G.R. No. 141530 - Republic vs. Court of Appeals

On 4 September 1997, petitioners Ligaya Mendoza and Adelia Mendoza obtained a loan amounting to P12,000,000.00 from the private respondent Bangko Kabayan (formerly Ibaan Rural Bank, Inc.), as evidenced by a Promissory Note.
To secure the loan, petitioners executed a Deed of Real Estate Mortgage covering 71 parcels of land registered under their names and located in Mabini, Batangas.

Petitioners incurred default on the loan, rendering the obligation due and demandable.
On 21 May 1998, Bangko Kabayan filed a Complaint for Judicial Foreclosure before the Regional Trial Court (RTC) of Batangas City.
Petitioners admitted the material allegations in the Complaint.
On 7 March 2002, the RTC rendered a Judgment on the Pleadings ordering petitioners to pay:

The principal sum of P12,000,000.00 with interest computed at 30% per annum and penalty from 4 September 1997 until fully paid.
Attorney’s fees of 10% of the amount due, along with costs of suit.

Subsequently, petitioners failed to file a timely appeal or motion for reconsideration.

After the failure to appeal, Bangko Kabayan filed a Motion for Execution to enforce the RTC Judgment.
Petitioners opposed the Motion for Execution on the ground that they were not properly served with a copy of the RTC decision.
On 28 May 2003, the RTC denied the Notice of Appeal on the basis that it was filed out of time, attributing the delay to the negligence of petitioners’ counsel.
On 13 July 2004, the RTC issued an Order denying petitioners’ Motion for Reconsideration and directed the Sheriff to proceed with the sale of the foreclosed properties at public auction.

The Court of Appeals, in its Decision dated 29 November 2007, affirmed the RTC Orders, holding that there was valid service of the 7 March 2002 judgment.
A Certification issued by the Postmaster General evidenced that the copy of the judgment was delivered to the address of petitioners’ counsel (2/F LPC Mansion, 122 L.P. Leviste St., Salcedo Village, Makati City) and received by Daniel Soriano, the security guard, on 15 March 2002.
The CA similarly affirmed the denial of petitioners’ Motion for Reconsideration in its Resolution dated 28 April 2008.

Petitioners filed a Petition for Certiorari assailing the CA’s Decision and the RTC Orders on several grounds:

That the service of the RTC Judgment was invalid because the security guard was not authorized to receive mail for their counsel.
That their counsel’s negligence in handling mail and ensuring receipt of official communications should relieve petitioners of their responsibility.
That the dismissal of their Notice of Appeal was premature, given that the judgment may have been received only a day earlier than when the appeal was filed.
That the CA abused its discretion by ruling based on the service sent to an alternate or collaborating counsel.
That no valid execution should be effected in absence of actual notice to petitioners.

Whether there was valid service of the RTC Judgment on petitioners’ counsel, considering that the copy was received by a security guard at the counsel’s office.

Whether petitioners’ counsel’s negligence in receiving and monitoring official communications can be imputed to petitioners, thereby barring the filing of a timely appeal.

Whether the RTC improperly ruled the petitioners’ Notice of Appeal as untimely, based on the alleged delay caused by counsel’s mishandling of mail.

Whether the CA committed grave abuse of discretion amounting to a lack or excess of jurisdiction by affirming the RTC Orders despite the petitioners’ allegations regarding defective service and procedural irregularities.

Whether the extension of the appeal period in the interest of justice could have been exercised despite the technical default in filing due to counsel’s negligence.