G.R. No. 171582 , August 19, 2015
ALBERTO T. LASALA, previously doing business under the style PSF SECURITY AGENCY, Petitioner, vs. THE NATIONAL FOOD AUTHORITY, Respondent

FACTS

Petitioner Alberto T. Lasala, through PSF Security Agency, provided security services to respondent National Food Authority (NFA). In 1994, Lasala’s employees filed a complaint with the NLRC for underpayment of wages. The NLRC held Lasala and the NFA solidarily liable, leading to the garnishment of NFA’s bank deposits. Believing it had no liability, the NFA filed a complaint for sum of money with damages and a writ of preliminary attachment against Lasala before the RTC of Quezon City, Branch 220. Lasala filed an Answer with a counterclaim praying for a total of ₱3,550,000.00 in various damages. The trial court initially granted the writ of attachment, but it was later nullified by the CA. On May 2, 1997, the trial court dismissed the NFA’s complaint due to the repeated absences of its deputized lawyer, Atty. Rogelio B. Mendoza. The NFA replaced him with Atty. Ernesto D. Cahucom. Although the complaint was dismissed, Lasala’s counterclaim proceeded. Atty. Cahucom did not submit evidence to controvert Lasala’s claim and waived cross-examination. On September 2, 2002, the trial court granted Lasala’s counterclaim, awarding him ₱52,788,970.50—a sum substantially higher than his original prayer. The NFA failed to appeal this decision because Atty. Cahucom did not inform its management. The NFA filed a petition for relief from judgment based on excusable negligence, which the trial court denied. Subsequently, the NFA, through the OGCC, filed a petition for annulment of judgment with the CA on grounds of lack of jurisdiction and extrinsic fraud. The CA granted the petition and annulled the RTC decision. Lasala filed the present petition.

ISSUE

Whether the Court of Appeals correctly annulled the Regional Trial Court’s September 2, 2002 decision granting Lasala’s counterclaim.

RULING

The Supreme Court DENIED Lasala’s petition, thereby affirming the CA’s annulment of the RTC decision. The Court held that a petition for annulment of judgment, being an exceptional remedy, is allowed only on grounds of extrinsic fraud or lack of jurisdiction, and when ordinary remedies are no longer available through no fault of the petitioner. The prior filing of a petition for relief did not bar the subsequent petition for annulment, as they were based on different grounds (excusable negligence vs. extrinsic fraud and lack of jurisdiction). The Court found that extrinsic fraud was present, attributable to the NFA’s lawyers (Attys. Mendoza and Cahucom), whose gross negligence in handling the case—failing to present evidence, waiving cross-examination, and not informing the NFA of the adverse decision—deprived the NFA of its day in court. Furthermore, the trial court lacked jurisdiction over the counterclaim because Lasala’s evidence, consisting solely of his self-serving testimony without corroborating documents, was insufficient to establish the exorbitant award of ₱52,788,970.50. The award, being unconscionable and baseless, rendered the judgment a nullity. The Court also clarified that while a compulsory counterclaim does not require payment of docket fees, the trial court’s jurisdiction is contingent on the presentation of competent evidence to support the claim.