G.R. No. L-12644; April 29, 1960
KOPPEL (PHILIPPINES) INC., plaintiff-appellee, vs. RUSTICO A. MAGALLANES, in his individual capacity and as Special Administrator of the Estate of Paulino Magallanes, defendant. ANTONIO MAGALLANES, present administrator-appellant.

FACTS

The case was instituted by Koppel (Philippines) Inc. on February 22, 1954. Plaintiff alleged it sold agricultural machinery to Rustico Magallanes, as special administrator of the estate of Paulino Magallanes, for P14,470, with a down payment leaving a balance of P5,770. As security, a chattel and real estate mortgage was executed on November 19, 1952, and registered. After partial payments, a balance of P4,824 remained unpaid. The mortgage deed provided for attorney’s fees of 25% of the indebtedness in case of foreclosure. Plaintiff sought judicial foreclosure of the real estate mortgage and extrajudicial foreclosure of the chattel mortgage. Defendant’s answer admitted the original indebtedness but contested the balance amount, claimed the mortgage was void and usurious, and argued the attorney’s fees were excessive. After trial, on February 24, 1955, a decision was rendered in open court based on an agreement of the parties that defendant’s outstanding obligation was P3,873 (including attorney’s fees), and defendant agreed to a judgment for that amount. The court ordered defendant to deposit the amount within 90 days, failing which the mortgaged lands would be sold. Plaintiff later purchased the lands at auction for P2,500, leaving a deficiency. Plaintiff moved for confirmation of the sale and a deficiency judgment. Meanwhile, Antonio Magallanes replaced Rustico as special administrator. On July 31, 1956, Antonio Magallanes filed an “answer” to plaintiff’s motion, raising defenses including that the mortgage could be reformed due to mistake, that plaintiff could not recover a deficiency after extrajudicial foreclosure of the chattel mortgage, and that the mortgagor was not the absolute owner. The lower court confirmed the sale but denied the motion for a deficiency judgment on January 11, 1957. On February 12, 1957, defendant filed a “Petition for Relief from Judgment and Order,” alleging the 1955 judgment was entered through extrinsic fraud and asserting several defenses. This petition was denied on March 2, 1957, prompting the appeal.

ISSUE

Whether the lower court correctly denied the defendant’s “Petition for Relief from Judgment and Order” filed on February 12, 1957, seeking to set aside the judgment of February 24, 1955, and the order of January 11, 1957.

RULING

Yes, the lower court correctly denied the petition. The petition for relief under Rule 38 of the Rules of Court must be filed within sixty (60) days after the petitioner learns of the judgment and not more than six (6) months after such judgment was entered. Here, the judgment was rendered on February 24, 1955, and the petition was filed on February 12, 1957, almost two years later, well beyond the six-month reglementary period. The judgment was rendered in open court upon an agreement made by both parties present, so they had knowledge of it since its promulgation. The petition, therefore, cannot be entertained as it was filed out of time. The appellant’s argument that the petition was filed within sixty days from knowledge of the 1957 order is unavailing because that order was a necessary consequence of the 1955 judgment and no fraud, accident, mistake, or excusable negligence was claimed specifically to warrant relief from that order. The alternative argument that the action is one for annulment of judgment based on extrinsic fraud, with a four-year prescriptive period, is inapplicable. Such an action for annulment must be a separate, independent action, not a petition in the original case. Moreover, the alleged flaws (e.g., registration issues, usury, mistake in the agreement, ownership of the property, recovery of deficiency) constitute, at best, intrinsic fraud—not extrinsic fraud—which is not a ground for relief under Rule 38 but could only be reviewed on appeal. The order appealed from is affirmed.