TRADERS ROYAL BANK EMPLOYEES UNION-INDEPENDENT, petitioner vs.

to a lawyer by his client for the legal services he has rendered to the latter. The basis of this
NATIONAL LABOR RELATIONS COMMISSION and EMMANUEL NOEL A. compensation is the fact of his employment by and his agreement with the client.
CRUZ, respondents., G.R. No. 120592, Mar 14, 1997 In its extraordinary concept, an attorney’s fee is an indemnity for damages ordered by the
court to be paid by the losing party in a litigation. The basis of this is any of the cases
FACTS: provided by law where such award can be made, such as those authorized in Article 2208,
Civil Code, and is payable not to the lawyer but to the client, unless they have agreed that the
award shall pertain to the lawyer as additional compensation or as part thereof.
Petitioner and private respondent Atty. Emmanuel Noel A. Cruz entered into a retainer
It is the first type of attorney’s fees which private respondent demanded before the labor
agreement whereby the former obligated itself to pay the latter a monthly retainer fee of
arbiter. A claim for attorney’s fees may be asserted either in the very action in which the
P3,000.00 in consideration of the undertaking to render the services enumerated in their
services of a lawyer had been rendered or in a separate action. While a claim for attorney’s
contract.
fees may be filed before the judgment is rendered, the determination as to the propriety of the
During the existence of that agreement, petitioner union referred to private respondent the
fees or as to the amount thereof will have to be held in abeyance until the main case from
claims of its members for holiday, mid-year and year-end bonuses against their employer,
which the lawyer’s claim for attorney’s fees may arise has become final. Otherwise, the
Traders Royal Bank (TRB). A complaint was filed by petitioner. NLRC favored the
determination to be made by the courts will be premature. Of course, a petition for attorney’s
employees, awarding them holiday pay differential, mid-year bonus differential, and year-end
fees may be filed before the judgment in favor of the client is satisfied or the proceeds thereof
bonus differential. TRB challenged the decision of the NLRC before the SC. The SC deleted
delivered to the client.
the award of mid-year and year-end bonus differentials while affirming the award of holiday
Private respondent was well within his rights when he made his claim and waited for the
pay differential.
finality of the judgment for holiday pay differential, instead of filing it ahead of the award’s
After private respondent received the decision of the SC he notified the petitioner union, the
complete resolution.
TRB and the NLRC of his right to exercise and enforce his attorney’s lien over the award of
The P3,000.00 which petitioner pays monthly to private respondent does not cover the
holiday pay differential, he filed a motion before LA for the determination of his attorney’s
services the latter actually rendered before the LA and the NLRC in behalf of the former. As
fees, praying that 10% of the total award for holiday pay differential computed by TRB at
stipulated in their retainer’s agreement, the monthly fee is intended merely as a consideration
P175,794.32, or the amount of P17,579.43, be declared as his attorney’s fees, and that
for the law firm’s commitment to render the services.
petitioner union be ordered to pay and remit said amount to him.
There are two kinds of retainer fees a client may pay his lawyer. These are a general retainer,
Petitioner opposed said motion. LA favored private respondent. Petitioner appealed to NLRC
or a retaining fee, and a special retainer.
but NLRC affirmed LA’s decision. Hence the petition at bar.
A general retainer, or retaining fee, is the fee paid to a lawyer to secure his future services as
ISSUE:
general counsel for any ordinary legal problem that may arise in the routinary business of the
client and referred to him for legal action. The future services of the lawyer are secured and
Is the private respondent entitled to Atty.’s fees aside from his retainer fee? committed to the retaining client. For this, the client pays the lawyer a fixed retainer fee. The
RULING: fees are paid whether or not there are cases referred to the lawyer. The reason for the
remuneration is that the lawyer is deprived of the opportunity of rendering services for a fee
Yes. There are 2 commonly accepted concepts of attorney’s fees, the so-called ordinary and to the opposing party or other parties. In fine, it is a compensation for lost opportunities.
extraordinary. In its ordinary concept, an attorney’s fee is the reasonable compensation paid A special retainer is a fee for a specific case handled or special service rendered by the lawyer
for a client. A client may have several cases demanding special or individual attention. If for
every case there is a separate and independent contract for attorney’s fees, each fee is difficulty of the questions involved; (c) the importance of the subject matter; (d) the skill
considered a special retainer. demanded; (e) the probability of losing other employment as a result of acceptance of the
The P3,000.00 monthly fee provided in the retainer agreement between the union and the law proffered case; (f) the customary charges for similar services and the schedule of fees of the
firm refers to a general retainer, or a retaining fee, as said monthly fee covers only the law IBP chapter to which the lawyer belongs; (g) the amount involved in the controversy and the
firm’s commitment to render the legal services enumerated in said agreement.. benefits resulting to the client from the services; (h) the contingency or certainty of
Whether there is an agreement or not, the courts can fix a reasonable compensation which compensation; (i) the character of the employment, whether occasional or established; and (j)
lawyers should receive for their professional services. However, the value of private the professional standing of the lawyer.
respondent’s legal services should not be established on the basis of Article 111 of the Labor WHEREFORE, the Resolution of respondent is MODIFIED, and petitioner is hereby
Code alone. Said article provides: ORDERED to pay the amount of P10,000.00 as attorney’s fees to private
“(a) In cases of unlawful withholding of wages the culpable party may be assessed attorney’s
fees equivalent to ten percent of the amount of the wages recovered.” _____________________________________________________________________
The implementing provision 38 of the foregoing article further states:
“Sec. 11. Attorney’s fees. Attorney’s fees in any judicial or administrative proceedings for Rilloraza, Africa, De Ocampo and Africa vs. Eastern Telecommunications, Phils., Inc.
the recovery of wages shall not exceed 10% of the amount awarded. The fees may be G.R. No. 104600, July 2, 1999
deducted from the total amount due the winning party.”
The fees mentioned here are the extraordinary attorney’s fees recoverable as indemnity for
damages sustained by and payable to the prevailing part. The 10% attorney’s fees fixes only DOCTRINE: Whether there is an agreement or not, the courts shall fix a reasonable
the limit on the amount of attorney’s fees the victorious party may recover in any judicial or compensation which lawyers may receive for their professional services.” “A lawyer has the
administrative proceedings and it does not revent the NLRC from fixing an amount lower right to be paid for the legal services he has extended to his client, which compensation must
than 10% ceiling prescribed by the article when circumstances warrant it. be reasonable.” A lawyer would be entitled to receive what he merits for his services.
The measure of compensation for private respondent’s services as against his client should Otherwise stated, the amount must be determined on a quantum meruit basis.
properly be addressed by the rule of quantum meruit which means “as much as he deserves,”
which is used in the absence of a contract, but recoverable by him from his client. Where a FACTS:
lawyer is employed without a price for his services being agreed upon, the courts shall fix the Eastern Telecommunications, Phils., Inc. (ETPI) represented by the law firm SAGA,
amount on quantum meruit basis. filed with the Regional Trial court a complaint for the recovery or revenue shares against
But instead of adopting the above guidelines, the labor arbiter erroneously set the amount of PLDT. Atty. Rilloraza, a partner of the firm, appeared for ETPI.
attorney’s fees on the basis of Article 111 of the Labor Code. He completely relied on the After ETPI rested its case, it paid SAGA the billed amount. The latter was dissolved
operation of Article 111 when he fixed the amount of attorney’s fees. and the junior partners formed RADA, which took over as counsel in the case for ETPI. ETPI
Article 111 of the Labor Code may not be used as the lone standard in fixing the exact signed a retainer agreement with counsel wherein it was stated that in cases of collection or
amount payable to the lawyer by his client for the legal services he rendered. While it limits judicial action, “our attorney’s fees shall be 15% of the amounts collected or the value of the
the maximum allowable amount of attorney’s fees, it does not direct the instantaneous and property acquired or liability saved.” The retainer agreement was terminated in 1988. the next
automatic award of attorney’s fees in such maximum limit. The criteria found in the Code of day, RADA filed a notice of attorney’s lien. In its notice, RADA informed the court that there
Professional Responsibility are to be considered, in assessing the proper amount. These are: were negotiations toward a compromise between ETPI and PLDT.
(a) the time spent and the extent of services rendered or required; (b) the novelty and
 In 1990, the parties arrived at an amicable settlement and the same was entered as a right to lawful attorney's fees and for petitioner to oppose or refute the same. The trial court
judgment. The petitioner (RADA) filed a motion for the enforcement of attorney’s lien. has the principal task of fixing the amount of attorney's fees.

ISSUE: Is RADA entitled to the awards of attorney’s fees they are claiming?

HELD: _________________________________________________________________
RADA is entitled to attorney’s fees but the Supreme Court remanded the case to the
court of origin for the determination of the amount of attorney’s fees to which the petitioner is People of the Philippines vs. Honorable Sandiganbayan, G.R. Nos. 115439-41, July 16,
entitled. 1997
Atty. Rilloraza handled the case from its inception until ETPI terminated the law
firm’s services in 1988. Petitioner’s claim for attorney’s fees hinges on two grounds: first, the
fact that Atty. Rilloraza personally handled the case when he was working for SAGA, and
DOCTRINE: It is well settled that communication between a lawyer and his client, to be
second, the retainer agreement.
privileged, must be for a lawful purpose or in furtherance of a lawful end. The existence of an
Whether there is an agreement or not, the courts shall fix a reasonable compensation
unlawful purpose prevents the privilege from attaching. In fact, the prosecution of the
which lawyers may receive for their professional services.” “A lawyer has the right to be paid
honorable relation of attorney and client will not be permitted under the guise of privilege,
for the legal services he has extended to his client, which compensation must be reasonable.”
and every communication made to an attorney by a client for a criminal purpose is a
A lawyer would be entitled to receive what he merits for his services. Otherwise stated, the
conspiracy or attempt at a conspiracy which is not only lawful to divulge, but which the
amount must be determined on a quantum meruit basis.
attorney under certain circumstances may be bound to disclose at once in the interest of
"Quantum meruit, meaning 'as much as he deserved' is used as a basis for
justice.
determining the lawyer's professional fees in the absence of a contract but recoverable by
him from his client. 19 Recovery of attorney's fees on the basis ofquantum meruit is The privilege to apply, the period to be considered is the date when the privileged
authorized when (1) there is no express contract for payment of attorney's fees agreed upon communication was made by the client to the attorney in relation to either a crime committed
between the lawyer and the client; (2) when although there is a formal contract for attorney's in the past or with respect to a crime intended to be committed in the future. IOW, if the client
fees, the fees stipulated are found unconscionable or unreasonable by the court; and (3) when seeks his lawyer’s advice with respect to a crime which he has already committed, he is given
the contract for attorney's fee's is void due to purely formal defects of execution; (4) when the the protection of a virtual confessional seal which the privilege declares cannot be broken by
counsel, for justifiable cause, was not able to finish the case to its conclusion; (5) when the attorney without the client’s consent. The same privileged confidentiality, however, does
lawyer and client disregard the contract for attorney's fees, not attach with regard to a crime a client intends to commit thereafter or in the future and for
purposes of which he seeks the lawyer’s advice.
In fixing a reasonable compensation for the services rendered by a lawyer on the basis
of quantum meruit, the elements to be considered are generally (1) the importance of the
subject matter in controversy, (2) the extent of services rendered, and (3) the professional
standing of the lawyer. A determination of these factors would indispensably require nothing
less than a full-blown trial where private respondents can adduce evidence to establish the
FACTS: The case involves a prominent politician in Mindanao, respondent Ceferino Paredes, HELD: No. There is no privileged communication rule to talk about. The privilege applies
Jr., who was formerly the Provincial Attorney of Agusan del Sur, then Governor, and only if the information was relayed by the client to the lawyer respecting a past crime. The
Congressman. During his stint, Paredes applied for and was granted a free patent over a vast reckoning point is when the communication was given, not when the lawyer was made to
tract of land. However, it was cancelled because apparently, it has already been designated testify.
and reserved as a school site. The court found that Paredes had obtained title thereto through
fraudulent misrepresentations in his application, and somebody came forward and filed a case The attorney-client privilege cannot apply in these cases as the facts thereof and the
of perjury against him. However, the same was dismissed on the ground of prescription. Then actuations of both respondents therein constitute an exception to the rule.
again, another case was filed against him for violation of RA 3019 (Anti-Graft and Corrupt
Practices Act) for using his former position as Provincial Attorney to influence and induce the It may be correctly assumed that there was a confidential communication made by Paredes to
Bureau of Lands officials to favorably act on his application for patent. In all these cases, Sansaet in connection with the criminal cases since the latter served as his counsel therein.
Paredes was represented by respondent Atty. Sansaet, a practicing attorney. The privilege is not confined to verbal or written communications made by the client to his
attorney but extends as well to information communicated by other means. IOW, including
Paredes, as defense, contends that he has already been charged under the same set of facts and physical acts. The acts and words of the parties, therefore, during the period when the
the same evidence where such complaint (perjury case where he was already arraigned) has documents were being falsified were necessarily confidential since Paredes would not have
already been dismissed. Hence, double jeopardy has already attached. In support hereof, invited Sansaet to his house and allowed him to witness the same except under conditions of
Paredes presented court records and transcripts as proof of his arraignment in the perjury secrecy and confidence.
case.
However, the announced intention of a client to commit a crime is not included within the
However, the documents were found to be falsified, in conspiracy with Paredes’ counsel and confidences which his attorney is bound to respect. It is true that by now, insofar as the
the clerk of court where the perjury case was filed. One Teofilo Gelacio claims that no notice falsifications are concerned, those crimes were necessarily committed in the past. But for the
of arraignment was ever received by the Office of the Provincial Fiscal. Hence, another case privilege to apply, the period to be considered is the date when the privileged communication
was filed for falsification of judicial records. It was then that respondent Sansaet offered to was made by the client to the attorney in relation to either a crime committed in the past or
testify as a state witness against his client Paredes, claiming that the latter contrived and with respect to a crime intended to be committed in the future. IOW, if the client seeks his
induced him to have the graft case dismissed on the ground of double jeopardy by having him lawyer’s advice with respect to a crime which he has already committed, he is given the
and co-respondent prepare and falsify the subject documents. protection of a virtual confessional seal which the privilege declares cannot be broken by the
attorney without the client’s consent. The same privileged confidentiality, however, does not
But the Sandiganbayan denied the motion on the ground of attorney-client privilege since the attach with regard to a crime a client intends to commit thereafter or in the future and for
lawyer could not testify against his own client. In view of such relationship, confidential purposes of which he seeks the lawyer’s advice.
matters must have been disclosed by Paredes, as client, to accused Sansaet, as his lawyer, in
his professional capacity, and therefore privileged. Here, the testimony sought to be elicited from Sansaet as state witness are the
communications made to him by physical acts and/or accompanying words of Paredes at the
ISSUE: Whether or not the testimony of respondent Sansaet, as proposed state witness, is time he and Honrada were about to falsify the documents. Clearly, therefore, the confidential
barred by attorney-client privilege. communications thus made by Paredes to Sansaet were for purposes of and in reference to the
crime of falsification which had not yet been committed in the past by Paredes but which he,
in confederacy with his present co-respondents, later committed. Having been made for PCGG excluded Raul Roco, one of the partners of the in an agreement that he will reveal the
purposes of a future offense, those communications are outside the pale of the attorney-client identity of the principal/s for whom he acted as nominee/stockholder.
privilege. The other partners, requested their exclusion. PCGG set the following conditions precedent
for their exclusion:
It is well settled that communication between a lawyer and his client, to be privileged, must (a) the disclosure of the identity of its clients; (b) submission of documents substantiating the
be for a lawful purpose or in furtherance of a lawful end. The existence of an unlawful lawyer-client relationship; and (c) the submission of the deeds of assignments petitioners
purpose prevents the privilege from attaching. In fact, the prosecution of the honorable executed in favor of its clients covering their respective shareholdings.[9]
relation of attorney and client will not be permitted under the guise of privilege, and every The other lawyers refused to comply. PCGG raised the complaint to SB, which favored the
communication made to an attorney by a client for a criminal purpose is a conspiracy or PCGG. Hence, this petition.
attempt at a conspiracy which is not only lawful to divulge, but which the attorney under
certain circumstances may be bound to disclose at once in the interest of justice.
Issue:
To prevent a conniving counsel from revealing the genesis of a crime which was later WON SB gravely abused its discretion in subjecting petitioners ACCRA to reveal the
committed pursuant to a conspiracy, because of the objection thereto of his conspiring client, confidential privilege client information – identity of their clients, to the strict application of
would be one of the worst travesties in the rules of evidence and practice in the noble the law of agency.
profession of law.
Ruling:
Yes, SB gravely abused its discretion and is ordered to annul it’s decision against the
petitioners.
REGALA v. SANDIGANBAYAN GR. No. 108113.September 20, 1996
In Canon 17 of the Code of Professional Responsibility which provides that: Canon 17.A
lawyer owes fidelity to the cause of his clientand he shall be mindful of the trust and
FACTS:
confidence reposed in him
PCGG raised a complaint before the Sandiganbayan(SB) against Eduardo M. Cojuangco, Jr.
and Teodoro Regala and his partners in the ACCRA law Firm, for the recovery of alleged ill-
Petitioners are being prosecuted solely on the basis of activities and services performed in the
gotten wealth, which includes shares of stocks in the named corporations in PCGG Case No.
course of their duties as lawyers.Quite obviously, petitioners inclusion as co-defendants in the
33 (Civil Case No. 0033), entitled “Republic of the Philippines versus Eduardo Cojuangco, et
complaint is merely being used as leverage to compel them to name their clients and
al.”
consequently to enable the PCGG to nail these clients.Such being the case, respondent PCGG
ACCRA Law Firm performedlegal services for the clients (mga corporation na hina-hunting
has no valid cause of action as against petitioners and should exclude them from the Third
ng PCGG)– and specifically delivering client documents which substantiate the client’s
Amended Complaint.
(Cocolevy fund corporations ) equity holdings. ACCRA lawyers assisted in the organization
An effective lawyer-client relationship is largely dependent upon the degree of confidence
and acquisition of the companies and acted as nominees-stockholders of the said corporations
which exists between lawyer and client which in turn requires a situation which encourages a
involved in sequestration proceedings [2]
dynamic and fruitful exchange and flow of information.It necessarily follows that in order to
attain effective representation, the lawyer must invoke the privilege not as a matter of option (3)Where the interests of justice so require, and accord relief to the client who suffered by
but as a matter of duty and professional responsibility. [49] reason of the lawyer's gross or palpable mistake or negligence.
“Communications made to an attorneyin the course of any personal employment, relating
to the subject thereof, and which may be supposed to be drawn out in consequence of the
relation in which the parties stand to each other, are under the seal of confidence and entitled
to protection as privileged communication”[50] Theuberrimei fidei relationship between a SUMMARY: Apex Mining Inc. filed a petition for annulment of a judgment rendered by
lawyer and his client therefore imposes a strict liability for negligence on the former. The RTC. According to Apex, the gross negligence of the counsel that handled its case amounted
ethical duties owing to the client, including confidentiality, loyalty, competence, diligence as to extrinsic or collateral fraud and unduly deprived them of their right to be heard and to due
well as the responsibility to keep clients informed and protect their rights to make decisions process of law. The Supreme Court held that while, as a general rule, the negligence of
have been zealously sustained. counsel binds the client, the case of Apex falls under the exceptions.
The utmost zeal given by Courts to the protection of the lawyer-client confidentiality
privilege and lawyer’s loyalty to his client is evident in the duration of the protection, which FACTS:
exists not only during the relationship, but extends even after the termination of the
relationship (1st Case)
This case stemmed from a complaint for damages filed by herein respondents Bagaipo et al.,
___________________________________________________________________________ against herein petitioners Apex Mining Corporation (APEX) et al., before the RTC. The
TOPIC: When a lawyer’s mistake binds or does not bind the client bulldozer owned by APEX, due to its negligence, allegedly damaged Bagaipo’s mining claim
known as Tunnel T-45, which put a stop to Bagaipo’s operations.
Apex Mining Inc. v. CA (319 SCRA 546)
G.R. No. 133750 Date: November 29, 1999 How APEX’s former counsel handled the case:

DOCTRINE: Upon receipt of the complaint, APEX’s counsel filed an answer alleging that the claims of
Bagaipo were without factual and legal bases.
General Rule: Negligence of counsel binds the client.
During the trial, Atty. Olaguer, a partner of the APEX’s retained law firm, cross-examined the
This is based on the rule that any act performed by a counsel within the scope of his general Bagaipo’s witnesses. After Bagaipo rested their case, APEX’s counsel filed a demurrer to
or implied authority is regarded as an act of his client. evidence but was denied.

Exceptions: When the trial court set the reception of evidence for APEX, counsel did not appear and failed
to inform APEX of the scheduled hearing for the reception of their evidence, despite due
(1)Where reckless or gross negligence of counsel deprives the client of due process of law; or notice by the court. This precluded APEX in the submission of their evidence which would
(2)When its application will result in outright deprivation of the client's liberty or property; have disproved the material allegations in Bagaipo’s complaint.
or
When the trial court issued an order declaring APEX to have waived its right to present
evidence in defense, APEX’s counsel did not move for reconsideration of the order, despite (2)By reason of said actuation of their former counsel they have been unduly deprived of
due notice. Consequently, the trial court decided based solely on the evidence presented by their right to be heard and to due process of law through no fault of their own.
Bagaipo and found APEX liable for damages.
CA issued a TRO and a hearing on the application for preliminary injunction was conducted.
Again, APEX was not notified by its counsel of this decision, instead, the counsel opted to In the hearing, the VP of APEX alleged "sell-out" and gross negligence of their former
appeal the TC decision to the CA without prior consultation with APEX. counsel. Pieces of documentary evidence were also marked and formally offered.

CA dismissed the appeal because the counsel failed to pay the docket fees within the In their answer, Bagaipo argued that the petition for annulment of judgment should be
reglementary period. Additionally, after receiving the resolution of the CA, no motion to dismissed because (1) It is not the proper remedy; (2)The grounds invoked do not
reinstate the dismissed appeal was filed with a tender of the unpaid docketing fee resulting in warrant the annulment of the challenged decision;(3)Apex et. al are guilty of forum-
the Entry of Judgment. shopping.

In a case status report submitted by the law firm to APEX, it misrepresented that the case was CA dismissed the petition for annulment of judgment on the following grounds:(1) It has
"still pending on appeal with CA" when on the date of the report, the appeal had already been no jurisdiction to annul or set aside its own decision, (2)APEX et al. are bound by the
dismissed fifteen (15) months earlier. negligence, mistake, or lack of competence of their counsel. The dispositive portion of the
decision read:
When asked the second time about the status case, a partner of the firm assured APEX that
the case was still pending resolution and that the company would be advised of whatever (1)Generally, a client will suffer the consequences of the negligence, mistake, or lack of
developments, stressing that there are more urgent cases decided with finality and that the competence of his counsel. But where a party was given every opportunity to present his
case is not one that merits Apex's immediate concern and attention. evidence and to pursue an appeal from the adverse judgment but the counsel's negligence
resulted in the loss of said appeal, the defeated party cannot raise the alleged gross negligence
APEX only learned that its appeal had been dismissed by CA when it confronted its counsel of his counsel resulting in the denial of due process to warrant the reversal of the lower
after it was informed by Base Metals Mineral Resources Corp.(Base Metals) that Base court's decision.
Metals, by reason of their MOA, received an order from the court to turn over all money and
machinery due in favor of APEX, by virtue of a writ of execution. The neglect or failure of counsel to inform his client of an adverse judgment resulting in the
loss of his right to appeal will not justify setting aside a judgment that is valid and regular on
(2nd Case) APEX Petition of Annulment of Judgment its face. (Mayuga v CA citing Tuason v CA)

APEX et al., through their new counsel, filed a Petition for Annulment of Judgment with an (2)There would be no end to litigation. If this was allowed every error of counsel could be
application for a writ of preliminary injunction and/or TRO before CA. APEX contended that: the subject of challenge by the client through another counsel who, if he is also found
wanting, would likewise be disowned by the same client through another counsel, and so on
(1) The actions of their former counsel constituted professional chicanery amounting to ad infinitum. There would be no end to litigation since court proceedings would be subject to
extrinsic or collateral fraud properly warranting the annulment of the judgment of the TC. reopening at any time by the mere subterfuge of replacing counsel.
 Instant case falls within the exception. It is clear from the facts that APEX’s counsel is
APEX appealed to SC asserting that CA erred in disregarding the significant and guilty of gross negligence in handling their case before the trial court.
uncontroverted acts of its former counsel amounting to a "sell-out" of his clients' interest
which are sufficient reasons to annul the adverse decision of the trial court. APEX’s former counsel did not attend the scheduled hearing for the reception of the evidence
for the defense despite due notice. The law firm did not even bother to inform its client of the
ISSUE: W/N the negligence of counsel can justify the annulment of judgment (YES) scheduled hearing, as a result of which both counsel and APEX were unable to attend the
same. After the trial court issued an order declaring APEX as having waived their right to
HELD: present evidence, their counsel did not take steps to have the same set-aside. Although after a
decision against APEX was rendered by the trial court, its counsel was able to file a timely
A judgment can be annulled only on two grounds: (1) lack of jurisdiction and (2) extrinsic notice of appeal. It, however, failed to pay the docket fee and refused to do so despite
fraud. repeated notice to pay was given by the CA. Hence, the appeal was dismissed and became
final and executory.
Fraud is regarded as extrinsic or collateral where it has prevented a party from (1) having a
trial, (2) presenting all of his case to the court. It is the kind of fraud that denied the party the APEX cannot be faulted for not inquiring into the records and status of the case. They
opportunity to fully litigate upon the trial all the rights or defenses he was entitled to assert. expected that their counsel would amply protect their interest since they were their retained
counsel which handled a majority, if not all of its cases.
On when a lawyer’s mistake binds or does not bind the client:
Where counsel is guilty of gross ignorance, negligence, and dereliction of duty, which
General Rule: Negligence of counsel binds the client. resulted in the client's being held liable for damages in a damage suit, the client is deprived of
his day in court and the judgment may be set aside and the case may be reopened.
This is based on the rule that any act performed by a counsel within the scope of his general
or implied authority is regarded as an act of his client. Consequently, the mistake or The incompetence or negligence of APEX’s former counsel is so great it prevented them from
negligence of counsel may result in the rendition of an unfavorable judgment against the fairly presenting their defense.
client.
Higher interests in justice and equity demand that APEX be allowed to present evidence on
Exceptions: The application of the general to a given case should be looked into and adopted their defense. APEX may not be made to suffer for the lawyer's mistakes. To cling to the
according to the surrounding circumstances. Thus, admits the following exceptions: general rule, in this case, is only to condone rather than rectify a serious injustice to a party
whose only fault was to repose his faith and entrust his innocence to his previous lawyers.
(1)Where reckless or gross negligence of counsel deprives the client of due process of law; or
(2)When its application will result in outright deprivation of the client's liberty or property; What should guide judicial action is that a party be given the fullest opportunity to establish
or the merits of his action or defense rather than for him to lose life, liberty, honor, or property
(3)Where the interests of justice so require, and accord relief to the client who suffered by on mere technicalities. In cases involving gross or palpable negligence of counsel, the courts
reason of the lawyer's gross or palpable mistake or negligence. must step in and accord relief to a client who has suffered thereby. This Court will always be
disposed to grant relief to parties aggrieved by perfidy, fraud, reckless inattention, and
downright incompetence of lawyers, which has the consequence of depriving their clients, of
their day in court.

The petition is GRANTED. CA decision SET ASIDE. RTC's decision on the claim for
damages, the writ of execution, and the Order ANNULLED. RTC of Davao del Norte II is
directed to REOPEN Civil Case No. 2131, for the reception of evidence for APEX, and of
rebuttal and surrebuttal evidence if warranted, and to dispose of the case with reasonable
dispatch.