Abrogar v. Land Bank of the Philippines

Certiorari under Rule 65 is not a substitute for a lost appeal; where an ordinary appeal under Rule 41 is available from an RTC decision rendered in the exercise of original jurisdiction, a party's recourse to certiorari is improper, and the negligence of counsel in choosing the wrong remedy binds the client unless the client proves by clear and convincing evidence that counsel's gross negligence was motivated by malice, thereby depriving the client of due process.

Spouses Agerico and Carmelita Abrogar obtained a loan from Land Bank of the Philippines secured by a real estate and chattel mortgage. Upon their default, Land Bank initiated extrajudicial foreclosure proceedings, prompting the spouses to seek judicial intervention to compel restructuring based on a bank letter containing proposed terms and conditions. The dispute thus centers on whether a bank's proposal for loan restructuring constitutes a demandable right and on the procedural consequences of selecting the wrong mode of appellate review.

On October 14, 1996, Spouses Agerico and Carmelita Abrogar obtained a loan amounting to ₱11,250,000.00 from Land Bank of the Philippines, secured by a real estate and chattel mortgage executed in the bank's favor. Petitioners eventually defaulted in the payment of their loan obligation, prompting Land Bank to commence extrajudicial foreclosure proceedings on the mortgaged properties.

To stop the foreclosure, petitioners filed a complaint against Land Bank before Branch 51 of the Regional Trial Court in Puerto Princesa City for specific performance and damages, with an application for a writ of preliminary injunction and/or temporary restraining order. They prayed that the RTC order Land Bank to allow them to settle their obligation pursuant to a letter dated October 5, 1998, which contained the bank's proposed terms and conditions for restructuring their loan.

The RTC, in its Decision dated April 1, 2011, dismissed the complaint for lack of cause of action. It explained that petitioners' lawful obligation was to settle their delinquent account and that restructuring was not part of their original contract but merely a privilege accorded by Land Bank. When the bank refused to adopt petitioners' own interpretation of the restructuring proposal, that refusal was equivalent to a denial of their request. The RTC likewise denied petitioners' Motion for Reconsideration in its Order dated November 25, 2013.

Petitioners thereafter elevated the case to the Court of Appeals via a Petition for Certiorari under Rule 65 of the Rules of Court. The CA, in its Resolution dated June 23, 2014, dismissed the petition outright for being the wrong mode of appeal and for lack of an affidavit of service pursuant to Section 13, Rule 13. The CA stressed that the proper recourse was an ordinary appeal under Section 2(a), Rule 41, not certiorari under Rule 65, and noted that even if the petition were treated as an ordinary appeal, it would still be dismissed for having been filed beyond the 15-day reglementary period. Petitioners' motion for reconsideration was denied in the CA Resolution dated October 22, 2015, leading to the present petition before the Supreme Court.

• Wrong Mode of Appeal Not Binding on Client: Petitioners insisted that they should not be bound by their former counsel's negligence in choosing to file a petition for certiorari under Rule 65 instead of an ordinary appeal, because doing so would deprive them of their property without due process of law.
• Gross Negligence of Former Counsel: Petitioners alleged that the error of their former counsel in choosing to file a Rule 65 petition rather than an ordinary appeal constituted gross negligence that would cause them deprivation of property without due process of law, warranting liberal application of the Rules.

• Propriety of Certiorari: Whether the Court of Appeals correctly dismissed the Petition for Certiorari outright for being the wrong mode of appeal.
• Negligence of Counsel: Whether the negligence of petitioners' former counsel in choosing the wrong remedy should excuse petitioners from the procedural lapse and warrant liberal application of the Rules of Court.

• Propriety of Certiorari: Yes. The CA correctly dismissed the petition, the proper recourse from an RTC decision rendered in the exercise of original jurisdiction being an ordinary appeal under Section 2(a), Rule 41, not certiorari under Rule 65.
• Negligence of Counsel: No. The negligence of counsel binds the client, and the exception for gross negligence depriving the client of due process requires proof of malice, which petitioners failed to establish.

• Propriety of Certiorari: Certiorari under Rule 65 may only be resorted to where there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law. The extraordinary remedy of certiorari is not a substitute for a lost appeal and is not allowed when a party fails to appeal a judgment to the proper forum, especially when one's own negligence or error in the choice of remedy occasioned the loss. Because the remedies of appeal and certiorari are mutually exclusive, certiorari will not prosper if appeal is available, even if the ground is grave abuse of discretion. Here, the RTC Decision dated April 1, 2011 was rendered in the exercise of the RTC's original jurisdiction; the proper recourse was therefore an ordinary appeal under Section 2(a), Rule 41. Certiorari under Rule 65 was thus improper, and the CA correctly dismissed the petition.

• Negligence of Counsel: The negligence of counsel binds the client, even mistakes in the application of procedural rules. The sole exception is when the reckless or gross negligence of counsel deprives the client of due process of law, in which case the counsel's error must be so palpable and maliciously exercised that it would viably be the basis for disciplinary action. For the exception to apply, the client must prove by clear and convincing evidence that he was maliciously deprived of information such that he could not have acted to protect his interests. Petitioners merely alleged gross negligence without any showing of malicious intent on the part of their former counsel. Malice is never presumed but must be proved as a fact, which petitioners evidently failed to do. Consequently, there was no basis to relax the rules of procedure, and the RTC Decision had long attained finality given petitioners' failure to appeal within the reglementary period.

• Certiorari as not a substitute for a lost appeal — The extraordinary remedy of certiorari under Rule 65 is available only where there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law. It cannot substitute for a lost appeal, particularly when the loss was occasioned by the party's own negligence or error in the choice of remedy. The remedies of appeal and certiorari are mutually exclusive; certiorari will not prosper if appeal is available, even if the ground is grave abuse of discretion. The Court applied this doctrine to hold that since the RTC decision was rendered in the exercise of original jurisdiction, the proper recourse was an ordinary appeal under Section 2(a), Rule 41, rendering the Rule 65 petition improper.

• Negligence of counsel binds the client — The negligence of counsel binds the client, including mistakes in the application of procedural rules. The only exception is when the reckless or gross negligence of counsel deprives the client of due process of law, requiring that the counsel's error be so palpable and maliciously exercised as to warrant disciplinary action. The client must prove by clear and convincing evidence that he was maliciously deprived of information such that he could not act to protect his interests. Malice is never presumed but must be proved as a fact. The Court applied this doctrine to reject petitioners' plea for liberal application of the Rules, finding that they alleged gross negligence but failed to prove malice on the part of their former counsel.

• "The extraordinary remedy of certiorari is not a substitute for a lost appeal; it is not allowed when a party to a case fails to appeal a judgment to the proper forum, especially if one's own negligence or error in one's choice of remedy occasioned such loss or lapse." — This passage articulates the ratio decidendi on the mutual exclusivity of appeal and certiorari, explaining why the CA correctly dismissed the Rule 65 petition.

• "the negligence of the counsel binds the client, even mistakes in the application of procedural rules." — This is the canonical formulation of the doctrine as applied to the facts, establishing the baseline rule before the Court discusses the narrow exception for gross negligence amounting to deprivation of due process.

• "for the exception to apply, the client must prove by clear and convincing evidence that he was maliciously deprived of information that he could not have acted to protect his interests." — This passage defines the evidentiary standard for the exception to the counsel-negligence doctrine, specifying that malice must be proved as a fact and cannot be presumed.

• Villalon vs. Lirio, 765 Phil. 474, 481 (2015) — Cited for the proposition that certiorari is not a substitute for a lost appeal and that the remedies of appeal and certiorari are mutually exclusive. Followed in this case to sustain the CA's dismissal of the Rule 65 petition.

• Ong Lay Hin vs. Court of Appeals, et al., 752 Phil. 15, 23 (2015) — Cited for the doctrine that the negligence of counsel binds the client, including mistakes in procedural rules, and for the exception when reckless or gross negligence deprives the client of due process. Followed to reject petitioners' plea for liberal application of the Rules.

• Baclaran Mktg. Corp. vs. Nieva, et al., 809 Phil. 92, 104 (2017) — Cited for the requirement that the client must prove by clear and convincing evidence that counsel maliciously deprived the client of information, and that malice is never presumed but must be proved as a fact. Followed to hold that petitioners' bare allegation of gross negligence, without proof of malice, was insufficient.

• Section 1, Rule 65, Rules of Court — Defines certiorari as a remedy available only when there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law. Applied to hold that certiorari was improper because an ordinary appeal was available.

• Section 2(a), Rule 41, Rules of Court — Provides that the appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal. Applied to establish that the proper recourse from the RTC's April 1, 2011 Decision was an ordinary appeal, not certiorari.

• Section 13, Rule 13, Rules of Court — Requires an affidavit of service in the filing of pleadings. Noted by the CA as an additional ground for dismissal of the Rule 65 petition.

Perlas-Bernabe (Chairperson) and Delos Santos, JJ., concurred. A. Reyes, Jr., and Inting, JJ., were on official leave.