G.R. No. 251669, December 7, 2021
Spouses Marcelo G. Flores and Medelyn Flores, Petitioners, vs. Spouses Leopoldo A. Estrellado and Enriqueta Estrellado, Bede Tabalingcos, Atty. Cres Dan D. Bangoy, Atty. Raymond Caraos, and Atty. Socrates Rivera, Respondents.

FACTS

Petitioners Spouses Flores contracted loans from respondent Spouses Estrellado, secured by a mortgage on their property. They engaged the services of Bede Tabalingcos, who filed a complaint to nullify the loan documents and foreclosure proceedings (SP 6569(09)). Unknown to petitioners, Tabalingcos had been disbarred on July 10, 2012. On December 12, 2012, Tabalingcos withdrew as counsel, and Atty. Cres Dan D. Bangoy entered an appearance as petitioners’ new lawyer, but petitioners never engaged Bangoy’s services. Tabalingcos continued to act as their counsel, receive fees, and assure them of representation. Pleadings were filed on petitioners’ behalf by Bangoy and later by a stranger, Atty. Raymond Caraos. The trial court dismissed the complaint via a Joint Decision dated December 16, 2013. A motion for reconsideration, signed by a certain Socrates R. Rivera, was denied. A notice of appeal, also signed by Rivera, was filed. The appeal (CA GR CV No. 102852) was dismissed for failure to file the appellants’ brief. Tabalingcos promised further action, and a motion for extension was filed in the Supreme Court (G.R. No. 222917) under Rivera’s name. The Supreme Court denied the appeal. Petitioners later discovered Rivera had no knowledge of their case and his signatures were forged. Rivera then deceitfully filed a new complaint with the Court of Appeals. Petitioners filed a Petition for Annulment of Judgment before the Court of Appeals (CA GR SP No. 159899), alleging extrinsic fraud due to Tabalingcos’s unauthorized representation using disbarred status and forged signatures of other lawyers. The Court of Appeals dismissed the petition outright via a Resolution dated April 26, 2019, ruling the judgments had lapsed into finality due to petitioners’ negligence. Their motion for reconsideration was denied on January 28, 2020.

ISSUE

Whether the Court of Appeals erred in outrightly dismissing the Petition for Annulment of Judgment.

RULING

Yes. The Supreme Court granted the petition, reversed the Court of Appeals’ Resolutions, and reinstated the Petition for Annulment of Judgment for further proceedings. The Court held that the outright dismissal was improper because the allegations in the petition, if true, constituted extrinsic fraud warranting an annulment of judgment. Extrinsic fraud refers to any fraudulent act of the prevailing party committed outside of the trial, which prevented the aggrieved party from having a fair submission of their case. Here, petitioners alleged that their former counsel, Tabalingcos, a disbarred lawyer, fraudulently continued to represent them by causing other lawyers to file pleadings without their knowledge and consent, and by forging signatures. This deceit prevented petitioners from properly pursuing their case and appeals. The negligence of a disbarred lawyer who fraudulently continues to practice cannot be binding on the client. The allegations required a full-blown hearing to determine their veracity. The case was remanded to the Court of Appeals to give petitioners the opportunity to prove their allegations of extrinsic fraud.