G.R. No. 97664 - Ouano Arrastre Service, Inc. vs. Aleonar

International Pharmaceuticals, Inc. (IPI) filed a complaint against Mercantile Insurance Company, Inc. (“Mercantile”) and Ouano Arrastre Service, Inc. (“OASI”) before the Regional Trial Court of Cebu City.
The dispute involved the replacement of equipment imported by IPI, which were insured by Mercantile but were allegedly lost on arrival in Cebu City due to mishandling by OASI.

OASI’s answer was filed by the law firm Ledesma, Saludo and Associates (LSA), signed initially by Atty. Manuel Trinidad of the Cebu branch.
A transition occurred when Atty. Trinidad resigned and Atty. Fidel Manalo, a partner from LSA’s Makati office, subsequently filed a motion to postpone the hearing, stating that the case had just been endorsed to him by OASI.

After trial on January 12, 1990, the Regional Trial Court rendered a decision holding Mercantile and OASI jointly and severally liable for the replacement cost and damages, totaling P435,000.00.
Only Mercantile appealed the decision.
IPI later filed a motion on June 19, 1990 for the execution of the decision against OASI, which was granted by the trial court on June 25, 1990.

On June 26, 1990, OASI’s counsel, through Atty. Catipay of LSA’s Cebu Branch, filed a notice of appeal.
On June 27, 1990, the same counsel filed a motion for reconsideration of the order granting the writ of execution, alleging:

The failure to file an appeal in time was due to excusable neglect arising from miscommunication between LSA’s Cebu branch and its main office in Makati.
Mercantile’s timely appeal should benefit OASI as a solidary co-debtor.

On July 2, 1990, the motion for reconsideration was denied, with the court emphasizing that the appeal was barred due to lack of merit.

OASI contended that there was defective service of the trial court decision on its counsel, thus affecting when the appeal period began.
OASI argued that the appeal from co-defendant Mercantile should operate to stay the execution against it.
The petitioner also maintained that strict adherence to procedural technicalities, to the detriment of substantial justice and equity (and Article 1222 of the Civil Code), resulted in an unfair ruling.
OASI questioned the separation of responsibilities within LSA, claiming that service should have been directed exclusively to its Cebu branch as its representative.

Whether there was valid service of the Regional Trial Court’s decision upon OASI’s counsel, considering:

The refusal of Atty. Catipay of LSA’s Cebu branch to formally accept the decision, and
The subsequent receipt of the decision by the Makati office of the same firm.

Whether the timely appeal filed by co-defendant Mercantile, as a solidary debtor, should confer a benefit on OASI or stay the writ of execution against it.

Whether the alleged miscommunication within the law firm Ledesma, Saludo and Associates could justify the tardiness of OASI’s notice of appeal.

Whether applying strict procedural technicalities, as done by the Court of Appeals, in the context of joint and several liabilities ultimately upholds or undermines substantial justice and equity.