Sebastian vs. Spouses Cruz

A court acquires no jurisdiction over a judicial reconstitution proceeding when the owner's duplicate certificate of title was not actually lost or destroyed but is in fact in the possession of another person; the resulting reconstituted title is void. The fact of loss or destruction of the owner's duplicate certificate of title is a condition sine qua non for the court to validly acquire jurisdiction over the subject matter of a reconstitution case under Section 15 of Republic Act No. 26.

Petitioner Joy Vanessa M. Sebastian purchased a 40,835-square meter parcel of land in Brgy. Bogtong-Bolo, Mangatarem, Pangasinan from respondent Nelson C. Cruz through his father and attorney-in-fact, Lamberto P. Cruz, as evidenced by a Deed of Absolute Sale. The land was covered by Katibayan ng Orihinal na Titulo Big. (OCT No.) P-41566, registered in Nelson's name. The governing law for judicial reconstitution of title is Republic Act No. 26, which presupposes that the property whose title is sought to be reconstituted has already been brought under the Torrens System and requires that the certificate of title was actually lost or destroyed.

Petitioner Joy Vanessa M. Sebastian purchased a 40,835-square meter parcel of land in Brgy. Bogtong-Bolo, Mangatarem, Pangasinan from respondent Nelson C. Cruz, who was married to Cristina P. Cruz. The sale was negotiated through Nelson's father and attorney-in-fact, Lamberto P. Cruz, and was evidenced by a Deed of Absolute Sale executed in November 2009. Upon Sebastian's payment of the purchase price, Lamberto surrendered to her possession of the subject land, OCT No. P-41566, his General Power of Attorney, and a copy of Tax Declaration No. 9041 and Property Index No. 013-26-019-0322.

Sebastian then paid the corresponding capital gains tax and other fees to cause the transfer of title to her name. However, when she presented the documents to the Register of Deeds of the Province of Pangasinan, she was directed to secure a Special Power of Attorney executed by Spouses Cruz authorizing Lamberto to sell the subject land. Sebastian requested such document from Lamberto, who promised to comply but failed to do so. Consequently, Sebastian caused the annotation of an adverse claim in OCT No. P-41566 on August 2, 2011 to protect her rights over the subject land.

According to Sebastian, it was only on July 14, 2014, upon her inquiry with the Register of Deeds about the status of the title, that she discovered: (a) Nelson executed an Affidavit of Loss dated September 23, 2013 attesting to the loss of the owner's duplicate copy of OCT No. P-41566, which he registered with the Register of Deeds; (b) Spouses Cruz filed before the RTC a petition for the issuance of a second owner's copy of OCT No. P-41566, docketed as LRC Case No. 421; and (c) on March 27, 2014, the RTC promulgated a Decision granting Spouses Cruz's petition and ordering the issuance of a new owner's duplicate copy of OCT No. P-41566 in their names.

Sebastian thereafter filed a petition for annulment of judgment before the CA on the ground of lack of jurisdiction, contending that the RTC had no jurisdiction to take cognizance of LRC Case No. 421 because the duplicate copy of OCT No. P-41566 was never lost and was in fact in her possession all along. The CA dismissed the petition outright, holding that Spouses Cruz's compliance with the jurisdictional requirements of publication and notice of hearing clothed the RTC with jurisdiction over the action in rem, and that personal notice to Sebastian was no longer necessary.

• Lack of Jurisdiction: Petitioner argued that the RTC had no jurisdiction to take cognizance of LRC Case No. 421 because the duplicate copy of OCT No. P-41566 — which was declared to have no further force in effect — was never lost, and in fact, was in her possession all along.
• Prima Facie Merit: Petitioner maintained that her petition for annulment of judgment clearly alleged facts showing that the owner's duplicate copy of OCT No. P-41566 was not really lost, as the same was surrendered to her by Lamberto, Nelson's father and attorney-in-fact, and was in her possession all along.

N/A — The decision does not recount the respondents' specific arguments before the Court.

• Jurisdiction over Reconstitution Proceedings: Whether the CA correctly denied due course to Sebastian's petition for annulment of judgment, resulting in its outright dismissal, where the petition alleged that the RTC lacked jurisdiction over LRC Case No. 421 because the owner's duplicate certificate of title was not actually lost but was in Sebastian's possession.

• Jurisdiction over Reconstitution Proceedings: Yes, the CA erred. The petition for annulment of judgment had prima facie merit because Sebastian's allegation, if proven, would show that the RTC had no jurisdiction over the subject matter of LRC Case No. 421, rendering the RTC Decision dated March 27, 2014 void and subject to annulment on the ground of lack of jurisdiction.

• Jurisdiction over Reconstitution Proceedings: Under Section 2, Rule 47 of the Rules of Court, the only grounds for annulment of judgment are extrinsic fraud and lack of jurisdiction. Lack of jurisdiction refers to either lack of jurisdiction over the person of the defending party or over the subject matter of the claim. Where there is want of jurisdiction over the subject matter, the judgment is rendered null and void; a void judgment is in legal effect no judgment, by which no rights are divested, from which no right can be obtained, which neither binds nor bars any one, and under which all acts performed and all claims flowing out are void.

The governing law for judicial reconstitution of title is Republic Act No. 26, Section 15 of which provides the requisites for an order of reconstitution: (a) that the certificate of title had been lost or destroyed; (b) that the documents presented by petitioner are sufficient and proper to warrant reconstitution; (c) that the petitioner is the registered owner of the property or had an interest therein; (d) that the certificate of title was in force at the time it was lost and destroyed; and (e) that the description, area and boundaries of the property are substantially the same as those contained in the lost or destroyed certificate of title. The fact of loss or destruction of the owner's duplicate certificate of title is crucial in clothing the RTC with jurisdiction over the judicial reconstitution proceedings.

The Court reiterated the rule in Spouses Paulino vs. CA that when the owner's duplicate certificate of title was not actually lost or destroyed, but is in fact in the possession of another person, the reconstituted title is void because the court that rendered the order of reconstitution had no jurisdiction over the subject matter of the case. In reconstitution proceedings, before jurisdiction over the case can be validly acquired, it is a condition sine qua non that the certificate of title has not been issued to another person. The existence of a prior title ipso facto nullifies the reconstitution proceedings.

In this case, Sebastian's petition for annulment of judgment clearly alleged that the owner's duplicate copy of OCT No. P-41566 was not really lost, as the same was surrendered to her by Lamberto and was in her possession all along. Should such allegation be proven following the conduct of further proceedings, there would be no other conclusion than that the RTC had no jurisdiction over the subject matter of LRC Case No. 421, and the RTC Decision would be annulled on the ground of lack of jurisdiction. The Court found prima facie merit in the petition and remanded the case to the CA for further proceedings, with a directive to grant due course to the petition and cause service of summons on Spouses Cruz and the Register of Deeds in accordance with Section 5, Rule 47 of the Rules of Court.

• Lack of jurisdiction as a ground for annulment of judgment — Under Section 2, Rule 47 of the Rules of Court, the only grounds for annulment of judgment are extrinsic fraud and lack of jurisdiction. Lack of jurisdiction refers to either lack of jurisdiction over the person of the defending party or over the subject matter of the claim. Where there is want of jurisdiction over the subject matter, the judgment is rendered null and void; a void judgment is in legal effect no judgment, by which no rights are divested, from which no right can be obtained, which neither binds nor bars any one, and under which all acts performed and all claims flowing out are void. It can never become executory and cannot constitute a bar to another case by reason of res judicata.

• Loss of certificate of title as condition sine qua non for reconstitution jurisdiction — In reconstitution proceedings, before jurisdiction over the case can be validly acquired, it is a condition sine qua non that the certificate of title has not been issued to another person. If a certificate of title has not been lost but is in fact in the possession of another person, the reconstituted title is void and the court rendering the decision has not acquired jurisdiction over the petition for issuance of new title. The courts simply have no jurisdiction over petitions by third parties for reconstitution of allegedly lost or destroyed titles over lands that are already covered by duly issued subsisting titles in the names of their duly registered owners. The existence of a prior title ipso facto nullifies the reconstitution proceedings.

• Requisites for judicial reconstitution under RA 26 — For an order of reconstitution to be issued under Section 15 of Republic Act No. 26, the following requisites must be complied with: (a) that the certificate of title had been lost or destroyed; (b) that the documents presented by petitioner are sufficient and proper to warrant reconstitution of the lost or destroyed certificate of title; (c) that the petitioner is the registered owner of the property or had an interest therein; (d) that the certificate of title was in force at the time it was lost and destroyed; and (e) that the description, area and boundaries of the property are substantially the same as those contained in the lost or destroyed certificate of title.

• "As early as the case of Strait Times, Inc. v. CA, the Court has held that when the owner's duplicate certificate of title has not been lost, but is, in fact, in the possession of another person, then the reconstituted certificate is void, because the court that rendered the decision had no jurisdiction. Reconstitution can be validly made only in case of loss of the original certificate." — This passage, quoted from Spouses Paulino vs. CA, states the controlling doctrine that the fact of loss is essential to the court's jurisdiction over reconstitution proceedings.

• "In reconstitution proceedings, the Court has repeatedly ruled that before jurisdiction over the case can be validly acquired, it is a condition sine qua non that the certificate of title has not been issued to another person. If a certificate of title has not been lost but is in fact in the possession of another person, the reconstituted title is void and the court rendering the decision has not acquired jurisdiction over the petition for issuance of new title." — This passage articulates the condition sine qua non rule for jurisdiction in reconstitution cases and is the canonical formulation of the doctrine applied in this case.

• "The courts simply have no jurisdiction over petitions by (such) third parties for reconstitution of allegedly lost or destroyed titles over lands that are already covered by duly issued subsisting titles in the names of their duly registered owners. The existence of a prior title ipso facto nullifies the reconstitution proceedings." — This passage explains the jurisdictional consequence when a subsisting title exists in the name of a registered owner, supporting the Court's finding of prima facie merit in Sebastian's petition.

• Spouses Paulino vs. CA, 735 Phil. 448 (2014) — Controlling precedent reiterating the rule that when the owner's duplicate certificate of title was not actually lost or destroyed but is in the possession of another person, the reconstituted title is void because the court that rendered the order of reconstitution had no jurisdiction over the subject matter of the case. The Court quoted extensively from this case and relied on it for the doctrine applied.

• Strait Times, Inc. vs. CA — Cited in Spouses Paulino as the earliest case establishing the rule that when the owner's duplicate certificate of title has not been lost but is in the possession of another person, the reconstituted certificate is void because the court that rendered the decision had no jurisdiction.

• Republic vs. Tuastumban, 604 Phil. 491 (2009) — Cited for the proposition that RA 26 presupposes that the property whose title is sought to be reconstituted has already been brought under the provisions of the Torrens System.

• Hilado vs. Chavez, 482 Phil. 104 (2004) — Cited in Spouses Paulino for the definition of a void judgment and its effects, including that it cannot constitute a bar to another case by reason of res judicata.

• Section 2, Rule 47, Rules of Court — Provides that the only grounds for annulment of judgment are extrinsic fraud and lack of jurisdiction. The Court applied this provision to determine that Sebastian's petition, alleging lack of jurisdiction, was a proper ground for annulment of judgment.

• Section 15, Republic Act No. 26 — Provides the requisites for an order of reconstitution of a lost or destroyed certificate of title. The Court applied this provision to identify the fact of loss or destruction of the owner's duplicate certificate of title as crucial in clothing the RTC with jurisdiction over judicial reconstitution proceedings.

• Section 5, Rule 47, Rules of Court — Provides that should prima facie merit be found in the petition for annulment of judgment, the same shall be given due course and summons shall be served on the respondent. The Court directed the CA to comply with this provision upon remand.

• Maria Lourdes P.A. Sereno
• Teresita J. Leonardo-De Castro
• Mariano C. Del Castillo
• Alfredo Benjamin S. Caguioa

N/A — No dissenting opinions are noted in the provided text.