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THIRD DIVISION

G.R. No. 165333 : February 9, 2010

REPUBLIC OF THE PHILIPPINES (DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES), Petitioner, v. TECHNOLOGICAL ADVOCATES FOR AGRO-FOREST PROGRAMS ASSOCIATION, INC. (TAFPA, INC.), Respondent.

D E C I S I O N

PERALTA, J.:

This is a Petition for Review on Certiorari assailing the Decision1cralaw dated September 9, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 76176 denying the petition for Annulment of Judgment filed by the Republic of the Philippines, Department of Environment and Natural Resources (DENR).

The factual and procedural antecedents are as follows:

On November 27, 1995, respondent Technological Advocates for Agro-Forest Programs Association, Inc. (TAFPA) and DENR, Regional Office (RO) No. IX, represented by its then Regional Executive Director (RED), Cipriano B. Paet, entered into a contract2cralaw for community organizing activities, social investigation, and information education campaign at the San Isidro Tinago Reforestation Sub-Project in Sergio Osmeña, Sr., Zamboanga del Norte.

Respondent later submitted to the Office of the RED its Accomplishment Reports and Requests for Billing on July 8, 1998 for accomplishments covering the 4th, 5th, and 6th Quarters and on June 7, 1999 for the 7th Quarter.3cralaw

After evaluation and validation by the Composite Inspection Committee (CIC) of the 4th, 5th, 6th, and 7th Accomplishment Reports, the CIC recommended the payment of the sum of P802,350.64 to respondent.4cralaw

However, in a letter5cralaw dated September 8, 1999, RED Antonio M. Mendoza informed respondent that by reason of the latter's delay in the submission of its reports, it owed the DENR, Region 9, Zamboanga City, the amount of P1,192,611.00 as penalty for delay deductible from its collectibles of P802,350.64. Thus, respondent was still liable to the DENR in the sum of P390,260.36.

Respondent sought reconsideration of the position of RED Mendoza regarding its claims in a letter6cralaw dated October 9, 1999. The letter was later referred to the Legal Division, DENR, Region 9, Zamboanga City, for legal interpretation of the provisions of the contract entered into by the parties.

On November 22, 1999, Atty. Orlando V. Kong issued a Memorandum7cralaw clarifying that the "delay" contemplated in the contract that would warrant the imposition of the stipulated penalty referred to the "failure to undertake the primary community organizing activities such as community planning workshops, assemblies, meetings/seminars, social development, and technical trainings, consultations with community members and leaders and not to the non-submission of reports."

However, instead of paying respondent's claims, the matter was referred to the Program Director, National Forestation Development Office (NFDO), DENR, seeking its position on whether to impose penalty on the billings of respondent. On December 1, 1999, the Program Director issued a memorandum8cralaw stating that the regional office was correct in its position to impose the contract's penalty clause. He further stated that the only recourse of the respondent would be to petition the proper court for the equitable reduction of the penalty imposed by the contract. RED Mendoza forthwith informed respondent of the Program Director's position.

On December 15, 1999, respondent filed with the RTC, Zamboanga City, a special civil action for Mandamus with Prayer for Damages, docketed as SPL. CIVIL ACTION No. 459, praying that after notice and hearing, a writ be issued commanding the RED of the DENR to pay respondent P802,350.64, representing the latter's unpaid claims, P50,000.00 as moral damages, P25,000.00 by way of attorney's fees and legal interest on the principal sum demanded. The RTC subsequently treated the case as one for specific performance rather than an action for mandamus, since the allegations in the complaint clearly reflected that respondent's cause of action was based on a contract.

Meanwhile, on January 18, 2000, Atty. Vidzfar A. Julie (Atty. Julie), entered his appearance as counsel for DENR.9cralaw

After the DENR filed its answer, the case was set for pre-trial. Respondent then filed a motion for judgment on the pleadings. The DENR through counsel, was furnished a copy of the motion, but filed no opposition or comment.

On June 8, 2000, the Office of the Solicitor General (OSG) deputized Atty. Julie as special counsel to assist the Solicitor General in the subject case. Atty. Julie was further directed to advise the OSG from time to time of the progress of the case and furnish the said Office with all copies of orders, pleadings, and motions.10cralaw

On December 1, 2000, the RTC issued an Order granting the motion for judgment on the pleadings. The DENR was furnished a copy of the order, but it did not seek reconsideration thereof.11cralaw

On March 16, 2001, the RTC rendered a Decision12cralaw in favor of the respondent and against the petitioner. The dispositive portion of the which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of petitioner TAFPA Inc., represented by its president Danilo A. delos Santos against the respondent DENR Regional Office No. IX, Zamboanga City represented by its Regional Executive Director, ordering the latter to pay the former, as follows:

(1) Unpaid claim under the contract in the amount of P802,350.64 plus legal interest on the principal sum due from the time of the billing for the accomplishments under the contract on June 7, 1999 up to the time the said sum is fully paid;

(2) Attorney's fees in the amount of P20,000.00; and

(3) Costs of suit.

The claim for moral damages is hereby dismissed for lack of evidence.

SO ORDERED.13cralaw

In ruling in favor of the respondent, the RTC opined that the language of the contract entered into by the parties was clear that the penalty clause applied only to delay in the full completion of the contracted services, and not to non-submission or delayed submission of the corresponding report. The court also held that it was incumbent upon petitioner to comply with its obligation in good faith by paying what was due the respondent.14cralaw

On May 22, 2001, petitioner, through its deputized counsel, filed a Motion for Reconsideration,15cralaw but it was denied on September 18, 2001.16cralaw

On February 19, 2002, the RTC made an Entry of Final Judgment17cralaw stating, among other things, that the decision dated March 16, 2001 had, on January 31, 2002, become final and executory, there being no appeal filed by any party before any appellate court. Respondent thus filed an urgent motion for execution with the RTC which was granted on March 14, 2002.18cralaw

Subsequently, the OSG filed a Manifestation and Motion19cralaw asking the RTC to set aside the March 16, 2001 Decision on the ground of lack of due process. On May 20, 2002, the RTC issued an Order20cralaw denying the motion.

Undeterred, the OSG filed a Notice of Appeal21cralaw dated July 23, 2002, before the RTC raising the following issues: (1) whether or not plaintiff has a cause of action against defendant; and (2) whether or not plaintiff is entitled to be paid his money claim against defendant.22cralaw

On December 27, 2002, the RTC issued an Order23cralaw disapproving the motion, the dispositive portion of which reads:

WHEREFORE, premises considered, the Notice of Appeal is hereby DISAPPROVED. Likewise, the Motion to Set Aside Writ of Execution is hereby DENIED.

Respondent incumbent Regional Executive Director of the DENR, R-9, Zamboanga City is hereby ordered to request from the National Treasury for the release of the subject cash allocation within thirty (30) days from receipt hereof so that the respondent's obligation in favor of petitioner can be paid as decreed on the Decision of May 16, 2001.

SO ORDERED.

The RTC ratiocinated that both the decision dated March 16, 2001 and May 20, 2002 order had already become final and executory. There is no provision in the Rules of Court which allows the filing of a pleading for the dismissal of the case after judgment has become final and executory and for which a writ of execution has been issued. The court added that the grounds invoked and discussed for the dismissal of the case were neither related to the pending incidents nor were previously raised before the court. Instead of addressing the issues, petitioner sought the dismissal of the case on the ground of lack of cause of action and failure to exhaust administrative remedies.24cralaw

Aggrieved, petitioner sought recourse before the CA via a petition for Annulment of Judgment25cralaw under Rule 47 of the Rules of Court, seeking the annulment of the decision of the RTC dated March 16, 2001, based on the following grounds: (1) That the action lies within the jurisdiction of the [Commission on Audit] COA and not before the courts; (2) That private respondent did not exhaust administrative remedies against petitioner, hence, no cause of action against petitioner; and (3) Respondent is not entitled to be paid its money claim against petitioner.26cralaw

On September 9, 2004, the CA rendered a Decision27cralaw denying the petition. The decretal portion of the which reads as follows:

WHEREFORE, the instant petition is hereby DENIED due course for lack of merit and assailed decision of the lower court is hereby AFFIRMED. No costs.

SO ORDERED.28cralaw

In denying the petition, the CA opined that the RTC acquired jurisdiction over respondent's cause of action. The CA added that the rule on due process was not violated as petitioner was given all the opportunity to participate in the proceedings before the RTC, which it in fact did, and was duly notified of all court processes, orders, and decision. As for petitioner's claim of non-exhaustion of administrative remedies, the CA concluded that the DENR was estopped from raising the defense, considering that when the DENR denied respondent's claim, it informed the latter that its only recourse was to petition the proper court for it to equitably reduce the penalty based on the contract. The CA also affirmed the RTC's conclusion that prior resort to the COA is directed only when the money claim is against government funds that have not yet been appropriated by law.

Hence, the petition assigning the following errors:

i

The Court of Appeals erred on a question of law in upholding the finality of the trial court's judgment on the ground that notice to the deputized counsel is notice to the OSG.

ii

the Court of Appeals erred on a question of law in affirming the denial of petit[i] oner's right to due process by upholding the trial court's order for the release of funds in favor of respondent.

iii

the Court of Appeals erred on a question of law in ruling against petitioner which was not even a party to the case for mandamus filed by respondent before the trial court.

Petitioner argues that the CA erred in dismissing the petition for annulment of judgment on the ground that notice to the deputized counsel was notice to the OSG. Petitioner maintains that the lawyer deputized and designated as "special attorney-OSG" is a mere representative of the OSG, and the latter retains supervision and control over the deputized counsel. The OSG continues to be the principal counsel and, as such, the Solicitor General is the party entitled to be furnished copies of the orders, notices, and decisions. The deputized attorney has no legal authority to decide whether or not an appeal should be made. As a consequence, copies of orders and decisions served on the deputized counsel, acting as agent or representative of the Solicitor General, are not binding until they are actually received by the latter.

The petition is devoid of merit.

An action to annul a final judgment is an extraordinary remedy, which is not to be granted indiscriminately by the court. It is a recourse equitable in character and allowed only in exceptional cases. The reason for the restriction is to prevent this extraordinary action from being used by a losing party to make a complete farce of a duly promulgated decision that has long become final and executory.29cralaw

Under Section 2, Rule 47 of the Rules of Civil Procedure, the only grounds for annulment of judgment are extrinsic fraud and lack of jurisdiction. Lack of jurisdiction as a ground for annulment of judgment refers to either lack of jurisdiction over the person of the defending party or over the subject matter of the claim.30cralaw It is absence of, or no, jurisdiction; that is, the court should not have taken cognizance of the petition because the law does not vest it with jurisdiction over the subject matter.

It should be stressed that in a petition for annulment of judgment based on lack of jurisdiction, petitioner must show not merely an abuse of jurisdictional discretion, but an absolute lack of jurisdiction.31cralaw In the present case, the CA has put to rest the issue of whether the RTC had jurisdiction over respondent's cause of action. The CA was correct when it concluded that:

In the present case, the action a quo is one for mandamus and, under Section 21 of Batas Pambansa Bilang 129, as amended, the Regional Trial Court exercises original jurisdiction in the issuance of the writs of certiorari , prohibition, mandamus, quo warranto, habeas corpus, and injunction which may be enforced in any part of their regions. The court a quo after evaluating the allegations in the initiatory pleading concluded that the action is one for specific performance and proceeded to hear it as such. In doing so, the said court retained jurisdiction. The same law grants the Regional Trial Courts exclusive original jurisdiction over all cases in which the subject of the litigation is incapable of pecuniary estimation and all cases in which the demand exceeds P100,000.00, to which the action a quo belongs.32cralaw

In this recourse, petitioner is no longer questioning the jurisdiction of the RTC based on the above arguments. Petitioner now questions the propriety of the notice sent to the deputized counsel of the OSG, arguing that notice to its deputized counsel is not notice to the OSG. Hence, absent such notice, the decision of the RTC did not become final and executory. Moreover, the failure of the RTC to serve the OSG copies of legal notices, orders, and judicial processes constitutes lack of due process. This Court disagrees.

What petitioner is seeking is for this Court to nullify the decision and orders of the RTC via the present petition after petitioner has effectively lost its right to question the said decision and orders, the same having become final and executory. As aptly found by the RTC in its Order33cralaw dated May 20, 2002:

Section 35 of the Revised Administrative Code specifically enjoins the Office of the Solicitor General to represent the Government, its agencies and instrumentalities and its officials and agents in any litigation proceedings investigation or matters requiring the services of a lawyer. But there is no law or rule which imposes upon the court to furnish the said Office with judicial processes as a matter of course, except in specific cases among others, such as land registration and naturalization cases (NPC v. NLRC, 272, SCRA 704) and petition for change of name, (Rule 103, Rules of Court).

Be that as it may, the records of the case show summons was properly served upon respondent DENR, Region 9 Regional Executive Director through its legal officers, who entered their appearance as counsel for respondent. Respondent assisted by counsel, participated in the proceedings in the above-entitled case as evidenced by the fact that through counsel he filed motion/manifestation, pre-trial brief, motion for reconsideration and other similar pleadings before this Court. He appeared, through counsel during the pre-trial conference of the case and was subsequently served with copy of the pre-trial conference of the case and was subsequently served with copy of the pre-trial order. Respondent interposed no objection to petitioner's motion for judgment on the pleadings, nor questioned the Court's order of December 1, 2000, granting petitioner's motion. Thus, as held by the Supreme Court, it is not for a party to participate in the proceedings, submit the case for the decision and accept the judgment if it is favorable to him, but attack it for any reason when it is adverse. (Ruby Industrial Corporation v. Court of Appeals, 284 SCRA 445.)

The records further show movant OSG was officially notified with judicial process of this Court on March 12, 2000 when respondent OIC Regional Executive Director Maximo Dichoso, forwarded copy of the pre-trial order and the records of the case, and at the same time, asked for proper representation in behalf of the of the DENR. (Annex "A" Petitioner's Opposition.) Only July 23, 2001, movant OSG through Assistant Solicitor General Amy C. Lazaro-Javier wrote respondent Maximo O. Dichoso in connection with the latter's request to elevate the case to the Court of Appeals, to furnish her a copy of the Court's resolution immediately in case the motion for reconsideration of the Decision is denied by the Court. (Annex "E", Petitioner's Opposition). On July 23, 2001, Regional Executive Director Teotimo M. Redulla of the DENR, Region 9, wrote Assistant Solicitor General Lazaro-Javier, informing her of the Order of the Court, denying the Motion for Reconsideration and reiterating the respondent's request to have the case elevated to the Court of Appeals (Annex "F", Petitioner's Opposition).

This was buttressed by the CA's conclusion that:

We find petitioner's allegations bereft of any factual support. Records show that on June 8, 200 Assistant Solicitor General Mariano M. Martinez deputized Atty. Vidzfar A. Julie, Legal Division, DENR, Zamboanga City, as special counsel to assist the Solicitor General in the subject case. He then instructed Atty. Julie to advise the OSG from time to time on the progress of the case and to furnish them with all copies of orders, pleadings and motions. In view of Atty. Julie's deputization and his being counsel on record in the case, notices to her are notices to the OSG. x x x x

x x x x

Records further show, as noted by the court a quo, that the Office of the Solicitor General was served with judicial process of the court on March 12, 2000 when respondent OIC Regional Executive Director Maximo Dichoso forwarded to it a copy of the pre-trial order and the records of the case, and at the same time, asked for proper representation in behalf of the DENR. On July 23, 2001, the OSG, through Assistant Solicitor General Amy C. Lazaro-Javier wrote respondent Maximo O. Dichoso in connection with the latter's request to elevate the case to the Court of Appeals, directing him to furnish her a copy of the court's resolution immediately in case the motion for reconsideration of the Decision was denied by the court. On July 23, 2001 RED Redulla of DENR, Region IX, wrote assistant Solicitor General Lazaro-Javier, informing her of the Order of the Court denying the motion for reconsideration and reiterating the respondent's request to have the case elevated to the Court of Appeals.34cralaw

Verily, it was Atty. Julie who entered his appearance as counsel for DENR on January 18, 2000 and, as such, was the counsel on record. It was only later or on June 8, 2000 that the OSG, through Assistant Solicitor General Mariano M. Martinez, informed Atty. Julie that the latter had been deputized to assist the Solicitor General in the case pending before the RTC. As such, being the counsel on record, Atty. Julie had the authority to represent the petitioner, and it was but logical that notices of court processes sent to him were sufficient to bind petitioner. Thus, the CA correctly concluded that petitioner's right to due process was not violated.

Moreover, in Republic v. Soriano ,35cralaw We ruled that:

The petitioner's contention that service of the questioned Orders to deputized special attorneys of the OSG would not bind the OSG so that the Orders did not attain their finality when the Motion was filed, does not have a leg to stand on. It is a well-settled principle that the acts of the authorized Deputy bind the principal counsel. Thus, service on the Deputy is service to the OSG.

Moreover, the records will disclose that Atty. Fidel Evangelista, who is a deputized attorney, was the one who appeared for the petitioner in the lower court. It is not only lawful, but also in accordance with the normal and standard practice that notices be sent to said special Attorney to avoid delays and complications. Precisely, the OSG has no time and manpower to handle all the cases of multifarious government entities such that deputization is authorized by law to cope with such contingencies.

Since Atty. Julie had the authority to represent the DENR before the RTC, notices of decision, orders, and other court processes to him as counsel on record and the duly deputized counsel of the OSG were sufficient to bind petitioner, and both the counsel and the OSG's failure to appeal the decision and to avail themselves of the other remedies provided by the Rules was likewise binding upon petitioner.

Respondent should not suffer for petitioner's failure to avail itself of the appropriate remedies provided for by law and the Rules. After a decision is declared final and executory, vested rights are acquired by the winning party. Just as a losing party has the right to appeal within the prescribed period, the winning party has the correlative right to enjoy the finality of the decision on the case.36cralaw Whether through inadvertence or negligence of its deputized counsel or the OSG itself, the decision has already become final and executory. To conclude otherwise would run counter to the basic principle of fair play. Besides, there would be no end to litigations if the parties who have unsuccessfully availed themselves of any of the appropriate remedies or lost them through their fault or inadvertence could have unfavorable decisions annulled by simply bringing an action for annulment of judgment.

As regards petitioner's remaining arguments, suffice it to say that this is not an appeal from the decision and orders of the RTC, which to reiterate has become final and executory; the correctness of the judgment is therefore not in issue. Accordingly, there is no need to address the errors allegedly committed by the trial court in issuing the assailed orders.

WHEREFORE, premises considered, the petition is DENIED. The Decision dated September 9, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 76176 is AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

WE CONCUR:

RENATO C. CORONA
Associate Justice
Chairperson

PRESBITERO J. VELASCO, JR.
Associate Justice
ANTONIO EDUARDO B. NACHURA
Associate Justice

JOSE CATRAL MENDOZA
Associate Justice

A T T E S T A T I O N

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

RENATO C. CORONA
Associate Justice
Third Division, Chairperson

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 Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

REYNATO S. PUNO
Chief Justice



Endnotes:

1cralaw Penned by Associate Justice Romulo V. Borja, with Associate Justices Teresita Dy-Liacco Flores and Rodrigo F. Lim, Jr., concurring; rollo, pp. 36-51.

2cralaw Records, pp. 6-11.

3cralaw Rollo, at 254.

4cralaw Id. at 287.

5cralaw Id. at 280-281.

6cralaw Records, pp. 49-56.

7cralaw Rollo, at 134.

8cralaw Id. at 135.

9cralaw Id. at 143.

10cralaw Id. at 146.

11cralaw Records, p. 282.

12cralaw Id. at 284-290.

13cralaw Id. at 290.

14cralaw Id. at 288-290.

15cralaw Rollo, at 169-171.

16cralaw Id. at 172-173.

17cralaw Id. between 174-175.

18cralaw Id. at 175-176.

19cralaw Id. at 177-179.

20cralaw Id. at 184-186.

21cralaw Id. at 188-189.

22cralaw Id. at 195-196.

23cralaw Id. at 202-205.

24cralaw Id.

25cralaw CA rollo, pp. 1-21.

26cralaw Id. at 7.

27cralaw Rollo, at 36-51.

28cralaw Id. at 50.

29cralaw Nudo v. Caguioa, et al., G.R. No. 176906, August 4, 2009.

30cralaw Tolentino v. Leviste , G.R. No. 156118, November 19, 2004, 443 SCRA 274, 284.

31cralaw Barco v. Court of Appeals, G.R. No. 120587, January 20, 2004, 420 SCRA 162, 174; citing Durisol Philippines, Inc. v. Court of Appeals, G.R. No. 121106, February 20, 2002, 377 SCRA 353.

32cralaw Rollo, at 46-47.

33cralaw Supra, note 20.

34cralaw Rollo, at 49-50.

35cralaw No. L-76944, December 20, 1988, 168 SCRA 560-567.

36cralaw Bello v. National Labor Relations Commission , G.R. No. 146212, September 5, 2007, 532 SCRA 234, 242.





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