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### **Facts**:
– **December 2005**: Petitioners, Spouses Marcelo and Medelyn Flores, contracted a loan of PHP 3,000,000 from respondents, Spouses Leopoldo and Enriqueta Estrellado, with an interest of 3.5% per month.
– **February – May 2006**: Petitioners made monthly interest payments of PHP 105,000.
– **June 30, 2006**: Petitioners obtained a second loan of PHP 2,500,000 from the respondents, who agreed to defer interest for both loans until the second loan matured.
– **Loan Security**: A residential property in Barangay San Agustin, Alaminos, Laguna, was mortgaged.
– **Demand for Payments**: Despite the deferral agreement, respondents demanded payments and sought 42% annual interest without accounting for prior payments.
– **Foreclosure**: The mortgaged property was foreclosed and sold at a public auction.
– **March 3, 2009**: The petitioners filed a complaint, through counsel Atty. Bede Tabalingcos, to nullify the loan documents and foreclosure proceedings in RTC Branch 32, San Pablo City, Laguna.
**Counsel Issues:**
– **July 10, 2012**: Tabalingcos was disbarred by the Supreme Court.
– **December 12, 2012**: Tabalingcos withdrew representation. Atty. Cres Dan D. Bangoy purportedly took over without petitioners’ consent.
– **October 23, 2013**: Trial Court submission for decision.
**Trial Court Decision**:
– **December 16, 2013**: The trial court dismissed the complaint and upheld the foreclosure. It also awarded damages and attorney’s fees to the respondents.
– **March 10, 2014**: Petitioners’ motion for reconsideration, filed under Atty. Socrates R. Rivera’s name, was denied.
– **Appeal Failure**: Rivera filed a notice of appeal, which was dismissed for failure to file appellants’ brief, leading the petitioners to confront Tabalingcos.
**Supreme Court Dismissal**:
– **April 18, 2016**: The Supreme Court denied their appeal due to technical deficiencies.
**Subsequent Deceptions by Rivera**:
– Rivera continued fraudulent representations and filed spurious documents with petitioners’ knowledge.
– Petitioners discovered Rivera was suspended from law practice, but not before misrepresentations about favorable rulings.
### **Issues**:
1. **Due Process Violation**: Whether petitioners were deprived of due process rights due to being represented by disbarred or suspended lawyers leading to the annulment of the judgment.
2. **Petitioners’ Negligence**: Whether petitioners were negligent, thus contributing to their situation, and therefore barred from seeking an annulment.
3. **Fraudulent Representation**: The effect of fraudulent acts by counsel on clients’ right to due process.
### **Court’s Decision**:
**Issue 1: Due Process Violation**:
– **Ruling**: The Supreme Court held that petitioners were denied due process due to representation by disbarred and suspended counsels.
– **Reasoning**: A party’s right to be represented by a member of the Bar in good standing is paramount. Tabalingcos’ and Rivera’s representation was invalid, rendering petitioners effectively without counsel.
**Issue 2: Petitioners’ Negligence**:
– **Ruling**: The Court ruled that petitioners were not negligent.
– **Reasoning**: Petitioners stayed in constant communication with their counsel and took reasonable steps to ensure their case’s progress. Their lack of legal knowledge and advanced age justified their reliance on counsel representations.
**Issue 3: Fraudulent Representation**:
– **Ruling**: The actions by Tabalingcos and Rivera constituted fraud, further exacerbating the due process violation.
– **Reasoning**: Misrepresentations, forged signatures, and unauthorized filings by counsel prevented petitioners from having a fair opportunity to present their case.
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### **Doctrine**:
– **Right to Counsel**: The right to be represented by a competent and licensed attorney extends to civil cases when the outcome involves deprivation of property.
– **Due Process**: A party’s right to due process is violated if their counsel is not duly authorized or competent to practice, amounting to a denial of the right to a fair hearing.
– **Annulment of Judgment**: Judgments procured where one party’s right to due process is violated may be annulled under Rule 47 of the Rules of Court.
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### **Class Notes**:
– **Key Elements**:
1. **Right to Counsel** in civil cases as a due process requirement.
2. **Grounds for Annulment** of Judgments: Extrinsic fraud, lack of jurisdiction, and denial of due process.
3. **Gross Negligence or Fraud by Counsel** can invalidate judgments.
4. **Annulment under Rule 47**: Judgments bypassing due process can be annulled.
– **Statutory Provision**:
– Section 1 & 14(2), Article III of the Philippine Constitution ensures due process rights and the right to counsel.
– Rule 47, Rules of Court: Grounds for annulment of judgment include extrinsic fraud, lack of jurisdiction, and denial of due process.
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### **Historical Background**:
– **Prevailing Legal Standards**: This case underscores critical axioms such as the right to competent legal representation and due process’ sanctity within Philippine jurisprudence.
– **Legal Evolution**: It reiterates concepts from seminal cases like **Arcelona v. Court of Appeals**, **Spouses Telan v. Court of Appeals**, which laid down principles on fraud and due process violations in judicial proceedings.
– **Scenarios of Counsel Misconduct**: Expands understanding of how counsel’s professional misconduct, especially in civil litigation contexts, adversely affects clients’ substantive rights and the judicial process’s integrity.
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