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RAMON P. ARON v. FRANCISCO REALON

FACTS:

Roman Realon owned two parcels of land, Lot No. 1253 and Lot No. 602. When Roman died intestate in 1946, he was survived by his son Alfredo and the children of his deceased son Buenaventura. Alfredo's grandson, Emiliano Realon Purificacion, worked as a tenant on the property since 1970. On May 14, 1979, Alfredo and his nephews executed an Extrajudicial Settlement entitled "Manahan Sa Labas ng Hukuman," where they adjudicated Lot No. 602 to Alfredo and divided Lot No. 1253. Alfredo was given 84,632 square meters, and the rest, 62,316 square meters, was divided among Marciano, Joaquino, Florentino, Felipe, Marcelo, Sesinando, and Montano. On the same day, Felipe, Sesinando, Montano, Marcelo, Florentino, and Joaquino appointed Marciano as their attorney-in-fact to sell their shares in Lot No. 1253. Marciano, on behalf of his brothers, then executed a Contract to Sell covering Lot No. 1253 in favor of the petitioner on July 31, 1979. On the same day, Alfredo also executed a Contract to Sell over his undivided share in Lot No. 1253 in favor of the petitioner. However, the vendors failed to register the property under the Torrens System, leading the petitioner to refuse to pay the balance of the purchase price.

In November 1983, the petitioner filed an application for the registration of Lot No. 1253 in his name. In January 1985, Marciano executed a Deed of Sale with Mortgage in favor of the petitioner over their undivided shares, and Alfredo executed a similar Deed of Sale with Mortgage in favor of the petitioner.

Alfredo Realon, together with his nephews Marciano Realon and Roman Realon, executed contracts to sell a portion of their land in favor of Ramon Aron. On the same day, Alfredo executed a similar Deed of Sale with Mortgage with Aron over his share of the property. The contracts to sell were presented as evidence by Aron and the Regional Trial Court (RTC) confirmed his title to the land and ordered the issuance of a decree of registration. Alfredo and Marciano passed away in 1989 and 1990, respectively.

In 1993, the Register of Deeds issued OCT No. O-2348 under Aron's name, subject to the remaining balance of P129,349.73. In 1994, Aron filed an amended complaint for consignation against the heirs of Alfredo and Marciano, stating that he had already paid a total of P397,994.77 and had a remaining balance of P42,849.23. Aron deposited this amount with the RTC and sought a declaration that his obligation under the Deed of Sale was discharged.

The trial court declared the consignation valid and released Aron from his obligation. This decision became final and executory. However, in 1996, the heirs of Alfredo, Marciano, and Roman Realon filed a complaint for reconveyance and ownership against Aron, alleging that he still owed a balance of P379,908.96 according to the contracts to sell. They claimed that Aron falsely claimed ownership of the property in his application for registration.

ISSUES:

  1. Whether the trial court erred in holding that the petitioner employed fraud when he filed his application for registration of the property.

  2. Whether the respondents are entitled to a reconveyance of the subject property.

  3. Whether or not the respondents have the legal capacity to sue.

  4. Whether or not the trial court and the appellate court have jurisdiction over the case.

  5. Whether or not the trial court and the appellate court properly ruled on the remedies sought by the respondents.

  6. Whether the absence of an indispensable party renders all subsequent actions of the court null and void.

  7. Whether the failure of the respondents to include all the other heirs and obtain a special power of attorney authorizing them to sue is fatal to the complaint.

  8. Whether the Court of Appeals erred in affirming the trial court's decision despite the lack of proof of actual or extrinsic fraud.

  9. Whether the distinction between actual or extrinsic fraud and constructive fraud is significant in determining the grounds for reopening and reviewing a decree of registration.

  10. Whether or not the respondents can assail the admissions made by Alfredo and Marciano Realon in a previous case wherein they testified for the petitioner.

  11. Whether or not the decision of the trial court declaring the petitioner as the legal owner of the property based on the contracts to sell can still be altered or overturned.

  12. Whether or not the respondents are barred from impugning the deed of sale with mortgage executed in favor of the petitioner.

RULING:

  1. The trial court did not err in holding that the petitioner employed fraud when he filed his application for registration of the property. The Court of Appeals affirmed the decision of the trial court, ruling that the petitioner falsely alleged in his application that he was the owner of the property based on a deed of sale when, in fact, he would only acquire title over the property upon payment of the full purchase price and the execution of a final deed of sale by the vendors.

  2. The respondents are entitled to a reconveyance of the subject property. The trial court declared that the ownership of the property belongs to the respondents and ordered the surrender and cancellation of the petitioner's certificate of title. The Court of Appeals affirmed this ruling.

  3. The Court ruled in favor of the petitioner.

  4. Yes, the absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act.

  5. Yes, the failure of the respondents to include all the other heirs and obtain a special power of attorney authorizing them to sue is fatal to the complaint and warrants its dismissal.

  6. Yes, the Court of Appeals erred in affirming the trial court's decision because the respondents failed to prove actual or extrinsic fraud.

  7. Yes, the distinction between actual or extrinsic fraud and constructive fraud is significant in determining the grounds for reopening and reviewing a decree of registration.

  8. The respondents, as successors-in-interest of the vendees, can no longer challenge the admissions made by Alfredo and Marciano Realon when they testified for the petitioner in a previous case.

  9. The decision of the trial court declaring the petitioner as the legal owner of the property based on the contracts to sell has already become final and executory. Therefore, it can no longer be altered or overturned.

  10. The respondents are barred from impugning the deed of sale with mortgage executed in favor of the petitioner as they failed to appeal the decision of the trial court in the previous case, which has likewise become final and executory.

PRINCIPLES:

  • A party who employs fraud in his application for registration of property may be subject to reconveyance of the property.

  • Every action must be prosecuted or defended in the name of the real party-in-interest.

  • The party bringing suit has the burden of proving the sufficiency of the representative character they claim.

  • The presence of all indispensable parties is a condition sine qua non for the exercise of judicial power.

  • One who is a party to a case is not bound by any decision of the court; otherwise, he will be deprived of his right to due process.

  • The absence of an indispensable party renders all subsequent actions of the court null and void.

  • Failure to include all parties or obtain proper authorization to sue may warrant the dismissal of the complaint.

  • Actual or extrinsic fraud is a ground for the nullification of a judgment or decree, while constructive fraud may have detrimental effects on public interests and the Torrens System.

  • Actual or extrinsic fraud refers to fraud that prevents a party from having a trial or from presenting their entire case to the court, while constructive fraud includes acts that have detrimental effects even without an actual intent to commit fraud.

  • Admissions made by parties in a previous case, even if contrary to their claims in a subsequent case, can bind and bar them from challenging those admissions in the later case.

  • A decision of a trial court that has become final and executory cannot be altered or overturned, even if erroneous.

  • Failure to appeal a decision within the prescribed period renders it final and executory, barring any further challenges to its validity or enforceability.