Case Summary (G.R. No. 167232)
Factual Antecedents
The dispute arises from a Purchase Receivables Agreement (PRA) between LBP and LLCI, where LBP granted credit accommodations up to P95 Million to LLCI for liquidity purposes. This arrangement included the assignment of LLCI's receivables as collateral. Emmanuel and Fe Zapanta, as spouses, executed a Comprehensive Surety Agreement, incurring solidary liability for LLCI’s obligations. LLCI defaulted on the loan leading LBP to file a complaint against both LLCI and the spouses Zapanta.
Proceedings Before the RTC
Initial summons were served on the Zapantas on November 20, 2013, with the return indicating Fe authorized their maid to receive the summons. LBP subsequently moved to declare the Zapantas in default. The RTC granted this motion and subsequently denied the Zapantas' Omnibus Motion to lift the order of default, asserting they failed to demonstrate valid reasons for their failure to respond timely due to illness and lack of awareness.
CA Decision
The Court of Appeals (CA) granted the Zapantas' petition for certiorari, ruling that there was no valid service of summons and that the RTC had gravely abused its discretion in refusing to lift the order of default based on Emmanuel’s illness. The CA indicated that lifting the default was appropriate, emphasizing substantial justice due to the significant financial stake involved and recognizing that the assignment of receivables constituted a legitimate defense.
Issues Raised by LBP
LBP contended that:
- The Zapantas were estopped from questioning the summons' service validity.
- The CA erred in attributing Emmanuel's illness to excusable negligence justifying the lifting of default.
- The CA incorrectly found that the Zapantas had a meritorious defense.
Response by the Zapantas
The spouses asserted LBP's petition was improper since it addressed interlocutory orders and raised factual issues, maintaining that the CA's factual findings were binding and founded on substantial evidence.
Court's Ruling on the Procedural Issues
The Supreme Court found merit in the procedural grounds argued by the Zapantas. It clarified that LBP’s petition was indeed a challenge to interlocutory orders, which are usually not appealable. The CA’s rulings were not merely incidental but resolved core issues regarding the parties' rights.
Validity of Service of Summons
The RTC acknowledged valid service based on substituted service to the household help of the Zapantas. However, the CA ruled this service was inadequate as it did not follow the essential conditions for a valid substituted service, notably the requirement of multiple attempts at personal service and giving a summons to a person of suitable age and discretion.
Lifting of the Order of Default
The CA decided Emmanuel's illness constituted an accident justifying the non-filing of an answer. However,
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Case Background
- The case is a Petition for Review on Certiorari filed by Land Bank of the Philippines (LBP) seeking to reverse the Court of Appeals' (CA) Decision dated October 21, 2016, and its Resolution dated February 10, 2017.
- Respondents include La Loma Columbary, Inc. (LLCI) and spouses Emmanuel R. Zapanta and Fe Zapanta.
- The lower court's orders declared the respondents in default due to their failure to file an answer in a case where LBP sought to collect a sum of money following LLCI's default on a loan.
Factual Antecedents
- LLCI is a corporation engaged in real estate development, including the sale of columbary vaults and memorial parks.
- On February 22, 2010, LBP and LLCI entered into a Purchase Receivables Agreement (PRA), granting LLCI credit accommodation of up to P95 million.
- As security, the spouses Zapanta executed a Comprehensive Surety Agreement, assuming solidary liability for LLCI's obligations.
- LLCI defaulted on its obligations, prompting LBP to file a complaint for a sum of money against LLCI and the spouses Zapanta.
Proceedings Before the RTC
- Summons were served to the spouses Zapanta on November 20, 2013, and to LLCI the following day.
- The sheriff's return indicated that Fe Zapanta authorized a household maid to receive the summons on their behalf.
- LBP moved to declare the respondents in default on January 16, 2014, which the RTC granted on January 24, 2014.
- The spouses Zapanta filed an Omnibus Motion to lift the order of default, citing Emmanuel's illness and Fe's lack of awareness regarding the case.
- The RTC denied the motion on October 22, 2014, and again on March 17, 2015, stating that the respondents failed to show sufficient cause for their default.
CA Decision
- The CA granted the