Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Regional Trial Court, Marikina City, Branch 193
REITERATIONFacts
The Antecedents: Investco, Inc. entered into a contract to sell properties to Solid Homes, Inc. Due to Solid Homes' default, Investco sued for specific performance. Investco later sold the properties to AFP Mutual Benefit Association, Inc. (AFPMBAI), which obtained new titles after full payment. Solid Homes filed an action against the Register of Deeds, AFPMBAI, and Investco for annotation of lis pendens and damages. This Court, in prior related cases, directed the cancellation of Solid Homes' notice of lis pendens and declared AFPMBAI a buyer in good faith and for value. Procedural History: On August 26, 2003, Solid Homes filed another action to cancel AFPMBAI's titles. The Regional Trial Court (RTC) of Marikina City, Branch 193, dismissed this complaint on January 23, 2004, on the ground of res judicata. Solid Homes' motions for reconsideration were denied. Subsequently, Solid Homes filed a petition for relief from judgment, alleging extrinsic fraud by Investco and AFPMBAI in the proceedings that led to the prior adverse judgment. This fraud allegedly consisted of AFPMBAI's failure to disclose knowledge of a prior sale between Investco and Solid Homes. Solid Homes also caused the annotation of notices of lis pendens on AFPMBAI's titles based on this petition. On July 18, 2008, the RTC issued an order giving due course to Solid Homes' petition for relief. The Petition: AFPMBAI filed a petition for prohibition and mandamus with the Supreme Court, assailing the RTC's July 18, 2008 order. AFPMBAI argued that the RTC gravely abused its discretion in giving due course to Solid Homes' petition for relief on grounds including untimeliness, lack of affidavit of merit, the nature of the alleged fraud not being extrinsic, the issue being barred by res judicata, and the improper annotation of lis pendens.
Issue(s)
Whether or not the petition is technically deficient as Solid Homes points out, justifying its outright dismissal. Whether or not Solid Homes filed its petition for relief from judgment with the RTC beyond the period allowed by the rules. Whether or not such petition include an appropriate affidavit of merit that shows the supposed fraud, accident, mistake, and excusable negligence Solid Homes relied on. Whether or not the fraud that Solid Homes invoked as ground for its petition for relief—AFPMBAI’s alleged fraud in acquiring the subject property—is the fraud contemplated by the rules. Whether or not the RTC’s grant of Solid Homes’ petition for relief based on AFPMBAI’s alleged fraud in acquiring its titles to the subject property is barred by res judicata. Whether or not the annotation of a notice of lis pendens is allowed in connection with a pending petition for relief from judgment.
Ruling
The Supreme Court GRANTED the petition, ORDERED the permanent dismissal of Civil Case 2003-901-MK of the Regional Trial Court of Marikina City, Branch 193, SET ASIDE the order dated July 18, 2008, MADE PERMANENT the temporary restraining order issued on August 27, 2008, and ORDERED the Register of Deeds of Marikina City to cancel Solid Homes’ notices of lis pendens.
Ratio Decidendi
On the technical deficiencies raised by Solid Homes: The Court found that AFPMBAI's failure to file a motion for reconsideration was excused because the petition raised pure questions of law and the questioned order was a patent nullity. The direct recourse to the Supreme Court was justified as it involved questions of law. While mandamus might be inappropriate, prohibition was a correct remedy to prevent the RTC from acting in excess of jurisdiction. The alleged lack of affidavit of service was found to be present in the records, and the defective jurat was cured by an amended verification. On the timeliness of the petition for relief: The Court agreed with AFPMBAI that Solid Homes filed its petition for relief beyond the period allowed by the rules. Section 3, Rule 38 of the Rules of Civil Procedure requires filing within 60 days from notice of judgment or six months from entry. The RTC's order denying Solid Homes' original motion for reconsideration was issued on April 21, 2004. Solid Homes filed its petition for relief on February 14, 2005, nearly 10 months later, after the order of dismissal had long become final and executory. The period could not be counted from the denial of the second motion for reconsideration, as it was a prohibited pleading. On the affidavit of merit: The Court could not make a determination regarding the alleged defectiveness of Solid Homes' affidavit of merit because AFPMBAI, despite attaching Solid Homes' petition for relief, did not include a copy of the affidavit of merit itself. On the nature of the alleged fraud: The Court clarified that extrinsic fraud, which justifies a petition for relief from judgment, is fraud that prevented the losing party from being heard on their action or defense. It concerns the manner in which the judgment was obtained, not the judgment itself. The fraud alleged by Solid Homes—Investco and AFPMBAI's prior knowledge of the sale to Solid Homes—went into the merits of the case, specifically the issue of whether AFPMBAI was a buyer in good faith. This was not the type of fraud contemplated by the rules for a petition for relief. On res judicata: The Court held that the RTC's grant of Solid Homes' petition for relief was barred by res judicata. The issue of whether AFPMBAI was a buyer in good faith had already been decided with finality by the Supreme Court in previous cases (G.R. 104769 and G.R. 135016). The principle of res judicata prohibits the relitigation of issues actually and directly resolved in a former suit between the same parties. On the annotation of notice of lis pendens: Given the rulings on the petition for relief being time-barred and the alleged fraud not being extrinsic, the Court concluded that Solid Homes was not entitled to notices of lis pendens in connection with its petition.
Main Doctrine
A petition for relief from judgment based on extrinsic fraud must be filed within the reglementary periods and must be accompanied by an affidavit of merit. Fraud that goes into the merits of the case, rather than preventing a party from being heard, does not constitute extrinsic fraud justifying a petition for relief and may be barred by res judicata.