Torres v. China Banking Corporation
REITERATIONFacts
The Antecedents: Petitioner Jaime T. Torres, as owner of St. James School, obtained a loan of P4,600,000.00 from China Banking Corporation, secured by a mortgage over two parcels of land. The loan agreement stipulated repayment within five years with monthly interest and quarterly principal amortizations. Petitioner requested a restructuring of the loan, making partial payments which the bank applied to accrued interest. Despite repeated demand letters from the bank for settlement of overdue accounts, petitioner continued to make further payments, which were also applied to interest. The bank ultimately proceeded with the extrajudicial foreclosure and auction sale of the mortgaged properties when petitioner failed to fully settle the outstanding obligation. Procedural History: Petitioner filed an action for annulment of the extrajudicial foreclosure sale and damages, alleging illegal foreclosure. The trial court ruled in favor of petitioner, declaring the foreclosure sale null and void, voiding excessive penalty charges, ordering a 12% interest rate on the remaining obligation, and awarding damages and attorney's fees. The respondent bank appealed to the Court of Appeals. The Court of Appeals modified the trial court's decision, ordering petitioner to pay the balance of the redemption price with legal interest and deleting the awards for damages and attorney's fees. Petitioner's motion for reconsideration was denied, and an Entry of Judgment was issued. Petitioner later filed a Motion to Set Aside Entry of Judgment and to Resolve Appellant's Motion for Reconsideration, which was also denied by the Court of Appeals. The Petition: This petition for review on certiorari under Rule 45 of the Rules of Court seeks to reverse the Court of Appeals' decision and resolutions. Petitioner argues that the Court of Appeals' ruling that his motion for reconsideration was resolved is inconsistent with the respondent's motion to remand records. He contends that the Entry of Judgment was premature as his motion for reconsideration had not been resolved, or if it was, he had no knowledge of it due to his counsel's alleged gross negligence. Petitioner invokes Amil v. Court of Appeals to argue that he should not be bound by his counsel's negligence, which deprived him of his day in court and property without due process. He further argues that the Court of Appeals erred in modifying the trial court's judgment by ordering him to pay the balance of the redemption price and in deleting the award for damages.
Issue(s)
Whether the Court of Appeals erred in ruling that petitioner's motion for reconsideration had already been resolved and whether the Entry of Judgment issued by the Court of Appeals was premature. Whether the Court of Appeals erred in modifying the trial court's judgment by ordering the petitioner to pay the balance of the redemption price. Whether the Court of Appeals erred in deleting the award for damages made by the trial court.
Ruling
The petition is DENIED for lack of merit. The Decision of the Court of Appeals dated March 23, 2001, is AFFIRMED.
Ratio Decidendi
On the issue of the resolution of the motion for reconsideration and the prematurity of the Entry of Judgment: The Court reiterated the settled rule that the mistake of a counsel binds the client, and relief is granted only in cases of gross or palpable negligence that deprives the client of due process. The Court found that the instant case underwent a full-blown trial where both parties were heard, and all issues were ventilated. The Court of Appeals' Resolution dated November 5, 2001, denying petitioner's motion for reconsideration, was properly served on petitioner's counsel of record on November 14, 2001. Notice to the counsel of record is binding upon the client, and the neglect of counsel to inform the client of an adverse judgment does not warrant setting aside a valid and executory judgment. Therefore, the Entry of Judgment issued on November 30, 2001, was in order, and the subsequent motion to set it aside was correctly denied. On the issue of the redemption price and the applicable law: The Court affirmed the Court of Appeals' ruling that Section 78 of the General Banking Act (Republic Act No. 337), not Rule 39 of the Rules of Court, applies to the determination of the redemption price when the mortgagee is a bank. This section provides that the redemption price is the outstanding obligation plus interest and expenses. The Court agreed with the CA that the petitioner had defaulted in his payments, and the bank had the right to foreclose. The CA correctly determined the redemption price and ordered the petitioner to pay the balance, as the petitioner's tendered payment was deficient. On the issue of damages: The Court sustained the Court of Appeals' deletion of the award for damages. The CA found that the award of damages was without factual and legal basis because the petitioner was at fault for not complying with the loan terms and conditions, leading to the foreclosure of his mortgage. The petitioner's default in his obligations justified the foreclosure, negating any claim for damages against the bank.
Main Doctrine
The mistake of a counsel binds the client, and the negligence of counsel binds the client unless it is so gross and palpable as to deprive the client of due process. Notice to counsel of record is binding upon the client, and the failure to appeal within the reglementary period, even if due to counsel's failure to inform the client, does not warrant setting aside a valid and executory judgment.