CASE 2012-0042: PHILIPPINE TOURISM    AUTHORITY VS. PHILIPPINE GOLF DEVELOPMENT & EQUIPMENT, INC. (G.R. NO. 176628, MARCH 19, 2012, BRION, J.) SUBJECT/S: JUDGMENT OF DEFAULT; ACTS OF COUNSEL BINDS CLIENT/ EXCEPTION; APPEAL VIS A VIS CERTIORARI; EXTRINSIC FRAUD (BRIEF TITLE: PTA VS. PHILIPPINE GOLF)

====================  

DISPOSITIVE:

 

        WHEREFORE, premises considered, we hereby DISMISS the petition for certiorari. No costs.

 

        SO ORDERED.

 

 

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WHY DOES THE COURT PROVIDES FOR DEADLINES IN ACTIONS?

 

 

TO ENSURE AN ORDERLY DISPOSITION OF CASES.

 

 

XXXXXXXXXXXX

 

 

CAN A PARTY INVOKE THE NEGLIGENCE OF ITS COUNSEL IF COUNSEL FAILED TO MEET A DEADLINE IN AN ACTION?

 

 

NO. OTHERWISE, SUCH PRACTICE IF ALLOWED WOULD DEFEAT THE PURPOSE OF THE RULES ON PERIODS SINCE EVERY PARTY WOULD MERELY LAY THE BLAME ON ITS COUNSEL TO AVOID ANY LIABILITY.

 

 

XXXXXXXXXXXXXX

 

 

WHAT IS THE RULE ON THIS MATTER?

 

 

A CLIENT IS BOUND BY THE ACTS, EVEN MISTAKES, OF HIS COUNSEL IN THE REALM OF PROCEDURAL TECHNIQUE[,]AND UNLESS SUCH ACTS INVOLVE GROSS NEGLIGENCE THAT THE CLAIMING PARTY CAN PROVE, THE ACTS OF A COUNSEL BIND THE CLIENT AS IF IT HAD BEEN THE LATTER’S ACTS.”[1][6]

 

 

NOTE THE EXCEPTION: UNLESS SUCH ACT INVOLVES GROSS NEGLIGENCE.

 

 

XXXXXXXXXXXXXXX

 

The Rules of Court specifically provides for deadlines in actions before the court to ensure an orderly disposition of cases. PTA cannot escape these legal technicalities by simply invoking the negligence of its counsel. This practice, if allowed, would defeat the purpose of the Rules on periods since every party would merely lay the blame on its counsel to avoid any liability. The rule is that “a client is bound by the acts, even mistakes, of his counsel in the realm of procedural technique[,]and unless such acts involve gross negligence that the claiming party can prove, the acts of a counsel bind the client as if it had been the latter’s acts.”[2][6]

 

XXXXXXXXXXXXXXXX

 

 

DEFINE GROSS NEGLIGENCE APPLICABLE TO THIS RULE?

 

 

THAT  “[G]ROSS NEGLIGENCE IS CHARACTERIZED BY WANT OF EVEN SLIGHT CARE, ACTING OR OMITTING TO ACT IN A SITUATION WHERE THERE IS A DUTY TO ACT, NOT INADVERTENTLY BUT WILLFULLY AND INTENTIONALLY WITH A CONSCIOUS INDIFFERENCE TO CONSEQUENCES INSOFAR AS OTHER PERSONS MAY BE AFFECTED.”

 

 

In LBC Express – Metro Manila, Inc. v. Mateo,[3][7] the Court held that “[g]ross negligence is characterized by want of even slight care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally with a conscious indifference to consequences insofar as other persons may be affected.” This cannot be invoked in cases where the counsel is merely negligent in submitting his required pleadings within the period that the rules mandate.

 

It is not disputed that the summons together with a copy of the complaint was personally served upon, and received by PTA through its Corporate Legal Services Department, on October 10, 2003.[4][8] Thus, in failing to submit a responsive pleading within the required time despite sufficient notice, the RTC was correct in declaring PTA in default.

 

 

XXXXXXXXXXXXXXXXX

 

 

PTA FAILED TO FILE RESPONSIVE PLEADING. IT WAS DECLARED IN DEFAULT BY RTC. WAS RTC CORRECT?

 

 

YES. THE RECORDS REVEAL THAT THE JUDGMENT OF DEFAULT[5][10] WAS SENT VIA REGISTERED MAIL TO PTA’S COUNSEL. HOWEVER, PTA NEVER AVAILED OF THE REMEDY OF A MOTION TO LIFT THE ORDER OF DEFAULT.[6][11] SINCE THE FAILURE OF PTA TO PRESENT ITS EVIDENCE WAS NOT A PRODUCT OF ANY FRAUDULENT ACTS (REFERRED TO AS EXTRINSIC FRAUD)  COMMITTED OUTSIDE TRIAL, THE RTC DID NOT ERR IN DECLARING PTA IN DEFAULT.

 

 

XXXXXXXXXXXX

 

 

WHAT IS EXTRINSIC FRAUD?

 

 

IT REFERS TO ANY FRAUDULENT ACT OF THE PREVAILING PARTY IN THE LITIGATION WHICH IS COMMITTED OUTSIDE OF THE TRIAL OF THE CASE, WHEREBY THE UNSUCCESSFUL PARTY HAS BEEN PREVENTED FROM EXHIBITING FULLY HIS CASE, BY FRAUD OR DECEPTION PRACTICED ON HIM BY HIS OPPONENT.”[7][9]

 

 

        “Extrinsic fraud refers to any fraudulent act of the prevailing party in the litigation which is committed outside of the trial of the case, whereby the unsuccessful party has been prevented from exhibiting fully his case, by fraud or deception practiced on him by his opponent.”[8][9] Under the doctrine of this cited case, we do not see the acts of PTA’s counsel to be constitutive of extrinsic fraud.

        The records reveal that the judgment of default[9][10] was sent via registered mail to PTA’s counsel. However, PTA never availed of the remedy of a motion to lift the order of default.[10][11] Since the failure of PTA to present its evidence was not a product of any fraudulent acts committed outside trial, the RTC did not err in declaring PTA in default.

 

XXXXXXXXXXXXXX

 

 

PTA FILED A PETITION TO ANNUL JUDGMENT BY DEFAULT? IS THIS THE PROPER REMEDY?

 

 

NO. THE PROPER REMEDY IS APPEAL. ANNULMENT OF JUDGMENT UNDER RULE 47 OF THE RULES OF COURT IS A RECOURSE EQUITABLE IN CHARACTER AND ALLOWED ONLY IN EXCEPTIONAL CASES WHERE THE ORDINARY REMEDIES OF NEW TRIAL, APPEAL, PETITION FOR RELIEF OR OTHER APPROPRIATE REMEDIES ARE NO LONGER AVAILABLE THROUGH NO FAULT OF PETITIONER.”[11][12]

 

 

        PTA’s appropriate remedy was only to appeal the RTC decision. “Annulment of Judgment under Rule 47 of the Rules of Court is a recourse equitable in character and allowed only in exceptional cases where the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of petitioner.”[12][12]

 

In this case, appeal was an available remedy. There was also no extraordinary reason for a petition for annulment of judgment, nor was there any adequate explanation on why the remedy for new trial or petition for relief could not be used. The Court is actually at a loss why PTA had withdrawn a properly filed appeal and substituted it with another petition, when PTA could have merely raised the same issues through an ordinary appeal.

 

 

XXXXXXXXXXXXXX

 

 

PTA RAISED THE DEFENSE OF STATE IMMUNITY. IS PTA CORRECT?

 

 

NO.  THE APPLICATION OF STATE IMMUNITY IS PROPER ONLY WHEN THE PROCEEDINGS ARISE OUT OF SOVEREIGN TRANSACTIONS AND NOT IN CASES OF COMMERCIAL ACTIVITIES OR ECONOMIC AFFAIRS. THE STATE, IN ENTERING INTO A BUSINESS CONTRACT, DESCENDS TO THE LEVEL OF AN INDIVIDUAL AND IS DEEMED TO HAVE TACITLY GIVEN ITS CONSENT TO BE SUED.[13][13]

 

 

PTA also erred in invoking state immunity simply because it is a government entity. The application of state immunity is proper only when the proceedings arise out of sovereign transactions and not in cases of commercial activities or economic affairs. The State, in entering into a business contract, descends to the level of an individual and is deemed to have tacitly given its consent to be sued.[14][13]

 

Since the Intramuros Golf Course Expansion Projects partakes of a proprietary character entered into between PTA and PHILGOLF, PTA cannot avoid its financial liability by merely invoking immunity from suit.

         

 

XXXXXXXXXXXXXXXXXX

 

 

PTA FILED PETITION FOR CERTIORARI UNDER RULE 65 AT SC. IS THIS A PROPER REMEDY?

 

 

NO. CERTIORARI IS NOT A MODE OF APPEAL AND CANNOT BE MADE AS A SUBSTITUTE FOR APPEAL.

 

 

        Lastly, a special civil action under Rule 65 of the Rules of Court is only available in cases when a tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law. It is not a mode of appeal, and cannot also be made as a substitute for appeal. It will not lie in cases where other remedies are available under the law.

 

In Land Bank of the Philippines v. Court of Appeals,[15][14] the Court had the occasion to state:

 

The general rule is that a [certiorari] will not issue where the remedy of appeal is available to the aggrieved party. The remedies of appeal in the ordinary course of law and that of certiorari under Rule 65 of the Revised Rules of Court are mutually exclusive and not alternative or cumulative. Hence, the special civil action for certiorari under Rule 65 is not and cannot be a substitute for an appeal, where the latter remedy is available. xxx

 

x        x        x        x

 

The proper recourse of the aggrieved party from a decision of the CA is a petition for review on certiorari under Rule 45 of the Revised Rules of Court. On the other hand, if the error subject of the recourse is one of jurisdiction, or the act complained of was perpetrated by a quasi-judicial officer or agency with grave abuse of discretion amounting to lack or excess of jurisdiction, the proper remedy available to the aggrieved party is a petition for certiorari under Rule 65 of the said Rules. [emphases supplied; citations omitted]

 

 

 

In sum, PTA had the remedy of appealing the RTC decision to the CA and, thereafter, to us. Under the circumstances, we find no adequate reason to justify the elevation of this case to the CA and then to us, under Rule 65 of the Rules of Court.

 

 

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Republic of thePhilippines

Supreme Court

Manila

 

SECOND DIVISION

 

 

 

PHILIPPINE TOURISM                     G.R. No. 176628

AUTHORITY,

                        Petitioner,                               

                                                          Present:

 

                                                          CARPIO, J., Chairperson,

  BRION,

      – versus –                             PEREZ,

  SERENO, and

  REYES, JJ.

 

 

  Promulgated:

 

PHILIPPINE GOLF DEVELOPMENT

& EQUIPMENT, INC.,                                March 19, 2012

                                Respondent.

x————————————————————————————x

 

R E S O L U T I O N

 

 

BRION, J.:

 

 

Before this Court is a petition for certiorari, under Rule 65 of the 1997 Rules of Civil Procedure, to annul the decision[16][1] dated December 13, 2006 of the Court of Appeals (CA) in CA G.R. SP No. 90402. This CA decision dismissed the petition for annulment of judgment which sought to set aside the decision[17][2] of the Regional Trial Court (RTC) of Muntinlupa City, Branch 203, in Civil Case No. 03-212. The RTC held the Philippine Tourism Authority (PTA) liable for its unpaid obligation to Philippine Golf Development & Equipment, Inc. (PHILGOLF).

 

FACTUAL BACKGROUND

         

          On April 3, 1996, PTA, an agency of the Department of Tourism, whose main function is to bolster and promote tourism, entered into a contract with Atlantic Erectors, Inc. (AEI) for the construction of the Intramuros Golf Course Expansion Projects (PAR 60-66) for a contract price of Fifty-Seven Million Nine Hundred Fifty-Four Thousand Six Hundred Forty-Seven and 94/100 Pesos (P57,954,647.94).

 

The civil works of the project commenced. Since AEI was incapable of constructing the golf course aspect of the project, it entered into a sub-contract agreement with PHILGOLF, a duly organized domestic corporation, to build the golf course amounting to Twenty-Seven Million Pesos (P27,000,000.00). The sub-contract agreement also provides that PHILGOLF shall submit its progress billings directly to PTA and, in turn, PTA shall directly pay PHILGOLF.[18][3]

 

On October 2, 2003, PHILGOLF filed a collection suit against PTA amounting to Eleven Million Eight Hundred Twenty Thousand Five Hundred Fifty and 53/100 Pesos (P11,820,550.53), plus interest, for the construction of the golf course. Within the period to file a responsive pleading, PTA filed a motion for extension of time to file an answer.

 

On October 30, 2003, the RTC granted the motion for extension of time.  PTA filed another motion for extension of time to file an answer. The RTC again granted the motion.

 

 

Despite the RTC’s liberality of granting two successive motions for extension of time, PTA failed to answer the complaint. Hence, on April 6, 2004, the RTC rendered a judgment of default, ruling as follows:

 

 

 

WHEREFORE, judgment is hereby rendered, ordering the defendant to pay plaintiff:

 

  1. The amount of Eleven Million, Eight Hundred Twenty Thousand, Five Hundred Fifty Pesos and Fifty Three Centavos (P11,820,550.53), representing defendant’s outstanding obligation, plus interest thereon of twelve percent (12%) per annum from the time the unpaid billings of plaintiff were due for payment by the defendant, until they are fully paid.

 

  1. The amount of Two Hundred Thousand Pesos  (P200,000.00), as attorney’s fees.

 

  1. The amount of One Hundred Twenty Eight Thousand, Five Hundred Twenty Nine Pesos and Fourteen Centavos (P128,529.14), as filing fees and other costs of litigation.

 

  1. The amount of Three Hundred Thousand Pesos (P300,000.00), as moral damages.

 

  1. The amount of One Hundred Fifty Thousand (Pesos (P150,000.00), as nominal damages, and

 

  1. The amount of Two Hundred Fifty Thousand Pesos (P250,000.00), as exemplary damages.

 

SO ORDERED.[19][4]

 

 

 

On July 11, 2005, PTA seasonably appealed the case to the CA. But before the appeal of PTA could be perfected, PHILGOLF already filed a motion for execution pending appeal with the RTC. The RTC, in an Order dated June 2, 2004, granted the motion and a writ of execution pending appeal was issued against PTA. On June 3, 2004, a notice of garnishment was issued against PTA’s bank account at the Land Bank of thePhilippines, NAIA-BOC Branch to fully satisfy the judgment.

 

PTA filed a petition for certiorari with the CA, imputing grave abuse of discretion on the part of the RTC for granting the motion for execution pending appeal. The CA ruled in favor of PTA and set aside the order granting the motion for execution pending appeal. 

 

On July 11, 2005, PTA withdrew its appeal of the RTC decision and, instead, filed a petition[20][5] for annulment of judgment under Rule 47 of the Rules of Court. The petition for annulment of judgment was premised on the argument that the gross negligence of PTA’s counsel prevented the presentation of evidence before the RTC.  

 

On December 13, 2006, the CA dismissed the petition for annulment of judgment for lack of merit. PTA questions this CA action in the present petition for certiorari.

 

THE PETITION

 

The petition cites three arguments: first, that the negligence of PTA’s counsel amounted to an extrinsic fraud warranting an annulment of judgment; second, that since PTA is a government entity, it should not be bound by the inactions or negligence of its counsel; and third, that there were no other available remedies left for PTA but a petition for annulment of judgment.

 

OUR RULING

 

        We find the petition unmeritorious.

 

The Rules of Court specifically provides for deadlines in actions before the court to ensure an orderly disposition of cases. PTA cannot escape these legal technicalities by simply invoking the negligence of its counsel. This practice, if allowed, would defeat the purpose of the Rules on periods since every party would merely lay the blame on its counsel to avoid any liability. The rule is that “a client is bound by the acts, even mistakes, of his counsel in the realm of procedural technique[,]and unless such acts involve gross negligence that the claiming party can prove, the acts of a counsel bind the client as if it had been the latter’s acts.”[21][6]

 

In LBC Express – Metro Manila, Inc. v. Mateo,[22][7] the Court held that “[g]ross negligence is characterized by want of even slight care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally with a conscious indifference to consequences insofar as other persons may be affected.” This cannot be invoked in cases where the counsel is merely negligent in submitting his required pleadings within the period that the rules mandate.

 

It is not disputed that the summons together with a copy of the complaint was personally served upon, and received by PTA through its Corporate Legal Services Department, on October 10, 2003.[23][8] Thus, in failing to submit a responsive pleading within the required time despite sufficient notice, the RTC was correct in declaring PTA in default.

 

There was no extrinsic fraud

 

 

        “Extrinsic fraud refers to any fraudulent act of the prevailing party in the litigation which is committed outside of the trial of the case, whereby the unsuccessful party has been prevented from exhibiting fully his case, by fraud or deception practiced on him by his opponent.”[24][9] Under the doctrine of this cited case, we do not see the acts of PTA’s counsel to be constitutive of extrinsic fraud.

        The records reveal that the judgment of default[25][10] was sent via registered mail to PTA’s counsel. However, PTA never availed of the remedy of a motion to lift the order of default.[26][11] Since the failure of PTA to present its evidence was not a product of any fraudulent acts committed outside trial, the RTC did not err in declaring PTA in default.

 

Annulment of judgment is not

the proper remedy

 

 

        PTA’s appropriate remedy was only to appeal the RTC decision. “Annulment of Judgment under Rule 47 of the Rules of Court is a recourse equitable in character and allowed only in exceptional cases where the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of petitioner.”[27][12]

 

In this case, appeal was an available remedy. There was also no extraordinary reason for a petition for annulment of judgment, nor was there any adequate explanation on why the remedy for new trial or petition for relief could not be used. The Court is actually at a loss why PTA had withdrawn a properly filed appeal and substituted it with another petition, when PTA could have merely raised the same issues through an ordinary appeal.

 

PTA was acting in a proprietary

character

PTA also erred in invoking state immunity simply because it is a government entity. The application of state immunity is proper only when the proceedings arise out of sovereign transactions and not in cases of commercial activities or economic affairs. The State, in entering into a business contract, descends to the level of an individual and is deemed to have tacitly given its consent to be sued.[28][13]

 

Since the Intramuros Golf Course Expansion Projects partakes of a proprietary character entered into between PTA and PHILGOLF, PTA cannot avoid its financial liability by merely invoking immunity from suit.

         

A special civil action for certiorari

under Rule 65 is proper only when

there is no other plain, speedy, and

adequate remedy

 

        Lastly, a special civil action under Rule 65 of the Rules of Court is only available in cases when a tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law. It is not a mode of appeal, and cannot also be made as a substitute for appeal. It will not lie in cases where other remedies are available under the law.

 

In Land Bank of the Philippines v. Court of Appeals,[29][14] the Court had the occasion to state:

 

The general rule is that a [certiorari] will not issue where the remedy of appeal is available to the aggrieved party. The remedies of appeal in the ordinary course of law and that of certiorari under Rule 65 of the Revised Rules of Court are mutually exclusive and not alternative or cumulative. Hence, the special civil action for certiorari under Rule 65 is not and cannot be a substitute for an appeal, where the latter remedy is available. xxx

 

x        x        x        x

 

The proper recourse of the aggrieved party from a decision of the CA is a petition for review on certiorari under Rule 45 of the Revised Rules of Court. On the other hand, if the error subject of the recourse is one of jurisdiction, or the act complained of was perpetrated by a quasi-judicial officer or agency with grave abuse of discretion amounting to lack or excess of jurisdiction, the proper remedy available to the aggrieved party is a petition for certiorari under Rule 65 of the said Rules. [emphases supplied; citations omitted]

 

 

 

In sum, PTA had the remedy of appealing the RTC decision to the CA and, thereafter, to us. Under the circumstances, we find no adequate reason to justify the elevation of this case to the CA and then to us, under Rule 65 of the Rules of Court.

 

 

        WHEREFORE, premises considered, we hereby DISMISS the petition for certiorari. No costs.

 

        SO ORDERED.

 

 

 

 

 

                                ARTURO D. BRION

                                Associate Justice

 

 

WE CONCUR:

 

 

 

 

 

ANTONIO T. CARPIO

Associate Justice

Chairperson

 

 

 

 

 

JOSE PORTUGAL PEREZ

Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

 

 

 

 

 

BIENVENIDO L. REYES

Associate Justice

A T T E S T A T I O N

 

 

        I attest that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

 

 

                                ANTONIO T. CARPIO

                                Associate Justice

                                Chairperson, Second Division

 

 

 

C E R T I F I C A T I O N

 

        Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I certify that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

 

 

 

                                        RENATO C. CORONA

                                         Chief Justice

 

 

 


 


[1][6]           Labao v. Flores, G.R. No. 187984,November 15, 2010, 634 SCRA 723, 733.

[2][6]           Labao v. Flores, G.R. No. 187984,November 15, 2010, 634 SCRA 723, 733.

[3][7]           G.R. No. 168215,June 9, 2009, 589 SCRA 33, 37.

[4][8]           Rollo, p. 28.

[5][10]          DatedFebruary 17, 2004.

[6][11]          Rollo, p. 46.

[7][9]           City Government of Tagaytay v. Guerrero, G.R. Nos. 140743, 140745 and 141451-52,September 17, 2009, 600 SCRA 33, 61.

[8][9]           City Government of Tagaytay v. Guerrero, G.R. Nos. 140743, 140745 and 141451-52,September 17, 2009, 600 SCRA 33, 61.

[9][10]          DatedFebruary 17, 2004.

[10][11]         Rollo, p. 46.

[11][12]         City Government of Tagaytay v. Guerrero, supra note 8, at 51.

[12][12]         City Government of Tagaytay v. Guerrero, supra note 8, at 51.

[13][13]         United States of America v. Ruiz, No. L-35645, May 22, 1985, 136 SCRA 487.

[14][13]         United States of America v. Ruiz, No. L-35645, May 22, 1985, 136 SCRA 487.

[15][14]         456 Phil. 755, 785-787 (2003).

[16][1]          Penned by Associate Justice Rosmari D. Carandang, and concurred in by Associate Justices Remedios A. Salazar-Fernando and Monina Arevalo-Zenarosa; rollo, pp. 86-95.

[17][2]          Dated April 6, 2004; id. at 26-33.

[18][3]          Id. at 88.

[19][4]          Id. at 33.

[20][5]          DatedJuly 5, 2005.

[21][6]          Labao v. Flores, G.R. No. 187984,November 15, 2010, 634 SCRA 723, 733.

[22][7]          G.R. No. 168215,June 9, 2009, 589 SCRA 33, 37.

[23][8]          Rollo, p. 28.

[24][9]          City Government of Tagaytay v. Guerrero, G.R. Nos. 140743, 140745 and 141451-52,September 17, 2009, 600 SCRA 33, 61.

[25][10]         DatedFebruary 17, 2004.

[26][11]         Rollo, p. 46.

[27][12]         City Government of Tagaytay v. Guerrero, supra note 8, at 51.

[28][13]         United States of America v. Ruiz, No. L-35645, May 22, 1985, 136 SCRA 487.

[29][14]         456 Phil. 755, 785-787 (2003).