Viking Industrial Corporation vs. Court of Appeals

A motion for new trial under Section 1(a), Rule 37 of the 1997 Rules of Civil Procedure based on "mistake" or "excusable negligence" requires that the mistake be one which ordinary prudence could not have guarded against; a party's refusal to file an answer based on a mistaken belief that the court lacked jurisdiction due to erroneous impleading, when the defect could have been remedied by a motion to dismiss or formal amendment under the Rules, does not constitute such excusable mistake, and granting a new trial merely to accommodate obstinate litigants who exalt technicality over actuality violates the principle that litigation must have an end (interest republicae ut sit finis litium).

In 1993, petitioner Viking Industrial Corporation extended a secured loan to respondent Jose L. Luison, Jr. When a dispute arose regarding the computation of interest and penalties in 1995, petitioner threatened foreclosure, prompting respondent to file a petition for prohibition and declaratory relief. The case became procedurally complicated when petitioner was erroneously named "Viking Trading Corporation" in the pleadings, leading to a prolonged series of defaults, judgments, executions, and multiple collateral attacks that spanned several years and involved multiple judges and appellate courts.

• In 1993, petitioner extended to respondent a loan amounting to P2,000,000.00 secured by a promissory note and a real estate mortgage.
• In 1995, petitioner demanded payment of P19,102,916.39, representing principal, interest, and penalties, which respondent disputed.
• Respondent filed a petition for prohibition and declaratory relief (Civil Case No. Q-96-27553) to prevent foreclosure and determine the correct computation of indebtedness.
• Petitioner was erroneously impleaded as "Viking Trading Corporation" instead of "Viking Industrial Corporation" in the petition.
• Petitioner refused to answer the petition due to the erroneous designation, resulting in the RTC declaring it in default and allowing respondent to present evidence ex parte.
• On July 8, 1996, the RTC rendered judgment by default holding that the principal amount was only P1,453,500.00 and reducing the interest from 60% per annum to 30% per annum.
• Records show petitioner received a copy of the judgment on August 9, 1996, but did not appeal.
• On October 15, 1996, the RTC issued a writ of execution, and on November 15, 1996, the judgment was fully satisfied when petitioner paid P790,605.59 through a Far East Bank cheque received by respondent.
• Petitioner refused to acknowledge full satisfaction, leading respondent to file motions for cancellation of the mortgage annotation and to enjoin auction sale.
• The RTC initially set aside the judgment on February 5, 1997, due to improper service of summons (served on "Viking Trading Corporation"), but reinstated it on June 13, 1997, upon respondent's motion for reconsideration.
• Petitioner pursued unsuccessful certiorari petitions before the Court of Appeals and the Supreme Court, which were dismissed on June 11, 1998, and November 16, 1998, respectively.
• On January 21, 1999, petitioner filed a motion for new trial claiming it received the judgment only on January 9, 1999, and asserting "honest mistake" in failing to file an answer due to the erroneous impleading.
• The RTC granted the new trial on April 7, 1999, finding the mistake excusable, but the Court of Appeals reversed this on February 29, 2000, finding grave abuse of discretion.

• Petitioner claimed it received a copy of the judgment by default only on January 9, 1999, making its motion for new trial filed on January 21, 1999 timely within the 15-day reglementary period.
• It argued that its failure to file an answer was due to an "honest mistake" in believing it had no legal obligation to answer a petition erroneously impleading it as "Viking Trading Corporation" instead of "Viking Industrial Corporation."
• It contended that its refusal to file an answer was not frivolous, as evidenced by its perseverance in pursuing the issue through the appellate courts up to the Supreme Court, demonstrating honest belief in its cause.
• It asserted that the evidence was insufficient to justify the judgment and that the judgment was against the law.

• Respondent argued that there was conclusive proof on record that petitioner was served a copy of the judgment on August 9, 1996, making the motion for new trial filed in January 1999 clearly out of time.
• He maintained that the question of when petitioner actually received the judgment was a question of fact not proper for review under a petition for certiorari under Rule 45.
• He emphasized that the judgment by default had become final and executory and had been fully satisfied, and therefore could no longer be set aside.
• He contended that the Court of Appeals correctly found grave abuse of discretion in the RTC's grant of new trial.

• Procedural Issues:
  • Whether the petition for review on certiorari properly raises questions of fact regarding the date when petitioner received the judgment by default.
  • Whether the motion for new trial was filed within the reglementary period under the Rules of Civil Procedure.
• Substantive Issues:
  • Whether the RTC committed grave abuse of discretion in granting the motion for new trial based on "honest mistake."
  • Whether a mistake of law by counsel regarding jurisdiction and erroneous impleading qualifies as "mistake or excusable negligence" under Section 1(a), Rule 37 of the Rules of Civil Procedure.

• Procedural:
  • The Supreme Court is not a trier of facts; questions of fact cannot be raised in a petition for review on certiorari under Rule 45, which is confined to questions of law.
  • Whether petitioner received the judgment on August 9, 1996, or January 9, 1999, is a question of fact involving the ascertainment of the veracity of the parties' factual allegations.
  • The findings of fact of the Court of Appeals are final and conclusive when supported by the records; the CA found that petitioner received the judgment on August 9, 1996, based on the trial court's records and the sheriff's return of execution.
  • The motion for new trial filed on January 21, 1999, was filed out of time, as the 15-day period had long expired since August 9, 1996.
• Substantive:
  • The RTC committed grave abuse of discretion in granting the motion for new trial.
  • Under Section 1(a), Rule 37, the "mistake" or "excusable negligence" that justifies a new trial must be one which ordinary prudence could not have guarded against.
  • Petitioner's mistake was a mistake of law; its counsel believed he should not file an answer because of erroneous impleading, when he could have filed a motion to dismiss under Rule 16 or sought formal amendment under Rule 10, Section 4, which allows summary correction of defects in designation of parties.
  • The mistake could have been prevented by a closer review of the 1997 Rules of Civil Procedure; hence, it does not qualify as excusable negligence.
  • Petitioner exhibited an obsession to exalt technicality over actuality, and a new trial cannot be granted merely to accommodate obstinate litigants who refuse to accept defeat after exhausting all remedies.
  • To grant a new trial based on such "honest mistake" would set a precedent allowing endless litigation, violating the principle of interest republicae ut sit finis litium (it is in the interest of the state that litigation should end).

• Interest republicae ut sit finis litium — It is in the interest of the state that litigation should end; applied to prevent the perpetuation of suits through technicalities and to ensure that parties do not resort to multiple collateral attacks after exhausting appellate remedies.
• Honest Mistake as Ground for New Trial — Under Section 1(a), Rule 37 of the 1997 Rules of Civil Procedure, "mistake" or "excusable negligence" must be one which ordinary prudence could not have guarded against; mistakes of law by counsel that could have been avoided by proper application of procedural rules do not qualify.
• Finality of Factual Findings of the Court of Appeals — Findings of fact of the Court of Appeals are final and conclusive and cannot be reviewed on appeal by the Supreme Court as long as they are supported by the records.
• Supreme Court as Not a Trier of Facts — The Supreme Court is not a trier of facts; pure questions of fact may not be the proper subject of appeal by certiorari under Rule 45, which is generally confined to questions of law.
• Voluntary Submission to Jurisdiction — By seeking affirmative reliefs through responsive pleadings or participating in proceedings without objecting to jurisdiction, a party voluntarily submits to the jurisdiction of the court, waiving any defect in jurisdiction over the person.

• "Litigation is a not a 'trial and error' proceeding. A party who moves for a new trial on the ground of 'honest mistake' must show that ordinary prudence could not have guarded against it. A new trial is not a refuge for the obstinate."
• "Interest republicae ut sit finis litium."
• "What we see in petitioner's conduct is its obsession to exalt technicality over actuality. It is willing to close its eyes to reality if only to win its case through a technicality. Hence, in the end, it must suffer for its obstinacy."
• "Definitely, petitioner's reliance on 'honest mistake' is misplaced. The mistake referred to above is one which ordinary prudence could not have guarded against. Here, the mistake petitioner committed is a mistake of law."

• Valmonte vs. Court of Appeals, G.R. No. 41621, February 18, 1999, 303 SCRA 278 — Cited for the principle that pure questions of fact may not be the proper subject of appeal by certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as this mode of appeal is generally confined to questions of law.
• Spouses Batingal vs. Court of Appeals, G.R. No. 128636, February 1, 2001, 351 SCRA 60 — Cited for the distinction between questions of law (doubt as to what the law is on a certain state of facts) and questions of fact (doubt as to the truth or falsehood of facts).

• Section 1(a), Rule 37, 1997 Rules of Civil Procedure — Provides the grounds for new trial or reconsideration, specifically "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."
• Section 4, Rule 10, 1997 Rules of Civil Procedure — Provides that defects in the designation of parties and other clerical or typographical errors may be summarily corrected by the court at any stage of the action, provided no prejudice is caused to the adverse party.
• Section 1, Rule 16, 1997 Rules of Civil Procedure — Lists the grounds for a motion to dismiss, including that the court has no jurisdiction over the person of the defending party.
• Section 23, Rule 14, 1997 Rules of Civil Procedure — States that voluntary appearance of a party is equivalent to service of summons.