GSIS vs Bengson Commercial Bldgs Inc : 137448 : January 31, 2002 : C.J. Davide, Jr : En Banc

EN BANC

[G.R. No. 137448. January 31, 2002]

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs. BENGSON COMMERCIAL BUILDINGS, INC., respondent.

[G.R. No. 141454. January 31, 2002]

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs. COURT OF APPEALS, JUDGE VICENTE PACQUING, RTC-San Fernando, La Union, Branch 26, SHERIFF MARIO ANACLETO M. BAÑEZ, Provincial Sheriff of La Union, BENGSON COMMERCIAL BLDGS., and MR. ENRIQUE LL. YUSINGCO, in his capacity as Corporate Secretary of SAN MIGUEL CORPORATION, respondents.

D E C I S I O N

DAVIDE, JR., C.J.:

Before us are two consolidated cases docketed as G.R. No. 137448 and G.R. No. 141454, which were both filed by the Government Service Insurance System (GSIS, for brevity). The first is a petition for review on certiorari assailing the 24 November 1998[1] and 29 January 1999[2] Resolutions of the Court of Appeals in CA-G.R. SP No. 47669, which denied GSIS’s petition for certiorari for having been filed out of time and for non-compliance with procedural requirements. The second is a special civil action for certiorari challenging the 14 January 2000 Decision[3] of the Court of Appeals in the consolidated cases of CA-G.R. SP Nos. 51131 & 47699, which dismissed GSIS’s petitions on the ground of forum-shopping.

The pertinent facts are as follows:

Private respondent Bengson Commercial Buildings, Inc., (hereafter BENGSON) obtained loans from GSIS on 20 August 1965 and 23 November 1971 in the amounts of P1.25 million and P3 million, respectively, or in the aggregate sum of P4.25 million. As a security for the payment of these loans, BENGSON executed real estate and chattel mortgages in favor of GSIS. On 26 May 1972, BENGSON sold to GSIS nine units of debenture bonds in the total amount of P900,000. For BENGSON’s failure to settle its arrearages despite due notices, the mortgaged properties were extra-judicially foreclosed and sold at public auction to the highest bidder, the GSIS itself. A certificate of sale and new certificates of title were thereafter issued in favor of GSIS.[4]

On 23 June 1977, BENGSON filed with then Court of First Instance of San Fernando, La Union, an action for the annulment of the foreclosure sale, which was docketed as Civil Case No. 2794. After trial, the trial court (Regional Trial Court of San Fernando, La Union, Branch 26) rendered a decision (1) nullifying the foreclosure of BENGSON’s mortgaged properties; (2) ordering the cancellation of the titles issued to GSIS and the issuance of new ones in the name of BENGSON; (3) ordering BENGSON to pay GSIS P900,000 for the debenture bonds; and (4) directing GSIS to (a) restore to BENGSON full possession of the foreclosed properties, (b) restructure the P4.25 million loans at the legal rate of interest from the finality of the judgment, (c) pay BENGSON P1.9 million representing accrued monthly rentals and P20,000 rental monthly until the properties are restored to BENGSON’s possession, and (e) pay the costs.[5]

In its 19 January 1988 Decision in CA-G.R. Civil Case No. 09361, the Court of Appeals affirmed with modification the decision of the court a quo, and the case was ordered remanded to the trial court for reception of evidence on the costs of suit and for the determination of the veracity of the provincial sheriff’s report that the mortgaged properties were no longer in existence, as well as a determination of their replacement value should GSIS fail to return them. As stated in our decision in GSIS v. Gines,[6] GSIS “did not lift a finger to question the legality and soundness of that decision”; it did not file a motion for reconsideration or an appeal, and hence that decision of the Court of Appeals became final and executory on 10 February 1988.

On 15 July 1988, BENGSON filed with the trial court a Motion for Hearing on the Costs of Suit and submitted a Schedule of Costs of Suit,[7] which consisted of various loans owing to different persons, mortgaged jewelry, foreclosed appliances, car, etc., amounting to P42,619,798.56. The trial court thus conducted hearings.

On 6 April 1995, the trial court issued an order[8] awarding to BENGSON the sum of P31 million as costs of suit. A copy of that order was received on that same date by GSIS’s counsel Atty. Rogelio Terrado. After the said order became final, or on 24 April 1995, the trial court granted[9] Bengson’s ex-parte motion for execution.

It was only on 4 May 1995, upon receipt of a copy of the order of execution, that GSIS became aware of the 6 April 1995 Order because Atty. Terrado had been absent without official leave (AWOL) since 6 April 1995. Hence, on 15 May 1995, GSIS, through its corporate counsel, Atty. Oscar Garcia, filed with the trial court an Urgent Omnibus Motion.[10] Attached to the motion was an affidavit of merit[11] executed by Margarito C. Recto, Manager of Legal Department II of GSIS Legal Services Group, stating that the Omnibus Motion should be considered by the court as a petition for relief from the 6 April 1995 Order. He also stated that GSIS had not received yet the said Order because its former counsel Atty. Terrado had been on AWOL since 6 April 1995, and that this gross negligence of Atty. Terrado should not legally bind GSIS, for to do otherwise would result in the deprivation of GSIS’s property “without due process of law on mere technicality.” He then proceeded to discuss GSIS’s “good and substantial defenses.”

Incidentally, on 5 June 1995, Atty. Terrado was administratively charged with gross misconduct for his alleged willful, unlawful and deliberate act of not filing the appropriate motion for the reconsideration of, or appeal from, the questioned orders of the trial court.[12] He was eventually found guilty and dismissed from the service.[13]

In its Decision[14] of 16 January 1997, the trial court denied GSIS’s Urgent Omnibus Motion, which was treated as a petition for relief from judgment, on the following grounds: (1) GSIS is bound by the negligence of its counsel; (2) to grant the petition would be to revive the right to appeal which GSIS had irretrievably lost through its gross inaction; (3) equity or fairness could not be invoked as valid grounds for petition for relief from judgment; (4) the case could not be reopened because res judicata had already set in; (5) no evidence of extrinsic or collateral fraud was adduced by GSIS; and (6) the questioned orders are already final and executory. Petitioner received a copy of this order on 4 February 1997, and filed its motion for reconsideration on 16 February 1997.

Its motion for reconsideration having been denied in the Order of 23 April 1998 of the trial court,[15] which it received on 29 April 1998, GSIS instituted on 11 June 1998 with the Court of Appeals a special civil action for certiorari. This case was docketed as CA-G.R. SP No. 47669.

In its 24 November 1998 Resolution, the Court of Appeals dismissed the petition in CA-GR SP No. 47669 for the following reasons: (1) the petition was filed out of time, as three years had already lapsed since the issuance of the order awarding P31 million costs of suit; (2) the Verification and Certification on Non-Forum Shopping were not done by petitioner’s duly authorized officer, but only by its counsel; (3) no copy of the relevant writ of execution allegedly issued on 24 April 1995 was attached to the petition; (4) the copy of the 16 January 1997 Decision was not a certified true copy; (5) petitioner did not rebut BENGSON’s evidence; and (6) the assailed Order of 6 April 1995 had become final and executory.

When its motion for the reconsideration[16] of the Resolution of 24 November 1998 was denied by the Court of Appeals in its Resolution of 29 January 1999, GSIS filed with us a petition, which was docketed as G.R. No. 137448.

Meanwhile, on 16 December 1998, the trial court ordered[17] the issuance of an alias writ for the execution of the award of P31 million costs of suit adjudged in its 6 April 1995 Order. Pursuant thereto, an alias writ was issued and 6.2 million Class “A” shares of stocks of San Miguel Corporation owned by GSIS were garnished and later sold at public auction, with BENGSON as the only bidder. Upon denial on 8 January 1999[18] by the trial court of the Motion for Reconsideration with Motion to Quash Alias Writ of Execution,[19] GSIS filed with this Court a petition, docketed as G.R. No. 136874, seeking the annulment of both the 16 December 1998 and 8 January 1999 Orders of the trial court.

On 31 January 1999, this Court issued a Temporary Restraining Order (TRO)[20] enjoining the implementation of the 6 April 1995 Order and the transfer, registration or issuance of new certificates of stocks in the name of BENGSON. The Court thereafter referred the petition to the Court of Appeals for consideration and adjudication on the merits or any other action it would deem appropriate.[21] The petition was thus re-docketed as CA-G.R. SP No. 51131.

On 29 November 1999, CA-G.R. SP No. 47669, which was then still pending in view of BENGSON’s unresolved motion for partial reconsideration of the 29 January 1999 Resolution of the Court of Appeals, was ordered consolidated with CA-G.R. SP No. 51131. On 14 January 2000, the Court of Appeals rendered a consolidated decision dismissing both petitions on the ground of forum-shopping and lifting the TRO issued in G.R. No. 136874.

Hence, GSIS filed with this Court a special civil action for certiorari with very urgent motion for the issuance of a preliminary injunction and/or TRO. This petition was docketed as G.R. No. 141454 and consolidated with G.R. No. 137448. A TRO[22] was issued on 7 February 2000, and as clarified in our 2 October 2000 Resolution,[23] it enjoined the following: (1) the implementation of the 14 January 2000 Decision of the Court of Appeals; (2) the execution of the 6 April 1995 Order awarding P31 million costs of suit; (3) the recording, transfer, or registration of any disposition or issuance of new certificates of stocks in the name of BENGSON; and (4) any disposition or alienation by BENGSON of said shares to third persons.

We find merit in the petition docketed as G.R. No. 141454, which ascribes to the Court of Appeals grave abuse of discretion in dismissing CA-G.R. SP Nos. 51131 and 47669 on the ground of forum-shopping.

Forum-shopping is an act of a party against whom an adverse judgment or order has been rendered in one forum of seeking and possibly getting a favorable opinion in another forum, other than by appeal or special civil action for certiorari.[24] It may also be the institution of two or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition.[25] For it to exist, there should be (a) identity of parties, or at least such parties as would represent the same interest in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) identity of the two preceding particulars such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration.[26] Thus, there is no forum-shopping where, for instance, the special civil action for certiorari and the appeal brought by a party do not involve the same issue.[27]

The petition in CA-G.R. SP No. 47669 was a special civil action for certiorari filed by GSIS after its petition for relief from the 6 April 1995 Order of the trial court and its motion for reconsideration were both denied in the 16 January 1997 Decision and 23 April 1998 Order of the trial court, respectively. On the other hand, the petition in CA-G.R. No. 51131, which was formerly G.R. No. 136874 filed by GSIS and referred by us to the Court of Appeals, was a petition for certiorari seeking the annulment of (1) the 16 December 1998 Order of the trial court directing the issuance of an alias writ of execution to enforce the 6 April 1995 Order; and (2) the 8 January 1999 Order denying petitioner’s Motion for Reconsideration with Motion to Quash the Alias Writ of Execution. The main issue or argument raised in the first petition was that the 6 April Order awarding P31 million costs of suit contradicts the pertinent provisions of the Rules of Court, equity and justice. In the second petition, GSIS argued that the Alias Writ of Execution, together with the corresponding levy and execution sale of the 6.2 million shares of stock in San Miguel Corporation, is void for being contrary to the provision of Republic Act No. 8291, which exempts the “funds and/or properties” of GSIS from attachment, garnishment, execution or levy. Moreover, the reliefs sought in both petitions were distinct from each other. Hence, the proscription against forum-shopping was not violated by GSIS. The dismissal of CA-G.R. SP Nos. 47669 and 51131 on the ground of forum-shopping cannot, therefore, be sustained.

We rule, however, that the Court of Appeals did not err in dismissing CA-G.R. SP No. 47669 for non-compliance with some of the requirements mentioned in Section 3, Rule 46 of the 1997 Rules of Civil Procedure. It is undisputed that the petition was not accompanied with a clearly legible duplicate copy or a certified true copy of the judgment subject thereof. Indeed, what was submitted was not a certified true copy of the 16 January 1997 Decision of the trial court. Hence, on this score alone the special civil action was properly dismissed by the Court of Appeals. Moreover, the Verification and Certificate on Non-Forum Shopping were executed by petitioner’s counsel, not by its duly authorized officer. This was also in itself a sufficient ground to dismiss the petition.[28]

It must be observed that if the petition in CA G.R. SP No. 47669 had assailed the 23 April 1998 Order of the trial court denying petitioner’s motion for reconsideration, as well as its 16 January 1997 Decision denying the petition for relief from judgment, as stated in petitioner’s motion for extension of time to file a petition, the said petition could not have been said to have been filed out of time.

The records disclose that the petitioner received on 4 February 1997 a copy of the 16 January 1997 Decision denying its petition for relief from judgment. On 16 February 1997, petitioner filed a motion for reconsideration. On 29 April 1998, it received a copy of the 23 April 1998 Order denying its motion for reconsideration. It then filed a Motion for Extension of Time to File Petition for Certiorari with Prayer for the Issuance of a Temporary Restraining Order and/or Preliminary Injunction to question the 23 April 1998 Order of the trial court. On 11 June 1998, it filed the petition for certiorari, which was docketed as CA-G.R. SP No. 47669.

Under the former rule,[29] an order denying a petition for relief from judgment was subject to appeal and, in the course thereof, the appellant could assail the judgment On the merits. The purpose of this rule was to enable the appellate court to determine not only the existence of any of the grounds relied upon whether it be fraud, accident, mistake or excusable negligence, but also and primarily the merit of appellant’s cause of action or defense, as the case may be. Should the appellate court find that one of the grounds for relief from judgment existed and the petitioner had a good cause of action or defense, it would not reverse or modify the judgment on the merits because the judgment involved had become final and executory. Instead, it would reverse the denial or dismissal of the petition for relief from judgment, set aside the judgment in the main case, and remand the case to the lower court for a new trial in accordance with then Section 7 of Rule 38 of the former Rules.[30]

On the other hand, the 1997 Rules of Civil Procedure, specifically Section 1(b) of Rule 41, provides that no appeal may be taken from an order denying a petition for relief or any similar action seeking the relief from judgment. The last paragraph thereof, however, allows the aggrieved party to file a special civil action for certiorari under Rule 65 of the Rules.

Under Section 4 of Rule 65 of the new Rules, the petition may be filed not later than 60 days from notice of the judgment, order, or resolution sought to be annulled. The petition for certiorari in CA-G.R. SP No. 47669 was filed on 11 June 1998, or 43 days from receipt of the 24 April 1998 Order, and hence it was seasonably filed.

A plain reading of the petition in CA-G.R. SP No. 47669, however, discloses that GSIS did not assail the denial of both its petition for relief from judgment and its motion for reconsideration; neither did it allege or show the “fraud” or “negligence” purportedly committed by its former counsel Atty. Terrado. As correctly pointed out by the Court of Appeals, the petition challenged, and focused instead on, the 6 April 1995 Order awarding to BENGSON P31 million costs of suit, and then prayed for its nullification. We cannot, therefore, ascribe error to the Court of Appeals when it said that the petition was filed out of time, three years having elapsed since the issuance of the 6 April 1995 Order awarding P31 million costs of suit.

Nevertheless, it must be noted that in its motion for the reconsideration of the 24 November 1998 Resolution of the Court of Appeals, GSIS (again through a new counsel) pointed out that the lengthy discussion on the 6 April 1995 Order was just to emphasize the grave injustice resulting from the trial court’s denial of the petition for relief. A pattern of fraud perpetrated against GSIS is evident from the following statement of the trial court in its 6 April 1995 Order:

(a) the defendant’s [herein petitioner’s] counsel previously opted not to present evidence to controvert plaintiff’s [herein private respondent’s] evidence in support of its claim for cost of suit;

(b) the defendant did not submit its comment [on] the veracity of the accounts contained in plaintiff’s documentary exhibits.

Worse, according to GSIS, after personally going to the trial court, without any official trip or authorization to get a copy of the 6 April 1995 Order, Atty. Terrado did not notify it of said Order and went on AWOL. This deprived GSIS of the chance to move to reconsider or appeal the Order. If Atty. Terrado’s acts did not constitute fraud, they amounted to gross negligence, at the very least.

Along with the motion for reconsideration, GSIS submitted, for admission by the Court of Appeals, a certified true copy of the 16 January 1997 Decision; the duplicate original of the 23 April 1998 Order; a copy of the 24 April 1995 Order of Execution; and the Verification and Certificate on Non-Forum Shopping signed by GSIS’s authorized officer.

It is readily apparent that part of GSIS’s predicament stemmed from the negligence or mistake, to put it mildly, of its former counsels.

Indeed, it is undisputed that despite ample opportunity, GSIS’s former counsel, Atty. Rogelio Terrado, did not rebut BENGSON’s evidence on the costs of suit or, at the very least, verify the schedule of costs and cross-examine BENGSON’s witnesses. Much worse, he allowed the 6 April 1995 Order awarding BENGSON P31 million costs of suit to attain finality by not filing a motion for reconsideration with the trial court or a petition with the Court of Appeals. Instead, he went on AWOL without informing GSIS of the said Order. These acts constituted gross negligence, if not fraud, and resulted in the deprivation of GSIS of an opportunity to move to reconsider or appeal the adverse order.

But petitioner was left with no recourse. Another remedy was available to it: a petition for relief from judgment. Its Urgent Omnibus Motion was in fact treated as a petition for relief, with Atty. Terrado’s negligence and act of fraud as grounds therefor. When that petition was denied in the trial court’s 16 January 1997 Decision, a timely motion for reconsideration was filed. From the Order of 23 April 1998 denying such motion, the remedy available to GSIS was a special civil action for certiorari pursuant to Section 1(b), Rule 41 of the 1997 Rules of Civil Procedure, as earlier discussed. This remedy was, however, rendered futile on account of procedural and substantive defects arising from the negligence or mistake of its next counsel, Atty. Faustino R. Madriaga, thus compounding the predicament of GSIS.

In the Motion for Extension of Time to File Petition for Certiorari, Atty. Madriaga stated that petitioner would be filing a Petition for Certiorari with Prayer for the Issuance of a Temporary Restraining Order and/or Preliminary Injunction to question the 23 April 1998 Order denying the motion for the reconsideration of the denial of the petition for relief from judgment. In the petition itself, however, what he questioned was the 6 April 1995 Order, which was already final and executory at the time. And, it bears repeating that he did not attempt therein to show the gross negligence of GSIS’s former counsel, Atty. Terrado, that could justify relief from that final and executory order. He also failed to attach a certified true copy of the Decision denying the petition for relief and the Order of Execution dated 24 April 1995. Moreover, he was the one who signed the Verification and Certificate on Non-Forum Shopping, not an authorized officer of GSIS. All these have prompted the Court of Appeals, and rightly so, to dismiss the petition.

As a general rule, the negligence or mistake of counsel binds the client,[31] for otherwise there would never be an end to a suit so long as a new counsel could be employed who could allege and show that the former counsel had not been sufficiently diligent, experienced, or learned.[32] But if under the circumstances of the case, the rule deserts its proper office as an aid to justice and becomes a great hindrance and chief enemy, its rigors must be relaxed to admit exceptions thereto and to prevent a miscarriage of justice. In other words, the court has the power to except a particular case from the operation of the rule whenever the purposes of justice require it. What should guide judicial action is that a party is given the fullest opportunity to establish the merits of his action or defense rather than for him to lose life, honor or property on mere technicalities.[33]

Apropos is the ruling of this Court in People’s Homesite & Housing Corp. v. Tiongco,[34] thus:

Although the above judgment was received by counsel for the appellants, he never informed the latter about the matter. Neither did he take steps to protect the interests of his clients, by presenting a motion for reconsideration and/or filing a petition to set aside judgment. Appellants only came to know that an adverse decision had been promulgated when on May 12, 1961, the Deputy Sheriff of Quezon City, served upon them a copy of [the] writ of execution ordering them to vacate the premises and to pay the amounts ordained therein.... Atty. Tañega admitted to the court that he did not inform the appellants of the hearing, as he forgot all about the same; that he received the decision but did not also inform the appellants about it, because he forgot all about the case, explaining that he had so many ejectment cases then, that the orders and decisions in the case just escaped his attention.

…

Viewed from the strictly legal perspective, it appears that the petition was presented outside the reglementary period of sixty (60) days from notice of judgment. Nevertheless due to the very peculiar circumstances obtaining in the premises, We consider that the rule was substantially complied with and the petition for relief from judgment was seasonably filed. The rules should receive liberal interpretation in order to promote their object and to assist the parties in obtaining a just, speedy and inexpensive determination of every action. 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. We find no better opportunity to apply this prerogative than in the case at bar.

There was something fishy and suspicious concerning the actuations of former counsel Any. Tañega in this case. He did not give any significance at all to the processes of the Court, which has proven prejudicial to the rights of his clients... Counsel had simply ignored the rights of his clients by giving a lame and flimsy explanation that the court’s processes just escaped his attention. He deprived them of their day in court.

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 rights 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 notice to his clients. (Emphasis and italics ours; Footnotes omitted)

Similarly, in the higher interest of justice and equity, and the ground for relief from the 6 April 1995 Order of the trial court being evident, we shall reverse and set aside the 24 November 1998 and 8 January 1999 Resolutions of the Court of Appeals, as well as the 16 January 1997 Decision and 23 April 1998 Order of the trial court. We shall then remand the case to the trial court, and pursuant to Section 6 of Rule 38 of the 1997 Rules of Civil Procedure the case shall stand as if the 6 April 1995 Order has never been issued. Thereafter, the court shall proceed to hear and determine the case as if a timely motion for a new trial or reconsideration has been granted by it.

WHEREFORE, the petitions at bar are GRANTED. The Resolutions of the Court of Appeals dated 24 November 1998, 8 January 1999, and 14 January 2000, as well as the 16 January 1997 Decision and 23 April 1998 Order of the Regional Trial Court, Branch 26, San Fernando, La Union, are hereby REVERSED and SET ASIDE. The cases are hereby ordered remanded to the trial court, which shall then proceed to hear and determine the case as if a timely motion for a new trial or reconsideration has been granted by it. Since the issues raised in CA-G.R. SP No. 51131 are irretrievably linked with, or are but a consequence of, the 6 April 1995 Order of the trial court, the said case shall be suspended or held in abeyance until after the aforementioned proceedings in the trial court shall have been finally resolved. The Temporary Restraining Order we issued on 7 February 2000 shall remain in effect until further orders from the Court.

No costs.

SO ORDERED.

Bellosillo, Melo, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Buena, Ynares-Santiago, De Leon, Jr., Sandoval-Gutierrez, and Carpio, JJ., concur.

Puno, J., joins J. Pardo.

Pardo, J., concurs in the result, and submits a separate opinion.