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#3

PINAUSUKAN SEAFOOD HOUSE, ROXAS BOULEY ARD, INC. vs. FAR EAST BANK & TRUST
COMPANY
G.R. No. 159926
January 20, 2014
Bersamin, J.
FACTS: On various dates in 1993, Bonier de Guzman (Bonier), then the President of petitioner
corporation (Pinausukan), executed four real estate mortgages involving the petitioners parcel
of land situated in Pasay City in favor of Far East Bank and Trust Company (now BPI; referred to
herein as the Bank). When the unpaid obligation secured by the mortgages had ballooned
to 15,129,303.67 as of June 2001, the Bank commenced proceedings for the extrajudicial
foreclosure of the mortgages in the Office of the Ex Officio Sheriff in the Pasay City RTC. Two
weeks thereafter, the sheriff issued the notice of sheriffs sale, setting the public auction on
October 8, 2001.
Learning of the impending sale of its property by reason of the foreclosure of the mortgages,
Pinausukan brought against the Bank and the sheriff an action for the annulment of real estate
mortgages in the RTC, averring that Bonier had obtained the loans only in his personal capacity
and had constituted the mortgages on the corporate asset without Pinausukans consent
through a board resolution. Pinausukan applied for the issuance of a temporary restraining
order or writ of preliminary injunction to enjoin the Bank and the sheriff from proceeding with
the extrajudicial foreclosure and the public auction. However, the RTC soon dismissed
Pinausukans case for failure to prosecute. The order of dismissal attained finality.
The sheriff later issued a notice of extrajudicial sale concerning the property of
Pinausukan. Claiming surprise over the turn of events, Pinausukan inquired from the RTC and
learned that Atty. Michael Dale Villaflor (Atty. Villaflor), its counsel of record, had not informed
it about the order of dismissal of the civil case.
Pinausukan brought the petition for annulment in the CA seeking the nullification of the order
dismissing its case, stating that its counsel had been guilty of gross and palpable negligence in
failing to keep track of the case he was handling, and in failing to apprise Pinausukan of the
developments on the case. The CA dismissed the petition for annulment, citing the failure to
attach the affidavits of witnesses attesting to and describing the alleged extrinsic fraud
supporting the cause of action as required by Section 4, Rule 47 of the Rules of Court, and
observing that the verified petition related only to the correctness of its allegations, a
requirement entirely different and separate from the affidavits of witnesses required under the
same Rule. The CA likewise denied Pinausukans motion for reconsideration.
ISSUE: Did the CA err in dismissing Pinausukans petition for annulment of judgment?
RULING: NO.

The objective of the remedy of annulment of judgment or final order is to undo or set aside the
judgment or final order, and thereby grant to the petitioner an opportunity to prosecute his
cause or to ventilate his defense. If the ground relied upon is lack of jurisdiction, the entire
proceedings are set aside without prejudice to the original action being refiled in the proper
court. If the judgment or final order or resolution is set aside on the ground of extrinsic fraud,
the CA may on motion order the trial court to try the case as if a timely motion for new trial had
been granted therein. The remedy is by no means an appeal whereby the correctness of the
assailed judgment or final order is in issue; hence, the CA is not called upon to address each
error allegedly committed by the trial court.
Given the extraordinary nature and the objective of the remedy of annulment of judgment or
final order, Pinausukan must be mindful of and should closely comply with the following
statutory requirements for the remedy as set forth in Rule 47 of the Rules of Court.
(1) The first requirement prescribes that the remedy is available only when the petitioner
can no longer resort to the ordinary remedies of new trial, appeal, petition for relief or
other appropriate remedies through no fault of the petitioner. This means that the
remedy, although seen as "a last remedy," is not an alternative to the ordinary remedies
of new trial, appeal and petition for relief. The petition must aver, therefore, that the
petitioner failed to move for a new trial, or to appeal, or to file a petition for relief
without fault on his part. But this requirement to aver is not imposed when the ground
for the petition is lack of jurisdiction (whether alleged singly or in combination with
extrinsic fraud), simply because the judgment or final order, being void, may be assailed
at any time either collaterally or by direct action or by resisting such judgment or final
order in any action or proceeding whenever it is invoked, unless the ground of lack of
jurisdiction is meanwhile barred by laches.
(2) The second requirement limits the ground for the action of annulment of judgment to
either extrinsic fraud or lack of jurisdiction. [] Fraud is extrinsic [] "where the
unsuccessful party has been prevented from exhibiting fully his case, by fraud or
deception practiced on him by his opponent, as by keeping him away from court, a false
promise of a compromise; or where the defendant never had knowledge of the suit,
being kept in ignorance by the acts of the plaintiff; or where an attorney fraudulently or
without authority connives at his defeat; these and similar cases which show that there
has never been a real contest in the trial or hearing of the case are reasons for which a
new suit may be sustained to set aside and annul the former judgment and open the
case for a new and fair hearing." The overriding consideration when extrinsic fraud is
alleged is that the fraudulent scheme of the prevailing litigant prevented the petitioner
from having his day in court. Nonetheless, 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 contrast, intrinsic fraud refers to the acts of a party at a trial that prevented a
fair and just determination of the case, but the difference is that the acts or things, like

falsification and false testimony, could have been litigated and determined at the trial or
adjudication of the case.
(3) The third requirement sets the time for the filing of the action. The action, if based on
extrinsic fraud, must be filed within four years from the discovery of the extrinsic fraud;
and if based on lack of jurisdiction, must be brought before it is barred by laches or
estoppel.
(4) The fourth requirement demands that the petition should be verified, and should allege
with particularity the facts and the law relied upon for annulment, as well as those
supporting the petitioners good and substantial cause of action or defense, as the case
may be. [] The petition is to be filed in seven clearly legible copies, together with
sufficient copies corresponding to the number of respondents, and shall contain
essential submissions, specifically: (a) the certified true copy of the judgment or final
order or resolution, to be attached to the original copy of the petition intended for the
court and indicated as such by the petitioner; (b) the affidavits of witnesses or
documents supporting the cause of action or defense; and (c) the sworn certification
that the petitioner has not theretofore commenced any other action involving the same
issues in the Supreme Court, the CA or the different divisions thereof, or any other
tribunal or agency; if there is such other action or proceeding, he must state the status
of the same, and if he should thereafter learn that a similar action or proceeding has
been filed or is pending before the Supreme Court, the CA, or different divisions thereof,
or any other tribunal or agency, he undertakes to promptly inform the said courts and
other tribunal or agency thereof within five days therefrom.
A review of the dismissal by the CA readily reveals that Pinausukans petition for annulment
suffered from procedural and substantive defects. [] Pinausukans failure to include the
affidavits of witnesses was fatal to its petition for annulment. [The] objective of the
requirements of verification and submission of the affidavits of witnesses is to bring all the
relevant facts that will enable the CA to immediately determine whether or not the petition has
substantial merit. [Only] by the affidavits of the witnesses who had competence about the
circumstances constituting the extrinsic fraud can the petitioner detail the extrinsic fraud being
relied upon as the ground for its petition for annulment. This is because extrinsic fraud cannot
be presumed from the recitals alone of the pleading but needs to be particularized as to the
facts constitutive of it.
[The] supposed neglect of Atty. Villaflor to keep track of the case [], even if it was true, did not
amount to extrinsic fraud because it did not emanate from any act of FEBTC as the prevailing
party, and did not occur outside the trial of the case. Moreover, the failure to be fully aware of
the developments in the case was Pinausukan's own responsibility.

#4
MARICHU G. EJERA vs. BEAU HENRY L. MERTO and ERWIN VERGARA
G.R. No. 163109
January 22, 2014
Bersamin, J.
FACTS: Respondent Provincial Agriculturist Beau Henry Merto issued Office Order No. 008
(Amending Office Order No. 008, Series of 2000, Re: Assignment/Re-assignment of BADC
[Barangay Agricultural Development Center] Area Coordinators and Development Team
Members) [i]n the interest of the service and to provide intensive agricultural extension
services to residents of interior barangays under the BADC Program in the province, which is
aimed at achieving Food Security and Poverty Alleviation. Petitioner Marichu Ejera was one
of the personnel re-assigned under Office Order No. 008, from Dumaguete to Siaton in Negros
Oriental. When she refused to obey the office order, Merto ordered her to explain in writing
within 72 hours why no administrative disciplinary action should be taken against her. After she
did not submit her explanation, Merto and respondent Atty. Erwin B. Vergara, the Provincial
Legal Officer, summoned her to a conference. She and her counsel attended the conference,
but later on walked out allegedly because Vergara refused to record her objections to the
questions she was being asked to answer.
Petitioner filed in the Dumaguete City RTC her complaint for final injunction with temporary
restraining order and/or preliminary injunction, and damages, averring that Merto had
issued Office Order No. 008 because he had so bitterly resented her attacks against him before
the CSC (Civil Service Commission) Regional Office [in view of a previous spat brought before
the CSC where petitioner contested an appointment to a post she applied for]; she also argued
inter alia that her reassignment was a virtual banishment because her position required her
to stay someplace far away; and that the re-assignment was whimsical, indiscriminate, and with
bad faith and malice in violation of Article 19 and Article 20 of the Civil Code, thereby entitling
her to damages.
Prior to hearing on the merits, petitioner moved for the admission of a supplemental complaint
in order to implead Gregorio P. Paltinca, the Officer-in-Charge of the Office of the Provincial
Agriculturist, for issuing Office Order No. 005 to amend Office Order No. 008, reassigning her
from her previous assignment in the latter office order to another barangay in Siaton.
The RTC later dismissed the case, holding on the legality of the contested office orders and
opining that petitioner should have first gone to the CSC to challenge their legality prior to her
resort to the courts; and that, therefore, she had not exhausted all her administrative remedies
considering that her case did not fall under any of the exceptions to the application of the
doctrine on the exhaustion of administrative remedies.

Not satisfied, the petitioner appealed to the CA. The CA affirmed the RTC. It pointed out that
the petitioner should have appealed her transfer to the CSC conformably with the Omnibus
Rules Implementing Book V of the Administrative Code of 1987 that mandated an
administrative appeal or remedy before a resort to judicial action instead of directly resorting
to the court action.
ISSUES:
(1) Whether petitioners case did not constitute an exception to the rule on exhaustion of
administrative remedies;
(2) Whether a motion to dismiss could be acted upon even without an order admitting
the supplemental complaint;
(3) Whether respondents as defaulted defendants could benefit from the special defense of
petitioners non-exhaustion of administrative remedies raised by Paltinca, the nondefaulting defendant.
RULING:
(1) YES.
Section 26, Chapter 5, Title I-A, Book V of the Administrative Code of 1987 lists the
personnel actions that may be taken in the government service, namely: (1)
appointment through certification; (2) promotion; (3) transfer; (4) reinstatement; (5)
reemployment; (6) detail; and (7) reassignment. [] The subject of the assailed office
orders was a reassignment []
Where the enabling statute indicates a procedure for administrative review and
provides a system of administrative appeal or reconsideration, therefore, the courts
for reasons of law, comity and convenience will not entertain a case unless the
available administrative remedies have been resorted to and the appropriate authorities
have been given an opportunity to act and correct the errors committed in the
administrative forum.
It is true that the doctrine of exhaustion of administrative remedies is not an ironclad
rule, but recognizes exceptions, specifically: (a) where there is estoppel on the part of
the party invoking the doctrine; (b) where the challenged administrative act is
patently illegal, amounting to lack of jurisdiction; (c) where there is unreasonable
delay or official inaction that will irretrievably prejudice the complainant; (d) where the
amount involved is relatively so small as to make the rule impractical and oppressive; (e)
where the question involved is purely legal and will ultimately have to be decided by the
courts of justice; (f) where judicial intervention is urgent; (g) where the application of
the doctrines may cause great and irreparable damage; (h) where the controversial acts
violate due process; (i) where the issue of non-exhaustion of administrative remedies

has been rendered moot; (j) where strong public interest is involved; and (l) in quo
warranto proceedings.
The exceptions did not cover the petitioners case [] Still, her immediate resort to the
RTC remained premature, because the legal issues she seemingly raised were
admittedly interlaced with factual issues, like whether or not Merto had issued Office
Order No. 008 because of her having attacked him in her protest against [the
appointment of another person to the post she was applying for], and whether or not
her reassignment constituted banishment from her office in Dumaguete [] She further
averred that the reassignment had been whimsical and indiscriminate, an averment
that surely called for factual basis. It ought to be beyond question that the factual issues
could only be settled by a higher policy-determining provincial official like the Provincial
Governor by virtue of his authority, experience and expertise to deal with the
issues. The Provincial Governor should have been given a very meaningful opportunity
to resolve the matter and to exhaust all opportunities for its resolution before bringing
the action in court.
[The] non-observance of the doctrine of exhaustion of administrative remedies resulted
in the complaint having no cause of action. Hence, the RTC and the CA correctly
dismissed the case.
[T]he non-exhaustion by the petitioner had jurisdictional implications. had the
petitioner followed the grievance procedure under the CSCs Omnibus Rules, her next
step would have been to elevate her case to the CSC itself, the constitutional body
charged with the exclusive jurisdiction not only over disciplinary actions against
government officials and employees but also over cases involving personnel actions.
(2) YES.
The petitioner filed her supplemental complaint to assail Office Order No. 005, and
thereby raised issues identical to those raised in her original complaint involving Office
Order No. 008. Hence, the RTC could already resolve Paltincas motion to dismiss even
without first admitting the supplemental complaint. Unlike an amended complaint, her
supplemental complaint could exist side-by-side with the original complaint, because
the supplemental complaint averred facts supervening from the filing of the complaint
[as per Rule 10 of the 1997 Rules of Civil Procedure.
(3) YES.
The defense of non-exhaustion of her administrative remedies raised by Paltinca as the
non-defaulting defendant inured to the benefit of the respondents who had been
declared in default. For one, there was a common cause of action against the
respondents and Paltinca. The non-exhaustion was fatal to such common cause of
action. Moreover, such benefit inuring to the respondents despite default was

predicated on Section 3, Rule 9 of the 1997 Rules of Civil Procedure [specifically its initial
paragraph and 9(c).]