ARCELIE B. PARMAN, PETITIONER, VS. CITY TRUST REALTY CORPORATION (NOW BANK OF THE PHILIPPINE ISLANDS) AND HON. FORTUNITO L. MADRONA IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH …

Parman versus City Trust Realty Corporation

The Case

This is a petition for annulment of a final order under Rule 47 of the Revised Rules of Court, brought by Arcelie Parman against City Trust Realty Corporation, now Bank of the Philippine Islands, and the presiding judge of the Parañaque regional trial court. Parman asks the Supreme Court to annul the order that directed the issuance of a writ of possession over her mortgaged home, and to declare the extra-judicial foreclosure and the certificate of sale void. The case matters because it gathers in one place the rules every examinee must know on the writ of possession in foreclosure, on the exceptional remedy of annulment of judgment, and on the deadlines that kill that remedy.

Procedural History

The foreclosure produced a certificate of sale in favor of City Trust Realty Corporation. When Parman failed to redeem, title was consolidated in the purchaser's name, and the corporation applied with the regional trial court of Parañaque for a writ of possession. In November 2000 the trial court granted the application and ordered the writ issued. Parman then tried an injunction suit before another branch of the same court, which failed because one court cannot enjoin a co-equal court. She tried again before the Court of Appeals, which dismissed the petition in July 2002 because injunction is a mere auxiliary remedy. In 2006 the trial court issued an alias writ of possession and a notice to vacate. Parman then filed this petition for annulment of final order directly with the Supreme Court in August 2006. The Court denied her application for a temporary restraining order, referred the case to the Parañaque trial court for pre-trial and reception of evidence, and after trial and the submission of the parties' evidence, decided the petition on the merits.

Facts

In December 1991 Arcelie Parman and her husband mortgaged their house and lot in Betterliving Subdivision, Parañaque, covered by their transfer certificate of title, to Citytrust Banking Corporation to secure a loan of 800,000 pesos. They signed a promissory note the next day, payable in thirty-six monthly installments, and the spouses began living on the property.

In February 1993 the bank applied for extra-judicial foreclosure. A public auction was held in March 1993, and the property was sold for 1,028,000 pesos to City Trust Realty Corporation, the highest bidder. A certificate of sale was issued in August 1993 and registered in September 1993. Before the one-year redemption period expired, in August 1994, Parman paid the bank 383,787 pesos, leaving a balance of 960,569 pesos and 44 centavos. She did not complete the redemption, so an affidavit of consolidation was executed and a new title was issued in the purchaser's name.

In 1996 a subsidiary of the purchaser wrote to the spouses about renewing the fire insurance on the property, and Parman paid the premiums, believing she was still a mortgagor in good standing. The purchaser applied for a writ of possession, which the trial court granted in November 2000. Parman received a notice to vacate in November 2001. Her injunction suits failed, and in 2006 an alias writ of possession was issued. She then filed this petition, alleging lack of jurisdiction and extrinsic fraud, claiming she never received the notices and that there was no posting or publication of the auction sale.

Issues

• Whether or not a petition for annulment of final order under Rule 47 is the proper remedy to nullify a writ of possession and an extra-judicial foreclosure.
• Whether or not the ground of extrinsic fraud may still be invoked, given the period for filing the petition.
• Whether or not the trial court lacked jurisdiction to issue the writ of possession.

Applicable Provisions

Section 1 of Rule 47 provides:

A petition for annulment of judgment or final order may be filed 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.

This is the gatekeeper provision, and the Court found that Parman did not pass through it.

Section 3 of Rule 47 provides:

If based on extrinsic fraud, the action must be filed within four years from its discovery.

This is the deadline the Court applied to her fraud ground.

Section 8 of Act Number 3135, as amended, provides:

In case it is disputed that the writ of possession was irregularly issued, the mortgagor may file with the trial court that issued the writ a petition to set aside the sale and to cancel the writ of possession within 30 days after the purchaser-mortgagee was given possession.

This is the remedy the Court said Parman should have used instead of Rule 47.

Ruling

On the first issue, the Court held that Parman availed of the wrong remedy. Annulment of judgment is a remedy in equity so exceptional in nature that it may be availed of only when other remedies are wanting, and it cannot substitute for a lost appeal, especially where the loss was caused by one's own error in the choice of remedies. Parman's erroneous filing of injunction cases did not justify the petition.

On the second issue, even assuming Rule 47 was correct, the fraud ground had prescribed. The records showed that the spouses discovered the foreclosure as early as June 1996, when the bank gave them a receipt and statement of account, and the husband testified that he learned of it on the very day of that payment. Parman filed the petition only in August 2006, more than four years later. The Court also defined extrinsic fraud as any fraudulent act of the prevailing party committed outside the trial, whereby the defeated party is prevented from fully exhibiting his side by fraud or deception, such as keeping him away from court or keeping him in ignorance of the suit. Since she had the opportunity to assert her rights and failed through her own fault, there was no extrinsic fraud.

On the third issue, the Court held that the trial court had jurisdiction over an application for a writ of possession. It acquires jurisdiction upon the filing of the application, and errors it may commit are mere errors of judgment correctible by ordinary appeal, not by annulment. The Court stressed that the order for a writ of possession is rendered as a matter of course, that the judge need not look into the validity of the mortgage or the manner of its foreclosure, and that once the writ is issued the court has no alternative but to enforce it without delay.

Doctrine

A petition for annulment of judgment or final order under Rule 47 is an exceptional remedy in equity, available 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. It cannot be used as a substitute for a lost appeal, especially where the loss results from the party's own negligence or error in the choice of remedies.

If the annulment is based on extrinsic fraud, the petition must be filed within four years from its discovery. Extrinsic fraud is a fraudulent act of the prevailing party committed outside the trial, by which the defeated party is prevented from fully presenting his side, such as keeping him away from court or keeping him in ignorance of the suit.

The issuance of a writ of possession in a foreclosure is ministerial. The court need not look into the validity of the mortgage or the manner of its foreclosure, and any question on the regularity of the writ is raised by a petition to set aside the sale and cancel the writ within thirty days after the purchaser was given possession, under Section 8 of Act Number 3135, not by annulment under Rule 47.

Disposition

The Supreme Court denied the petition, upheld the writ of possession and the alias writ, and refused to annul the trial court's order or the foreclosure.

Remember This

Memorize the line that annulment of judgment is a remedy in equity so exceptional in nature that it may be availed of only when other remedies are wanting. Examiners use this case to test the hierarchy of remedies after a foreclosure writ of possession, and the four-year period for extrinsic fraud counted from discovery.