|
JAIME
T. TORRES, Petitioner, - versus - CHINA BANKING CORPORATION, Respondent. |
G.R. No. 165408 Present: VELASCO, JR., NACHURA, PERALTA, and MENDOZA, JJ. Promulgated: January 15,
2010 |
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D E C I S I O N
PERALTA, J.:
This
is a petition for review on certiorari[1]
seeking to reverse, vacate and set aside the Court of Appeals’ Decision dated
March 23, 2001 in CA-G.R. CV No. 46261, its Entry of Judgment issued on
November 30, 2001, and its Resolution dated September 10, 2004, denying
petitioner’s Motion to Set Aside Entry of Judgment and to Resolve Appellant’s
Motion for Reconsideration.
The
facts, as culled from the decision of the trial court[2]
and the records, are as follows:
On
P4,600,000.00. The loan was evidenced by a Promissory Note[4]
dated August 22, 1986, which stated that the “loan was repayable within a
period of five years with interest, payable monthly in arrears at 20 percent
per annum commencing on September 22, 1986 until fully paid.” The principal was payable in 16 equal
quarterly amortizations of P287,500.00 each, commencing on
Thereafter,
petitioner requested the restructuring of the loan. Petitioner first paid the
amount of P200,000.00 and, later, the amount of P654,465.75 to
complete compliance with the requirements to restructure the loan.
On
P4,600,000.00,
exclusive of interest and penalties, rendering the obligation due and
demandable; otherwise, respondent would extrajudicially foreclose the real
estate mortgage.
In
a letter[5]
dated P200,000.00 and P654,465.75 made on
x x x As stated in our letter dated January 18, 1989,
your request for a restructuring of the subject loan after all interest are
updated was not approved by the bank. All past due interest and quarterly
installments on principal should be updated before we discuss any restructuring
of the loan. For this reason, kindly
update your quarterly installments and monthly interest payments within seven
(7) days from receipt hereof, failing which, we shall extrajudicially foreclose
pursuant to law the real estate mortgage executed by you in our favor to secure
the said account and/or to take such other legal steps against you to effect
collection.[6]
On P2,000,000.00, together with a letter stating that the amount
was to update payment of petitioner’s restructured account, and the excess
amount to be applied to the principal balance, under Official Receipt No.
59845.[7] Another payment was made on P1,000,000.00
under Official Receipt No. 60084.[8]
On
On
P2,466,217.38 to
respondent as the highest bidder.[9]
On
In
its Answer,[10] respondent
stated that petitioner had no valid cause of action against it, since petitioner
failed to pay his obligation in accordance with the terms of the promissory note,
which rendered the entire principal of the promissory note due and demandable.
Moreover, respondent cited provisions in the
promissory note and other loan documents, and informed the court that
petitioner failed to pay monthly interest amortizations and quarterly principal
amortizations. Instead of paying the
same, petitioner formally requested respondent to restructure the subject
loan. Respondent required petitioner to
pay all past due interests and quarterly installments before loan restructuring
could be discussed. However, respondent
accepted the check payment of P2,000,000.00, which was applied to
petitioner’s loan interest up to P4,600,000.00. Respondent also claimed that in its last
letter dated
On
P2,756,487.77 as redemption price of
the foreclosed property.[11]
Respondent protested the tender of payment,
maintaining that Section 78 of the General Banking Act applied in this case, not Section 30, Rule 39
of the Rules of Court; hence, the redemption price due as of May 30, 1990
should be P2,993,219.41, resulting in a deficient payment by petitioner in
the sum of P236,731.64.
On
WHEREFORE,
premises considered, in the light of the above facts, law and jurisprudence,
judgment is hereby rendered in favor of plaintiff and against defendant,
granting the following:
1.
Declaring the extrajudicial foreclosure sale
and the certificate of sale as null and void; and ordering defendant to return
subject transfer certificate of title to plaintiff after complete payment of
the loan account;
2.
Declaring
the penalty charges of 1/10 of 1% per day as void for being excessive and
unconscionable; and considering the circumstances of this case, that in the
computation of the remaining obligation of plaintiff with defendant Bank, the
plaintiff is hereby ordered to pay only 12% interest per annum on the loan
effective May 11, 1989 until complete payment;
3.
Ordering
defendant to pay plaintiff the amount of P500,000.00 as damages, as
allowed under the Title XVIII on Damages in the New Civil Code; and
4.
Ordering
defendant to pay plaintiff the amount of P25,000.00 as attorney’s fees.[12]
Respondent appealed the trial court’s
decision to the Court of Appeals, raising the following assignments of error:
1.
The lower court erred in holding that there was both novation in the legal
sense and restructuring in the business sense of the subject loan account;
2. The lower court erred in declaring that the
extrajudicial foreclosure sale and the certificate of sale were null and void;
.
3. The lower court erred in declaring that the
penalty charges of 1/10 of 1% per day is both excessive and unconscionable and
in ordering plaintiff to pay only 12% interest per annum on the loan effective
May 11, 1989;
4. The lower court erred in applying Rule 3[9],
Rules of Court when the law applicable was Sec. 78 of Republic Act No. 337;
5. The lower court erred in ordering China
Banking Corporation to pay plaintiff P500,000.00 as damages and P25,000.00
as attorney’s fees.[13]
In a Decision dated
WHEREFORE,
the decision appealed from is MODIFIED in that plaintiff is ORDERED to pay to
defendant bank the balance of the redemption price of P2,993,219.41 with
legal interest thereon at the rate of six (6) percent per annum effective May
30, 1990 until fully paid. The awards
for damages and attorney’s fees are DELETED.[14]
The
Court of Appeals found respondent’s appeal to be partly meritorious. It disagreed with the trial court’s finding
that the foreclosure sale was null and void, because the trial court’s
conclusion that the foreclosure was premature and attended by bad faith was not
supported by the facts of the case and the law on the matter.
According
to the Court of Appeals, the records showed that petitioner had defaulted in
paying his obligation, and petitioner’s request for restructuring of the loan was
denied;[15]
hence, respondent had the right to foreclose the mortgage. Since petitioner had already tendered the sum
of P2,756,487.77 as redemption price for the foreclosed properties, the
main issue tackled by the appellate court was the proper amount of the
redemption price.
The
Court of Appeals agreed with respondent that the redemption price should be P2,993,219.41,
which was petitioner’s outstanding balance as of P3,854,465.75. It also
agreed with respondent that the applicable law was Section 78 of Republic Act No. 337, otherwise known as the General Banking Act, and not Rule 39 of
the Rules of Court.
In
support of its decision, the Court of Appeals cited Sy v. Court of Appeals[16]
which held that the General Banking Act partakes of the nature of an amendment
to Act No. 3135 insofar as the redemption price is concerned, when the
mortgagee is a bank or a banking or credit institution. Sy v.
Court of Appeals stated that Section 78 of the General Banking Act,[17]
as amended, provides that the amount at which the subject property is
redeemable is the amount due under the mortgage deed or the outstanding
obligation of the obligor, plus interest and expenses.[18]
The Court of Appeals also held that the award
of damages was without factual and legal basis, since petitioner was at fault
for not complying with the terms and conditions of the loan and his obligation
was overdue; hence, his mortgage was foreclosed.
The
appellate court further held that the award of attorney’s fees was improper
since the trial court failed to justify the grant of the award in its decision.
On
On
On
In
a Resolution[26] dated
To reiterate,
plaintiff-appellant’s (petitioner’s) motion for reconsideration filed by
counsel of record Atty. Britanico had been resolved by this Court as early as
Well-settled is
the rule that when a party is represented by counsel, notice should be made
upon the counsel of record at his given address. Although Atty.
Alentajan entered his appearance on behalf of plaintiff Torres, before a
counsel of record (in this case, Atty. Britanico) may be considered relieved of
his responsibility, he is required to file a formal petition manifesting his
withdrawal from the case; without it, the notice of judgment served on the
counsel of record is deemed notice to the client, the date of receipt of which
is considered the starting point from which the period of appeal prescribed by
law shall begin to run. Not having withdrawn
formally as counsel in the case, Atty. Salvador
Britanico continued to be the counsel for record and was, for all legal
purposes, plaintiff-appellant’s attorney upon whom the court’s processes may be
served, as they were in fact duly served.[27]
Petitioner
Torres filed this petition, raising these issues:
I
THE RULING OF
THE HONORABLE COURT OF APPEALS THAT PETITIONER’S MOTION FOR RECONSIDERATION HAD
ALREADY BEEN RESOLVED IS CLEARLY INCONSISTENT WITH RESPONDENT’S MOTION TO
REMAND RECORDS TO THE TRIAL COURT.
II
THE ENTRY OF
JUDGMENT ISSUED BY THE HON. COURT OF APPEALS IS PREMATURE, CONSIDERING THAT
PETITIONER’S MOTION FOR RECONSIDERATION HAS NOT YET BEEN RESOLVED DESPITE
ANNOUNCEMENT OF THE COURT OF APPEALS THAT IT HAD ALREADY RESOLVED SAID MOTION
AS EARLY AS NOVEMBER 5, 2001.
III
THE HONORABLE COURT
OF APPEALS SERIOUSLY ERRED IN MODIFYING THE JUDGMENT OF THE COURT A QUO BY ORDERING THE PETITIONER TO PAY
THE BALANCE OF THE REDEMPTION PRICE OF P2,993,219.41, DESPITE THE FACT
THAT PETITIONER HAD ALREADY FULLY PAID HIS OBLIGATIONS TO RESPONDENT BANK,
EXCEPT THE AMOUNT OF P289,655.75 WHICH WAS TENDERED BY PETITIONER TO
RESPONDENT BUT WHICH IT UNJUSTIFIABLY REFUSED TO ACCEPT.
IV
THE HONORABLE COURT
OF APPEALS SERIOUSLY ERRED IN DELETING THE AWARD [FOR] DAMAGES MADE BY THE
TRIAL COURT IN FAVOR OF PETITIONER, WHICH WERE SUBSTANTIATED BY COMPETENT AND
SUBSTANTIAL EVIDENCE.[28]
Petitioner
contends that he inquired about the status of this case from Atty. Britanico, his
counsel of record, but Atty. Britanico did not inform him about the Court of
Appeals’ Resolution dated
Petitioner
alleges that Atty. Britanico mismanaged his case and failed to discharge his
duties efficiently, and his actuation in this case should not be binding on him
as the client, who had no participation whatsoever in the omission or neglect of his former
counsel. Petitioner invokes Amil v. Court of Appeals,[29]
which held that an exception to the principle that a client is bound by the
mistakes of his counsel is one wherein the negligence of the latter is so gross
that the former was deprived of his day in court, as a result of which he was
deprived of his property without due process.
Petitioner
insists that his motion for reconsideration had not yet been resolved by the Court
of Appeals, or if it was resolved, he had no knowledge about it until receipt
of the Resolution dated
The
petition lacks merit.
It
is settled rule that the mistake of a counsel binds the client.[30] It is only in case of gross or palpable
negligence of counsel when the courts must step in and accord relief to a
client who suffered thereby.[31]
In
Saint Louis University v. Cordero,[32] the Court held:
The doctrinal rule is that the negligence of counsel binds the
client. Otherwise, there would never be
an end to a suit so long as a new counsel could be employed who would allege
and show that the prior counsel had not been sufficiently diligent,
experienced, or learned.
To fall within the
exceptional circumstances such as those found in Amil v. Court Appeals
relied upon by the petitioners, it must be shown that the negligence of counsel
must be so gross that the client is deprived of his day in court, the result of
which is that he is deprived of his property without due process of law. Thus, where “a party was given the
opportunity to defend [its] interests in due course, [it] cannot be said to
have been denied due process of law, for this opportunity to be heard is the
very essence of due process.”
In the Amil case, the petitioner therein was
declared in default for failure of his counsel to file an answer within the
reglementary period. The case was heard ex-parte, and judgment was rendered in favor of the respondents. Petitioner’s counsel further failed to take
any action to protect the interests of the petitioner in subsequent proceedings
by filing an opposition to the motion to declare him in default or by moving to
set aside the order of default. The
petitioner therein was, therefore, deemed to have been deprived of his chance
to present his side and to flesh out his arguments.
In contrast, the instant case underwent a full-blown trial. Both parties
were adequately heard, and all issues were ventilated before the decision was
promulgated. All the necessary pleadings
were filed by petitioners’ counsel to protect their interests when the case was
still before the trial court. In fact,
when a decision was rendered, petitioners’ counsel even filed an Opposition to
respondents’ motion for reconsideration.
Unlike in Amil, herein
petitioners were not deprived of their day in court.[33]
Similarly, in this case, petitioner was not
deprived of his day in court, because both parties were heard in a full-blown
trial and, thereafter, a decision was rendered by the trial court, which
decision was appealed by petitioner to the Court of Appeals. The Court of Appeals
modified the decision of the trial court, correctly holding that Article 78 of
the General Banking Act applies in the determination of the redemption price;
thus, petitioner was ordered to pay the deficient amount due to respondent.
Moreover,
the Court of Appeals resolved petitioner’s motion for reconsideration in its
Resolution[34] dated
Petitioner
contends that the ruling of the Court of Appeals that his motion for
reconsideration had been resolved is inconsistent with respondent’s Motion to Remand
Records to the Court A Quo.
The
contention is without merit.
There
is no inconsistency as respondent’s Motion to Remand Records to the Court A Quo[37]
was for the purpose of securing a writ of execution of the Decision of the
Court of Appeals dated
Based
on the records of the case, the
Resolution dated
The failure to file an appeal from the decision rendering it final and
executory is not a denial of due process.[40] The right to appeal is not a natural right or
a part of due process; it is merely a statutory privilege, and may be exercised
only in the manner and in accordance with the provisions of the law.[41]
Further, the proper remedy for allegations of mistake or inexcusable
negligence of counsel, which prevented a party from taking an appeal, is a
petition for relief under Rule 38 of the Rules of Court.[42] The petition
must
be filed within 60 days after the
petitioner learns of the judgment, final order, or other proceeding to be set
aside, and not more than six (6) months after such judgment or final order was
entered.[43] It must be filed within the reglementary
period, which is reckoned from the time the party’s counsel receives notice of
the decision for notice to counsel of the decision is notice to the party.[44]
Since
the Decision of the Court of Appeals became final and executory and Entry of Judgment
was issued on
WHEREFORE,
the petition is DENIED for lack of
merit.
The Decision of the Court of Appeals dated
SO ORDERED.
DIOSDADO M. PERALTA
Associate
Justice
WE CONCUR:
RENATO
C. CORONA
Associate Justice
PRESBITERO J. VELASCO, JR. ANTONIO EDUARDO B. NACHURA
Associate Justice Associate Justice
JOSE C. MENDOZA
Associate Justice
ATTESTATION
I attest that the conclusions in
the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
RENATO C. CORONA
Associate Justice
Third Division, Chairperson
CERTIFICATION
Pursuant to Section 13, Article
VIII of the Constitution and the Division Chairperson’s Attestation, I certify
that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court’s
Division.
REYNATO
S. PUNO
Chief
Justice
[1] Under Rule 45 of the Rules of Court.
[2] RTC Judgment, rollo, pp. 94-105.
[3] Exhibit “2,” records, vol. I, p.
59.
[4] Exhibit “N,” id. at 28.
[5] Exhibit “H,” id. at 22.
[6]
[7] Exhibit
“K,” id. at 25.
[8] Exhibit
“M,” id. at 27.
[9] Exhibit “A,” id.
at 14.
[10] Records, vol. I, p. 45.
[11] Exhibit “P,” records, vol. II, p.
16.
[12] Rollo,
pp. 104-105.
[13]
[14]
[15] Exhibit “7,” records, p. 165.
[16] 254 Phil. 120 (1989).
[17] Sec. 78.
Loans against real estate security shall not exceed seventy percent (70
%) of the appraised value of the respective real estate security, plus seventy
percent (70 %) of the appraised value of the insured improvements, and such
loans shall not be made unless title to the real estate shall be in the
mortgagor. In the event of foreclosure,
whether judicially or extrajudicially, of any mortgage on real estate which is
security for any loan granted before the passage of this Act or under the
provisions of this Act, the mortgagor or
debtor whose real property has been sold at public auction, judicially or
extrajudicially, for the full or partial
payment of an obligation to any bank, banking or credit institution, within
the purview of this Act shall have the
right, within one year after the sale of the real estate as a result of the
foreclosure of the respective mortgage, to
redeem the property by paying the amount fixed by the court in order of
execution, or the amount due under the
mortgage deed, as the case may be, with interest thereon at the rate specified
in the mortgage, and all the costs, and judicial and other expenses incurred by the bank or institution concerned
by reason of the execution and sale and as a result of the custody of said
property less the income received from the property. However, the purchaser at the auction sale
concerned in a judicial foreclosure shall have the right to enter upon and take
possession of such property immediately after the date of the confirmation of
the auction sale by the court and administer the same in accordance with
law. (As amended by Presidential Decree
No. 1828.) (Emphasis supplied.)
[18] Sy
v. Court of Appeals, supra note 16, at 129.
[19] CA rollo, pp. 227-234.
[20]
[21]
[22]
[23] CA Resolution dated
[24]
[25] CA rollo, pp. 272-275.
[26] Rollo, pp. 62-64.
[27]
[28]
[29] 374 Phil. 659 (1999).
[30] Legarda
v. Court of Appeals, G.R. No. 94457,
[31]
[32] 478 Phil. 739 (2004).
[33]
[34] CA rollo, p. 254.
[35]
[36] Duran
v. Pagarigan, 106 Phil. 907 (1960).
[37] CA rollo, pp. 286-287.
[38]
[39]
[40] Mercury
Drug Corporation v. Court of Appeals, 390 Phil. 902, 915 (2000).
[41]
[42] Sec. 2. Petition for relief from denial of appeal. – When a judgment or
final order is rendered by any court in a case, and a party thereto, by fraud,
accident, mistake, or excusable negligence, has been prevented from taking an
appeal, he may file a petition in such court and in the same case praying that
the appeal be given due course.
[43] Rule 38, Sec. 3. Time
for filing petition; contents and verification. – A petition provided for
in either of the preceding sections of this Rule must be verified, filed within
sixty (60) days after the petitioner learns of the judgment, final order, or
other proceeding to be set aside, and not more than six (6) months after such
judgment or final order was entered, or such proceeding was taken; and must be
accompanied with affidavits showing the fraud, accident, mistake, or excusable
negligence relied upon, and the facts constituting the petitioner’s good and
substantial cause of action or defense, as the case may be.
[44] Mercury Drug Corporation v. Court of Appeals, supra note 40, at 913.