GR194962 Digest
GR194962 Digest
GR194962 Digest
Hence, this petition praying for the reversal and setting aside of the August 13, 2010 and December 9,
2010 Resolutions of the CA in CA-G.R. SP Number 115034 anchored on the ground that the CA gravely
erred
(A) WHEN IT RULED THAT PETITIONER CEZA FAILED TO SHOW THE SPECIFIC ACTS COMMITTED BY HON. JUDGE
ZALDIVAR THAT CONSTITUTE GRAVE ABUSE OF DISCRETION.
(B) WHEN IT RULED THAT PETITIONER CEZA IS BOUND BY THE MISTAKES AND NEGLIGENCE OF ATTY. BANIAGA.
(C) WHEN IT RULED THAT PETITIONER CEZA’s 15-DAY PERIOD TO APPEAL IS COUNTED FROM ATTY. BANIAGA’S
RECEIPT OF THE 30 OCTOBER 2009 DECISION.
(D) WHEN IT RULED THAT UNDER REPUBLIC ACT (R.A.) NO. 7922, PETITIONER CEZA HAS THE POWER TO OPERATE ON
ITS OWN OR LICENSE TO OTHERS, JAI-ALAI.
Petitioner CEZA ascribes grave error on the part of the CA in dismissing its petition on a mere
technicality. The petitioner avers that its case is an exception to the general rule that the
negligence of counsel binds the client because the negligence of Atty. Baniaga was so gross, reckless
and inexcusable as it systematically deprived CEZA of its right to appeal and fully ventilate its
cause.
Traversing such assertion, MVGC insists that CEZA should be bound by the mistakes of its counsel and
suffer the consequences. It asserts that relief from judgment should not be granted on the excuse that
the failure to appeal was due to the negligence of its counsel. MVGC also argues that the petition for
relief cannot be used to revive the right to appeal which had been lost through the counsel’s
inexcusable negligence
The Court finds the petition meritorious.
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. This remedy is equitable in
character, allowed only in exceptional cases where there is no other available or adequate remedy
provided by law or the rules. Generally, 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 the negligence of his
counsel because of the time-honored principle that clients are bound by the mistakes and negligence of
their counsel.
The notices sent to the 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 that is valid and regular on its face. This is based on the rule
that any act performed by a counsel within the scope of his general or implied authority is regarded
as an act of the client.
In highly meritorious cases, however, the Court may depart from the application of this rule such as
when the negligence of the counsel is so gross, reckless, and inexcusable that the client is deprived
of due process of law; when adherence to the general rule would result in the outright deprivation of
the clients’ property; or when the interests of justice so require. In the case of People’s Homesite
and Housing Corporation v. Tiongco, the Court stated the reason therefor. Thus:
There should be no dispute regarding the doctrine that normally notice to counsel is notice to
parties, and that such doctrine has beneficient effects upon the prompt dispensation of justice. Its
application to a given case, however, should be looked into and adopted, according to the surrounding
circumstances; otherwise, in the court’s desire to make a short cut of the proceedings, it might
foster, wittingly or unwittingly, dangerous collusions to the detriment of justice. It would then be
easy for one lawyer to sell one’s right down the river, by just alleging that he just forgot every
process of the court affecting his clients, because he was so busy. Under this circumstance, one
should not insist that a notice to such irresponsible lawyer is also a notice to his clients.
Emphases Supplied
Thus, though the Court is cognizant of the general rule, in cases of gross and palpable negligence of
counsel and of extrinsic fraud, the Court must step in and accord relief to a client who suffered
thereby. For negligence to be excusable, it must be one which ordinary diligence and prudence could
not have guarded against, and for the extrinsic fraud to justify a petition for relief from judgment,
it must be 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. Guided by these pronouncements, the Court in the case of Apex Mining, Inc. vs. Court of
Appeals wrote:
If the incompetence, ignorance or inexperience of counsel is so great and the error committed as a
result thereof is so serious that the client, who otherwise has a good cause, is prejudiced and denied
his day in court, the litigation may be reopened to give the client another chance to present his
case. Similarly, when an unsuccessful party has been prevented from fully and fairly presenting his
case as a result of his lawyer’s professional delinquency or infidelity the litigation may be reopened
to allow the party to present his side. Where counsel is guilty of gross ignorance, negligence and
dereliction of duty, which resulted in the clients being held liable for damages in a damage suit, the
client is deprived of his day in court and the judgment may be set aside on such ground.
Emphases Supplied
The situation in this case is almost similar to that in the recent case of Lasala v. National Food
Authority. In said case, the Court allowed the petition for relief from judgment filed by the National
Food Authority due to its counsels’ repeated acts of negligence and employment of extrinsic fraud to
its detriment. The Court wrote:
Extrinsic fraud in a petition for annulment refers to "any fraudulent act of the prevailing party in
litigation committed outside of the trial of the case, where the defeated party is prevented from
fully exhibiting his side by fraud or deception practiced on him by his opponent, such as by keeping
him away from court, by giving him a false promise of a compromise, or where an attorney fraudulently
or without authority connives at his defeat."
Because extrinsic fraud must emanate from the opposing party, extrinsic fraud concerning a party's
lawyer often involves the latter's collusion with the prevailing party, such that his lawyer connives
at his defeat or corruptly sells out his client's interest.
In this light, we have ruled in several cases that a lawyer's mistake or gross negligence does not
amount to the extrinsic fraud that would grant a petition for annulment of judgment.
We so ruled not only because extrinsic fraud has to involve the opposing party, but also because the
negligence of counsel, as a rule, binds his client.
We have recognized, however, that there had been instances where the lawyer's negligence had been so
gross that it amounted to a collusion with the other party, and thus, qualified as extrinsic fraud.
In Bayog v. Natino, for instance, we held that the unconscionable failure of a lawyer to inform his
client of his receipt of the trial court's order and the motion for execution, and to take the
appropriate action against either or both to protect his client's rights amounted to connivance with
the prevailing party, which constituted extrinsic fraud.
Two considerations differentiate the lawyer's negligence in Bayog from the general rule enunciated in
Tan. While both cases involved the lawyer's negligence to inform the client of a court order, the
negligence in Bayog was unconscionable because (1) the client's pauper litigant status indicated that
he relied solely on his counsel for the protection and defense of his rights; and (2) the lawyer's
repeated acts of negligence in handling the case showed that his inaction was deliberate.
In contrast, the Court ruled in Tan that the petitioner's failure to file a notice of appeal was
partly his fault and not just his lawyer's. Too, the failure to file the notice of appeal was the only
act of negligence presented as extrinsic fraud.
We find the exceptional circumstances in Bayog to be present in the case now before us.
The party in the present case, the NFA, is a government agency that could rightly rely solely on its
legal officers to vigilantly protect its interests. The NFA's lawyers were not only its counsel, they
were its employees tasked to advance the agency's legal interests.
Further, the NFA's lawyers acted negligently several times in handling the case that it appears
deliberate on their part.
First, Atty. Mendoza caused the dismissal of the NFA's complaint against Lasala by negligently and
repeatedly failing to attend the hearing for the presentation of the NFA's evidence-in-chief.
Consequently, the NFA lost its chance to recover from Lasala the employee benefits that it allegedly
shouldered as indivect employer.
Atty. Mendoza never bothered to provide any valid excuse for this crucial omission on his part.
Parenthetically, this was not the first time Atty. Mendoza prejudiced the NFA; he did the same when he
failed to file a motion for reconsideration and an appeal in a prior 1993 case where Lasala secured a
judgment of P34,500,229against the NFA.
For these failures, Atty. Mendoza merely explained that the NFA's copy of the adverse decision was
lost and was only found after the lapse of the period for appeal. Under these circumstances, the NFA
was forced to file an administrative complaint against Atty. Mendoza for his string of negligent acts.
Atty. Cahucom, Atty. Mendoza's successor in handling the case, notably did not cross-examine Lasala's
witnesses, and did not present controverting evidence to disprove and counter Lasala's counterclaim.
Atty. Cahucom further prejudiced the NFA when he likewise failed to file a motion for reconsideration
or an appeal from the trial court's September 2, 2002 decision, where Lasala was awarded the huge
amount of P52,788,970.50, without any convincing evidence to support it.
When asked to justify his failure, Atty. Cahucom, like Atty. Mendoza, merely mentioned that the NFA's
copy of the decision was lost and that he only discovered it when the period for appeal had already
lapsed.
The trial court's adverse decision, of course, could have been avoided or the award minimized, if
Atty. Cahucom did not waive the NFA's right to present its controverting evidence against Lasala's
counterclaim evidence. Strangely, when asked during hearing, Atty. Cahucom refused to refute Lasala's
testimony and instead simply moved for the filing of a memorandum.
The actions of these lawyers, that at the very least could be equated with unreasonable disregard for
the case they were handling and with obvious indifference towards the NFA's plight, lead us to the
conclusion that Attys. Mendoza's and Cahucom's actions amounted to a concerted action with Lasala when
the latter secured the trial court's huge and baseless counterclaim award. By this fraudulent scheme,
the NFA was prevented from making a fair submission in the controversy.
Emphases in the original; Underscoring Supplied
Similarly, the negligence of the petitioner’s counsel was evidently so gross as to call for the
exercise of this Court’s equity jurisdiction. Clearly, the negligence of Atty. Baniaga was
unconscionable and inexcusable. It was highly suspicious, if not outright deliberate. Obviously, he
fell short of the high standard of assiduousness that a counsel must perform to safeguard the rights
of his clients. At the inception, CEZA was already deprived of its right to present evidence during
the trial of the case when Atty. Baniaga filed a joint manifestation submitting the case for decision
based on the pleadings without informing CEZA. In violation of his sworn duty to protect his client’s
interest, Atty. Baniaga agreed to submit the case for decision without fully substantiating their
defense. Worse, after he received a copy of the decision, he did not even bother to inform his client
and the OGCC of the adverse judgment. He did not even take steps to protect the interests of his
client by filing an appeal. Instead, he allowed the judgment to lapse into finality. Such reckless and
gross negligence deprived CEZA not only of the chance to seek reconsideration thereof but also the
opportunity to elevate its case to the CA.
It must be stressed that a lawyer-client relationship is highly fiduciary in nature. The Code of
Professional Responsibility mandates every lawyer to observe candor, fairness and loyalty in all his
dealings and transactions with his client and to serve them with competence and diligence. It is the
duty of every lawyer to give adequate attention and time to every case entrusted to him and to exert
his best judgment in the prosecution or defense thereof and to exercise reasonable and ordinary care
and diligence in the pursuit or defense of the case.
Under the circumstances, CEZA should not be made to suffer the consequences of its counsel’s gross
negligence. A petition for relief from judgment is an equitable remedy that is allowed in exceptional
cases where there is no other available or adequate remedy. In the interest of justice and equity, the
Court deems it just and equitable to grant the petition and enable CEZA to appeal its case.
Time and again, this Court has stressed that rules of procedure are not to be applied in a very strict
and technical sense. The rules are not inflexible tools designed to hinder or delay, but to facilitate
and promote the administration of justice. Their strict and rigid application, which would result in
technicalities that tend to frustrate, rather than promote substantial justice, must always be
eschewed. As pronounced in the case of Legarda vs. Court of Appeals:
Procedural technicality should not be made a bar to the vindication of a legitimate grievance. When
such technicality deserts from being an aid to justice, the courts are justified in excepting from its
operation a particular case. Where there was something fishy and suspicious about the actuations of
the former counsel of petitioner in the case at bar, in that he did not give any significance at all
to the processes of the court, which has proven prejudicial to the rights of said clients, under a
lame and flimsy explanation that the court’s processes just escaped his attention, it is held that
said lawyer deprived his clients of their day in court, thus entitling said clients to petition for
relief from judgment despite the lapse of the reglementary period for filing said period for filing
said petition.
Potential Liability of Atty. Baniaga
The records disclose that on January 27, 2011, the OGCC dismissed Atty. Baniaga for "Serious
Dishonesty, Grave Misconduct, Gross Neglect of Duty, Conduct Prejudicial to the Best Interest of the
Service, and Violation of Reasonable Office Rules and Regulations. "
The Court is forwarding a copy of the records of this case to the Board of Governors of the Integrated
Bar of the Philippines so it may conduct the appropriate investigation regarding Atty. Baniaga's
fitness to remain as a member of the Bar.
As in Lasala, the Court's ruling in this case involves solely the finding of extrinsic fraud for the
purpose of granting CEZA a relief from judgment. The Board of Governors should conduct its own
investigation regarding the incidents surrounding this case with this decision and its records to be
considered as part of evidence to determine the potential liabilities of Atty. Baniaga.
WHEREFORE, the petition is GRANTED. The August 13, 2010 and December 9, 2010 Resolutions of the Court
of Appeals, affirming the March 4, 2010 Resolution of the Regional Trial Court, Branch 7, Aparri,
Cagayan , are SET ASIDE.
The Petition for Relief from Judgment filed by petitioner Cagayan Economic Zone Authority is GRANTED.
Accordingly, the Court of Appeals is ordered to give due course to its Notice of Appeal.
Let copies of this decision and the relevant records of this case be sent to the Board of Governors of
the Integrated Bar of the Philippines for its administrative investigation of Atty. Edgardo Baniaga,
based on the given facts of this decision to determine whether he has the requisite competence and
integrity to maintain his membership in the roll of lawyers of this country.
SO ORDERED.
JOSE CATRAL MENDOZA Associate Justice