G.R. No. 219978 . February 13, 2023
TERESITA R. GABUCAN, EUSEBIA R. ARNAN, RAFAEL S. RALLOS, EMMANUEL S. RALLOS, RAMON S. RALLOS, RENATO S. RALLOS, VICENTE R. SY, SARAH S. PO, HERMENIGILDA S. YBAÑEZ, CLETA R. NAVARES, VICENTE B. RALLOS, NESTOR B. RALLOS, ELENA R. ROJAS, LYDIA B. RALLOS, CECILIA R. TARRIMAN, MAGDALENO B. RALLOS, LAMBERTO R. RALLOS, JR., CARINA B. RALLOS, THERESA B. RALLOS, AND MAURILLO B. RALLOS, PETITIONERS, VS. HONORABLE COURT OF APPEALS FORMER SPECIAL EIGHTEENTH (18TH) DIVISION AND CEBU CITY, CORAZON R. NIEVES, EVANGELINA R. SANTOS, AMADO R. SY, EDUARDO R. SY, CARMELINO R. ADARNA, CONSUELO ADARNA, AND VICTORIA ADARNA, RESPONDENTS.

FACTS

This case originated from a 1997 Complaint filed by petitioners against Cebu City for forfeiture of improvements concerning Lot Nos. 485-D and 485-E. The RTC treated it as an expropriation case. On January 14, 2000, the RTC rendered the Expropriation Decision, finding petitioners as owners and ordering the City to pay just compensation. On July 24, 2001, the RTC issued the Just Compensation Decision, ordering the City to pay PHP 34,905,000.00 plus 12% interest. The RTC granted execution pending appeal (EPA Order). The City’s funds were garnished. The City’s Petition for Certiorari assailing the EPA Order was dismissed by the CA, which dismissal became final.
Both parties moved for reconsideration of the Just Compensation Decision. On March 21, 2002, the RTC issued a Consolidated Order (Modified Award), increasing the compensation. The City appealed to the CA, also assailing the Expropriation Decision. On May 29, 2007, the CA denied the City’s appeal and affirmed the Expropriation and Just Compensation Decisions and the Modified Award, noting the City failed to perfect its appeal. The CA denied reconsideration. The City’s appeal to the Supreme Court was dismissed, and an Entry of Judgment was issued on April 21, 2008.
Petitioners moved for execution. The RTC issued orders for execution, leading to garnishment of City funds. The City then filed motions to quash based on an alleged 1940 “convenio” (agreement) which it claimed bestowed ownership of the lots upon the City. The RTC denied these motions, finding the convenio was not a supervening event and was in existence since 1940 but was not presented during litigation.
Without awaiting resolution of its motion for reconsideration, the City filed a Petition for Annulment of Final Decisions and Orders before the CA, seeking to annul the Expropriation and Just Compensation Decisions and the Modified Award, grounded on the alleged fraudulent concealment of the convenio by petitioners. The CA granted a TRO and later a writ of preliminary injunction. Petitioners filed a Motion to Dismiss the Petition for Annulment and an ad cautelam Answer. The CA, in its First Assailed Resolution (July 16, 2012), denied the Motion to Dismiss and admitted it as petitioners’ Answer. In its Second Assailed Resolution (July 20, 2015), the CA denied petitioners’ Motion for Reconsideration. Petitioners then filed the present Petition for Certiorari, Prohibition, and Mandamus under Rule 65.

ISSUE

Whether the Court of Appeals committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the assailed Resolutions which denied petitioners’ Motion to Dismiss and admitted the same as their Answer to the City’s Petition for Annulment.

RULING

Yes, the Court of Appeals committed grave abuse of discretion. The Supreme Court GRANTED the petition, REVERSED the assailed Resolutions of the Court of Appeals, and DISMISSED the City’s Petition for Annulment.
The Supreme Court held that a petition for annulment of judgment under Rule 47 of the Rules of Court is not an alternative to a timely appeal or a substitute for a lost remedy. It is an extraordinary remedy available only on the grounds of extrinsic fraud or lack of jurisdiction. The City’s Petition for Annulment before the CA was fatally defective. First, it was filed out of time. Under the Rules, it must be filed within four years from its discovery of the extrinsic fraud. The City alleged it discovered the convenio in 2011, but it filed the petition only in 2012, which was beyond the reglementary period as the four-year period should be counted from the finality of the judgment sought to be annulled (April 21, 2008), not from the alleged discovery. Second, the alleged ground—fraudulent concealment of the convenio—constituted intrinsic fraud, not extrinsic fraud. Extrinsic fraud refers to acts which prevent a party from having a trial or presenting their case. The convenio was a document that could have been presented during the original expropriation proceedings. The City’s failure to present it then was due to its own negligence, not due to any act of the petitioners that prevented its presentation. The City had ample opportunity to raise the convenio during the long litigation but failed to do so. Therefore, the CA should have dismissed the Petition for Annulment outright. By proceeding with the case and denying the Motion to Dismiss, the CA acted in a capricious and whimsical manner, amounting to grave abuse of discretion.