R Transport Corporation vs. Philippine Hawk Transport Corporation

When a copy of a court decision sent to a party's counsel of record is returned unserved due to the counsel's failure to notify the court of a change of address, service is validly effected through substituted service by delivering the copy to the clerk of court, and the reglementary period to appeal is reckoned from the date of such substituted service, not from the party's subsequent actual receipt.

R Transport Corporation, defendant in a civil case before the Regional Trial Court of Pasig City, was represented by Atty. Jose O. Uy Jr. The trial court rendered an adverse decision against petitioner on April 7, 1997. A copy of the decision was sent to Atty. Uy's address on record but was returned unserved with the notation "RTS-Moved," as counsel had relocated without notifying the court. Respondent subsequently filed a Motion for Execution in November 1999. The trial court then ordered that petitioner be furnished a copy of the motion solely to notify it of the adverse judgment, which petitioner received on March 13, 2000.

• The Trial Court Decision: On April 7, 1997, the Regional Trial Court of Pasig City, Branch 162, rendered a decision against R Transport Corporation in Civil Case No. 61983.
• Service of the Decision: A copy of the decision was mailed to petitioner's counsel, Atty. Jose O. Uy Jr., at his last known address on record. The copy was returned unserved with the notation "RTS-Moved." Atty. Uy had not filed a notice of change of address. Prior pleadings and notices sent to this address had been successfully received by counsel, who had actively participated in the trial by filing an Answer to Counterclaim, an Answer to Cross-claim, and cross-examining respondent's witnesses.
• Motion for Execution and Belated Notice: On November 19, 1999, respondent filed a Motion for Execution. On March 3, 2000, the trial court issued an order directing that petitioner be furnished a copy of the motion to notify the party of the adverse decision. Petitioner received the copy on March 13, 2000.
• Attempted Appeal: Petitioner filed a Notice of Appeal on March 23, 2000. The trial court denied the appeal for being filed out of time and granted the motion for execution. Petitioner's motion for reconsideration was likewise denied.

• Proper Service of Decision: Petitioner argued that proper service of the trial court's decision occurred only on March 13, 2000, the date of actual receipt, not on the earlier date of service upon counsel, because the copy sent to counsel was never actually received.
• Service Upon Party: Petitioner maintained that because the trial court ordered that petitioner be furnished a copy of the decision, the reckoning point for the appeal period became the actual date of receipt by the party, pursuant to Section 2, Rule 13 of the 1997 Rules of Civil Procedure.
• Loss of Jurisdiction: Petitioner contended that because a timely appeal was filed, the trial court lost jurisdiction under Section 9, Rule 41 and had no authority to grant the motion for execution.
• Gross Negligence of Counsel: Petitioner insisted that counsel's disappearance and failure to notify the court of his change of address constituted gross negligence, depriving petitioner of property without due process of law.

• Service at Last Known Address: Respondent countered that the decision was properly sent to counsel's last known address on record, and the failure to receive it was the fault of petitioner's counsel for not filing a notice of change of address.
• Binding Nature of Counsel's Mistakes: Respondent argued that petitioner is bound by the mistakes of its counsel, citing Bernardo v. Court of Appeals.
• Substituted Service: Respondent asserted that substituted service was validly effected under Section 8, Rule 13 by delivering the copy to the clerk of court after the failure of personal service and service by mail, making service complete upon such delivery and rendering the appeal out of time.

• Validity of Substituted Service: Whether the trial court's decision was properly served through substituted service despite the return of the copy sent to counsel's last known address.
• Gross Negligence of Counsel: Whether the counsel's failure to update his address constitutes gross negligence that deprives the petitioner of due process, warranting an exception to the rule that a client is bound by the mistakes of counsel.
• Timeliness of Appeal: Whether the notice of appeal was filed within the reglementary period based on the reckoning point of substituted service.

• Validity of Substituted Service: The decision was properly served through substituted service. When the copy sent to counsel's last known address was returned unserved due to the counsel's unnotified change of address, service was validly effected by delivering the copy to the clerk of court under Section 8, Rule 13 of the Revised Rules of Court.
• Gross Negligence of Counsel: Counsel's failure to notify the court of his change of address constitutes simple negligence, not gross negligence. Unlike in Legarda v. Court of Appeals (where there was a complete absence of effort to defend the client) or Escudero v. Dulay (where there was outright deprivation of property without due process), counsel here actively participated in the trial, filed pleadings, and cross-examined witnesses. Petitioner was afforded a reasonable opportunity to be heard, satisfying the essence of due process; thus, the client is bound by the counsel's negligence.
• Timeliness of Appeal: The notice of appeal was filed out of time. The reglementary period is reckoned from the date of substituted service, not from the belated actual receipt on March 13, 2000. The perfection of an appeal within the prescribed period is mandatory and jurisdictional; failure to perfect an appeal timely renders the judgment final and executory.

• Binding Nature of Counsel's Negligence — A client is generally bound by the acts, even mistakes, of counsel. Exceptions exist only when the reckless or gross negligence of counsel deprives the client of due process of law or results in the outright deprivation of property through a technicality. The exception was held inapplicable because counsel's failure to update his address was mere simple negligence, given his active participation in the trial.
• Substituted Service of Court Issuances — Under Section 8, Rule 13, if service cannot be made personally or by mail because the office and residence of the party or counsel is unknown, service may be made by delivering the copy to the clerk of court, with proof of failure of both personal service and service by mail. Service is complete at the time of such delivery. The doctrine was applied to uphold the validity of service when the copy sent to counsel's last known address was returned unserved due to his unnotified relocation.
• Perfection of Appeal as Jurisdictional — The right to appeal is a statutory privilege that must be exercised strictly in accordance with the law. Perfection of an appeal within the prescribed period is mandatory and jurisdictional; failure to do so renders the lower court's judgment final and executory.

• "The general rule is that a client is bound by the acts, even mistakes of his counsel."
• "The perfection of an appeal in the manner and within the period permitted by law is not only mandatory but also jurisdictional. The failure to seasonably perfect the appeal to a higher court renders the judgment of the lower court final and executory."

• Legarda v. Court of Appeals, G.R. No. 94457 (March 18, 1991) — Distinguished. In Legarda, counsel was grossly negligent due to a complete absence of effort to defend the client, whereas in the present case, counsel actively participated in the proceedings.
• Escudero v. Dulay, No. L-60578 (February 23, 1988) — Distinguished. In Escudero, there was an outright deprivation of property without due process, unlike here where the petitioner was afforded the opportunity to be heard.
• Bernardo v. Court of Appeals, G.R. No. 106153 (July 14, 1997) — Followed. A client is bound by the mistakes of counsel.

• Section 2, Rule 13, 1997 Rules of Civil Procedure — Provides that if a party has appeared by counsel, service shall be made upon counsel unless service upon the party is ordered by the court. Applied to emphasize that service must generally be upon counsel of record.
• Section 8, Rule 13, 1997 Rules of Civil Procedure — Provides for substituted service by delivering a copy to the clerk of court when the residence of the party or counsel is unknown, with proof of failure of personal service and service by mail; service is complete upon such delivery. Applied to validate the service of the trial court's decision when the copy sent to counsel was returned unserved.
• Section 9, Rule 41, 1997 Rules of Civil Procedure — Provides that the court loses jurisdiction over the case upon the perfection of appeals filed in due time and the expiration of the time to appeal of the other parties. Cited by petitioner but found inapplicable because the appeal was not filed within the reglementary period.

Hilario G. Davide, Jr., Consuelo Ynares-Santiago, Antonio T. Carpio, Adolfo S. Azcuna