FACTS:

Sometime in 1961, a judgment for a sum of money was rendered in favor of Independent Mercantile Corp. (IMC) against a certain Manuel Magali. 

After said judgment became final, a writ of execution was issued, and a Notice of Levy made on a parcel of land covered by  TCT No. 9138, registered in the name of “Domingo Magali, married to Modesta Calimlim”.

It specified that the said levy was only against “all rights, title, action, interest and participation of the defendant Manuel Magali over the parcel of land described in this title. ” 

The Certificate of Sale executed in favor of IMC also stated that the sale referred only to the rights and interest of Manuel Magali over the land. 

However, the final Deed of Sale erroneously stated that the sale was with respect to “the parcel of land described in this title” (referring to TCT No. 9138) and not only over the rights and interest of Manuel Magali in the same. The execution of the said final Deed of Sale was annotated at the back of said title.

IMC filed a petition in the respondent Court to compel Manuel Magali to surrender the owner’s duplicate of TCT No. 9138.

Not being the registered owner and the title not being in his possession, Manuel Magali failed to surrender the said title. 

IMC filed an ex-parte petition to declare TCT No. 9138 as cancelled and to issue a new title in its name. The petition was granted. Hence, the Register of Deeds of Pangasinan issued a new title in the name of IMC, Identified as TCT No. 68568.

Petitioner Modesta Calimlim, surviving spouse of Domingo Magali, upon learning that her husband’s title over the parcel of land had been cancelled, filed a petition with the respondent Court, sitting as a cadastral court, in LRC Record No. 39492, praying for the cancellation of TCT No. 68568. 

The respondent Court dismissed the petition. 

Herein petitioners did not appeal the dismissal of the petition. Instead, they filed the complaint in Civil Case No. SCC-180, praying for the cancellation of the conveyances and sales that had been made with respect to the property covered by TCT No. 9138 previously registered in the name of Domingo Magali, married to Modesta Calimlim. 

Private respondent Francisco Ramos, who claimed to have bought the property from IMC, filed a Motion To Dismiss the case, on the ground that the same is barred by prior judgement or by statute of limitations.

Respondent court dismissed the case on the ground of estoppel by prior judgment.

Petitioner’s two Motions for Reconsideration were denied.

Hence, this Petition.

ISSUE:

Whether or not petitioner is barred by prior judgment or by laches to file Civil Case No. SCC-180.

RULING:

In order to avail of the defense of res judicata, it must be shown, among others, that the judgment in the prior action must have been rendered by a court with the proper jurisdiction to take cognizance of the proceeding in which the prior judgment or order was rendered. 

If there is lack of jurisdiction over the subject-matter of the suit or of the parties, the judgment or order cannot operate as an adjudication of the controversy. 

This essential element of the defense of bar by prior judgment or res judicata does not exist in the case presently considered.

The petition filed by the herein petitioners in LRC Record No. 39492 was an apparent invocation of the authority of the respondent Court sitting as a land registration court. 

It has been settled by consistent rulings of this Court that a court of first instance, acting as a land registration court, is a court of limited and special jurisdiction. As such, its proceedings are not adequate for the litigation of issues pertaining to an ordinary civil action, such as, questions involving ownership or title to real property.

The lack of jurisdiction of a court may be raised at any stage of the proceedings, even on appeal. This doctrine has been qualified by recent pronouncements which stemmed principally from the ruling in the cited case of Sibonghanoy. 

It is to be regretted, however, that the holding in said case had been applied to situations which were obviously not contemplated therein. The exceptional circumstance involved in Sibonghanoy which justified the departure from the accepted concept of non-waivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been repeatedly upheld that rendered the supposed ruling in Sibonghanoy not as the exception, but rather the general rule, virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not lost by waiver or by estoppel.

The petitioners in the instant case may not be faulted with laches. 

It is neither fair nor legal to bind a party by the result of a suit or proceeding which was taken cognizance of in a court which lacks jurisdiction over the same irrespective of the attendant circumstances. The equitable defense of estoppel requires knowledge or consciousness of the facts upon which it is based.

The point simply is that when a party commits error in filing his suit or proceeding in a court that lacks jurisdiction to take cognizance of the same, such act may not at once be deemed sufficient basis of estoppel. 

It could have been the result of an honest mistake, or of divergent interpretations of doubtful legal provisions. If any fault is to be imputed to a party taking such course of action, part of the blame should be placed on the court which shall entertain the suit, thereby lulling the parties into believing that they pursued their remedies in the correct forum. 

Under the rules, it is the duty of the court to dismiss an action “whenever it appears that the court has no jurisdiction over the subject matter.”

Should the court render a judgment without jurisdiction, such judgment may be impeached or annulled for lack of jurisdiction, within ten (10) years from the finality of the same.