Sarraga v. Banco Filipino Savings and Mortgage Bank
REITERATIONFacts
The Antecedents: Spouses Dante Sarraga, Sr. and Maria Teresa Sarraga mortgaged three parcels of land to Banco Filipino Savings and Mortgage Bank as security for a loan. The Sarragas defaulted on their loan, leading to the foreclosure of the mortgage by Banco Filipino. Subsequently, Banco Filipino was placed under conservatorship and later ordered closed, placed under receivership, and liquidation by the Central Bank of the Philippines. Procedural History: While the mortgaged properties were still within the redemption period, the Sarragas offered to redeem them. Banco Filipino's receiver initially stated that the properties were not yet for sale. Despite this, negotiations for repurchase commenced, and on October 30, 1990, a Memorandum of Agreement (MOA) was signed, allowing the Sarragas to repurchase the lots for P8,506,597.73 plus interest. Two lots were conveyed on May 16, 1991. Although the Sarragas paid the full repurchase price for all three lots by October 30, 1992, Banco Filipino refused to execute the deed of sale for the third lot (Lot 416-B) and instead filed a complaint for quieting of title, recovery of ownership and possession, accounting, and damages. The Regional Trial Court ruled in favor of Banco Filipino regarding Lot 416-B, prompting the Sarragas to file a motion for reconsideration. This motion was denied, and a subsequent petition for relief from judgment was also dismissed as filed out of time. The Court of Appeals affirmed the dismissal, leading to the present petition. The Petition: The Sarragas seek review on certiorari of the Court of Appeals' decision, arguing that the trial court gravely abused its discretion in dismissing their petition for relief from judgment. They contend that the service of the order denying their motion for reconsideration upon their counsel, Atty. Bagabuyo, was invalid as he was not their counsel of record. Furthermore, they argue that even if service was valid, Atty. Bagabuyo's negligence, which led to the late filing of their appeal, was so gross that it deprived them of due process and their property, thus warranting an exception to the rule that the negligence of counsel binds the client. They pray for the setting aside of the Court of Appeals' decision and for the Regional Trial Court to give due course to their notice of appeal.
Issue(s)
Whether the service of the trial court’s order denying petitioners’ motion for reconsideration upon Atty. Bagabuyo was valid. Whether Atty. Bagabuyo was negligent, preventing petitioners from filing a timely notice of appeal. Whether such negligence is binding upon petitioners.
Ruling
The petition is GRANTED. The challenged Decision of the Court of Appeals dated June 20, 2000, is SET ASIDE. The Regional Trial Court, Branch 38, Cagayan de Oro City, is DIRECTED to grant the petition for relief filed by petitioners and to GIVE DUE COURSE to their notice of appeal in Civil Case No. 93-186.
Ratio Decidendi
On the validity of service upon Atty. Bagabuyo: The Court held that service of the trial court's order denying petitioners' motion for reconsideration upon Atty. Bagabuyo was valid. Petitioners were represented by two lawyers, Attys. Dumlao and Bagabuyo. Pursuant to Section 2, Rule 13 of the 1997 Rules of Civil Procedure, service may be made upon either counsel. The Court of Appeals correctly found that Atty. Bagabuyo was actively handling the case, filing several pleadings and acting as lead counsel, thereby establishing him as a counsel upon whom service could be validly made. His active participation and representation of the defendants, without indicating deference to Atty. Dumlao, confirmed his status as a counsel of record for the purpose of service. On Atty. Bagabuyo's negligence: The Court found that Atty. Bagabuyo was negligent. He knew his clerk lacked experience and should have closely supervised her, especially considering the importance of the legal proceedings. The clerk's failure to properly handle and report the court order, coupled with Atty. Bagabuyo's subsequent excitement and relocation due to a new appointment, led to the delay in informing petitioners of the denial of their motion for reconsideration. This negligence prevented petitioners from filing a timely notice of appeal. On whether Atty. Bagabuyo's negligence is binding upon petitioners: While the general rule is that the negligence of counsel binds the client, the Court recognized exceptions to this rule. In this case, the negligence of Atty. Bagabuyo was deemed gross negligence that deprived petitioners of their right to appeal and would result in the deprivation of their property. The Court cited exceptions where reckless or gross negligence deprives the client of due process, or when its application would result in the outright deprivation of property, or when the interests of justice require. The Court found that Atty. Bagabuyo's gross negligence fell under these exceptions, warranting relief for the petitioners. The Court emphasized that clients should not suffer for their lawyer's mistakes, especially when it leads to the loss of their day in court or their property.
Main Doctrine
The negligence of counsel, even if gross, binds the client, unless exceptions such as deprivation of due process, liberty, or property, or when the interests of justice require, are met. In such exceptional cases, the client may be afforded relief from the consequences of counsel's negligence.