G.R. No. 143783 December 9, 2002
Dante Sarraga, Sr. and Maria Teresa Sarraga, petitioners, vs. Banco Filipino Savings and Mortgage Bank, respondent.

FACTS

Petitioners, spouses Dante Sarraga, Sr. and Maria Teresa Sarraga, were the absolute owners of three parcels of land. They mortgaged these lots to respondent Banco Filipino as security for a loan. Upon default, Banco Filipino foreclosed the mortgage. During the redemption period, petitioners offered to redeem the lots, but Banco Filipino, which was under receivership and liquidation, initially stated it was not yet selling the properties. Titles were consolidated in Banco Filipino’s name. Later, Banco Filipino’s liquidator negotiated with petitioners and, through a Memorandum of Agreement dated October 30, 1990, allowed them to repurchase the lots for a specified price with interest, payable by installments, with the bank to execute a deed of sale upon full payment. Banco Filipino conveyed two lots to petitioners on May 16, 1991. Petitioners paid the full repurchase price on October 30, 1992, but Banco Filipino refused to execute the deed of sale for the third lot (Lot 416-B) and instead filed a complaint for quieting of title, recovery of ownership and possession, accounting, and damages.
The Regional Trial Court (RTC) rendered a decision on June 1, 1998, declaring the sale of the two lots valid and title thereto to pertain to petitioners, but declaring Banco Filipino as the true owner of Lot 416-B and ordering petitioners to surrender its possession. Petitioners filed a motion for reconsideration, signed by both their counsel of record, Atty. Florentino G. Dumlao, Jr., and another counsel, Atty. Rogelio Bagabuyo, who had been actively handling the case. The RTC denied the motion via an order dated September 3, 1998. A copy of this order was received on September 10, 1998, by a newly-hired, inexperienced clerk at Atty. Bagabuyo’s office, who misplaced it and failed to inform him. Atty. Bagabuyo, who was appointed Senior State Prosecutor and relocated to Manila, also failed to apprise Atty. Dumlao of the case status. Discovering later that the records had been transmitted to the Court of Appeals due to a partial appeal by Banco Filipino, petitioners filed a notice of appeal, which was denied for being late. Their subsequent petition for relief from judgment was dismissed by the RTC as filed out of time. The Court of Appeals dismissed their petition for certiorari, prompting this petition for review.

ISSUE

1. Whether there was a valid service of the trial court’s order denying petitioners’ motion for reconsideration upon Atty. Bagabuyo.
2. Whether Atty. Bagabuyo was negligent which prevented petitioners from filing a timely notice of appeal.
3. If so, whether such negligence is binding upon petitioners.

RULING

1. Yes, there was a valid service. Petitioners were represented by two lawyers, Attys. Dumlao and Bagabuyo. Pursuant to Section 2, Rule 13 of the 1997 Rules of Civil Procedure, service may be made upon any one of multiple counsels. The Court of Appeals correctly found that Atty. Bagabuyo actively handled the case, filed several pleadings as “counsel for the defendants,” indicated his address, and acted alone in significant proceedings, making service upon him effective and binding on petitioners.
2. Yes, Atty. Bagabuyo was negligent. He knew his clerk lacked work experience in a law firm but failed to closely supervise her office performance. Law offices are admonished to adopt a system for distributing and receiving pleadings and notices so lawyers are promptly informed. The negligence of a clerk which adversely affects a case is binding upon the lawyer.
3. Generally, the negligence of counsel binds the client. However, exceptions exist, such as when the reckless or gross negligence of counsel deprives the client of due process of law, or when its application will result in the outright deprivation of the client’s liberty or property. The Supreme Court found that the negligence of Atty. Bagabuyo and his staff constituted gross negligence, excusing petitioners from the procedural lapse. The Court, in the exercise of its equity jurisdiction, may stay the dismissal of appeals grounded on technicalities, especially where the appeal appears prima facie worthy of consideration on the merits.
The Supreme Court GRANTED the petition, SET ASIDE the challenged Decision of the Court of Appeals, and DIRECTED the RTC to grant the petition for relief and give due course to petitioners’ notice of appeal.