PALANCA

v THE AMERICAN FOOD MANUFACTURING COMPANY

FACTS:
1. Palanca filed with the Philippine Patent Office, an application to register the
trademark LION and the representation of Lions head alleging that she had
been using the same since 1958 for food seasoning.
2. American opposed on the ground that the trademark was similar to its
trademark which it had been using since 1953.
3. The Director of Patents issued a decision stating that the two trademarks
were substantially the same. It decided on the ground of priority of uses.
Since American has been using the same since 1953, its opposition was
granted and the application of Palanca was rejected.
4. After petitioners counsel was furnished with a copy of decision, no appeal
was taken from the decision within the reglementary period.
5. Subsequently. Palanca filed with the Patent Office to set aside the judgment
invoking Section 2, Rule 38, of fraud/negligence committed by her counsel
for the latter failed to file a memorandum before the case was submitted for
decision and that his counsel did not inform her of the decision. Thus, causing
her to be unable to appeal on time.
She claims, furthermore, that the acts and/or behavior of her counsel
cannot be considered honest mistakes, but are fraudulent and
deliberate lapses or omissions on his part, which cannot bind her as a
client.
Palanca found an evidence that the American had been using the
trademark since 1958 and that the bechin American sold were not of
the Lion brand but the Lion Tiger brand.
6. American denied the allegations and put up the defense:
The petition was filed out of time.
The evidence presented was not new and was available during the
hearing.
The decision was not rendered in fraud/negligence as contemplated
in Section 2, Rule 38
7. The Director of Patents denied Palancas petition.
From the facts established, there is no extrinsic or collateral fraud that
would warrant the setting aside of the judgment.
The testimony of the witness presented by Palaca is immaterial to the
issue because what should have been proven was the alleged fraud.
This respondent-appellee maintains that the acts or omissions of her
counsel, cited by petitioner-appellant as constituting fraud, had not
prevented her from presenting fully her case, such that it could not be
said that there had never been a real contest before the Patent Office
regarding the subject matter of the suit. He further maintains that the
acts of petitioner-appellant's counsel complained of, including the
failure to file the memorandum, refer to procedural matters, and were
binding on her.
8. Hence, this petition.

ISSUE: W/N there is fraud perpetrated as contemplated under Section 2 Rule
38

HELD: NO.
1. Records show that the Decision of the Director of Patents has become final
because counsel for the appellant had been served with the copy of the
decision and no appeal had been taken from said decision
It is a settled rule that notice of any decision or order of a court to counsel
is also notice to the client
2. Under Section 2, Rule 38, not every kind of fraud is sufficient ground to set
aside judgment. This Court has held that only extrinsic or collateral, as
distinguished from intrinsic, fraud is a ground for annulling a judgment.
Extrinsic fraud refers to any fraudulent act of the successful party in a
litigation which is committed outside the trial of a case against the
defeated party, or his agents, attorneys or witnesses, whereby said
defeated party is prevented from presenting fully and fairly his side of the
case.
On the other hand, intrinsic fraud refers to acts of a party in a litigation
during the trial, such as the use of forged instruments on perjured
testimony, which did not affect the presentation of the case, but did
prevent a fair and just determination of the case.
3. In the case at bar, the acts complained of by petitioner-appellant, even if
assumed to be true and fraudulent, were all committed by her own counsel,
and not by the successful party or opponent in the case. Hence, petitioner-
appellant had not shown extrinsic fraud that would warrant the setting aside
of the decision.
"Negligence, mistake or fraud of one's own attorney is not ground for
granting a new trial."

4. This Court has held that mistakes of counsel as to the competency of witnesses,
the sufficiency and relevancy of evidence, the proper defense, or the burden of
proof, his failure to introduce certain evidence, or to summon witnesses and to
argue the case, are not proper grounds for a new trial, unless the incompetence of
counsel be so great that his client is prejudiced and prevented from fairly presenting
his case.
The failure of counsel to notify her on time of the adverse judgment to
enable her to appeal therefrom does not constitute excusable
negligence. Notice sent to counsel of record is binding upon the client
and the neglect or failure of counsel to inform him of an adverse
judgment resulting in the loss of his right to appeal is not a ground for
setting aside a judgment valid and regular on its face.

Relief under Rule 38 will not be granted to a party who seeks relief
from the effects of a judgment on the 'ground of fraud, where the loss
 of the remedy is due to his own fault or negligence or that of his
counsel.

4. Even assuming that the evidence presented by respondent-appellee The
American Food Manufacturing Company was false, this circumstance would not
constitute extrinsic fraud, but only intrinsic fraud.
Presentation of false testimony or the concealment of evidentiary facts does
not per se constitute extrinsic fraud, the only kind of fraud sufficient to annul
a court decision.
That the testimony upon which a judgment has been based was false or
perjured is no ground to assail said judgment, unless the fraud refers to
jurisdiction
If the alleged fraud does not refer to jurisdiction, but to the admission by the
trial court in said case, of supposedly false or forged documents, which is
intrinsic in character.