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Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 167230               August 14, 2009

SPOUSES DANTE and MA. TERESA L. GALURA, Petitioners,
vs.
MATH-AGRO CORPORATION, Respondent.

D E C I S I O N

CARPIO, J.:

The Case

This is a petition¹ for review on certiorari under Rule 45 of the Rules of Court, with prayer for the issuance of a writ of preliminary injunction or temporary restraining order. The petition challenges the 25 January and 28 February 2005 Resolutions² of the Court of Appeals in CA-G.R. SP No. 88088 dismissing the petition³ for annulment of judgment and final order and denying the motion⁴ for reconsideration, respectively, filed by Dante and Ma. Teresa L. Galura (Spouses Galura). The Spouses Galura sought to annul the 27 June 2001 Decision⁵ and 10 November 2004 Order⁶ of the Regional Trial Court (RTC), Judicial Region 3, Malolos, Bulacan, Branch 22, in Civil Case No. 473-M-2000.

The Facts

In March 1997, the Spouses Galura purchased broiler starters and finishers worth ₱426,000 from Math-Agro Corporation (MAC). The Spouses Galura paid MAC ₱72,500. Despite several demands, they failed to pay the ₱353,500 unpaid balance.

MAC engaged the services of a certain Atty. Ronolfo S. Pasamba (Atty. Pasamba) for the purpose of collecting the ₱353,500 unpaid balance from the Spouses Galura. In his letter⁷ dated 13 November 1998 and addressed to the Spouses Galura, Atty. Pasamba stated:

Ang kinatawan ng aming kliyente na Math Agro Corporation na may tanggapan sa Balagtas , Bulacan, ay lumapit sa aming tanggapan at kinuha ang aming paglilingkod bilang manananggol kaugnay sa inyong natitirang pagkakautang sa kanila na halagang ₱353,500.00, na hanggang sa ngayon ay hindi pa ninyo nababayaran.

Dahilan dito , kayo ay binibigyan namin ng limang (5) araw mula sa pagkatanggap ng sulat na ito upang bayaran ang aming nabanggit na kliyente, pati na ang kaukulang tubo nito. Ikinalulungkot naming sabihin sa inyo na kung hindi ninyo bibigyang pansin ang mga bagay na ito, mapipilitan na kaming magsampa ng kaukulang dimanda sa hukuman laban sa inyo upang mapangalagaan namin ang karapatan at interes ng aming nabanggit na kliyente.

Inaasahan namin na bibigyang pansin ninyo ang mga bagay na ito .

In its complaint⁸ dated 21 June 2000 and filed with the RTC, MAC prayed that the RTC order the Spouses Galura to pay the ₱353,500 unpaid balance and ₱60,000 attorney’s fees and litigation expenses. In the complaint, MAC stated that "defendants are both of legal age, spouses, and residents of G.L. Calayan Agro System Inc., Bo. Kalayaan, Gerona, Tarlac, and/or 230 Apo St., Sta. Mesa Heights, Quezon City, where they may be served with summonses and other processes of this Honorable Court."

Clerk of Court Emmanuel L. Ortega issued the corresponding summons⁹ dated 15 August 2000 requiring the Spouses Galura to file their answer within 15 days, otherwise judgment by default would be taken against them.

On 17 September 2000, Court Process Server Faustino B. Sildo (Sildo) went to 230 Apo Street, Sta. Mesa Heights, Quezon City, to serve the summons. There, Dante Galura’s father, Dominador Galura, told Sildo that the Spouses Galura were presently residing at Tierra Pura Subdivision, Tandang Sora, Quezon City. On 22 September 2000, Sildo went to G.L. Calayan Agro System, Inc. in Barrio Kalayaan, Gerona, Tarlac to serve the summons. Sildo learned that the property had been foreclosed and that the Spouses Galura no longer resided there. On 26 September 2000, Sildo went to Tierra Pura Subdivision, Tandang Sora, Quezon City, to serve the summons. Sildo served the summons on Teresa L. Galura’s sister, Victoria Lapuz (Lapuz). In his return of service¹⁰ dated 4 October 2000, Sildo stated:

THIS IS TO CERTIFY that on September 22, 2000 the undersigned went to the given address of the defendant at G. Bo. Kalayaan, Gerona, Tarlac for the purpose of serving the summons, issued in the above-entitled case

That the defendants is [sic] no longer residing at the given address and their property was foreclose [sic] by the Bank,

That on September 17, the undersigned went to the given address of the defendants at 230 Apo St., Sta Mesa Heights, Quezon City;

That the defendants is [sic] not residing at the given address as per information given by Mr. Dominador Galura father of the defendants.

That Mr. Dominador Galura give [sic] the address of the defendant where they are presently residing at Tierra Fura [sic] Subd. at Tandang Sora, Quezon City.

That on September 26, 2000 the undersigned went to Tandang Sora where the defendants presently residing [sic] Tierra Fura [sic] Subd. for the purpose of serving the summons, complaint together with the annexes,

That Ms. Victoria Lapuz sister-in-Law of Dante Galura received the copy of said summons, as evidence [sic] by her signature appearing on the face of original summons.

The Spouses Galura failed to file their answer. In its Order dated 23 January 2001, the RTC declared the Spouses Galura in default and allowed MAC to present its evidence ex parte.

In its 27 June 2001 Decision, the RTC ruled in favor of MAC and ordered the Spouses Galura to pay the ₱353,500 unpaid balance, ₱30,000 attorney’s fees, and expenses of litigation. The RTC stated:

Based on the facts and findings established above, the Court is of the considered view that a judgment in favor of the plaintiff is in order. Likewise, this Court strongly believes that the failure of the defendants or their refusal to file any answer to the complaint is a clear admission on their part of their obligation to the plaintiff. It may even be safely presumed that by their inaction, defendants have no valid defense against the claim of the plaintiff such that under the circumstances, this Court has no other alternative but to pass judgment on the issued [sic] based on the evidence on record.

The award of attorney’s fees in the amount of ₱30,000.00 is justified under the premises in view of the court’s finding that the defendants acted in gross and evident bad faith in refusing to satisfy plaintiff’s plainly valid, just and demandable claim.

WHEREFORE, judgment is hereby rendered ordering the defendants to pay the plaintiff the following:

1. The sum of ₱353,500.00 representing the unpaid purchase price of the poultry products plus interest of 6% per annum accruing from the date of defendants’ receipt of the first demand letter on October 18, 1998 until full payment is made;

2. The sum of ₱30,000.00 as and for attorney’s fees; and

3. The costs of suit.

SO ORDERED.¹¹

In its Order dated 10 November 2004, the RTC issued a writ of execution to implement the 27 June 2001 Decision. The RTC stated:

In support of the motion, it is alleged among others that on June 27, 2001, the Decision was rendered in the above-entitled case, has become final and executory on August 1, 2001 and was duly recorded in the Book of Entry of Judgment.

On the other hand, the fifteen (15) days period given to the defendants, from receipt of the order of the Court dated November 11, 2003 had already lapsed without complying therewith, hence his right to file comment on the Motion for Execution filed by the plaintiff was waived.

For reasons heretofore made apparent, the Court resolves to grant the motion for execution.¹²1avvphi1

On 13 December 2004, the Spouses Galura received "from their parents-in-law" a copy of the 10 November 2004 Order. On 6 January 2005, the Spouses Galura filed with the Court of Appeals a petition¹³ for annulment of judgment and final order under Rule 47 of the Rules of Court, with prayer for the issuance of a writ of preliminary injunction or temporary restraining order. The Spouses Galura claimed that the RTC’s 27 June 2001 Decision and 10 November 2004 Order were void for two reasons: (1) the RTC failed to acquire jurisdiction over their persons because the substituted service of summons was invalid, and (2) there was extrinsic fraud because MAC made them believe that it would not file a case against them. The Spouses Galura stated:

The assailed decision dated June 27, 2001 and the order of execution dated November 10, 2004, issued by respondent Judge in Civil Case No. 473-M-2000, should be annulled pursuant to Rule 47 of the 1997 Rules of Court.

1. The assailed decision and order of execution are null and void having been rendered and issued despite failure of the court a quo to first acquire jurisdiction over the persons of the petitioners, on account of the improper service of summons upon them.

2. The assailed decision and order of execution were rendered with extrinsic fraud in attendance. The owner of Math-Agro and herein petitioners had an existing agreement for the settlement of their obligation, and herein petitioners were complying with the agreement. Math-Agro, despite the commitment of its owner not to file the complaint, did so. Such an act on the part of Math-Agro and its owner constitutes extrinsic fraud, as it prevented petitioners from defending themselves in the action lodged with the court a quo.¹⁴

The Court of Appeals’ Ruling

In its 25 January 2005 Resolution, the Court of Appeals dismissed the petition for lack of merit. The Court of Appeals held that there was a valid substituted service of summons, that the allegation of extrinsic fraud was unbelievable, and that the Spouses Galura should have first availed of the ordinary remedies of new trial, appeal, or petition for relief. The Court of Appeals stated:

1. Petitioners make no denial that insofar as known by the respondent Math-Agro Corporation, their address at the time of the filing of the complaint on July 25, 2000 was at G.L. Calayaan Agro System Inc., Bo. Kalayaan, Gerona, Tarlac and/or 230 Apo St., Sta. Mesa Heights, Quezon City. They likewise do not deny the proceedings taken by Court Process Server Paulino Sildo as narrated in his Return of Service dated October 4, 2000 x x x.

Under the circumstances, we believe, and so hold, that there was a valid substituted service of summons on the petitioners as defendants in the case. To begin with, the petitioners never took the bother of informing the creditor Math-Agro Corporation that they were leaving their address known to the latter and were moving on to another place of residence, so the process server took it upon himself to diligently trace the whereabouts of the petitioners until he was able to effect service of the summons on Victoria Lapuz, a sister-in-law of petitioner Dante Galura at Tierra Fura Subdivision in Tandang Sora, Quezon City, where the defendants were then residing. What they claim is that substituted service was immediately resorted to without the process server first exhausting all opportunities for personal service which is improper. x x x

Far from being improper, the actuations taken and the efforts exerted by the process server are highly commendable for he started looking for the petitioners in the addresses given by them to their creditor and alleged by the latter in the complaint. Finding them not to be there, he methodically traced their whereabouts until he came upon their latest address at Tierra Fura Subdivision, Tandang Sora, Quezon City, as given by Dominador Galura, father of petitioner-husband, Dante Galura. Quite conspicuously, the petitioner do not deny that they were residing at that place when service of the summons was made on petitioner-husband’s sister-in-law, Victoria Lapuz.

x x x x

2. Petitioners’ posturing that they are at the receiving end of extrinsic fraud because they had an existing payment arrangement with their creditor, Math-Agro Corporation, that the latter would not resort to judicial action for as long as payments are being made by them and that they had been paying their obligation until July, 2004 is hard to be believed in. This is but a bare and vagrant allegation without any visible means of support for nowhere in their petition, as well as in their joint affidavit of merit, did they attach copies of the corresponding receipts of their payments. x x x

3. Prescinding from the foregoing records also show that contrary to Section 1, Rule 47 of the 1997 Rules of Civil Procedure, petitioners have not availed themselves first of the ordinary remedies of a motion to lift order of default, new trial, appeal, petition for relief before resorting to this extra-ordinary action for annulment of judgment.¹⁵

The Spouses Galura filed a motion for reconsideration dated 14 February 2005. In its Resolution dated 28 February 2005, the Court of Appeals denied the motion for lack of merit.

Hence, the present petition.

The Issues

In their petition dated 8 April 2005, the Spouses Galura raised as issues that the Court of Appeals erred when it ruled that (1) there was a valid substituted service of summons; (2) the allegation of extrinsic fraud was unbelievable; and (3) they should have availed first of the ordinary remedies of new trial, appeal, or petition for relief.

In its Resolution¹⁶ dated 27 April 2005, the Court issued a temporary restraining order enjoining the Court of Appeals from implementing its 25 January and 28 February 2005 Resolutions.

The Court’s Ruling

The petition is meritorious.

The Spouses Galura claim that the RTC failed to acquire jurisdiction over their persons because the substituted service of summons was invalid. They stated:

The resort of the process server to what purports to be a substituted service, when he left the summons with Ms. Victoria Lapuz is clearly unjustified, as it was premature. He could still serve the summons personally upon herein petitioners had he exerted efforts to do so. Unfortunately, he did not, and he immediately resorted to a substituted service of the summons. Clearly, the acts of the trial court’s process server contravenes the rulings espoused by the Honorable Supreme Court that summons must be served personally on the defendant as much as possible.

x x x x

The process server, in his return of service above, did not state that his attempts to serve the summons by personal service upon the petitioners at the Tierra Pura Subdivision address failed, and that the same could not be made within a reasonable time. He likewise failed to state facts and circumstances showing why personal service of the summons upon the petitioners at the said address was impossible. Finally, he also failed to state that Ms. Victoria Lapuz, the person with whom he left the summons, was a person of sufficient age and discretion, and residing in the said Tierra Pura address.¹⁷

The Court agrees. Section 6, Rule 14 of the Rules of Court states that, "Whenever practicable, the summons shall be served by handing a copy thereof to the defendant in person, or, if he refuses to receive and sign for it, by tendering it to him." Section 7 states:

SEC. 7. Substituted service. — If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendant’s residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendant’s office or regular place of business with some competent person in charge thereof.

In Sandoval II v. HRET,¹⁸ the Court enumerated the requisites of a valid substituted service: (1) service of summons within a reasonable time is impossible; (2) the person serving the summons exerted efforts to locate the defendant; (3) the person to whom the summons is served is of sufficient age and discretion; (4) the person to whom the summons is served resides at the defendant’s place of residence; and (5) pertinent facts showing the enumerated circumstances are stated in the return of service. In Sandoval, the Court held that "statutory restrictions for substituted service must be strictly, faithfully and fully observed."

In the present case, there is no showing that personal service of summons within a reasonable time was impossible. On 17 September 2000, Sildo went to 230 Apo Street, Sta. Mesa Heights, Quezon City, to serve the summons. There, Dominador Galura told him that the Spouses Galura were presently residing at Tierra Pura Subdivision, Tandang Sora, Quezon City. Despite being told of the Spouses Galura’s correct address, Sildo still went to G.L. Calayan Agro System, Inc. in Barrio Kalayaan, Gerona, Tarlac to serve the summons, only to find out that the property had already been foreclosed and that the Spouses Galura no longer resided there. On 26 September 2000, Sildo went to Tierra Pura Subdivision, Tandang Sora, Quezon City, and, without any explanation, served the summons on Lapuz. In his 4 October 2000 return of service, Sildo stated:

That on September 26, 2000 the undersigned went to Tandang Sora where the defendants presently residing [sic] Tierra Fura [sic] Subd. for the purpose of serving the summons, complaint together with the annexes,

That Ms. Victoria Lapuz sister-in-Law of Dante Galura received the copy of said summons, as evidence [sic] by her signature appearing on the face of original summons.

Whenever practicable, the summons must be served on the defendant in person. Substituted service may be resorted to only when service of summons within a reasonable time is impossible. Impossibility of prompt service should appear in the return of service — the efforts exerted to find the defendant and the fact that such efforts failed must be stated in the return of service. In Keister v. Judge Navarro,¹⁹ the Court held:

Service of summons upon the defendant is the means by which the court may acquire jurisdiction over his person. In the absence of a valid waiver, trial and judgment without such service are null and void. This process is solely for the benefit of the defendant. Its purpose is not only to give the court jurisdiction of the person of the defendant, but also to afford the latter an opportunity to be heard on the claim made against him.

The summons must be served to the defendant in person. It is only when the defendant cannot be served personally within a reasonable time that a substituted service may be made. Impossibility of prompt service should be shown by stating the efforts made to find the defendant personally and the fact that such efforts failed. This statement should be made in the proof of service. This is necessary because substituted service is in derogation of the usual method of service. It has been held that this method of service is "in derogation of the common law; it is a method extraordinary in character, and hence may be used only as prescribed and in the circumstances authorized by statute." Thus, under the controlling decisions, the statutory requirements of substituted service must be followed strictly, faithfully and fully, and any substituted service other than that authorized by the statute is considered ineffective.

Indeed, the constitutional requirement of due process requires that the service be such as may be reasonably expected to give the desired notice to the party of the claim against him.

In the present case, there was no showing in the return of service (1) of the impossibility of personal service within a reasonable time; (2) that Lapuz, the person on whom summons was served, was of suitable age and discretion; and (3) that Lapuz resided in the residence of the Spouses Galura. Consequently, the RTC did not acquire jurisdiction over the persons of the Spouses Galura, and thus the Spouses Galura are not bound by the RTC’s 27 June 2001 Decision and 10 November 2004 Order.²⁰

The Spouses Galura claim that the Court of Appeals erred when it ruled that they should have first availed of the ordinary remedies of new trial, appeal, or petition for relief. The Spouses Galura stated:

In the case at bar, the assailed decision was rendered in June 27, 2001. More than three years have passed since the said decision, clearly the remedies for a motion to lift order of default, new trial, appeal, petition for relief, have already prescribed. Herein petitioners, therefore, are left only with the remedy of a petition for the annulment of judgment.²¹

The Court agrees. When a petition for annulment of judgment or final order under Rule 47 is grounded on lack of jurisdiction over the person of the defendant, the petitioner does not need to allege that the ordinary remedies of new trial, appeal, or petition for relief are no longer available through no fault of his or her own. In Ancheta v. Ancheta,²² the Court held:

[T]he Court of Appeals erred in dismissing the original petition and denying admission of the amended petition. This is so because apparently, the Court of Appeals failed to take note from the material allegations of the petition, that the petition was based not only on extrinsic fraud but also on lack of jurisdiction over the person of the petitioner, on her claim that the summons and the copy of the complaint in Sp. Proc. No. NC-662 were not served on her. While the original petition and amended petition did not state a cause of action for the nullification of the assailed order on the ground of extrinsic fraud, we rule, however, that it states a sufficient cause of action for the nullification of the assailed order on the ground of lack of jursdiction of the RTC over the person of the petitioner, notwithstanding the absence of any allegation therein that the ordinary remedy of new trial or reconsideration, or appeal are no longer available through no fault of the petitioner.

In a case where a petition for annulment of a judgment or final order of the RTC filed under Rule 47 of the Rules of Court is grounded on lack of jurisdiction over the person of the defendant/respondent or over the nature or subject of the action, the petitioner need not allege in the petition that the ordinary remedy of new trial or reconsideration of the final order or judgment or appeal therefrom are no longer available through no fault of her own. This is so because a judgment rendered or final order issued by the RTC without jurisdiction is null and void and may be assailed any time either collaterally or in a direct action or by resisting such judgment or final order an any action or proceeding whenever it is invoked, unless barred by laches. (Emphasis supplied)

WHEREFORE, the Court (1) GRANTS the petition, (2) SETS ASIDE the 25 January and 28 February 2005 Resolutions of the Court of Appeals in CA-G.R. SP No. 88088, (3) MAKES PERMANENT the temporary restraining order issued on 27 April 2005, and (4) SETS ASIDE the 27 2001 Decision and 10 November 2004 Order of the Regional Trial Court, Judicial Region 3, Malolos, Bulacan, Branch 22, in Civil Case No. 473-M-2000.

SO ORDERED.

ANTONIO T. CARPIO
Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice
Chairperson

RENATO C. CORONA Associate Justice

TERESITA J. LEONARDO-DE CASTRO Associate Justice

LUCAS P. BERSAMIN
Associate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNO
Chief Justice

Footnotes

¹ Rollo, pp. 17-33.

² Id. at 6-14. Penned by Associate Justice Salvador J. Valdez, Jr., with Associate Justices Juan Q. Enriquez, Jr. and Vicente Q. Roxas concurring.

³ Id. at 75-87.

⁴ Id. at 43-51.

⁵ Id. at 70-72. Penned by Judge Candido R. Belmonte.

⁶ Id. at 73-74.

⁷ Id. at 67.

⁸ Id. at 59-62.

⁹ Id. at 68.

¹⁰ Id. at 69.

¹¹ Id. at 71-72.

¹² Id. at 73.

¹³ Id. at 75-87.

¹⁴ Id. at 80.

¹⁵ Id. at 7-11.

¹⁶ Id. at 110.

¹⁷ Id. at 24-27.

¹⁸ 433 Phil. 290, 301 (2002).

¹⁹ 167 Phil. 567, 572-573 (1977).

²⁰ Orion Security Corporation v. Kalfam Enterprises, Inc., G.R. No. 163287, 27 April 2007, 522 SCRA 617, 623-624.

²¹ Rollo, p. 31.

²² 468 Phil. 900, 911 (2004).

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