G.R. No. 179955, April 24, 2009.
JOSE SY BANG (deceased), ILUMINADA TAN, ZENAIDA SY, REYNALDO SY BANG, JOSE SY BANG, JR., WILSON SY BANG, ROBERT SY BANG, ESTELITA SY, MA. THERESA SY, MARY JANE SY, CARMELO SY BANG, BENEDICT SY BANG, EDWARD SY BANG, ANTHONY SY BANG, EDWIN SY BANG AND MA. EMMA SY, Petitioners, vs. ROSAURO SY (deceased), ENRIQUE SY (deceased) and JULIET SY, Respondents.

FACTS

The case involves a dispute over the estate of the deceased Sy Bang. Petitioners are heirs from Sy Bang’s first marriage, while respondents are heirs from his second marriage. In 1971, Sy Bang died intestate. In 1980, respondents filed a Complaint for Partition (Civil Case No. 8578) against petitioners, resulting in a notice of lis pendens annotated on several certificates of title. The RTC rendered a Third Partial Decision on June 8, 1982, declaring that properties in the names of petitioners belonged to the estate of Sy Bang. This decision was affirmed by the Court of Appeals on May 6, 1993, and an appeal (G.R. No. 114217) remains pending before the Supreme Court.
Subsequently, the annotations of the notice of lis pendens were cancelled. Respondents requested the Register of Deeds of Lucena City to re-annotate the notice on eight specific Transfer Certificates of Title (TCTs) in the names of petitioners. The Register of Deeds denied the request, and the Land Registration Authority (LRA) upheld this denial in a Resolution dated February 3, 1999.
To prevent further interference, petitioners filed a Petition for Quieting of Titles (Civil Case No. 96-81) on June 17, 1996, claiming absolute ownership of the subject lots acquired through their individual efforts. Respondents’ Motion to Dismiss was denied by the RTC, and their subsequent Petition for Certiorari (CA-G.R. SP No. 44043) was dismissed by the Court of Appeals on August 28, 1997.
During the proceedings, petitioner Jose Sy Bang died on September 11, 2001. The RTC ordered petitioners’ counsel, Atty. Eduardo Santos, to submit authority for the substitution of heirs. Without complying, Atty. Santos filed a Manifestation on April 19, 2002, stating that due to Jose Sy Bang’s death, his wife and children decided to move for dismissal, as rulings from the LRA and Court of Appeals provided enough legal protection. A second Manifestation dated May 6, 2002, reiterated this, bearing the signature of petitioner Robert Sy Bang. Treating the first Manifestation as a motion to dismiss, the RTC granted it in an Order dated May 6, 2002, and subsequently dismissed the entire case on June 18, 2002.
On September 23, 2002, petitioners, through new counsel, filed a Petition for Relief, alleging that Atty. Santos filed the dismissal manifestations without their knowledge or consent. They claimed Atty. Santos secured Robert Sy Bang’s signature through misrepresentation and continued to misinform them about the case’s status. The RTC granted the Petition for Relief in an Order dated March 22, 2004, reinstating Civil Case No. 96-81. Respondents appealed to the Court of Appeals, which reversed the RTC’s Order in a Decision dated May 29, 2007, finding no extrinsic fraud to justify relief. The Court of Appeals denied petitioners’ Motion for Reconsideration on September 19, 2007.

ISSUE

Whether the Court of Appeals erred in reversing the RTC’s Order granting the Petition for Relief from the dismissal of Civil Case No. 96-81.

RULING

The Supreme Court denied the petition and affirmed the Decision of the Court of Appeals. The Court held that a Petition for Relief from judgment under Rule 38 of the Rules of Court requires the petitioner to show that the judgment was entered through fraud, accident, mistake, or excusable negligence, and that the petitioner has a meritorious defense. The fraud must be extrinsic or collateral, not intrinsic. Extrinsic fraud refers to any fraudulent act committed outside the trial by which the prevailing party prevented the aggrieved party from presenting their case fully. Intrinsic fraud pertains to matters that were or could have been litigated in the original action.
The Court found that the alleged acts of Atty. Eduardo Santos constituted intrinsic fraud. His actions—filing the dismissal manifestations without proper authority and allegedly misrepresenting the case’s status to his clients—occurred during the proceedings of Civil Case No. 96-81. Petitioners had the opportunity to address these issues within the same case, such as by filing a motion for reconsideration or informing the court of the lack of authority, but they failed to do so. The fraud, if any, was intrinsic as it related to the conduct of the trial and the attorney-client relationship within the pending case.
Furthermore, the Court noted that petitioners failed to exercise due diligence. They did not inquire about the status of their case for over four months after the dismissal, despite being aware of the proceedings and the death of Jose Sy Bang. Their reliance on Atty. Santos’s assurances did not constitute excusable negligence warranting relief.
Thus, the Court of Appeals correctly ruled that no extrinsic fraud justified the Petition for Relief. The dismissal of Civil Case No. 96-81 stood, and the RTC’s Order granting relief was properly reversed.