FACTS:

The case involves two separate complaints for recovery of possession filed by the respondent corporation, Heirs of Eugenia V. Roxas, Inc., against the petitioners Rebecca Boyer-Roxas and Guillermo Roxas. The respondent corporation sought the ejectment of the petitioners from buildings inside the Hidden Valley Springs Resort located in Calauan, Laguna, which were allegedly owned by the respondent corporation.

In the case of Rebecca Boyer-Roxas (Civil Case No. 802-84-C), the respondent corporation claimed that Rebecca was in possession of two houses, one of which was still under construction, built at the expense of the respondent corporation. They alleged that her occupancy was only tolerated by the respondent corporation.

In the case of Guillermo Roxas (Civil Case No. 803-84-C), the respondent corporation alleged that Guillermo occupied a house that was built by the respondent corporation for Guillermo's father when he was still the general manager. The house was originally intended as a recreation hall but was converted for residential use by Guillermo. The respondent corporation claimed that Guillermo's possession was only upon tolerance.

The respondent corporation further alleged that the petitioners never paid rentals for the buildings and lots and ignored demand letters to vacate. The petitioners, on the other hand, claimed to be heirs of Eugenia V. Roxas and co-owners of the Hidden Valley Springs Resort, asserting their right to stay within the premises.

The cases were consolidated and tried jointly, with the parties limiting the issues to various matters including the entitlement of the plaintiff to recover the premises, rental payments, the use of the corporate fiction as a defense, the status of the defendants as builders in good faith, damages and compensation, counterclaims, interference with plaintiff's operation of the resort, and unjust enrichment.

The presiding judge who initially handled the case inhibited himself, and the cases were reassigned to another judge who continued the hearings. The petitioners and their counsel failed to attend a scheduled hearing, leading the court to consider the cases submitted for decision. At this point, the petitioners had not yet presented their evidence, while the respondent corporation had already completed its presentation.

The evidence presented by the respondent corporation included testimonies and exhibits that established the incorporation of the plaintiff corporation and its primary purpose of engaging in agriculture to develop the inherited properties.

The lower court set the hearing of the cases for July 21, 1986, but it was later cancelled and rescheduled for August 11, 1986. The petitioners were notified of the changes in the schedule. On August 11, 1986, only the respondent corporation's counsel appeared for the hearing as the petitioners and their counsel failed to attend. The court waived further cross-examination of a witness and set a new hearing date for September 29, 1986. The petitioners were notified of this order. However, they again failed to appear for the scheduled hearing on October 22, 1986. The court considered the cases submitted for decision based on the evidence on record. Subsequently, the respondent corporation filed an opposition to a motion for reconsideration, but the court could not act on it as no motion for reconsideration was filed by the petitioners. On January 15, 1987, the lower court rendered its decision in the case. On January 20, 1987, the petitioners' counsel filed a motion for reconsideration of the order submitting the cases for decision.

ISSUES:

1. Whether the petitioners' failure to file a motion for reconsideration within the reglementary period can be excused.

2. Whether the lower court erred in denying the petitioners' motion for reconsideration.

3. Whether the negligence of the counsel should be imputed to the petitioners.

4. Whether the petitioners were deprived of their right to due process.

5. Whether the ownership of an aliquot portion of the respondent corporation's properties entitles the petitioners to possession of the questioned properties.

6. Whether the consent of Eufrocino Roxas, the deceased husband of Eugenia V. Roxas and majority stockholder of the corporation, to the petitioners' occupancy of certain properties is valid and binding.

7. Whether the corporation has the right to eject the petitioners from the company premises.

8. Whether the veil of corporate fiction should be pierced.

RULING:

1. The court held that the petitioners' failure to file a motion for reconsideration within the reglementary period cannot be excused. The court ruled that the client is bound by the mistakes or negligence of their lawyer, unless gross negligence is proven and the client's right to due process was violated.

2. The lower court did not err in denying the petitioners' motion for reconsideration.

3. The negligence of the counsel cannot be imputed to the petitioners in this case. While it is a general rule that clients are bound by the mistakes of their counsel, exceptions can be made in the interest of justice and equity. In this case, the negligence of counsel appears to be so gross and inexcusable that it deprived the petitioners of their day in court. The reckless and gross negligence of counsel should not be allowed to bind the petitioners. However, the petitioners cannot claim that they were deprived of their right to due process because they knew all along that their counsel was not attending the scheduled hearings and did not take steps to change their counsel or make him attend. They continued to retain the services of their counsel despite knowing his lapses.

4. No, the ownership of an aliquot portion of the respondent corporation's properties does not entitle the petitioners to possession of the questioned properties. The respondent corporation, as a separate juridical entity, owns the properties registered in its name. Shares of stock in the corporation do not represent ownership of the corporation's property. The petitioners are not co-owners or tenants in common of the corporate property.

5. No, the consent of Eufrocino Roxas to the petitioners' occupancy of certain properties is not valid and binding. The authority of officers or agents of the corporation is derived from the board of directors or other governing body, unless conferred by the corporation's charter. The consent of Eufrocino Roxas, as an officer or agent, is not sufficient to give the petitioners a valid claim to the questioned properties.

6. The corporation has the right to eject the petitioners from the company premises. The petitioners' stay within the questioned properties was merely by tolerance of the corporation and there was no contract between the petitioners and the corporation. Therefore, the corporation may elect to eject the petitioners at any time for the benefit and interest of the corporation.

7. The veil of corporate fiction should not be pierced. The separate personality of the corporation may only be disregarded when it is used for fraudulent or illegal purposes, to work injustice, for equity, or for the protection of creditors. None of these circumstances were present in the case.

PRINCIPLES:

• The client is bound by the mistakes or negligence of their lawyer.

• The client is not bound by the actions of the counsel if their gross negligence resulted in the client's deprivation of property without due process of law.

• Clients are generally bound by the mistakes of their counsel.

• Exceptions can be made to the general rule in the interest of justice and equity.

• Negligence of counsel that is gross and inexcusable can deprive the client of their day in court.

• Clients cannot claim to be deprived of their right to due process if they fail to take appropriate steps in response to the negligence of their counsel.

• A corporation has a distinct personality separate from its members.

• Ownership of shares of stock does not represent ownership of the corporation's property.

• The authority of officers or agents of a corporation must be sought from the statute, charter, by-laws, or a delegation of authority from the board of directors.

• Consent given by an officer or agent of a corporation is not necessarily binding unless authorized or ratified by the board of directors or other governing body.

• In the absence of any existing contract, a corporation may elect to eject occupants of its premises at any time for the benefit and interest of the corporation.

• The separate personality of a corporation may only be disregarded when it is used for fraudulent or illegal purposes, to work injustice, for equity, or for the protection of creditors.