Oriental Assurance Corporation vs. Solidbank Corporation

Procedural rules may be applied retroactively to pending cases, and an appellant's failure to pay appellate docket and other lawful fees under the 1997 Rules of Civil Procedure warrants dismissal of the appeal; a party is bound by its counsel's negligence in failing to monitor the status of a pending appeal.

Oriental Assurance Corporation is an insurer that issued fire insurance policies covering the stock, raw materials, machinery, and equipment of Wear Me Garments Manufacturing, Inc. Solidbank Corporation held trust receipts over the insured goods and was named as mortgagee under a renewal receipt for one of the policies. The present petition concerns the dismissal of Oriental's appeal to the Court of Appeals for nonpayment of appellate docket fees under the 1997 Rules of Civil Procedure, which superseded the old Rules of Court requiring payment within fifteen days from notice that the record on appeal had been received.

Oriental Assurance Corporation issued Fire Insurance Policy No. F-92/22733-D, insuring the stock of finished and/or unfinished products including raw materials, machinery and equipment belonging to Wear Me Garments Manufacturing, Inc. The policy insured against loss and/or damage by fire from March 20, 1991 to March 20, 1992. The policy was subsequently renewed for another year from March 20, 1992 to March 20, 1993 under Renewal Receipt No. 40948. A Memorandum stating that the policy was "[m]ade further subject to MORTGAGEE CLAUSE in favor of SOLIDBANK CORPORATION" was typewritten on the face of the receipt. On April 27, 1993, Oriental issued another Fire Insurance Policy (No. F-93-40690-D) insuring the same items of Wear Me from March 20, 1993 to March 20, 1994.

On July 12, 1993, a fire broke out at the factory of Wear Me, destroying a major portion of the insured properties. Wear Me submitted to Oriental and its co-insurers a Notice of Loss for the value of the damaged properties. The claims were denied.

As holder of trust receipts over the burned goods, Solidbank sent an undated telegram to Oriental, asking the latter to pay the proceeds of Fire Insurance Policy No. F-92/22733-D. Oriental refused to comply because the policy did not contain a mortgagee clause in favor of Solidbank.

Solidbank then instituted Civil Case No. 94-70505 before the Regional Trial Court of Manila against Oriental and Wear Me, as well as Angelita Amparo Go and Arnold A. Go, Leonila Cui, and Prudential Guarantee and Assurance Inc.

• Retroactive Application: Petitioner argued that the Court of Appeals committed reversible error in giving retroactive effect to Section 1(c), Rule 50 of the 1997 Rules of Civil Procedure by dismissing its appeal for failure to pay the appellate court docket and other lawful fees.
• Vested Rights Under Old Rules: Petitioner maintained that the 1997 Rules cannot be given retroactive effect because such application would impair its vested rights under the old Rules, which required an appellant to pay docket fees within fifteen days from receipt of notice from the CA clerk of court that the record on appeal had been received.
• Cause of Delay: Petitioner asserted that the long pendency of its appeal was due to the filing by Prudential of a petition for certiorari and the filing by respondent of a motion to dismiss the appeal.

• Retroactive Application of Procedural Rules: Whether the Court of Appeals committed reversible error in giving retroactive effect to Section 1(c), Rule 50 of the 1997 Rules of Civil Procedure by dismissing petitioner's appeal for failure to pay the appellate court docket and other lawful fees.
• Dismissal for Counsel's Negligence: Whether the appeal may be dismissed due to petitioner's and its counsel's negligence in failing to inquire into the status of the appeal, even assuming petitioner was entitled to notice under the old Rules.

• Retroactive Application of Procedural Rules: No. The 1997 Rules of Civil Procedure apply retroactively to pending cases, and Section 1(c), Rule 50 authorizes dismissal for failure to pay appellate docket and other lawful fees.
• Dismissal for Counsel's Negligence: Yes. Even assuming petitioner was entitled to notice under the old Rules, the appeal was dismissible because petitioner and its counsel failed to inquire into the status of the appeal for over three years, and the client is bound by counsel's negligence.

• Retroactive Application of Procedural Rules: The retroactive application of procedural rules to pending cases is well settled. Petitioner itself admitted this. Section 1(c), Rule 50 of the 1997 Rules provides that an appeal may be dismissed by the Court of Appeals, on its own motion or on that of the appellee, for failure of the appellant to pay the docket and other lawful fees as provided in Section 5, Rule 40 and Section 4, Rule 41. Section 4, Rule 41 requires the appellant to pay the full amount of the appellate court docket and other lawful fees to the clerk of the court which rendered the judgment or final order appealed from within the period for taking an appeal, with proof of payment transmitted to the appellate court. Because the 1997 Rules govern the pending appeal, the CA correctly dismissed it for nonpayment. The Court also noted that even if petitioner were entitled to the notice under the old Rules, the dismissal would still stand.
• Dismissal for Counsel's Negligence: In Arambulo vs. CA, the Court held that where the required notice was sent to the wrong counsel, the fifteen-day period did not commence; nevertheless, the appeal could be dismissed because the new counsel had the duty, consistent with competence and diligence, to inquire from the trial or appellate court about the status of the appeal after not receiving notice for several months. Here, the appeal had been pending for over three years, and counsel had not received any notice to pay the required docket and other lawful fees. These circumstances should have compelled counsel to act; the reason for the delay was flimsy and unacceptable. The allegation that the long pendency was due to Prudential's petition for certiorari and respondent's motion to dismiss was erroneous and irrelevant; the relevant matter was petitioner's failure to check the status of its appeal. Under Canon 18 of the Code of Professional Responsibility, a lawyer shall serve his client with competence and diligence. Petitioner is bound by the negligence of its counsel. In view of this conclusion, the merits of the appealed case need not be ruled upon.

• Retroactive Application of Procedural Rules — Procedural rules may be applied retroactively to pending cases; there is no vested right in procedural rules. The Court applied the 1997 Rules of Civil Procedure to an appeal pending when the Rules took effect, requiring payment of appellate docket fees and authorizing dismissal for nonpayment.
• Dismissal for Failure to Pay Appellate Docket Fees — Under Section 1(c), Rule 50 of the 1997 Rules of Civil Procedure, an appeal may be dismissed by the Court of Appeals, on its own motion or on that of the appellee, for failure of the appellant to pay the docket and other lawful fees as provided in Section 5, Rule 40 and Section 4, Rule 41. Section 4, Rule 41 requires payment within the period for taking an appeal. The Court affirmed dismissal where the appellant failed to pay.
• Duty of Counsel to Monitor Appeal and Binding Effect of Counsel's Negligence — A lawyer shall serve the client with competence and diligence under Canon 18 of the Code of Professional Responsibility. Counsel has the duty to inquire from the trial or appellate court about the status of a pending appeal, especially where no notice to pay docket fees has been received for a long time. The client is bound by the negligence of counsel. The Court applied this to uphold dismissal despite the appellant's claim of entitlement to notice under the old Rules.

• "The retroactive application, of procedural rules to pending cases is well settled. Hence, the 1997 Rules of Civil Procedure, which require the payment of docket fees upon the filing of the notice of appeal, applies to the present case." — This states the ratio decidendi on retroactivity and directly supports the affirmance of the CA's dismissal.
• "Even if we assume that petitioner is entitled to the notice mentioned in the old Rules, the appeal may be dismissed nonetheless, due to petitioner and its counsel's negligence in inquiring on the status of the appeal." — This is the Court's alternative ground for affirmance, establishing that dismissal stands independently of the retroactivity issue.
• "Indeed, it is the duty of petitioner's counsel to check the status of a pending appeal." — This defines the counsel's duty that the Court used to bind petitioner to the consequences of counsel's inaction.
• "Under the circumstances, it is bound by the negligence of its counsel." — This states the binding effect of counsel's negligence on the client.

• Arambulo vs. CA, 226 SCRA 589, September 17, 1993 — The Court relied on this precedent for the rule that even if notice under the old Rules was not properly sent, the appeal may be dismissed due to counsel's negligence in failing to inquire into the status of the appeal. It also supplied the standard of competence and diligence.
• Reyes vs. CA, 189 SCRA 46, August 24, 1990 — Cited for the proposition that a client is bound by the negligence of its counsel.
• People vs. Sumilang, 77 Phil. 764, December 18, 1946 — Cited among the authorities supporting the well-settled retroactive application of procedural rules to pending cases.

• Section 1(c), Rule 50, 1997 Rules of Civil Procedure — Provides a ground for dismissal of appeal for failure of the appellant to pay the docket and other lawful fees as provided in Section 5, Rule 40 and Section 4, Rule 41. Applied to affirm the CA's dismissal of Oriental's appeal.
• Section 4, Rule 41, 1997 Rules of Civil Procedure — Requires the appellant to pay the full amount of the appellate court docket and other lawful fees to the clerk of the court which rendered the judgment or final order appealed from within the period for taking an appeal, with proof of payment transmitted to the appellate court. Applied to require payment.
• Section 5, Rule 40, 1997 Rules of Civil Procedure — Referred to in Section 1(c), Rule 50 as one of the provisions governing the docket and other lawful fees. The Court cited it as part of the dismissal ground.
• Sections 4 and 5, Rule 46, old Rules of Court — The old rules required the clerk to notify the parties of receipt of the record on appeal and required the appellant to pay the docket fee within fifteen days from such notice. The Court assumed petitioner was entitled to this notice but held the appeal still dismissible due to negligence.
• Canon 18, Code of Professional Responsibility — Provides that a lawyer shall serve his client with competence and diligence. Applied to counsel's duty to check the status of the pending appeal.

Melo (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.