Civil Law - AFP Mutual Benefit Association, Inc. v. Regional Trial Court, Marikina City. G.R. No. 183906. February 14, 2011

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G.R. No.

183906 : February 14, 2011


AFP MUTUAL BENEFIT ASSOCIATION, INC. Petitioner, v. REGIONAL TRIAL
COURT, MARIKINA CITY, BRANCH 193 and SOLID HOMES,
INC., Respondents.
ABAD, J.:
FACTS:
Investco, Inc. (Investco) entered into a contract to sell to Solid Homes, Inc.
(Solid Homes) certain properties in Quezon City and in Marikina City. But,
because Solid Homes defaulted in payments, Investco sued for specific
performance and damages. During the pendency of the action, Investco
sold the properties to the Armed Forces of the Philippines Mutual Benefits
Association, Inc. (AFPMBAI).
Solid Homes filed an action against the Register of Deeds, AFPMBAI, and
Investco with the Regional Trial Court (RTC), which rendered a decision,
directing the Register of Deeds to cancel Solid Homes notice of lis
pendens on AFPMBAIs titles and declared AFPMBAI a buyer in good faith and
for value.
Solid Homes filed a petition for relief from judgment claiming that Investco
and AFPMBAI committed extrinsic fraud involving AFPMBAIs alleged failure
to disclose its knowledge of a prior sale between Investco and Solid Homes.
The RTC issued an order, giving due course to Solid Homes petition.
ISSUES: Whether or not the RTCs grant of Solid Homes petition for relief
based on AFPMBAIs alleged fraud in acquiring its titles to the subject
property is barred by res judicata.
HELD:

Petition is meritorious.
CIVIL LAW: Fraud
The extrinsic fraud that will justify a petition for relief from judgment is that
fraud which the prevailing party caused to prevent the losing party from
being heard on his action or defense. Such fraud concerns not the judgment
itself but the manner in which it was obtained. For example, the petition of a
defending party would be justified where the plaintiff deliberately caused
with the process servers connivance the service of summons on defendant
at the wrong address and thus succeeded in getting a judgment by default
against him.
Here, the fraud that Solid Homes proposed as ground for its petition for
relief is Investco and AFPMBAIs alleged prior knowledge of the sale of the
disputed lands to Solid Homes, which fraud goes into the merit of the case
rather than on Solid Homes right to be heard on its action. In effect the
RTC will rehear the issue of whether or not AFPMBAI was a buyer in good
faith, an issue barred by res judicata.
Petition is GRANTED.

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