February 2008 - Philippine Supreme Court Resolutions
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[G.R. No. 160810 : February 18, 2008] VIRGILIO O. VILLEGAS AND TOMAS C. MARANAN, PETITIONERS, V. THE HON. COURT OF APPEALS AND CESAR VERGARA, RESPONDENTS:
[G.R. No. 160810 : February 18, 2008]
VIRGILIO O. VILLEGAS AND TOMAS C. MARANAN, PETITIONERS, V. THE HON. COURT OF APPEALS AND CESAR VERGARA, RESPONDENTS
Sirs/Mesdames:
Quoted hereunder, for your information, is a resolution of this Court dated 18 February 2008:
G.R. No. 160810 (VIRGILIO O. VILLEGAS and TOMAS C. MARANAN, Petitioners, v. THE HON. COURT OF APPEALS and CESAR VERGARA, Respondents)
This petition for certiorari[1] assails the 25 June 2003 Decision[2] and the 17 November 2003 Resolution[3] of the Court of Appeals (appellate court) in CA-G.R. SP No. 54825. The appellate court's decision dismissed the petition to annul the 7 January 1998 Decision[4] and the 18 August 1999 Order[5] granting the motion for execution in Civil Case No. Q-97-31520. The Regional Trial Court of Quezon City (trial court) ordered petitioners Virgilio O. Villegas (Villegas) and Tomas C. Maranan (Maranan) to pay respondent Cesar Vergara (Vergara) P695,000 as principal, interest, and penalty, and P30,000 as attorney's fees.
The appellate court stated the facts as follows:
In its Decision dated 25 June 2003, the appellate court ruled in favor of Vergara and dismissed the petition to annul the trial court's judgment.[7] The appellate court stated that the alleged negligence of Villegas and Maranan's counsel was coupled with that of his clients and was not wanton enough to have deprived his clients of their day in court.
On 12 December 2003, Villegas and Maranan filed their petition for review before this Court.
Petitioners assign numerous errors made by the appellate court. However, the main issue involves the propriety of the appellate court's refusal to annul the decision of the trial court.
The petition has no merit.
An action for annulment of judgment is a remedy in law independent of the case where the judgment sought to be annulled is rendered.[8] A judgment can be annulled only on two grounds: lack of jurisdiction and extrinsic fraud. The exclusivity of the grounds is a safeguard against delaying a final and executory judgment. Furthermore, annulment of judgment may not be invoked where the party has availed himself of the remedy of new trial, appeal, petition for relief or other appropriate remedy and lost therefrom, or where he has failed to avail himself of those remedies through his own fault or negligence.[9]
A final judgment may be annulled on the ground of lack of jurisdiction, which may be a lack of jurisdiction over the subject matter or over the person of indispensable parties. Only evidence found in the records of the case can justify the annulment of judgment due to lack of jurisdiction.[10]
Fraud is extrinsic or collateral when a party is prevented from having a trial or from presenting all of his case to the court.[11] Extrinsic fraud usually refers to any fraudulent act of the prevailing party which is committed outside the trial of the case. Extraneous evidence is admitted where an action for annulment of judgment is grounded on extrinsic fraud.[12]
The acts of the losing party's counsel are not usually covered by extrinsic fraud; hence, negligence of the counsel binds his client. However, the general rule that the negligence of the counsel binds his client admits of exceptions. The Court has recognized the existence of extrinsic fraud where reckless or gross negligence of counsel deprives the client of due process of law, or when the application of the general rule results in the outright deprivation of one's property through a technicality.[13] Villegas and Maranan failed to show that the exceptions apply to the present case.
Villegas and Maranan were not able to avail of the remedies of a motion for reconsideration, a new trial, an appeal or a petition for relief through their own fault. Both the trial and appellate courts correctly found that Villegas and Maranan's appeal should be dismissed for non-payment of docket fees. Villegas and Maranan alleged that they paid �5,000 to Atty. Marquez so that he would file a notice of appeal of the trial court's decision, because they thought that this amount was enough to cover everything necessary for their appeal. When Atty. Marquez filed a notice of appeal, he did not pay the docket fee. Villegas and Maranan alleged they were unaware that they needed to pay docket fees worth a little over P1 ,000. Villegas and Maranan, however, failed to substantiate this allegation.
The appellate court correctly ruled out the assertion of lack of jurisdiction. The trial court had jurisdiction over the persons of Villegas and Maranan as they admitted that they received the summons. The amount of P695,000 was well within the jurisdictional amount cognizable by the trial court.
Atty. Marquez's manner of representing Villegas and Maranan before the trial court is not characterized by gross negligence. Records show that Atty. Marquez appeared on behalf of Villegas and Maranan during the hearing on the motion to declare them in default. Despite Atty. Marquez's entry of appearance, all subsequent notices were sent only to Villegas and Maranan. Nothing was sent to Atty. Marquez. Atty. Marquez could not inform Villegas and Maranan about the status of their case because he did not receive any notice from the trial court. Atty. Marquez was able to file a timely opposition to Vergara's motion for execution only after Villegas and Maranan informed him. The trial court agreed with Atty. Marquez's argument that notice to the party is not notice to the counsel. The trial court stated that its decision dated 7 January 1998 was not yet final and executory as of 10 June 1998, which is the day Atty. Marquez took notice of the trial court's decision and the day before the scheduled hearing on the motion for execution.
Villegas and Maranan failed to show that they are qualified to avail of the remedy of annulment of judgment. They lost the opportunity to avail of other remedies through their fault. The trial court had jurisdiction over the subject matter of the case and over the persons of Villegas and Maranan. We found no evidence of extrinsic fraud. In view of the foregoing circumstances, we see no reason why the ruling of the appellate court should be overturned.
WHEREFORE, the petition is DENIED. The 25 June 2003 Decision and 17 November 2003 Resolution of the Court of Appeals in CA-G.R. SP No. 54825 are AFFIRMED. Costs against the petitioners.
SO ORDERED. Quisumbing, J., on official leave; Azcuna, J., designated additional member pursuant to Adm. Circular No. 84-2007.
G.R. No. 160810 (VIRGILIO O. VILLEGAS and TOMAS C. MARANAN, Petitioners, v. THE HON. COURT OF APPEALS and CESAR VERGARA, Respondents)
This petition for certiorari[1] assails the 25 June 2003 Decision[2] and the 17 November 2003 Resolution[3] of the Court of Appeals (appellate court) in CA-G.R. SP No. 54825. The appellate court's decision dismissed the petition to annul the 7 January 1998 Decision[4] and the 18 August 1999 Order[5] granting the motion for execution in Civil Case No. Q-97-31520. The Regional Trial Court of Quezon City (trial court) ordered petitioners Virgilio O. Villegas (Villegas) and Tomas C. Maranan (Maranan) to pay respondent Cesar Vergara (Vergara) P695,000 as principal, interest, and penalty, and P30,000 as attorney's fees.
The appellate court stated the facts as follows:
Villegas and Maranan are respectively the President and Vice-President of Vast Top Supply Corporation (Vast Top). They borrowed � 80,000.00 from Vergara, but signed therefor a Promissory Note for the amount of P234,000.00 with 5% interest per month and another 3% a month as penalty in case of default. To secure payment, Villegas with the consent of his wife Shirley executed a chattel mortgage over his Toyota vehicle and a real estate mortgage over their 600 square meters [sic] lot in Malimba, Gapan, Nueva Ecija covered by TCT No. NT-206616. In addition, seven (7) PCIB postdated checks were issued by Maranan to cover the payment thereof.On 8 September 1999, Villegas and Maranan filed a petition for annulment of judgment with prelimmary injunction and prayer for temporary restraining order before the appellate court.
Because of financial setbacks suffered in their business, [Villegas and Maranan] failed to settle this obligation. The said checks bounced, and despite the six months extension given them they were still unable to make good on the replacement checks. With this coupled with the accrued interests and penalties, their account had ballooned to P695,000.00.
In another attempt to settle their account, Villegas and his spouse executed a Dacion En Pago in favor of Vergara over the same parcel of land they had mortgaged to their said creditor. This was allegedly on the belief that they would then be relieved of their loan obligations.
But Vergara nonetheless sued Villegas and Maranan before the court a quo for collection of the said P695,000.00 and demanded an additional thirty (30%) percent of it as attorney's fees.
[Villegas and Maranan] admittedly received the summons and immediately referred their case to their counsel Atty. Archimedes Marquez who, unknown to them, did not file any responsive pleading. Consequently, they were declared in default and Vergara was allowed to present his evidence exparte. Predictably the court a quo decided the case in favor of Vergara and granted the prayer in the complaint. [Villegas and Maranan] claimed surprise, swearing they had no knowledge of having been declared in default as the notices were sent to their counsel who did not apprise them of this and its consequences. Stunned by their receipt of the adverse result of the case, they were nonetheless assured by Atty. Marquez that "everything was alright" and that "they have nothing to worry about since he is taking the necessary steps to protect their right."
Again, when they received the notice of the hearing on the Motion for Execution filed by Vergara, they inquired from their counsel whether they have to attend this and were told by Atty. Marquez that they "are not needed thereat and he shall be the one to attend." But already wary of the progress of their case, Maranan nonetheless attended the hearing at which their counsel was absent and discovered that he failed to file any paper/pleading and that they have already lost the remedy of appeal for failure to pay the docket fees. [Villegas and Maranan] assert having no knowledge of the appeal taken by their counsel and the need to pay the corresponding docket fees thereon. They tried to call up again Atty. Marquez but he would invariably just say "they have nothing to worry about the case."[6]
In its Decision dated 25 June 2003, the appellate court ruled in favor of Vergara and dismissed the petition to annul the trial court's judgment.[7] The appellate court stated that the alleged negligence of Villegas and Maranan's counsel was coupled with that of his clients and was not wanton enough to have deprived his clients of their day in court.
On 12 December 2003, Villegas and Maranan filed their petition for review before this Court.
Petitioners assign numerous errors made by the appellate court. However, the main issue involves the propriety of the appellate court's refusal to annul the decision of the trial court.
The petition has no merit.
An action for annulment of judgment is a remedy in law independent of the case where the judgment sought to be annulled is rendered.[8] A judgment can be annulled only on two grounds: lack of jurisdiction and extrinsic fraud. The exclusivity of the grounds is a safeguard against delaying a final and executory judgment. Furthermore, annulment of judgment may not be invoked where the party has availed himself of the remedy of new trial, appeal, petition for relief or other appropriate remedy and lost therefrom, or where he has failed to avail himself of those remedies through his own fault or negligence.[9]
A final judgment may be annulled on the ground of lack of jurisdiction, which may be a lack of jurisdiction over the subject matter or over the person of indispensable parties. Only evidence found in the records of the case can justify the annulment of judgment due to lack of jurisdiction.[10]
Fraud is extrinsic or collateral when a party is prevented from having a trial or from presenting all of his case to the court.[11] Extrinsic fraud usually refers to any fraudulent act of the prevailing party which is committed outside the trial of the case. Extraneous evidence is admitted where an action for annulment of judgment is grounded on extrinsic fraud.[12]
The acts of the losing party's counsel are not usually covered by extrinsic fraud; hence, negligence of the counsel binds his client. However, the general rule that the negligence of the counsel binds his client admits of exceptions. The Court has recognized the existence of extrinsic fraud where reckless or gross negligence of counsel deprives the client of due process of law, or when the application of the general rule results in the outright deprivation of one's property through a technicality.[13] Villegas and Maranan failed to show that the exceptions apply to the present case.
Villegas and Maranan were not able to avail of the remedies of a motion for reconsideration, a new trial, an appeal or a petition for relief through their own fault. Both the trial and appellate courts correctly found that Villegas and Maranan's appeal should be dismissed for non-payment of docket fees. Villegas and Maranan alleged that they paid �5,000 to Atty. Marquez so that he would file a notice of appeal of the trial court's decision, because they thought that this amount was enough to cover everything necessary for their appeal. When Atty. Marquez filed a notice of appeal, he did not pay the docket fee. Villegas and Maranan alleged they were unaware that they needed to pay docket fees worth a little over P1 ,000. Villegas and Maranan, however, failed to substantiate this allegation.
The appellate court correctly ruled out the assertion of lack of jurisdiction. The trial court had jurisdiction over the persons of Villegas and Maranan as they admitted that they received the summons. The amount of P695,000 was well within the jurisdictional amount cognizable by the trial court.
Atty. Marquez's manner of representing Villegas and Maranan before the trial court is not characterized by gross negligence. Records show that Atty. Marquez appeared on behalf of Villegas and Maranan during the hearing on the motion to declare them in default. Despite Atty. Marquez's entry of appearance, all subsequent notices were sent only to Villegas and Maranan. Nothing was sent to Atty. Marquez. Atty. Marquez could not inform Villegas and Maranan about the status of their case because he did not receive any notice from the trial court. Atty. Marquez was able to file a timely opposition to Vergara's motion for execution only after Villegas and Maranan informed him. The trial court agreed with Atty. Marquez's argument that notice to the party is not notice to the counsel. The trial court stated that its decision dated 7 January 1998 was not yet final and executory as of 10 June 1998, which is the day Atty. Marquez took notice of the trial court's decision and the day before the scheduled hearing on the motion for execution.
Villegas and Maranan failed to show that they are qualified to avail of the remedy of annulment of judgment. They lost the opportunity to avail of other remedies through their fault. The trial court had jurisdiction over the subject matter of the case and over the persons of Villegas and Maranan. We found no evidence of extrinsic fraud. In view of the foregoing circumstances, we see no reason why the ruling of the appellate court should be overturned.
WHEREFORE, the petition is DENIED. The 25 June 2003 Decision and 17 November 2003 Resolution of the Court of Appeals in CA-G.R. SP No. 54825 are AFFIRMED. Costs against the petitioners.
SO ORDERED. Quisumbing, J., on official leave; Azcuna, J., designated additional member pursuant to Adm. Circular No. 84-2007.
Very truly yours,
(Sgd.) LUDICHI YASAY-NUNAG
Clerk of Court
(Sgd.) LUDICHI YASAY-NUNAG
Clerk of Court
Endnotes:
[1] Under Rule 45 of the 1997 Rules of Civil Procedure.
[2] Rollo, pp. 39-48. Penned by Associate Justice Roberto A. Banios, with Associate Justices Josefina Guevara-Salonga and Lucas P. Bersamin, concurring.
[3] Id. at 66-67.
[4] Id. at 91-92. Penned by Judge Benedicto B. Ulep.
[5] Id. at 93.
[6] Id. at 40-42.
[7] Id. at 47.
[8] Canlas v. Court of Appeals, G.R. No. L-77691, 8 August 1988, 164 SCRA 160; Macalalag v. Ombudsman, 468 Phil. 918 (2004).
[9] Macalalag v. Ombudsman, supra at 923.
[10] Arcelona v. Court of Appeals, 345 Phil. 250 (1997).
[11] Asian Surety and Insurance Co., Inc. v. Island Steel, Inc.,No. L-31366, 15 November 1992, 118 SCRA 233; Gerardo v. De la Pena, G.R. No. 61527, 26 December 1990, 192 SCRA 691; Ruiz v. Court of Appeals, G.R. No. 93454,13 September 1991,201 SCRA 577. .
[12] Arcelona v. Court of Appeals, supra note 10.
[13] Salonga v. Court of Appeals, 336 Phil. 514 (1997).
