Philippine Amanah Bank (Now Al-Amanah Islamic Investment Bank of The Philippines, Also Known As Islamic Bank) vs. Contreras

SUPREME COURT REPORTS ANNOTATED VOLUME 736 17/02/2019, 2)27 PM
G.R. No. 173168. September 29, 2014.*
PHILIPPINE AMANAH BANK (now AL-AMANAH

ISLAMIC INVESTMENT BANK OF THE PHILIPPINES,
also known as ISLAMIC BANK), petitioner, vs.
EVANGELISTA CONTRERAS, respondent.
Remedial Law; Civil Procedure; Appeals; Both the law and

jurisprudence hold that the perfection of an appeal in the manner
and within the period prescribed by law is mandatory.·Both the
law and jurisprudence hold that the perfection of an appeal in the
manner and within the period prescribed by law is mandatory.
Failure to conform to the rules on appeal renders the judgment
final, executory and unappealable. Finality means that the decision
can no longer be disturbed or reopened no matter how erroneous the
ruling might have been. The decision fully binds, and should be
complied with by the parties and their successors-in-interest.
Same; Same; Relief from Judgment; A party filing a petition for
relief from judgment must strictly comply with two (2) reglementary
periods: first, the petition must be filed within sixty (60) days from
knowledge of the judgment, order or other proceeding to be set aside;
and second, within a fixed period of six (6) months from entry of
such judgment, order or other proceeding.·A party filing a petition
for relief from judgment must strictly comply with two (2)
reglementary periods: first, the petition must be filed within sixty
(60) days from knowledge of the judgment, order or other
proceeding to be set aside; and second, within a fixed period of six
(6) months from entry of such judgment, order or other proceeding.
Strict compliance with these periods is required because a petition
for relief from judgment is a final act of liberality on the part of the
State, which remedy cannot be allowed to erode any further the
fundamental principle that a judgment, order or proceeding must,
at some definite time, attain finality in order to put an end to
litigation.
http://www.central.com.ph/sfsreader/session/00000168fa2246828c2e8af5003600fb002c009e/p/ARL604/?username=Guest Page 1 of 20
_______________
* SECOND DIVISION.
568
568 SUPREME COURT REPORTS ANNOTATED

Philippine Amanah Bank (now Al-Amanah Islamic
Investment Bank of the Philippines, also known as Islamic
Bank) vs. Contreras
Same; Same; Same; As a petition for relief is actually the „last

chance‰ given by law to litigants to question a final judgment or
order, the failure to avail of this final chance within the grace period
fixed by the Rules is fatal.·Strict compliance with the periods
stated under Rule 38 stems from the equitable character and nature
of the petition for relief. Indeed, relief is allowed only in exceptional
cases such as when there is no other available or adequate remedy.
As a petition for relief is actually the „last chance‰ given by law to
litigants to question a final judgment or order, the failure to avail of
this final chance within the grace period fixed by the Rules is fatal.
Same; Same; Same; Relief from judgment is a remedy provided
by law to any person against whom a decision or order is entered
through fraud, accident, mistake, or excusable negligence. It is a
remedy, equitable in character, that is allowed only in exceptional
cases when there is no other available or adequate remedy.·Section
1, Rule 38 of the 1997 Rules of Civil Procedure provides that [w]hen
a judgment or final order is entered, or any other proceeding is
thereafter taken against a party in any court through fraud,
accident, mistake, or excusable negligence, he may file a petition in
the same court and in the same case praying that the judgment,
order or proceeding be set aside. Relief from judgment is a remedy
provided by law to any person against whom a decision or order is
entered through fraud, accident, mistake, or excusable negligence.
It is a remedy, equitable in character, that is allowed only in
exceptional cases when there is no other available or adequate
remedy. When a party has another remedy available to him, which
may either be a motion for new trial or appeal from an adverse
decision of the trial court, and he was not prevented by fraud,
accident, mistake, or excusable negligence from filing such motion
or taking such appeal, he cannot avail of the remedy of petition for
relief.
Attorneys; It is settled that clients are bound by the mistakes,
negligence and omission of their counsel.·Negligence to be
excusable must be one that ordinary diligence and prudence could
not have guarded against. Atty. ValmoridaÊs oversight in the present
case can hardly be characterized as excusable, much less
unavoidable. We point out that the one who died was the
respondentÊs wife, and not the respondent; nothing prevented Atty.
Valmorida from filing an appeal to challenge the RTC ruling. That
Atty. Valmorida took into account the emotions vis-à-vis the medical
condition of the respon-
569
VOL. 736, SEPTEMBER 29, 2014 569

Bank) vs. Contreras
dent, was beside the point. As a lawyer, he knew or ought to

have known that failure to appeal the RTC decision would render it
final. To be sure, the respondent could have easily prevented the
RTC decision from becoming final and executory had he only
exerted ordinary diligence by filing a timely motion for
reconsideration or filing a notice of appeal. It is settled that clients
are bound by the mistakes, negligence and omission of their
counsel. While, exceptionally, the client may be excused from the
failure of counsel, the circumstances obtaining in the present case
do not convince this Court to recognize the exception.
Procedural Rules and Technicalities; While it is true that
litigation is not a game of technicalities, it is equally true that every
case must be prosecuted in accordance with the prescribed procedure
to ensure an orderly and speedy administration of justice.·
Procedural rules are designed to facilitate the adjudication of cases.
Courts and litigants alike are enjoined to abide strictly by the rules.
While in certain instances, we allow a relaxation in the application
of the rules, we never intend to forge a weapon for erring litigants
to violate the rules with impunity. The liberal interpretation and
application of the rules apply only in proper cases of demonstrable
merit and under justifiable causes and circumstances. While it is
true that litigation is not a game of technicalities, it is equally true
that every case must be prosecuted in accordance with the

prescribed procedure to ensure an orderly and speedy
administration of justice. Party-litigants and their counsel are well-
advised to abide by, rather than flaunt, procedural rules; these rules
illumine the path of the law and place the pursuit of justice in
reasonable and orderly basis.
Remedial Law; Civil Procedure; Relief from Judgment; Relief
will not be granted to a party who seeks avoidance from the effects of
the judgment when the loss of the remedy at law was due to his own
(or that of his counselÊs) negligence; otherwise, the petition for relief
can be used to revive the right to appeal which had been lost through
inexcusable negligence.·We stress that the mistake contemplated
by Rule 38 of the Rules of Court pertains generally to one of fact,
not of law. It does not refer to a judicial errors that the court might
have committed. Such judicial errors may be corrected by means of
an appeal. To recall, the respondent already raised these grounds in
his complaint for annulment of real estate mortgage, cancellation of
original certificate of title, reconveyance, recovery of possession and
570

Bank) vs. Contreras
damages before the RTC. Indeed, relief will not be granted to a

party who seeks avoidance from the effects of the judgment when
the loss of the remedy at law was due to his own (or that of his
counselÊs) negligence; otherwise, the petition for relief can be used
to revive the right to appeal which had been lost through
inexcusable negligence.
Banks and Banking; Banks are expected to exercise more care
and prudence than private individuals in their dealings, even those
involving registered lands, since their business is impressed with
public interest.·We are aware of the rule that banks are expected
to exercise more care and prudence than private individuals in their
dealings, even those involving registered lands, since their business
is impressed with public interest. The rule that persons dealing
with registered lands can rely solely on the certificate of title does
not apply to banks. Simply put, the ascertainment of the status or
condition of a property offered to it as security for a loan must be a

standard and indispensable part of a bankÊs operations.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Reynaldo S. Llego for petitioner.
Buenaventura E. Sagrado for respondent.
BRION, J.:
Before us is a petition for review on certiorari filed by

petitioner Philippine Amanah Bank (now Al-Amanah
Islamic Investment Bank of the Philippines)1 against
respondent Evangelista Contreras assailing the decision2
and resolution3
_______________
1 A government-owned or -controlled corporation.

2 Rollo, pp. 37-48; penned by Associate Justice Teresita Dy-Liacco-
Flores, and concurred in by Associate Justices Japar B. Dimaampao and
Romulo V. Borja.
3 Id., at p. 49.
571
VOL. 736, SEPTEMBER 29, 2014 571

Bank) vs. Contreras
of the Court of Appeals (CA) dated May 4, 2004 and May

26, 2006, respectively, in C.A.-G.R. CV No. 47053.
The Antecedents
On July 21, 1981, the respondent filed a complaint for

annulment of real estate mortgage, cancellation of original
certificate of title, reconveyance, recovery of possession and
damages4 before the Regional Trial Court (RTC), Branch
19, Cagayan de Oro City against spouses Calinico and

Elnora Ilogon and the petitioner bank, docketed as Civil
Case No. 7950.
The respondent alleged that he was the owner of
Cadastral Lot No. 19316-D, a 640-square meter parcel of
land located in Cagayan de Oro City. On August 1, 1980,
the respondent went to the house of his brother-in-law,
Calinico Ilogon, to seek assistance in obtaining a loan from
the petitioner bank since he (Calinico) is a friend of the
bankÊs Chief of the Loan Division. The respondent brought
with him the documents of the subject lot, and told Calinico
that he was willing to mortgage this property as security
for the loan. Three days later, Calinico told the respondent
that the petitioner bank could grant a loan up to
P200,000.00 if the subject property would be titled.
On August 3, 1980, the respondent and Calinico, upon
the suggestion of the Chief of the petitioner bankÊs Loan
Division, entered into a Deed of Confirmation of Sale5
under which they transferred the title of the land to
Calinico6 who, in turn, mortgaged it to the petitioner bank.
On October 25, 1980, Calinico and the respondent executed
an Agreement7 stating, among others, that the deed of sale
they executed was for the purpose of securing a loan with
the petitioner bank.
_______________
4 Records, pp. 1-7.

5 Id., at p. 319.
6 OCT No. P-2034 was issued in favor of Calinico Ilogon.
7 Records, p. 10.
572

Bank) vs. Contreras
On May 20, 1981, the respondent wrote a letter and

went to the petitioner bank directing the latterÊs manager
not to release the loan to Calinico. The respondent handed
a copy of the letter to the bank on the same day. On the

next day, the respondent again went to the petitioner bank,
but was informed that the loaned amount of P50,000.00
had already been given to Calinico earlier that morning.
The respondent thereafter learned that the petitioner
released another P50,000.00 as loan to Calinico.
That petitioner bank subsequently extrajudicially
foreclosed the mortgage due to the Ilogon spousesÊ failure to
pay the loan. On January 9, 1989, the Provincial Sheriff
sold the mortgaged property at public auction to the
petitioner bank as the highest bidder. On October 31, 1989,
the Provincial Sheriff issued a Certificate of Sale in favor of
the petitioner bank.
For the mortgagorÊs failure to redeem the mortgaged
property within the period prescribed by law, the title to
the property was consolidated in the petitioner bankÊs
name. Consequently, Original Certificate of Title (OCT) No.
P-20348 was cancelled and Transfer Certificate of Title
(TCT) No. T-633319 was issued in the petitioner bankÊs
name.
The RTC and the CAÊs Rulings
In its decision dated September 13, 1993, the RTC

dismissed the complaint for lack of merit. It held that the
petitioner bank was not aware of the agreement between
the respondent and the Ilogon spouses, and that the
respondent failed to present any evidence as basis to annul
the mortgage contract. To quote the RTC ruling:
_______________
8 Id., at pp. 12-13.

9 Id., at p. 419.
573
VOL. 736, SEPTEMBER 29, 2014 573

Bank) vs. Contreras
xxxx
Plaintiff has not presented any evidence to be a basis for the
annulment of the real estate mortgage, the bankÊs certificate of title,
as well as justification for an order from this court to return the
possession of the lot to the plaintiff. The agreement between
plaintiff and defendant Ilogon spouses about the purpose(s) of the
loan and how they would dispose of it had until the filing of this
case, been unknown to the bank. The latter has been a lender in
good faith, later a buyer in good faith.
The court finds that plaintiff has failed to prove his allegations,
and that the preponderance of evidence has been in favor of the
bank.10
xxxx
The respondent moved to reconsider this decision,11

but the RTC denied his motion for having been filed out of
time. Accordingly, the RTC declared its September 13, 1993
decision final and executory.
The respondent filed a petition for relief from
judgment12 before the RTC, claiming that he had been
prevented from moving for the timely reconsideration of
the trial courtÊs decision or to appeal this decision on time
due to the excusable negligence arising from the death of
his wife on September 13, 1993.
He explained that his counsel, Atty. Bienvenido
Valmorida, only informed him of the trial courtÊs adverse
decision thirty-seven (37) days from his counselÊs receipt of
the decision. The respondent also claimed that the
petitioner bank was not a lender in good faith since it knew
that the Ilogon spouses did not own the mortgaged
property.
_______________
10 Rollo, p. 51.
11 Filed by respondentÊs new lawyer, Atty. Tommy Pacana.
12 Rollo, pp. 61-66.
574


Bank) vs. Contreras
In its order13 dated July 1, 1994, the RTC denied the

respondentÊs petition for relief from judgment for lack of
merit.
The respondent appealed to the CA and the appeal was
docketed as C.A.-G.R. CV No. 47053. In its decision of May
4, 2004, the CA set aside the RTCÊs July 1, 1994 order, and
declared the real estate mortgage null and void. It also
ordered the petitioner bank to reconvey the land covered by
TCT No. T-63331 to the respondent within sixty (60) days
from entry of judgment.
It further directed the petitioner bank to pay the
equivalent monetary value of the land based on the price of
the property at the public auction, with 6% interest per
annum from the date of the sheriff Ês auction sale or the
amount of the sale of the lot by the bank to third persons
plus 6% interest per annum, in the event that the property
had already been conveyed by the petitioner bank to third
persons.
The CA held that while the respondent was late in filing
his motion for reconsideration, the rules of procedure
should be relaxed since the matters he raised in his
petition were meritorious.
It disagreed with the RTCÊs ruling that the respondent
did not present any evidence that the petitioner bank had
knowledge of the defect in CalinicoÊs title to the mortgaged
land. According to the CA, the petitioner bank knew that
there were conflicting claims over the land, and that the
OCT of this land carried a prohibition of any encumbrance
on the lot for five (5) years. It added that the petitioner
bank failed to exercise diligence in ascertaining the
ownership of the land, and ignored the respondentÊs
representations that CalinicoÊs title was defective and was
only for loan purposes.
The Ilogon spouses and the petitioner bank moved to
reconsider this decision, but the CA denied their motion in
its resolution dated May 26, 2006.
_______________
13 Id., at p. 71.
575
VOL. 736, SEPTEMBER 29, 2014 575

Bank) vs. Contreras
The Petition for Review on Certiorari
In the present petition, the petitioner bank alleged that

the respondentÊs petition for relief from judgment is
unmeritorious as it was filed only after the lapse of ninety-
one (91) days from his (respondentÊs) notice of the adverse
judgment. The bank also claimed that the failure of the
respondentÊs counsel to file a timely motion for
reconsideration from the RTCÊs judgment did not constitute
excusable negligence so as to warrant the granting of the
respondentÊs petition.
The petitioner bank further maintained that the real
estate mortgage over the land was valid because: (1) its
validity was never raised as an issue before the trial court;
and (2) the petitioner bank is exempted from the 5-year
prohibitory period since it is a Government branch, unit or
institution.
In his comment, the respondent,14 represented by his
heirs, maintained that his counselÊs negligence was
excusable, and that the petitioner bank was a mortgagee in
bad faith.
Our Ruling
After due consideration, we resolve to grant the

petition.
RTC judgment already final and executory
We note at the outset that the RTCÊs September 13, 1993

decision which dismissed the respondentÊs complaint for
damages had already become final and executory due to the

failure of his counsel to file a timely motion for
reconsideration. This fact was admitted by the respondent
himself in his various pleadings before the lower and
appellate courts, as well as in his comment before this
Court.
_______________
14 Died on April 25, 2000; see Rollo, p. 78.
576

Bank) vs. Contreras
Both the law and jurisprudence hold that the perfection

of an appeal in the manner and within the period
prescribed by law is mandatory. Failure to conform to the
rules on appeal renders the judgment final, executory and
unappealable. Finality means that the decision can no
longer be disturbed or reopened no matter how erroneous
the ruling might have been. The decision fully binds, and
should be complied with by the parties and their
successors-in-interest.
The Petition for Relief was filed out of time
We sustain the trial courtÊs denial of the respondentÊs

petition for relief from judgment to challenge its final and
executory decision.
Section 3, Rule 38 of the 1997 Rules of Civil Procedure
lays down the requirements for a petition for relief from
judgment, thus:
Section 3. Time for filing petition; contents and verification.·A

petition provided for in either of the preceding sections of this Rule
must be verified, filed within sixty (60) days after the petitioner
learns of the judgment, final order, or other proceeding to be set
aside, and not more than six (6) months after such judgment or
final order was entered, or such proceeding was taken; and must be
accompanied with affidavits showing the fraud, accident, mistake,
or excusable negligence relied upon, and the facts constituting the
petitionerÊs good and substantial cause of action or defense, as the
case may be.
A party filing a petition for relief from judgment must

strictly comply with two (2) reglementary periods: first, the
petition must be filed within sixty (60) days from
knowledge of the judgment, order or other proceeding to be
set aside; and second, within a fixed period of six (6)
months from entry of such judgment, order or other
proceeding.
577
VOL. 736, SEPTEMBER 29, 2014 577

Bank) vs. Contreras
Strict compliance with these periods is required because

a petition for relief from judgment is a final act of liberality
on the part of the State, which remedy cannot be allowed to
erode any further the fundamental principle that a
judgment, order or proceeding must, at some definite time,
attain finality in order to put an end to litigation.15
In the present case, the respondentÊs counsel received a
copy of the RTCÊs decision dated September 13, 1993 on
September 15, 1993. Thus, the petition for relief from
judgment should have been filed on or before November 14,
1993. However, the records showed that the petition was
filed only on December 15, 1993, or ninety-one (91) days
later.
Strict compliance with the periods stated under Rule 38
stems from the equitable character and nature of the
petition for relief. Indeed, relief is allowed only in
exceptional cases such as when there is no other available
or adequate remedy. As a petition for relief is actually the
„last chance‰ given by law to litigants to question a final
judgment or order, the failure to avail of this final chance
within the grace period fixed by the Rules is fatal.16
The respondentÊs cited circumstances are not the proper

subject of a petition for relief from the judgment
Section 1, Rule 38 of the 1997 Rules of Civil Procedure

provides that [w]hen a judgment or final order is entered,
or any other proceeding is thereafter taken against a party
in any court through fraud, accident, mistake, or excusable
negligence, he may file a petition in the same court and in
the
_______________
15 See Lynx Industries Contractor, Inc. v. Tala, 557 Phil. 711, 716; 531
SCRA 169, 175 (2007).
16 See Quelnan v. VHF Philippines, 507 Phil. 75, 83; 470 SCRA 73, 80
(2005).
578

Bank) vs. Contreras
same case praying that the judgment, order or

proceeding be set aside.
Relief from judgment is a remedy provided by law to any
person against whom a decision or order is entered through
fraud, accident, mistake, or excusable negligence. It is a
remedy, equitable in character, that is allowed only in
exceptional cases when there is no other available or
adequate remedy. When a party has another remedy
available to him, which may either be a motion for new
trial or appeal from an adverse decision of the trial court,
and he was not prevented by fraud, accident, mistake, or
excusable negligence from filing such motion or taking such
appeal, he cannot avail of the remedy of petition for relief.17
In the present case, the respondent alleged that he had
been prevented from moving for the timely reconsideration
of the trial courtÊs decision or to appeal this decision on
time due to the death of his wife on September 13, 1993. He

explained that his counsel, Atty. Valmorida, was the
brother of his deceased wife, and could not bear to tell him
that he had lost his case in the RTC given the
circumstances. Atty. Valmorida only informed him of the
courtÊs adverse decision thirty-seven (37) days after his
(Atty. ValmoriaÊs) receipt of the adverse decision. This
circumstance, according to the respondent, was a clear case
of excusable negligence on the part of his counsel,
warranting relief from judgment.
We do not find this explanation persuasive.
Negligence to be excusable must be one that ordinary
diligence and prudence could not have guarded against.
Atty. ValmoridaÊs oversight in the present case can hardly
be characterized as excusable, much less unavoidable.
We point out that the one who died was the respondentÊs
wife, and not the respondent; nothing prevented Atty. Val-
_______________
17 Guevarra, et al. v. Sps. Bautista, et al., 593 Phil. 20, 26; 572 SCRA
375, 381 (2008).
579
VOL. 736, SEPTEMBER 29, 2014 579

Bank) vs. Contreras
morida from filing an appeal to challenge the RTC

ruling. That Atty. Valmorida took into account the emotions
vis-à-vis the medical condition of the respondent, was
beside the point. As a lawyer, he knew or ought to have
known that failure to appeal the RTC decision would
render it final. To be sure, the respondent could have easily
prevented the RTC decision from becoming final and
executory had he only exerted ordinary diligence by filing a
timely motion for reconsideration or filing a notice of
appeal.
It is settled that clients are bound by the mistakes,
negligence and omission of their counsel. While,
exceptionally, the client may be excused from the failure of

counsel, the circumstances obtaining in the present case do
not convince this Court to recognize the exception.
We likewise emphasize that procedural rules are
designed to facilitate the adjudication of cases. Courts and
litigants alike are enjoined to abide strictly by the rules.
While in certain instances, we allow a relaxation in the
application of the rules, we never intend to forge a weapon
for erring litigants to violate the rules with impunity. The
liberal interpretation and application of the rules apply
only in proper cases of demonstrable merit and under
justifiable causes and circumstances. While it is true that
litigation is not a game of technicalities, it is equally true
that every case must be prosecuted in accordance with the
prescribed procedure to ensure an orderly and speedy
administration of justice. Party-litigants and their counsel
are well-advised to abide by, rather than flaunt, procedural
rules; these rules illumine the path of the law and place the
pursuit of justice in reasonable and orderly basis.
In his petition for relief, the respondent also claimed
that the petitioner bank was not a lender in good faith
since it knew that the mortgaged land was not owned by
the Ilogon spouses. He added that the petitioner bank and
the Ilogon spouses connived with each other to release the
loan to Calinico.
580

Bank) vs. Contreras
We stress that the mistake contemplated by Rule 38 of

the Rules of Court pertains generally to one of fact, not of
law. It does not refer to a judicial errors that the court
might have committed. Such judicial errors may be
corrected by means of an appeal. To recall, the respondent
already raised these grounds in his complaint for
damages before the RTC. Indeed, relief will not be granted

to a party who seeks avoidance from the effects of the
judgment when the loss of the remedy at law was due to his
own (or that of his counselÊs) negligence; otherwise, the
petition for relief can be used to revive the right to appeal
which had been lost through inexcusable negligence.18
At any rate, the grounds raised by the respondent are
unmeritorious.
We are aware of the rule that banks are expected to
exercise more care and prudence than private individuals
in their dealings, even those involving registered lands,
since their business is impressed with public interest. The
rule that persons dealing with registered lands can rely
solely on the certificate of title does not apply to banks.19
Simply put, the ascertainment of the status or condition of
a property offered to it as security for a loan must be a
standard and indispensable part of a bankÊs operations.20
In the present case, however, nothing in the documents
presented by Calinico would arouse the suspicion of the
petitioner bank to prompt a more extensive inquiry. When
the Ilogon spouses applied for a loan, they presented as
collateral a parcel of land evidenced by OCT No. P-2034
issued by the Office of the Register of Deeds of Cagayan de
Oro, and regis-
_______________
18 Id., at p. 27; p. 382.

19 See Philippine Trust Company v. Court of Appeals, G.R. No.
150318, November 22, 2010, 635 SCRA 518, 530.
20 See Cruz v. Bancom Finance Corporation, 429 Phil. 225, 239; 379
SCRA 490, 505 (2002).
581
VOL. 736, SEPTEMBER 29, 2014 581

Bank) vs. Contreras
tered in the name of Calinico. This document did not

contain any inscription or annotation indicating that the
respondent was the owner or that he has any interest in

the subject land. In fact, the respondent admitted that
there was no encumbrance annotated on CalinicoÊs title at
the time of the latterÊs loan application. Any private
arrangement between Calinico and the respondent
regarding the proceeds of the loan was not the concern of
the petitioner bank, as it was not a privy to this agreement.
If Calinico violated the terms of his agreement with the
respondent on the turn-over of the proceeds of the loan, then
the latterÊs proper recourse was to file the appropriate
criminal action in court.
The respondent also failed to prove its allegation that
the petitioner bank knew, thru a letter sent by the formerÊs
lawyer, Atty. Crisanto Mutya, Jr., that the sale of the
subject land between him and Calinico was made only for
loan purposes, and that failure of Calinico to turn over the
proceeds of the loan will invalidate the sale. In his
November 6, 1991 testimony, the respondent admitted that
it was his son who gave the letter to the manager of the
petitioner bank, thus:
ATTY. REYNALDO LLEGO:

Q: Mr. Contreras, may I just show to you Exhibit C, the letter
addressed to Amanah Bank. You said that, this letter Exhibit C was
received by the Manager of the bank. May I know from you the
name of the Manager at that time?
EVANGELISTA CONTRERAS:
A: I did not know the name of the Manager at that time. Because
it was my son who brought this Exhibit C to the bank, and
according to him it was the personnel of the bank who
received Exhibit C.
Q: And this was received on what date?
A: May 20, 1981.
582

Bank) vs. Contreras
Q: Directing your attention to Exhibit B which is the supposed
counter agreement. You will of course agree with me that the bank
has no knowledge of the execution of that agreement, is that
correct?
A: When my lawyer wrote a letter to the bank at that time, he
attached one of the Xerox copy of this Exhibit B.
xxxx
Q: The title of the land was already in the name of the spouses
Ilogon. There was no encumbrance at the time it was offered for
loan.
A: When Mr. Ilogon got the title, I did not see anymore because I
trust him already.21 (Emphasis ours)
Clearly, the respondent testified on matters not of his

own personal knowledge, hence hearsay. Corollarily, the
respondentÊs son was never presented in court. Even
assuming, for the sake of argument, that the petitioner
bank received a copy of Atty. MutyaÊs letter,22 it was still
well within its discretion to grant or deny the loan
application after evaluating the documents submitted for
loan applicant. As earlier stated, OCT No. P-2034 issued in
CalinicoÊs favor was free from any encumbrances. The
petitioner bank is not anymore privy to whatever
arrangements the owner entered into regarding the
proceeds of the loan.
Finally, we point out that the petitioner bank is a
government owned or -controlled corporation. While OCT
No. P-2034 (issued in favor of Calinico by virtue of the deed
of confirmation of sale) contained a prohibition against the
alienation and encumbrance of the subject land within five
(5) years from the date of the patent, the CA failed to
mention that by the ex-
_______________
21 TSN, November 6, 1991, pp. 6-7.

22 The mark „5/20/81‰ was written on Atty. MutyaÊs letter, but it was
not clear who wrote this mark. There was also no receiving stamp from
the petitioner bank on this letter.
583
VOL. 736, SEPTEMBER 29, 2014 583

Bank) vs. Contreras
press wordings of the OCT itself, the prohibition does

not cover the alienation and encumbrance „in favor of the
Government or any of its branches, units or institutions.‰23
WHEREFORE, in light of all the foregoing, we GRANT
the present petition, and SET ASIDE the decision and
resolution of the Court of Appeals dated May 4, 2004 and
May 26, 2006, respectively, in C.A.-G.R. CV No. 47053.
Accordingly, the decision of the Regional Trial Court,
Branch 19, Cagayan de Oro City dated September 13, 1993
is REINSTATED.
SO ORDERED.
Carpio (Chairperson), Del Castillo, Mendoza and

Leonen, JJ., concur.
Petition granted, judgment and resolution set aside.
Notes.·A petition for relief from judgment must be

filed within 60 days from notice of such judgment or within
six months from the entry of judgment. (AFP Mutual
Benefit Association, Inc. vs. Regional Trial Court, Marikina
City, Branch 193, 642 SCRA 720 [2011])
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. (Id.)
··o0o··
_______________
23 Records, p. 413.
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SUPREME COURT REPORTS ANNOTATED VOLUME 736 17/02/2019, 2)27 PM

G.R. No. 173168. September 29, 2014.*

PHILIPPINE AMANAH BANK (now AL-AMANAH

Remedial Law; Civil Procedure; Appeals; Both the law and

568 SUPREME COURT REPORTS ANNOTATED

Same; Same; Same; As a petition for relief is actually the „last

VOL. 736, SEPTEMBER 29, 2014 569

dent, was beside the point. As a lawyer, he knew or ought to

that every case must be prosecuted in accordance with the

570 SUPREME COURT REPORTS ANNOTATED

damages before the RTC. Indeed, relief will not be granted to a

condition of a property offered to it as security for a loan must be a

PETITION for review on certiorari of the decision and

Before us is a petition for review on certiorari filed by

1 A government-owned or -controlled corporation.

VOL. 736, SEPTEMBER 29, 2014 571

of the Court of Appeals (CA) dated May 4, 2004 and May

On July 21, 1981, the respondent filed a complaint for

19, Cagayan de Oro City against spouses Calinico and

4 Records, pp. 1-7.

572 SUPREME COURT REPORTS ANNOTATED

On May 20, 1981, the respondent wrote a letter and

a copy of the letter to the bank on the same day. On the

The RTC and the CAÊs Rulings

In its decision dated September 13, 1993, the RTC

8 Id., at pp. 12-13.

VOL. 736, SEPTEMBER 29, 2014 573

The respondent moved to reconsider this decision,11

574 SUPREME COURT REPORTS ANNOTATED

Investment Bank of the Philippines, also known as Islamic

In its order13 dated July 1, 1994, the RTC denied the

VOL. 736, SEPTEMBER 29, 2014 575

The Petition for Review on Certiorari

In the present petition, the petitioner bank alleged that

After due consideration, we resolve to grant the

RTC judgment already final and executory

We note at the outset that the RTCÊs September 13, 1993

damages had already become final and executory due to the

14 Died on April 25, 2000; see Rollo, p. 78.

576 SUPREME COURT REPORTS ANNOTATED

Both the law and jurisprudence hold that the perfection

The Petition for Relief was filed out of time

We sustain the trial courtÊs denial of the respondentÊs

Section 3. Time for filing petition; contents and verification.·A

A party filing a petition for relief from judgment must

VOL. 736, SEPTEMBER 29, 2014 577

Strict compliance with these periods is required because

within the grace period fixed by the Rules is fatal.16

The respondentÊs cited circumstances are not the proper

Section 1, Rule 38 of the 1997 Rules of Civil Procedure

578 SUPREME COURT REPORTS ANNOTATED

same case praying that the judgment, order or

time due to the death of his wife on September 13, 1993. He

VOL. 736, SEPTEMBER 29, 2014 579

morida from filing an appeal to challenge the RTC

exceptionally, the client may be excused from the failure of

580 SUPREME COURT REPORTS ANNOTATED

We stress that the mistake contemplated by Rule 38 of

damages before the RTC. Indeed, relief will not be granted