SECOND DIVISION

[G.R. No. 161955. August 31, 2005]

CELEDONIO MOLDES, ROSITA MOLDES and CAROLINA

CEDIA, petitioners, vs. TIBURCIO VILLANUEVA, APOLONIO
VILLANUEVA,
MANUEL
VILLANUEVA,
MARIANO
DULLAVIN, RONALDO
DULLAVIN
and
TEODORA
DULLAVIN, respondents.
DECISION
CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision[1] of the Court of Appeals
(CA) and its Resolution[2] in CA-G.R. CV No. 47518.
The Antecedents
The spouses Juan Mollet and Silvina Del Monte were the owners of three
parcels of land then located in the Municipality of Taguig (now a part of Muntinlupa
City) identified as Lot Nos. 589, 590 and 591. The lots had a total area of 3,600
square meters, covered by Transfer Certificate of Title (TCT) No. 2180 issued by the
Register of Deeds of Rizal. Their daughter, Josefa, died intestate on November 24,
1918 at the age of 25. Juan Mollet died intestate on January 30, 1934 and his
widow died also, intestate, on March 22, 1948. They were survived by their
daughter Romana Mollet, who married Andres Gelardo. [3] Romana and Andres were
blessed with five children, namely, Flaviana, Brigida, Maria, Isaac and Leonila, all
surnamed Gelardo.[4] Flaviana married Manuel Villanueva, and their marriage
produced four offsprings, namely, Apolinario, Tiburcio, Manuel and Juanita (now
deceased), all surnamed Villanueva. [5] Juanita married Cornelio Maritana. The
couple begot five children, namely, Luis, Orlando, Normita, Diego, and Julieta, all
surnamed Maritima.
Brigida married Mariano Dullavin and they had two children, Rolando and
Teodora, both surnamed Dullavin.[6] Maria married Primo Tolentino and the couple
had two children, Hermino and Carolyn. [7] Leonila married Delfin Malacca and they
had two sons, Gelardo and Marcial.[8] Isaac died a bachelor and without any issue.[9]

On March 17, 1965, a document denominated as Deed of Extrajudicial

Settlement with Quitclaim[10] covering Lot Nos. 589, 590 and 591 was executed by
Maria and Leonila, surnamed Gelardo, Mariano Dullavin, Manuel, Juanita, Tiburcio
and Apolonio, all surnamed Villanueva, and Emeterio, Celedonio, Domingo, Rosita
and Carolina, all surnamed Moldes.
Lot 589 was divided as follows: Maria Gelardo, share; Emeterio Moldes,
Domingo Moldes, Celedonio Moldes, Rosita Moldes, and Carolina Moldes Cedia,
share. It appears that the Villanueva siblings (Manuel, Tiburcio, Apolonio and
Juanita) waived their share in favor of the Moldeses and Carolina.
Lot 590 was adjudicated as follows: Lot 590-B entirely to Leonila Gelardo; Lot
590-C was allotted to Emeterio Moldes, Domingo Moldes, Celedonio Moldes, Rosita
Moldes, and Carolina Moldes Cedia; Lot 590-D was given to Maria Gelardo, Leonila
Gelardo, Mariano Dullavin, Emeterio Moldes, Domingo Moldes, Celedonio Moldes,
Rosita Moldes, and Carolina Moldes Cedia.
It appears that Mariano Dullavin and the Villanueva siblings waived their
respective shares in Lot 590-B in favor of Leonila Gelardo; in Lot 590-C, to Emeterio
Moldes, Domingo Moldes, Celedonio Moldes, Rosita Moldes, and Carolina Moldes
Cedia; and, again in Lot D in favor of Maria Gelardo, Leonila Gelardo, Emeterio
Moldes, Domingo Moldes, Celedonio Moldes, Rosita Moldes, and Carolina Moldes
Cedia.
Lot 591 was partitioned as follows: share of Lot 591-A to Leonila Gelardo; share
of Lot 591-A to Maria Gelardo; and Lot Nos. 591-B and 591-C to Celedonio Moldes.
It appears that Emeterio Moldes, Domingo Moldes, Rosita Moldes, Apolonio
Moldes and Carolina Moldes Cedia, the Villanueva siblings, and Mariano Dullavin
waived all their respective rights to the share of Lot 591-A given to Leonila Gelardo;
to the share of Lot 591-A given to Maria Gelardo; and to Lot Nos. 591-B and 591-C
awarded to Celedonio Moldes.
On January 26, 1987, Manuel Villanueva and his children, namely, Tiburio and
Apolonio, and Mariano Dullavin and his children, namely, Rolando and Teodora,
filed a Complaint with the Regional Trial Court (RTC) of Makati against Celedonio,
Rosita and Carolina Cedia, all surnamed Moldes, to annul the Deed of Extrajudicial
Settlement with Quitclaim. The complaint contained the following prayer:

WHEREFORE, it is most respectfully prayed of this Honorable Court to:

1. Order the rescission of the Extrajudicial Settlement with Quitclaim

(Annex B);
2. Order the defendants to pay plaintiffs the following:
a) Moral damages in the sum of P100,000;
b) Exemplary damages in the sum of P50,000;
c) Attorneys fee of P60,000 plus P450 per court appearance; and,
d) To pay the costs of suit.
Plaintiffs further pray for such other reliefs and remedies which are just and
equitable under premises.[11]
Plaintiffs Rolando and Teodora Dullavin also alleged that they never knew of
any document wherein they repudiated their share in the estate of their greatgrandparents. In fact, in the past, they had wanted to eject the Moldeses but their
case was dismissed because of the questioned deed, which incidentally was the
very first time they saw it. They pointed out that by reckoning, they were still minor
when their father, Mariano, signed the questioned deed. Be that as it may, it was of
no moment, because their father had nothing to repudiate as he was not given any
share in the estate of the spouses Mollet.[12]
Plaintiffs Tiburio and Apolonio Villanueva alleged that they and their sister
Juanita were entrusted by their father to their aunt, Leonila Gelardo, when they
were eight years old, six years old and one year old, respectively; they lived with her
until 1938 when they were married; as a result, they developed a deep respect for
their aunt, so much so that they signed the deed believing that they would be
getting their inheritance under the deed more expeditiously, not knowing that
because of their illiteracy, they had relinquished their rights over their inheritance.
Plaintiffs Tiburcio, Apolonio and Manuel further alleged that they were
hoodwinked by their aunt Leonila as well as Celedonio in parting with their
inheritance. They claimed that being illiterate and unlettered, they did not
understand the contents and the legal effects of the questioned deed. They
explained that they signed the deed upon Leonilas representation and that what
they were signing was just a partition of the estate of their great-grandparents. As it
turned out and was revealed later, they were surprised to be excluded therefrom. [13]

The plaintiffs alleged, inter alia, that the deed was tainted with fraud because it
included Celedonio, Rosita and Carolina, who were not heirs of the spouses Mollet
(whose estate was partitioned). They denied the defendants allegation that they
were Josefas descendants, the latter having died single at the age of 25 and without
issue.
In their answer, the defendants specifically denied that there was fraud or
undue pressure in the execution of the questioned deed. They maintained that they
were the direct descendants of the spouses Mollet, and successors-in-interest of
Josefa Mollet from whom they derived their rights. According to them, long before
she died, their grandmother Josefa married one Florencio Diaz. This matrimonial
union begot Domingo Diaz and their mother, Dolores Diaz, who, in turn, married
their father, Emeterio Moldes.[14]
By way of special and affirmative defense, the defendants averred that the
action had prescribed because more than 20 years had elapsed from execution of
the questioned deed.[15] As counterclaim, they prayed that the plaintiffs be adjudged
to pay them the amounts of P100,000.00 for moral damages; P50,000.00, for
exemplary damages; andP30,000.00, for attorneys fees.[16]
The Ruling of the Regional Trial Court
On May 16, 1994, the RTC rendered a decision declaring that the Deed of
Extra-judicial Settlement with Quitclaim was void. The dispositive portion thereof,
reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the

plaintiffs. It is the findings of this Court that since the consent of the plaintiffs
were not freely given when they signed the document of the parties which they
did not understand, but was obtained thru fraud, the Deed of Partition with
Quitclaim is hereby ordered rescinded and voided.
The other great grandchildren, particularly the children of Brigida Mollet Gelardo,
married to Mariano Dullavin, being Rolando Dullavin and Teodora Dullavin,
including the children of Maria Mollet Gelardo married to Primo Tolentino, being
Hermino and Carolyn, were not given their share of their inheritance, all the more
reason that this Deed of Partition with Waiver and Quitclaim should be rescinded
and partition effected among all of the Plaintiffs as they probably are the only true
heirs of spouses Juan Mollet and Silvina Del Monte.

Accordingly, the property should remain as the Estate of the late Spouses Juan
Mollet and Silvina Del Monte Mollet.
As plaintiffs were force to litigate, all Defendants are, jointly and solidarily,
directed to pay the Plaintiffs actual damages in the sum of P100,000.00.
Defendants, jointly and solidarily, must pay moral damages for the trouble and
anxiety caused to plaintiffs in the sum of P100,000.00 and as a deterrent to their
propensity to covet what do not belong to them, Defendants must, jointly and
solidarily, pay Plaintiffs exemplary damages of P100,000.00.
As Plaintiffs were forced to litigate thru counsel, Defendants must, jointly and in
solidum, pay Attorneys fees in the sum of P50,000.00, and,
The cost of this proceedings.
It is SO ORDERED.[17]
The RTC held that the Deed of Extrajudicial Settlement with Quitclaim was a
sham. Through deceit and machinations, the plaintiffs, being illiterate at that, were
mislead, duped, railroaded and bamboozled by the defendants in signing the deed
and waiving their respective shares. In fact, the defendants never filed it in the
Office of the Register of Deeds, an act [giving] doubt to [its] existence and validity.
The RTC further ruled that the evidence showed that the defendants were not
heirs of the spouses Mollet, whose estate was partitioned. According to the trial
court, the defendants own evidence belied their claim of heirship.
The defendants appealed the decision to the CA where they alleged, inter alia,
that the RTC erred (1) in ruling that they were not heirs of the spouses Juan Mollet
and Silvina Del Monte Mollet; (2) in voiding the Deed of Extrajudicial Settlement with
Quitclaim on the ground of fraud; and (3) in awarding damages against them. [18]
The Ruling of the Court of Appeals
On January 30, 2003, the CA affirmed with modification the decision of the RTC
with this fallo:

WHEREFORE, the assailed decision dated 16 May 1994 is hereby AFFIRMED

with MODIFICATION deleting the award of damages and attorneys fees.

SO ORDERED.[19]
The CA affirmed the findings of the RTC that the plaintiffs-appellees were duped
by the defendants-appellants in signing the fraudulent deed. It amplified that the
waivers, having no consideration, were wangled from the very much gullible
plaintiffs-appellees, who were not given a copy by the defendants-appellants. In
fact, the latter refused to give the plaintiffs-appellees a copy of the deed when they
requested one.
The appellate court further ratiocinated that as the subject deed included
persons who were not heirs of the person whose estate was partitioned, such deed
is governed by Article 1105 of the Civil Code. [20] Thus, since the partition deemed
inexistent and void from the beginning, the action seeking a declaration of its nullity
could not prescribe.
The appellate court denied the motion for reconsideration of the defendantsappellants[21] who, forthwith, filed the instant petition. They made the following
allegations:
I. The Court of Appeals disregarded the basic rule that the respondents were the
plaintiffs who had the burden of proving the rescissability (sic) of the notarial
deed in favor of the petitioners.
II. The Court of Appeals disregarded the incontestable and uncontested fact that
petitioners have been in possession of the property in the concept of owners
fifty (50) years prior to the execution of the deed that respondents sought to
rescind.
III. The Court of Appeals disregarded the basic principle in the adjudication that
when the evidence of the parties in a civil case are in equipoise, the complaint
must be dismissed for failure of the plaintiff to prove his case by preponderant
evidence.
IV. The Court of Appeals based its decision on evidence it itself pronounce as
improbable, compounding the error by completely disregarding the nature and
consequence of a notarial document.[22]

The Ruling of the Court

The Court grants the petition on the sole ground that the respondents, who
were the plaintiffs in the trial court, failed to implead indispensable parties.

The respondents herein, who were the plaintiffs in the court a quo, alleged in
their complaint that, as heirs of the spouses Mollet, they were co-owners of the
subject property together with the heirs of Maria and Leonila, namely, Primo
Tolentino and their children, Hermino and Carolyn, and Delfin Malacca and their
sons Gelardo and Marcial. With the death of the respondents sister Juanita
Maritana, her heirs, (Cornelio Maritana and their children Luis, Orlando, Normita,
Diego, and Julieta) retained their right to inherit despite her death. [23] However, the
respondents failed to implead the aforementioned heirs as parties-plaintiffs. The
respondents also failed to implead the other signatories of the deed, namely,
Emeterio and Domingo, surnamed Moldes, who, under the deed, were deeded
shares in the property.
This is fatal to the complaint. All heirs of the deceased are indispensable parties
to the respondents action to nullify the deed and the partition of the subject property
among the signatories therein.[24] All the parties to the deed are, likewise,
indispensable parties.[25]
Section 7, Rule 3 of the Rules of Court provides:

SEC. 7. Compulsory joinder of indispensable parties. Parties-in-interest without

whom no final determination can be had of an action shall be joined either as
plaintiffs or defendants.
An indispensable party is one who has such an interest in the controversy or
subject matter that a final adjudication cannot be made, in his absence, without
injuring or affecting that interest. A party who has not only an interest in the subject
matter of the controversy, but also has an interest of such nature that a final decree
cannot be made without affecting his interest or leaving the controversy in such a
condition that its final determination may be wholly inconsistent with equity and
good conscience. He is a person in whose absence there cannot be a determination
between the parties already before the court which is effective, complete, or
equitable.[26] In Commissioner Andrea D. Domingo v. Herbert Markus Emil Scheer,
[27]
the Court held that the joinder of indispensable parties is mandatory. Without the
presence of indispensable parties to the suit, the judgment of the court cannot attain
real finality. Strangers to a case are not bound by the judgment rendered by the
court. The absence of an indispensable party renders all subsequent actions of the
court null and void, with no authority to act not only as to the absent party but also
as to those present. The responsibility of impleading all the indispensable parties
rests on the petitioner/plaintiff.

Likewise, in Metropolitan Bank and Trust Company v. Hon. Floro T. Alejo,[28] the
Court ruled that the evident aim and intent of the Rules regarding the joinder of
indispensable and necessary parties is a complete determination of all possible
issues, not only between the parties themselves but also as regards to other
persons who may be affected by the judgment. A valid judgment cannot even be
rendered where there is want of indispensable parties.
WHEREFORE, the petition is GRANTED. The Decision of the Regional Trial
Court and Decision of the Court of Appeals in CA-G.R. CV No. 47518 are
REVERSED and SET ASIDE. No costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

Republic of the Philippines

Supreme Court
Baguio City

THIRD DIVISION
PHILIP L. GO, PACIFICO Q.
LIM and ANDREW Q. LIM
Petitioners,

- versus -

G.R. No. 194024

Present:

VELASCO, JR., J.,Chairperson,

PERALTA,
ABAD,

DISTINCTION PROPERTIES
DEVELOPMENT AND
CONSTRUCTION, INC.
Respondent.

MENDOZA, and
PERLAS-BERNABE, JJ.

Promulgated:

April 25, 2012

X -------------------------------------------------------------------------------------- X

DECISION
MENDOZA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of

the 1997 Rules of Civil Procedure assailing the March 17, 2010 Decision [1] and
October 7, 2010 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No.
110013 entitled Distinction Properties Development & Construction, Inc.
v. Housing LandUse Regulatory Board (NCR), Philip L. Go, Pacifico Q. Lim
and Andrew Q. Lim.
Factual and Procedural Antecedents:
Philip L. Go, Pacifico Q. Lim and Andrew Q. Lim (petitioners) are
registered individual owners of condominium units in Phoenix Heights
Condominium located at H. Javier/Canley Road, Bo. Bagong Ilog, Pasig City,
Metro Manila.
Respondent Distinction Properties Development and Construction,
Inc. (DPDCI) is a corporation existing under the laws of the Philippines with
principal office at No. 1020 Soler Street, Binondo, Manila. It was incorporated
as a real estate developer, engaged in the development of condominium
projects, among which was the Phoenix Heights Condominium.
In February 1996, petitioner Pacifico Lim, one of the incorporators and
the then president of DPDCI, executed a Master Deed and Declaration of
Restrictions(MDDR)[3] of Phoenix Heights Condominium, which was filed with
the Registry of Deeds. As the developer, DPDCI undertook, among others, the
marketing aspect of the project, the sale of the units and the release of flyers
and brochures.
Thereafter, Phoenix Heights Condominium Corporation (PHCC) was
formally organized and incorporated. Sometime in 2000, DPDCI turned over
to PHCC the ownership and possession of the condominium units, except for
the two saleable commercial units/spaces:
1.

G/F Level BAS covered by Condominium Certificate of

Title
(CCT)
No.
21030
utilized
as
the
PHCCs administration office, and

2.

G/F Level 4-A covered by CCT No. PT-27396/C-136-II

used as living quarters by the building administrator.
Although used by PHCC, DPDCI was assessed association dues for
these two units.
Meanwhile, in March 1999, petitioner Pacifico Lim, as president of
DPDCI, filed an Application for Alteration of Plan[4] pertaining to the
construction of 22 storage units in the spaces adjunct to the parking area of the
building. The application, however, was disapproved as the proposed
alteration would obstruct light and ventilation.
In August 2004, through its Board,[5] PHCC approved a settlement offer
from DPDCI for the set-off of the latters association dues arrears with the
assignment of title over CCT Nos. 21030 and PT-27396/C-136-II and their
conversion into common areas. Thus, CCT Nos. PT-43400 and PT-43399 were
issued by the Registrar of Deeds of Pasig City in favor of PHCC in lieu of the
old titles. The said settlement between the two corporations likewise included
the reversion of the 22 storage spaces into common areas. With the conformity
of PHCC, DPDCIs application for alteration (conversion of unconstructed 22
storage units and units GF4-A and BAS from saleable to common areas) was
granted by the Housing and Land Use Regulatory Board (HLURB).[6]
In August 2008, petitioners, as condominium unit-owners, filed a
complaint[7] before the HLURB against DPDCI for unsound business practices
and violation of the MDDR. The case was docketed as REM- 080508-13906.
They alleged that DPDCI committed misrepresentation in their circulated
flyers and brochures as to the facilities or amenities that would be available in
the condominium and failed to perform its obligation to comply with the
MDDR.
In defense, DPDCI denied that it had breached its promises and
representations to the public concerning the facilities in the condominium. It
alleged that the brochure attached to the complaint was a mere preparatory
draft and not the official one actually distributed to the public, and that the
said brochure contained a disclaimer as to the binding effect of the supposed
offers therein. Also, DPDCI questioned the petitioners personality to sue as
the action was a derivative suit.

After due hearing, the HLURB rendered its decision[8] in favor of

petitioners. It held as invalid the agreement entered into between DPDCI and
PHCC, as to the alteration or conversion of the subject units into common
areas, which it previously approved, for the reason that it was not approved by
the majority of the members of PHCC as required under Section 13 of the
MDDR. It stated that DPDCIs defense, that the brochure was a mere draft,
was against human experience and a convenient excuse to avoid its obligation
to provide the facility of the project. The HLURB further stated that the case
was not a derivative suit but one which involved contracts of sale of the
respective units between the complainants and DPDCI, hence, within its
jurisdiction pursuant to Section 1, Presidential Decree (P.D.) No. 957(The
Subdivision and Condominium Buyers Protective Decree), as amended. The
decretal portion of the HLURB decision reads:
WHEREFORE, in view of the foregoing, judgment is hereby
rendered:
1.

Ordering respondent to restore/provide proper gym

facilities, to restore the hallway at the mezzanine floor.

2.

Declaring the conversion/alteration of 22 storage units

and Units GF4-A and BAS as illegal, and consequently,
and ordering respondent to continue paying the
condominium dues for these units, with interest and
surcharge.

3.

Ordering the Respondent to pay the sum of

Php998,190.70, plus interests and surcharges, as
condominium dues in arrears and turnover the
administration office to PHCC without any charges
pursuant to the representation of the respondent in the
brochures it circulated to the public with a corresponding
credit to complainants individual shares as members of
PHCC entitled to such refund or reimbursements.

4.

Ordering the Respondent to refund to the PHCC the

amount of Php1,277,500.00, representing the cost of the
deep well, with interests and surcharges with a

corresponding credit to complainants individual shares

as members of PHCC entitled to such refund or
reimbursements.
5.

Ordering the Respondent to pay the complainants moral

and exemplary damages in the amount of 10,000.00 and
attorneys fees in the amount of10,000.00.

All other claims and counterclaims are hereby dismissed

accordingly.
IT IS SO ORDERED.[9]

Aggrieved, DPDCI filed with the CA its Petition for Certiorari and
Prohibition[10] dated August 11, 2009, on the ground that the HLURB decision
was a patent nullity constituting an act without or beyond its jurisdiction and
that it had no other plain, speedy and adequate remedy in the course of law.
On March 17, 2010, the CA rendered the assailed decision which
disposed of the case in favor of DPDCI as follows:
WHEREFORE, in view of the foregoing, the petition is
GRANTED. Accordingly, the assailed Decision of the HLURB
in Case No. REM-0800508-13906 is ANNULLED and SET
ASIDE and a new one is entered DISMISSING the
Complaint a quo.
IT IS SO ORDERED.[11]

The CA ruled that the HLURB had no jurisdiction over the complaint
filed by petitioners as the controversy did not fall within the scope of the
administrative agencys authority under P.D. No. 957. The HLURB not only
relied heavily on the brochures which, according to the CA, did not set out an
enforceable obligation on the part of DPDCI, but also erroneously cited Section
13 of the MDDR to support its finding of contractual
violation.

The CA held that jurisdiction over PHCC, an indispensable party, was

neither acquired nor waived by estoppel. Citing Carandang v. Heirs of De
Guzman,[12]it held that, in any event, the action should be dismissed because the
absence of PHCC, an indispensable party, rendered all subsequent actuations of
the court void, for want of authority to act, not only as to the absent parties but
even as to those present.
Finally, the CA held that the rule on exhaustion of administrative
remedies could be relaxed. Appeal was not a speedy and adequate remedy as
jurisdictional questions were continuously raised but ignored by the
HLURB. In the present case, however, [t]he bottom line is that the challenged
decision is one that had been rendered in excess of jurisdiction, if not with
grave abuse of discretion amounting to lack or excess of jurisdiction.[13]
Petitioners filed a motion for reconsideration[14] of the said decision. The
motion, however, was denied by the CA in its Resolution dated October 7,
2010.
Hence, petitioners interpose the present petition before this Court
anchored on the following
GROUNDS
(1)
THE COURT OF APPEALS ERRED IN HOLDING THAT
THE HLURB HAS NO JURISDICTION OVER THE INSTANT
CASE;
(2)
THE COURT OF APPEALS ALSO ERRED IN FINDING
THAT PHCC IS AN INDISPENSABLE PARTY WHICH
WARRANTED THE DISMISSAL OF THE CASE BY REASON
OF IT NOT HAVING BEEN IMPLEADED IN THE CASE;
(3)
THE COURT OF APPEALS HAS LIKEWISE ERRED IN
RELAXING THE RULE ON NON-EXHAUSTION OF

ADMINISTRATIVE REMEDIES BY DECLARING THAT

THE APPEAL MAY NOT BE A SPEEDY AND ADEQUATE
REMEDY WHEN JURISDICTIONAL QUESTIONS WERE
CONTINUOUSLY RAISED BUT IGNORED BY THE
HLURB; and
(4)
THAT FINALLY, THE COURT A QUO ALSO ERRED IN NOT
GIVING DUE RESPECT OR EVEN FINALITY TO THE
FINDINGS OF THE HLURB.[15]

Petitioners contend that the HLURB has jurisdiction over the subject
matter of this case. Their complaint with the HLURB clearly alleged and
demanded specific performance upon DPDCI of the latters contractual
obligation under their individual contracts to provide a back-up water system
as part of the amenities provided for in the brochure, together with an
administration office, proper gym facilities, restoration of a hallway, among
others. They point out that the violation by DPDCI of its obligations
enumerated in the said complaint squarely put their case within the ambit of
Section 1, P.D. No. 957, as amended, enumerating the cases that are within the
exclusive jurisdiction of the HLURB. Likewise, petitioners argue that the case
was not a derivative suit as they were not suing for and in behalf of
PHCC. They were suing, in their individual capacities as condominium unit
buyers, their developer for breach of contract. In support of their view that
PHCC was not an indispensable party, petitioners even quoted the dispositive
portion of the HLURB decision to show that complete relief between or among
the existing parties may be obtained without the presence of PHCC as a party
to this case. Petitioners further argue that DPDCIs petition before the CA
should have been dismissed outright for failure to comply with Section 1, Rule
XVI of the 2004 Rules of Procedure of the HLURB providing for an appeal to
the Board of Commissioners by a party aggrieved by a decision of a regional
officer.
DPDCI, in its Comment,[16] strongly objects to the arguments of
petitioners and insists that the CA did not err in granting its petition. It posits
that the HLURB has no jurisdiction over the complaint filed by petitioners

because the controversies raised therein are in the nature of intra-corporate

disputes. Thus, the case does not fall within the jurisdiction of the HLURB
under Section 1, P.D. No. 957 and P.D. No. 1344. According to DPDCI,
petitioners sought to address the invalidation of the corporate acts duly entered
and executed by PHCC as a corporation of which petitioners are admittedly
members of, and not the acts pertaining to their ownership of the units. Such
being the case, PHCC should have been impleaded as a party to the
complaint. Its non-inclusion as an indispensable party warrants the dismissal
of the case. DPDCI further avers that the doctrine of exhaustion is inapplicable
inasmuch as the issues raised in the petition with the CA are purely legal; that
the challenged administrative act is patently illegal; and that the procedure of
the HLURB does not provide a plain, speedy and adequate remedy and its
application may cause great and irreparable damage. Finally, it claims that the
decision of the HLURB Arbiter has not attained finality, the same having been
issued without jurisdiction.
Essentially, the issues to be resolved are: (1) whether the HLURB has
jurisdiction over the complaint filed by the petitioners; (2) whether PHCC is an
indispensable party; and (3) whether the rule on exhaustion of administrative
remedies applies in this case.
The petition fails.
Basic as a hornbook principle is that jurisdiction over the subject matter
of a case is conferred by law and determined by the allegations in the
complaint which comprise a concise statement of the ultimate facts constituting
the plaintiff's cause of action. The nature of an action, as well as which court or
body has jurisdiction over it, is determined based on the allegations contained
in the complaint of the plaintiff, irrespective of whether or not the plaintiff is
entitled to recover upon all or some of the claims asserted therein.
The averments in the complaint and the character of the relief sought are
the ones to be consulted. Once vested by the allegations in the complaint,
jurisdiction also remains vested irrespective of whether or not the plaintiff is
entitled to recover upon all or some of the claims asserted therein. [17] Thus, it
was ruled that the jurisdiction of the HLURB to hear and decide cases is

determined by the nature of the cause of action, the subject matter or property
involved and the parties.[18]
Generally, the extent to which an administrative agency may exercise its
powers depends largely, if not wholly, on the provisions of the statute creating
or empowering such agency.[19] With respect to the HLURB, to determine if
said agency has jurisdiction over petitioners cause of action, an examination of
the laws defining the HLURBs jurisdiction and authority becomes
imperative. P.D. No. 957,[20] specifically Section 3, granted the National
Housing Authority (NHA) the "exclusive jurisdiction to regulate the real estate
trade and business." Then came P.D. No. 1344[21] expanding the jurisdiction of
the NHA (now HLURB), as follows:
SECTION 1. In the exercise of its functions to regulate the real
estate trade and business and in addition to its powers
provided for in Presidential Decree No. 957, the National
Housing Authority shall have exclusive jurisdiction to hear and
decide cases of the following nature:
(a) Unsound real estate business practices;
(b) Claims involving refund and any other claims filed by
subdivision lot or condominium unit buyer against the project
owner, developer, dealer, broker or salesman; and
(c) Cases involving specific performance of contractual and
statutory obligations filed by buyers of subdivision lot or
condominium unit against the owner, developer, dealer,
broker or salesman.

This provision must be read in light of the laws preamble, which

explains the reasons for enactment of the law or the contextual basis for its
interpretation.[22] A statute derives its vitality from the purpose for which it is
enacted, and to construe it in a manner that disregards or defeats such purpose
is to nullify or destroy the law.[23] P.D. No. 957, as amended, aims to protect
innocent subdivision lot and condominium unit buyers against fraudulent real
estate practices.[24]

The HLURB is given a wide latitude in characterizing or categorizing

acts which may constitute unsound business practice or breach of contractual
obligations in the real estate trade. This grant of expansive jurisdiction to the
HLURB does not mean, however, that all cases involving subdivision lots or
condominium units automatically fall under its jurisdiction. The CA aptly
quoted the case of Christian General Assembly, Inc. v. Ignacio,[25] wherein the
Court held that:
The mere relationship between the parties, i.e., that of
being subdivision owner/developer and subdivision lot buyer,
does not automatically vest jurisdiction in the HLURB. For an
action to fall within the exclusive jurisdiction of the HLURB,
the decisive element is the nature of the action as enumerated in
Section 1 of P.D. 1344. On this matter, we have consistently
held that the concerned administrative agency, the National
Housing Authority (NHA) before and now the HLURB, has
jurisdiction over complaints aimed at compelling the
subdivision developer to comply with its contractual and
statutory obligations.[26] [Emphases supplied]

In this case, the complaint filed by petitioners alleged causes of action

that apparently are not cognizable by the HLURB considering the nature of the
action and the reliefs sought. A perusal of the complaint discloses that
petitioners are actually seeking to nullify and invalidate the duly constituted
acts of PHCC - the April 29, 2005 Agreement [27] entered into by PHCC with
DPDCI and its Board Resolution[28] which authorized the acceptance of the
proposed offsetting/settlement of DPDCIs indebtedness and approval of the
conversion of certain units from saleable to common areas. All these
were approved by the HLURB. Specifically, the reliefs sought or prayers are
the following:
1. Ordering the respondent to restore the gym to its original
location;
2. Ordering the respondent to restore the hallway at the
second floor;

3. Declaring the conversion/alteration of 22 storage units and

Units GF4-A and BAS as illegal, and consequently, ordering
respondent to continue paying the condominium dues for
these units, with interest and surcharge;
4. Ordering the respondent to pay the sum of
PHP998,190.70, plus interest and surcharges, as
condominium dues in arrears and turnover the
administration office to PHCC without any charges
pursuant to the representation of the respondent in the
brochures it circulated to the public;
5. Ordering the respondent to refund to the PHCC the
amount of PHP1,277,500.00, representing the cost of the
deep well, with interests and surcharges;
6. Ordering the respondent to pay the complainants
moral/exemplary
damages
in
the
amount
of
PHP100,000.00; and
7. Ordering the respondent to pay the complainant attorneys
fees in the amount of PHP100,000.00, and PHP3,000.00
for every hearing scheduled by the Honorable Office. [29]

As it is clear that the acts being assailed are those of PHHC, this case
cannot prosper for failure to implead the proper party, PHCC.
An indispensable party is defined as one who has such an interest in the
controversy or subject matter that a final adjudication cannot be made, in his
absence, without injuring or affecting that interest.[30] In the recent case
of Nagkakaisang Lakas ng Manggagawa sa Keihin (NLMK-OLALIA-KMU) v.
Keihin Philippines Corporation,[31] the Court had the occasion to state that:
Under Section 7, Rule 3 of the Rules of Court, "parties in
interest without whom no final determination can be had of an
action shall be joined as plaintiffs or defendants." If there is a
failure to implead an indispensable party, any judgment
rendered would have no effectiveness. It is "precisely when an
indispensable party is not before the court (that) an action

should be dismissed. 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." The purpose of the rules on joinder of
indispensable parties is a complete determination of all issues
not only between the parties themselves, but also as regards
other persons who may be affected by the judgment. A
decision valid on its face cannot attain real finality where there
is want of indispensable parties.[32] (Underscoring supplied)

Similarly, in the case of Plasabas v. Court of Appeals,[33] the Court held

that a final decree would necessarily affect the rights of indispensable parties
so that the Court could not proceed without their presence. In support thereof,
the Court in Plasabas cited the following authorities, thus:
"The general rule with reference to the making of parties in a
civil action requires the joinder of all indispensable parties
under any and all conditions, their presence being a sine qua
non of the exercise of judicial power. (Borlasa v. Polistico, 47
Phil. 345, 348) For this reason, our Supreme Court has held
that when it appears of record that there are other persons
interested in the subject matter of the litigation, who are not
made parties to the action, it is the duty of the court to
suspend the trial until such parties are made either plaintiffs
or defendants. (Pobre, et al. v. Blanco, 17 Phil. 156). x x x
Where the petition failed to join as party defendant the person
interested in sustaining the proceeding in the court, the same
should be dismissed. x x x When an indispensable party is not
before the court, the action should be dismissed. (People, et al. v.
Rodriguez, et al., G.R. Nos. L-14059-62, September 30, 1959)
(sic)
"Parties in interest without whom no final determination can be had
of an action shall be joined either as plaintiffs or defendants. (Sec. 7,
Rule 3, Rules of Court). The burden of procuring the presence of
all indispensable parties is on the plaintiff. (39 Amjur [sic] 885).
The evident purpose of the rule is to prevent the multiplicity of suits
by requiring the person arresting a right against the defendant to
include with him, either as co-plaintiffs or as co-defendants, all
persons standing in the same position, so that the whole matter in

dispute may be determined once and for all in one litigation. (Palarca
v. Baginsi, 38 Phil. 177, 178).

From all indications, PHCC is an indispensable party and should have

been impleaded, either as a plaintiff or as a defendant,[34] in the complaint filed
before the HLURB as it would be directly and adversely affected by any
determination therein. To belabor the point, the causes of action, or the acts
complained of, were the acts of PHCC as a corporate body. Note that in the
judgment rendered by the HLURB, the dispositive portion in particular,
DPDCI was ordered (1) to pay 998,190.70, plus interests and surcharges, as
condominium dues in arrears and turnover the administration office to PHCC;
and (2) to refund to PHCC1,277,500.00, representing the cost of the deep
well, with interests and surcharges. Also, the HLURB declared as illegal the
agreement regarding the conversion of the 22 storage units and Units GF4-A
and BAS, to which agreement PHCC was a party.
Evidently, the cause of action rightfully pertains to PHCC. Petitioners
cannot exercise the same except through a derivative suit. In the complaint,
however, there was no allegation that the action was a derivative suit. In fact, in
the petition, petitioners claim that their complaint is not a derivative suit. [35] In
the cited case of Chua v. Court of Appeals,[36] the Court ruled:
For a derivative suit to prosper, it is required that the
minority stockholder suing for and on behalf of the
corporation must allege in his complaint that he is suing on a
derivative cause of action on behalf of the corporation and all
other stockholders similarly situated who may wish to join him
in the suit. It is a condition sine qua non that the corporation be
impleaded as a party because not only is the corporation an
indispensable party, but it is also the present rule that it must
be served with process. The judgment must be made binding
upon the corporation in order that the corporation may get the
benefit of the suit and may not bring subsequent suit against
the same defendants for the same cause of action. In other
words, the corporation must be joined as party because it is its
cause of action that is being litigatedand because judgment
must be a res adjudicata against it. (Underscoring supplied)

Without PHCC as a party, there can be no final adjudication of the

HLURBs judgment. The CA was, thus, correct in ordering the dismissal of the
case for failure to implead an indispensable party.
To justify its finding of contractual violation, the HLURB cited a
provision in the MDDR, to wit:
Section 13. Amendment. After the corporation shall
have been created, organized and operating, this MDDR may
be amended, in whole or in part, by the affirmative vote of
Unit owners constituting at least fifty one (51%) percent of the
Unit shares in the Project at a meeting duly called pursuant to
the Corporation By Laws and subject to the provisions of the
Condominium Act.

This citation, however, is misplaced as the above-quoted provision

pertains to the amendment of the MDDR. It should be stressed that petitioners
are not asking for any change or modification in the terms of the MDDR. What
they are really praying for is a declaration that the agreement regarding the
alteration/conversion is illegal. Thus, the Court sustains the CAs finding that:
There was nothing in the records to suggest that DPDCI
sought the amendment of a part or the whole of such
MDDR. The cited section is somewhat consistent only with
the principle that an amendment of a corporations Articles of
Incorporation must be assented to by the stockholders
holding more than 50% of the shares. The MDDR does not
contemplate, by such provision, that all corporate acts ought to
be with the concurrence of a majority of the unit owners. [37]

Moreover, considering that petitioners, who are members of PHCC, are

ultimately challenging the agreement entered into by PHCC with DPDCI, they
are assailing, in effect, PHCCs acts as a body corporate. This action,
therefore, partakes the nature of an intra-corporate controversy, the
jurisdiction over which used to belong to the Securities and Exchange
Commission (SEC), but transferred to the courts of general jurisdiction or the

appropriate Regional Trial Court (RTC),pursuant to Section 5b of P.D.

No. 902-A,[38] as amended by Section 5.2 of Republic Act (R.A.) No. 8799.[39]
An intra-corporate controversy is one which "pertains to any of the
following relationships: (1) between the corporation, partnership or association
and the public; (2) between the corporation, partnership or association and the
State in so far as its franchise, permit or license to operate is concerned; (3)
between the corporation, partnership or association and its stockholders,
partners, members or officers; and (4) among the stockholders, partners or
associates themselves."[40]
Based on the foregoing definition, there is no doubt that the controversy
in this case is essentially intra-corporate in character, for being between a
condominium corporation and its members-unit owners. In the recent case
of Chateau De Baie Condominium Corporation v. Sps. Moreno,[41] an action
involving the legality of assessment dues against the condominium
owner/developer, the Court held that, the matter being an intra-corporate
dispute, the RTC had jurisdiction to hear the same pursuant to R.A. No. 8799.
As to the alleged failure to comply with the rule on exhaustion of
administrative remedies, the Court again agrees with the position of the CA
that the circumstances prevailing in this case warranted a relaxation of the rule.
The doctrine of exhaustion of administrative remedies is a cornerstone of
our judicial system. The thrust of the rule is that courts must allow
administrative agencies to carry out their functions and discharge their
responsibilities within the specialized areas of their respective competence.
[42]
It has been held, however, that the doctrine of exhaustion of administrative
remedies and the doctrine of primary jurisdiction are not ironclad rules. In the
case of Republic of the Philippines v. Lacap,[43] the Court enumerated the
numerous exceptions to these rules, namely: (a) where there is estoppel on the
part of the party invoking the doctrine; (b) where the challenged administrative
act is patently illegal, amounting to lack of jurisdiction; (c) where there is
unreasonable delay or official inaction that will irretrievably prejudice the
complainant; (d) where the amount involved is relatively so small as to make
the rule impractical and oppressive; (e) where the question involved is purely

legal and will ultimately have to be decided by the courts of justice; (f) where
judicial intervention is urgent; (g) where the application of the doctrine may
cause great and irreparable damage; (h) where the controverted acts violate due
process; (i) where the issue of non-exhaustion of administrative remedies has
been rendered moot; (j) where there is no other plain, speedy and adequate
remedy; (k) where strong public interest is involved; and (l) in quo warranto
proceedings.[44] [Underscoring supplied]
The situations (b) and (e) in the foregoing enumeration obtain in this
case.
The challenged decision of the HLURB is patently illegal having been
rendered in excess of jurisdiction, if not with grave abuse of discretion
amounting to lack or excess of jurisdiction. Also, the issue on jurisdiction is
purely legal which will have to be decided ultimately by a regular court of
law. As the Court wrote in Vigilar v. Aquino:[45]
It does not involve an examination of the probative value
of the evidence presented by the parties. There is a question of
law when the doubt or difference arises as to what the law is
on a certain state of facts, and not as to the truth or the
falsehood of alleged facts. Said question at best could be
resolved only tentativelyby the administrative authorities. The
final decision on the matter rests not with them but with the
courts of justice. Exhaustion of administrative remedies does
not apply, because nothing of an administrative nature is to be
or can be done. The issue does not require technical
knowledge and experience but one that would involve the
interpretation and application of law.

Finally, petitioners faulted the CA in not giving respect and even finality
to the findings of fact of the HLURB. Their reliance on the case of Dangan v.
NLRC,[46] reiterating the well-settled principles involving decisions of
administrative agencies, deserves scant consideration as the decision of the
HLURB in this case is manifestly not supported by law and jurisprudence.

Petitioners, therefore, cannot validly invoke DPDCIs failure to fulfill its

obligation on the basis of a plain draft leaflet which petitioners were able to
obtain, specifically Pacifico Lim, having been a president of DPDCI. To
accord petitioners the right to demand compliance with the commitment under
the said brochure is to allow them to profit by their own act. This, the Court
cannot tolerate.
In sum, inasmuch as the HLURB has no jurisdiction over petitioners
complaint, the Court sustains the subject decision of the CA that the HLURB
decision is null and void ab initio. This disposition, however, is without
prejudice to any action that the parties may rightfully file in the proper forum.
WHEREFORE, the petition is DENIED.

THIRD DIVISION

ZENAIDA ACOSTA, EDUARDO

ACOSTA, ARNOLD ACOSTA, DELIA
ACOSTA, SPS. TEODULO MACHADO
AND AURORA ORENZA,
SPS. ROLDAN PALARCA AND PACITA
PANGILINAN, SPS. FROMENCIO
JONATAS AND LUCENA M. MARIANO,
SPS. MARCIAL IGLESIA AND
VIRGINIA LAPURGA, ATTY.-IN-FACT
FELINO MACARAEG, SPS. MANUEL
MANGROBANG AND VALERIANA
SOTIO, SPS. VIRGINIA
DELA ROSA AND ROMEO DELA
ROSA, SPS. PACIFICO SOTIO AND
LOLITA SORIANO, JUAN DALINOC
(DECEASED), REPRESENTED BY
DAUGHTER CONSUELO DALINOC,
SPS. MARIANO TORIO AND MAXIMA
MACARAEG, REPRESENTED BY
LEGAL HEIRS TORIBIA TORIO AND
MAYUMI MACARAEG, TEOFILO
MOLINA AND AVELINO DIZON,
Petitioners,

G.R. No. 161034

Present:
YNARES-SANTIAGO, J.,
Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.

- versus TRINIDAD SALAZAR AND ANICETA

SALAZAR,
Respondents.

Promulgated:
June 30, 2009

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:
This is a petition for review on certiorari assailing the July 25, 2003
Decision[1] of the Court of Appeals (CA) as well as its November 25, 2003
Resolution[2] in CA-G.R. CV No. 70161, which reversed and set aside the
December 20, 2000 Decision[3] of the Regional Trial Court (RTC), Branch 64,
Tarlac City in Civil Case No. 7256. Said RTC decision dismissed the complaint
for quieting of title filed by herein respondents Trinidad Salazar and Aniceta
Salazar against petitioners.
Below are the facts.
On November 19, 1985, respondents Trinidad and Aniceta Salazar
(hereinafter, Salazars), filed a petition for the cancellation of the entries
annotated at the back of Original Certificate of Title (OCT) No. 40287
registered in the names of spouses Juan Soriano and Vicenta Macaraeg, who
died without issue.[4] The Salazars claim that two of the entries Entry Nos.
19756 and 20102 annotated at the back of the aforesaid title are void since no
consolidation of rights appear in the Registry of Deeds (RD) of Tarlac to
support the entries; and that Transfer Certificate of Title (TCT) No. 9297,
which supposedly cancelled OCT No. 40287, is non-existent according to a
certification issued by the RD.[5] On October 21, 1986, RTC Branch 63 of
Tarlac resolved to grant the petition and ordered the cancellation of Entry No.
20102.[6] No respondent was impleaded in the said petition.
Subsequently, the Salazars filed an urgent motion praying for the
issuance of an order to direct the RD of Tarlac to recall all titles issued under
Entry Nos. 19756 and 20102 and to cancel all the tax declarations issued based
thereon. The motion was granted in an Order issued on November 7, 1986.[7]
On November 20, 1986, the Salazars filed a second urgent motion
praying that the owners of the affected property be ordered to appear before the
court to show cause why their titles should not be cancelled.[8]

On October 20, 1987, the Salazars filed a new motion praying that the
RD of Tarlac be ordered to comply with the courts order issued on November
7, 1986. The RD, however, explained that to comply with the said court order
would remove the basis for the issuance of TCT No. 9297 which title had, in
turn, been cancelled by many other transfer certificates of title and would
indubitably result in the deprivation of the right to due process of the registered
owners thereof.[9] On this basis, the RTC denied the motion and advised the
Salazars to elevate the matter en consulta to the Land Registration Commission
(now Land Registration Authority or LRA). After the Salazars moved for
reconsideration, the RTC directed the RD of Tarlac to comply with the October
21, 1986 and November 7, 1986 orders. Threatened with contempt, the RD
elevated the matter en consulta to the National Land Titles and Deeds
Registration Administration, which, in turn, issued a resolution directing the
RD to comply with the RTCs orders.[10] On March 7, 1989, OCT No. 40287
was reconstituted and TCT No. 219121 was issued in the names of the
Salazars, sansEntry Nos. 19756 and 20102.
It was at this stage of the proceedings that herein petitioners together
with other subsequent purchasers for value of the disputed property twentyseven (27) titleholders in all[11] filed their formal written comment dated April
17, 1989.[12] In their comment, the oppositors contended, among others, that
they had acquired their titles in good faith and for value, and that the lower
court, acting as a land registration court, had no jurisdiction over issues of
ownership.[13]
On September 14, 1989, the said court, apparently realizing its mistake,
issued an Order, stating thus:
Upon motion of Atty. Alcantara and without objection on the
part of Atty. Molina and Atty. Lamorena, all the incidents in this case
are hereby withdrawn without prejudice to the filing of an
appropriate action in a proper forum.
SO ORDERED.[14]

This prompted the Salazars to file a complaint for quieting of title

impleading herein petitioners as well as other individuals who claim to have

purchased the said property from the heirs of Juan Soriano. The case was
docketed as Civil Case No. 7256 before Branch 64 of the RTC of Tarlac. [15] The
complaint alleged that TCT No. 219121 was issued in the names of the
Salazars without Entry Nos. 19756 and 20102 at the back of said title, but the
previous TCTs issued by the RD of Tarlac as well as the tax declarations
existing in the Assessors Office have not been cancelled and revoked by the
said government agencies to the detriment and prejudice of the complainants
(herein respondents). They also alleged that Pcs-395, from which Lot Nos.
702-A to 702-V were taken, is non-existent and, thus, the court should cause
the cancellation and revocation of spurious and null and void titles and tax
declarations.[16]
Defendants filed three separate answers. Defendants Raymundo
Macaraeg, Martha Estacio (both deceased), Adelaida Macaraeg, Lucio
Macaraeg, represented by Eufracia Macaraeg Baluyot as attorney-in-fact,
Gregorio Baluyut and Eligia Obcena (hereinafter, Macaraegs) maintained that
the November 7, 1986 order of the RTC is null and void because the court did
not acquire jurisdiction over the case. They also argued that TCT No. 219121
issued in the name of the Salazars is void and that the case for quieting of title
is not a direct, but a collateral, attack against a property covered by
a Torrens certificate.[17]
Defendants, now herein petitioners, for their part, maintained that the
Plan of Consolidation Subdivision Survey Pcs-396 had been an existing
consolidation-subdivision survey plan annotated on OCT No. 40287 under
Entry No. 20102 dated February 17, 1950 from which TCT No. 9297 was
issued covering Lot Nos. 702-A to 702-V, inclusive, in the names of the heirs
of Juan Soriano. They argued that TCT No. 219121 issued in the name of the
Salazars is spurious and null and void from the beginning since it was acquired
pursuant to an illegal order issued by the court. [18] By way of special and
affirmative defenses, they also alleged, among others, (1) that the Salazars
were not among the heirs of the late Juan Soriano, not within the fifth civil
degree of consanguinity, and hence, they have no right to inherit; (2) that TCT
No. 219121 constitutes a cloud upon the Torrens title of herein petitioners, and
should therefore be cancelled and revoked; (3) that assuming, without
admitting, that the Salazars have any right over the lots in question their right

to enforce such action had already prescribed by laches or had been barred by
prescription since more than forty (40) years had lapsed since the heirs of Juan
Soriano had registered the lots in question under TCT No. 9297 on February
17, 1950; and (4) that petitioners and/or their predecessors-in-interest acquired
the lots in question in good faith and for value from the registered owners
thereof.[19]
Defendant spouses Francisco Jonatas and Lucena M. Mariano and
spouses Manuel Mangrobang and Valeriana Sotio filed their answers
practically raising the same defenses.[20]
Meanwhile, on July 29, 1991, petitioners, together with the Macaraegs
and Jonatas, et al., filed before the CA a petition for annulment of
judgment[21] rendered by RTC Branch 63 of Tarlac, Tarlac. The case, docketed
as CA-G.R. SP No. 25643, was, however, dismissed on the ground of litis
pendencia.[22]
On December 20, 2000, Branch 64 of the RTC of Tarlac dismissed the
complaint for quieting of title. The trial court faulted the Salazars for failure to
present proof that they are heirs of the late Juan Soriano.[23] It also declared
TCT No. 219121 issued in the name of the Salazars as null and void, and
affirmed TCT No. 9297 as well as all certificates of title derived therefrom.[24]
Unsatisfied, the Salazars appealed to the CA,[25] which ruled in their
favor.
According to the CA, it was erroneous for Branch 64 of the RTC of
Tarlac to reverse and declare as null and void the decision of Branch 63, which
is a court of equal rank. Such issue should have been properly ventilated in an
action for annulment of final judgment. Consequently, the orders issued by
RTC Branch 63, had become final and executory, hence, covered by res
judicata.[26]
The CA also struck down the arguments raised by the appellees that the
orders of RTC Branch 63 are null and void for lack of proper notice. It
ratiocinated that the proceeding is a land registration proceeding, which is an

action in rem. This being so, personal notice to the owners or claimants of the
land sought to be registered is not necessary in order to vest the court with
jurisdiction over the res and over the parties.[27]
A motion for reconsideration[28] was filed, but the same was denied.
[29]
Hence, this petition.
Pivotal to the resolution of this case is the determination of the validity
of the action taken by the Salazars in Branch 63 of the RTC of Tarlac.
We rule for petitioners.
It is true that the registration of land under the Torrens system is a
proceeding in rem and not in personam. Such a proceeding in rem, dealing with
a tangibleres, may be instituted and carried to judgment without personal
service upon the claimants within the state or notice by mail to those outside of
it. Jurisdiction is acquired by virtue of the power of the court over the res. Such
a proceeding would be impossible were this not so, for it would hardly do to
make a distinction between constitutional rights of claimants who were known
and those who were not known to the plaintiff, when the proceeding is to bar
all.[30]
Interestingly, however, the proceedings instituted by the Salazars both
in Branch 63 of the RTC of Tarlac for the cancellation of entries in OCT No.
40287 and later in Branch 64 of the RTC of Tarlac for quieting of title can
hardly be classified as actions in rem. The petition for cancellation of entries
annotated at the back of OCT No. 40287 ought to have been directed against
specific persons: namely, the heirs of Juan Soriano as appearing in Entry No.
20102 and, indubitably, against their successors-in-interest who have acquired
different portions of the property over the years because it is in the nature of an
action quasi in rem. Accordingly, the Salazars should have impleaded as party
defendants the heirs of Juan Soriano and/or Vicenta Macaraeg as well as those
claiming ownership over the property under their names because they are
indispensable parties. This was not done in this case. [31] Since no indispensable
party was ever impleaded by the Salazars in their petition for cancellation of
entry filed before Branch 63 of the RTC of Tarlac, herein petitioners are not

bound by the dispositions of the said court.[32] Consequently, the judgment or

order of the said court never even acquired finality.
Apparently realizing their mistake, the Salazars later on filed an action
for quieting of title, also an action quasi in rem, albeit this time before Branch
64 of the RTC of Tarlac. Because the Salazars miserably failed to prove the
basis for their claim, the RTC dismissed the complaint. [33] In fact, the RTC was
bold enough to have pronounced thus:
Who are the heirs of Juan Soriano who caused the
consolidation and in whose favor TCT No. 9297 was issued?
Certainly, they are not the plaintiffs. If the plaintiffs claim that they
are the only heirs, they should file a case against those who executed
the consolidation in whose favor [E]ntry [N]o. 20102 was made.
x x x In its order dated February 24, 2000, this Court ruled
that it is necessary that plaintiffs should prove that they are the heirs
of Juan Soriano, the registered owners as indicated in OCT No.
40287 of (sic) Vicenta Macaraeg, the late spouse. Despite the cue,
the plaintiffs opted not to present evidence on how they became the
heirs of Juan Soriano or Vicenta Macaraeg. There being [no]
evidence presented to prove that plaintiffs are the heirs of the late
Juan Soriano and Vicenta Macaraeg, they had no right and cause of
action to prosecute this case.[34]

Needless to say, the failure of the Salazars to implead indispensable party

defendants in the petition for cancellation of entries in OCT No. 40287 should
have been a ground for the RTC to dismiss, or at least suspend, the proceedings
of the case.[35] Yet, although the action proceeded, any judgment or order issued
by the court thereon is still null and void for want of authority on the part of the
court to act with respect to the parties never impleaded in the action. [36] Thus,
the orders issued by said court dated October 21, 1986 and November 7, 1986
never acquired finality.[37] Quod ab initio non valet, in tractu temporis non
convalescit.[38]
Paraphrasing by analogy this Courts ruling in Metropolitan Waterworks
& Sewerage System v. Sison,[39] a void order is not entitled to the respect
accorded to a valid order. It may be entirely disregarded or declared inoperative

by any tribunal in which effect is sought to be given to it. It has no legal or

binding effect or efficacy for any purpose or at any place and thus
cannot affect, impair or create rights. It is not entitled to enforcement and is,
ordinarily, no protection to those who seek to enforce the same. Accordingly,
all proceedings founded on the void court order are themselves regarded as
invalid, and the situation is the same as it would be if there was no order issued
by the court. It leaves the party litigants in the same position they were in
before the trial.[40] A void order, like any void judgment, may be said to be a
lawless thing which can be treated as an outlaw and slain at sight.[41]
More crucial is the fact that both parties in this case are dealing with
property registered under the Torrens system. To allow any individual, such as
the Salazars in this case, to impugn the validity of a Torrens certificate of title
by the simple expediency of filing an ex parte petition for cancellation of
entries would inevitably erode the very reason why the Torrens system was
adopted in this country, which is to quiet title to land and to put a stop forever
to any question on the legality of the title, except claims that were noted, at the
time of registration, in the certificate, or which may arise subsequent thereto.
[42]
Once a title is registered under the Torrenssystem, the owner may rest
secure, without the necessity of waiting in the portals of the courts or sitting in
the mirador su casa to avoid the possibility of losing his land. [43] Rarely will
the court allow another person to attack the validity and indefeasibility of
a Torrens certificate, unless there is compelling reason to do so and only upon a
direct action filed in court proceeded in accordance with law.[44]
Finally, this Court also takes note of the fact that for more than 30 years
from the time Entry No. 20102 was annotated at the back of OCT No. 40287
on February 17, 1950 until the time of the filing of the ex parte petition for
cancellation of entries on the said certificate of title on November 19, 1985
the Salazars remained deafeningly quiet and never made any move to question
the issue of ownership over the said land before the proper forum. They also
failed to ventilate their claim during the intestate proceeding filed by the heirs
of Juan Soriano sometime in 1939. Likewise, they miserably failed to stop the
transfer of portions of the property to petitioners who, for themselves, were
able to secure TCTs in their own names. All of these would lead to the
inevitable conclusion that if there is any validity to the claim of the Salazars

over the said property although such issue is not the subject of the present
case the same had already prescribed[45] or, at the very least, had become stale
due to laches.
WHEREFORE, the petition is GRANTED. The assailed July 25, 2003
Decision of the Court of Appeals including its November 25, 2003 Resolution
are hereby SET ASIDE. Accordingly, the December 20, 2000 Decision
rendered by Branch 64 of the Regional Trial Court of Tarlac City, Tarlac
is REINSTATED. Costs against respondents.
SO ORDERED.