G.R. No. 138571 ; July 13, 2000
MERCURY DRUG CORPORATION, petitioner vs. THE HONORABLE COURT OF APPEALS, and the SPOUSES EDUARDO AND CARMEN YEE, respondents.

FACTS

Spouses Eduardo and Carmen Yee filed a complaint against Mercury Drug Corporation for annulment or reformation of a lease contract, seeking a rental increase from ₱6,900 to ₱50,000 per month. Their claim was based on a contract clause allowing rental adjustment in case of “official devaluation of the Philippine peso.” The Regional Trial Court dismissed the complaint, finding no official devaluation to trigger the clause. However, invoking equity, the court ordered Mercury Drug to pay increased rentals on a graduated scale. The Yee spouses’ former counsel received the decision on March 3, 1995, but failed to inform them or file an appeal. The spouses learned of the judgment only on March 24, 1995, after the 15-day appeal period had lapsed.
On May 15, 1995, the Yee spouses, through new counsel, filed a petition for relief from judgment under Rule 38. The RTC denied the petition, ruling it was filed 12 days beyond the 60-day period from the time the judgment was learned, which period began from counsel’s receipt. The Court of Appeals reversed the RTC, holding that the 60-day period should be counted from the clients’ actual knowledge, not their counsel’s receipt, and reinstated the petition for relief.

ISSUE

Whether the Court of Appeals erred in ruling that the 60-day period for filing a petition for relief from judgment should be reckoned from the clients’ actual knowledge of the judgment, and not from their counsel’s receipt thereof.

RULING

Yes, the Court of Appeals erred. The Supreme Court reversed its decision and reinstated the RTC’s order denying the petition for relief. The legal logic is anchored on the principle of notice to counsel being notice to client. Jurisprudence consistently holds that the period for filing a petition for relief under Rule 38 is counted from the date the party’s counsel receives the judgment, not from the party’s subsequent personal knowledge. This rule is based on the fiduciary nature of the attorney-client relationship, where the client is bound by the acts, including negligence, of their counsel in procedural matters. The 60-day period from knowledge and the 6-month period from entry of judgment are both mandatory and jurisdictional; failure to comply with either is fatal. Since the petition was filed 12 days after the 60-day period computed from counsel’s receipt, it was correctly dismissed by the RTC. The Court further noted that even if the petition were given due course, the trial court’s core finding—that no official devaluation occurred to justify contract reformation—remained unaffected. The equity-based rental increase granted by the RTC stood on a separate, discretionary ground.