THIRD DIVISION
[G.R. No. 204086. June 4, 2014.]
ELISA D. MORADOS, petitioner, vs. PHILIPPINE NATIONAL BANK, respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution datedJune 4, 2014, which reads as follows:
"G.R. No. 204086(Elisa D. Morados v. Philippine National Bank). — This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court assailing the May 28, 2012 Decision 1 and the September 25, 2012 Resolution 2 of the Court of Appeals, Cebu City (CA) in CA-G.R. CEB-CV No. 02755, which reversed and set aside the July 18, 2008 Decision 3 of the Regional Trial Court, Branch 57, San Carlos City, Negros Occidental (RTC) in a case for cancellation of encumbrance.
The Facts:
On February 3, 1982, petitioner Elisa D. Morados (Elisa) executed a special power of attorney authorizing her husband, Geronimo Morados (Geronimo), to secure a loan from the respondent Philippine National Bank of Victorias, Negros Occidental (PNB). Geronimo obtained a loan which was secured by a real estate mortgage over the lots situated in Poblacion, City of San Carlos, Negros Occidental, registered in his name and covered by three (3) transfer certificates of title (TCTs).
In a petition, dated August 18, 2004, Elisa prayed for the cancellation of the entries, liens and encumbrances annotated on the said TCTs, considering that all rights that might have arisen from there had already prescribed after the lapse of more than 22 years.
PNB opposed the petition, asserting that it was not the proper course of action as the issue of whether the foreclosure of mortgage had already prescribed should first be determined in a separate action before the cancellation of the annotation. PNB likewise argued that Elisa was not the real party-in-interest and that the petition was seriously flawed for non-joinder of the indispensable party, the estate of the late Geronimo.
During the trial, Elisa testified that she married Geronimo on December 2, 1973 and gave birth to their daughter on October 3, 1975. Geronimo died on February 14, 1982 shortly after obtaining the loan from PNB. Geronimo's loan remained unpaid but she did not receive any notice or demand from PNB for the payment of the loan. 4
PNB, on the other hand, presented its custodian of collaterals and loan documents as a witness who testified that the subject properties were levied by the City of San Carlos due to tax delinquency. An auction sale was held which caused the issuance of certificates of sale of delinquent real property, dated November 29, 1996, and final bills of sale, dated November 6, 1997, in favor of the City. PNB redeemed the properties on August 30, 2004, as evidenced by three (3) certificates of redemption. The encumbrances were annotated on the titles covering the said properties on February 4, 2005. 5
On July 18, 2008, the RTC granted the petition and disposed the case as follows:
WHEREFORE, in view of the foregoing, the Court resolves to GRANT the present petition.
After the finality of this Decision and the payment of proper fees, the Register of Deeds of San Carlos City, Negros Occidental is hereby DIRECTED to cause the cancellation of Entries Nos. 17321 and 17322 annotated on the dorsal portion of Transfer Certificates of Title Nos. T-7736, T-7737 and T-7738. EHSIcT
SO ORDERED. 6
PNB moved for reconsideration contending that the RTC, as a land registration court, had no jurisdiction to hear the issue of prescription and that Elisa failed to prove that PNB's right to foreclose had prescribed. It further contended that asserting that PNB's right had already prescribed during the time of redemption, Elisa still was not the proper party who had the right to seek cancellation of the mortgage lien, but the City of San Carlos. PNB's motion for reconsideration was denied on September 24, 2008.
Not in conformity, PNB interposed an appeal before the CA, assigning as errors the failure of the RTC to address the following issues: (1) whether or not Elisa was the real party-in-interest, and (2) non-joinder of indispensable party.
In the assailed Decision, dated May 28, 2012, the CA granted the appeal. The dispositive portion of the said decision reads:
WHEREFORE, the petition is GRANTED. The assailed Decision dated July 18, 2008 of the RTC of San Carlos City, Negros Occidental, Branch 57, in Cad. Case No. RTC-680, LRC Cad. Rec. No. 446, is hereby REVERSED and SET ASIDE. No pronouncement as to costs.
SO ORDERED. 7
In reversing the RTC, the CA took into consideration the property regime governing the property relations of Geronimo and Elisa and the time when the property was purchased. It found that the spouses were governed by the conjugal partnership of gains. There was no proof, however, that said properties were acquired during the marriage. It concluded that the properties were exclusively owned by Geronimo inasmuch as the TCTs were registered in the name "GERONIMO MORADOS, married to Elisa D. Morados." Elisa, therefore, was not the real party-in-interest to file any petition for cancellation of the lien or encumbrance affecting the exclusive properties of Geronimo. Being exclusive properties of the latter, his unsettled estate was the proper party to institute said petition.
Aggrieved, Elisa filed a motion for reconsideration which was subsequently denied in the assailed Resolution, dated September 25, 2012. Hence, the present petition.
Issues:
1. Whether or not Elisa Morados was the real party-in-interest.
2. Whether or not the subject properties were exclusively owned by Geronimo. IcHSCT
3. Whether or not Geronimo Morados' estate was an indispensable party.
Elisa argues that the CA gravely erred in concluding that she was not the real party-in-interest to file the petition for cancellation of mortgage. She emphasizes that the first paragraph of the Real Estate Mortgage (REM) covering the subject properties clearly showed that the same was executed by Geronimo, not only for himself but also as her attorney-in-fact. 8 She was, thus, a party to the said REM. Hence, she was a real party-in-interest. Citing Baranda v. Baranda, 9 Elisa adds that the heirs of a decedent are the parties in interest to commence actions arising out of the rights belonging to the deceased. From the moment of Geronimo's death, his heirs acquired a definite right to the inheritance, whether such right be pure or contingent, pursuant to Article 777 of the Civil Code. Being Geronimo's widow, she is not only a legal heir but a compulsory heir of the former.
Elisa further argues that the case of De Leon v. De Leon, 10 cited by the CA, even ruled that all properties of the marriage are presumed to belong to the conjugal partnership unless proven to pertain exclusively to the husband or the wife. 11 In fact, even when the manner in which the properties were acquired does not appear, the presumption would still apply, and the properties would still be considered conjugal. 12 Therefore, contrary to the conclusion of the CA, the presumption that the properties are conjugal stands as there was no proof that said properties were exclusively owned by Geronimo. Even assuming that the properties exclusively belong to Geronimo, upon his death, they were transmitted to her and their only child, Dee Morados-Samoro (Dee), as his heirs. By operation of law, they became the owners of said properties. Thus, Elisa's filing of the case, being beneficial to the co-ownership, was deemed to have been instituted by her not only for herself, but for and in behalf of co-owner Dee.
In its Comment, 13 PNB submits that Elisa clearly had no claim over the subject properties. It insists that Elisa was not the proper party to file the petition for cancellation of liens and encumbrances over the subject lots because the same were exclusive properties of Geronimo. Thus, according to it, the unsettled estate of Geronimo was the proper party to institute the said petition as it was the one directly, materially and substantially benefited or affected by the cancellation or non-cancellation of the mortgage encumbrance. His estate is considered an indispensably party whose absence in this case divested the RTC of its power to adjudicate the issues in the cancellation petition. Elisa then filed her Reply 14 praying that the petition be given due course and that a decision be rendered setting aside the assailed decision and resolution of the CA.
The Court's Disposition
As correctly ruled by the CA, Elisa was not the real party-in-interest to file the petition for cancellation of liens and encumbrances affecting the exclusive properties of Geronimo.
Records show that Geronimo and Elisa were married on December 2, 1973, before the effectivity of the Family Code. There being no marriage settlement between them, the regime of conjugal partnership of gains governed their property relations. 15
Under Article 116 of the Family Code, which also applies to conjugal partnership of gains already established between the spouses before its effectivity, all property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved. For this presumption to apply, however, it must be proved that the property was acquired during the marriage. Proof of acquisition during the coverture is a condition sine qua non to the operation of the presumption in favor of conjugal partnership. 16 In other words, the presumption in favor conjugality does not operate if there is no showing as to when the property alleged to be conjugal was acquired. 17
In this case, there was no proof that the subject properties were acquired during the marriage. Elisa failed to adduce proof that the same were acquired during the existence of their union. It was not even shown when the said properties were acquired. The presumption of conjugality, therefore, could not be applied. The mortgaged properties not being conjugal, were exclusively owned by Geronimo. As aptly found by the CA:
In the instant case, TCT Nos. T-7736, T-7737 and T-7738 remained registered under the name of "GERONIMO MORADOS, married to Elisa D. Morados." The clear import from the said certificates of title is that Geronimo is the owner of the properties, the same having been registered in his name alone, and being "married to Elisa D. Morados" was merely descriptive of his civil status and should not be construed to mean that Elisa is also a registered owner.
Moreover, records are bereft of proof that properties covered by the titles were acquired during the marriage; there is not even a showing as to when the properties were acquired. When the property is registered in the name of a spouse only and there is no showing as to when the property was acquired by said spouse, this is an indication that the property belongs exclusively to said spouse. The fact that when the titles over the lots in question were issued, Geronimo was already married to Elisa as evidenced by the registration in the name of "GERONIMO MORADOS, married to Elisa D. Morados," does not suffice to establish the conjugal nature of the properties. Thus, the presumption in favor of conjugality cannot be applied.
Neither is there any evidence to prove that the properties were obtained through any of the means mentioned in Article 117 of the Family Code. Then the subject lots cannot be considered as conjugal partnership properties, and, thus, belong exclusively to Geronimo. Consequently, Elisa is not the proper party to file any petition for the cancellation of the lien or encumbrance affecting the exclusive properties of Geronimo. 18
Even on the assumption that the subject properties were indeed acquired during the marriage, nonetheless, Elisa's interest thereon is considered inchoate prior to its settlement or liquidation. Prior to the liquidation of the conjugal partnership, the interest of each spouse in the conjugal assets is inchoate, a mere expectancy, which constitutes neither a legal nor an equitable estate, and does not ripen into a title until it appears that there are assets in the community as a result of the liquidation and settlement. 19 Here, the conjugal partnership may have been dissolved upon the death of Geronimo on February 14, 1982. There was no showing, however, that any action was instituted for the settlement of Geronimo's estate. It was not shown either that the partnership assets were liquidated by Elisa in accordance with Article 130 of the Family Code. The Court, thus, agrees with the CA that absent any liquidation proceeding, whatever interest Elisa may have over the mortgaged properties, remains inchoate. As such, she cannot be considered the real party-in-interest in the petition for cancellation of the annotations on the subject titles. This is especially true in this particular instance where, as correctly found by the CA, Elisa was not a party to the REM contracted between Geronimo and PNB.
Consequently, there being no settlement or liquidation, the mortgaged properties remained part of the estate of Geronimo. As aptly concluded by the CA, the unsettled estate of Geronimo becomes an indispensable party, without which no final determination can be had of an action.
The rules mandate the joinder of indispensable parties, thus:
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 and defendants. aSITDC
The general rule with reference to the making of parties in a civil action requires, of course, the joinder of all necessary parties where possible, and the joinder of all indispensable parties under any and all conditions, their presence being a sine qua non for the exercise of judicial power. It is precisely when an indispensable party is not before the court that the 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 as to those present. 20
Thus, in this case, the non-inclusion of an indispensable party, which is the unsettled estate of Geronimo as a party plaintiff/petitioner in the cancellation petition, rendered subsequent actions of the court null and void.
Indeed, Elisa is an heir of Geronimo. As such, she could represent his estate. She cannot, however, file the subject action in her personal capacity.
WHEREFORE, the petition is DENIED. (Villarama, Jr., J., designated Acting Member in view of the vacancy in the Third Division, per Special Order No. 1691 dated May 22, 2014)
SO ORDERED."
Very truly yours,
(SGD.) WILFREDO V. LAPITANDeputy Division Clerk of Court
Footnotes
1. Rollo, pp. 33-44. Penned by Associate Justice Pampio A. Abarintos, with Associate Justices Ramon Paul L. Hernando and Victoria Isabel A. Paredes, concurring.
2. Id. at 46-47. Penned by Associate Justice Pampio A. Abarintos, with Associate Justices Ramon Paul L. Hernando and Melchor Q.C. Sadang, concurring.
3. Id. at 48-51.
4. Id. at 35.
5. Id. at 36.
6. Id. at 51.
7. Id. at 44.
8. Id. at 20.
9. 234 Phil. 64 (1987).
10. 611 Phil. 384 (2009).
11. Rollo, p. 23, G.R. No. 185063, July 23, 2009.
12. Id. at 24.
13. Dated April 2, 2013. Id. at 70-88.
14. Dated October 10, 2013. Id. at 105-122.
15. Article 119 of the Civil Code.
16. Cited case of Pintiano-Anno v. Anno, G.R. No. 163743, January 27, 2006, 480 SCRA 419, 423-424.
17. Go v. Yamane, G.R. No. 160762, May 3, 2006, citing Phil. National Bank v. CA, August 31, 1987, 153 SCRA 435.
18. Rollo, pp. 40-41.
19. De Leon v. De Leon, supra note 10, citing Abalos v. Macatangay, Jr., 482 Phil. 877, 890-891 (2004); Wong v. Intermediate Appellate Court, G.R. No. 70082, August 19, 1991, 200 SCRA 792, 803.
20. Bulawan v. Aquende, G.R. No. 182819, June 22, 2011, 652 SCRA 585, citing Arcelona v. Court of Appeals, 345 Phil. 250, 267-268 (1997).