PINAUSUKAN SEAFOOD HOUSE, INC.

VS.
FAR EAST BANK, NOW B.P.I.

G.R. No. 159926, January 20, 2014

FACTS:

Petitioner Pausukan Seafood House issued four real estate mortgages in

favor of
Respondent Far East Bank & Trust Company (now Bank of the
Philippine Islands). When
the unpaid obligation secured by Pinausukan totaled more than Php15M,
respondent
commenced proceedings for the extrajudicial foreclosure of the
mortgages. Two weeks
after, the sheriff issued a notice of sheriff’s sale, setting the lands for
public auction.
Upon learning of the impending sale, Pinausukan brought an action for
the annulment of the
mortgages contending that Bonier (President of Pinausukan) obtained the
loans only in his
personal capacity and entered into the mortgages without Pinausukan’s
consent through a
board resolution. Pinausukan applied for the issuance of a TRO to stop
the extrajudicial
foreclosure and public auction.

RTC:
The case was assigned to Branch 108, RTC in Pasay City. The counsels
of the parties did
not appear in court on their scheduled hearing, despite having agreed
thereto. The RTC
dismissed the case for failure to prosecute, and the order attained finality.
The sheriff issued a notice of extrajudicial sale over the property. The
notice was received a
week later by Pinausukan, claiming surprise over the turn of events.
Pinausukan learned
that Atty. Michael Dale Villaflor, its counsel, had not informed it about
the order of dismissal
of the case.

CA:
Pinausukan brought a petition for annulment in the CA seeking
nullification of the dismissal,
stating that its counsel had been guilty of gross and palpable negligence
in failing to inform
his client of the developments of the case. In addition, Pinausukan was
never notified that its
attorney had changed his office and address. Pinausukan asserts that Atty.
Villaflor
constituted professional misconduct amounting to EXTRINSIC FRAUD,
properly warranting
the annulment of their case’s dismissal.
The CA dismissed the petition, citing the failure to attach affidavits of
witnesses attesting to
the extrinsic fraud as required by Sec.4, Rule 47 of the Rules of Court.
The CA denied
petitioner’s motion for reconsideration.

ISSUE:
Whether or not the petition for annulment of judgment grounded on
extrinsic fraud should be
granted by the CA.

RULING:

The appeal lacks merit.

1. Nature and statutory requirements for an action to annul a judgment or

final
order.
There are only two remedies available to a party aggrieved by a decision
rendered by a CFI
that had attained finality namely:
a) Sec. 113 of the Code of Civil Procedure, akin to the petition for relief
from
judgement under Rule 38; and
b) Sec. 513 of the Code of CivPro, stipulating that an aggrieved party
under
a judgment rendered by a CFI who had been “deprived of a hearing by
fraud,
accident, mistake, or excusable negligence” could present his petition to
the SC
within 60 days after he learns of the judgment.
Act No. 136 (An Act providing for the Organization of Courts in the
Philippine Islands) vested
original jurisdiction in the CFI over all civil actions in which the subject
of litigations is not
capable of pecuniary estimation.” The CFI retained this jurisdiction under
R.A. 296 (The
Judiciary Act of 1948).
The policy of judicial stability enunciates that the judgment of a court of
competent
jurisdiction could not be interfered with by any court of concurrent
jurisdiction.

The doctrine of immutability and unalterability serves a two-fold purpose,

namely:

a) to avoid delay in the administration of justice; and

b) to put an end to judicial controversies.

Given the extraordinary nature of the remedy of annulment of judgment,

Pinausukan must
be mindful of the following statutory requirements as set forth in Rule 47:

1) The remedy is only available only when the petitioner can no longer
resort to the
ordinary remedies of new trial, appeal, petition for relief or other
appropriate
remedies through no fault of the petitioner.

2) The ground for action of annulment of judgment is limited to extrinsic

fraud or lack
of jurisdiction.

a. Extrinsic Fraud- where the unsuccessful party has been prevented from
exhibiting fully his case, by fraud or deception practiced on him by his
opponent; or where the defendant never had knowledge of the suit; or
where the attorney fraudulently of without authority connives at his
defeat.
b. Intrinsic Fraud- acts of a party at a trial that prevented a fair and just
determination of the case, but the difference is that the acts or things,
could
have been litigated and determined at the trial or adjudication of the case.

3) The action, if based on extrinsic fraud, must be filed within 4 years

from
discovery; and if based on lack of jurisdiction, must be brought before it
is barred
by laches or estoppels.

a. Laches- failure or neglect for an unreasonable and unexplained length

of
time to do that which, by exercising due diligence, could have been done
earlier.

b. Estoppel- precludes a person who has admitted or made a

reperesentation
about something as true from denying or disproving it against anyone else
relying on his admission or representation.

4) The petition should be verified, and should allege with particularity the
facts and the
law relief upon for annulment, as well as those supporting the petitioner’s
good and
substantial cause of action or defense, as the case may be.

2. Pinausukan’s petition for annulment was substantively and

procedurally
defective.

The procedural defect in Pinausukan’s petition was its disregard of the

fourth requirement
consisting in its failure to submit together with the petition the affidavits
of witnesses or
documents supporting the cause of action.
The substantive defect related to the neglect of Atty. Villaflor did not
constitute extrinsic
fraud because – based solely on the allegations, they do not constitute
extrinsic fraud as
contemplated under Rule 47. The petitions own language states that what
is involved is
mistake and gross negligence of the petitioner’s own counsel. In applying
Rule 47, mistake
and gross negligence cannot be equated to intrinsic fraud. By its nature,
extrinsic fraud
related to a cause that is collateral in character, it relates to an act of the
prevailing party
which is committed outside of the case. Even in the presence of fraud,
annulment will not
lie unless the fraud is committed by the adverse party, not by one’s own
lawyer.

Wherefore, the court AFFIRMS the resolutions of the CA; ORDERS

the petitioner to pay
cost of suit.