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RIZAL COMMERCIAL BANKING CORPORATION v. IAC

FACTS:

The case involves a petition for the review of the decision of the Intermediate Appellate Court (IAC) in AC-G.R. No. SP-06313. The IAC annulled the decision of the trial court and directed the Register of Deeds to suspend the issuance of the owners' copies of land titles to the Rizal Commercial Banking Corporation (RCBC).

The dispute arose from the extra-judicial foreclosure of properties owned by BF Homes, Inc. (BF Homes). BF Homes was a party in a rehabilitation case before the Securities and Exchange Commission (SEC), and RCBC was one of its creditors listed in the inventory of creditors and liabilities.

RCBC requested the Provincial Sheriff of Rizal to foreclose its real estate mortgage on the properties. However, BF Homes obtained a temporary restraining order (TRO) and a writ of preliminary injunction from the SEC. These were issued after the auction sale had already taken place.

BF Homes then filed a motion to annul the auction sale and to cite RCBC and the sheriff for contempt. Despite the ongoing SEC proceedings, RCBC filed an action for mandamus in the Regional Trial Court, seeking the execution of a certificate of sale of the auctioned properties.

The trial court ruled in favor of RCBC, but BF Homes filed a petition for annulment of judgment in the IAC. In turn, the IAC annulled the trial court's decision and ordered the suspension of the issuance of new land titles to RCBC until the SEC resolves the rehabilitation case.

RCBC subsequently filed a petition for review of the IAC decision.

ISSUES:

  1. Whether or not the judgment on the pleadings issued by the trial court in the mandamus case should be annulled.

  2. Whether or not there was extrinsic fraud in procuring the judgment in the mandamus case.

  3. Whether or not the Regional Trial Court had jurisdiction to take cognizance of the mandamus case.

RULING:

  1. Yes, the judgment on the pleadings issued by the trial court in the mandamus case should be annulled.

  2. Yes, there was extrinsic fraud in procuring the judgment in the mandamus case.

  3. No, the Regional Trial Court did not have jurisdiction to take cognizance of the mandamus case.

PRINCIPLES:

  • Extrinsic fraud refers to any fraudulent act committed by one party in order to deprive the other party of its day in court. It refers to fraud outside of the proceedings, whereby the unsuccessful party has been prevented from exhibiting fully his side of the case. It is a species of fraud which prevents a party from having a trial or real contest on the merits of the action or cause of action.

  • A court acquires jurisdiction over a case when the law grants it jurisdiction. Jurisdiction may be acquired either by the nature of the action, by the express provision of a statute, or by the voluntary submission of the parties to the jurisdiction of the court. The court must have the power to adjudicate the claim or controversy.

  • The Securities and Exchange Commission (SEC) has exclusive jurisdiction over cases involving the suspension of payments, rehabilitation, or liquidation of corporations under Presidential Decree No. 902-A. Any action involving the properties of a corporation subject to SEC jurisdiction must be brought before the SEC and not before regular courts.