Civ Pro – Rule 47 Cases

ISLAMIC DA'WAH COUNCIL OF THE PHILIPPINES VS. CA AND THE HEIRS of JESUS AMADO ARANETA GR
NO. 80892 September 29, 1989

Facts: On Feb. 15, 1984, Freddie and Marconi Da Silva, as mortgagors, and Islamic Da'Wah, as
mortgagee, executed a real estate mortgage over a parcel of land in Cubao, Quezon City as security for
the payment of a one million peso promissory note in favor of the mortgagee. The mortgagors were
unable to pay their obligation, hence, the Council instituted foreclosure proceedings.

The parties entered into a compromise agreement wherein the mortgaged property will be transferred
to the Council. This agreement was approved by the RTC thus, a TCT was issued in the name of the
council by the Register of Deeds.

Thereafter, Jesus Amado Araneta filed an affidavit of adverse claim in connection with Civil Case No. Q-
43469 entitled "Marconi Da Silva, et al. v. Jesus Amado Araneta, et al." for recovery of possession.
(annotated at the back)

This was opposed by the Council by filing a complaint for Quieting of Title against Araneta. While this
case was pending, the heirs of Jesus Amado Araneta filed with CA a petition to annul the judgment in
Civil Case No. Q-43746 for foreclosure. They claimed that the lot in question was purchased by Araneta
from Spouses Garcia in 1953 and had been in possession thereof, that for some reason known only to
Araneta and Fred Da Silva,an employee of the former, title to the property was entrusted to Sps. Silva.
The parties already decided to terminate the trust so Da Silva executed a deed of sale in favor of Araneta
but no consideration was given. The Register of Deeds, however, refused to register the deed of sale
because the title is in the name of "Fred Da Silva married to Leocadia Da Silva" and is thus presumed
conjugal and the conjugal partnership should first be liquidated as the wife had already died. An alleging
that their copy was lost, Freddie and Marconi Da Silva, children of Fred Da Silva filed a petition for the
issuance of new copy of the owner’s duplicate of the TCT. They also claimed that the Da Silvas, with
connivance of the Council, executed a promissory note secured by a real estate mortgage the terms and
conditions of which were made very onerous as to pave the way for the foreclosure by virtue of a
confession of judgment; and, the Council had always known of the Araneta's claim of ownership over
the land.

Issue: WON CA erred in hearing the petition for annulment of judgment since it is already fully executed.

WON the heirs of Araneta have the right to question the validity of the judgment in the foreclosure since
they were not parties to said case

Held: 1. ( Rule 65 certiorari daw yung petition so titignan lang ng SC kung may grave abuse of discretion
yung CA)The Council contends that a Regional Trial Court has the authority and jurisdiction to annul a
judgment of another Regional Trial Court, a coordinate or co-equal court Specifically, petitioner alleges
that the filing of a separate action for annulment of judgment is unnecessary because the Regional Trial
Court hearing the Quieting of Title can annul the judgment for Foreclosure rendered by another RTC.

Annulment of judgment is a remedy in law independent of the case where the judgment sought to be
annulled was rendered. The judgment may be annulled on the ground of extrinsic or collateral fraud.
Jurisdiction over actions for annulment of Regional Trial Court judgment has been clarified by Batas
Pambansa Blg. 129. Sec. 9. Jurisdiction. -The Court of Appeals shall exercise: ...

(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional Trial Courts; Thus,
it is beyond dispute that it is only the Court of Appeals that can take cognizance of the annulment of
judgment rendered by the Regional Trial Court.

2. The next issue raised in this petition deals with the question of who may properly institute a petition
for annulment of judgment. It is petitioner's contention that the remedy is available only to one who is a
party to the case where the judgment sought to be annulled is rendered. In fine, the question deals with
whether or not the heirs of Araneta have a cause of action against the Council.

The view that an action or annulment of judgment can be availed of only by those principally or
secondarily bound is contrary to what had been so clearly declared by this Court in the leading case of
Anuran v. Aquino decided in 1918. "There can be no question as to the right of any persons adversely
affected by a judgement to maintain an action to enjoin its enforcement and to have it declared a nullity
on the ground of fraud and collusion practiced in the very matter of obtaining the judgment when such
fraud is extrinsic or collateral to the matters involved in the issues raised at the trial which resulted in
such judgment.”

It is therefore clear from the foregoing that a person need not be a party to the judgment sought to be
annulled. What is essential is that he can prove his allegation that the judgment was obtained by the use
of fraud and collusion and he would be adversely affected thereby.

In this present case it is true that the heirs of Araneta are not parties to the foreclosure case. Neither are
they principally nor secondarily bound by the judgment rendered therein. However. their petition filed
with the Court of Appeals they alleged fraud and connivance perpetuated by and between the Da Silvas
and the Council as would adversely affect them. This allegation, if fully substantiated by preponderance
of evidence, could be the basis for the annulment of judgment.

Finally, the Council asserts that the remedy of annulment of judgment applies only to final and
executory judgment and not to that which had already been fully executed or implemented. he Council's
contention is devoid of merit. In Garchitorena u. Sotelo, supra, the Court affirmed the trial court's
annulment of the judgment on foreclosure notwithstanding the fact that ownership of the house and lot
subject of the mortgage had passed from the mortgagee who foreclosed the mortgage and purchased
the property at public auction to a person who bought the same and finally to another individual in
whose name the Torrens certificate of title stood by the time the case reached this Tribunal.

In view of the foregoing the Court finds that the Court of Appeals neither acted without jurisdiction nor
committed grave abuse of discretion in giving due course to the petition for annulment of judgment as
would warrant the issuance of the extraordinary writ of certiorari in this case.
STRATEGIC ALLIANCE DEV’T CORP. VS. RADSTOCK SECURITIES LIMITED and PHIL. NATIONAL
CONSTRUCTION CORP. GR. No. 178158 Dec. 4, 2009

Facts: PNCC was incorporated in 1966 for a term of fifty years under the Corporation Code with the
name Construction Development Corporation of the Philippines (CDCP). It was granted a 30-year
franchise to construct, operate and maintain toll facilities in the North and South Luzon Tollways.

The Basay Mining Corp, an affiliate of CDCP, obtained loans from from Marubeni Corporation of Japan. A
CDCP official issued letters of guarantee for the loans. However, there was no CDCP Board Resolution
authorizing the issuance of the letters of guarantee. Later, Basay Mining changed its name to CDCP
Mining Corporation (CDCP Mining). CDCP Mining secured the Marubeni loans when CDCP and CDCP
Mining were still privately owned and managed.

In 1983, CDCP’s name was changed to Philippine National Construction Corporation (PNCC) in order to
reflect that the Government already owned 90.3% of PNCC and only 9.70% is under private ownership.
Meanwhile, the Marubeni loans to CDCP Mining remained unpaid.

On 20 October 2000 and 22 November 2000, the PNCC Board of Directors (PNCC Board) passed Board
Resolutions admitting PNCC’s liability to Marubeni. Previously, for two decades the PNCC Board
consistently refused to admit any liability for the Marubeni loans.

In January 2001, Marubeni assigned its entire credit to Radstock Securities Limited (Radstock), a foreign
corporation. Radstock immediately sent a notice and demand letter to PNCC. Radstock filed an action
for collection and damages against PNCC. Trial court ruled in favor of Radstock. On appeal, CA reversed
the decision of trial court.

PNCC and Radstock entered into a Compromise Agreement. Under this agreement, PNCC shall pay
Radstock the reduced amount of P6,185,000,000.00 in full settlement of PNCC’s guarantee of CDCP
Mining’s debt allegedly totaling P17,040,843,968.00 (judgment debt as of 31 July 2006). To satisfy its
reduced obligation, PNCC undertakes to (1) "assign to a third party assignee to be designated by
Radstock all its rights and interests" to the listed real properties of PNCC; (2) issue to Radstock or its
assignee common shares of the capital stock of PNCC issued at par value which shall comprise 20% of
the outstanding capital stock of PNCC; and (3) assign to Radstock or its assignee 50% of PNCC’s 6%
share, for the next 27 years, in the gross toll revenues of the Manila North Tollways Corporation. CA
approved the compromise agreement.

Strategic Alliance Development Corporation (STRADEC) moved for reconsideration. STRADEC alleged
that it has a claim against PNCC as a bidder of the National Government’s shares, receivables, securities
and interests in PNCC.

Meanwhile, Sison, also a stockholder and former PNCC President and Board Chairman, filed a Petition
for Annulment of Judgment Approving Compromise Agreement before the Court of Appeals. CA
dismissed Sison’s petition on the ground that it had no jurisdiction to annul a final and executory
judgment also rendered by the Court of Appeals.

Issue: WON Sison has a legal standing

Held: Section 2, Rule 19 of the 1997 Rules of Civil Procedure provides: SECTION 2. Time to intervene.–
The motion to intervene may be filed at any time before rendition of judgment by the trial court. A copy
of the pleading-in-intervention shall be attached to the motion and served on the original parties.

The rule is not absolute. The rule on intervention, like all other rules of procedure, is intended to make
the powers of the Court completely available for justice.

Sison has legal standing to challenge the Compromise Agreement. Although there was no allegation that
Sison filed the case as a derivative suit in the name of PNCC, it could be fairly deduced that Sison was
assailing the Compromise Agreement as a stockholder of PNCC. In such a situation, a stockholder of
PNCC can sue on behalf of PNCC to annul the Compromise Agreement.

In this case, the PNCC Board cannot conceivably be expected to attack the validity of the Compromise
Agreement since the PNCC Board itself approved the Compromise Agreement. In fact, the PNCC Board
steadfastly defends the Compromise Agreement for allegedly being advantageous to PNCC.

Besides, the circumstances in this case are peculiar. Sison, as former PNCC President and Chairman of
the PNCC Board, was responsible for the approval of the Board Resolution issued on 19 June 2001
revoking the previous Board Resolution admitting PNCC’s liability for the Marubeni loans. Such
revocation, however, came after Radstock had filed an action for collection and damages against PNCC
on 15 January 2001. Then, when the trial court rendered its decision on 10 December 2002 in favor of
Radstock, Sison was no longer the PNCC President and Chairman, although he remains a stockholder of
PNCC.

When the case was on appeal before the Court of Appeals, there was no need for Sison to avail of any
remedy, until PNCC and Radstock entered into the Compromise Agreement, which disposed of all or
substantially all of PNCC’s assets. Sison came to know of the Compromise Agreement only in December
2006. PNCC and Radstock submitted the Compromise Agreement to the Court of Appeals for approval
on 10 January 2007. The Court of Appeals approved the Compromise Agreement on 25 January 2007. To
require Sison at this stage to exhaust all the remedies within the corporation will render such remedies
useless as the Compromise Agreement had already been approved by the Court of Appeals. PNCC’s
assets are in danger of being dissipated in favor of a private foreign corporation. Thus, Sison had no
recourse but to avail of an extraordinary remedy to protect PNCC’s assets.

Besides, in the interest of substantial justice and for compelling reasons, such as the nature and
importance of the issues raised in this case, this Court must take cognizance of Sison’s action.
FRAGINAL VS HEIRS OF TORIBIA BELMONTE PARAAL GR NO. 150207 Feb. 23, 2007

Facts: The heirs of Toribia Belmonte Paraal filed filed with the Office of the Provincial Agrarian Reform
Adjudicator (PARAD) of the Department of Agrarian Reform Adjudication Board (DARAB), Camarines
Sur, a Complaint for Termination of Tenancy Relationship, Ejectment, and Collection of Arrear Rentals
and Damages, against the Fraginals.

In their answer, the Fraginals questioning the jurisdiction of the PARAD on the ground that they are not
tenants of the Heirs of Toribia Paraal, for the land they are tilling is a public agricultural land within the
exclusive jurisdiction of the DENR. The PARAD issued a decision ordering the ejectment of the Fraginals.

Two years from issuance of the PARAD decision, the Fraginals filed with the CA a Petition for Annulment
of Judgment. They insisted that the PARAD Decision is void as it was issued without jurisdiction. CA
dismissed the petition stating that, A petition for annulment of judgment under Rule 47 of the Revised
Rules of Court may be availed of to have judgments or final orders and resolutions in civil actions of
Regional Trial Courts annulled. Also, Rule 47 requires that recourse thereto may be had only when the
ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer
available through no fault of the petitioner.

Issue: WON CA erred in holding that Rule 47 of the Rules of Court pertains only to judgment or final
orders and resolutions in civil actions of the RTC.

Held: No. The remedy of annulment of judgment is extraordinary in character, and will not so easily and
readily lend itself to abuse by parties aggrieved by final judgments. Sections 1 and 2 of Rule 47 impose
strict conditions for recourse to it,

Section 1. Coverage.- This Rule shall govern the annulment by the Court of Appeals of judgments or final
orders and resolutions in civil actions of Regional Trial Courts for which the ordinary remedies of new
trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of
the petitioner.

Section 2. Grounds for annulment. The annulment may be based only on the grounds of extrinsic fraud
and lack of jurisdiction.

Extrinsic fraud shall not be a valid ground if it was availed of, or could have been availed of, in a motion
for new trial or petition for relief.

The Petition for Annulment of Judgment filed by Fraginal, et al. before the CA failed to meet the
foregoing conditions. First, it sought the annulment of the PARAD Decision when Section 1 of Rule 47
clearly limits the subject matter of petitions for annulment to final judgments and orders rendered by
Regional Trial Courts in civil actions. Final judgments or orders of quasi-judicial tribunals or
administrative bodies such as the National Labor Relations Commission, the Ombudsman, the Civil
Service Commission, the Office of the President, and, in this case, the PARAD, are not susceptible to
petitions for annulment under Rule 47.
Second, Section 1, Rule 47 does not allow a direct recourse to a petition for annulment of judgment if
other appropriate remedies are available, such as a petition for new trial, and a petition for relief from
judgment or an appeal. Fraginal, et al., could have appealed to the DARAB even without resources or
counsel.