SECOND DIVISION
G.R. No. 194962, January 27, 2016
CAGAYAN ECONOMIC ZONE AUTHORITY, Petitioner, v. MERIDIEN VISTA GAMING CORPORATION, Respondent.
D E C I S I O N
MENDOZA, J.:
Before the Court is a petition for review under Rule 45 of the Rules of Court assailing the August 13, 20101 and December 9, 20102 Resolutions of the Court of Appeals (CA), in CA-G.R. SP No. 115034, which denied the petition for certiorari and prohibition3 filed by petitioner Cagayan Economic Zone Authority (CEZA), after its Petition For Relief4 (from judgment) was denied by the Regional Trial Court, Branch 7, Aparri City (RTC) in its Resolution,5 dated March 4, 2010.
The Antecedents
Petitioner CEZA is a government-owned and controlled corporation, created by virtue of Republic Act (R.A.) No. 7922, otherwise known as the "Cagayan Special Economic Zone Act of 1995." Its primary purpose is to manage and supervise the development of the Cagayan Special Economic Zone and Freeport (Freeport Zone).
Due to several inquiries from a group of Spanish nationals on the possibility of operating a jai alai fronton, CEZA sought the opinion of the Office of the Government Corporate Counsel (OGCC) on whether it could operate/license jai alai inside the Freeport Zone.
The OGCC, in its Opinion No. 251, s. 2007,6 was of the view that the CEZA could operate and/or license jai alai under its legislative franchise including the authority to manage, establish and operate jai alai betting stations inside and outside the Freeport Zone.
Accordingly, respondent Meridien Vista Gaming Corporation (MVGC) applied with CEZA for registration as licensed/authorized operator of gaming, sports betting and tourism-related activities such as jai alai, cock fighting, virtual gaming, bingo, horse racing, dog racing, sports betting, internet gaming, and land based casinos.7chanroblesvirtuallawlibrary
CEZA granted the application of MVGC to engage in gaming operations within the Freeport Zone and subsequently issued several certifications attesting that MVGC was licensed to conduct gaming operations within the zone and to set up betting stations in any place as may be allowed by law.8chanroblesvirtuallawlibrary
On January 5, 2009, MVGC informed CEZA that its virtual games software had been alpha tested and was ready for actual field testing as of December 29, 2008. MVGC also proposed to conduct a real market environment testing starting on January 15, 2009 and to utilize an offsite gaming station in the provinces of Isabela, Camarines Sur and Nueva Viscaya subject to the requisite local government permits.9chanroblesvirtuallawlibrary
On March 31, 2009, the OGCC issued Opinion No. 67, series of 2009,10clarifying its earlier opinion regarding the authority of CEZA to grant a franchise to operate jai alai. In effect, the said opinion stated that CEZA could not grant a franchise to operate jai alai in the absence of an express legislative franchise.
Consequently, CEZA issued a letter,11 dated April 1, 2009, directing MVGC to stop all its gaming operations including the testing of softwares and telecommunication infrastructure relative thereto.
Its interest being affected, MVGC filed a petition12 for mandamus and damages with application for the issuance of a temporary restraining order and/or writ of preliminary mandatory injunction before the RTC. In its petition, MVGC prayed that it be allowed to continue with its gaming operations including the testing of softwares and relative telecommunication infrastructures.
The case was referred by CEZA to the OGCC, which assigned Atty. Edgardo Baniaga (Atty. Baniaga) to handle the case. Thus, all notices, orders and legal processes in connection with the case were forwarded to him for appropriate action.
CEZA, in its Answer,13 admitted issuing a license agreement in favor of MVGC to operate jai alai. It, however, denied allowing the latter to manage virtual gaming operations. CEZA argued that MVGC had no legal right to compel it, by way of mandamus, to allow the operation of its virtual gaming. CEZA cited four (4) laws to bolster its argument that the granting of franchise to operate jai alai must be clearly prescribed by law; namely: (1) Executive Order (E.O.) No. 392, transferring the authority to regulate jai alai from the Local Government to the Games and Amusement Board; (2) Republic Act (R.A.) No. 954, or an act prohibiting certain activities in connection with horse races and basque pelota games (jai alai); (3) Presidential Decree (P.D.) No. 771 revoking all powers and authority of the Local Government to grant, franchise, license, permit, and regulate wages or betting by the public on horse and dog races, jai alai and other forms of gambling; and (4) P.D. No. 810, "An Act Granting the Philippine Jai-Alai and Amusement Corporation a Franchise to Operate, Construct and Maintain a Fronton for Basque Pelota and Similar Games of Skill in the Greater Manila Area."
On October 30, 2009, after the parties had filed their Joint Manifestation with Motion to Render Judgment based on the Pleadings,14 the RTC rendered a decision15 in favor of MVGC, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the petitioner and against the respondent. Accordingly, let a Writ of Mandamus issue directing respondent or any other person/s acting under its control and direction to allow the petitioner to continue with its gaming operations in accordance with the license already granted. The bond earlier posted by Petitioner is hereby released in its favor.
Let a copy of this Decision be furnished the Department of Justice, the Department of Interior and Local Government and the Philippine National Police and other law enforcement agencies of the government for their reference and guidance.
No Costs.
SO ORDERED.16chanrobleslaw
(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.
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.37chanroblesvirtuallawlibrary[Emphases Supplied]
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]
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 indirect 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 P34,500,229.67 against 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]
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.
Endnotes:
1Rollo, pp. 81-88.
2 Id. at 90-93.
3 Id. at 433-479.
4 Id. at 305-340.
5 Id. at 391-392.
6 Annex "C" of the Petition, id. at 94-100.
7 Annex "D" of the Petition, id. at 102-103.
8 Annexes "E-I" of the Petition, id. at 104-114.
9 Annex "F" of the Petition, id. at 112.
10 Annex "I" of the Petition, id. at 115-119.
11 Annex "K" of the Petition, id. at 120.
12 Annex "L" of the Petition, id. at 121-133.
13 Annex "R" of the Petition, id. at 194-226.
14 Annex "AA" of the Petition, id. at 272-276.
15 Annex "BB" of the Petition, id. at 277-287.
16 Id. at 286-287.
17 Id. at 41.
18 Id. at 289-290.
19 Id. at 302-303.
20 Id. at 304.
21 Id. at 305-358.
22 Annex "NN" of the Petition, id. at 391-392.
23On January 27, 2011, the GOCC DISMISSED Atty. Edgardo G. 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, id. at 47; and Annex UU, id. at 431-432.
24 Id. at 81-88.
25 Id. at 90-93.
26 Id. at 52-53.
27Guevarra v. Spouses Bautista, 593 Phil. 20, 27 (2008).
28Azucena v. Foreign Manpower Services, 484 Phil. 316, 329 (2004).
29Tuason v. Court of Appeals, 256 SCRA 158 (1996).
30LTS Philippines Corporation v. Maliwat, 489 Phil. 230, 235 (2005).
31Rivera v. Court of Appeals, 568 Phil. 401, 418 (2008).
32APEX Mining, Inc. v. Court of Appeals, 371 Phil. 482, 493 (1999).
33 Id. at at 495; Labao v. Flores, 649 Phil. 213, 223 (2010).
34Escudero v. Dulay, 241 Phil. 877, 886 (1988).
35Villanueva v. People of the Philippines, 659 Phil. 418, 429 (2011).
36 120 Phil. 1264, 1270(1964).
37 Id.
38 Kalubiran v. Court of Appeals, 360 Phil. 510, 526 (1998).
39Gold Line Transit, Inc. v. Ramos, 415 Phil. 492, 503 (2001).
40 AFP Mutual Benefit Association, Inc. v. RTC, Marikina City, Branch 193, 658 Phil. 69, 77(2011).
41Apex Mining, Inc. v. Court of Appeals, supra note 32, at 495-496.
42 G.R. No. 171582, August 19, 2015.
43Francisco v. Portugal, 519 Phil. 547, 555 (2006).
44Macarilay v. Serina, 497 Phil. 348, 356 (2005).
45 Canon 15 of the Code of Professional Responsibility,
46 Canon 8 of the Code of Professional Responsibility.
47 Pineda v. Macapagal, 512 Phil. 668, 671 (2005).
48 Abiero v. Juanino, 492 Phil. 149, 156 (2005).
49Spouses Dela Cruz v. Andres, 550 Phil. 679, 683 (2007).
50Somoso v. Court of Appeals, 258-A Phil. 435, 445 (1989).
51Jaworski v. PAGCOR, 464 Phil. 375, 385 (2004).
52 G.R. No. 94457, March 18, 1991, 195 SCRA 418, 426, citing People's Homesite and Housing Corporation v. Tiongco and Escasa, supra note 36.
53Rollo, p. 47; and Annex "UU," rollo, pp. 431-432.