FACTS:

On various dates in 1993, Bonier de Guzman, President of Pinausukan, executed four real estate mortgages involving the Pinausukan’s parcel of land in favor of Far East Bank.

The unpaid obligation secured by the mortgages went up to ₱15,129,303.67. The Bank commenced proceedings for the extrajudicial foreclosure of the mortgages, and two weeks thereafter, the property was set for public auction.

Learning of the impending sale of its property, Pinausukan brought against the Bank and the sheriff an action for the annulment of real estate mortgages in the RTC 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 RTC dismissed the case for failure to prosecute, due to the failure of the counsels of the parties to appear in the hearing. The order of dismissal attained finality.

The sheriff issued a notice of extrajudicial sale concerning the property of Pinausukan, which was received by Pinausukan a week later.

Pinausukan learned that its counsel of record, had not informed it about the order of dismissal.

Pinausukan brought the petition for annulment in the CA seeking the nullification of the Order.

The CA dismissed the petition for annulment, and denied Pinausukan’s motion for reconsideration.

 

ISSUE:

Whether or not Annulment of Judgment will lie in the case at bar.

 

RULING:

No.

The remedy of annulment of judgment has been long authorized and sanctioned in the Philippines.

The jurisdiction over the action for the annulment of judgment had been lodged in the CFI as a court of general jurisdiction on the basis that the subject matter of the action was not capable of pecuniary estimation.

The Court has expounded on the nature of the remedy of annulment of judgment or final order in Dare Adventure Farm Corporation v. CA, viz:

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.

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.

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.

Not every kind of fraud justifies the action of annulment of judgment. Only extrinsic fraud does.

Fraud is extrinsic “where the unsuccessful party has been prevented from exhibiting fully his case, by fraud or deception practiced on him by his opponent, as 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 where an attorney fraudulently or without authority connives at his defeat; these and similar cases which show that there has never been a real contest in the trial or hearing of the case are reasons for which a new suit may be sustained to set aside and annul the former judgment and open the case for a new and fair hearing.”

Pinausukan’s petition for annulment was substantively and procedurally defective.

A review of the dismissal by the CA readily reveals that Pinausukan’s petition for annulment suffered from procedural and substantive defects.

Based solely on these allegations, we do not see any basis to give due course to the petition as these allegations do not speak of the extrinsic fraud contemplated by Rule 47.