G.R. No. 194962, January 27, 2016.
CAGAYAN ECONOMIC ZONE AUTHORITY, Petitioner, vs. MERIDIEN VISTA GAMING CORPORATION, Respondent.

FACTS

Petitioner Cagayan Economic Zone Authority (CEZA), a government-owned corporation created under R.A. No. 7922, sought an opinion from the Office of the Government Corporate Counsel (OGCC) on its authority to operate/license jai alai inside the Cagayan Special Economic Zone. Based on OGCC Opinion No. 251, s. 2007, which stated CEZA could do so, CEZA granted respondent Meridien Vista Gaming Corporation (MVGC) a license to engage in gaming operations. Subsequently, OGCC issued Opinion No. 67, s. 2009, clarifying that CEZA could not grant a franchise to operate jai alai without an express legislative franchise. Consequently, CEZA directed MVGC to stop all gaming operations. MVGC filed a petition for mandamus and damages before the Regional Trial Court (RTC). The RTC, after the parties filed a Joint Manifestation with Motion to Render Judgment based on the Pleadings, rendered a decision on October 30, 2009, in favor of MVGC, ordering CEZA to allow MVGC to continue its gaming operations. On the same date, a copy of the decision was obtained by CEZA’s counsel, Atty. Edgardo Baniaga of the OGCC, who was in the court premises. The OGCC later filed a Manifestation on November 26, 2009, stating it had not received an official copy and requested one, which was furnished on December 3, 2009. CEZA filed a Notice of Appeal on December 9, 2009. The RTC denied the notice, ruling the 15-day reglementary period to appeal lapsed, counting from Atty. Baniaga’s receipt on October 30, 2009. CEZA filed a Petition for Relief from Judgment, alleging excusable neglect by Atty. Baniaga, who mistakenly thought the copy he received was a personal copy and that an official copy would be sent later. The RTC denied the petition, stating negligence of counsel binds the client. The Court of Appeals (CA) denied CEZA’s petition for certiorari and prohibition, sustaining the RTC. Hence, this petition.

ISSUE

Whether the Court of Appeals gravely erred in ruling that: (A) petitioner CEZA failed to show grave abuse of discretion by the judge; (B) petitioner CEZA is bound by the mistakes and negligence of its counsel, Atty. Baniaga; (C) petitioner CEZA’s 15-day period to appeal is counted from Atty. Baniaga’s receipt of the decision on October 30, 2009; and (D) under R.A. No. 7922, petitioner CEZA has the power to operate or license jai-alai.

RULING

The Supreme Court granted the petition. The Court held that the negligence of Atty. Baniaga was so gross, reckless, and inexcusable that it deprived CEZA of its right to appeal and due process, constituting an exception to the general rule that clients are bound by the negligence of their counsel. Atty. Baniaga’s failure to properly inform CEZA of the adverse decision and to timely appeal, despite having received a copy, was a blatant disregard of his duties. His subsequent dismissal by the OGCC for serious dishonesty, grave misconduct, and gross neglect of duty corroborated the gross negligence. The Court emphasized that while notice to counsel is generally notice to the client, the rule is not absolute. In highly meritorious cases, such as when the counsel’s negligence is gross and results in the deprivation of the client’s property or right to due process, the Court may relax the rule. Here, CEZA, a government entity, was systematically deprived of its right to appeal a significant case involving its regulatory powers. The Court found the circumstances warranted the granting of relief from judgment to serve the ends of justice. The case was remanded to the RTC to give due course to CEZA’s appeal. The Court did not rule on the substantive issue regarding CEZA’s power to license jai-alai under R.A. No. 7922, as the resolution of the procedural issue was sufficient to dispose of the case.