KOPPEL (PHILIPPINES) INC., PLAINTIFF AND APPELLEE, VS. RUSTICO A. MAGALLANES, IN HIS INDIVIDUAL CAPACITY AND AS SPECIAL ADMINISTRATOR OF THE ESTATE OF PAULINO MAGALLANES, DEFEND…

Antonio Magallanes, as special administrator of the estate of
Paulino Magallanes, seeks a review of an order of the Court of First
Instance of Misamis Occidental.

This case was instituted by Koppel (Philippines) Inc., on February
22, 1954. In its complaint, plaintiff alleged that early in November,
1952, it sold to the original defendant, Rustico Magallanes, as special
administrator of the estate of Paulino Magallanes, certain agricultural
machineries consisting of a tractor, a plow and a harrow, more
particularly described in the complaint, for the aggregate sum of
P14,470, on account of which P8,700, was paid in cash, thereby leaving
a balance of P5,770, payable on installments as specified in the
complaint; that’ as security for the payment of said sum of P5,770, the
aforementioned defendant constituted in favor of plaintiff a chattel
mortgage on the harrow above referred to and a real estate mortgage on
two parcels of land situated in the municipality of Tangub, province of
Misamis Occidental, as set forth in a deed of chattel and real estate
mortgage executed by said parties on November 19, 1952, which
instrument was registered in the office of the Register of Deeds of
said province on December 15, 1952; that of said sum of P5,770 only
P1,450 had been paid by the defendant, thereby leaving a balance of
P4,824, which was long overdue and unpaid despite repeated demands;
that in said deed of chattel and real estate mortgage, defendant had
agreed to pay, in the event of foreclosure proceedings, an additional
sum equivalent to 25 per cent of the total indebtedness, or P1,206, by
way of attorney’s fees, thus increasing defendant’s debt to P6,030; and
that, plaintiff elected to foreclose the real estate mortgage
judicially, simultaneously with the extrajudicial foreclosure of the
chattel mortgage, for it believed that the proceeds to be realized in
the latter would be insufficient to fully satisfy defendant’s
obligation. Plaintiff prayed, in its complaint, that defendant be held
to be indebted in said sum of P6,030, plus interest thereon, and the
additional sum of P1,206, by way of attorney’s fees, in addition to the
costs, and that, after crediting such amount as may be realized in the
extrajudicial foreclosure of the chattel mortgage, the defendant be
sentenced to pay the balance to plaintiff, within ninety (90) days,
and, in default of such payment, to order the sale of said two (2)
parcels of land in the manner provided in Rule 70 of the Rules of Court.

Defendant filed an answer admitting some allegations of the
complaint, including the original indebtedness of P5,770, but alleging
that the unpaid balance thereof is P4,205, not the sum stated in the
complaint; that defendant’s failure to pay said balance of P4,205 was
“due to the excessive interest” imposed by the plaintiff; that the
aforesaid chattel and real estate mortgage is null and void, it being
“contrary to public policy”; that the interest charged on the principal
obligation is usurious; and that the stipulated attorney’s fees is
excessive and should be reduced.

After due trial, on February 24, 1955, decision was rendered, in
open court, stating that both parties had “agreed” in “open court” that
the “net amount” of defendant’s “outstanding obligation” was P3,873,
including attorney’s fees, and that defendant had “agreed to a
judgment” for said amount, and, consequently, ordering him to deposit
it, within ninety (90) days, with the clerk of court, and directing, if
he failed to do so, the sale of the mortgaged lands to satisfy said
obligation, with interest thereon. On May 29, 1956, plaintiff filed a
motion alleging, among: other things, that it had purchased said lands
for P2,500, at a public auction held in compliance with the
aforementioned decision, thereby living an unpaid balance of P1,373.75,
and praying that the sale in its favor be confirmed and the
corresponding deed of sale executed by the sheriff approved, and that a
deficiency judgment be rendered, and a writ of execution issued, for
said sum of P1,373.75.

Meanwhile, Rustico Magallanes had been relieved, and appellant
Antonio Magallanes was appointed and assumed office in his stead, as
special administrator of the estate of Paulino Magallanes. Thereafter,
or on July 31, 1956, Antonio Magallanes filed an “answer”, admitting
some allegations in said motion of the plaintiff dated May 29, 1956;
denying any knowledge or information about the truth of other
allegations therein; asserting that the above mentioned chattel and
real estate mortgage “can be the subject of reformation of instrument
or amendment of the contract on the ground of mistake or inequitable
conduct in accordance with Article 1359 of the new Civil Code”; that
judgment had been entered “through mistake,” for the chattel mortgage
had already been foreclosed extra-judicially, and “plaintiff cannot
recover the unpaid balance of the price”, and Rustico Magallanes was
not the absolute owner of the properties mortgaged to plaintiff, apart
from the fact that latter ”cannot appropriate the things given by way
of pledge or mortgage, or dispose of them”; and praying that “judgment
be rendered in favor of the defendant” and for “.such other relief
consistent with law and equity and for cost”. By an order dated January
11, 1957, the lower court confirmed the aforementioned sale to the
plaintiff, but denied the motion for a deficiency judgment and a writ
of execution.

Soon thereafter, or on February 12, 1957, defendant filed a
“Petition for Relief from Judgment and Order.” He alleged therein that
the judgment, dated February 24, 1955, and the order, dated January 11,
1957, came to his knowledge in July, 1956, and on February 5, 1957,
respectively; that said judgment was “entered through extrinsic fraud
by the plaintiff”; that defendant has a good and substantial defense,
inasmuch as (1) the registration of the chattel mortgage in the
province where the lands are situated “is a futile act”, (2) the deed
of chattel and real estate mortgage was founded upon a “usurious
transaction” and (3) failed to express the “true intent and agreement
of the parties”, (4) the mortgagor was not the absolute owner of the
property mortgaged, and (5) having extrajudicially foreclosed the
chattel mortgage, plaintiff may no longer recover the unpaid balance of
the price. This motion was denied on March 2, 1957. Hence, the present
appeal.

Pursuant to section 3 of Rule 38 of the Rules of Court, a petition
for relief from a judgment or order of a court of first instance must
be filed “within sixty (60) days after the petitioner learns of the
judgment, order, or other proceeding to be set aside and not more than six months after such judgment or order was entered
or such proceeding was taken.” In the case at bar, the lower court
rendered its judgment on February 24, 1955, whereas the petition for
relief therefrom was filed on February 12, 1957, almost two (2) years
later. More than six (6) months having elapsed since the entry of said
judgment, defendant may not avail himself of the relief provided for in
Rule 38 of the Rules of Court. Besides, the judgment was rendered in
“open court,” upon agreement made, likewise, in open court, of both
parties, who were present, therefore, at the promulgation of the
judgment and had knowledge thereof since February 24, 1955. No matter
how we may look at defendant’s petition for relief and regardless of
its Intrinsic demerits—and much could be said about it—said petition
cannot be entertained, therefore, it having been filed beyond the
reglementary period.

It is argued that the petition was submitted within sixty (60) days
from defendant’s knowledge, and within six (6) months from the
issuance, of the order of January 11, 1957. But, it is not claimed that
this order was issued through “fraud, accident, mistake or excusable
negligence,” to warrant the relief to set it aside. Besides, said order
is a necessary consequence of the aforementioned judgment, and should,
accordingly, be maintained as long as the latter remains in full force
and effect.

It is lastly urged that the defendant seeks to annul said judgment,
and that this remedy may be applied for within four (4) years from the
discovery of the fraud (Sec. 43[3], Act No. 190). This is, however, the
period within which the annulment of a judgment may be prayed for in an
action independent and separate from that in which it was rendered (Anuran vs. Aquino, 38 Phil., 29, 32; Banco Español-Filipino vs. Palanca, 37 Phil., 921, 949-950; Javier vs. Paredes, 62 Phil., 910; Domingo vs. Manuel, 68 Phil., 134; Garchitorena vs. Sotelo, 74 Phil., 25; Quion vs.
Claridad, 74 Phil., 100). Moreover, the basis of that separate action
for annulment of the judgment must be “extrinsic” fraud (Almeda vs. Cruz, 84 Phil., 643; 47 Off. Gaz., 1179; Varela vs. Villanueva, 96 Phil., 248; 50 Off. Gaz., 4242; In re De Leon, 87 Phil., 551; 48 Phil., 619; U. S. vs. Throckworton, 98 U.S. 65, 25 L. ed. 96; Donovan vs.
Miller, 88 Pac. 82, 84). Again, the aforementioned period of four (4)
years does not apply to a petition, filed in the original or main
action, to secure a relief against said judgment, particularly when the
petition is based upon an alleged error in the judgment or a supposed
flaw in the transaction which is the very subjectmatter of litigation,
for, contrary to appellant’s pretense, such error or flaw constitutes,
not extrinsic fraud, but, at best, intrinsic fraud—if any, on which we
need not, and do not, express any opinion, insofar as the case at bar
is concerned—which may be a ground for review only on appeal (Tarca, et
al. vs. Cason Vda. de Carretero, 99 Phil., 419; 52 Off. Gaz., 3558; Vicente and Lucas vs. Lucas, et al., 95 Phil., 716).

Wherefore, the order appealed from is hereby affirmed, with costs against the administrator-appellant. It is so ordered.

Paras, C. J., Bengzon, Bautista Angelo, Labrador, Endencia, Barrera, and Gutierrez David, JJ., concur.
Reyes, J.B.L., J., took no part.