PNB vs. Court of Appeals

The perfection of an appeal within the reglementary period is mandatory and jurisdictional, but the Supreme Court may suspend its own rules or except a particular case from their operation whenever the purposes of justice require it, particularly when substantial amounts and apparent merit of the appeal so warrant. In the context of service by registered mail, a counsel who has consistently and without objection received court notices and orders through an employee of the client's mailing division is estopped from denying that employee's authority to receive a registered mail containing a final judgment, and service is deemed complete upon such employee's receipt of the mail from the post office.

Philippine National Bank (PNB) and National Investment Development Corporation (NIDC) were defendants in Civil Case No. RQ-18176 before the Regional Trial Court of Quezon City, Branch 89, a case that had been pending for nineteen years and involved approximately P20 million in claims. The private respondents were Clara Reyes Pastor and other stockholders of C & C Commercial Corporation. Petitioners were represented by Atty. Avamor Perez of PNB's Legal Department, whose address of record was listed as the "6th Floor, PNB Bldg., Escolta, Manila." PNB maintained a Mailing Division within its General Services Department, tasked with collecting all PNB mail matters from the post office. The dispute before the Supreme Court centered not on the merits of the underlying case but on whether service of the trial court's decision was validly effected upon petitioners' counsel through PNB's mailing clerk, and consequently whether the petitioners' notice of appeal was filed within the reglementary period.

Civil Case No. RQ-18176 was a dispute pending for nineteen years before the Regional Trial Court of Quezon City, Branch 89, involving approximately P20 million. The plaintiffs therein were Clara Reyes Pastor and other stockholders of C & C Commercial Corporation, while the defendants were Philippine National Bank (PNB) and National Investment Development Corporation (NIDC). Petitioners were represented by Atty. Avamor Perez of PNB's Litigation and Collection Division, Legal Department, whose address of record was entered as the "6th Floor, PNB Bldg., Escolta, Manila." On January 20, 1992, the trial court rendered its decision ordering the petitioners to pay the private respondents P19,985,848.00 as actual damages with six percent interest from the date of judgment until fully paid, P1 million as exemplary damages, and P0.5 million as attorney's fees, and declaring the private respondents' secured loans of P490,000.00 and P796,000.00 obtained from the Development Bank of the Philippines in 1960 and 1961, respectively, and later assigned to PNB, as deemed fully paid by reason of set-off with the award of damages and attorney's fees.

The trial court sent a copy of its decision to Atty. Perez by registered mail. The registered mail was addressed to him at the 6th Floor, PNB Bldg., Escolta, Manila. On January 23, 1992, Catalino M. Sandoval, an employee of PNB's Mailing Division, General Services Department, retrieved the registered mail from the post office and signed the registry return receipt. The mail was thereafter delivered to the Legal Department on January 28, 1992. Petitioners filed their notice of appeal on February 10, 1992.

At the hearing on March 17, 1992 before the trial court, Atty. Perez admitted that Sandoval was duly authorized to receive mails for PNB and that all previous orders and notices of the court in the case had been received through the Mailing Division without objection. He had never questioned the validity of such service, and Sandoval had been signing registry return receipts for orders and notices sent to him without complaint from the Litigation and Collection Division. The trial court found that Atty. Perez was estopped from questioning the validity of the service of the decision through the Mailing Division, noting that both divisions were housed in the same PNB Building at Escolta, Manila. The trial court accordingly disallowed the appeal, holding that service was complete on January 23, 1992, making the last day for appeal February 7, 1992, and rendering the February 10, 1992 filing three days late. The Court of Appeals sustained this ruling, and the Supreme Court initially affirmed in its decision of March 3, 1994.

• Right to Appeal: Petitioner argued that the right to appeal is an essential part of the judicial system and may not be denied or forfeited for a mere three-day delay, especially since private respondents' substantial rights were not prejudiced by such delay.
• Applicability of PLDT vs. NLRC: Petitioner maintained that the doctrine in PLDT vs. NLRC (128 SCRA 402 [1984]) applies, as ruled by the Second Division in its December 15, 1993 resolution in PNB vs. Court of Appeals (G.R. No. 111305) involving the same factual milieu, and that when a party is represented by counsel, notices should be sent to the latter.
• Justice and Equity: Petitioner argued that justice and equity demand that this nineteen-year, P20 million case be decided on the merits rather than on technicality, assuming arguendo that the notice of appeal was three days late.
• Negligence of Counsel: Petitioner invoked the doctrine in PHHC vs. Tiongco (12 SCRA 471 [1964]) to absolve a party from the effects of the negligence of its counsel.

• Frivolous and Dilatory Motion: Respondent countered that the motion for reconsideration was frivolous and dilatory, being a rehash of arguments previously raised, and moved to expunge it.
• Internal Mailing Practice: Respondent argued that PNB's Mailing Division was "in charge of collecting all PNB mail matters" and that the registered mail was collected, received, and signed for by petitioners' own Mailing Division in accordance with petitioners' internal rules and practice, placing the mail within petitioners' complete control and disposition from January 23, 1992 onwards.
• Employer Responsibility: Respondent maintained that the procedures and personnel of the Mailing Division were petitioners' own making, exclusively within petitioners' supervision and control, and in petitioners' pay, such that any delay in internal delivery was petitioners' own responsibility as employer.

• Validity of Service: Whether service of the trial court's decision by registered mail was validly effected upon petitioners' counsel when the registered mail was received by PNB's mailing clerk, Catalino Sandoval, from the post office on January 23, 1992, rather than when it was delivered to the Legal Department on January 28, 1992.
• Estoppel: Whether petitioners' counsel was estopped from denying Sandoval's authority to receive the registered mail containing the decision, given his prior acquiescence to receiving court notices through the Mailing Division.
• Timeliness of Appeal: Whether the notice of appeal filed on February 10, 1992 was timely, counting the fifteen-day reglementary period from January 23, 1992.
• Suspension of Rules: Whether the Supreme Court may suspend its rules to give due course to a tardy appeal in the higher interest of justice, given the substantial amounts and apparent merit of the appeal.

• Validity of Service: Yes. Service by registered mail was validly effected upon petitioners' counsel through Sandoval, who was authorized — at least impliedly — to receive registered mail addressed to Atty. Perez, pursuant to the estoppel doctrine.
• Estoppel: Yes. Atty. Perez was estopped from denying Sandoval's authority, having consistently received all previous court notices and orders through the Mailing Division without protest.
• Timeliness of Appeal: No. The appeal was three days late, the reglementary period having expired on February 7, 1992, counting from January 23, 1992.
• Suspension of Rules: Yes. The Court suspended its rules in the higher interest of justice, given the substantial amounts involved and the detailed demonstration of the merits of the appeal, and ordered the RTC to give due course to the appeal.

• Validity of Service: The registered mail containing the trial court's decision was addressed exclusively to Atty. Avamor Perez in his capacity as counsel for the petitioners, not as an official or employee of PNB. Under Section 7, Rule 13 of the Rules of Court, final orders or judgments must be served either personally or by registered mail. Under Section 2 of the same Rule, service must be made upon the attorney when a party is represented by counsel, and service on the party himself is not notice in law. Under Section 8, service by registered mail is complete upon actual receipt by the addressee, with an implied exception where the addressee has authorized another to receive the registered mail matter, in which case service takes effect upon receipt by the latter. The Court resolved whether Atty. Perez could be deemed to have authorized Sandoval to claim and receive the registered mail, and answered in the affirmative based on estoppel.

• Estoppel: Atty. Perez admitted at the hearing on March 17, 1992 that he had received all previous notices and orders of the court in Civil Case No. RQ-18176 through Sandoval, who had been signing the registry receipts therefor, and that he had never questioned the validity of such service. The Court relied on the doctrine in Philippine Commercial and Industrial Bank vs. Ortiz (150 SCRA 380 [1987]), where counsel who had acquiesced to and impliedly adopted a different address for service of notices — accepting service there without objection — was estopped from disowning that adopted address. The Court found that Atty. Perez's conduct constituted an implied authorization of Sandoval to receive registered mail on his behalf. The petitioners' belated attempt to show that only Antonio Peñalosa, Danilo Masajo, and Dominador de los Reyes were authorized in writing to claim mail for the Legal Department — revealed for the first time only in their Memorandum filed on January 16, 1995 — did not persuade, as it should have been presented to the trial court at the March 17, 1992 hearing, and in any event did not prevent Atty. Perez from impliedly authorizing Sandoval thereafter.

• Timeliness of Appeal: Because Atty. Perez was deemed to have received the decision on January 23, 1992, the fifteen-day reglementary period was counted from that date, making the last day for appeal February 7, 1992. The notice of appeal filed on February 10, 1992 was therefore three days late. The Court acknowledged that perfection of an appeal within the period fixed by the rules is mandatory and jurisdictional.

• Suspension of Rules: Notwithstanding the jurisdictional nature of the appeal period, the Court held that it is always within its power to suspend its own rules or to except a particular case from their operation whenever the purposes of justice require it. Strong compelling reasons such as serving the ends of justice and preventing a grave miscarriage thereof warrant the suspension. The Court cited multiple precedents where tardy appeals were entertained: Republic vs. Court of Appeals (83 SCRA 453 [1978]), where the Republic stood to lose close to 300 hectares of land; Siguenza vs. Court of Appeals (137 SCRA 570 [1985]), where the appeal appeared impressed with merit; Pacific Asia Overseas Shipping Corporation vs. NLRC (161 SCRA 122 [1988]), where the POEA lacked jurisdiction; Cortes vs. Court of Appeals (161 SCRA 444 [1988]), where the seven-day delay was excusable; Olacao vs. NLRC (177 SCRA 38 [1989]), to forestall double payment; Legasto vs. Court of Appeals (172 SCRA 722 [1989]), where the appeal raised an important legal question; and City Fair Corporation vs. NLRC (G.R. No. 95711, April 21, 1995), where the amount and issue warranted liberality. The Court found that to bar the appeal would be inequitable and unjust given the trial court's award of nearly P20 million in actual damages plus P1 million exemplary damages and P0.5 million attorney's fees, and the declaration of loans as fully paid by set-off. The petitioners' detailed demonstration of the merits of the appeal convinced the Court that the ends of justice would best be served if the appeal were given due course.

• Estoppel in Service of Court Notices — A counsel who has consistently and without objection received court notices, orders, and decisions through a particular channel — such as a client's mailing division employee — is estopped from later denying the authority of that channel to receive registered mail containing a final judgment. The doctrine derives from the principle that a party cannot acquiesce to a mode of service throughout litigation and then disown it to escape the consequences of delay. Applied here, Atty. Perez's admission that he had received all previous notices through Sandoval without protest barred him from questioning the validity of service of the decision through the same channel.

• Implied Authorization to Receive Registered Mail — Under Section 8, Rule 13 of the Rules of Court, service by registered mail is complete upon actual receipt by the addressee. An implied exception exists where the addressee has authorized another to receive the registered mail matter, in which case service takes effect upon receipt by the latter. Authorization may be implied from a pattern of conduct, such as consistently allowing a particular person to claim and sign for registered mail without objection.

• Suspension of Rules of Court in the Higher Interest of Justice — While the perfection of an appeal within the reglementary period is mandatory and jurisdictional, the Supreme Court possesses the inherent power to suspend its own rules or to except a particular case from their operation whenever the purposes of justice require it. Strong compelling reasons — such as serving the ends of justice and preventing a grave miscarriage — warrant such suspension. Factors considered include the substantial amounts involved, the apparent merit of the appeal, and whether barring the appeal would be inequitable or unjust.

• Service Upon Counsel of Record — Under Section 2, Rule 13 of the Rules of Court, when a party is represented by counsel, service of notices, pleadings, motions, and papers — including notices of decisions or orders — must be made upon the attorney. Service on the party himself who is represented by counsel is not notice in law and is invalid, unless the court specifically orders service upon the party.

• "But, it is always in the power of this Court to suspend its own rules, or to except a particular case from its operation, whenever the purposes of justice require it." — This passage articulates the ratio decidendi for the dispositive ruling: the Court's inherent power to suspend procedural rules in the interest of justice, notwithstanding the mandatory and jurisdictional character of the appeal period.

• "The registered mail containing the trial court's decision of 20 January 1992 was not a mail matter for the PNB or for petitioner National Investment Development Corporation (NIDC). It was a registered mail matter addressed to and exclusively intended for Atty. Avamor Perez, in his capacity as counsel for the petitioners, and not as an official or employee of the PNB." — This passage distinguishes between mail addressed to a party's institution and mail addressed to counsel of record in his professional capacity, establishing that service must be upon the addressee or his authorized agent, not merely upon the client organization's mailing system.

• "Estoppel will thus bar him from denying Sandoval's authority and from questioning the validity of the service of the decision." — This sentence states the Court's conclusion on the estoppel issue, applying the doctrine to bar counsel from disavowing a mode of service he had consistently accepted throughout nineteen years of litigation.

• "Similarly, this Court shall, in the higher interest of justice, allow the appeal of the petitioners which was filed three days late. For, to bar the appeal would be inequitable and unjust when viewed in the light of the trial court's decision." — This passage bridges the Court's finding that the appeal was late with its ultimate decision to suspend the rules, articulating the equitable rationale for the dispositive order.

• Philippine Commercial and Industrial Bank vs. Ortiz, 150 SCRA 380 (1987) — Controlling precedent on estoppel in service of court notices. The Court held that counsel who acquiesced to and impliedly adopted a different address for service of notices — accepting service there without objection — was estopped from disowning that address. Applied directly to hold that Atty. Perez was estopped from denying Sandoval's authority.

• Republic vs. Court of Appeals, 83 SCRA 453 (1978) — Cited as precedent for suspending the rules to allow a tardy appeal, where the Republic stood to lose close to 300 hectares of land used for educational purposes. Followed as an example of compelling circumstances justifying relaxation of the reglementary period.

• Siguenza vs. Court of Appeals, 137 SCRA 570 (1985) — Cited for the proposition that an appeal impressed with merit on its face may be entertained despite being filed thirteen days late. The Court in that case decided the merits forthwith rather than remanding.

• Cortes vs. Court of Appeals, 161 SCRA 444 (1988) — Cited for the principle that a seven-day delay in filing an appeal was excusable where counsel of record had been appointed RTC judge, had not withdrawn his appearance, and the appeal was ostensibly meritorious.

• City Fair Corporation vs. NLRC, G.R. No. 95711, April 21, 1995 — Cited as recent precedent upholding the NLRC's acceptance of a tardy appeal, where the Court found that the facts and circumstances warranted liberality given the amount and issue involved.

• PLDT vs. NLRC, 128 SCRA 402 (1984) — Cited by petitioners for the proposition that when a party is represented by counsel, notices should be sent to the latter. Referenced in the context of the service-of-counsel rule under Section 2, Rule 13.

• PHHC vs. Tiongco, 12 SCRA 471 (1964) — Cited by petitioners for the doctrine absolving a party from the effects of negligence of its counsel. The Court did not rely on this doctrine in its ruling.

• Section 7, Rule 13, Rules of Court — Governs service of final orders or judgments, requiring service either personally or by registered mail (or by publication in special cases). Applied to determine the proper mode of service of the trial court's decision.

• Section 4, Rule 13, Rules of Court — Defines personal service as delivery of a copy to the party or his attorney, or by leaving it in his office with his clerk or a person having charge thereof. Cited to establish the manner of personal service, though the decision was served by registered mail in this case.

• Section 2, Rule 13, Rules of Court — Provides that when a party is represented by counsel, service shall be made upon the attorney unless the court orders service upon the party. Applied to establish that service on the party himself when represented by counsel is not notice in law and is invalid.

• Section 8, Rule 13, Rules of Court — Provides that service by registered mail is complete upon actual receipt by the addressee, with an exception where the addressee fails to claim mail within five days from first notice. Applied to determine when service of the decision was complete; the Court recognized an implied exception where the addressee has authorized another to receive the mail.

• Section 39, Batas Pambansa Bilang 129 — Governs the period to appeal, cited by the dissent as the statutory basis for the mandatory and jurisdictional nature of the appeal period, with no saving clause permitting deviation.

• Article 5, New Civil Code — Provides that acts executed against the provisions of mandatory or prohibitory laws shall be void, except when the law itself authorizes their validity. Cited by the dissent to argue that the Court cannot suspend the mandatory provisions of law on the period for appealing.

Narvasa, C.J., Feliciano, Padilla, Regalado, Romero, Quiason, Vitug, and Francisco, JJ., concurred. Mendoza, J., took no part. Bellosillo, J., was on leave.

• Justice Melo (concurring: Justices Puno and Kapunan) — Justice Melo dissented on the ground that the reglementary period for appeal is mandatory and jurisdictional, and that the Court's inherent power to suspend its rules cannot extend to the statutory period for appealing governed by Section 39 of Batas Pambansa Bilang 129, which contains no saving clause. He argued that the lapse arose from simple inattention by petitioners' counsel, not from any insurmountable cause such as the death of counsel, caso fortuito, or transcendental importance involving life, liberty, or state security. He invoked Article 5 of the New Civil Code, which voids acts executed against mandatory or prohibitory laws, and Article 2254, which denies vested rights from acts contrary to law. He further contended that the majority suspended the rule based on "petitioners' detailed demonstration of the merits of the appeal" without actually delving into those merits, and that the case — involving only monetary claims reducible to pesos and centavos — was not important enough to justify the extraordinary device of suspending not a mere court rule but the mandatory provisions of the law itself. He cited Justice Cardozo's The Nature of the Judicial Process for the principle that uniformity of law must not be sacrificed to do justice in the individual instance.