VIKING INDUSTRIAL CORPORATION, PETITIONER, VS. THE COURT OF APPEALS AND JOSE L. LUISON, JR., RESPONDENTS.

Viking Industrial versus Luison

The Case

This is a petition for review on certiorari brought by Viking Industrial Corporation against Jose L. Luison, Jr. and the Court of Appeals. The dispute began as a borrower's challenge to the computation of his loan, but it became a procedural case about the finality of judgments. The trial court had rendered a judgment by default against Viking, and that judgment had already been fully executed. Years later, the trial court suddenly set that judgment aside and ordered a new trial on the ground of "honest mistake." The Court of Appeals stopped it. The Supreme Court was asked to decide whether a party who ignored a complaint because of an error in its corporate name may later obtain a new trial. The case matters because it fixes the limits of a motion for new trial and reminds every lawyer that a mistake of law is not excusable negligence.

Procedural History

Luison filed a petition for prohibition and declaratory relief before the Regional Trial Court of Quezon City, Branch 77. Viking did not answer because the petition named it as Viking Trading Corporation. The trial court declared Viking in default and allowed Luison to present evidence ex parte. On July 8, 1996, the trial court, through Judge Ignacio Salvador, rendered judgment by default. Viking received a copy on August 9, 1996, but did not appeal. On October 15, 1996, the trial court ordered execution, and the judgment was fully satisfied on November 15, 1996.

Later, Judge Normandie Pizarro set aside the default judgment for improper service of summons, but on reconsideration he reinstated it. Viking went to the Court of Appeals by certiorari, and that court dismissed the petition on June 11, 1998, holding that Viking had voluntarily submitted to the jurisdiction of the trial court. Viking elevated the matter to the Supreme Court, which denied the petition on November 16, 1998, and the denial became final and executory.

Still unwilling to yield, Viking filed a motion for new trial before the trial court on January 21, 1999, invoking honest mistake. Judge Vivencio Baclig granted it on April 7, 1999 and set aside the judgment by default. Luison went to the Court of Appeals by certiorari and prohibition. On February 29, 2000, the Court of Appeals granted Luison's petition, finding grave abuse of discretion because the motion for new trial was filed late. Reconsideration was denied on June 28, 2000. Hence this petition for review on certiorari before the Supreme Court.

Facts

In 1993, Viking extended to Luison a loan of 2,000,000 pesos, secured by a promissory note and a real estate mortgage. Two years later, Viking demanded 19,102,916 pesos and 39 centavos, representing principal plus interest and penalties. Luison disputed the amount, and when Viking threatened to foreclose the mortgage, Luison filed a petition for prohibition and declaratory relief. Viking refused to answer because the petition impleaded it as Viking Trading Corporation instead of Viking Industrial Corporation. The trial court declared Viking in default and allowed Luison to present his evidence ex parte.

On July 8, 1996, the trial court rendered judgment by default, holding that the principal loan was only 1,453,500 pesos, reducing the stipulated interest from 60 percent to 30 percent per annum, making the injunction permanent, and awarding 150,000 pesos in attorney's fees. Viking received a copy on August 9, 1996 but did not appeal. The judgment was executed, and the sheriff's return of November 15, 1996 stated that the judgment had been fully paid and satisfied.

Viking nevertheless refused to acknowledge satisfaction. When Luison moved to cancel the mortgage annotation and recover his title, the trial court at first set aside the default judgment for improper service of summons, then reinstated it. Viking's challenges failed all the way to the Supreme Court. Only then did Viking file a motion for new trial on January 21, 1999, claiming it received the judgment only on January 9, 1999 and that its failure to answer was an honest mistake. The trial court granted the motion, but the Court of Appeals reversed it, leading to this petition.

Issues

• Whether or not the motion for new trial was filed within the reglementary period, which turns on whether Viking received a copy of the judgment by default only on January 9, 1999.
• Whether or not the question of when Viking received the judgment is a question of fact that may not be raised in a petition for review on certiorari.
• Whether or not Viking's failure to file an answer, based on its belief that it was erroneously impleaded, constitutes mistake or excusable negligence under the rule on new trial.

Applicable Provisions

Section 1 of Rule 37 of the 1997 Rules of Civil Procedure provides:

SECTION 1, Grounds of and period for filing a motion for new trial or reconsideration. -- Within the period for taking an appeal, the aggrieved party may move the trial court to set aside the judgment or final order and grant a new trial for one or more of the following causes materially affecting the substantial rights of said party: (a) Fraud, accident, mistake or excusable negligence which ordinary prudence could not have guarded against and by reason of which such aggrieved party has probably been impaired in his rights; or

This is the ground Viking invoked, and the Court measured its conduct against the requirement that the mistake be one that ordinary prudence could not have guarded against.

Section 4 of Rule 10 of the same Rules provides:

SEC. 4. Formal amendments. – A defect in the designation of the parties and other clearly clerical or typographical errors may be summarily corrected by the court at any stage of the action, at its initiative or on motion, provided no prejudice is caused thereby to the adverse party.

This shows that the wrong corporate name could have been corrected, so ignoring the petition was unnecessary.

Section 1 of Rule 16 provides:

SEC. 1. Grounds. – Within the time for but before filing of the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made on any of the following grounds. (a) That the court has no jurisdiction over the person of the defending party.

This is the remedy Viking's counsel should have used instead of ignoring the petition.

Ruling

On the first issue, the Court held that the motion for new trial was filed out of time. Whether Viking received the judgment only on January 9, 1999 is a question of fact, and the Court of Appeals found that Viking had actually received it on August 9, 1996. The Court of Appeals reasoned that Viking could not have gone to the appellate courts without receiving a copy of the decision, and that the judgment had been executed as early as November 15, 1996. The Supreme Court found no reason to disturb these findings.

On the second issue, the Court held that it is not a trier of facts, and that pure questions of fact may not be raised in a petition for review on certiorari under Rule 45. The findings of fact of the Court of Appeals are final and conclusive when supported by the records.

On the third issue, the Court held that even if the motion had been timely, it should not have been granted. Viking's mistake was a mistake of law, not the excusable mistake contemplated by the Rule. The Court stressed that the mistake must be one which ordinary prudence could not have guarded against. Had counsel reviewed the Rules, he would have filed a motion to dismiss or sought a formal amendment of the designation of the parties. The Court described Viking's conduct as an obsession to exalt technicality over actuality, and it closed with the maxim that it is in the public interest that litigation end.

Doctrine

A motion for new trial on the ground of mistake or excusable negligence under Section 1 of Rule 37 must be filed within the period for taking an appeal, and the mistake must be one which ordinary prudence could not have guarded against. A mistake of law committed by counsel, such as the belief that no answer is needed because the client was erroneously impleaded, is not excusable negligence and binds the client. A defect in the designation of a party may be summarily corrected under Section 4 of Rule 10, and lack of jurisdiction over the person of the defendant may be raised by motion to dismiss under Section 1 of Rule 16. Questions of fact are not proper subjects of a petition for review on certiorari under Rule 45, and the factual findings of the Court of Appeals are final when supported by the records. Finally, a judgment that has become final and fully executed may no longer be set aside through a belated motion for new trial.

Disposition

The Supreme Court denied the petition and affirmed the decision and order of the Court of Appeals, with costs against Viking Industrial Corporation.

Remember This

Memorize this line: a new trial is not a refuge for the obstinate, and a mistake of law is never the excusable mistake that ordinary prudence could have guarded against. Examiners use this case to test the grounds and period for a motion for new trial, the finality of executed judgments, and the rule that the Supreme Court is not a trier of facts.