BACLARAN - v - NIEVA, SIBULO

BACLARAN MARKETING CORPORATION versus FERNANDO C. NIEVA and MAMERTO SIBULO, JR | THIRD DIVISION, G.R. No. 189881 April 19, 2017 JARDELEZA, J.

Doctrine:

Rule 47 of the Rules of Court does not apply to an action to annul the levy and sale at public auction of petitioner’s properties or the certificate of sale executed by the deputy sheriff over said properties. Neither does it apply to an action to nullify a writ of execution because a writ of execution is not a final order or resolution, but is issued to carry out the mandate of the court in the enforcement of a final order or of a judgment. It is a judicial process to enforce a final order or judgment against the losing party.

Facts:

Petitioner BMC is a domestic corporation engaged in the business of distribution, marketing and delivery of cement. It is one of the defendants in a civil case pending with RTC Antipolo. The case is one for damages arising from a vehicular collision in Taytay, Rizal between a 10-wheeler truck owned by BMC and driven by its employee Mendoza, and a car owned and driven by Sibulo. The Antipolo Court, in its Decision (1990 Decision), ruled in favor of BMC and Mendoza and dismissed Sibulo’s complaint. 

On appeal, the CA, in its Decision reversed the Antipolo Court. It awarded Sibulo damages. In the absence of a motion for reconsideration, the Decision became final and executory. The Antipolo Court subsequently issued a Writ of Execution. Then, in an Order, it directed the Deputy Sheriff, upon motion of Sibulo, to implement the Writ of Execution against the real properties owned by BMC, as it appears that BMC has no personal properties. The sheriff of the Antipolo Court levied upon BMC’s real property in Paranaque City. He sold the property and its improvements through public auction. Respondent Nieva emerged as the highest bidder.

For BMC’s failure to redeem the property within one year from the sale, Nieva consolidated ownership over it. He filed a Petition for Cancellation of Transfer Certificate Title and Issuance of New [Title] in the RTC Paranaque. The Paranaque Court granted the petition in its Decision and ordered BMC to surrender to Nieva, within 15 days from receipt of the Decision, its owner’s duplicate certificate of title over the property. Failing such, the Paranaque Court ordered the Register of Deeds to annul the old TCT and issue a new title in Nieva’s name. The Decision of the Paranaque Court became final. Consequently, Nieva filed a Petition for Issuance of a Writ of Possession over the property in the Paranaque Court. The Paranaque Court granted the petition in its Decision and issued a Writ of Possession and Notice to Vacate against BMC.

In view of the Writ of Possession and Notice to Vacate issued against it, BMC filed a Petition for Annulment of Judgment before the CA. BMC alleged that its counsel, Atty. Rizon, committed acts of gross and inexcusable negligence constituting “extrinsic fraud,” which deprived it of due process and an opportunity to present its side. It discovered the fraud only in December 2008 when its representatives tried to pay the real estate tax on the property, only to learn that the title to it had already been transferred to Nieva. BMC averred that it did not know that Sibulo appealed the 1990 Decision of the Antipolo Court to the CA. It claimed that Atty. Rizon assured BMC that the 1990 Decision ended the controversy. Had BMC known of the appeal, it could have opposed the proceedings or engaged the services of new counsel. The CA, in its Resolution dated August 26, 2009, denied BMC’s petition. BMC moved for reconsideration; this, however, was denied. Hence, this petition for Review on Certiorari.

Issue: Whether or not the CA erred in dismissing BMC’s petition for annulment of judgment. Held: No.

Ruling:

Rule 47 of the Rules of Court governs actions for the annulment of final judgments, orders, or resolutions of regional trial courts in civil actions. It is a recourse equitable in character, allowed only in exceptional cases where there is no available or other adequate remedy. Its objective is to set aside a final and executory judgment, which is not void upon its face, but is entirely regular in form, and whose alleged defect is not apparent upon its face or from the recitals contained in the judgment. Since it disregards the time-honored rule of immutability and unalterability of final judgments, the Rules of Court impose stringent requirements before a litigant may avail of it. A petitioner must comply with the statutory requirements as set forth under Rule 47. These are:

(1)    The remedy is 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 grounds for the action of annulment of judgment are limited to either extrinsic fraud or lack of jurisdiction;

(3)    The action 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; and

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

BMC’s petition for annulment of judgment fails to meet the first and second requisites.

It bears stressing that Rule 47 of the Rules of Civil Procedure applies only to a petition to annul a judgment or final order and resolution in civil actions, on the ground of extrinsic fraud or lack of jurisdiction or due process. A final order or resolution is one which is issued by a court which disposes of the subject matter in its entirety or terminates a particular proceeding or action, leaving nothing else to be done but to enforce by execution what has been determined by the court. The rule does not apply to an action to annul the levy and sale at public auction of petitioner’s properties or the certificate of sale executed by the deputy sheriff over said properties. Neither does it apply to an action to nullify a writ of execution because a writ of execution is not a final order or resolution, but is issued to carry out the mandate of the court in the enforcement of a final order or of a judgment. It is a judicial process to enforce a final order or judgment against the losing party. Similar to a writ of execution, a writ of possession is not a final order which may be annulled under Rule 47. It is merely a judicial process to enforce a final order against the losing party. For this reason the Decision of the Antipolo Court ordering the issuance of writ of possession is also not amenable to an action for annulment of judgment.

Rule 47, Section 2 provides extrinsic fraud and lack of jurisdiction as the exclusive grounds for the remedy of annulment of judgment. Case law, however, recognizes a third ground-denial of due process of law. Extrinsic fraud refers to a fraud committed to the unsuccessful party by his opponent preventing him from fully exhibiting his case by keeping him away from court, a false promise of a compromise; or where the defendant never had knowledge of the suit, being kept in ignorance by the acts of the plaintiff; or when an attorney fraudulently or without authority connives at his defeat. Fraud is not extrinsic if the alleged fraudulent act was committed by petitioner’s own counsel. The fraud must emanate from the act of the adverse party and must be of such nature as to deprive petitioner of its day in court. A lawyer’s mistake or gross negligence does not amount to extrinsic fraud that would grant a petition for annulment of judgment. In this case, the CA correctly found that BMC neither alleged nor proved that the gross negligence of its former counsel was done in connivance with Nieva or Sibulo. Therefore, it is not the extrinsic fraud contemplated under Rule 47, Section 2.

It is well-settled that the negligence of the counsel binds the client, except in cases where the gross negligence of the lawyer deprived his client of due process of law. For the exception to apply, the client must prove by clear and convincing evidence that he was maliciously deprived of information that he could not have acted to protect his interests. Moreover, the gross negligence of the counsel must not be accompanied by the client’s own negligence. While it might be true that Atty. Rizon assured it that the case has already ended with the 1990 Decision, the prudent thing would have been for BMC to ask for evidence or proof that the decision was already final. This, BMC failed to do.

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