedy in equity, available only when other remedies are wanting and only on the grounds of lack of jurisdiction or extrinsic fraud; a non-party to the assailed judgment cannot invoke it.
• Sufficiency of the Allegation on Unavailability of Ordinary Remedies: No error. Section 1, Rule 47 requires the petitioner to show that the ordinary remedies are no longer available through no fault of the petitioner, and the petition failed to make that showing.
• Availability of Other Recourses: No error. The petitioner's proper recourse was an action for quieting of title or an action for reconveyance of the property, not annulment of judgment.

• Propriety of Annulment of Judgment: A petition for annulment of judgment is a remedy in equity so exceptional in nature that it may be availed of only when other remedies are wanting, and only if the judgment, final order, or final resolution sought to be annulled was rendered by a court lacking jurisdiction or through extrinsic fraud. Because the remedy is exceptional, it may not be so easily and readily abused by parties aggrieved by final judgments; the Court has instituted safeguards by limiting the grounds for annulment to lack of jurisdiction and extrinsic fraud, and by prescribing in Section 1 of Rule 47 that the petitioner show that the ordinary remedies of new trial, appeal, petition for relief, or other appropriate remedies are no longer available through no fault of the petitioner. A petition that ignores or disregards any of these safeguards cannot prosper. The judicial reluctance toward annulment is understandable, for the remedy disregards the time-honored doctrine of immutability and unalterability of final judgments, a solid cornerstone in the dispensation of justice. That doctrine serves a two-fold purpose: (a) to avoid delay in the administration of justice and thus, procedurally, to make orderly the discharge of judicial business; and (b) to put an end to judicial controversies, at the risk of occasional errors, which is precisely why the courts exist. A judgment that has acquired finality becomes immutable and unalterable and is no longer to be modified in any respect, even if the modification is meant to correct an erroneous conclusion of fact or of law, whether by the court that rendered the decision or by the highest court of the land; controversies cannot drag on indefinitely because fundamental considerations of public policy and sound practice demand that the rights and obligations of every litigant must not hang in suspense for an indefinite period. Applied here, the petitioner's resort to annulment was unnecessary because the judgment rendered in Civil Case No. MAN-2838 did not prejudice it. A judgment of a court is conclusive and binding only upon the parties and those who are their successors in interest by title after the commencement of the action, as Section 47(b) of Rule 39 expressly provides. The petitioner was not a party to Civil Case No. MAN-2838, and the assailed judgment could not operate against it. The principle that a person cannot be prejudiced by a ruling rendered in an action or proceeding in which he has not been made a party conforms to the constitutional guarantee of due process of law, as illustrated in Muñoz vs. Yabut, Jr., where a person not impleaded and given the opportunity to take part in the proceedings was held not bound by the decision declaring null and void the title from which his own title was derived, and where the Court ruled that the effect of a judgment could not be extended to non-parties by simply issuing an alias writ of execution against them, for no man should be prejudiced by any proceeding to which he was a stranger.

• Sufficiency of the Allegation on Unavailability of Ordinary Remedies: Section 1 of Rule 47 extends the remedy of annulment only to a party in whose favor the remedies of new trial, reconsideration, appeal, and petition for relief from judgment are no longer available through no fault of said party. The petitioner, being a non-party in Civil Case No. MAN-2838, could not bring the action for annulment of judgment, because the remedies of new trial, reconsideration, appeal, or setting aside the judgment through a petition for relief were never available to it in the first place. The Court of Appeals was therefore correct in dismissing the petition outright for its failure to allege why the ordinary remedies were no longer available through no fault of the petitioner. The requirement is not a mere formality but a safeguard that a petition ignoring it cannot survive.

• Availability of Other Recourses: The Court agreed with the Court of Appeals that the petitioner's proper recourse was either an action for quieting of title or an action for reconveyance of the property. Permitting the petitioner, despite its being a non-party in Civil Case No. MAN-2838, to avail itself of annulment would not help it in any substantial way: although Rule 47 would initially grant relief from the effects of the annulled judgment, the decision of the Court of Appeals would not really and finally determine the petitioner's rights in the property as against the competing rights of the original parties. Annulment of judgment is an equitable relief not because a party-litigant thereby gains another opportunity to reopen the already-final judgment, but because a party-litigant is enabled to be discharged from the burden of being bound by a judgment that was an absolute nullity to begin with. An action for quieting of title is a common law remedy designed for the removal of any cloud upon, or doubt or uncertainty affecting, title to real property; it may be brought whenever there is a cloud on title by reason of any instrument, record, claim, encumbrance, or proceeding that is apparently valid or effective but is, in truth and in fact, invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, and the competent court is tasked to determine the respective rights of the plaintiff and the other claimants so that whoever has the right will see every cloud of doubt over the property dissipated. An action for reconveyance, on the other hand, belongs to the landowner whose property has been wrongfully or erroneously registered in another person's name, and such landowner demands the reconveyance of the property in the proper court; if the property has meanwhile passed into the hands of an innocent purchaser for value, the landowner may seek damages. The petitioner would be better off obtaining relief through the proper recourse; otherwise, it would waste its own time and effort, aside from unduly burdening the dockets of the courts.

• Annulment of Judgment as an Exceptional Equitable Remedy — A petition for annulment of judgment under Rule 47 of the 1997 Rules of Civil Procedure is a remedy in equity, exceptional in nature, and may be availed of only when other remedies are wanting and only if the judgment, final order, or final resolution sought to be annulled was rendered by a court lacking jurisdiction or through extrinsic fraud. Because the remedy is exceptional, it cannot be easily and readily abused; the Court has instituted safeguards by (a) limiting the grounds for annulment to lack of jurisdiction and extrinsic fraud, and (b) requiring, under Section 1 of Rule 47, that the petitioner show that the ordinary remedies of new trial, appeal, petition for relief, or other appropriate remedies are no longer available through no fault of the petitioner. A petition that ignores or disregards any of these safeguards cannot prosper. The petitioner's action failed on both counts: it was not a party to the assailed judgment, and it had not lost the ordinary remedies through any fault of its own.

• Immutability and Unalterability of Final Judgments — A judgment that has acquired finality becomes immutable and unalterable and is no longer to be modified in any respect, even if the modification is meant to correct an erroneous conclusion of fact or of law, whether by the court that rendered the decision or by the highest court of the land. The doctrine serves a two-fold purpose: (a) to avoid delay in the administration of justice and thus, procedurally, to make orderly the discharge of judicial business; and (b) to put an end to judicial controversies, at the risk of occasional errors, which is precisely why the courts exist. The Court invoked this doctrine to explain the judicial reluctance toward annulment of judgments, since the remedy disregards a solid cornerstone in the dispensation of justice.

• Conclusiveness of Judgment; Binding Effect Only on Parties and Successors in Interest by Title — Under Section 47(b) of Rule 39 of the Rules of Court, a judgment or final order is conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity. A person who is not a party to the action, and who is not a successor in interest by title subsequent to its commencement, is not bound by the judgment rendered therein. The petitioner, never having been impleaded in Civil Case No. MAN-2838, was not bound by the judgment rendered in that case.

• Due Process; Non-Parties Cannot Be Prejudiced by Judgments in Actions to Which They Were Strangers — The principle that a person cannot be prejudiced by a ruling rendered in an action or proceeding in which he has not been made a party conforms to the constitutional guarantee of due process of law. A person not impleaded and given the opportunity to take part in the proceedings is not bound by the decision; the effect of a judgment cannot be extended to non-parties by simply issuing an alias writ of execution against them, for no man should be prejudiced by any proceeding to which he was a stranger, and a writ of execution may be issued only against a party, not against a person who did not have his day in court.

• Proper Recourses of a Non-Party Claiming an Interest in Registered Land — A person who claims an interest in property adjudicated or registered in another's name but who was not a party to the proceeding may vindicate his rights through an action for quieting of title or an action for reconveyance. Quieting of title is a common law remedy designed for the removal of any cloud upon, or doubt or uncertainty affecting, title to real property; it lies whenever there is a cloud on title by reason of any instrument, record, claim, encumbrance, or proceeding that is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title. An action for reconveyance belongs to the landowner whose property has been wrongfully or erroneously registered in another person's name; if the property has passed into the hands of an innocent purchaser for value, the landowner may seek damages.

• "A petition for annulment of judgment is a remedy in equity so exceptional in nature that it may be availed of only when other remedies are wanting, and only if the judgment, final order or final resolution sought to be annulled was rendered by a court lacking jurisdiction or through extrinsic fraud." — This passage states the ratio decidendi on the nature, grounds, and availability of the remedy of annulment of judgment under Rule 47, and is the formulation commonly cited for the rule's exceptional character.

• "It is elementary that a judgment of a court is conclusive and binding only upon the parties and those who are their successors in interest by title after the commencement of the action in court." — This states the controlling rule on the conclusiveness of judgment that disposed of the petitioner's claim, grounding the holding that a non-party cannot be bound by, and therefore need not annul, the judgment in Civil Case No. MAN-2838.

• "The principle that a person cannot be prejudiced by a ruling rendered in an action or proceeding in which he has not been made a party conforms to the constitutional guarantee of due process of law." — This passage supplies the constitutional foundation for the rule on non-parties, linking the procedural doctrine of conclusiveness of judgment to the due process guarantee.

• "Moreover, Section 1 of Rule 47 extends the remedy of annulment only to a party in whose favor the remedies of new trial, reconsideration, appeal, and petition for relief from judgment are no longer available through no fault of said party." — This defines the class of persons who may invoke Rule 47, and is the basis for the holding that the petitioner, a non-party, could not bring the action at all.

• Filamer Christian Institute vs. Court of Appeals, G.R. No. 75112, October 16, 1990, 190 SCRA 485 — Cited at the threshold for the principle that a decision rendered on a complaint in a civil action or proceeding does not bind or prejudice a person not impleaded therein, and that such a person cannot bring an action for annulment of the judgment under Rule 47 except if he is a successor in interest by title subsequent to the commencement of the action or the action is in rem.
• People vs. Bitanga, G.R. No. 159222, June 26, 2007, 525 SCRA 623 — Cited for the rule that a petition for annulment of judgment is a remedy in equity so exceptional in nature that it may be availed of only when other remedies are wanting and only on the grounds of lack of jurisdiction or extrinsic fraud.
• Fraginal vs. Heirs of Toribia Belmonte Parañal, G.R. No. 150207, February 23, 2007, 516 SCRA 530 — Cited for the safeguard that the exceptional remedy of annulment may not be so easily and readily abused by parties aggrieved by final judgments, orders, or resolutions.
• Macalalag vs. Ombudsman, G.R. No. 147995, March 4, 2004, 424 SCRA 741 — Cited for the requirement under Section 1 of Rule 47 that the petitioner show that the ordinary remedies are no longer available through no fault of the petitioner.
• Apo Fruits Corporation vs. Court of Appeals, G.R. No. 164195, December 4, 2009, 607 SCRA 200 — Cited for the two-fold purpose of the doctrine of immutability and unalterability of final judgments: to avoid delay in the administration of justice and to put an end to judicial controversies.
• Peña vs. Government Service Insurance System (GSIS), G.R. No. 159520, September 19, 2006, 520 SCRA 383 — Cited for the rule that a judgment that has acquired finality becomes immutable and unalterable and may no longer be modified even to correct an erroneous conclusion of fact or of law.
• Villanueva vs. Velasco, G.R. No. 130845, November 27, 2000, 346 SCRA 99; Ayala Corporation vs. Ray Burton Development Corporation, G.R. No. 126699, August 7, 1998, 294 SCRA 48 — Cited for the rule that a judgment of a court is conclusive and binding only upon the parties and their successors in interest by title after the commencement of the action.
• Muñoz vs. Yabut, Jr., G.R. No. 142676, June 6, 2011, 650 SCRA 344 — The principal illustrative precedent; a person not impleaded and given the opportunity to take part in the proceedings was held not bound by the decision declaring null and void the title from which his own title to the property had been derived, and the effect of the judgment could not be extended to non-parties by simply issuing an alias writ of execution against them.
• Antonio vs. The Register of Deeds of Makati, G.R. No. 185663, June 20, 2012; Barco vs. Court of Appeals, G.R. No. 120587, January 20, 2004, 420 SCRA 162 — Cited for the nature of annulment of judgment as an equitable relief that enables a party-litigant to be discharged from the burden of being bound by a judgment that was an absolute nullity to begin with.
• Heirs of Enrique Toring vs. Heirs of Teodosia Boquilaga, G.R. No. 163610, September 27, 2010, 631 SCRA 278 — Cited for the definition and purpose of an action for quieting of title as a common law remedy for the removal of any cloud upon, or doubt or uncertainty affecting, title to real property.
• Vda. de Recinto vs. Inciong, G.R. No. L-26083, May 31, 1977, 77 SCRA 196 — Cited for the definition of an action for reconveyance as the remedy belonging to the landowner whose property has been wrongfully or erroneously registered in another person's name, and for the rule that damages may be sought if the property has passed to an innocent purchaser for value.

• Section 1, Rule 47, 1997 Rules of Civil Procedure — Governs the annulment by the Court of Appeals of judgments or final orders and resolutions in civil actions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief, or other appropriate remedies are no longer available through no fault of the petitioner. The provision was applied to limit the remedy to a party who has lost the ordinary remedies through no fault of his own; the petitioner, a non-party, could not invoke it, and its petition failed to allege the required unavailability of remedies.
• Section 47(b), Rule 39, 1997 Rules of Civil Procedure — Provides that, in other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity. The provision was applied to hold that the judgment in Civil Case No. MAN-2838 did not bind the petitioner, which was neither a party nor a successor in interest by title.
• Section 13, Article VIII, 1987 Constitution — Cited in the Chief Justice's certification that the conclusions in the Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

• Maria Lourdes P.A. Sereno (Chief Justice)
• Teresita J. Leonardo-De Castro (Associate Justice)
• Arturo D. Brion (Associate Justice; Vice Justice Martin S. Villarama, Jr., who was on leave per Special Order No. 1305 dated September 10, 2012)
• Bienvenido L. Reyes (Associate Justice)