RMFPU Holdings, Inc. vs. Forbes Park Association, Inc.

Forbes Park Association, Inc. is an indispensable party in any petition for cancellation of the Deed of Restrictions annotated on certificates of title covering properties within Forbes Park Village, and the failure to implead or notify FPA in such proceedings renders the resulting court orders void for lack of jurisdiction and extrinsic fraud, warranting annulment under Rule 47 of the Rules of Court.

Forbes Park Village is an exclusive residential subdivision in Makati City whose lot titles are subject to a Deed of Restrictions imposed by the original developers (San Lorenzo Corporation and Ayala Securities Corporation) as conditions of purchase. The Deed of Restrictions, annotated on each lot owner's transfer certificate of title, is valid for fifty (50) years from January 1, 1949, and provides, among other things, that lot owners are automatically members of the Forbes Park Association, Inc. (FPA), that all building and landscaping plans must be approved by FPA, and that the restrictions may be extended, amended, or cancelled by a resolution approved by a two-thirds vote of FPA members and registered with the Register of Deeds. FPA's Articles of Incorporation and By-Laws designate the enforcement of these restrictions as a core function of the association. The validity of the extension of the Deed of Restrictions and of FPA's corporate life was litigated in prior proceedings before the HIGC, the CA, and the Supreme Court, culminating in a final CA decision upholding a twenty-five-year extension.

Raymond M. Moreno is the registered owner of a property at No. 31 McKinley Road, Forbes Park Village, Makati City, covered by TCT Nos. S-93867 and S-93868. RMFPU Properties, Inc. (RPI) owns a lot at No. 7 Palm Avenue, Forbes Park Village, covered by TCT No. 226850. Quick Silver Development Corporation owns a lot at No. 50 McKinley Road, Forbes Park Village, covered by TCT No. 156723. Each of these certificates of title bears an annotated Deed of Restrictions, the pertinent terms of which include a two-meter easement for drainage and utilities, automatic membership in the Forbes Park Association for the lot owner, a requirement that all building and landscaping plans be approved by FPA, and a term of fifty (50) years from January 1, 1949, with provision for extension by a two-thirds vote of FPA members registered with the Register of Deeds.

On February 15, 2001, Quick Silver filed an ex parte petition before the RTC, Branch 58, Makati City (LRC Case No. M-4133) seeking cancellation of the Deed of Restrictions on TCT No. 156723, alleging that the restrictions had expired on midnight of December 31, 1998, and that no resolution for extension had been registered by FPA. The RTC granted the petition on February 23, 2001, and a Certificate of Finality was issued on March 12, 2001. On July 21, 2004, Moreno filed a similar ex parte petition before the RTC, Branch 59 (LRC Case No. M-4570) for cancellation of the Deed of Restrictions on TCT Nos. S-93867 and S-93868, which was granted on July 29, 2004. On March 18, 2010, RPI filed its own ex parte petition before the same branch (LRC Case No. M-5359) for cancellation of the Deed of Restrictions on TCT No. 226850, which was granted on March 26, 2010, with a Certificate of Finality issued on April 26, 2010. In all three proceedings, FPA was neither impleaded nor notified.

On March 22, 2012, FPA filed three petitions for annulment of judgment before the CA under Rule 47, contending that the RTC orders were void for lack of jurisdiction because FPA, an indispensable party, was not impleaded, and that extrinsic fraud was committed when petitioners deprived FPA of the opportunity to prove the extension of the Deed of Restrictions. Petitioners countered that FPA had no interest in the subject properties after the Deed of Restrictions expired on December 31, 1998, and therefore was not an indispensable party; they also raised the defenses of prescription, laches, and lack of authority of FPA's counsel. The CA granted FPA's petitions on March 6, 2015, annulling the three RTC orders and ordering the restoration of the Deed of Restrictions annotations on the subject certificates of title, and denied reconsideration on September 2, 2015.

• FPA Not an Indispensable Party: Petitioners maintained that FPA is not an indispensable party or a party in interest because the Deed of Restrictions had lapsed on midnight of December 31, 1998, without valid extension, and any extension should have been annotated on their certificates of title to bind them.
• Inapplicability of PAGREL: Petitioners argued that the CA erred in applying PAGREL, Inc. vs. Forbes Park Association, Inc. on the doctrine of stare decisis, since PAGREL was resolved through an unsigned Resolution that is binding only on the parties thereto.
• Procedural Irregularity Before the CA: Petitioners contended that the CA erred in rendering judgment on the merits based solely on the pleadings, without conducting pre-trial, trial, or requiring the submission of memoranda.
• Prescription and Laches: Petitioners argued that FPA's petitions for annulment of judgment were filed beyond the periods prescribed by Section 3, Rule 47, and that FPA was guilty of laches for the eleven-year delay in filing.
• Restoration of Annotations: Petitioners questioned the CA's order to restore the Deed of Restrictions on their certificates of title.
• Due Process and Equal Protection: RMFPU asserted that their rights to due process and equal protection were violated, arguing that imposing the same restrictions on properties inside and outside the gated confines of Forbes Park Village would be inequitable.
• Public Purpose of Restrictions: Quick Silver urged scrutiny of whether the Deed of Restrictions serves a public purpose and whether restrictions imposed by posh communities further the social responsibility that land ownership entails.
• Authority of FPA's Counsel: Petitioners contended that FPA's counsel lacked authority to file the petitions for annulment, as the Board Resolution authorizing counsel was limited to re-annotating the Deed of Restrictions.
• Removal of Party Name: Quick Silver sought the removal of the name of Jaime Gonzalez from the title of the case.

• FPA as Indispensable Party: Respondent countered that FPA is an indispensable party whose interest in the subject lots is undisputed, as it stands to be affected by the cancellation of the Deed of Restrictions, and that its Articles of Incorporation and By-Laws designate enforcement of the restrictions as a core function.
• Extrinsic Fraud: Respondent argued that petitioners deliberately excluded FPA from the RTC proceedings, depriving it of the opportunity to present its side, which constitutes extrinsic fraud affecting the very jurisdiction of the RTCs.
• Compliance with Section 108, PD 1529: Respondent maintained that Section 108 of PD 1529 expressly requires notice to all interested parties in proceedings for amendment or alteration of certificates of title, and that the absence of such notice rendered the RTC orders null and void.

• Indispensable Party: Whether FPA is an indispensable party that must be impleaded and notified in ex parte petitions for cancellation of the Deed of Restrictions annotated on certificates of title covering properties within Forbes Park Village.
• Applicability of PAGREL: Whether the CA erred in applying PAGREL, Inc. vs. Forbes Park Association, Inc. to the present cases.
• CA Procedure: Whether the CA erred in rendering judgment on the merits based on the pleadings without conducting pre-trial, trial, or requiring the submission of memoranda.
• Prescription and Laches: Whether FPA's petitions for annulment of judgment were barred by prescription or laches.
• Restoration of Annotations: Whether the CA erred in ordering the restoration of the Deed of Restrictions on petitioners' certificates of title.
• Due Process and Equal Protection: Whether petitioners' rights to due process and equal protection were violated.

• Indispensable Party: Yes. FPA is an indispensable party and a party in interest whose non-notification in petitions for cancellation of the Deed of Restrictions under Section 108 of PD 1529 renders the resulting RTC orders void for lack of jurisdiction and extrinsic fraud.
• Applicability of PAGREL: Yes, but not on the basis of stare decisis. The CA erred in invoking stare decisis because PAGREL was resolved through an unsigned Resolution binding only on the parties thereto; however, the Court found no cogent reason to depart from the PAGREL ruling given the undeniable factual parallelism.
• CA Procedure: No. Section 6, Rule 47 does not make pre-trial and trial mandatory, and Section 1, Rule 51 does not require the submission of a memorandum as a prerequisite to judgment; the CA has discretion to decide on the pleadings if they are sufficient.
• Prescription and Laches: No. The CA's factual finding of no undue delay is binding in a Rule 45 petition, and FPA's prior active pursuit of related litigation demonstrates vigilance negating laches.
• Restoration of Annotations: No error. Restoration is the logical consequence of nullifying the RTC orders that cancelled the annotations.
• Due Process and Equal Protection: N/A. The Court found it unnecessary to discuss these matters, as they would not affect the outcome and are irrelevant to the issues resolved.

• Indispensable Party: Section 108 of PD 1529 expressly requires that all interested parties be duly notified in proceedings for amendment or alteration of certificates of title, including petitions grounded on the termination or cessation of registered interests. The petitions filed by RMFPU and Quick Silver sought to cancel FPA's registered interests appearing on the certificates of title — interests described in the Deed of Restrictions, which include FPA's authority to approve building plans, impose restrictions, and enforce membership. FPA's Articles of Incorporation and By-Laws confirm that enforcement of the restrictions is a core function of the association. Because cancellation of the annotation would extinguish FPA's authority over the subject properties and affect any subsequent transferee's knowledge of the restrictions, FPA stands to be injured by the judgment and is therefore an indispensable party under Section 7, Rule 3. The ex parte nature of the petitions, coupled with petitioners' presumed knowledge of FPA's enforcement role, demonstrates that FPA was deliberately kept away from court — constituting extrinsic fraud as defined in Cosmic Lumber Corporation vs. Court of Appeals. The absence of an indispensable party renders all subsequent court actions null and void for want of authority to act, as held in Orbeta vs. Sendiong. Both lack of jurisdiction and extrinsic fraud are valid grounds for annulment under Section 2, Rule 47.

• Applicability of PAGREL: PAGREL was resolved through an unsigned Resolution, which, like a minute Resolution, is binding only as between the parties and does not operate as binding precedent on non-parties under the doctrine of stare decisis, as clarified in Deutsche Bank AG Manila Branch vs. Commissioner of Internal Revenue. The CA therefore erred in justifying its invocation of PAGREL on stare decisis. Nevertheless, the factual parallelism between PAGREL and the present cases is unmistakable: the same question (whether FPA is an indispensable party) arises from the same event (cancellation of the Deed of Restrictions) and is raised by parties similarly situated (registered owners of Forbes Park Village properties). Finding no cogent reason to depart from the PAGREL ruling, the Court reaffirmed its conclusion that FPA is an indispensable party. The Court also noted that the validity of the extension of the Deed of Restrictions and of FPA's corporate life had been upheld in Forbes Park Association, Inc. vs. PAGREL, Inc., et al., where the CA decision affirming the extension became final and executory on August 29, 2003.

• CA Procedure: Section 6, Rule 47 provides that the procedure in ordinary civil cases shall be observed, but states only that "should a trial be necessary," the reception of evidence may be referred to a member of the court or an RTC judge — implying that a trial is not invariably required. Section 1, Rule 51 provides that where no hearing is held, a case is deemed submitted for judgment upon the filing of the last pleading or the expiration of the period for its filing. The CA thus had discretion to submit the consolidated cases for decision on the merits without trial if the pleadings were sufficient to determine the issues.

• Prescription and Laches: Under Section 3, Rule 47, an action for annulment based on lack of jurisdiction must be filed before it is barred by laches or estoppel. The CA's finding that no undue delay could be attributed to FPA is a factual determination binding on the Court in a Rule 45 petition, absent any showing of recognized exceptions. Moreover, FPA's active pursuit of related litigation — Rocha, PAGREL, and Forbes Park — involving the same Deed of Restrictions demonstrates vigilance in asserting its rights, negating estoppel by laches.

• Restoration of Annotations: The restoration of the Deed of Restrictions annotations is the necessary and logical consequence of annulling the RTC orders that ordered their cancellation. To leave the annotations cancelled would be tantamount to not nullifying those orders at all.

• Due Process and Equal Protection: The Court found it unnecessary to discuss the merits of the remaining matters raised by petitioners, including equal protection and the public purpose of the restrictions, as the outcome would not be affected and the matters are irrelevant to the issues resolved. Petitioners were directed to find the proper forum for those concerns.

• Indispensable Party in Land Registration Proceedings — An indispensable party is one whose interest in the controversy is of such nature that a final decree cannot be made without affecting that interest, and who must be included before an action may properly proceed. In proceedings for cancellation of annotations under Section 108 of PD 1529, the party whose registered interests are sought to be cancelled is an indispensable party who must be duly notified. The joinder of indispensable parties is a condition sine qua non of the exercise of judicial power; their absence renders all subsequent court actions null and void for want of authority to act. Applied here: FPA, as the entity whose registered interests under the Deed of Restrictions were the subject of the cancellation petitions, was an indispensable party whose non-implementation rendered the RTC orders void.

• Extrinsic Fraud as Ground for Annulment of Judgment — Extrinsic fraud refers to any fraudulent act of the prevailing party committed outside the trial, whereby the defeated party is prevented from exhibiting fully his case — as by keeping him away from court, keeping him in ignorance of the suit, or a false promise of compromise. It is a valid ground for annulment of judgment under Section 2, Rule 47. Applied here: petitioners' filing of ex parte petitions without notifying FPA, despite their presumed knowledge of FPA's enforcement authority, constituted extrinsic fraud.

• Unsigned/Minute Resolutions as Non-Binding Precedent — An unsigned Resolution, similar to a minute Resolution, is binding only as between the parties to the case and does not operate as binding precedent on non-parties under the doctrine of stare decisis, even if the disposition effectively affirms the lower court's ruling on the merits. Applied here: the CA erred in invoking stare decisis to apply PAGREL, but the Court nevertheless reached the same conclusion based on the undeniable factual parallelism.

• Notice Requirement in Section 108, PD 1529 as Jurisdictional — The notice requirement in Section 108 of PD 1529, which mandates that the court hear and determine a petition for amendment or alteration of a certificate of title "after notice to all parties in interest," is jurisdictional. Non-compliance renders the resulting order void. Applied here: the RTCs lacked jurisdiction to grant the ex parte cancellation petitions because FPA, a party in interest, was not notified.

• "Being the only one whose registered interests are affected by said petitions, FPA is the party in interest, an indispensable party, that should have been notified. Without the required notice to all parties in interest, as required in Section 108 of PD 1529, the jurisdiction of the RTCs to entertain said petitions is questionable, notice in land registration cases being a basic requirement and jurisdictional." — This passage articulates the ratio decidendi connecting Section 108 of PD 1529 to the jurisdictional consequence of failing to notify an indispensable party in land registration proceedings.

• "In preventing FPA to participate in the RTC proceedings, petitioners can be said to have committed extrinsic fraud, which likewise affected the very jurisdiction of the RTCs to hear and decide the cases before them." — This establishes the link between the ex parte nature of the petitions and the finding of extrinsic fraud as a ground for annulment.

• "Being an unsigned Resolution, similar to a minute Resolution, the disposition therein is binding only as between the parties. The doctrine of stare decisis cannot be invoked in a subsequent case to bind non-parties thereto, who may be similarly situated as the original parties to the case." — This clarifies the precedential weight of unsigned Resolutions and corrects the CA's erroneous application of stare decisis.

• "The restoration of the annotation of the Deed of Restrictions on petitioners' certificates of title is understandably the logical consequence of the nullification of the Orders of the RTCs, which ordered the cancellation of the annotation of the Deed of Restrictions on their certificates of title. If the annotation of the Deed of Restrictions remained cancelled, then that would be tantamount to said Orders not being nullified." — This explains the remedial logic underlying the CA's order to restore the cancelled annotations.

• PAGREL, Inc. vs. Forbes Park Association, Inc., G.R. No. 194532, December 10, 2012 — Unsigned Resolution holding that FPA is an indispensable party in petitions for cancellation of the Deed of Restrictions on Forbes Park Village titles, and that failure to implead FPA amounts to lack of jurisdiction and extrinsic fraud. Followed in the present cases on the basis of factual parallelism, though the Court clarified that stare decisis does not apply because the Resolution is binding only on the parties thereto.

• Forbes Park Association, Inc. vs. PAGREL, Inc., et al., G.R. No. 153821, February 13, 2008, 545 SCRA 39 — Decision resolving the procedural history of the Deed of Restrictions extension, including the HIGC proceedings, the validity of the extension of FPA's corporate life and the Deed of Restrictions, and the removal of the litis pendentia obstacle to FPA's annulment petition. Cited as the precursor to PAGREL and as authority recognizing the validity of the extension of the Deed of Restrictions and FPA's corporate life.

• Chua, et al. vs. B.E. San Diego, Inc., G.R. No. 165863, April 10, 2013, 695 SCRA 408 (consolidated with Lorenzana Food Corp. vs. B.E. San Diego, Inc., G.R. No. 165875) — Cited for the proposition that Section 108 of PD 1529 requires notice to all interested parties in proceedings for amendment or alteration of certificates of title, and that lack of notice to a party in interest with an adverse claim places the validity of the judgment in serious question.

• Orbeta vs. Sendiong, G.R. No. 155236, July 8, 2005, 463 SCRA 180 — Cited for the rule that the joinder of indispensable parties is a condition sine qua non of the exercise of judicial power, and that the absence of an indispensable party renders all subsequent actions of the court null and void.

• Cosmic Lumber Corporation vs. Court of Appeals, G.R. No. 114311, November 29, 1996, 265 SCRA 168 — Cited for the definition of extrinsic fraud as any fraudulent act of the prevailing party that prevents the defeated party from presenting his case fully.

• Metropolitan Bank and Trust Company vs. Alejo — Cited in PAGREL for the definition of an indispensable party as one whose interest is of such nature that a final decree cannot be made without affecting it.

• Deutsche Bank AG Manila Branch vs. Commissioner of Internal Revenue, G.R. No. 188550, August 28, 2013, 704 SCRA 216 — Cited for the principle that a minute Resolution is not binding precedent on non-parties and does not operate under stare decisis in subsequent cases involving different parties.

• Rocha vs. Forbes Park Association, Inc., G.R. No. 163869 — Minute Resolution upholding the CA decision affirming the extension of the Deed of Restrictions and FPA's corporate life for twenty-five years. Recognized as non-binding on non-parties but continued to be acknowledged in the absence of a subsequent contrary ruling.

• Section 108, Presidential Decree No. 1529 (Property Registration Decree) — Governs amendments and alterations of certificates of title, requiring that the court hear and determine a petition "after notice to all parties in interest." Applied as the jurisdictional basis requiring FPA's notification in the cancellation proceedings; non-compliance rendered the RTC orders void.

• Section 2, Rule 3, Rules of Court — Defines a real party in interest as the party who stands to be benefited or injured by the judgment. Applied to confirm FPA's status as a party in interest in the cancellation proceedings.

• Section 7, Rule 3, Rules of Court — Mandates the compulsory joinder of indispensable parties. Applied through PAGREL to require FPA's impleadment in the ex parte petitions.

• Section 2, Rule 47, Rules of Court — Limits grounds for annulment of judgment to extrinsic fraud and lack of jurisdiction. Applied to sustain the CA's annulment of the RTC orders on both grounds.

• Section 3, Rule 47, Rules of Court — Prescribes the period for filing annulment actions: four years from discovery of extrinsic fraud, and before barred by laches or estoppel for lack of jurisdiction. Applied in rejecting petitioners' prescription and laches defenses.

• Section 6, Rule 47, Rules of Court — Provides that the procedure in ordinary civil cases shall be observed, but that a trial is necessary only if required. Applied to uphold the CA's discretion to decide on the pleadings without trial.

• Section 1, Rule 51, Rules of Court — Provides that where no hearing is held, a case is deemed submitted for judgment upon the filing of the last pleading or the expiration of the period for its filing. Applied to reject the argument that submission of memoranda was a prerequisite to judgment.

Gesmundo, C.J. (Chairperson), Carandang, Zalameda, and Rosario, JJ., concurred.