G.R. No. 207377 - Philippine National Bank vs. Spouses Victor

Case Summary (G.R. No. 207377)

Factual Background

In 2009, the respondents spouses filed a civil complaint for declaration of nullity of real estate mortgage, extra-judicial foreclosure, and cancellation of title against PNB before the RTC of Malolos City, Branch 9, challenging the mortgage and transfer of title in favor of the bank. PNB filed an Answer with Compulsory Counterclaim. The respondents moved for judgment on the pleadings, to which PNB failed to file a comment or opposition, and the matter was deemed submitted for decision. In April 2011 the RTC adjudged the extra-judicial foreclosure null and void and cancelled PNB’s title on the subject properties.

RTC Proceedings and Order Denying Petition for Relief

PNB sought relief by filing a Motion for Extension of Time to file a motion for reconsideration, which the trial court denied for failure to strictly comply with the applicable period. Thereafter PNB filed a Petition for Relief on July 15, 2011, asserting it was deprived of due process because of the gross negligence of its prior counsel. The RTC, by Order dated August 12, 2011, denied the petition as filed out of time under Section 3, Rule 38, noting that the Decision was received by PNB’s then counsel on April 27, 2011 and that the sixty-day period to file a petition for relief thus expired on June 27, 2011.

Petition for Certiorari Before the Court of Appeals

Dissatisfied, PNB invoked Rule 65 before the Court of Appeals and framed its petition on two grounds: that the RTC committed grave abuse of discretion by treating notice to counsel as notice to the client and that the RTC erred in denying the petition for relief as filed out of time. PNB contended that it only learned of its counsel’s negligent handling on May 18, 2011, when it received the denial of the Motion for Extension, and that counsel’s omissions amounted to abandonment warranting relaxation of technical rules.

Court of Appeals Decision

The Court of Appeals dismissed PNB’s petition in a Decision dated December 21, 2012. The CA first observed that PNB failed to attach required pleadings, which alone justified dismissal. On the merits, the CA reiterated that strict compliance with the twin-period under Rule 38 is required because a petition for relief is a final act of liberality; it computed the last day to file as June 27, 2011 and noted that PNB filed on July 15, 2011. The CA held that the bank was not deprived of due process by counsel’s negligence, given that notices had been sent to counsel and an answer was filed, and that a party is bound by the actions of its counsel.

Issues Presented to the Supreme Court

On appeal to the Supreme Court, PNB asserted that the CA committed reversible error in dismissing the Rule 65 petition and in denying reconsideration. PNB reiterated that it only acquired knowledge of counsel’s negligence on May 18, 2011 and that counsel’s omissions amounted to abandonment and total disregard of the case, resulting in deprivation of property without a hearing. PNB asked the Court to relax the technical rule and to accept that it had no participatory negligence because it had instructed its counsel to take appropriate remedies.

Legal Standards on Petition for Relief and Timeliness

The Court identified the controlling provisions, namely Section 1 and Section 3 of Rule 38, Rules of Court, which allow a petition for relief from judgment for fraud, accident, mistake, or excusable negligence, but require that the petition be verified, filed within sixty days after the petitioner learns of the judgment or proceeding to be set aside, and not more than six months after entry of the judgment. The Court reiterated the settled principle that the twin-period is mandatory and jurisdictional and must be strictly complied with. The Court also invoked the doctrine that notice to counsel of record is equivalent to notice to the party, as reflected in decisions such as Taningco v. Fernandez, G.R. No. 215615, December 9, 2020.

Supreme Court Analysis on Timeliness

The Court found no reversible error in the CA’s computation of the filing period. It held that the proper reckoning point was when PNB’s counsel received the RTC decision on April 27, 2011. Because the petition for relief was filed on July 15, 2011, it was beyond the sixty-day period which expired on June 27, 2011. The contention that the period should have been measured from May 18, 2011 was rejected because notice to counsel binds the client and the filing of a motion for reconsideration or a motion for extension does not toll the sixty-day period provided in Rule 38.

Supreme Court Analysis on Counsel’s Negligence and Due Process

The Court evaluated whether counsel’s alleged omissions rose to the level of gross negligence that would deprive PNB of due process and justify relief from the strict application of procedural periods. Citing Duremdes v. Jorilla, G.R. No. 234491, February 26, 2020, and Spouses Que v. Court of Appeals

Case Syllabus (G.R. No. 207377)

Parties and Posture

PHILIPPINE NATIONAL BANK was the Petitioner before the Supreme Court in a Petition for Review on Certiorari under Rule 65, Rules of Court.
Spouses Nestor and Felicidad Victor and Spouses Reynaldo and Gavina Victor were the Respondents in the underlying civil action and the respondents in the CA and Supreme Court proceedings.
The present appeal assailed the December 21, 2012 Decision and the April 29, 2013 Resolution of the Court of Appeals in CA-G.R. SP No. 121847 which dismissed PNB's petition for certiorari and denied its motion for reconsideration.
The subject matter arose from an action filed before the Regional Trial Court, Malolos City, Branch 9 for declaration of nullity of real estate mortgage, extrajudicial foreclosure, and cancellation of title.

Key Facts

The respondents spouses filed the complaint in 2009 challenging the mortgage and transfer of title in favor of PNB.
PNB filed an Answer with Compulsory Counterclaim, after which respondents spouses moved for judgment on the pleadings.
PNB's counsel did not file a comment or opposition to the motion for judgment on the pleadings and the case was deemed submitted for decision.
In April 2011, the RTC declared PNB's extrajudicial foreclosure null and void and cancelled PNB's title to the properties.
The RTC denied PNB's Motion for Extension of Time to File a Motion for Reconsideration for failure to adhere to the applicable period.
PNB's counsel failed to appear at a hearing on a motion to nullify proceedings, after which the RTC granted a writ of execution in July 2011.
PNB filed a Petition for Relief on July 15, 2011 asserting deprivation of due process due to the gross negligence of its previous counsel.

Procedural History

On August 12, 2011, the RTC of Malolos City, Branch 9 denied PNB's Petition for Relief as filed out of time pursuant to Section 3, Rule 38, Rules of Court.
PNB filed a petition for certiorari under Rule 65 before the Court of Appeals raising two grounds attacking the RTC's reliance on notice to counsel as notice to the client and the denial as untimely.
The Court of Appeals dismissed the petition in a decision dated December 21, 2012 and denied PNB's motion for reconsideration in a resolution dated April 29, 2013.
PNB elevated the matter to the Supreme Court via the present Petition for Review on Certiorari.

Issues Presented

Whether PNB's Petition for Relief from judgment was filed within the reglementary period prescribed by Section 3, Rule 38.
Whether the alleged acts and omissions of PNB's counsel deprived PNB of due process so as to justify relaxation of technical rules and tolling of the prescriptive periods.

Contentions of Petitioner

PNB contended that it only learned of its counsel's negligence on May 18, 2011 when it received the RTC's denial of the motion for extension and that the 60-day period should have been counted from that date.
PNB asserted that its counsel's omissions amounted to gross negligence and abandonment that deprived PN