Producers Bank of the Philippines vs. Court of Appeals

A client is bound by the acts, even mistakes, of counsel in matters of procedural technique; only negligence so gross, reckless, and inexcusable as to deprive the client of the opportunity to be heard will warrant relief, and the failure to perfect an appeal within the reglementary period is mandatory and jurisdictional.

Producers Bank of the Philippines owned treasury bills and maintained a demand deposit account with the Central Bank of the Philippines. Asia Trust Development Bank and several of its officers were among those later impleaded in petitioner's suit to recover the proceeds of those treasury bills. The Central Bank had placed petitioner under conservatorship, and the lifting of that conservatorship was conditioned on petitioner's dropping all pending cases against the Central Bank.

On March 29, 1988, Producers Bank of the Philippines, through its former counsel Atty. Antonio M. Pery, filed a Complaint before the Regional Trial Court of Makati, Branch 147, to recover ₱11,420,000.00 from Asia Trust Development Bank and the Central Bank of the Philippines. Petitioner later filed an amended complaint impleading additional defendants. Petitioner sought to recover the proceeds of several treasury bills amounting to ₱11,420,000.00, which it alleged were fraudulently credited to the demand deposit account of Asiatrust with the Central Bank and withdrawn by Milagros B. Nayve, Elizabeth C. Garcia, and Alberto Limjoco, Sr.

Petitioner owned the treasury bills. On their respective maturity dates, petitioner caused the bills to be delivered to the Central Bank. The bills were initially received by Manuel B. Ala, petitioner's rediscounting clerk, together with a letter of transmittal and a receipt for the bills addressed to the Central Bank. Ala turned over the bills and accompanying documents to Rogelio Carrera for delivery to the Central Bank. Alberto Limjoco, Sr., Elizabeth C. Garcia, and Milagros B. Nayve came into possession of the bills and delivered them to Rainelda A. Andrews and Rhodora B. Landrito. Petitioner alleged that Andrews and Landrito failed to ascertain the lawful ownership of the bills and caused their transmittal and delivery to the Central Bank through a letter signed by Eduardo G. Escobar and Alfonso Leong, Jr.

The proceeds of the bills were credited to the account of Asiatrust, which approved the manager's check applications and facilitated payment to the bearers of the bills. Petitioner discovered that the proceeds were not credited to its demand deposit account with the Central Bank. Upon discovery, petitioner informed the Central Bank, which furnished petitioner a copy of the acknowledgment from Asiatrust of receipt of the bills and of the fact that the proceeds were credited to Asiatrust's account. Petitioner claimed that Rainelda A. Andrews, Samson Flores, Alfonso Leong, Jr., Rhodora D. Landrito, Joseph Chua, Ramon Yu, and Eduardo G. Escobar were negligent as officers of Asiatrust because they failed to exercise reasonable care and caution to determine the true ownership of the bills before allowing the proceeds to be paid to Milagros B. Nayve, Elizabeth C. Garcia, and Alberto Limjoco, Sr. Petitioner sought to hold Asiatrust solidarily liable with the other defendants for the value of the treasury bills and for damages.

The complaint was subsequently dismissed as against the Central Bank on petitioner's motion because the Central Bank had lifted petitioner's conservatorship and allowed the return of management and assets to petitioner's Board of Directors, conditioned on petitioner's dropping all its cases against the Central Bank. The defendants filed their respective Answers, after which the issues were joined and trial on the merits ensued.

On August 30, 1993, the law firm of Quisumbing, Torres and Evangelista entered its appearance for petitioner in substitution of Atty. Antonio M. Pery. Petitioner's handling counsel, Atty. Alvin Agustin T. Ignacio of Quisumbing, Torres and Evangelista, arrived late during the hearing held on May 17, 1995. On motion of Asiatrust's counsel, the RTC issued an Order on the same day dismissing the case for lack of interest to prosecute. On June 9, 1995, Atty. Ignacio filed a motion for reconsideration, explaining that his late arrival at the hearing was due to unexpected heavy traffic at Roxas Boulevard in front of Baclaran Church, and offering his apologies for his unintended tardiness. Quisumbing, Torres and Evangelista received a copy of the Order dated August 1, 1995 denying the motion for reconsideration on August 11, 1995. At that time, Atty. Ignacio was indisposed for allegedly suffering from "fatigue and stress." It was only on August 25, 1995 that Atty. Ignacio found out that the Order denying the motion for reconsideration had been received by the law firm on August 11, 1995. He filed a Notice of Appeal on August 25, 1995.

On November 13, 1995, Asiatrust, et al. filed a Motion to Dismiss Appeal with the Court of Appeals. On March 8, 1996, Quisumbing, Torres and Evangelista filed its Comment to the Motion to Dismiss Appeal. The Court of Appeals found that petitioner received the Order denying the motion for reconsideration on August 11, 1995 at 3:00 p.m., that the last day to file the Notice of Appeal was August 12, 1995, and that the Notice of Appeal was filed late by 13 days. It also found that the handling lawyer's alleged "fatigue and stress" was not serious or incapacitating and that he failed to forewarn his law firm or inquire about the result of the motion for reconsideration.

• Binding Effect of Counsel's Negligence: Petitioner argued that a client should not be bound by counsel's gross and inexcusable negligence, invoking Legarda vs. Court of Appeals.
• Similarity to Legarda: Petitioner maintained that its case was similar to Legarda because it was not negligent in choosing counsel, it engaged the well-known and reputable law firm of Quisumbing, Torres and Evangelista, its previous counsel committed two blunders, and the Court of Appeals found gross and inexcusable negligence, unlike the simple negligence found in Legarda.
• Admitted Blunders: Petitioner admitted that Atty. Ignacio failed to arrive on time during one hearing due to traffic and failed to file the Notice of Appeal within the reglementary period due to "fatigue and stress," and conceded that these were a "flimsy excuse" and an "out of this world excuse," but argued that such gross negligence and mistake of counsel should not bind the client.
• Alabanza Inapplicable: Petitioner argued that the Court of Appeals erred in citing Alabanza vs. Intermediate Appellate Court because the Court of Appeals itself found gross and inexcusable negligence on the part of Quisumbing, Torres and Evangelista, making Legarda the applicable precedent.

• Pro Forma Notice of Appeal: Asiatrust pointed out that all that is required is a single-paged, pro forma notice of appeal, the accomplishment of which does not require a high degree of legal skill.
• Dismissal of Appeal: Asiatrust, et al. moved to dismiss petitioner's appeal before the Court of Appeals, and the Court of Appeals granted the motion on the ground that the appeal was filed out of time.

• Dismissal of Appeal / Counsel's Negligence: Whether the Court of Appeals erred in dismissing petitioner's appeal as filed out of time despite its finding that petitioner's counsel was grossly and inexcusably negligent.
• Binding Effect of Counsel's Negligence: Whether petitioner should be relieved from the consequences of its counsel's negligence in failing to perfect an appeal within the reglementary period.
• Due Process: Whether petitioner was deprived of its day in court or due process by the dismissal of its appeal due to counsel's late filing.
• Nature of Negligence: Whether the negligence of petitioner's counsel was gross and inexcusable or merely simple.

• Dismissal of Appeal / Counsel's Negligence: No. The Court of Appeals correctly dismissed the appeal; the perfection of an appeal within the reglementary period is mandatory and jurisdictional, and failure to do so renders the judgment final and executory.
• Binding Effect of Counsel's Negligence: Yes. A client is bound by the acts, even mistakes, of counsel in procedural technique; the exception for gross negligence depriving the client of a day in court did not apply.
• Due Process: No. Petitioner was not denied due process because it was given a reasonable opportunity to be heard; the right to appeal is a statutory privilege, not a natural right or part of due process.
• Nature of Negligence: Simple negligence. Tardiness is plain and simple negligence, and the failure to file the Notice of Appeal due to "fatigue and stress" did not amount to gross, palpable, pervasive, and reckless negligence.

• Dismissal of Appeal / Counsel's Negligence: The general rule is that a client is bound by the acts, even mistakes, of his counsel in the realm of procedural technique. The exception is when the negligence of counsel is so gross, reckless, and inexcusable that the client is deprived of his day in court, in which case the remedy is to reopen the case and allow the party to adduce evidence. Petitioner could not invoke the exception. The perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but jurisdictional, and failure to perfect an appeal renders the judgment final and executory. The Notice of Appeal was filed 13 days late. The period to appeal is prescribed not only by the Rules of Court but also by Section 39 of Batas Pambansa Blg. 129. Public policy and sound practice demand that judgments of courts become final and irrevocable at some definite date fixed by law.

• Binding Effect of Counsel's Negligence: Petitioner's reliance on Legarda vs. Court of Appeals was misplaced. In Legarda, the Court initially found counsel's negligence gross and inexcusable, but on motion for reconsideration the Court en banc held that as long as a party was given the opportunity to defend her interests in due course, she could not be said to have been denied due process. The Court en banc did not relieve the client from the consequences of her counsel's negligence and mistakes. In petitioner's case, the case took its regular course in the trial court; petitioner presented witnesses and filed a timely motion for reconsideration. Upon denial of the motion, petitioner could have easily remedied the situation by filing a notice of appeal within the reglementary period, since a dismissal for failure to prosecute is an adjudication on the merits. All that was required was a single-paged, pro forma notice of appeal, which did not require a high degree of legal skill. Petitioner was represented by a law firm, which meant that any of its members could lawfully act as counsel; when a client employs a law firm, it employs the entire firm. Petitioner also had a legal department to monitor its pending cases and liaise with retained counsel. To agree with petitioner would enable every party to render inutile any adverse order or decision by simply alleging gross negligence on the part of its counsel.

• Due Process: The essence of due process is the reasonable opportunity to be heard and to submit any evidence one may have in support of one's defense. "To be heard" does not mean only verbal arguments in court; one may be heard also through pleadings. Where opportunity to be heard, either through oral arguments or pleadings, is accorded, there is no denial of due process. Petitioner was not deprived of its day in court. 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. The party who seeks to avail of the same must comply with the requirements of the rules; failing to do so, the right to appeal is lost. The failure to perfect an appeal within the prescribed reglementary period is not a mere technicality but jurisdictional.

• Nature of Negligence: The negligence of the law firm engaged by petitioner was not gross but simple negligence. Petitioner capitalized on two "blunders": arriving late during the May 17, 1995 hearing and filing the Notice of Appeal 13 days late. Tardiness is plain and simple negligence. Counsel's failure to file the Notice of Appeal within the reglementary period did not deprive petitioner of due process. The proffered excuse of "stress and fatigue" was highly unacceptable, but it did not amount to gross, palpable, pervasive, and reckless negligence so as to deprive counsel's client of its day in court. Because the negligence was simple, the Court need no longer concern itself with the merits of petitioner's causes of action or the propriety of the trial court's dismissal for lack of interest to prosecute.

• Client Bound by Counsel's Acts; Exception for Gross Negligence — A client is generally bound by the acts, even mistakes, of counsel in the realm of procedural technique. The exception is when counsel's negligence is so gross, reckless, and inexcusable that the client is deprived of his day in court; the remedy is to reopen the case and allow the party to adduce evidence. Here, the general rule controlled because petitioner's counsel was merely negligent in failing to file a pro forma notice of appeal on time, and petitioner had been given an opportunity to be heard.
• Due Process as Reasonable Opportunity to Be Heard — Due process consists of a reasonable opportunity to be heard and to submit evidence in support of one's defense. Being heard does not require only verbal arguments in court; it may be through pleadings. Where such opportunity is accorded, there is no denial of due process. No denial was found because petitioner's case took its regular course and petitioner filed a timely motion for reconsideration.
• Right to Appeal as Statutory Privilege — The right to appeal is not a natural right or part of due process; it is merely a statutory privilege that may be exercised only in the manner and in accordance with the provisions of law. A party seeking to appeal must comply with the rules; failure to do so loses the right. This rule supported denial of relief for the late Notice of Appeal.
• Perfection of Appeal Within Reglementary Period Is Mandatory and Jurisdictional — The perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but jurisdictional. Failure to perfect an appeal renders the judgment final and executory, and public policy demands that judgments become final and irrevocable at a definite date fixed by law. This rule supported affirmance of the dismissal of petitioner's appeal.
• Simple Negligence vs. Gross Negligence of Counsel — Tardiness is plain and simple negligence. An unacceptable excuse such as "stress and fatigue" for failing to file a notice of appeal does not amount to gross, palpable, pervasive, and reckless negligence. Only gross negligence that deprives a client of the opportunity to be heard justifies relief. Counsel's acts were characterized as simple negligence.
• Representation by a Law Firm — When a client employs the services of a law firm, it employs the entire law firm, not merely the lawyer assigned to personally handle the case. Any member of the firm may lawfully act as counsel, and the firm is bound to provide a replacement if the appearing counsel resigns. This principle rejected petitioner's attempt to disclaim responsibility for its counsel's negligence.

• "The general rule is that a client is bound by the acts, even mistakes, of his counsel in the realm of procedural technique. The exception to this rule is when the negligence of counsel is so gross, reckless and inexcusable that the client is deprived of his day in court. In which case, the remedy then is to reopen the case and allow the party who was denied his day in court to adduce his evidence." — This passage states the ratio decidendi on the binding effect of counsel's procedural mistakes and the narrow exception for gross negligence.
• "The essence of due process is to be found in the reasonable opportunity to be heard and submit any evidence one may have in support of one’s defense. `To be heard' does not mean only verbal arguments in court; one may be heard also through pleadings. Where opportunity to be heard, either through oral arguments or pleadings, is accorded, there is no denial of due process." — This passage defines due process as reasonable opportunity to be heard, including through pleadings, and supports the finding that petitioner was not denied due process.
• "Time and again it has been held that 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." — This passage establishes that the right to appeal is statutory and must be exercised in accordance with the rules.
• "Clearly, the perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but jurisdictional, and failure to perfect an appeal has the effect of rendering the judgment final and executory. Public policy and sound practice demand that judgments of courts should become final and irrevocable at some definite date fixed by law." — This passage articulates the mandatory and jurisdictional nature of perfecting an appeal within the reglementary period.

• Legarda vs. Court of Appeals, 195 SCRA 418 (1991) — Invoked by petitioner but held not applicable; the Court noted that on motion for reconsideration, the Court en banc held that a client is not relieved from counsel's negligence where she was given an opportunity to defend her interests in due course.
• People’s Homesite & Housing Corp. vs. Tiongco, 12 SCRA 471 (1964); Escudero vs. Dulay, 158 SCRA 69 (1988); De Guzman vs. Sandiganbayan, 256 SCRA 171 (1996) — Cited for the exception to the general rule and the remedy of reopening the case when gross negligence of counsel deprives a client of his day in court.
• Salonga vs. Court of Appeals, 269 SCRA 534 (1997) — Cited for the definition of due process as a reasonable opportunity to be heard and submit evidence, including through pleadings.
• Ortiz vs. Court of Appeals, 299 SCRA 708 (1998) — Cited for the rule that the right to appeal is a statutory privilege and must be exercised in accordance with the law.
• Rosa Yap Paras and Valente Dy Yap vs. Judge Ismael O. Baldado and Justo De Jesus Paras, G.R. No. 140713, March 8, 2001 — Cited for the rule that failure to perfect an appeal within the prescribed reglementary period is not a mere technicality but jurisdictional.
• Almeda vs. Court of Appeals, 292 SCRA 587 (1998) — Cited for the mandatory nature of rules on reglementary periods and the public policy requiring finality of judgments.
• Five Star Bus Company, Inc. vs. Court of Appeals, 313 SCRA 367 (1999) — Cited for the principle that when a client employs a law firm, it employs the entire firm and any of its members may act as counsel.
• Rilloraza, Africa, De Ocampo and Africa vs. Eastern Telecommunications, Inc., 309 SCRA 566 (1999) — Cited for the rule that a client employs the entire law firm, not merely the lawyer assigned to personally handle the case.
• Bernardo vs. Court of Appeals, 275 SCRA 413 (1997), citing Greenhills Airconditioning and Services, Inc. vs. NLRC, 245 SCRA 384 — Cited for the principle that litigants represented by counsel should not simply sit back and await the outcome of their case.
• Salva vs. Court of Appeals, 304 SCRA 632 (1999) — Cited for the rule that clients should suffer the consequences of the negligence, mistake, or lack of competence of the counsel whom they themselves hired.
• Alabanza vs. Intermediate Appellate Court, 204 SCRA 304 — Cited in the proceedings below for the principle that a party cannot shake itself of the inexcusable negligence of its counsel; petitioner argued it was inapplicable because the Court of Appeals found gross negligence.

• Section 1, Article III, Constitution — Provides that no person shall be deprived of life, liberty, or property without due process of law. The provision was applied by holding that due process is satisfied by a reasonable opportunity to be heard and that petitioner was not denied such opportunity.
• Section 39, Batas Pambansa Blg. 129 — Prescribes a 15-day period for appeal from final orders, resolutions, awards, judgments, or decisions of any court, counted from notice of the final order, resolution, award, judgment, or decision appealed from. The provision was cited to show that the period to appeal is statutory and that failure to perfect an appeal within it is mandatory and jurisdictional.
• Section 2, Rule 41, Old Rules of Court — Provides that only final judgments or orders shall be subject to appeal. The provision was cited in relation to the availability of an appeal from the dismissal of the case.
• Section 3, Rule 17, Old Rules of Court (cited in footnote as Sec. 13, Rule 17) — Provides that a dismissal for failure to prosecute has the effect of an adjudication upon the merits unless otherwise provided by the court. The provision was cited to show that the dismissal for lack of interest to prosecute could have been appealed.

Vitug, Panganiban, and Sandoval-Gutierrez, JJ., concur. Melo, J., was abroad on official leave.