Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=82748:56551-1&catid=1579&Itemid=566
Timestamp: 2019-04-19 10:35:39+00:00

Document:
G.R. No. 159926, January 20, 2014 - PINAUSUKAN SEAFOOD HOUSE, ROXAS BOULEVARD, INC., Petitioner, v. FAR EAST BANK & TRUST COMPANY, NOW BANK OF THE PHILIPPINE ISLANDS AND HECTOR IL. GALURA, Respondents.
PINAUSUKAN SEAFOOD HOUSE, ROXAS BOULEVARD, INC., Petitioner, v. FAR EAST BANK & TRUST COMPANY, NOW BANK OF THE PHILIPPINE ISLANDS AND HECTOR IL. GALURA, Respondents.
Extrinsic fraud, as a ground for the annulment of a judgment, must emanate from an act of the adverse party, and the fraud must be of such nature as to have deprived the petitioner of its day in court. The fraud is not extrinsic if the act was committed by the petitioner’s own counsel.
Learning of the impending sale of its property by reason of the foreclosure of the mortgages, Pinausukan, represented by Zsae Carrie de Guzman, brought against the Bank and the sheriff an action for the annulment of real estate mortgages in the RTC on October 4, 2001 (Civil Case No. 01–0300), averring that Bonier had obtained the loans only in his personal capacity and had constituted the mortgages on the corporate asset without Pinausukan’s consent through a board resolution. The case was assigned to Branch 108.7 Pinausukan applied for the issuance of a temporary restraining order or writ of preliminary injunction to enjoin the Bank and the sheriff from proceeding with the extrajudicial foreclosure and the public auction.
In the ensuing trial of Civil Case No. 01–0300, Pinausukan presented Zsae Carrie de Guzman as its first witness on May 30, 2002. However, the subsequent hearing dates were reset several times. In August 2002, the parties informed the RTC about their attempts to settle the case.
On June 24, 2003, the sheriff issued a notice of extrajudicial sale concerning the property of Pinausukan.10 The notice was received by Pinausukan a week later.
Claiming surprise over the turn of events, Pinausukan inquired from the RTC and learned that Atty. Michael Dale Villaflor (Atty. Villaflor), its counsel of record, had not informed it about the order of dismissal issued on October 31, 2002.
6. Inquiry from counsel, Atty. Michael Dale T. Villaflor disclosed that although the Registry Return Receipt indicated that he received the Order on November 28, 2002, according to him, as of said date, he no longer holds office at 12th Floor, Ever Gotesco Corporate Center, 1958 C.M. Recto Avenue, Manila but has transferred to Vecation (sic) Club, Inc., with office address 10th Floor Rufino Tower, Ayala Avenue, Makati City. Petitioner was never notified of the change of office and address of its attorney.
On July 31, 2003, the CA dismissed the petition for annulment,12 citing the failure to attach the affidavits of witnesses attesting to and describing the alleged extrinsic fraud supporting the cause of action as required by Section 4, Rule 47 of the Rules of Court; and observing that the verified petition related only to the correctness of its allegations, a requirement entirely different and separate from the affidavits of witnesses required under Rule 47 of the Rules of Court.
On September 12, 2003,13 the CA denied Pinausukan’s motion for reconsideration.
Pinausukan posits that the requirement for attaching the affidavits of witnesses to the petition for annulment should be relaxed; that even if Roxanne had executed the required affidavit as a witness on the extrinsic fraud, she would only repeat therein the allegations already in the petition, thereby duplicating her allegations under her oath; that the negligence of Atty. Villaflor, in whom it entirely relied upon, should not preclude it from obtaining relief; and that it needed a chance to prove in the RTC that Bonier had no right to mortgage its property.
The remedy of annulment of judgment has been long authorized and sanctioned in the Philippines. In Banco Español–Filipino v. Palanca,14 of 1918 vintage, the Court, through Justice Street, recognized that there were only two remedies available under the rules of procedure in force at the time to a party aggrieved by a decision of the Court of First Instance (CFI) that had already attained finality, namely: that under Sec. 113, Code of Civil Procedure, which was akin to the petition for relief from judgment under Rule 38, Rules of Court; and that under Sec. 513, Code of Civil Procedure, which stipulated that the party aggrieved under a judgment rendered by the CFI “upon default” and who had been “deprived of a hearing by fraud, accident, mistake or excusable negligence” and the CFI had “finally adjourned so that no adequate remedy exists in that court” could “present his petition to the Supreme Court within sixty days after he first learns of the rendition of such judgment, and not thereafter, setting forth the facts and praying to have judgment set aside.”15 It categorically ruled out a mere motion filed for that purpose in the same action as a proper remedy.
In the period under the regimes of Act No. 136 and Republic Act No. 296, the issues centered on which CFI, or branch thereof, had the jurisdiction over the action for the annulment of judgment. It was held in Mas v. Dumara–og16 that “the power to open, modify or vacate a judgment is not only possessed by, but is restricted to the court in which the judgment was rendered.” In J.M. Tuason & Co., Inc. v. Torres,17 the Court declared that “the jurisdiction to annul a judgment of a branch of the Court of First Instance belongs solely to the very same branch which rendered the judgment.” In Sterling Investment Corporation v. Ruiz,18 the Court enjoined a branch of the CFI of Rizal from taking cognizance of an action filed with it to annul the judgment of another branch of the same court.
A petition for annulment of judgment is a remedy in equity so exceptional in nature that it may be availed of only when other remedies are wanting, and only if the judgment, final order or final resolution sought to be annulled was rendered by a court lacking jurisdiction or through extrinsic fraud. Yet, the remedy, being exceptional in character, is not allowed to be so easily and readily abused by parties aggrieved by the final judgments, orders or resolutions. The Court has thus instituted safeguards by limiting the grounds for the annulment to lack of jurisdiction and extrinsic fraud, and by prescribing in Section 1 of Rule 47 of the Rules of Court that the petitioner should show that the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner. A petition for annulment that ignores or disregards any of the safeguards cannot prosper.
The attitude of judicial reluctance towards the annulment of a judgment, final order or final resolution is understandable, for the remedy disregards the time–honored doctrine of immutability and unalterability of final judgments, a solid corner stone in the dispensation of justice by the courts. The doctrine of immutability and unalterability serves a two–fold purpose, namely: (a) to avoid delay in the administration of justice and thus, procedurally, to make orderly the discharge of judicial business; and (b) to put an end to judicial controversies, at the risk of occasional errors, which is precisely why the courts exist. As to the first, a judgment that has acquired finality becomes immutable and unalterable and is no longer to be modified in any respect even if the modification is meant to correct an erroneous conclusion of fact or of law, and whether the modification is made by the court that rendered the decision or by the highest court of the land. As to the latter, controversies cannot drag on indefinitely because fundamental considerations of public policy and sound practice demand that the rights and obligations of every litigant must not hang in suspense for an indefinite period of time.
Given the extraordinary nature and the objective of the remedy of annulment of judgment or final order, Pinausukan must be mindful of and should closely comply with the following statutory requirements for the remedy as set forth in Rule 47 of the Rules of Court.
The second requirement limits the ground for the action of annulment of judgment to either extrinsic fraud or lack of jurisdiction.
Lack of jurisdiction on the part of the trial court in rendering the judgment or final order is either lack of jurisdiction over the subject matter or nature of the action, or lack of jurisdiction over the person of the petitioner. The former is a matter of substantive law because statutory law defines the jurisdiction of the courts over the subject matter or nature of the action. The latter is a matter of procedural law, for it involves the service of summons or other process on the petitioner. A judgment or final order issued by the trial court without jurisdiction over the subject matter or nature of the action is always void, and, in the words of Justice Street in Banco Español–Filipino v. Palanca,39 “in this sense it may be said to be a lawless thing, which can be treated as an outlaw and slain at sight, or ignored wherever and whenever it exhibits its head.”40 But the defect of lack of jurisdiction over the person, being a matter of procedural law, may be waived by the party concerned either expressly or impliedly.
The third requirement sets the time for the filing of the action. The action, if based on extrinsic fraud, must be filed within four years from the discovery of the extrinsic fraud; and if based on lack of jurisdiction, must be brought before it is barred by laches or estoppel.
A review of the dismissal by the CA readily reveals that Pinausukan’s petition for annulment suffered from procedural and substantive defects.
We concur with the CA. Verily, such neglect of counsel, even if it was true, did not amount to extrinsic fraud because it did not emanate from any act of FEBTC as the prevailing party, and did not occur outside the trial of the case. Moreover, the failure to be fully aware of the developments in the case was Pinausukan’s own responsibility. As a litigant, it should not entirely leave the case in the hands of its counsel, for it had the continuing duty to keep itself abreast of the developments if only to protect its own interest in the litigation. It could have discharged its duty by keeping in regular touch with its counsel, but it did not. Consequently, it has only itself to blame.
Sereno, C.J., Leonardo–De Castro, Bersamin, Villarama, Jr., and Reyes, JJ. concur.
1Rollo, pp. 37–38; penned by Associate Justice Arturo D. Brion (now a Member of this Court), with the concurrence of Associate Justice Roberto A. Barrios (retired/deceased) and Associate Justice Josefina Guevara–Salonga (retired).
3 Id. at 164–183 (The real estate mortgages were to secure the payment of the following loans, to wit: P2,000,000.00 dated February 19, 1993; P1,500,000.00 dated May 4, 1993; P262,500.00 dated June 25, 1993; and P2,000,000.00 dated September 2, 1993).
11 CA rollo, pp. 4–5.
14 37 Phil. 921 (1918).
16 No. L–16252, September 29, 1964, 12 SCRA 34, 37.
17 No. L–24717, December 4, 1967, 21 SCRA 1169, 1172.
18 No. L–30694, October 31, 1969, 30 SCRA 318, 322.
19 No. L–28306, December 18, 1971, 42 SCRA 537.
23 Approved on August 14, 1981.
24Batas Pambansa Blg. 129, Section 9, (2).
25 Id., Section 19, (1).
26 The 1997 Rules of Civil Procedure, which was adopted by the Court in Baguio City on April 8, 1997 in Bar Matter No. 803, took effect on July 1, 1997.
27 G.R. No. 161122, September 24, 2012, 681 SCRA 580, 586–587.
28Rules of Court, Rule 47, Section 7.
30Republic v. Heirs of Sancho Magdato, G.R. No. 137857, September 11, 2000, 340 SCRA 115, 124.
31Rules of Court, Rule 47, Section 1.
32 2 Feria & Noche, Civil Procedure, Annotated, 2001 Edition, Central Lawbook Publishing, Quezon City, p. 219.
34 G.R. No. 114311, November 29, 1996, 265 SCRA 168, 180.
35Tolentino v. Leviste, G.R. No. 156118, November 19, 2004, 443 SCRA 274, 282.
36Arcenas v. Queen City Development Bank, G.R. No. 166819, June 16, 2010, 621 SCRA 11, 18.
37Ybañez v. Court of Appeals, G.R. No. 117499, February 9, 1996, 253 SCRA 540, 551.
38Strait Times, Inc. v. Court of Appeals, G.R. No. 126673, August 28, 1998, 294 SCRA 714, 723.
39 Supra note 14, at 949.
41 Olizon v. Court of Appeals, G.R. No. 107075, September 1, 1994, 236 SCRA 148, 157–158, citing Tejido v. Zamacoma, G.R. No. L–63040, August 7, 1985, 138 SCRA 78; Tijam v. Sibonghanoy, No. L–21450, April 15, 1968, 23 SCRA 29; Sotto v. Teves, No. L–38018, October 31, 1978, 86 SCRA 154, 183.
42Pangilinan v. Court of Appeals, G. R. No. 83588, September 29, 1997, 279 SCRA 590, 601.
43Go Chi Gun v. Co Cho, et al., 96 Phil. 622, 637 (1955); Maneclang v. Baun, G.R. No. 27876, April 22, 1992, 208 SCRA 179, 198.
45Rules of Court, Rule 131, Section 2(a).
46 Id., Rule 47, Section 4.
47 Id., Rule 8, Section 5.
48 Id., Rule 47, Section 4.
50 Id., Rule 47, Section 5.
52Oshita v. Republic, No. L–21180, March 31, 1967, 19 SCRA 700, 702.
53Rules of Court, Rule 133, Section 7.

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