G.R. No. 163653 - Commissioner of Internal Revenue vs. Filinvest Development Corp.

Case Digest (G.R. No. 163653)
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Facts:

Initiation of the Case

Petitioners, Patricia S. Villareal (for herself and as guardian of her minor children, Claire Hope and Tricia) filed a complaint in the Regional Trial Court (RTC) of Makati, Metro Manila, in Civil Case No. 16194.
The complaint sought recovery of damages amounting to P1,944,000.00 in connection with the killing of petitioners’ husband, Jose Villareal, on June 6, 1986.
It was discovered that the private respondents, Eliseo Sevilla and Erna Sevilla, had left the country soon after the murder and had begun disposing of their properties in the Philippines.

Pre-Trial and Attachment Proceedings

On March 11, 1987, after a hearing where witness Deborah Alamares provided an address for the respondents in the United States, the trial court ordered the attachment of the respondents’ properties upon the posting of a bond of P500,000.00.
Deputy Sheriff Eulalio C. Juanson executed the attachment on March 17, 18, and 19, 1987.
On July 21, 1987, petitioners filed a Motion for Leave for Extraterritorial Service, asserting the non-residency of the respondents. The motion was granted, and summons were served by registered mail at an address in California on August 17, 1987.
A subsequent motion to declare the respondents in default was denied on October 12, 1987, with the court noting possible inaccuracies in the address provided.

Modification of Orders and Subsequent Service

On October 13, 1987, the trial court, motu proprio, set aside its March 11, 1987, order due to the claim being unliquidated, releasing the attached properties.
On December 21, 1987, the trial court modified its order by permitting an attachment of P30,000.00—the amount representing the value of human life as fixed by the Court.
Petitioners later obtained permission (on August 29, 1988) to serve summons by publication. Summons and related documents were published in the Manila Times (on November 29, December 6, and 13, 1988) and also sent by registered mail to the last known addresses of the respondents in both the Philippines and the United States.
The mail sent to the United States was returned on January 17, 1989, with the notation “Moved, left no address.”

Default Declarations and Amendments

On March 7, 1989, petitioners filed a Motion to Declare the respondents in default for failing to answer within the prescribed 60-day period from the last publication date. The trial court declared the respondents in default on April 11, 1989 and allowed the petitioners to present ex-parte evidence.
The complaint was subsequently amended to conform to the evidence presented, and the amount of damages prayed for was increased to P13,082,888.00, plus 50% thereof as attorney’s fees. Petitioners also included the minor children as plaintiffs in the amended complaint.
On August 29, 1989, the trial court admitted the amended complaint and granted the Motion for Extra-territorial Service of Summons. Summons were again published (weekly for three consecutive weeks) and sent by registered mail to the respondents’ known addresses; however, the documents were returned with notations such as “MOVED” and “REFUSED TO RECEIVE.”

Respondents’ Appearance and Subsequent Motions

On January 24, 1990, the trial court declared the respondents in default for the second time due to their failure to file an answer to the amended complaint.
On February 7, 1990, respondent Eliseo Sevilla’s counsel, Teresita Marbibi, filed a Notice of Appearance on behalf of the respondents.
On February 14, 1990, through counsel, the respondents filed a verified Motion to Lift the Order of Default with Motion for Reconsideration, stating they had been unaware of the case and denying involvement in the killing.
The trial court, however, denied the motion on March 27, 1990, and on April 2, 1990, rendered a decision finding the respondents liable for the killing of Jose Villareal, ordering them jointly and severally to pay in excess of P10 million in damages.

Post-Judgment Developments and Appeal Issues

After the decision and denial of the Motion to Lift the Order of Default, the respondents filed a series of motions for reconsideration and supplemental motions, asserting for the first time that the court lacked jurisdiction over their persons.
On August 10, 1990, the trial court denied the respondents’ motions and simultaneously granted the Motion for Execution Pending Appeal. Consequently, a Writ of Execution Pending Appeal was issued on August 14, 1990, and various notices and orders (including a Notice of Levy over respondents’ properties) were served on or about that period.
The trial court ruled on October 2, 1990, that a Notice of Appeal filed by the respondents on August 21, 1990, was untimely on the ground that the appeal period should have been reckoned from the receipt of the original order on August 21, 1990—not from an earlier photocopy received on August 16, 1990.
Further motions by respondents ensued, including a Motion to Set Aside/Reconsider the October 2, 1990, order, which was denied on December 17, 1990.
The trial court entered judgment on January 29, 1991, and on February 15, 1991, respondents filed a Motion for Reconsideration with requests to elevate records and quash the judgment entry—motions that were also denied.
Finally, on September 11, 1991, the respondents filed a petition for certiorari, prohibition, and mandamus with a preliminary injunction in the Court of Appeals, contesting the trial court’s jurisdiction over them and the denial of their appeal.

Court of Appeals Decision

On December 23, 1991, the Court of Appeals granted respondents’ petition, setting aside the trial court’s default orders, hearing ex-parte, default judgment, and execution pending appeal.
The appellate ruling held that the trial court had abused its discretion by converting an action in personam into one aimed at enforcing a money judgment against non-resident defendants merely through the attachment of their properties.
The appellate court also pointed out that the respondents had acquired personal jurisdiction by their voluntary appearance in the trial court, and as such, the trial court’s subsequent rendering of a personal judgment against them was proper.
Moreover, the Court of Appeals identified grave abuse of discretion in the trial court’s method of computing the timeliness of the appeal, thereby ordering the trial court to give due course to the respondents’ appeal while maintaining the attachment on their properties.

Issues:

Whether the trial court properly acquired personal jurisdiction over the non-resident respondents through extra-territorial service and their subsequent voluntary appearance.
Whether the attachment of the respondents’ properties was proper given that the petitioner’s claims, being initially unliquidated, posed jurisdictional challenges.
Whether the respondents’ failure to timely file responsive pleadings could be excused by demonstrating accident, mistake, or excusable neglect.
Whether the trial court erred in determining the applicable date for the commencement of the appeal period (photocopy received on August 16, 1990, versus the original order received on August 21, 1990).
Whether the trial court committed grave abuse of discretion in denying the respondents’ motions to lift the default and in handling their subsequent appeals.

Ruling:

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Ratio:

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