G.R. No. 194962 - Cagayan Economic Zone Authority vs. Meridien Vista Gaming Corp.

The petitioner, Cagayan Economic Zone Authority (CEZA), is a government-controlled corporation created under Republic Act No. 7922 (“Cagayan Special Economic Zone Act of 1995”) with the mandate to manage and supervise the development of the Cagayan Special Economic Zone and Freeport.
Respondent Meridien Vista Gaming Corporation (MVGC) sought CEZA’s registration as a licensed operator for gaming, sports betting, and tourism-related activities, which included jai alai, virtual gaming, cockfighting, and other betting operations.

CEZA, prompted by inquiries from Spanish nationals regarding the operation of a jai alai fronton, sought the opinion of the Office of the Government Corporate Counsel (OGCC).
OGCC’s Opinion No. 251, s. 2007, initially held that CEZA could operate or license jai alai under its legislative franchise and manage betting stations both inside and outside the Freeport Zone.
Consequently, CEZA approved MVGC’s application and issued certifications permitting the gaming operations within the Freeport Zone.

MVGC commenced testing of its virtual gaming software and proposed further real market testing beginning January 15, 2009, including plans for offsite gaming stations subject to local permits.
On March 31, 2009, the OGCC clarified in Opinion No. 67, series of 2009, that CEZA lacked an express legislative franchise for operating jai alai, thereby limiting its authority.

Pursuant to the new interpretation, CEZA issued a letter on April 1, 2009, directing MVGC to immediately stop its gaming operations, including software testing and related telecommunication setups.
MVGC responded by filing a petition for mandamus and damages before the Regional Trial Court (RTC) to allow the continuation of its operations.

On October 30, 2009, the RTC ruled in favor of MVGC, issuing a writ of mandamus ordering CEZA to let MVGC continue its gaming operations.
Atty. Edgardo Baniaga, assigned by the OGCC to handle the case on behalf of CEZA, received a copy of the decision personally on that day.
Despite the RTC decision, CEZA’s subsequent appeals were marred by a delay, purportedly due to Atty. Baniaga’s failure to inform CEZA of the adverse decision.
CEZA filed a petition for relief from judgment on January 25, 2010, contending that its right to appeal was lost as a result of its counsel’s gross negligence.
The RTC, in its March 4, 2010 resolution, denied the petition for relief from judgment, holding that the negligence of counsel was binding on the client.
CEZA subsequently filed petitions for certiorari and prohibition with the Court of Appeals (CA), which were denied on August 13, 2010 and December 9, 2010 respectively.
Finally, CEZA elevated the matter to the Supreme Court through a petition for review under Rule 45, arguing that the CA erred in its rulings and that the negligence of Atty. Baniaga was so gross as to warrant relief from judgment.

Records later disclosed that on January 27, 2011, the OGCC dismissed Atty. Baniaga for “Serious Dishonesty, Grave Misconduct, Gross Neglect of Duty, Conduct Prejudicial to the Best Interest of the Service, and Violation of Reasonable Office Rules and Regulations.”
The Supreme Court’s decision forwarded these records to the Integrated Bar of the Philippines, recommending an appropriate investigation of Atty. Baniaga’s fitness to continue practicing law.

Whether the negligence of counsel, particularly the gross and inexcusable errors committed by Atty. Baniaga in failing to inform CEZA of the adverse RTC decision, can serve as a ground for granting a petition for relief from judgment despite the lapse of the reglementary period for appeal.
Whether the general rule that binds a client to the acts or negligence of its counsel (“notice to counsel is notice to the client”) should yield to an exception in cases where such negligence is so gross, reckless, and deliberate as to constitute extrinsic fraud.
Whether CEZA’s loss of its right to appeal should be excused by the extraordinary circumstances in which Atty. Baniaga’s conduct prevented the petitioner from being afforded its day in court.
Whether the strict and technical application of procedural deadlines is appropriate when it results in a manifest injustice, particularly when the failure to file an appeal arises from counsel’s misconduct rather than the client’s inattention.