Action to quiet title & validity of donation

Nevertheless, petitioners cannot preclude the determination of validity of the deed of donation on the ground that (1) it has been impliedly admitted by respondents; (2) it has already been determined with finality by the RTC in Petition Case No. U-920; or (3) the only issue in an action for reconveyance is who has a better right over the land.

The validity of the private deed of donation propter nuptias in favor of petitioners predecessors was one of the issues in this case before the lower courts. The pre-trial order of the RTC stated that one of the issues before it is (w)hether or not the transfer of the whole property covered by OCT No. 352 on the basis of the private deed of donation notwithstanding the discrepancy in the description is valid. Before the CA, one of the errors assigned by respondents is that THE TRIAL COURT ERRED IN NOT FINDING THAT THE PRIVATE DEED OF DONATION DATED APRIL 26, 1919 WAS NULL AND VOID.The issue of the validity of donation is likewise brought to the Supreme Court by petitioners as they stated in their Memorandum that one of the issues to be resolved is regarding the alleged fact that THE HONORABLE COURT OF APPEALS ERRED IN FINDING THE DONATION INVALID. The Supreme Court thus poised to inspect the deed of donation and to determine its validity.

The Supreme Court cannot agree with petitioners contention that respondents may no longer question the validity of the deed of donation on the ground that they already impliedly admitted it. Under the provisions of the Civil Code, a void contract is inexistent from the beginning. The right to set up the defense of its illegality cannot be waived. The right to set up the nullity of a void or non-existent contract is not limited to the parties as in the case of annullable or voidable contracts; it is extended to third persons who are directly affected by the contract.

Consequently, although respondents are not parties in the deed of donation, they can set up its nullity because they are directly affected by the same. The subject of the deed being the land they are occupying, its enforcement will definitely affect them.

Petitioners cannot also use the finality of the RTC decision in Petition Case No. U-920 as a shield against the verification of the validity of the deed of donation.According to petitioners, the said final decision is one for quieting of title. In other words, it is a case for declaratory relief under Rule 64 (now Rule 63) of the Rules of Court, which provides:

SECTION 1. Who may file petition. Any person interested under a deed, will, contract or other written instrument, or whose rights are affected by a statute, executive order or regulation, or ordinance, may, before breach or violation thereof, bring an action to determine any question of construction or validity arising under the instrument or statute and for a declaration of his rights or duties thereunder.

An action for the reformation of an instrument, to quiet title to real property or remove clouds therefrom, or to consolidate ownership under Article 1607 of the Civil Code, may be brought under this rule.

SECTION 2. Parties. All persons shall be made parties who have or claim any interest which would be affected by the declaration; and no declaration shall, except as otherwise provided in these rules, prejudice the rights of persons not parties to the action. (Emphasis ours)

However, respondents were not made parties in the said Petition Case No. U-920. Worse, instead of issuing summons to interested parties, the RTC merely allowed the posting of notices on the bulletin boards of Barangay Cabalitaan, Municipalities of Asingan and Lingayen, Pangasinan. As pointed out by the CA, citing the ruling of the RTC:

x x x In the said case or Petition No. U-920, notices were posted on the bulletin boards of barangay Cabalitaan, Municipalities of Asingan and Lingayen, Pangasinan, so that there was a notice to the whole world and during the initial hearing and/or hearings, no one interposed objection thereto.

Suits to quiet title are not technically suits in rem, nor are they, strictly speaking, in personam, but being against the person in respect of the res, these proceedings are characterized as quasi in rem. The judgment in such proceedings is conclusive only between the parties. Thus, respondents are not bound by the decision in Petition Case No. U-920 as they were not made parties in the said case.

The rules on quieting of title expressly provide that any declaration in a suit to quiet title shall not prejudice persons who are not parties to the action.

That respondents filed a subsequent pleading in the same Petition Case No. U-920 after the decision there had become final did not change the fact that said decision became final without their being impleaded in the case. Said subsequent pleading was dismissed on the ground of finality of the decision.

Thus, the RTC totally failed to give respondents their day in court. As a result, they cannot be bound by its orders. Generally accepted is the principle that no man shall be affected by any proceeding to which he is a stranger, and strangers to a case are not bound by judgment rendered by the court.

Moreover, for the principle of res judicata to apply, the following must be present: (1) a decision on the merits; (2) by a court of competent jurisdiction; (3) the decision is final; and (4) the two actions involve identical parties, subject matter and causes of action. The fourth element is not present in this case. The parties are not identical because respondents were not impleaded in Petition Case No. U-920. While the subject matter may be the same property covered by OCT No. 352, the causes of action are different. Petition Case No. U-920 is an action for declaratory relief while the case below is for recovery of property.

The Supreme Court not persuaded by petitioners posture that the only issue in this action for reconveyance is who has a better right over the land; and that the validity of the deed of donation is beside the point. It is precisely the validity and enforceability of the deed of donation that is the determining factor in resolving the issue of who has a better right over the property. Moreover, notwithstanding procedural lapses as to the appropriateness of the remedies prayed for in the petition filed before the court, the Supreme Court can brush aside the technicalities in the interest of justice. In some instances, this Court even suspended its own rules and excepted a case from their operation whenever the higher interests of justice so demanded.

Moreover, although respondents did not directly raise the issue of validity of the deed of donation at the commencement of the case before the trial court, it was stipulated by the parties during the pre-trial conference. In any event, this Court has authority to inquire into any question necessary in arriving at a just decision of a case before it. Though not specifically questioned by the parties, additional issues may also be included, if deemed important for substantial justice to be rendered.

Furthermore, this Court has held that although a factual issue is not squarely raised below, still in the interest of substantial justice, this Court is not prevented from considering a pivotal factual matter. The Supreme Court is clothed with ample authority to review palpable errors not assigned as such if it finds that their consideration is necessary in arriving at a just decision.

A rudimentary doctrine on appealed cases is that this Court is clothed with ample authority to review matters, even if they are not assigned as errors on appeal, if it finds that their consideration is necessary at arriving at a just decision of the case.[Also, an unassigned error closely related to an error properly assigned or upon which the determination of the question raised by the error properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as an error. (G.R. No. 169454; December 27, 2007)