Deduro v. Basa

FIRST DIVISION

[G.R. No. 249825. April 28, 2021.]

MARY JANE B. DEDURO, JOINED BY HER HUSBAND, JICIEL U. DEDURO, petitioners,vs. MARLYN B. BASA, JOINED BY HER HUSBAND, GUADALUPE BASA, respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution datedApril 28, 2021which reads as follows:

"G.R. No. 249825 (Mary Jane B. Deduro, joined by her husband, Jiciel U. Deduro, Petitioners, v. Marlyn B. Basa, joined by her husband, Guadalupe Basa, Respondents). — This petition 1 assails the Decision 2 promulgated on 14 August 2018 and Resolution promulgated on 28 June 2019 by the Court of Appeals (CA) in CA-G.R. CV No. 05581, which reversed and set aside the Decision 3 dated 21 April 2015 of Branch 19, Regional Trial Court (RTC) of Roxas City in Civil Case No. V-38-07.

Antecedents

On 20 October 2003, respondents obtained a loan from petitioners in the aggregate amount of Php130,000.00. Their agreement was set out under two (2) Kasugtanan 4 for the amount of Php50,000.00 and Php80,000.00, payable in one (1) year, with ten percent (10%) interest per month. To secure the debt, respondents delivered copies of TCT Nos. 25152 and 32655 covering Lot Nos. 161-A and 434, respectively. When the obligation became due, respondents failed to pay the same, despite demand. Petitioners then filed a complaint for sum of money against respondents before the Municipal Circuit Trial Court (MCTC) of Dao-Ivisan Capiz, docketed as Civil Case No. 317. 5

Despite service of summons upon respondents on 01 December 2004, they failed to file any responsive pleading within the reglementary period. On 03 January 2008, petitioner filed a Motion for Summary Judgment which was set for hearing on 21 January 2005. On even date, respondents through their counsel Atty. Ely Azarraga, Jr. (Atty. Azarraga) filed a Motion to Admit Answer with Answer, which the MCTC denied in its order dated 31 January 2005. 6

Subsequently, on 04 April 2005, the MCTC rendered a Decision 7 in favor of petitioners, ordering respondents to pay petitioners Php130,000.00, plus 6% interest a month from 20 November 2003 until full payment, attorney's fees, litigation expenses, and costs of suit. 8

When respondents failed to file any appeal, the MCTC decision became final and executory. Later, they caused the levy on Lot Nos. 161-A and 434 and were the highest bidder in the auction that ensued. They then had TCT Nos. 25152 and 32655 cancelled and new titles issued in their name. 9 HSAcaE

On 26 July 2007, petitioners filed a complaint for declaration of nullity of judgment and of the sheriff's levy and auction sale, and injunction or recovery of possession, with claims for damages against respondents before the RTC. 10

Respondents alleged that, through the gross negligence of their former counsel, Atty. Azarraga, they were unduly deprived of their right to be heard and to due process of law through no fault of their own. They contended that the actuation of their former counsel constituted professional chicanery amounting to extrinsic fraud or collateral fraud warranting the annulment of the MCTC's judgment. 11

In their Answer, petitioners argued that the complaint should be dismissed since grounds invoked do not warrant the annulment of the challenged decision. They contended that annulment of judgment may be availed of only when the ordinary remedies of new trial, appeal, petition for relief, or other appropriate remedies are no longer available through no fault of the claimant. Considering that respondents failed to avail of these remedies without sufficient justification, they could no longer resort to an action for annulment of judgment. 12

Ruling of the RTC

On 21 April 2015, the RTC dismissed the complaint, thus:

WHEREFORE, for failure to substantiate the cause of action against the defendants, this case is ordered DISMISSED.

No costs.

SO ORDERED. 13

The RTC held that since respondents failed to appeal, the MCTC Decision had already become final and executory. 14 Likewise, contrary to respondents' claim that they were not given a day in court to present evidence, respondent Marlyn testified that she was aware that petitioners' Motion for summary judgment was set for hearing but she and her counsel failed to attend the same. 15 Meanwhile, respondents' allegation that of their counsel's gross negligence and incompetence were unsubstantiated. 16

Unsatisfied, respondent filed an appeal with the CA.

Ruling of the CA

In the now assailed Decision, the CA granted the appeal and reversed the decision of the RTC:

WHEREFORE, the appeal is GRANTED. The Decision dated 21 April 2015 of the Regional Trial Court of Roxas City, 6th Judicial Region, Branch 19, in Civil Case No. V-38-07, is REVERSED and SET ASIDE.

Consequently, the Decision of the Municipal Circuit Trial Court of Dao-Ivasan [sic], Capiz, dated 04 April 2005 in Civil Case No. 317 is declared NULL and VOID. The Sheriff's Certificate of Sale on Lot No. 161-A and Lot No. 434; and the subsequent final deed of sale covering the same property, are all hereby declared null and void. Spouses Jiciel Deduro and Mary Jane Deduro are directed to reconvey Lot No. 161-A and Lot No. 434 to spouses Marlyn B. Basa and Guadalupe Basa, and the Register of Deeds is ordered to cancel the registration of said properties in the name of Spouses Jiciel Deduro and Mary Jean Deduro and to issue a new one in the name of Spouses Marlyn B. Basa and Guadalupe Basa.

The Municipal Circuit Trial Court of Dao-Ivasan [sic], Capiz is hereby directed to REOPEN Civil Case No. 317 for further proceedings.

SO ORDERED. 17

The CA held that while Section 2, 18 Rule 47 of the Rules of Court provides that a petition for annulment of judgment may be based only on the grounds of extrinsic fraud and lack of jurisdiction, jurisprudence recognizes lack of due process as additional ground to annul a judgment. 19 It further held that respondents' counsel is guilty of gross negligence in handling respondents' case before the trial court, depriving them of their day in court. Likewise, such grossly negligence resulted in depriving respondents of their property without due process of law. Consequently, respondents did not lose the remedies of new trial, appeal, petition for relief, and other remedies because it was not through their own fault, but the gross negligence of their counsel that prevented them from pursuing such remedies. 20

Petitioners sought reconsideration, which the CA denied. Hence, this petition. 21

Issues

Petitioners are now before this Court raising the following issues:

(1) Whether the Honorable Court of Appeals was correct when it disregarded the clear provisions of Section 2, Rule 47 of the Revised Rules of Court which states that annulment of judgment may be based only on the grounds of extrinsic fraud and lack of jurisdiction, in reversing and setting aside the Honorable Court a quo's decision dismissing respondents' case for Declaration of Nullity of Judgment, Sheriff's Levy and Auction Sale, Injunction or Recovery of Possession.

(2) Whether the Honorable Court of Appeals, given the attendant circumstances, correctly appreciated and applied the lack of due process of law as supposedly an additional ground to annul a judgment, in reversing and setting aside the Honorable Court a quo's decision dismissing respondents' case for Declaration of Nullity of Judgment, Sheriff's Levy and Auction Sale, Injunction or Recovery of Possession. 22

Ruling of the Court

We deny the petition.

It is petitioners' postulation that the CA gravely erred when it applied lack of due process as an additional ground to annul a judgment. They stressed that Section 2, Rule 47 is restrictive, such that annulment of judgment may be based only on the grounds of extrinsic fraud and lack of jurisdiction. 23

Annulment of judgment is a recourse equitable in character, allowed only in exceptional cases where there is no available or other adequate remedy. Its objective is to set aside a final and executory judgment, which is not void upon its face, but is entirely regular in form, and whose alleged defect is not apparent upon its face or from the recitals contained in the judgment. Section 2, Rule 47 names only extrinsic fraud and lack of jurisdiction as grounds for the remedy of annulment of judgment. Case law, however, recognizes a third ground: denial of due process of law. 24 HESIcT

Contrary to petitioners' asseveration, the Court has previously ruled on lack of due process as a permissible ground to annul a judgment. In Arcelona v. Court of Appeals, 25 this Court declared that a final and executory judgment may still be set aside if, upon mere inspection, it can clearly be shown to be a patent nullity for having been issued without jurisdiction or for lack of due process of law. On the other hand, the Court, in Diona v. Balangue, 26 upheld the decision of the CA, which set aside the decision of the RTC on the ground of lack of due process of law. And more on point, the Court allowed the re-opening of the case in Mortel v. Kerr27 when it was proved that Mortel was deprived of his property without due process of law in view of the gross and palpable negligence of his counsel.

Petitioners also contend that the supposed negligence of respondents' counsel is not gross and palpable and does not constitute extrinsic fraud. 28 Further, there was no showing that respondents' counsel was motivated by malice in the performance of his task. 29 If at all, respondents must be held equally negligent with their counsel, having been remiss in their duty as party litigants. 30 Petitioners point out that respondents, without justification, failed to avail of the remedies of appeal, motion for new trial, or petition for relief and had simply allowed the case to take its course until its finality and execution. 31

As a general rule, a client is bound by the acts, even mistakes, of his counsel in the realm of procedural technique. 32 A recognized exception to the rule is when the lawyers were grossly negligent in their duty and such amounted to a deprivation of their client's property without due process of law. In which case, the courts must step in and accord relief to a client who suffered thereby. 33

We agree with the CA that the negligence of Atty. Azarraga can be characterized as reckless and inexcusable. At the outset, Atty. Azarraga failed to file any responsive pleading on behalf of his client within the reglementary period. 34 Only after petitioners filed a Motion for Summary Judgment did he filed a Motion to Admit Answer with the Answer. In addition, on the scheduled hearing of the Motion for Summary Judgement, Atty. Azarraga failed to appear and likewise did not file an opposition to the Motion. 35 Worse, despite an unfavorable judgment for respondents, Atty. Azarraga did not file a motion for reconsideration, or avail of any remedy available, but just let the judgment lapse into finality. 36 In all, Atty. Azarraga's conduct shows that he was remiss and grossly negligent in defending the cause of his clients, to the extent that they were deprived of their property without due process of law.

As aptly observed by the CA, thus:

Spouses Basa's counsel is guilty of gross negligence in handling their case before the trial court. Records show that spouses Basa did not have their day in court, as they were unable to submit their evidence to controvert the claims of spouses Deduro regarding their contractual obligation.

The manifest indifference of spouses Basa's former counsel in handling the cause of his clients was already present even from the beginning. It should be recalled that after filing his appearance, said counsel failed to file the answer within the reglementary period. It was only on 21 January 2005, when the case was set for hearing on spouses Deduro's Motion for Summary Hearing, that he filed an Answer. What is very disturbing is that he merely offered a lousy explanation of oversight on his part for his failure to file a responsive pleading on behalf of his clients. Moreover, he did not take the necessary move to protect his clients' interest upon learning of the MCTC's denial of admission of the Answer. Worse, he even allowed the MCTC Decision to become final by not perfecting an appeal. Neither did he file a petition from relief therefrom. His subsequent inaction for his clients' cause manifested his indifference and lack of professionalism, and was the primary cause why the spouses Basa was prevented from presenting their side, which is highly unfair and unjust. 37

In Apex Mining, Inc. v. Court of Appeals, 38 the Court held that when the incompetence, ignorance, or inexperience of counsel is so great and the result is so serious that the client, who otherwise has a good cause, is prejudiced and denied his day in court, the client deserves another chance to present his case; hence, the litigation may be reopened for that purpose. Also, when an unsuccessful party has been prevented from fully and fairly presenting his case because of his attorney's professional delinquency or infidelity the litigation may be reopened to allow the party to present his side. Lastly, where counsel is guilty of gross ignorance, negligence, and dereliction of duty, which resulted in the client's 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.

Respondents cannot be equally faulted for the negligence of their counsel. As soon as respondents were served with summons, they immediately hired a counsel. Their counsel assured them that necessary pleadings will be filed in court. 39 Though they were aware of the trial court's adverse decision, they completely relied on their counsel. However, We cannot blame respondents such reliance. Clients have reasonable expectations that their lawyer would amply protect their interest during the trial of the case. 40

It likewise bears emphasizing that respondents are plain and ordinary people who are totally ignorant of the intricacies and technicalities of the law and legal procedures. 41 As such, respondents did not lose the remedies of new trial, appeal, petition for relief, and other remedies through their own fault. Such failure can only be attributed to the gross negligence of their erstwhile counsel, which prevented them from pursuing the proper remedies. caITAC

In fine, court litigation is primarily a search for truth, and a liberal interpretation of the rules that gives to both parties the fullest opportunity to adduce proof is the best way to ferret out such truth. Thus, a court may suspend its own rules or except a case from them in order to serve the ends of justice; or, it may altogether disregard the rules in a proper case. To cling to the general rule of having the ignorance, negligence, and dereliction of duty of the counsel bind the client is only to condone, rather than to rectify, a serious injustice to a party whose only fault was to repose his faith and entrust his cause to his counsel. 42

WHEREFORE, the petition is DENIED. The Decision promulgated on 14 August 2018 and Resolution promulgated on 28 June 2019 by the Court of Appeals in CA-G.R. CV No. 05581 are AFFIRMED.

SO ORDERED."

By authority of the Court:

(SGD.) LIBRADA C. BUENADivision Clerk of Court

By:

MARIA TERESA B. SIBULODeputy Division Clerk of Court

 

Footnotes

1.Rollo, pp. 03-26.

2.Id. at 30-40; penned by Associate Justice Dorothy P. Montejo-Gonzaga and concurred in by Associate Justices Edgardo L. Delos Santos (now a Member of this Court) and Edward B. Contreras of the 19th Division, Court of Appeals, Cebu City.

3.Id. at 47-69; penned by Judge Esperanza Isabel E. Poco-Deslate.

4. Parties' Agreement written in local dialect.

5.Rollo, pp. 70-71.

6.Id. at 31.

7.Id. at 70-71.

8.Id. at 71.

9.Id. at 32.

10.Id.

11.Id.

12.Id. at 32-33.

13.Id. at 69.

14.Id. at 66.

15.Id. at 67.

16.Id. at 33.

17.Id. at 39.

18. Sec. 2. Grounds for annulment. — The annulment may be based only on the grounds of extrinsic fraud and lack of jurisdiction.

19.Rollo, p. 34.

20.Id. at 36-37.

21.Id. at 3-26.

22.Id. at 5-6.

23.Id. at 10-11.

24.Baclaran Marketing Corp. v. Nieva, 809 Phil. 92 (2017); G.R. No. 189881, 19 April 2017 [Per J. Jardeleza].

25. 345 Phil. 250 (1997); G.R. No. 102900, 02 October 1997 [Per J. Panganiban], citing Santiago v. Ceniza, 115 Phil. 493 (1962); G.R. No. L-17322, 30 June 1962 [Per J. Paredes]; Mercado v. Ubay, 265 Phil. 763 (1990); G.R. No. 35830, 24 July 1990 [Per J. Medialdea]; and Regidor v. Court of Appeals, G.R. No. 78115, 05 March 1993 [Per J. Nocon].

26. 701 Phil. 19 (2013); G.R. No. 173559, 07 January 2013 [Per J. Del Castillo].

27. 698 Phil. 228 (2012); G.R. No. 156296, 12 November 2012 [Per J. Bersamin].

28.Rollo, pp. 14-15.

29.Id. at 22.

30.Id. at 23.

31.Id. at 13-15.

32.Producers Bank of the Philippines v. Court of Appeals, 430 Phil. 812 (2002); G.R. No. 126620, 17 April 2002 [Per J. Carpio].

33.Diona v. Balangue, 701 Phil. 19 (2013); G.R. No. 173559, 07 January 2013 [Per J. Del Castillo].

34.Rollo, pp. 48-49.

35.Id. at 53.

36.Id. at 59.

37.Id. at 36.

38. 377 Phil. 482 (1999); G.R. No. 133750, 29 November 1999 [Per C.J. Davide, Jr.].

39.Rollo, p. 53.

40.Diona v. Balangue, 701 Phil. 19 (2013); G.R. No. 173559, 07 January 2013 [Per J. Del Castillo].

41.Rollo, p. 37.

42.Mortel v. Kerr, 698 Phil. 228 (2012); G.R. No. 156296, 12 November 2012 [Per J. Bersamin].