BPI-FAMILY SAVINGS BANK, INC., PETITIONER, VS. THE HONORABLE COURT OF APPEALS AND THE SPOUSES GAIL MANALANG, AND ERIC B. MANALANG, RESPONDENTS.

BPI Family Savings Bank versus Manalang

The Case

This is a petition for certiorari brought by BPI Family Savings Bank against the Court of Appeals and the spouses Gail and Eric Manalang. The bank had been declared in default by the trial court for its counsel's failure to appear at pre-trial, and judgment by default was later rendered against it. The bank's notice of appeal was dismissed as late because the trial court counted the period from the date its own postal representative received the decision, not from the date the decision reached its counsel of record. The case matters because it fixes, with precision, the rule on service of judgments: service must be made on the counsel of record, at the exact address given, and service on the client or on a stranger to the lawyer's office does not start the clock for appeal.

Procedural History

The private respondents sued the bank's predecessor, Family Savings Bank and Trust Company, for specific performance with damages before the Regional Trial Court of Makati, claiming that the termination of their lease was illegal. The trial court declared the bank in default when its counsel failed to appear at the pre-trial, received the plaintiffs' evidence ex parte the same morning, and later rendered judgment by default. The bank's motion to set aside the order of default was denied for failure to comply with the notice of hearing requirements. Judgment by default followed, and the bank filed a notice of appeal. The private respondents moved for execution, claiming the judgment had become final because the notice of appeal was filed out of time. The trial court granted execution. The bank then filed a petition for certiorari with the Court of Appeals, which dismissed the petition on the finding that the notice of appeal was late, and denied reconsideration. The bank came to the Supreme Court by petition for certiorari.

Facts

The bank owns a commercial building along Taft Avenue, and the Manalang spouses were its tenants, using the premises for their pawnshop business. Their lease ran for thirty-five and a half months, from January 16, 1985 to December 31, 1987. On September 4, 1987, some four months before the lease expired, a fire at a neighboring establishment destroyed a major portion of the leased premises. Invoking Article 1655 of the Civil Code, the bank treated the lease as terminated by fortuitous event, over the spouses' objections.

On December 3, 1987, the spouses filed a complaint for specific performance with damages, alleging that the termination was illegal. The bank answered with a counterclaim, claiming it was the successor in interest of the original lessor and that its termination of the lease was lawful under Article 1655. The trial court set pre-trial for March 15, 22, and 28, 1988.

On March 15, 1988, with due notice to all parties and counsel, pre-trial was held. The bank's counsel, Attorney Dante Ramos, did not appear because of illness. The trial court issued an order declaring the bank in default and allowing the plaintiffs to present evidence ex parte before a commissioner, which they did that same morning. The next day, the bank filed a verified urgent motion to set aside the order of default, explaining counsel's influenza and alleging that the bank's representative was present but did not hear the case called. The motion was denied for failure to comply with the three-day notice of hearing under Sections 4 and 5 of Rule 15. Judgment by default was rendered on December 13, 1988, ordering the bank to grant a one-year lease and to pay actual damages of 20,000 pesos, moral damages of 1,000,000 pesos, exemplary damages of 500,000 pesos, attorney's fees of 100,000 pesos, and costs.

The bank filed its notice of appeal on January 10, 1989. The private respondents moved for execution, claiming the judgment had become final. The trial court found that the decision had been received on December 22, 1988 through Reynaldo Quintos, the bank's authorized postal representative, and treated January 7, 1989 as the last day to appeal. It granted execution. The Court of Appeals dismissed the bank's certiorari petition on the same ground.

Issues

• Whether or not there was a valid service of the trial court's decision upon the petitioner's counsel of record, so as to start the period for filing the notice of appeal.
• Whether or not the Court of Appeals erred in deciding the case on purely technical grounds, instead of exercising its certiorari power to correct grave abuse of discretion by the trial court.

Applicable Provisions

Section 2 of Rule 13 of the Rules of Court, as quoted in the decision, provides:

Papers to be filed and served. — Every order required by its terms to be served, every pleading subsequent to the complaint, every written motion other than one which may be heard ex parte, and every written notice, appearance, demand, offer of judgment or similar papers shall be filed with the court, and served upon the parties affected thereby. If any of such parties has appeared by an attorney or attorneys, service upon him shall be made upon his attorneys or one of them unless service upon the party himself is ordered by the court.

This provision is the heart of the case: because the bank appeared through counsel, service of the judgment had to be made on that counsel, not on the bank or its postal representative.

Ruling

On the first issue, the Court held that there was no valid service on the bank's counsel. The term "every written notice" in Section 2 of Rule 13 includes notice of decisions or orders. Service should be made upon the lawyer, or the lawyer's authorized representative, and not upon the client or any of the client's representatives; service upon the client is not service upon the lawyer in the contemplation of law. The Court found that Reynaldo Quintos was not connected with the law firm of D. T. Ramos and Associates but was the bank's authorized postal representative. At most, his picking up of the firm's letters was a voluntary gesture; he was not duly authorized by the firm to receive its mails so as to bind it in a legal proceeding. The Court also held that the Court of Appeals erroneously fused the separate personalities of the bank, its postal representative, and its counsel of record. That the law firm was paid by the bank did not matter; it remained counsel of record, with its address on record at the fifteenth floor of the Filinvest Center. The Court quoted its earlier ruling with approval:

In modern multi-storied buildings, there may be several hundred rooms with hundreds of different employees discharging different functions. A receiving clerk in a given mailing section may not know the difference between a notice to a lawyer and the thousands of other communications received by her either by mail or through personal or commercial messengers and may not act accordingly. Service upon a lawyer must be effected at the exact given address of the lawyer and not in the vicinity or at a general receiving section of an entire multi-storied building with many offices.

The postmaster himself admitted that the letter containing the judgment was supposed to be delivered by the letter carrier to the law firm but was inadvertently included in the bank's direct delivery book. Hence, valid service took place only when the decision was actually received by the counsel at its office on December 26, 1988, and the period to appeal ran from that date. It was grave abuse of discretion for the trial court not to admit the notice of appeal. On the second issue, the Court found it unnecessary to discuss the matter, since the remedy of appeal had become available to the bank, and the appellate court was the proper forum to question the judgment.

Doctrine

Service of judgments, orders, and pleadings must be made upon the counsel of record, or the counsel's duly authorized representative, and not upon the client or the client's own representatives. Service upon the client is not service upon the lawyer in the contemplation of law, and it does not commence the reglementary period for appeal. Service must be effected at the exact address given by the lawyer, not at a general receiving section of a multi-storied building. Where a copy of the decision is served on a person who is neither a clerk nor one in charge of the attorney's office, such service is invalid, and the decision does not become executory on that basis. A law firm paid by a client remains a separate and distinct entity, and its receipt of mail through a client's employee, without authority from the firm, does not bind the firm.

Disposition

The petition was granted, the decision of the Court of Appeals was set aside, and the case was remanded to the Regional Trial Court with a directive to admit the bank's notice of appeal.

Remember This

Memorize the line: service upon the client is not service upon the lawyer in the contemplation of law, so the period to appeal runs only from actual receipt by counsel at the exact address on record. Examiners use this case to test Rule 13 service rules, the separate personality of counsel from client, and when grave abuse of discretion justifies certiorari despite the loss of appeal.