Gochan v. Mancao
REITERATIONFacts
The Antecedents: Felix Gochan, Amparo Alo, and Jose A. Cabellon were co-owners of Lot Nos. 1028 and 1030. Petitioners are successors-in-interest of Gochan. Respondent Charles Mancao is a buyer of certain lots from the heirs of Angustias Velez and Eduardo Palacios, who in turn acquired lots from Alo. In 1998, petitioners filed a case for legal redemption of specific lots against the spouses Bonifacio Paray, Jr. and Alvira Paray, who had purchased these lots from the heirs of Alo. A compromise agreement was reached, wherein the Spouses Paray conveyed their interests in the properties to the petitioners and Mae Gochan for Php650,000.00. The Regional Trial Court (RTC) approved this agreement and rendered judgment accordingly. Procedural History: Respondent Mancao filed a suit before the Court of Appeals (CA) seeking the annulment of the RTC's judgment based on the compromise agreement and its registration. Mancao claimed that the redeemed lots were road lots, essential for the subdivision's access, and thus beyond the commerce of men. He argued that the compromise agreement and the subsequent judgment were void ab initio because they appropriated these public road lots. The CA, in its Decision dated June 28, 2007, and Resolution dated March 10, 2008, annulled and set aside the RTC's judgment and the compromise agreement, declaring their registration null and void. The CA found that the petitioners had committed extrinsic fraud by preventing Mancao and other lot owners from participating in the proceedings. The Petition: Petitioners, Virginia Y. Gochan, et al., seek certiorari under Rule 45 of the Rules of Civil Procedure to assail the CA's decision and resolution. They argue that the CA erred in finding extrinsic fraud, in assuming the lots were within a residential subdivision, and in applying certain laws and jurisprudence. Petitioners contend that respondent Mancao was not an indispensable party to the legal redemption case and that his allegations of fraud were not sufficiently substantiated. They assert that an action to annul a judgment is an extraordinary remedy not to be granted indiscriminately and that Mancao had other adequate remedies to address his claims regarding the nature of the lots and his alleged right of way.
Issue(s)
Whether the Court of Appeals erred in finding that extrinsic fraud was present when the respondent was not impleaded in the legal redemption case and when petitioners entered into a compromise agreement with the Spouses Paray. Whether the Court of Appeals erred in assuming that the road lots are within a residential subdivision and in applying the ruling in White Plains Association, Inc. v. Legaspi and PD 957 and PD 1216. Whether the respondent had other adequate legal remedies to assert his claims regarding the nature of the lots and his alleged rights, such as filing a direct action to question the titles or an easement case, making the action for annulment of judgment improper and premature.
Ruling
The Supreme Court granted the petition, reversed, and set aside the decision and resolution of the Court of Appeals. The Court reinstated the judgment based on the compromise agreement dated November 27, 1998, of the Regional Trial Court, Branch 17, Cebu City.
Ratio Decidendi
On the issue of extrinsic fraud: The Court held that the respondent failed to prove extrinsic fraud. The mere fact that the respondent was not impleaded in the legal redemption case (Civil Case No. CEB-22825) does not automatically constitute extrinsic fraud. Legal redemption under Article 1620 of the Civil Code primarily involves the redeeming co-owner and the buyer, with the seller/co-owner not being an indispensable party. Consequently, a third person alleging prejudice, like the respondent, would have even less standing to demand impleader. Furthermore, the respondent did not present sufficient evidence of any specific trick, artifice, or device employed by the petitioners that prevented him from presenting his case or that caused the petitioners to prevail through deception. The respondent's claim that the lots were road lots and thus beyond the commerce of men was an issue that could have been fully litigated in a proper proceeding, not through an action to annul a judgment based on extrinsic fraud. On the nature of the lots and applicable laws: The Court found that the respondent's arguments regarding the lots being road lots, beyond the commerce of men, and the applicability of PD 957 and PD 1216, were matters that should have been raised and threshed out in a full-blown trial, such as a direct attack on the certificates of title, an easement case, or another pending civil case. These issues were not proper for a petition to annul a judgment, which is an extraordinary remedy limited to grounds of extrinsic fraud or lack of jurisdiction. The respondent's assertion that the compromise agreement was void ab initio due to the nature of the lots did not automatically equate to extrinsic fraud that would warrant the annulment of a final judgment. On the availability of other remedies: The Court emphasized that an action to annul a final judgment under Rule 47 of the Rules of Civil Procedure is an extraordinary remedy available only when ordinary remedies like new trial, appeal, or petition for relief are no longer available through no fault of the petitioner. In this case, the respondent had other adequate legal remedies to assert his claims regarding the nature of the lots and his alleged rights, such as filing a direct action to question the titles or an easement case. Resorting to an action for annulment of judgment was therefore improper and premature, as it would circumvent the principle of finality of judgments and the orderly administration of justice. The Court reiterated that litigation must end, and final judgments must be given repose, unless the exceptional grounds for annulment are strictly met and proven.
Main Doctrine
The Court of Appeals erred in annulling the judgment based on a compromise agreement on the ground of extrinsic fraud, as the respondent failed to prove that the petitioners' actions prevented him from presenting his case or that there was a scheme to deprive him of his day in court. Furthermore, an action to annul a final judgment is an extraordinary remedy and not the proper recourse when other adequate legal remedies are available.