G.R. No. 111478 March 13, 1997
GEORGE F. SALONGA and SOLID INTERTAIN CORPORATION, petitioners, vs. COURT OF APPEALS, HON. JULIO R. LOGARTA, and PAUL GENEVE ENTERTAINMENT CORPORATION, respondents.

FACTS

Private respondent Paul Geneve Entertainment Corporation filed a complaint for specific performance with a prayer for a preliminary injunction against petitioners George Salonga and Solid Intertain Corporation. The complaint sought to enforce a memorandum of agreement concerning a leased property where petitioners had opened “Club Ibiza.” Petitioners received the summons and a temporary restraining order (TRO) on November 29, 1991, which they referred to their counsel, Atty. Onofre Garlito, Jr. Despite notice, petitioners and their counsel failed to appear at the scheduled hearing for the preliminary injunction on December 4, 1991. The trial court granted the writ of preliminary injunction on December 12, 1991.
Petitioners, through counsel, filed motions for extension to file an answer but ultimately failed to submit one within the extended periods. Consequently, the trial court declared them in default and rendered a judgment by default against them. Petitioners later filed a motion to set aside the default judgment, attributing the failure to their counsel’s gross negligence and professional lapses. They argued this constituted extrinsic fraud and a denial of due process. Separately, the trial court also cited petitioners for indirect contempt based on a motion within the same civil case for allegedly violating the TRO.

ISSUE

The primary issues are: (1) Whether the professional lapses and negligence of counsel constitute extrinsic fraud or a deprivation of due process warranting the annulment of a default judgment; and (2) Whether a motion, as opposed to a separate petition, is sufficient to vest jurisdiction in the trial court for indirect contempt proceedings.

RULING

The Supreme Court ruled against the petitioners. On the first issue, the negligence of a counsel binds the client. The Court held that a lawyer’s gross negligence, carelessness, or professional lapse does not amount to extrinsic fraud. Extrinsic fraud refers to deceitful conduct outside the trial, such as preventing a party from presenting their case. The mistakes of counsel here were intrinsic to the litigation process. Furthermore, there was no deprivation of due process. Petitioners were duly served with summons and the TRO. Their counsel’s failure to file an answer and attend hearings was a strategic litigation risk they assumed. Due process requires notice and an opportunity to be heard, which were provided; the subsequent default resulted from their counsel’s actions, for which they are responsible.
On the second issue, the Court ruled that a motion within the same case is sufficient to initiate indirect contempt proceedings for acts committed against the authority of the court, such as alleged violations of its TRO. A separate petition or charge is not required. The trial court correctly acquired jurisdiction over the contempt charge. Therefore, the Court of Appeals’ decision affirming the trial court’s judgment was upheld. The petition was denied for lack of merit.