PABLO T. TOLENTINO and TEMPUS PLACE REALTY MANAGEMENT CORPORATION vs. HON.

OSCAR LEVISTE, Presiding Judge, RTC, Quezon City, Br. 97 and SPOUSES GERARDO CINCO, JR. and PAMELA H. CINCO

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Facts: 1. On October 18, 1996, respondents Spouses Gerardo Cinco, Jr. and Pamela Cinco filed a complaint for specific performance with damages against petitioners Tempus Place Realty Management Corporation and Pablo T. Tolentino. 2. The complaint alleged that respondents purchased from petitioners a condominium unit in Tempus Place Condominium II at Katarungan St., Diliman, Quezon City. Despite, however, the execution of the Deed of Absolute Sale and the delivery of the owners copy of the condominium certificate of title, petitioners failed to deliver possession of the unit because they have allegedly leased it to a third party. The complaint further alleged that petitioners refused to pay the corresponding capital gains tax and documentary stamp tax on the transaction, and execute the necessary board resolution for the transfer of the property, thus preventing respondents from registering the Deed of Absolute Sale and transferring the title to the unit in their names. 3. The respondents claimed that because petitioners refused to deliver possession of the unit and instead leased it to a third party, they are entitled to a reasonable rental value in the amount of P20,000.00 a month from May 1994 until the time the possession of the unit is delivered to them. They also claimed moral damages in the amount of P1,000,000.00 and exemplary damages in the amount of P1,000,000.00 plus attorneys fees in the amount of P1,000,000.00.1 4. As petitioners failed to file their answer to the complaint, Hon. Oscar Leviste, Presiding Judge, RTC, Branch 97, Quezon City, issued an order on January 17, 1997 granting respondents motion to declare petitioners in default. He also appointed the Branch Clerk of Court to act as commissioner to receive respondents evidence ex parte. After reception of evidence, the trial court, on April 15, 1997, issued a decision in favour of the respondents. 5. Petitioners thereafter filed a motion for new trial. They contended that their right to fair and impartial trial had been impaired by reason of accident, mistake or excusable negligence of their former counsel, a certain Atty. Villamor. DENIED 6. Petitioners, through their new counsel, Atty. Ricardo A. Santos, filed a notice of appeal of the April 15 decision of the trial court. The Court of Appeals, however, dismissed the appeal on February 26, 1999 on the ground of abandonment as petitioners

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failed to submit the required appeal brief. The decision became final and executory on March 26, 1999 and was recorded in the Book of Entries of Judgment. Petitioners filed with the Court of Appeals an action for annulment of judgment. On April 23, 2002, the appellate court issued a decision modifying the trial court decision. It explained that the annulment of judgment may be based on the grounds of extrinsic fraud and lack of jurisdiction, and it is important that petitioner failed to move for new trial, or appeal, or file a petition for relief, or take other appropriate remedies assailing the questioned judgment, final order or resolution through no fault attributable to him. The Court of Appeals found that the trial court decision may not be annulled on the ground of extrinsic fraud. It stated that the failure of petitioners counsel to file an appellants brief in the Court of Appeals did not amount to extrinsic fraud as to justify annulment of judgment, as it was not shown that their former counsels omission was tainted with fraud and/or deception tantamount to extrinsic or collateral fraud. Neither may it be annulled on the ground of lack of jurisdiction as the action for specific performance and damages was within the jurisdiction of the RTC. Respondents filed a motion for reconsideration of the Decision of the Court of Appeals. GRANTED Petitioners filed the instant petition for review of the decision and amended decision of the Court of Appeals. Issue: Whether the Court of Appeals erred in dismissing the petition for annulment of judgment filed by petitioners. Held: Negative The governing rule is Rule 47 of the 1997 Rules of Civil Procedure on Annulment of Judgments or Final Orders and Resolutions. Sections 1 and 2 of the Rule provide for its coverage and the grounds therefor, thus: Sec. 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. Sec. 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. Under the Rule, an action for annulment of judgments may only be availed of on the following grounds: (1) extrinsic fraud and (2) lack of jurisdiction. Extrinsic fraud refers to any fraudulent act of the prevailing party in the litigation which is committed outside of the trial of the case, whereby the unsuccessful party has been prevented from exhibiting fully his case, by fraud or deception practiced on him by his opponent. Fraud is regarded as extrinsic where it prevents a party from having a trial or from presenting his entire case to the court, or where it operates upon matters pertaining not to the judgment itself but to the manner in which it is procured. The overriding consideration when extrinsic fraud is alleged is that the fraudulent scheme of the prevailing litigant prevented a party from having his day in court. 1. Petitioners in this case did not allege nor present evidence of fraud or deception employed on them by the respondents to deprive them of opportunity to present their case to the court. They, however, assert that the negligence of their former counsel in failing to file the appeal brief amounts to extrinsic fraud which would serve as basis for their petition for annulment of judgment. We disagree. The Court has held that when a party retains the services of a lawyer, he is bound by his counsels actions and decisions regarding the conduct of the case. This is true especially where he does not complain against the manner his counsel handles the suit. Such is the case here. 2. When the complaint was filed before the trial court, summons was served upon the petitioners. They allegedly referred the matter to Atty. Villamor who was holding office at the building owned and managed by respondent Tempus Place Realty Management Corporation. However, after they have endorsed the summons to said lawyer, they did not exert any effort to follow up the developments of the suit. Hence, they were declared in default and judgment was rendered against them. Even in the course of the appeal, they never bothered to check with their counsel, Atty. Ricardo Santos, the status of the appeal. The notice of appeal was filed on November 3, 1997 and petitioners learned of the dismissal of the appeal in October 1999, after petitioner Tolentino received notice of garnishment of his insurance benefits in connection with the judgment in Civil Case No. Q-96-29207. It was only at that time that they learned that Atty. Santos had

migrated to Australia. This only shows that petitioners, as what happened during the pendency of the case before the trial court, never bothered to confer with their counsel regarding the conduct and status of their appeal. We reiterate the rule that a client is bound by the mistakes of his counsel except when the negligence of his counsel is so gross, reckless and inexcusable that the client is deprived of his day in court.19 Only when the application of the general rule would result in serious injustice should the exception apply.20 We find no reason to apply the exception in this case. In addition, it is provided in Section 2 of Rule 47 that 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. In other words, it is effectively barred if it could have been raised as a ground in an available remedial measure. The records show that after petitioners learned of the judgment of default, they filed a motion for new trial on the ground of extrinsic fraud. It was however denied by the trial court. They filed a notice of appeal thereafter. Hence, they are now precluded from alleging extrinsic fraud as a ground for their petition for annulment of the trial court decision. SC - not also persuaded by petitioners assertion that the trial court judge lacked jurisdiction so as to justify the annulment of his decision in Civil Case No. Q-96-29207. Lack of jurisdiction as a ground for annulment of judgment refers to either lack of jurisdiction over the person of the defending party or over the subject matter of the claim. Jurisdiction over the person of the defendant or respondent is acquired by voluntary appearance or submission by the defendant or respondent to the court, or by coercive process issued by the court to him, generally by the service of summons. The trial court clearly had jurisdiction over the person of the defending party, the petitioners herein, when the latter received the summons from the court. On the other hand, jurisdiction over the subject matter of the claim is conferred by law and is determined from the allegations in the complaint. Under the law, the action for specific performance and damages is within the jurisdiction of the RTC.