ISLAMIC DA’WAH COUNCIL OF THE PHILIPPINES, PETITIONER, VS. HONORABLE COURT OF APPEALS AND THE HEIRS OF JESUS AMADO ARANETA, RESPONDENTS.

Petitioner impugns the resolutions of the Court of Appeals dated
November 10 and December 2 and 3, 1987 which, in effect, gave due course to
private respondents’ petition for annulment of judgment.

The antecedents of this case are as follows:

On February 15, 1984
Freddie and Marconi Da Silva, as mortgagors, and
Islamic Da’Wah Council of the Philippines
(Council for brevity), as
mortgagee, executed a real estate mortgage over a 4,754 sq.m.
parcel of land located in Cubao, Quezon City and covered by
Transfer Certificate of Title (TCT) No. 30461 as security for the payment of a one million peso promissory note
in favor of the mortgagee.  The
mortgagors were unable to pay their obligation,
hence, the Council instituted foreclosure proceedings with the Regional Trial
Court, docketed as Civil Case No. Q-43746. 
On February 5, 1985 the parties submitted a compromise agreement
wherein it was stipulated that because of the Da Silvas‘ inability to pay their debt to the Council, and for
the additional consideration of P500,000.00; they jointly agree to cede,
transfer and convey to the Council the land they mortgaged to the latter.  On February
12, 1985, the Regional Trial Court approved the compromise
agreement.  Thereafter, TCT No. 328021 was issued in the name of the Council
by the Register of Deeds of Quezon City.

Subsequent thereto, on August 8, 1985, Jesus Amado
Araneta filed with the Register of Deeds a notice of lis pendens in connection with
Civil Case No. Q-47989 entitled “Islamic Da’Wah
Council of the Philippines
v. Jesus Amado Araneta”
for ejectment. 
The complaint was converted into an action for collection of rentals
with damages but was later on withdrawn by the Council.  On August
13, 1985 Araneta also filed with the same
Register of Deeds an affidavit of adverse claim in connection with Civil Case
No. Q-43469 entitled “Marconi Da Silva, et al.
v. Jesus Amado Araneta, et
al.” for recovery of possession. 
The notice of lis pendens
and adverse claim were annotated at the back of TCT No. 328021 by the Register
of Deeds.

On October
9, 1985 the Council
filed in the Regional Trial Court of Quezon City a
complaint for Quieting of Title, Recovery of Possession and Damages with
Preliminary Mandatory Injunction against Araneta
praying, inter alia, for the cancellation of all the
annotations at the back of TCT No. 328021. 
The case is docketed as Civil Case No. Q-46196.

While this case was pending, on July 6, 1987, the heirs of Jesus Amado
Araneta, private respondents herein, filed with the
Court of Appeals a petition to annul the judgment in Civil Case No. Q-43746 for
foreclosure.  In support of their
petition the heirs of Araneta narrated the following
events:

(1) on December 20,
1953 Jesus Amado Araneta
purchased the 4,754 sq.m. parcel of land located in Cubao from the Spouses Garcia and since then he and his
family have always been in possession thereof;

(2) for some reason known only to Araneta
and Fred Da Silva, an employee of the former, title
to the property was placed in the latter’s name as evidenced by TCT No. 30461
although from the time of its issuance the owner’s duplicate copy of said TCT
has always been in the possession of Araneta;

(3) on January 31, 1963, the parties decided to terminate the
trust that had been created over the property, thus, Da
Silva executed a deed of sale over the same parcel of land in favor of Araneta but no consideration was given by the latter to the
former for said sale and any recital consideration appearing in the deed is purely
fictitious;

(4) the Register of Deeds, however, refused to register the deed
of sale because the title is in the name of “Fred Da
Silva married to Leocadia Da
Silva” and is thus presumed conjugal and the conjugal partnership should
first be liquidated as the wife had already died;

(5) alleging that their copy was lost and/or destroyed, on
February 1, 1984 Freddie and Marconi Da Silva, two of
the three surviving children of Fred Da Silva who
died in 1963, filed a petition, docketed as LRC record Case No. Q-2772, for the
issuance of a new copy of the owner’s duplicate copy of TCT No. 30461.  The petition was granted by Judge Vera on March 24, 1984;

(6) Araneta learned about this and
immediately filed a motion to re-open the proceedings stating that he has in
his possession the owner’s duplicate copy of TCT No. 30461 and explaining the
reasons for such possession;

(7) the motion was granted and on December 7, 1984 the land
registration court ordered the Da Silvas
to (a) return to the Register of Deeds the second owner’s duplicate copy of the
title and (b) neither enter into any transaction concerning said second owner’s
duplicate copy nor utilize the title for any purpose other than to return the
same to the Register of Deeds;

(8) on November 11,
1985, the Da Silvas
manifested before the land registration court that the title to the property
was transferred to the Council based on a compromise agreement in Civil Case
No. Q-43746 for foreclosure; and,

(9) on motion of the heirs of Araneta,
who substituted him upon his death in 1985, Judge Vera consolidated Civil Cases
Nos. Q-2772 and Q-43469, both of which were raffled to his sala,
with Civil Case No. Q-46196 but the judge hearing the latter case would not
heed the order of consolidation.

and then set out their case for annulment
of judgment alleging that the Da Silvas, with the connivance of
the Council, executed a purported promissory note secured
by a real state mortgage the terms and conditions of which
were made very onerous as to pave the way for the foreclosure of the property by virtue of a confession of judgment; and, the Council had
always known of the Araneta’s claim of ownership
over the land because the former’s executive officer
and secretary general is the lawyer of the Da Silvas in the cases they filed against the Aranetas.  The heirs
of Araneta in their petition prayed, inter alia, that (1) the judgment in Civil Case No. Q-43746 be
annulled and set aside and (2) a restraining order be issued to enjoin
the proceedings in Civil Case No. Q-46196 [Petition, Annex “A”.]

In a resolution dated November
10, 1987 the Court
of Appeals issued a temporary restraining order enjoining the
trial judge from hearing Civil Case No. Q-46196 until further orders from the
court.  In the same resolution the
parties were ordered to appear for a pre-trial conference.  The Council filed a motion for
reconsideration of this resolution. 
Later on the Council filed a Supplement to Motion for
Reconsideration with Motion to Dismiss
questioning the Court of Appeals’ jurisdiction to hear the petition for annulment of a judgment that had
already been fully executed.  The Council
also invoked the additional grounds of lack of cause of action because the Aranetas are not valid claimants of the property; lack of
legal capacity to sue because the Aranetas were not parties to the foreclosure case; litis pendentia because of the pendency
of the quieting of title case between the same parties; and, abandonment,
waiver and unenforceability under the Statute of Frauds [Petition, Annex
“H”.] On December 2, 1987 the Court of Appeals denied the Council’s
motion for reconsideration for lack of merit. 
In the hearing conducted on December 3, 1987 the Council reiterated the grounds it raised
in its Supplemental Motion and Motion to Dismiss but the same were summarily
denied by the Court of Appeals.  Hence, this petition for certiorari.

Petitioner contends the
following:  first, that the Court of
Appeals should not continue to hear the petition for annulment of
judgment since it is already fully executed and the purpose for which the case
for annulment was filed will no longer be served, the parties having already
complied with the decision; second, private respondents have no right to
question the validity or legality of the decision rendered foreclosing the mortgage
since they are foreign to the transaction of mortgage between petitioner and
Freddie and Marconi Da Silva; lastly petitioner
claims that private respondents have another remedy in law and that is in Civil
Case No. Q-46196 for Quieting of Title where the question of ownership may
be passed upon.

At the outset it must be
clarified that the instant petition is one for certiorari under Rule 65
of the Rules of Court.  Thus, the inquiry
this Court should address itself is limited to error of jurisdiction or grave
abuse of discretion committed by the Court of Appeals, in particular, whether
or not respondent court acted without jurisdiction or with grave abuse of
discretion in giving due course to the petition for annulment of judgment.  This clarification is rendered necessary
because the parties themselves, in their pleadings, have gone beyond this issue
and have discussed the merits of the annulment of judgment case now pending
decision with the Court of Appeals.

In its Petition, the
Council contends that a Regional Trial Court has the authority and jurisdiction
to annul a judgment of another Regional Trial Court, a coordinate or co-equal
court.  Specifically, petitioner alleges
that the filing of a separate action for annulment of judgment is unnecessary because the Regional Trial Court
hearing Civil Case No. Q-43469 for Quieting of Title can annul the judgment in
Civil Case No. Q-43746 for Foreclosure rendered by another Regional
Trial Court [Rollo, pp. 15-16.] In its Memorandum,
however, the Council admitted that the Court of Appeals has the exclusive jurisdiction to annul the decision
of the Regional Trial Court [Rollo, pp. 152-153.]

Annulment of judgment is a remedy in law independent of the case
where the judgment sought to be annulled was rendered.  The judgment may be annulled on the ground of
extrinsic or collateral fraud [Canlas v. Hon. Court
of Appeals, G.R. No. 77691, August 8,
1988.] Jurisdiction over actions for annulment of Regional Trial
Court judgment has been clarified by Batas Pambansa Blg. 129 (otherwise known as The Judiciary Reorganization
Act of 1980).  Prior to the enactment of
this law, different views had been entertained regarding the issue of whether
or not a branch of a Regional Trial Court may annul a judgment of another branch of the same court.*
However, Batas Pambansa Blg.
129 introduced a new provision conferring on the Court of Appeals exclusive
original jurisdiction over actions for annulment of judgments of Regional Trial
Courts.  Sec. 9 (2) of Batas Pambansa Blg. 129 expressly provides
that:

Sec. 9.  Jurisdiction.
– The Court of Appeals shall exercise:

* * *

(2) Exclusive original jurisdiction over actions for annulment of
judgments of Regional Trial Courts;

* * *

Thus, it is beyond dispute that it is
only the Court of Appeals that can take cognizance of the annulment of judgment
in Civil Case No. Q-43746 rendered by the Regional Trial Court.

The next issue raised in this petition deals with the question of
who may properly institute a petition for annulment of judgment.  It is petitioner’s contention that the remedy
is available only to one who is a party to the case where the judgment sought
to be annulled is rendered.  Private respondents,
on the other hand, allege that “there are sufficient facts and circumstances
sufficient to show prima facie that [they] have a substantial interest in the ownership of the property which
had been foreclosed without their knowledge and consent” [Rollo, p. 90.]
In fine, the question deals with whether or not the heirs of Araneta have a cause of action against the Council.

In Militante v. Edrosolano [G.R. No. L-27940, June 10, 1971, 39 SCRA 473], an action for annulment of judgment in Civil Case
No. 6216 between Edrosolano and Belosillo
was filed by Militante.  The petition stemmed from a complaint
instituted by Militante on September 6, 1965 against Edrosolano
for damages arising from a breach of contract
of carriage.  On January 18, 1966 Militante
obtained an order of preliminary attachment on the property of Edrosolano.  Alleging that he purchased all of Edrosolano’s TPU equipment on February 28, 1966, Belosillo
filed a third-party claim.  It appears
that on February 25, 1963 Belosillo
obtained a judgment by default
against Edrosolano in Civil Case No. 6216 for collection of the amount of
P45,000.00, the value of the promissory note executed by the latter on February 1, 1960.  After
a recital of these antecedent facts, Militante, in
his petition for annulment of judgment contended, inter alia,
that (1) Civil Case No. 6216 “was
based on a fictitious cause of action because [the] promissory note was without
lawful consideration whatsoever” [at 476];
(2) Edrosolano did not file any answer to Belosillo’s complaint and allowed the latter to obtain a
judgment by default which judgment attained finality without the former
appealing therefrom; and, (3) while judgment in Civil
Case No. 6216 was promulgated in
1963 it was “only on
January 19, 1966 when . . . Belosillo caused the execution thereof after [Militante] had already instituted his civil case for
damages against . . . Edrosolano and an order for
issuance of preliminary attachment issued” [at 477.] The trial court
however dismissed Militante’s action for annulment on
finding that it did not state a cause of action.  Thereafter, Militante
filed an appeal to this Tribunal and in setting aside the trial court’s order
of dismissal, the Court, speaking through then Mr. Associate Justice Enrique
Fernando, stated that:

* * *

2.       More specifically,
the view entertained by the lower court in its order of dismissal that an
action for annulment of judgment can be availed of only by those principally or
secondarily bound is contrary to what had been so clearly declared by this Court in the leading case of Anuran v. Aquino [38 Phil. 29], decided in 1918.  It was
emphatically announced therein:  “There can be no question as to the
right of any person adversely affected by a judgment to maintain an action to
enjoin its enforcement and to have it declared a nullity on the ground of fraud
and collusion practiced in the very matter of obtaining the judgment when such fraud is extrinsic
or collateral to the matters involved in the issues raised at the trial which
resulted in such judgment.  *
* *.” [at 32-33.] Such a principle was further fortified by an observation
made by this Court through Justice Ozaeta in Garchitorena v. Sotelo [74 Phil.
25 (1942).] These are his words: 
“The collusive conduct of the parties in the foreclosure suit constituted an extrinsic or
collateral fraud by reason of which the judgment rendered therein may be
annulled in this separate action [citing also the case of Anuran.] Aside from
the Anuran-Aquino case, innumerable authorities from other jurisdictions may be cited in support of the
annulment.  But were there not any precedent to guide us, reason and
justice would compel us to lay down
such doctrine for the first time.” [at 481-482; Underscoring supplied.]

It is therefore clear from the foregoing that a person need not
be a party to the judgment sought to be annulled.  What is essential is that he can prove his
allegation that the judgment was obtained by the use of fraud and collusion and
he would be adversely affected thereby.

In this present case it is true that the heirs of Araneta
are not parties to the foreclosure case. 
Neither are they principally nor secondarily bound by the judgment
rendered therein.  However, in their petition filed with the Court
of Appeals they alleged fraud and connivance perpetuated by and between the Da Silvas and the Council as
would adversely affect them.  This
allegation, if fully substantiated by preponderance of evidence, could be the
basis for the annulment of Civil
Case No. Q-43476.

Finally, the Council asserts that the remedy of annulment of
judgment applies only to final and executory judgment
and not to that which had already been fully
executed or implemented.  It is
the Council’s contention that as
the judgment in the foreclosure case had already been executed evidenced by the
fact that title to the property in question had been transferred in its name
the judgment can no longer be annulled. 
The Council’s contention is devoid of merit.  In Garchitorena v. Sotelo,
supra, the Court affirmed the trial court’s annulment of the judgment on
foreclosure notwithstanding the fact that ownership of the house and lot
subject of the mortgage had passed from the mortgagee who foreclosed the
mortgage and purchased the property at public auction to a person who bought
the same and finally to another individual in whose name the Torrens certificate
of title stood by the time the case reached this Tribunal.

In view of the foregoing the Court finds that the Court of
Appeals neither acted without jurisdiction nor committed grave abuse of
discretion in giving due course
to the petition for annulment of judgment as would warrant the issuance of the
extraordinary writ of certiorari in this case.

WHEREFORE, the instant petition is DISMISSED and the
orders of the Court of Appeals dated November 10 and
December 2 and 3, 1987 are AFFIRMED.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr.,
Feliciano, and Bidin,
JJ., concur.

*
In Republic v. Reyes [G.R. Nos. L-30263-5, October 30, 1987, 155 SCRA 313
citing Cabigo v. Del Rosario, 44 Phil. 84
(1949); PNB v. Javellana, 92 Phil. 525 (1952); Mas
v. Dumara-og, G.R. No. L-16252, September 29, 1964, 12 SCRA 34; and
Parco v. Court of Appeals, G.R. No. L-33152, January 30, 1982, 111 SCRA
262], the Court held that the various branches of the Regional Trial Court
being co-equal cannot interfere with the respective cases of each branch, much
less a branch’s order or judgment.  In Republic v. Court
of Appeals [G.R. Nos. L-41115-6, September 11, 1982, 116 SCRA 505 citing Dulap v. Court of Appeals, G.R. No. L-28306, December 18, 1971, 42 SCRA 537; and Gianan v. Imperial, G.R. No. L-37963, February 28, 1974, 55 SCRA 755], the
Court held that a court or a branch thereof has authority or jurisdiction to
annul a judgment rendered by another court of concurrent jurisdiction
or by another branch.