G.R. No. 220340-41 - RMFPU Holdings, Inc. vs. Forbes Park Association, Inc.

Case Summary (G.R. No. 220340-41)

Factual Background

Each petitioner owned a residential lot within Forbes Park Village whose Transfer Certificate of Title bore an annotated Deed of Restrictions purporting a fifty-year term from January 1, 1949. Each petitioner filed an ex parte petition in the RTC seeking cancellation of the annotated Deed of Restrictions on the ground that the fifty-year term expired on December 31, 1998 and that no resolution extending the restrictions had been registered by FPA with the Register of Deeds of Makati City. The respective RTC branches granted the ex parte petitions and ordered the Register of Deeds to cancel the annotations.

First Case (RMFPU / Moreno)

RMFPU Holdings, Inc. and Raymond M. Moreno filed an ex parte petition on July 21, 2004, docketed as LRC Case No. M-4570, to cancel the Deed of Restrictions annotated on TCT Nos. S-93867 and S-93868. The RTC, Branch 59, issued an Order dated July 29, 2004 granting the petition and directing the Register of Deeds of Makati City to remove the annotations.

Second Case (RMFPU Properties, Inc.)

RMFPU Properties, Inc. filed an ex parte petition on March 18, 2010, docketed as LRC Case No. M-5359, to cancel the Deed of Restrictions annotated on TCT No. 226850. The RTC, Branch 59, issued an Order dated March 26, 2010 granting the petition and directing cancellation of the annotation.

Third Case (Quick Silver)

Quick Silver Development Corporation filed an ex parte petition on February 15, 2001, docketed as LRC Case No. M-4133, to cancel the Deed of Restrictions annotated on TCT No. 156723. The RTC, Branch 58, issued an Order dated February 23, 2001 granting the petition and directing cancellation of the annotation; the Order attained finality.

Proceedings Before the Court of Appeals

Forbes Park Association, Inc. filed three consolidated petitions for annulment of judgment under Rule 47 of the Rules of Court in the Court of Appeals, each alleging that the RTC Orders were void for lack of jurisdiction because FPA was an indispensable party and was not impleaded or notified, and that petitioners committed extrinsic fraud by keeping FPA away from the proceedings. The Court of Appeals found prima facie merit, issued summonses, received answers and counterclaims, and, after declaring the consolidated cases submitted for decision, rendered its Decision on March 6, 2015 granting FPA’s petitions and annulling the RTC Orders.

Ruling of the Court of Appeals

The Court of Appeals annulled and set aside the RTC Orders that cancelled the Deeds of Restrictions and ordered the Register of Deeds to restore the annotations. The CA held that FPA was an indispensable party and that petitioners’ failure to notify it breached the jurisdictional notice requirement of Section 108, PD 1529, and amounted to extrinsic fraud which deprived FPA of an opportunity to present its case.

Issues Presented to the Supreme Court

The petitions for review to the Supreme Court pleaded that the Court of Appeals erred in (1) holding that FPA was an indispensable party and in applying the precedent of PAGREL, Inc. v. Forbes Park Association, Inc.; (2) concluding that extrinsic fraud and lack of jurisdiction invalidated the assailed RTC Orders; (3) proceeding to judgment on pleadings without pre-trial, trial, or submission of memoranda; (4) failing to dismiss FPA’s petitions as barred by prescription or laches; and (5) ordering the restoration of the Deeds of Restrictions without proper justification.

Supreme Court's Disposition

The Supreme Court denied the consolidated Petitions for Review and affirmed the Court of Appeals’ Decision dated March 6, 2015 and Resolution dated September 2, 2015. The Court concurred with the CA that FPA was an indispensable party whose absence rendered the RTC Orders void for lack of jurisdiction and that the circumstances evidenced extrinsic fraud warranting annulment under Rule 47, Section 2.

Legal Basis: Section 108, PD 1529 and Parties in Interest

The Court anchored its ruling on Section 108 of PD 1529, which prescribes that petitions for amendment or cancellation of entries on a certificate of title may be heard only after notice to all parties in interest. The Court invoked the Rules definition of a real party in interest, Section 2, Rule 3, and held that FPA’s registered interest in enforcing the Deed of Restrictions and its functional role under its articles and by-laws made it an indispensable party whose interest would be affected by cancellation.

Extrinsic Fraud and Jurisdictional Consequences

The Court explained that the ex parte nature of petitioners’ filings and their knowledge that cancellation would eliminate FPA’s authority amounted to conduct that kept FPA away from court and thus constituted extrinsic fraud. The Court applied established doctrine that extrinsic fraud preventing a party from presenting its case negates a fair contest and destroys the court’s jurisdiction, thereby justifying annulment under Rule 47.

Precedent: PAGREL and Forbes Park

The Court analyzed the precedential landscape, including Forbes Park Association, Inc. v. PAGREL, Inc. and the earlier Forbes Park decisions that addressed extension of the Deed of Restrictions and FPA’s corporate term. The Court found that the Court of Appeals properly relied on the reasoning in those actions to conclude FPA’s indispensability. The Court acknowledged that PAGREL was rendered by an unsigned Resolution but concluded that the legal question before the CA and the present Court was consistent with the Court’s prior pronouncements in the Forbes Park line of cases.

Procedural Adequacy of the Court of Appeals’ Determination

The Supreme Court rejected petitioners’ contention that the CA erred by deciding on the pleadings without conducting pre-trial or trial or requiring memoranda. The Court observed that Section 6, Rule 47 vests the Court of Appeals with discretion to proceed on the pleadings when a trial is unnecessary and that Section 1, Rule 51 does not make submission of a memorandum a prerequisite for judgment in original actions and petitions for review.

Prescription, Laches, and Factual Findings

Petitioners argued that FPA delayed unduly in seeking annulment and that the remedies were barred by prescr

Case Syllabus (G.R. No. 220340-41)

Parties and Procedural Posture

RMFPU Holdings, Inc., Raymond M. Moreno, and RMFPU Properties, Inc. filed ex-parte petitions in the Regional Trial Court for cancellation of Deeds of Restrictions annotated on their Transfer Certificates of Title.
Quick Silver Development Corporation filed an ex-parte petition in the Regional Trial Court for cancellation of a Deed of Restrictions annotated on its Transfer Certificate of Title.
Forbes Park Association, Inc. (FPA) filed consolidated petitions for annulment of judgment under Rule 47, Rules of Court before the Court of Appeals seeking annulment of the RTC orders that cancelled the Deeds of Restrictions.
The Court of Appeals granted FPA’s petitions, annulled the RTC orders, and ordered the Register of Deeds to restore the annotations, and denied motions for reconsideration.
Petitioners filed consolidated Petitions for Review under Rule 45, Rules of Court in the Supreme Court assailing the CA Decision dated March 6, 2015 and Resolution dated September 2, 2015.
The Supreme Court resolved the consolidated Rule 45 petitions and affirmed the Court of Appeals’ Decision and Resolution.

Key Factual Allegations

The Deed of Restrictions annotated on the subject titles provided automatic membership in Forbes Park Association, Inc., required approval of building plans by FPA, and fixed a term of fifty years from January 1, 1949.
Petitioners alleged that the Deed of Restrictions expired on December 31, 1998 and that no registered resolution extended the restrictions, which prompted their respective ex-parte petitions to the RTCs to cancel the annotations.
The RTCs granted the ex-parte petitions and issued orders cancelling the annotated Deeds of Restrictions on the respective TCTs, some of which became final and were executed.
FPA contended before the Court of Appeals that it was an indispensable party in the RTC proceedings and that it was not impleaded, which rendered the RTC orders void for lack of jurisdiction and by reason of extrinsic fraud.
FPA further relied on prior litigation concerning the extension of the Deed of Restrictions and the corporate life of FPA, including proceedings colloquially referred to as Forbes Park and PAGREL litigation.

Statutory Framework

Presidential Decree No. 1529, Section 108, contemplates that alterations or cancellations of entries on certificates of title may be ordered by court only after notice to all parties in interest and prescribes that petitions for amendment be filed in the original registration case.
Section 2, Rule 3, Rules of Court defines a real party in interest as the party who stands to be benefited or injured by the judgment in the suit.
Rule 47, Rules of Court, Section 2 permits annulment of judgments based only on extrinsic fraud and lack of jurisdiction, and Section 3 prescribes the period for filing actions for annulment where extrinsic fraud must be filed within four years from discovery.
Rule 47, Section 6 and Rule 51, Section 1 govern procedure in annulment petitions and the submission of original actions for judgment, allowing the appellate court discretion as to reception of evidence and whether trial is necessary.

Issues Presented

Whether the Court of Appeals erred in holding that FPA was an indispensable party or party in interest who must be notified in petitions for cancellation of the Deed of Restrictions covering properties within Forbes Park Village.
Whether the Court of Appeals erred in applying the doctrine and precedent of PAGREL, Inc.