METROPOLITAN BANK & TRUST CO. V ALEJO
A cloud on a title is defined as “a semblance of title which appears in some legal form but which is in fact unfounded.” Where a title was previously held null and void already, an action to quiet title is not the proper remedy because the TCT (as basis of the right) is not, on its face or otherwise, valid in the first place.
FACTS:
Spouses Raul and Cristina Acampado obtained loans from Metropolitan Bank and Trust Company in the amounts of 5k and 2k. As security for the payment, Spouses Acampados executed in favor of the bank a Real Estate Mortgage over a parcel of land registered in their names. Subsequently a Complaint for Declaration of Nullity of the TCT of the spouses was filed by Sy Tan Se in the RTC of Valenzuela.
Despite being the mortgagee of the real property, the bank was not made a party to the said civil case(complaint for declaration of nullity of TCT.) They weren’t notified as well.
The spouses defaulted in the payment of their loan and extrajudicial foreclosure proceedings were initiated. The bank submitted the highest and winning bid. A certificate of sale was issued in their favor.
When they were about to get their TCT from the Register of Deeds, petitioner was informed of the existence of the decision in the aforementioned civil case (complaint for declaration of nullity of TCT) declaring the Spouses Acampados’s TCT null and void.
The bank filed with the CA a petition for the annulment of the RTC Decision. The CA dismissed their petition and ruled that the bank should have filed a petition for relief from judgment or an action for quieting of title.
ISSUES:
1. Whether or not a petition for annulment of judgment is the proper remedy available to the bank
2. Whether or not the judgment of the trial court (declaring the Spouses Acampados TCT null and void) should be declared null and void
HELD – Both Yes
1. Petition for annulment of judgment was the proper remedy available to the bank. It precisely alleged that Sy Tan Se purposely concealed the case by excluding petitioner as a defendant to the civil case even if he was an indispensable party. This deprived the bank of its duly registered property right without due process of the law. The allegation of extrinsic fraud may be the basis for annulling a judgment.
Petition for relief (what the CA recommended) was not available to the bank since it was never a party to the civil case.
An action for quieting of the title was also not available to the bank. An action for quieting of title is filed only when there is a cloud on title to real property or any interest therein. A cloud on a title is defined as a semblance of title which appears in some legal form but which is in fact unfounded. The subject judgment cannot be considered as a cloud on petitioner’s title or interest over the real property covered by TCT, which does not even have a semblance of being a title.
It would not be proper to consider the subject judgment as a cloud that would warrant the filing of an action to quiet title because to do so would require the court hearing the action to modife or interfere with the judgment of another co-equal court. Well-entrenched in our jurisdiction is the doctrine that our court has no power to do so, as that action may lead to confusion and seriously hinder the administration of justice. Clearly, an action for quieting of title is not an appropriate remedy in this case.
Bank can’t also intervene to a case that he has no knowledge of.
2. The judgment of the trial court should also be declared null and void because the bank, which is an indispensable party, was not impleaded in the civil case.
The absence of an indispensable party renders all subsequent actuations of the court null and void, for want of authority to act, not only as to the absent parties but even as to those present.
