G.R. No. 79184 - Ponce vs. Legaspi

Case Summary (G.R. No. 79184)

Factual Background

The petitioner instituted a complaint for judicial foreclosure of mortgage against the respondent on January 12, 2015. The clerk of court issued summons dated January 26, 2015 addressed to the respondent’s known address at 155 Haig Street, Mandaluyong City. The Sheriff’s Return dated January 29, 2015 recited that service was effected by substituted service pursuant to Sec. 7, Rule 14, leaving copies of the summons and complaint with a certain Giovanna Marcantonio described in the Return as the respondent’s “niece.” The respondent did not file a responsive pleading and the trial court declared her in default, allowed plaintiff’s presentation of evidence ex parte, and submitted the case for resolution.

Motion to Set Aside Order of Default and Trial Court Rulings

After learning of the case in April 2016, the respondent filed a Motion to Set Aside/Lift Order of Default and to Re-Open Trial dated April 11, 2016, asserting defective service of summons, that she resided in Cavite and no longer in Mandaluyong, and that the summons had been received by her daughter Giovanna who failed to inform her. The motion also alleged meritorious defenses, including alleged fraudulent misrepresentation and payments that controverted the amount claimed. The RTC denied the motion in its Order of August 15, 2016, finding substituted service valid as shown by the Sheriff’s Return. A motion for reconsideration was denied in the RTC’s September 22, 2017 Order, the court holding that the respondent’s filings amounted to a voluntary appearance that vested the court with jurisdiction over her person.

Court of Appeals Proceedings and Ruling

The respondent petitioned the Court of Appeals for certiorari and prohibition under Rule 65, contending grave abuse of discretion by the RTC in validating substituted service and in construing her motions as voluntary appearance. The CA, in its Decision dated June 29, 2018, found that substituted service was improperly resorted to because the Sheriff made only a single attempt at personal service and failed to describe the circumstances of any attempted personal service, contrary to the standard requiring best efforts as explained in Manotoc v. Court of Appeals. The CA further held that the respondent’s motions were not voluntary appearances that cured the jurisdictional defect because they were filed precisely to challenge the court’s jurisdiction. The CA annulled the RTC Orders of August 15, 2016 and September 22, 2017 and directed the RTC to allow the respondent to file a responsive pleading.

Issue on Review

The principal issue before the Supreme Court was whether the respondent may be granted relief from the RTC’s default order and whether her filings amounted to a voluntary submission to the jurisdiction of the trial court that cured defective service of summons. The petitioner did not contest the CA’s finding of invalid substituted service at the Supreme Court stage but argued that the respondent’s motion to set aside default constituted voluntary submission to jurisdiction and therefore bound her to the proceedings.

Parties’ Contentions before the Supreme Court

The petitioner maintained that the defect in service was cured by the respondent’s filing of the motion to set aside the default, which amounted to voluntary appearance and conferred jurisdiction such that the proceedings before the RTC were binding upon the respondent. The respondent argued that she consistently and at the first opportunity questioned the trial court’s jurisdiction due to improper service, that she expressly sought the right to file a responsive pleading, and that the RTC erroneously treated her motion as a responsive pleading while depriving her of the opportunity to participate in the trial.

Supreme Court Ruling (Disposition)

The Supreme Court denied the petition and affirmed the CA Decision dated June 29, 2018 and the CA Resolution dated November 23, 2018. The Court annulled and set aside the RTC Decision of May 25, 2018 rendered during the CA proceedings. The RTC was directed to allow Carlita C. Marcantonio to file a responsive pleading within the time prescribed by the Rules of Court, to permit her participation in the foreclosure proceedings, and thereafter to resolve the case with utmost dispatch.

Legal Basis and Reasoning on Substituted Service

The Court agreed with the CA that the substituted service was defective, invalid, and ineffectual. The Court reiterated the settled requirement that resort to substituted service is exceptional and permissible only after the sheriff establishes the impossibility of prompt personal service by at least three best-effort attempts, preferably on two different dates within a reasonable period such as one month, and by stating why those efforts failed, as required by Manotoc v. Court of Appeals. The Sheriff here made a single attempt and offered a generalized assertion that “earnest efforts were exerted,” without factual description. The Sheriff also misidentified the person who received the papers as the respondent’s niece when the record showed the recipient to be the respondent’s daughter. These lapses rendered substituted service insufficient.

Legal Basis and Reasoning on Voluntary Submission and Due Process

The Court held that the respondent’s filing of the motion to set aside the default did constitute a voluntary submission to the jurisdiction of the trial court and thereby cured the notice aspect of due process. The Court emphasized, however, that voluntary submission cures only the notice element of due process and does not by itself satisfy the hearing element. The Court explained that the twin requirements of due process are notice and hearing. Although the respondent was deemed notified when she sought affirmative relief to participate, the RTC’s insistence on the validity of its default order and refusal to allow the respondent to participate deprived her of the opportunity to be heard. The denial of the hearing aspect rendered subsequent proceedings null and void on due process grounds. The Court relied on the remedial avenues for a party declared in default as enumerated in Lina v. Court of Appeals and related jurisprudence, and treated the trial court’s exclusion o

Case Syllabus (G.R. No. 79184)

Parties and Procedural Posture

Felicitas Z. Belo filed a complaint for foreclosure of mortgage against Carlita C. Marcantonio on January 12, 2015.
The Regional Trial Court, Branch 208, Mandaluyong City declared Respondent in default after no responsive pleading was filed and allowed Petitioner to present evidence ex parte.
Respondent filed a Motion to Set Aside/Lift Order of Default and to Re-Open Trial on April 11, 2016 alleging defective service of summons and asserting meritorious defenses.
The RTC denied the Motion in an Order dated August 15, 2016 and denied a motion for reconsideration in an Order dated September 22, 2017, the latter ruling that Respondent’s motions constituted voluntary appearance.
Respondent petitioned the Court of Appeals for certiorari and prohibition, which in a Decision dated June 29, 2018 annulled and set aside the RTC Orders and directed the RTC to permit Respondent to file a responsive pleading.
Petitioner sought review in the Supreme Court by a Petition for Review on Certiorari assailing the CA Decision and its subsequent denial of reconsideration in a Resolution dated November 23, 2018.

Key Factual Allegations

The clerk of court issued summons dated January 26, 2015 addressed to Respondent's known address at 155 Haig St., Mandaluyong City.
The Sheriff’s Return dated January 29, 2015 stated that substituted service was effected on January 28, 2015 through a certain Giovanna Marcantonio described as Respondent's "niece."
Respondent later averred that the summons was actually received by her daughter, not her niece, and that she resided in Cavite and never received the summons.
Respondent alleged in her Motion that the foreclosure was pursued through fraudulent misrepresentation by a third party and that payments had been made which contradicted the amount claimed.

Sheriff’s Return and Service Defects

The Sheriff’s Return invoked Sec. 7 - Rule 14 and referenced Sec. 8 - Rule 14 and asserted that substituted service was effected because the defendant was not around at the given address.
The Sheriff made a single attempt at personal service and did not describe the circumstances of the attempt, thereby failing to comply with the requirements for substituted service.
The Sheriff misidentified the recipient as Respondent's "niece" when the Motion indicated the recipient was actually Respondent's daughter.

Trial Court Proceedings

The RTC, in its August 15, 2016 Order, found the Sheriff’s Return adequate and denied Respondent’s Motion to Set Aside the default.
The RTC, in its September 22, 2017 Order, denied reconsideration and held that Respondent’s filing of the Motion and the motion for reconsideration constituted voluntary appearance which vested the court with jurisdiction over her person.
While the CA proceedings were pending, the RTC issued a Decision dated May 25, 2018 ruling in favor of Petitioner, which the Supreme Court la