Facts:

The case before the Supreme Court of the Philippines involves Alejo Aranda and several family members as petitioners against Fortune Savings & Loan Association, Inc., the Provincial Sheriff of Cavite, and other respondents (G.R. No. 125684, June 08, 2006). On January 5, 1979, Alejo Aranda acquired a parcel of land encompassing 20,890 square meters known as Lot No. 1260-B from the Ministry of Agrarian Reform, resulting in the issuance of Transfer Certificate of Title (TCT) No. 102248. This purchase included a prohibition against alienation or encumbrance within five years without prior written consent from the ministry. Later, on June 19, 1980, a Permit to Mortgage was issued, allowing him to enter into a mortgage agreement with private institutions under specific conditions.

Following his mortgage application approval from Fortune Savings & Loan Association, Inc. (FSLAI), Alejo and his wife executed a Mortgage Contract on June 24, 1980, for a loan of P95,000, which they

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Facts:

Transaction and Mortgage Formation

• Alejo Aranda purchased a 20,890‑square‑meter parcel in Carmona, Cavite from the Ministry of Agrarian Reform, subject to a Deed of Sale that prohibited encumbrance or sale within five years without the Ministry’s consent.
• On June 19, 1980, the Ministry granted a Permit to Mortgage with specific conditions for private banking institutions or individuals, including a clause limiting participation in a foreclosure sale.
• Aranda’s pending loan application with Fortune Savings and Loan Association, Inc. (FSLAI) was approved, leading to the execution of a Mortgage Contract on June 24, 1980, by both Alejo Aranda and his wife, Simeona Joson-Aranda.
• The mortgage was evidenced by a Promissory Note, establishing joint and several liabilities with a due date of July 21, 1983, and was approved by the Ministry.

Foreclosure Proceedings and Compromise Agreement

• Upon failure to pay the loan, FSLAI initiated extrajudicial foreclosure proceedings, leading to the issuance of a Notice of Sheriff’s Sale.
• Alejo Aranda filed a Complaint in the Regional Trial Court (RTC) of Bacoor challenging the mortgage and the foreclosure sale.
• On December 22, 1983, a compromise agreement was executed by Alejo Aranda (through counsel) and FSLAI (through its counsel), which was subsequently approved by the RTC on January 5, 1984.
• The compromise agreement set forth a payment plan for the total obligation, applied specific interest and penalty charges, and secured the mortgage with provisions for foreclosure in case of default.
• The failure of Aranda to comply with the agreed installments led to a motion by FSLAI, and on July 25, 1985, the RTC issued an Order allowing extrajudicial foreclosure.
• FSLAI proceeded with the foreclosure process by selling the property at public auction on August 26, 1985; the Deputy Sheriff executed a Certificate of Sale, and the Register of Deeds later issued a Torrens title in favor of FSLAI in 1992.

Subsequent Litigations and Claims of Irregularity

• On March 8, 1993, Alejo Aranda filed a new Complaint in the RTC seeking cancellation of the newly issued titles and nullification of the mortgage and foreclosure proceedings, alleging that his signature had been forged and that the mortgage was executed without his full knowledge.
• Defendant Sabrino Aranda, along with other respondents, countered by asserting that transactions, including the subsequent sale of subdivided portions of the property and the issuance of titles, were in good faith.
• The RTC denied motions to dismiss the new complaint on some grounds but eventually dismissed it on res judicata, relying on the earlier approved compromise agreement in Civil Case No. BCV‑82‑16.
• Further, on January 6, 1995, Aranda, his wife, and their children filed a petition for annulment of the RTC’s decision in Civil Case No. BCV‑82‑16 before the Court of Appeals (CA), reiterating claims of fraud, unauthorized execution of documents (alleging the involvement of counsel Atty. Franco Loyola and Atty. Dennis Angeles), and extrinsic irregularities.

Appellate Proceedings and the Petition for Review on Certiorari

• In Civil Case No. BCV‑93‑26, FSLAI and other respondents moved to dismiss the complaint based on res judicata and other defenses, including estoppel and waiver.
• The RTC’s dismissal based on res judicata was eventually affirmed, as the earlier compromise agreement was deemed conclusive and binding.
• Allegations by Aranda that his signature was forged and that he did not authorize the filing of the earlier complaint were refuted by the testimony of his former counsel, Atty. Franco Loyola, whose deposition confirmed the voluntary execution of the documents.
• On February 22, 1996, the CA rendered judgment dismissing the petition for annulment on merit, also ruling that the cause of action was barred by prescription and that the dismissal in Civil Case No. BCV‑93‑26 was on the merits.
• The petition for review on certiorari asserted that the CA erred in affirming the RTC’s jurisdiction, in declaring the complaint barred by prescription, and in considering the dismissal of the earlier complaint as with prejudice.

Issue:

Jurisdiction and Validity of the Compromise Agreement

• Whether the RTC had proper jurisdiction over Civil Case No. BCV‑82‑16 and whether the compromise agreement, once approved, was binding on the parties.

Allegations of Fraud and Irregularities

• Whether the alleged forgery (of signatures) and unauthorized acts by counsel (Atty. Franco Loyola and Atty. Dennis Angeles) constitute sufficient grounds for annulling the mortgage, foreclosure proceedings, and the resulting titles.

Impact of Res Judicata and Prescription

• Whether the dismissal of the complaint in Civil Case No. BCV‑93‑26 on the basis of res judicata and the lapse of time (prescription) preclude relitigation of the mortgage and foreclosure issues.

Standing of the Petitioners

• Whether the additional petitioners (the children and other relatives) have the requisite standing as parties-in-interest, given that they claim to be compulsory heirs who are only entitled to inherit upon the death of the decedents.

Nature of Extrinsic Fraud

• Whether the circumstances described by petitioners amount to extrinsic or collateral fraud that vitiates the earlier judgment and warrants its annulment.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)