Lasala v. National Food Authority
REITERATIONFacts
The Antecedents: Alberto T. Lasala, doing business as PSF Security Agency, provided security services to the National Food Authority (NFA). Employees of Lasala deployed to the NFA filed a complaint for underpayment of wages and non-payment of benefits with the National Labor Relations Commission (NLRC). The NLRC found Lasala and the NFA solidarily liable and ordered payment of monetary awards. Consequently, the NFA's bank deposits were garnished. Believing it was not liable, the NFA filed a complaint for sum of money with damages and sought a writ of preliminary attachment against Lasala. Procedural History: Lasala filed a counterclaim against the NFA, seeking substantial moral, exemplary, compensatory damages, attorney's fees, and unpaid wage differentials. While the NFA's complaint was eventually dismissed due to its counsel's repeated absences, Lasala's counterclaim proceeded. The NFA's subsequent counsel, Atty. Cahucom, failed to present evidence or cross-examine Lasala's witnesses. The Regional Trial Court (RTC) granted Lasala's counterclaim, awarding P52,788,970.50, a sum significantly exceeding Lasala's original prayer. The NFA, having failed to appeal due to Atty. Cahucom's alleged non-notification, filed a petition for relief from judgment, which the RTC denied. Subsequently, the NFA filed a petition for annulment of judgment with the Court of Appeals (CA), alleging lack of jurisdiction and extrinsic fraud. The Petition: Lasala petitions this Court for review on certiorari, challenging the CA's decision annulling the RTC's judgment. Lasala argues that the NFA's prior petition for relief bars the subsequent petition for annulment due to res judicata. He also contends that the NFA waived the ground of extrinsic fraud by not raising it in the petition for relief and that grave abuse of discretion is not a valid ground for annulment. Lasala further asserts that the RTC had jurisdiction over his counterclaim, as it was compulsory and did not require docket fees. The NFA, conversely, argues that res judicata does not apply as the grounds for the two petitions were different. It maintains that extrinsic fraud was committed by its former counsels who mishandled the case, leading to the dismissal of the NFA's complaint and the failure to appeal the adverse judgment. The NFA also argues that the RTC lacked jurisdiction over Lasala's wage adjustment counterclaim because it was permissive and lacked the required docket fees, and that this counterclaim had also prescribed.
Issue(s)
Whether the prior filing of a petition for relief bars the filing of a petition for annulment of judgment due to res judicata. Whether the NFA waived the ground of extrinsic fraud by failing to raise it in its petition for relief. Whether the trial court lacked jurisdiction over Lasala's counterclaim for wage adjustment due to non-payment of docket fees. Whether the actions of the NFA's former counsels constituted extrinsic fraud. Whether Lasala's counterclaim for wage adjustment had prescribed.
Ruling
The Supreme Court DENIED the petition for lack of merit and AFFIRMED the decision of the Court of Appeals, which annulled and set aside the decision of the Regional Trial Court.
Ratio Decidendi
On the issue of res judicata and the prior petition for relief: The Court held that the prior filing of a petition for relief does not per se bar a petition for annulment of judgment. While there was an identity of parties, there was no identity of subject matter and cause of action between the petition for relief (grounded on excusable negligence) and the petition for annulment (grounded on extrinsic fraud and lack of jurisdiction). The evidence required for each petition was different, thus res judicata did not apply. On the issue of waiver of extrinsic fraud: The Court ruled that the NFA did not waive its right to raise extrinsic fraud. The petition for relief was drafted by Atty. Cahucom, one of the counsels whose actions were being questioned. It was not expected that he would raise his own negligence as a ground for relief. Furthermore, the NFA's management only discovered the extent of the mishandling of the case during a legal audit in 2002, which was after the petition for relief was filed. Thus, the prohibition under Section 2, Rule 47 of the Rules of Court, which states that extrinsic fraud cannot be a ground if it could have been availed of in a petition for relief, did not apply. On the issue of lack of jurisdiction over the counterclaim: The Court found that Lasala's counterclaim for wage adjustment was a permissive, not a compulsory, counterclaim. The cause of action for wage adjustment arose from a separate contract and predated the NFA's complaint. As a permissive counterclaim, it required the payment of docket fees. Lasala's failure to pay docket fees for this claim meant that the trial court never acquired jurisdiction over it. The Court noted that the claim, with compounded interest, constituted a significant portion of the award. On the issue of extrinsic fraud: The Court found that the gross negligence of Attys. Mendoza and Cahucom amounted to extrinsic fraud. Atty. Mendoza repeatedly failed to attend hearings, leading to the dismissal of the NFA's complaint. Atty. Cahucom failed to present controverting evidence and did not appeal the adverse decision. Their actions, characterized as unconscionable and amounting to a deliberate disregard for the NFA's interests, were deemed to be in concert with Lasala, preventing the NFA from presenting its case fairly. This constituted extrinsic fraud, as defined in jurisprudence, where a lawyer connives at his client's defeat. On the issue of prescription of the counterclaim: While the annulment of the judgment on the grounds of lack of jurisdiction and extrinsic fraud was proper, the Court clarified that Lasala's permissive counterclaim had already prescribed. Under Section 8, Rule 47, the prescriptive period for refiling an annulled action is not suspended when the extrinsic fraud is attributable to the plaintiff in the original action. In this case, the extrinsic fraud was attributable to the NFA's counsels, who were acting on behalf of the NFA. Therefore, the prescriptive period for Lasala's counterclaim was not tolled, and it could no longer be refiled.
Main Doctrine
A petition for annulment of judgment may be granted on the grounds of extrinsic fraud or lack of jurisdiction. Gross negligence of counsel may amount to extrinsic fraud if it is unconscionable and amounts to collusion with the opposing party. A counterclaim for wage adjustment that arises from a separate contract and predates the plaintiff's complaint is permissive and requires payment of docket fees; failure to pay such fees results in the court's lack of jurisdiction over the counterclaim.