G.R. No. 195619 - Planters Development Bank vs. Chandumal

BF Homes, Inc. (BF Homes) entered into a contract to sell a parcel of land with improvements in Talon Dos, Las Piñas City, covered by Transfer Certificate of Title No. T-10779, to Julie Chandumal (respondent).
On February 12, 1993, BF Homes sold all its rights, participations, and interests in this contract to Planters Development Bank (PDB).

Chandumal paid monthly amortizations from December 1990 to May 1994 but subsequently defaulted in payments.
On July 14, 1998, PDB issued a Notice of Delinquency and Rescission of Contract with Demand to Vacate, giving Chandumal 30 days to settle arrearages and increments or face rescission.
Despite the demand, Chandumal failed to pay her obligations.

On June 18, 1999, PDB filed an action for judicial confirmation of notarial rescission and delivery of possession (Civil Case No. LP-99-0137) alleging non-payment and rescission under Republic Act (R.A.) No. 6552 (Maceda Law).
PDB attempted to deliver the required cash surrender value of P10,000.00 to Chandumal, but she was unavailable.
Summons was served by Deputy Sheriff Roberto T. Galing, who made personal service attempts on three dates (July 15, 19, and 22, 1999) but failed to personally serve Chandumal.
On August 5, 1999, substituted service was effected through Chandumal’s mother, who acknowledged receipt of summons.

Chandumal did not file an answer within the reglementary period; PDB filed an ex parte motion to declare her in default, granted by the RTC on January 12, 2001.
On February 23, 2001, Chandumal filed an Urgent Motion to Set Aside Order of Default and to Admit Attached Answer, claiming she did not receive summons and alleging excusable negligence.
Her answer denied PDB’s demand and contended PDB did not tender the correct cash surrender value as mandated by R.A. No. 6552. She claimed payments made amounted to P782,000.00, entitling her to a surrender value of P391,000.00.
The RTC denied her motion to set aside the order of default and her motion for reconsideration.

PDB was allowed to present evidence ex parte.
On May 31, 2004, the RTC rendered a decision confirming the notarial rescission, ordering PDB to deposit P10,000.00 as cash surrender value, and directing the defendant to pay P50,000.00 attorney’s fees and costs.

Chandumal appealed the RTC decision to the CA.
On July 27, 2010, the CA nullified and vacated the RTC decision on the ground of invalid and ineffective substituted service of summons without ruling on the merits of the rescission.
PDB’s motion for reconsideration was denied by the CA on February 16, 2011.

PDB questioned the CA’s ruling, asserting: improper service was not valid substituted service; Chandumal voluntarily submitted to jurisdiction through her motion to set aside default; and the RTC properly confirmed the notarial rescission.

Whether substituted service of summons upon Chandumal was valid and proper.
Whether Chandumal voluntarily submitted to the jurisdiction of the RTC.
Whether the contract to sell was validly rescinded by notarial act pursuant to Section 3(b) of R.A. No. 6552.