Case Digest (G.R. No. 143783)
Facts:
Spouses Dante Sarraga, Sr. and Maria Teresa Sarraga owned three parcels of land in Cagayan de Oro City, which they mortgaged in the early 1980s to Banco Filipino Savings and Mortgage Bank as security for a loan of P3,618,714.59. After default, the bank foreclosed; meanwhile, on June 29, 1984 it was placed in conservatorship, and on January 25, 1985 it was ordered closed and placed under receivership and liquidation. Before the redemption period lapsed, petitioners offered redemption; however, titles later consolidated in the bank’s name. Negotiations culminated in October 30, 1990 in a repurchase arrangement (embodied in a Memorandum of Agreement) under which petitioners later paid in full on October 30, 1992, but the bank refused to execute the deed of sale and turnover Lot 416-B.
On April 5, 1993, Banco Filipino sued petitioners for quieting of title and recovery of ownership and possession, among others (Civil Case No. 93-186). A June 1, 1998 decision declared the bank the true owner of Lot 416-B and ordered petitioners to surrender possession. Petitioners filed a motion for reconsideration on July 1, 1998, signed by Attys. Dumlao and Bagabuyo, but before the denial was served, counsel Atty. Bagabuyo (who remained counsel of record) did not promptly inform his clients; he had a clerk mishandle the order denying reconsideration. Petitioners’ petition for relief from judgment was dismissed as filed out of time, and the Court of Appeals dismissed their certiorari petition; hence, this review on certiorari.
Issues:
- Was there a valid service of the trial court’s order denying petitioners’ motion for reconsideration upon Atty. Bagabuyo?
- Did Atty. Bagabuyo’s negligence prevent petitioners from filing a timely notice of appeal?
- If so, is such negligence binding upon petitioners under the circumstances?
Ruling:
The Court held that service upon Atty. Bagabuyo was valid, considering that petitioners were represented by two lawyers and the rules allow service on counsel of record. It found Atty. Bagabuyo negligent and that his gross negligence deprived petitioners of their right to appeal and, consequently, the enjoyment of their property.
Applying recognized exceptions to the general rule that counsel’s negligence binds the client, the Court ruled that the trial court gravely abused its discretion in dismissing the petition for relief. It set aside the Court of Appeals decision and directed the Regional Trial Court to grant the petition for relief and give due course to petitioners’ notice of appeal.
Ratio:
Under Sec. 2, Rule 13 (1997 Rules of Civil Procedure, as amended), when a party appears by counsel, service of pleadings and court orders may be made upon the counsel or one of them. The case records showed that Atty. Bagabuyo actively handled the case, signed multiple pleadings as counsel for defendants, and thus was properly the receiving counsel for the order denying reconsideration.
While negligence of counsel generally binds the client, the Court emphasized that relief is warranted when the negligence is gross and results in deprivation of due process, property, or the opportunity to be heard. Here, Atty. Bagabuyo failed to inform petitioners of the denial of their motion for reconsideration, leading to the loss of the right to appeal and the potential deprivation of Lot 416-B; thus, equity required relaxation of procedural strictness. In reckoning the timeliness of the petition for relief from the clients’ actual receipt of the denial order, the Court found the 60-day period under Sec. 3, Rule 38 met, and ordered the reinstatement of petitioners’ appeal to enable a merits review.
Doctrine:
- Under Sec. 2, Rule 13 of the 1997 Rules of Civil Procedure, when a party appears by counsel, service may be made upon the counsel or one of them.
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