Title
Demetriou vs. Court of Appeals
Case
G.R. No. 115595
Decision Date
Nov 14, 1994
Petitioners, co-owners of 2/3 of a property, discovered a fraudulent reconstituted title issued to private respondent after lease expiration. The Supreme Court ruled the reconstituted title void due to lack of jurisdiction, as the original title was not lost, and remanded the case.
annulment of judgment
property
intrinsic fraud
A

Case Summary (G.R. No. L-49065)

Factual Background

Petitioners alleged that they were co-owners, to the extent of two-thirds, of the subject property under TCT No. T-65878. They claimed acquisition of their two-thirds share through conveyances executed on 11 July 1985: two deeds of absolute sale from Miriam Catherine Ralla, and from another source stated in the allegations as Joan Pauline R. Belista. Petitioners further alleged that the sale was reconfirmed and/or ratified by subsequent instruments, and that an order dated 11 May 1989 of the Regional Trial Court of Fifth Judicial Region, Branch 8 Legaspi City ratified and confirmed the conveyance involving Joan Pauline R. Belista.

Petitioners also alleged that at the time of the sale there was a ten-year lease contract over the property expiring on 15 July 1991, prompting them to delay registration and title transfer until after the lease ended. After the lease expired, sometime in the first week of August 1991, petitioners’ father allegedly went to the Register of Deeds to register the deed and obtain a new title in petitioners’ names. He allegedly discovered that, by order of Judge Rhodie A. Nidea in RTC Tabaco, Albay, Branch 16, the owner’s duplicate copy of TCT No. T-65878 in petitioners’ possession was declared of no further force and effect, and that a new second owner’s duplicate copy had been issued to private respondent.

Petitioners traced the origin of this development to the petition filed on Sept. 20, 1990 by private respondent in RTC Tabaco, Albay, Branch 16, docketed as CAD Case No. T-1024. Petitioners alleged that private respondent falsely and fraudulently claimed that the owner’s duplicate copy of TCT No. T-65878 was lost or destroyed while in petitioners’ possession and custody, based on her Affidavit of Loss. Petitioners further alleged that private respondent’s representations were false, particularly that the affidavit claimed delivery of the owner’s duplicate by her mother after her father’s death and her subsequent loss during typhoon “Sisang”. Petitioners asserted that these representations were perjurious because two-thirds of the property covered by TCT No. T-65878 had already been sold to them on July 11, 1985, and because the owner’s duplicate copy was allegedly delivered by private respondent’s brother, Gerardo Ralla, to petitioners on the same day.

According to petitioners, on the basis of these representations, Judge Rhodie A. Nidea issued an order on Dec. 7, 1990 directing the Register of Deeds to issue a second owner’s duplicate copy to private respondent, with annotations and encumbrances, and declaring the lost or destroyed owner’s duplicate of TCT No. T-65878 of no further force and effect. Petitioners alleged that the Register of Deeds then issued the second owner’s duplicate to private respondent. Petitioners further alleged that despite repeated demands and settlement attempts, private respondent refused to deliver the second owner’s duplicate copy to them.

Petitioners asserted that the order had become final and executory, but claimed it was null and void because it was issued in reliance on the alleged fraudulent misrepresentations of private respondent.

Court of Appeals Ruling

Petitioners sought annulment of judgment in the Court of Appeals to invalidate the RTC order directing issuance of the second owner’s duplicate. The Court of Appeals denied due course. It reasoned that the fraud alleged was, at most, intrinsic rather than extrinsic fraud, and that intrinsic fraud did not justify setting aside a final judgment.

In support, the Court of Appeals applied the distinction between extrinsic fraud and intrinsic fraud. It characterized extrinsic fraud as fraudulent acts of the prevailing party committed outside the trial that prevented the defeated party from presenting fully its side of the case. It characterized intrinsic fraud as acts during litigation, such as the use of forged or false documents or perjured testimony, that do not affect the presentation of the case but prevent a fair and just determination.

Applying these concepts, the Court of Appeals concluded that the alleged fraud was the admission by the RTC of a false affidavit of loss, which it treated as intrinsic fraud. It stated that the use of a false affidavit of loss did not constitute extrinsic fraud warranting invalidation of a final judgment. It further explained that petitioners were not kept out of the proceedings because they could have rebutted or opposed the affidavit, since notice had been duly given in the case.

The Court of Appeals nevertheless dismissed the petition, relying on the intrinsic fraud characterization. It also rejected the petitioners’ position on forum shopping insofar as private respondent invoked Circular No. 28-91, holding that the Court of Appeals action should proceed on the intrinsic fraud ground.

The Parties’ Contentions Before the Supreme Court

Petitioners, in seeking reversal, maintained that the order granting private respondent’s petition for issuance of a new owner’s duplicate certificate was void. They anchored this in the claim that the owner’s duplicate was not truly lost because it was in their possession, and that the RTC’s action was based on false and fraudulent representations in the affidavit of loss and supporting allegations.

Private respondent argued that petitioners’ action amounted to forum shopping. She alleged that in a prior civil case for recovery of possession in the RTC of Albay against JB Line (identified as Civil Case No. T-1590), petitioners had intervened and alleged substantially the same facts used in the annulment petition. Private respondent thus contended that the Court of Appeals should not entertain the annulment petition due to violation of Circular No. 28-91.

Supreme Court’s Treatment of the Issues

The Supreme Court held that the Court of Appeals erred in dismissing the petition for annulment. It accepted the doctrinal distinction on fraud but emphasized a critical additional principle: a final judgment may be annulled not only on the ground of extrinsic fraud but also for lack of jurisdiction of the court that rendered the decision.

While the Court of Appeals viewed the use of a false affidavit of loss as intrinsic fraud similar to the use of forged instruments or perjured testimony, the Supreme Court pointed out that jurisdictional error could render the resulting decision void and therefore subject to attack at any time. The Court drew support from jurisprudence holding that when a certificate of title has not been lost but is in fact in another person’s possession, any reconstituted or replacement title is void because the court rendering the decision has not acquired jurisdiction. It cited Serra Sera v. Court of Appeals, 195 SCRA 482 (1991) for this proposition on analogous facts.

The Supreme Court further invoked the statutory rule in Rep. Act No. 26, which it summarized through its cited text: in case a certificate of title considered lost or destroyed is later found or recovered, the original shall prevail over the reconstituted certificate. This statutory rule reinforced that a proceeding premised on a lost or destroyed certificate cannot stand when the certificate is actually recoverable or already in another’s possession, as it implicates the court’s authority to order replacement.

Applying these principles to the allegations in petitioners’ petition, the Court concluded that the Court of Appeals dismissal was error because the case did not merely involve intrinsic fraud. The Court stated that if the title was not in truth lost but was in petitioners’ possession, the RTC’s decision in the replacement proceeding would be void for lack of jurisdiction, and thus could be attacked any time. Consequently, the Court found it improper for the Court of Appeals to foreclose annulment solely on the basis that the alleged fraud was intrinsic.

On the forum shopping issue, the Supreme Court rejected private respondent’s claim. It reviewed petitioners’ answer in intervention in the recovery of possession case (Civil Case No. T-1590). It found that petitioners’ allegations there were not the same as, and did not have the same objective as, the annulment petition in CAD Case No. T-1024. The Court noted that petitioners had invoked facts in the earlier intervention in order to demand partition, while recognizing that private respondent owned one-third. By contrast, the annulment petition in the Court of Appeals was solely to seek annulment of the RTC judgment in CAD Case No. T-1024 granting issuance of a new owner’s duplicate certificate to private respondent. For that reason, the Court held that the forum shopping allegation lacked basis.

Legal Basis and Reasoning

The Supreme Court’s reversal rested on two linked doctrines. First, it recognized that although fraud in a prior proceeding may be categorized as intrinsic rather than extrinsic, annulment remains possible if the rendering court lacked jurisdiction. Second, it treated replacement proceedings for lost certificates of title as jurisdiction-dependent, such that if the certificate was not actually lost but was already in another person’s possession, the replacement decision was void.

The Court incorporated these principles by reading the intrinsic-extrinsic fraud doctrine alongside the jurisdictional exceptions. It acknowledged that cases such as Palanca v. Republic, 24 SCRA 819 (1968) associate forged instruments or perjured testimony with intrinsic fraud, but it distinguished the present context by emphasizing that jurisdictional defects allow annulment without the extrinsic fraud requirement.

It then supplied the statutory underpinning through Rep. Act No. 26, which gives primacy to the original certificate if it is later found or recovered. This rule supported the jurisdictional approach in Serra Sera v. Court of Appeals, leading the Court to conclude that the Court of Appeals committed reversible error in limiting its analysis to intrinsic fraud.

On procedura

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