G.R. No. 244129 - Sarol vs. Spouses Diao

Case Summary (G.R. No. 244129)

Petitioner

Eleonor Sarol purchased Lot No. 7150 (1,217 sq. m.) in Guinsuan, Poblacion, Zamboanguita, Negros Oriental, from Claire Chiu in 2007 for P2,000,000.00; initial payments and the Deed of Sale (July 20, 2011) were completed, and a Transfer Certificate of Title in Sarol’s name issued on February 16, 2012. Sarol possessed and developed the property as a beach resort, later residing in Germany and appointing her father and a resort manager to manage her Philippine assets.

Respondents

Spouses Diao own the property adjacent to Lot No. 7150. A survey prepared prior to Sarol’s acquisition erroneously included 464 sq. m. of the Diaos’ land within Lot No. 7150. Upon learning of the overlap in 2009, the Diaos demanded return of their portion; when unsuccessful, they filed suit in 2015 seeking partial cancellation of the title instruments, reconveyance of the 464 sq. m., and damages.

Key Dates and Procedural Milestones

2007: Sarol’s purchase and possession of the property.
July 20, 2011: Deed of Sale executed.
February 16, 2012: TCT issued in Sarol’s name.
2009: Spouses Diao learn of the overlap.
2015: Spouses Diao file Civil Case No. 2015‑15007 in RTC Branch 44.
April 16, 2015: Sheriff’s Return of Summons (initial).
July 2015: Sheriff’s Return of Alias Summons (failed personal attempts).
February 5, 2016: RTC order permitting service by publication and mailing to last known address.
January 25, 2017: Claire Chiu and Sarol declared in default.
December 13, 2017: RTC Decision in favor of the Diaos (reconveyance; damages; attorney’s fees).
May 2, 2018: Writ of Execution issued.
December 13, 2018: CA Resolution dismissing Sarol’s petition for annulment of judgment.
December 9, 2020: Supreme Court decision granting the petition for review.

Applicable Law and Procedural Rules

The Court’s analysis centers on procedural due process under the 1987 Philippine Constitution and the Rules of Court. Key Rules cited include Rule 14 (Sections 7, 15, 16) governing substituted service, extraterritorial service by publication and mailing, and service upon residents temporarily abroad; and Rule 47 (Sections 1 and 2) on annulment of judgments for lack of jurisdiction or extrinsic fraud. The Court reiterated precedents that strict compliance with statutory requirements for service by publication and complementary mailing is essential, and that failure to effect proper service is a jurisdictional defect rendering subsequent proceedings void.

Factual Background Relevant to Service

Summons issued in the RTC case listed Sarol’s address as “Guinsuan, Poblacion, Zamboanguita, Negros Oriental” (the location of the disputed property). Sheriff Tale’s returns state personal service could not be effected because Sarol was out of the country; the sheriff’s inquiries to the resort caretaker indicated Sarol had arrived and departed during a short interval and that the caretaker was unaware of her presence. Spouses Diao moved for extraterritorial service by publication; the RTC ordered publication for two consecutive weeks in Dumaguete City and Negros Oriental and directed that copies of the summons and order be sent by registered mail to the last known address of Sarol in Guinsuan, Poblacion, Zamboanguita.

RTC Decision and Judgment

After Claire Chiu answered but failed to appear at pretrial and Sarol filed no pleadings, both were declared in default. The RTC proceeded ex parte and, on December 13, 2017, rendered judgment: partially declaring the sale instruments null and void insofar as they affected the Diaos’ lot; ordering reconveyance of the 464 sq. m.; awarding moral and exemplary damages and attorney’s fees; dismissing the counterclaim. The decision became final and was followed by a Writ of Execution.

Court of Appeals Ruling

The CA dismissed Sarol’s Petition for Annulment of Judgment. The CA reasoned that Sarol was a Filipino resident who was temporarily abroad, thus Section 16 (residents temporarily out of the Philippines) applied and allowed service by modes in Section 15 (extraterritorial service). The CA found that personal service was impossible and that the RTC properly authorized publication; it concluded service by publication (with the complementary mailing requirement) satisfied due process and that Sarol failed to show clear facts and law warranting annulment.

Petitioner’s Arguments on Appeal

Sarol asserted defective service of summons. She argued the address used (Guinsuan, Poblacion, Zamboanguita) was incorrect—her last known Philippine residence was Tamisu, Bais City—and she was a permanent resident of Germany. Sarol contended substituted service under Section 7 was not attempted properly (no service on a person of suitable age at her true residence), the mailing requirement under Section 15 was not complied with (no registered mail to her Tamisu address or Germany), Section 14 conditions for publication were not met (she was known and her whereabouts could be ascertained), and there was no affidavit of the publisher/editor proving publication.

Respondents’ Arguments on Appeal

Spouses Diao maintained Sarol had knowledge of the case or evaded service: she regularly returned to the resort, the caretaker had an arrangement to inform the sheriff of her presence yet represented she had left, and the sheriff’s returns showed diligent attempts. They argued Sarol deliberately evaded service and thus lost the opportunity to defend; they contended annulment was not appropriate where the petitioner had other remedies but deliberately avoided service.

Supreme Court Findings on Residence and Service

The Supreme Court gave weight to Sarol’s Deed of Sale and the TCT, both indicating her residence as Tamisu, Bais City, Negros Oriental. The Court found no allegation or evidence contradicting those records; hence Guinsuan could not be treated as Sarol’s residence for purposes of substituted service under Section 7. The sheriff’s returns did not show substituted service on any person of suitable age and discretion at Guinsuan or any competent person at a business address. Consequently, substituted service requirements were not satisfied.

Supreme Court Findings on Publication and Mailing Requirements

The Court reiterated that extraterritorial service by publication under Section 15 requires that a copy of the summons and order be sent by registered mail to the defendant’s last known correct address as a complement to publication. Section 16 (residents temporarily out of the Philippines) incorporates the same procedure. The RTC’s order directed mailing to the Guinsuan address the complainants supplied; however, the Court found Sarol’s last known address was Tamisu, Bais City. The records showed no proof that the required registered mail was sent to Tamisu (or to any correct last known address). The Court emphasized that strict compliance with publication‑and‑mailing requirements is mandatory and that failure to mail to the last known correct address is a fatal defect.

Jurisdictional Consequence and A

Case Syllabus (G.R. No. 244129)

Facts of the Case

In 2007, petitioner Eleonor Sarol purchased from Claire Chiu a parcel of land located in Guinsuan, Poblacion, Zamboanguita, Negros Oriental, designated as Lot No. 7150, with an area of 1,217 square meters.
Purchase price claimed by Sarol was P2,000,000.00: P1,800,000.00 paid initially and the remaining P200,000.00 settled in 2011.
A Deed of Sale was executed on July 20, 2011 in connection with the remaining balance payment.
The Original Certificate of Title (OCT) No. FV-44750 in the name of Claire Chiu was cancelled and Transfer Certificate of Title (TCT) No. 103-2012000605 was issued in the name of Sarol on February 16, 2012.
Sarol possessed the property since 2007 and developed a beach resort; she later left the Philippines to reside in Germany and appointed her father, Emproso Sarol, to manage her Philippine assets and Marie Jeane Alanta-ol to manage the beach resort.
Spouses George Gordon Diao and Marilyn A. Diao own an adjacent parcel; a prior survey allegedly included an erroneous overlap of 464 square meters of the Diaos’ property within Lot No. 7150.
The Diaos discovered the overlap in 2009 and demanded reconveyance from Claire Chiu and Sarol, but the demands were unsuccessful.
In 2015, the Diaos filed Civil Case No. 2015-15007 in RTC Branch 44, Dumaguete City (Spouses George Gordon Diao and Marilyn Diao v. Claire Chiu, Ginghis Gamaliel D. Chiu, Register of Deeds of Negros Oriental, and Eleonor Sarol), seeking partial cancellation of the contracts that conveyed Lot No. 7150, reconveyance of the 464-square-meter portion to them, and damages.

Summons, Service Attempts, and Sheriff’s Returns

Summons were issued for Claire Chiu, her husband, the Register of Deeds, and Sarol; the address indicated for Sarol in the summons was "Guinsuan, Poblacion, Zamboanguita, Negros Oriental" — the location of the disputed property.
Sheriff IV Norman Stephen Tale’s Sheriffs Return dated April 16, 2015 stated summons was served on Claire Chiu but not on Sarol because "she is out of the country."
The Diaos moved for alias summons. The Sheriff’s Return of Alias Summons dated July 25, 2015 reported three failed attempts to personally serve Sarol at Guinsuan; the return narrates attempts on July 10 and July 11, 2015 and statements from the caretaker that Sarol had returned July 3 and left July 7, 2015.
The sheriff’s returns recorded inquiries to the caretaker and the caretaker’s statements but did not show substituted service to a person of suitable age and discretion as required under Section 7, Rule 14.

RTC Proceedings, Default, Decision, and Execution

On motion of plaintiffs, and after Claire Chiu failed to appear at pre-trial and Sarol filed no pleadings, the RTC declared Claire Chiu and Sarol in default in an Order dated January 25, 2017; default allowed plaintiffs to present evidence ex parte.
On December 13, 2017, the RTC (Presiding Judge Neciforo C. Enot) rendered judgment in favor of the Diaos. The dispositive portion ordered, among others:
- Partial nullification of the Deed of Confirmation and Ratification of Sale and the Deed of Absolute Sale insofar as they affect the plaintiffs’ lot;
- Reconveyance by defendants of the 464-square-meter portion of Lot No. 7150 to the plaintiffs by executing a deed of conveyance;
- Payment by the Chiu defendants of P30,000.00 as moral damages, P15,000.00 as exemplary damages, and attorney’s fees of P15,000.00 based on quantum meruit;
- Dismissal of defendants’ counterclaim for lack of merit; costs against the defendants.
The RTC Decision became final and executory. On motion of the Diaos, a Writ of Execution was issued on May 2, 2018.

Petition for Annulment before the Court of Appeals

Sarol filed a Petition for Annulment of Judgment under Rule 47 with the Court of Appeals (CA) seeking nullification of the RTC Decision for lack of jurisdiction over her person, asserting defective or absent service of summons.
The CA, in a Resolution dated December 13, 2018 (CA-G.R. SP No. 12099), dismissed Sarol’s petition.
The CA concluded Sarol was a Filipino resident temporarily out of the country and that Section 16, Rule 14 applied, allowing extraterritorial service in the modes provided by Section 15 — including by publication with registered mail to last known address — and found that summons was served by publication; having failed to timely file an answer, Sarol had been properly declared in default. The CA found Sarol failed to show clear facts and laws for annulment.

Reliefs Sought in the Underlying Complaint and Remedies Available

The Diaos sought: partial cancellation of the contracts from which Claire Chiu derived title; reconveyance of a 464-square-meter portion of Lot No. 7150; damages against Claire Chiu and Sarol.
The opinion notes that, had proper service been effected, Sarol would have had ordinary remedies to challenge the RTC Decision: motion for new trial, appeal, certiorari, petition for relief from judgment, among others.

Petitioner’s (Sarol’s) Arguments on Appeal to the Supreme Court

Sarol reasserted that the RTC did not acquire jurisdiction over her person because she was not validly served with summons.
She contended the address used for her in the summons, Guinsuan, Poblacion, Zamboanguita, was incorrect and that she never resided there; her last known Philippine address was in Barangay Tamisu, Bais City, Negros Oriental.
Sarol maintained she migrated to Germany after purchasing the property and was a permanent resident in Germany, so personal service at Guinsuan could not have been validly effected.
She argued substituted service under Section 7, Rule 14 was not proved; the sheriff merely inquired of the resort caretaker and did not effect substituted service on a person of suitable age and discretion at her true residence or business address.
Sarol contended the RTC erred in allowing service by publication because:
- Section 14, Rule 14 (service by publication) applies when the defendant is unknown or whereabouts cannot be ascertained by diligent inquiry — which she argued was not the case because the Diaos knew she resided in Germany;
- Section 15, Rule 14 requires that copies of the summons and court order be sent by registered mail to the last known address of the defendant — Sarol asserted no registered mail was sent to her last known Philippine address (Tamisu) or to her German address;
- Section 16, Rule 14 (residents temporarily out of the Philippines) w