GR 159926; (January, 2014) (Digest)
G.R. No. 159926 ; January 20, 2014
PINAUSUKAN SEAFOOD HOUSE, ROXAS BOULEVARD, INC., Petitioner, vs. FAR EAST BANK & TRUST COMPANY, NOW BANK OF THE PHILIPPINE ISLANDS AND HECTOR I. GALURA, Respondents.
FACTS
Petitioner Pinausukan Seafood House filed a civil case to annul real estate mortgages executed by its then-president, Bonier de Guzman, over corporate property to secure his personal loans from respondent bank. During the pendency of that case, the parties attempted settlement. Due to the non-appearance of both counsels at a scheduled hearing, the trial court dismissed the case for failure to prosecute. This order of dismissal became final.
Pinausukan later claimed it only learned of the dismissal when the bank proceeded with the foreclosure. It alleged its counsel, Atty. Michael Dale Villaflor, was grossly negligent for failing to track the case and inform it of the dismissal, and for not updating his address of record. Pinausukan filed a petition for annulment of judgment in the Court of Appeals, citing extrinsic fraud due to its counsel’s negligence.
ISSUE
Whether the negligence of petitioner’s counsel constitutes extrinsic fraud as a valid ground for annulment of judgment under Rule 47 of the Rules of Court.
RULING
No. The petition for annulment was correctly dismissed. Extrinsic fraud, as a ground for annulment, refers to a fraudulent act committed by the adverse party outside of trial, which prevents the aggrieved party from having a full and fair opportunity to present its case. The fraud must deprive a party of its day in court. The negligence or mistake of a party’s own counsel does not qualify as extrinsic fraud.
The Court emphasized that a client is generally bound by the actions, or inaction, of its counsel. The alleged professional misconduct and failure to communicate by Atty. Villaflor constituted intrinsic fraud—a matter that should have been addressed through timely ordinary remedies like a motion for reconsideration or a petition for relief from judgment, not a collateral action for annulment. Furthermore, the Court of Appeals correctly dismissed the petition for failure to comply with the mandatory requirement under Section 4, Rule 47 to attach affidavits of witnesses or documents proving the alleged extrinsic fraud. The verification by a corporate officer alone was insufficient to substantiate the claim.