Title
Spouses Cruz vs. Onshore Strategic Assets , Inc.
Case
G.R. No. 212862
Decision Date
Jun 17, 2019
Petitioners sought to annul foreclosure sale; complaint dismissed due to counsel’s MCLE non-compliance. CA affirmed dismissal, SC upheld, ruling negligence binds clients; proper remedy was refiling.
dismissal of complaint
negligence of counsel
right to due process

Case Summary (G.R. No. 212862)

Procedural and Statutory Anchors

Petitioners filed their Complaint for Annulment of Extrajudicial Foreclosure Sale, Loan Documents, Accounting and Damages on March 17, 2011. OSAI moved to dismiss instead of filing an Answer, invoking, among others, non-compliance with Bar Matter No. 1922 on the required disclosure of counsel’s Mandatory Continuing Legal Education (MCLE) compliance information in pleadings. The RTC granted the motion to dismiss on September 21, 2011, and denied reconsideration on March 19, 2012. The CA dismissed petitioners’ appeal on July 25, 2013, and denied reconsideration on June 9, 2014. Petitioners then sought review by Petition for Review on Certiorari.

The principal rule in play was Bar Matter No. 1922, which required practicing lawyers to indicate in all pleadings filed before courts or quasi-judicial bodies the number and date of issue of the lawyer’s MCLE Certificate of Compliance or Certificate of Exemption for the immediately preceding compliance period, with failure to disclose, at the time relevant to the filing, expressly causing dismissal of the case and expunction of the pleadings. The Court also relied on the rules on appellate remedies, particularly Section 1, Rule 41 of the 1997 Revised Rules of Civil Procedure, as regards the appealability of orders dismissing actions without prejudice.

Factual Background: The Complaint and the Motion to Dismiss

On March 17, 2011, petitioners filed the complaint in the RTC. OSAI moved for dismissal on three stated grounds. First, it alleged failure of petitioners’ counsel to comply with Bar Matter No. 1922, specifically the requirement that every pleading indicate the counsel’s MCLE Compliance Number for the immediately preceding compliance period. Second, it alleged forum shopping because another action was allegedly pending between the same parties for the same cause. Third, it asserted that Millians Shoe, Inc. lacked legal capacity to sue due to the alleged revocation of its Articles of Incorporation by the Securities and Exchange Commission.

In response, petitioners contended that counsel, Atty. Michelle D. Martinez, did not intend to derogate the rules. Petitioners admitted that counsel complied with the MCLE requirement only for the second compliance period, and that counsel had a two-hour or two-unit deficiency for the third compliance period, which petitioners attributed to counsel’s occupied schedule and personal travel commitments. Petitioners invoked excusable negligence or honest oversight and asked that the complaint not be dismissed. Petitioners also argued that forum shopping was absent because the pending appellate-court case involved separate corporate rehabilitation proceedings initiated by Millians Shoe, Inc.

RTC Ruling: Dismissal Under Bar Matter No. 1922

On September 21, 2011, the RTC issued an order granting the motion to dismiss. The RTC found that Atty. Martinez failed to comply with the third MCLE requirement. It noted that the deadline for the MCLE III compliance period was April 14, 2010, while the complaint was filed on March 17, 2011. The RTC held that counsel knowingly ignored Bar Matter No. 1922, and it dismissed the complaint and directed expunction of the pleadings. The RTC did not delve into forum-shopping issues because it disposed of the case on the MCLE non-compliance ground.

When petitioners sought reconsideration, the RTC denied it in an order dated March 19, 2012.

CA Proceedings: Dismissal of the Appeal and the Wrong Remedy Issue

Petitioners appealed to the CA. In its July 25, 2013 Decision, the CA dismissed the appeal for lack of merit. It held that Bar Matter No. 1922 required lawyers to indicate their MCLE certificate of compliance or exemption details in all pleadings filed before the courts. The CA found that when counsel filed the complaint, she indicated her MCLE certificate number only for the second compliance period and failed to indicate compliance for the immediately preceding compliance period, the third compliance period. The CA also stressed that the complaint was filed on March 17, 2011, more than a year after the deadline for MCLE III compliance of April 14, 2010. The CA concluded that this failure was not a mere inadvertence, and that, under Bar Matter No. 1922 as then worded, the failure would cause dismissal of the case and expunction of the pleadings.

The CA rejected petitioners’ attempt to invoke liberality. It observed that petitioners offered no proof to support the asserted two-unit deficiency and noted the absence of an adequate explanation for counsel’s failure to comply. The CA further ruled that an appeal to it from the RTC’s dismissal orders was not the proper remedy. It reasoned that, under Section 1(h) of Rule 41, no appeal could be taken from an order dismissing an action without prejudice. Instead, petitioners should have refiled the case, signed by a counsel who complied with Bar Matter No. 1922.

In its June 9, 2014 Resolution denying reconsideration, the CA maintained its ruling.

Issues Raised Before the Supreme Court

Petitioners argued that the CA erred in dismissing their petition notwithstanding an alleged violation of their constitutional right to due process. They also argued that the RTC erred in concluding that counsel’s negligence and mistake should bind the client. They reiterated that counsel’s failure should be treated as excusable and that strict application of the procedural rule should be relaxed in the interest of substantial justice so as to avoid depriving them of a property right without due process.

Petitioners also maintained that there was no forum shopping because the foreclosure-related nullification actions pending in Marikina City and Antipolo City allegedly did not involve the same properties.

Respondents countered that dismissal was proper under the clear mandate of Bar Matter No. 1922. They emphasized that counsel not only failed to disclose the MCLE compliance details for the immediately preceding compliance period but also admitted non-compliance with MCLE III, which had ended almost a year before the filing of the complaint. Respondents also argued that petitioners and their counsel did not take steps to rectify the defect after being alerted. They contended that the dismissal did not violate due process because it was without prejudice, allowing refiling with a compliant counsel. Respondents additionally argued that the petition should still be dismissed for forum shopping and related defects, including alleged false certification and failure to attach material documents.

Legal Basis and Reasoning: Mandatory Disclosure Under Bar Matter No. 1922

The Court held that non-compliance by petitioners’ counsel with Bar Matter No. 1922 correctly resulted in dismissal of the complaint. The Court explained that Bar Matter No. 1922 required lawyers to indicate, in every pleading and motion filed before the courts or quasi-judicial bodies, the number and date of issue of the lawyer’s MCLE Certificate of Completion or Exemption. It reiterated the specific consequence under the rule as then applicable: failure to disclose would cause dismissal of the case and expunction of the pleadings from the records.

The Court found that it was not disputed that counsel failed to indicate the required date and number of her MCLE compliance certificate for the immediately preceding compliance period, the third compliance period. The Court further reasoned that the disclosure requirement was not a “useless formality.” It served to ensure that legal practice was reserved to those who had complied with the recognized mechanism for keeping abreast with law and jurisprudence and maintaining professional ethics and standards. Hence, dismissal for non-compliance was proper.

Legal Basis and Reasoning: No Liberal Construction in the Present Circumstances

The Court acknowledged the general doctrine that procedural rules are tools to facilitate justice and their strict application should not frustrate substantial justice. It also recognized that liberal application may be invoked only in proper cases and under justifiable causes and circumstances. Applying that limitation, the Court found no compelling reason to relax the rule.

The Court held that counsel’s busy schedule, attending client needs and personal concerns, was insufficient justification. It also held that petitioners offered no evidence of a conscious effort to at least substantially comply with Bar Matter No. 1922. Petitioners’ claim of a two-unit deficiency was unsupported by proof. The Court noted further that, in the opposition/comment filed before the RTC (undated), counsel stated that attending the May 2011 MCLE lectures would cure the two-unit deficiency. From the filing of that opposition/comment until the RTC’s dismissal order on September 21, 2011, counsel had more than enough time to comply but still did not do so. The Court treated counsel’s persistent refusal to comply as an act that should not be rewarded by a relaxation of the rule.

The Court also discussed developments in Bar Matter No. 1922 after the relevant filings. It recognized that Bar Matter No. 1922 was amended by an En Banc Resolution dated January 14, 2014, which repealed the phrase that failure to disclose would cause dismissal and expunction, and replaced it with language that failure would subject counsel to appropriate penalty and disciplinary action instead. The Court referred to Doble, Jr. v. ABB, Inc./Nitin Desai, where the Court applied the amended resolution even for pleadings filed before the amendment, thereby refusing to dismiss the case. However, the Court distinguished petitioners’ case. It noted that in the present case, counsel did not comply in time and did not obtain any similar favorable factual foundation, because counsel’s conduct did not show the kind of corrective effort present in Doble. The Court therefore found no basis to apply the same liberality.

Due Process: No Deprivation Where Dismissal Was Without Preju

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