Mortel vs Kerr (G.R. No. 156296 November 12, 2012)

Mortel vs Kerr
G.R. No. 156296 November 12, 2012

Facts: On July 19, 2000, respondent Salvador E. Kerr (Kerr) instituted a complaint for foreclosure of mortgage, docketed as Civil Case No. 279-0-2000, against Dennis Q. Mortel (Mortel), who duly filed an answer on August 11, 2000 through Atty. Leonuel N. Mas (Atty. Mas) of the Public Attorneys Office. The pre-trial was reset four times for various reasons, but on the fifth setting on December 7, 2000, Mortel and Atty. Mas were not around when the case was called. On motion of Kerrs counsel, the RTC declared Mortel as in default and allowed Kerr to present evidence ex parte. On December 28, 2000, Atty. Eugenio S. Tumulak (Atty. Tumulak) filed a notice of appearance in behalf of Mortel, but the RTC did not act on the notice of appearance. On March 22, 2001, Mortel, through Atty. Leopoldo C. Lacambra, Jr. (Atty. Lacambra), filed a motion for new trial. On March 23, 2001, Atty. Mas filed his withdrawal of appearance. On April 5, 2001, the RTC denied Mortels motion for new trial, noting that Atty. Mas withdrawal as counsel of Mortel had been filed only on March 23, 2001 and approved by the RTC on March 26, 2001. It held that considering that the records of the case showed that Atty. Mas had received the decision on March 1, 2001, the motion for new trial had been filed out of time on March 20, 2001. On May 4, 2001, Mortel, this time through Atty. Tumulak, filed a verified petition for relief from judgment under Rule 38 of the Rules of Court. On August 20, 2001, the RTC denied the verified petition for relief from judgment on the ground that the petition for relief had been filed beyond the reglementary period of 60 days based on a reckoning of the start of the period from March 1, 2001, the date when Atty. Mas received the notice and copy of the Order.

Issue: Whether or not the decision of the lower court received by the petitioner’s counsel prior to his filing of withdrawal of appearance binds his client.

Held: No. As a rule, a client is bound by his counsel’s conduct, negligence and mistake in handling a case. To allow a client to disown his counsels conduct would render proceedings indefinite, tentative, and subject to reopening by the mere subterfuge of replacing counsel.

But the rule admits of exceptions. In several rulings, the Court held the client not concluded by the negligence, incompetence or mistake of the counsel. For instance, in Suarez v. Court of Appeals, the Court set aside the judgment and mandated the trial court to reopen the case for the reception of the evidence for the defense after finding that the negligence of the therein petitioners counsel had deprived her of the right to present and prove her defense. Also, in Legarda v. Court of Appeals, the Court ordered restored to the petitioner her property that had been sold at public auction in satisfaction of a default judgment resulting from the failure of her counsel to file an answer and from counsels lack of vigilance in protecting her interests in subsequent proceedings before the trial court and the CA. Lastly, in Amil v. Court of Appeals, the Court declared that an exception to the rule that a client is bound by the mistakes of his counsel is when the negligence of the counsel is so gross that the client was deprived of his day in court, thereby also depriving the client of his property without due process of law.

Mortel did not have his day in court, because he was unable to submit his evidence to controvert the claim of Kerr about his contractual default after the RTC declared Mortel as in default due to his counsels failure to appear at the fifth setting of the pre-trial. Yet, he explained that he was only late because he arrived in court a few minutes after the case had been called. His explanation appears plausible, considering that he had unfailingly appeared in court in the four previous settings of the pre-trial. In view of the fact that it was his first time not to be present when the case was called at the fifth setting of the pre-trial, the RTC could have allowed a second or a third call instead of immediately granting his adverse party’s motion to declare him as in default. In Leyte v. Cusi, the Court has admonished against precipitate orders of default because such orders have the effect of denying a litigant the chance to be heard. Indeed, we have reminded trial courts that although there are instances when a party may be properly defaulted, such instances should be the exception rather than the rule and should be allowed only in clear cases of a litigants obstinate refusal or inordinate neglect to comply with the orders of the court. Without such a showing, the litigant must be given every reasonable opportunity to present his side and to refute the evidence of the adverse party in deference to due process of law.

The negligence and mistakes committed by his several counsels were so gross and palpable that they denied due process to Mortel and could have cost him his valuable asset. They thereby prevented him from presenting his side, which was potentially highly unfair and unjust to him on account of his defense being plausible and seemingly meritorious. He stated that he had already paid the principal of the loan and the interest, submitting in support of his statement a receipt for P200,000.00 that Kerr had allegedly signed. He also stated that he had actually overpaid in view of his arrangement for Kerr to withdraw P6,000.00 each month from Mortel’s bank account as payment of the interest, a statement that he would confirm in court through the testimony of a bank representative.

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