Sumalinog, Jaz Ann T.

478. Encarnacion v Johnson, G.R. No. 192285

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PETITIONER:Mateo ENCARNACION substituted by his heirs
RESPONDENT: Thomas JOHNSON
DATE: July 11, 2018
PONENTE: Jardeleza, J.
TOPIC: Annulment of Judgments

FACTS:
● Respondent filed an action for breach of contract with prayer for damages and costs
against spouses Narvin Edwarson and Mary Mitchie Edwarson (the latter is petitioner’s
daughter) before the Vancouver Registry of the SC of British Columbia, Canada.
○ Respondent alleged that the spouses convinced him to invest his money and
personal property in a vehicle leasing company owned by the couple which
turned out to be a fraudulent scheme.
● SC of British Columbia gave due course to the action and served summons to the
spouses. Respondent also moved to be granted him a Mareva injunction, with ex juris
affect to restrain the spouses from dealing with any of their assets. The Court issued the
Mareva injunction and authorized respondent to obtain orders in foreign jurisdictions
which would permit its enforcement int hose jurisdiction.
● Subsequently, the Court found the spouses liable and ordered them to pay.
● Later on, respondent filed an action for recognition and enforcement of foreign judgment
with prayer for the recognition of Mareva injunction before RTC Olongapo. He also
petitioned to be allowed to litigate as pauper litigant.
○ RTC granted his petition on the condition that a lien representing the amount of
filing fees would be imposed upon him.
● RTC then issued an order restraining the spouses from disposing or encumbering their
assets as well as those belonging to petitioner Mateo Encarnacion. It also ordered the
Registry of Deeds of Zambales and Provincial Assessor to annotate the said order on the
titles and tax declarations of all properties owned by the spouses and petitioner.
● The spouses failed to file their answer despite service of summons by publication. Thus,
they were declared in default.
● RTC issued a Writ of Execution authorizing the sheriff to attach sufficient properties
owned by the spouses. Later on, properties belonging to petitioner were also included.
● 13 levied properties were sold in public auction wherein respondent was the highest
bidder.
● Subsequently, respondent filed a motion for clarificatory order seeking the inclusion of
Mateo’s properties in the writ of execution. With this, petitioner filed an Affidavit of Third
Party Claim.
● RTC acted on respondent’s motion and ordered the levy of properties owned by
petitioner.
● Petitioner filed a petition for annulment of judgment before CA alleging that he is the
owner of the levied properties; that he was not a party to the case; and that the inclusion
of his properties were made without notice to him. However, he also admitted that he has
no standing to question the proceeding on the action for recognition and enforcement of
the foreign judgment. He is just questioning the order depriving him of his properties.
● Another sale occurred resulted in a certificate of sale issued in favor of respondent.
 Pending proceedings before CA, Mateo died thus, he was substituted by his heirs.
● CA later on denied the petition and upheld the jurisdiction of RTC over the action of
recognition of foreign judgment. It also ruled that the remedy of annulment of judgment is
improper because the assailed order is not yet final as it merely seeks to clarify RTC’s
further amended writ of execution.
● Hence, this petition.

ISSUE: Whether or not action for annulment of judgment is proper remedy of a third party
claimant of properties levied and sold under execution sale. NO

RULING:
An action for annulment of judgment is a remedy in law independent of the case where the
judgment sought to be annulled is rendered. The ultimate objective of this is to undo or set aside
the judgment or final order, and thereby grant to the petitioner an opportunity to prosecute his
cause or to ventilate his defense.

As ruled in Dare Adventure Farm Corp v CA, a petition for annulment of judgment may be
availed only when other remedies are wanting ad only if the judgment, final order or final
resolution sought to be annulled was rendered by the court lacking jurisdiction or through
extrinsic fraud. The ruled also prescribes that petitioner should show that the ordinary remedies
of new trial, appeal, petition for relief or other appropriate remedies are no longer available
through no fault of petitioner.

Moreover, in Pinausukan Seafood House v FEBTC, there are requirements that must be
complied with before the remedy is granted.
1) It is only available when the petitioner can no longer resort to the ordinary remedies of
new trial, appeal, petition for relief or other appropriate remedies through no fault of the
petitioner.
2) The ground is limited to either extrinsic fraud or lack of jurisdiction.
3) Time to avail this is set by the rules: if based on extrinsic fraud, it must be filed within 4
years from the discovery of extrinsic fraud; if based on lack of jurisdiction, it must be brought
before it is barred by laches or estoppel.
4) Petition should be verified and should allege with particularity the facts and law relied
upon, and those supporting the petitioner’s good and substantial cause of action or defense.

In this case, petitioners failed to show their standing to file the petition. They also failed to comply
with the 1st requirement.
(a) The proper party to file this petition need no be a part to the judgment sought to be
annulled. Nevertheless, it is essential that he is able to prove by preponderance of evidence
that he is adversely affected by the judgment. A person not adversely affected by a decision
cannot bring an action for annulment of judgment under Rule 47. the exception is if he is a
successor in interest by title subsequent to the commencement of the action, or if the action
or proceeding is in rem.

Here, the action sought to be annulled is a recognition of foreign judgment in a collection case
rendered by SC of British Columbia. Under the rules, the action for recognition of foreign
judgment does not require the relitigation of the case under Philippine court. The right being
enforced in the said action is a personal one against the spouses and their successor in interest.
Clearly, Mateo is not a party who would be adversely affected by the foreign judgment. He was
neither an indispensable party nor a real party in interest. He is not also a successor in interest.

Moreover, since the annulment of judgment grants a petitioner an opportunity to prosecute his
cause or ventilate his defense, granting the same in this case would not give petitioners available
defenses that he originally did not possess. Petitioners were only affected as far as the alleged
properties of Mateo were levied and sold in public auction- which came after the judgment.

(b) Under Sec.16, Rule 39, a third-party claimant has the following cumulative remedies: 1)
he may avail of “terceria”by serving on the levying officer making the levy an affidavit of his
title, and serving also a copy to the judgment creditor; 2) he may file a case for damages
against the bond issued by the judgment debtor within 120 days from the date of the filing of
the bond; and 3) he may file any proper action to vindicate his claim to the property.

Here, the proper recourse for petitioners is to vindicate and prove their ownership over the
properties in a separate action as allowed under Sec.16, Rule 39.

DISPOSITION: Petition DENIED.