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[G.R. NO. 143373. August 16, 2000]

ALAY SA PAG-ASA CHRISTIAN FOUNDATION vs. CA, et al.

SECOND DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated AUG 16 2000.

G.R. No. 143373 (Alay Pag-asa Christian Foundation vs. Court of Appeals, et al.)

Petitioner Alay Pag-asa Christian Foundation, Inc., together with Reynaldo C. Montinola and the Registrar of Deeds of Mandaluyong, is defendant in a case brought by respondents in the Regional Trial Court, Branch 261, Pasig, for the annulment of title and the declaration of respondents as owners of Lot 5, Block 51 of the consolidation and subdivision plan PSD-2473 of Mandaluyong City. Petitioner was declared as in default for its failure to attend the pre-trial conference despite due notice. For this reason, respondents were allowed to present evidence ex-parte, after which judgment was rendered in favor of respondents, nullifying (1) the affidavit of self-adjudication executed by Reynaldo C. Montinola, petitioner's predecessor-in-interest, (2) TCT No. 7298, (3) the deed of sale in favor of petitioner, and (4) TCT No. 7758 which had been issued in petitioner's name, and directing the Registrar of Deeds of Mandaluyong to reconvey the title to the property in favor of respondents.

Petitioner moved for a reconsideration of the order declaring it as in default. It alleged that its counsel, Arty. Orlando B. Medrano, was sick on the scheduled pre-trial conference. However, petitioner's motion was denied. Petitioner then filed a notice of appeal of the decision of the trial court. The appeal was, however, denied for having been filed out of time. Through a new counsel, petitioner next filed a petition for annulment of the decision of the trial court in which it was alleged that the incompetence of Atty. Medrano in handling its case amounted to extrinsic fraud. Said petition was denied by the Court of Appeals, which also held that petitioner did not acquire the property in good faith from Montinola. Hence, this petition for review.

The petition has no merit.

First. Petitioner claims that its former counsel, Atty. Medrano, who was also its chairman and corporate secretary, had no authority to represent it at the pre-trial conference since he had no special power of attorney from its board of directors. Thus, petitioner should be relieved of the effects of the default judgment as it was not properly represented by any counsel. Petitioner faults the trial court for not requiring the presentation of a special power of attorney during the pre-trial conference.

These contentions should be rejected if only for the fact that they are being raised by petitioner only for the first time. Besides, petitioner should be barred from questioning Atty. Medrano's alleged lack of authority to represent it during pre-trial. The trial court scheduled eight pre-trial sessions, but petitioner never questioned the authority of Atty. Medrano to represent it. By its inaction, petitioner clothed its former counsel with authority to represent it.

Second. With respect to petitioner's argument that Atty. Medrano's mishandling of the case amounted to extrinsic fraud, the Court of Appeals pointed out three errors committed by Atty. Medrano: first, his failure to file a motion to postpone the scheduled pre-trial; second, his failure to file on time the notice of appeal of the trial court's decision; third, his inaction after the denial of the notice of appeal.

The Court of Appeals did not consider these mistakes as amounting to extrinsic fraud. This Court agrees. Extrinsic fraud refers to a trickery or deceit committed against a party by means of which he is deprived of a hearing or the opportunity of presenting his cause to the court. Examples of extrinsic fraud are instances where counsel fraudulently pretends to represent a party and connives at his defeat, or corruptly sells out his client's interest (Magno v. Court of Appeals, 107 SCRA 285 (1981)).

But, in the case at bar, there was no deceit by which petitioner was deprived of its right to be heard. What is clear is that petitioner is bound by the mistakes and omissions of its counsel, otherwise the administration of justice would be hopelessly encumbered if a losing party could simply allege incompetence of counsel to sustain his appeal (Tupas v. Court of Appeals, 193 SCRA 595 (1991)). Indeed, this Court has time and again reminded parties of their duty to confer with their counsel so that they may be informed of the progress of their case (Reyes v. Court of Appeals, 189 SCRA 46 (1990)).

Third. Petitioner claims it has a meritorious case. It contends it bought the property subject matter of this case in good faith.

This contention has no basis. The title transferred by Montinola to petitioner bears the following annotation which is actually a duplicate of �4 of Rule 74. It provides:

Liability of distributees and estate. --If it shall appear at any time within two (2) years after the settlement and distribution of an estate in accordance with the provisions of either of the first two sections of this rule, that an heir or other person has been unduly deprived of his lawful participation in the estate, such heir or such other person may compel the settlement of the estate in the courts in the manner hereinafter provided for the purpose of satisfying such lawful participation....

As the action against petitioner was brought in 1993, or only one year from the date when Montinola acquired the property through an affidavit of self-adjudication, the cautionary notice in Rule 74, �4, applies, and petitioner has no cause for complaining it did not know said property was acquired fraudulently. The very purpose of the annotation on petitioner's title is to warn every purchaser of the precarious nature of the vendor's title thereto. Thus, it does not matter that petitioner had no knowledge of the fraud committed by Montinola. It suffices that it had been warned through the annotation on its title.

For the foregoing reasons, the Court RESOLVED to DENY the petition for lack of showing that the Court of Appeals committed reversible error.

Very truly yours,

(Sgd.) TOMASITA B. MAGAY-DRIS

Clerk of Court

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