G.R. No.

152776 October 8, 2003

HENRY S. OAMINAL, petitioner,

vs.
PABLITO M. CASTILLO and GUIA S. CASTILLO, respondents.

In the instant case, the receipt of the summons by the legal secretary of the defendants -- respondents
herein -- is deemed proper, because they admit the actual receipt thereof, but merely question the
manner of service. Moreover, when they asked for affirmative reliefs in several motions and thereby
submitted themselves to the jurisdiction of the trial court, whatever defects the service of summons
may have had were cured.

FACTS:

Oaminal filed a complaint for collection against Pablito and Guia Castillo with RTC QC. The summons
with complaint was served upon Ester Fraginal, secretary of Mrs. Castillo.

Defendants filed an urgent motion to declare service of summons improper and legally defective. They
alleged that Sheriff failed to comply with Sec 1, Rule 14 of the ROC or the substituted service of
summons. No hearing was conducted for the said motion.

Oaminal filed an Omnibus Motion to declare defendant in default and to render judgment because
defendant failed to file an answer within the reglementary period.

Defendants filed Omnibus Motion Ad Cautelam to Admit Motion to Dismiss and Answer with
Compulsory Counter-claim. Further, it also filed an Urgent Motion to dismiss. All of which were filed on
the same day.

RTC denied the motion the dismiss and admitted defendant’s Answer then set the case for pre-trial.

Defendants filed an 'Urgent Omnibus Motion for Reconsideration with the Accompanying Plea to Reset'.

RTC ruled that the 'Omnibus Motion Ad Cautelam to Admit Motion to Dismiss and Answer with
Counterclaim' was filed outside the period to file answer, hence he (1) denied the Motion to Admit
Motion to Dismiss and Answer; (2) declared [respondents] in default; and (3) ordered [petitioner] to
present evidence ex-parte within ten days from receipt of [the] order, [failing] which, the case will be
dismissed.

RTC ruled on the merits of the case which were made in favor of the plaintiffs.

Defendants filed with the CA a Petition for certiorari, prohibition and injunction, with a prayer for a writ
of preliminary injunction or temporary restraining order (TRO). In the main, they raised the issue of
whether the trial court had validly acquired jurisdiction over them.

The CA ruled that the trial court did not validly acquire jurisdiction over respondents, because the
summons had been improperly served on them. It based its finding on the Sheriff's Return, which did
not contain any averment that effort had been exerted to personally serve the summons on them
before substituted service was resorted to.

Issue:
Whether or not receipt by a legal secretary of a summons is deemed receipt by a lawyer in
contemplation of law.

Ruling:

NO. However, the lower court still acquired jurisdiction over the defendants when they submit
themselves voluntarily to the jurisdiction of the trial court.

Assuming arguendo that the service of summons was defective, such flaw was cured and respondents
are deemed to have submitted themselves to the jurisdiction of the trial court when they filed an
Omnibus Motion to Admit the Motion to Dismiss and Answer with Counterclaim, an Answer with
Counterclaim, a Motion to Inhibit, and a Motion for Reconsideration and Plea to Reset Pre-trial. The
filing of Motions seeking affirmative relief -- to admit answer, for additional time to file answer, for
reconsideration of a default judgment, and to lift order of default with motion for reconsideration --
are considered voluntary submission to the jurisdiction of the court. Having invoked the trial court's
jurisdiction to secure affirmative relief, respondents cannot -- after failing to obtain the relief prayed for
-- repudiate the very same authority they have invoked.

G.R. No. 144662 October 13, 2003

SPOUSES EFREN MASON and DIGNA MASON, petitioners,

vs.
THE HONORABLE COURT OF APPEALS and COLUMBUS PHILIPPINES BUS CORPORATION, respondents.

Facts:

Efren and Digna Mason owned two parcels of land which Columbus Philippines leased per agreement it
entered with the plaintiffs. Under the lease agreement, Columbus Philippines undertook to construct a
building at the end of the third year. Columbus failed to comply and hence the spouses filed a complaint
for rescission of the agreement with damages in RTC of Pasay.

Summons was served upon private respondent through a certain Ayreen Rejalde. While the receiving copy
of the summons described Rejalde as a secretary of Columbus, the sheriff’s return described Rejalde as a
secretary to the corporate president, duly authorized to receive legal processes.

Private respondent failed to file its answer or other responsive pleading, hence petitioners filed a motion
to declare private respondent in default. The motion was granted and petitioners were allowed to present
evidence ex-parte. Thereafter, the case was submitted for decision.

RTC ruled in favor of the plaintiffs.

That decision became final however, the following day, private respondent filed a motion to lift order of
default, which was opposed by petitioners. The trial court ordered the parties to submit their respective
memoranda. However, without waiting for the same, the trial court on May 26, 1999, denied the motion
to lift order of default.
The Order of this Court on May 21, 1999 allowing the parties to file their respective memoranda within
ten (10) days from May 21, 1999 is hereby revoked and set aside, since the incidents can be resolved
based on the records.

Private respondent filed a motion for reconsideration, which was denied. Undaunted, private respondent
filed a manifestation and motion to lift the writ of execution. It suffered the same fate as the motion for
reconsideration for being dilatory. The branch sheriff was directed to proceed with the enforcement of
the decision.

Private respondent appealed to the Court of Appeals, which ruled in its favor. It reasoned out that the
trial court erred when it denied private respondent’s motion to lift order of default. The appellate court
pointed out that private respondent was not properly served with summons, thus it cannot be faulted if
it failed to file an Answer. Since service upon private respondent was made through a certain Ayreen
Rejalde, a mere filing clerk in private respondent’s office, as evidenced by the latter’s employment record,
such service cannot be considered valid.

Issue:

a. Whether or not there is valid service of summons for the trial court to acquire jurisdiction over
the defendants.
b. Whether private respondent’s motion to lift order of default was in order.

Ruling;

a. No. SC ruled in favor of the respondents and affirmed the decision of CA that there was no valid
service of summons.

SC agreed to respondent’s arguments that the designation of persons or officers who are authorized to
accept summons for a domestic corporation or partnership is now limited and more clearly specified in
Section 11, Rule 14 of the 1997 Rules of Civil Procedure. The rule now states "general manager" instead
of only "manager"; "corporate secretary" instead of "secretary"; and "treasurer" instead of "cashier." The
phrase "agent, or any of its directors" is conspicuously deleted in the new rule.

The service of summons through Ayreen Rejalde, a mere filing clerk of private respondent and not one of
those enumerated above, is invalid.

The question of whether the substantial compliance rule is still applicable under Section 11, Rule 14 of
the 1997 Rules of Civil Procedure has been settled in Villarosa which applies squarely to the instant case.
In the said case, petitioner E.B. Villarosa & Partner Co. Ltd. (hereafter Villarosa) with principal office
address at 102 Juan Luna St., Davao City and with branches at 2492 Bay View Drive, Tambo, Parañaque,
Metro Manila and Kolambog, Lapasan, Cagayan de Oro City, entered into a sale with development
agreement with private respondent Imperial Development Corporation. As Villarosa failed to comply with
its contractual obligation, private respondent initiated a suit for breach of contract and damages at the
Regional Trial Court of Makati. Summons, together with the complaint, was served upon Villarosa through
its branch manager at Kolambog, Lapasan, Cagayan de Oro City. Villarosa filed a Special Appearance with
Motion to Dismiss on the ground of improper service of summons and lack of jurisdiction. The trial court
denied the motion and ruled that there was substantial compliance with the rule, thus, it acquired
jurisdiction over Villarosa. The latter questioned the denial before us in its petition for certiorari. We
decided in Villarosa’s favor and declared the trial court without jurisdiction to take cognizance of the
case.1awphi1.nét We held that there was no valid service of summons on Villarosa as service was made
through a person not included in the enumeration in Section 11, Rule 14 of the 1997 Rules of Civil
Procedure, which revised the Section 13, Rule 14 of the 1964 Rules of Court. We discarded the trial court’s
basis for denying the motion to dismiss, namely, private respondent’s substantial compliance with the
rule on service of summons, and fully agreed with petitioner’s assertions that the enumeration under the
new rule is restricted, limited and exclusive, following the rule in statutory construction that expressio
unios est exclusio alterius. Had the Rules of Court Revision Committee intended to liberalize the rule on
service of summons, we said, it could have easily done so by clear and concise language. Absent a manifest
intent to liberalize the rule, we stressed strict compliance with Section 11, Rule 14 of the 1997 Rules of
Civil Procedure.

Neither can herein petitioners invoke our ruling in Millenium to support their position for said case is not
on all fours with the instant case. We must stress that Millenium was decided when the 1964 Rules of
Court were still in force and effect, unlike the instant case which falls under the new rule. Hence, the
cases15 cited by petitioners where we upheld the doctrine of substantial compliance must be deemed
overturned by Villarosa, which is the later case.

At this juncture, it is worth emphasizing that notice to enable the other party to be heard and to present
evidence is not a mere technicality or a trivial matter in any administrative or judicial proceedings. The
service of summons is a vital and indispensable ingredient of due process.16 We will deprive private
respondent of its right to present its defense in this multi-million peso suit, if we disregard compliance
with the rules on service of summons.

b. Yes. Since we have ruled that service of summons upon private respondent through its filing clerk
cannot be considered valid, it necessarily follows therefore that the Regional Trial Court of Pasay
City did not acquire jurisdiction over private respondent. Consequently, all the subsequent
proceedings held before it, including the order of default, are null and void. As private respondent
points out, the second issue has become moot and academic.

G.R. No. 147369 October 23, 2003

Spouses PATRICK JOSE and RAFAELA JOSE, petitioners,

vs.
Spouses HELEN BOYON and ROMEO BOYON, respondents.

FACTS:

Patrick and Rafaela Jose lodged a complaint for specific performance against [respondents] Helen and
Romeo Boyon to compel them to facilitate the transfer of ownership of a parcel of land subject of a
controverted sale. The action was lodged before the Regional Trial Court of Muntinlupa.

As per return of the summons, substituted service was resorted to by the process server allegedly
because efforts to serve the summons personally to the [respondents] failed.
[Petitioners] filed before the trial court an Ex-parte Motion for Leave of Court to Effect Summons by
Publication.

RTC issued an Order granting the Ex-parte Motion for Leave of Court to Effect Summons by Publication.

Afterwards, issued an Order declaring herein [respondents] in default for failure to file their respective
answers.

As a consequence of the declaration of default, [petitioners] were allowed to submit their evidence ex-
parte and RTC ruled in favor of petitioners.

Helen Boyon, who was then residing in the United States of America, was surprised to learn from her
sister Elizabeth Boyon, of the resolution issued by the respondent court.

Respondents filed an Ad Cautelam motion questioning, among others, the validity of the service of
summons effected by the court a quo.

RTC denied said motion.

Respondents once again raised the issue of jurisdiction of the trial court via a motion for reconsideration
which was denied.

Respondents filed before the CA a Petition for certiorari under Rule 65 of the Revised Rules of Civil
Procedure, questioning the jurisdiction of the regional trial court (RTC).

The CA held that the trial court had no authority to issue the questioned Resolution and Orders.
According to the appellate court, the RTC never acquired jurisdiction over respondents because of the
invalid service of summons upon them.

Issue:

Whether or not there is valid service of summons hence, RTC acquired jurisdiction over the person of
the defendants.

Ruling:

NO, the service of summons is defective and therefore RTC never acquired jurisdiction over the
respondents, Boyon.

In the instant case, it appears that the process server hastily and capriciously resorted to substituted
service of summons without actually exerting any genuine effort to locate respondents. A review of the
records9 reveals that the only effort he exerted was to go to No. 32 Ariza Drive, Camella Homes, Alabang
on July 22, 1998, to try to serve the summons personally on respondents. While the Return of Summons
states that efforts to do so were ineffectual and unavailing because Helen Boyon was in the United States
and Romeo Boyon was in Bicol, it did not mention exactly what efforts -- if any -- were undertaken to find
respondents. Furthermore, it did not specify where or from whom the process server obtained the
information on their whereabouts. The pertinent portion of the Return of Summons is reproduced as
follows:
"That efforts to serve the said Summons personally upon defendants Sps. Helen and Romeo Boyon were
made but the same were ineffectual and unavailing for the reason that defendant Helen Boyon is
somewhere in the United States of America and defendant Romeo Boyon is in Bicol thus substituted
service was made in accordance with Section 7, Rule 14, of the Revised Rules of Court."

The Return of Summons shows that no effort was actually exerted and no positive step taken by either
the process server or petitioners to locate and serve the summons personally on respondents. At best,
the Return merely states the alleged whereabouts of respondents without indicating that such
information was verified from a person who had knowledge thereof. Certainly, without specifying the
details of the attendant circumstances or of the efforts exerted to serve the summons, a general
statement that such efforts were made will not suffice for purposes of complying with the rules of
substituted service of summons.

The necessity of stating in the process server’s Return or Proof of Service the material facts and
circumstances sustaining the validity of substituted service was explained by this Court in Hamilton v.
Levy, from which we quote:

"x x x The pertinent facts and circumstances attendant to the service of summons must be stated in the
proof of service or Officer’s Return; otherwise, any substituted service made in lieu of personal service
cannot be upheld. This is necessary because substituted service is in derogation of the usual method of
service. It is a method extraordinary in character and hence may be used only as prescribed and in the
circumstances authorized by statute. Here, no such explanation was made. Failure to faithfully, strictly,
and fully comply with the requirements of substituted service renders said service ineffective."

Moreover, the requirements of substituted service of summons and the effect of noncompliance with the
subsequent proceedings therefor were discussed in Madrigal v. Court of Appeals as follows:

"In a long line of cases, this Court held that the impossibility of personal service justifying availment of
substituted service should be explained in the proof of service; why efforts exerted towards personal
service failed. The pertinent facts and circumstances attendant to the service of summons must be stated
in the proof of service or Officer’s Return; otherwise, the substituted service cannot be upheld. It bears
stressing that since service of summons, especially for actions in personam, is essential for the acquisition
of jurisdiction over the person of the defendant, the resort to a substituted service must be duly justified.
Failure to do so would invalidate all subsequent proceedings on jurisdictional grounds."

It must be noted that extraterritorial service of summons or summons by publication applies only when
the action is in rem or quasi in rem. The first is an action against the thing itself instead of against the
defendant’s person; in the latter, an individual is named as defendant, and the purpose is to subject that
individual’s interest in a piece of property to the obligation or loan burdening it.

In the instant case, what was filed before the trial court was an action for specific performance directed
against respondents. While the suit incidentally involved a piece of land, the ownership or possession
thereof was not put in issue, since they did not assert any interest or right over it. Moreover, this Court
has consistently declared that an action for specific performance is an action in personam.
Having failed to serve the summons on respondents properly, the RTC did not validly acquire jurisdiction
over their persons. Consequently, due process demands that all the proceedings conducted subsequent
thereto should be deemed null and void.

G.R. No. 158407 January 17, 2005

FILOMENA DOMAGAS, petitioner,

vs.
VIVIAN LAYNO JENSEN, respondent.

FACTS:

Filomena Domagas filed a complaint for forcible entry against respondent Vivian Jensen before the MTC
of Calasiao, Pangasinan. The petitioner alleged in her complaint that she was the registered owner of a
parcel of land situated in Calasiao, Pangasinan. By means of force, strategy and stealth, the respondent
gained entry into the petitioner’s property by excavating a portion thereof and thereafter constructing a
fence thereon. As such, the petitioner was deprived of a 68-square meter portion of her property along
the boundary line.

The summons and the complaint were not served on the respondent because the latter was apparently
out of the country. This was relayed to the Sheriff by her (the respondent’s) brother, Oscar Layno, who
was then in the respondent’s house at No. 572 Barangay Buenlag, Calasiao, Pangasinan. The Sheriff left
the summons and complaint with Oscar Layno, who received the same.

Nonetheless, MTC ruled in favor of plaintiff.

The respondent failed to appeal the decision. Consequently, a writ of execution was issued.

the respondent filed a complaint against the petitioner before the RTC of Dagupan City for the annulment
of the decision of the MTC on the ground that due to the Sheriff’s failure to serve the complaint and
summons on her because she was in Oslo, Norway, the MTC never acquired jurisdiction over her person.

The respondent alleged therein that the service of the complaint and summons through substituted
service on her brother, Oscar Layno, was improper because of the following: (a) when the complaint was
filed, she was not a resident of Barangay Buenlag, Calasiao, Pangasinan, but of Oslo, Norway, and although
she owned the house where Oscar Layno received the summons and the complaint, she had then leased
it to Eduardo Gonzales; (b) she was in Oslo, Norway, at the time the summons and the complaint were
served; (c) her brother, Oscar Layno, was merely visiting her house in Barangay Buenlag and was not a
resident nor an occupant thereof when he received the complaint and summons; and (d) Oscar Layno was
never authorized to receive the summons and the complaint for and in her behalf.

In her answer to the complaint, the petitioner alleged that the respondent was a resident of Barangay
Buenlag, Calasiao, Pangasinan and was the owner of the subject premises where Oscar Layno was when
the Sheriff served the summons and complaint; that the service of the complaint and summons by
substituted service on the respondent, was proper since her brother Oscar Layno, a resident and
registered voter of Barangay. Buenlag, Calasiao, Pangasinan, received the complaint and summons for
and in her behalf.

The petitioner appended the following to her answer: (a) a copy13 of the Deed of Absolute Sale executed
by Jose Layno in her favor, dated August 26, 1992, showing that the respondent was a resident of Barangay
Buenlag, Calasiao, Pangasinan; (b) a Real Estate Mortgage14 executed by the respondent, dated February
9, 1999 showing that she was a resident of Barangay Buenlag, Calasiao, Pangasinan; (c) the Joint
Affidavit15 of Vicenta Peralta and Orlando Macalanda, both residents of Barangay Buenlag, Calasiao,
Pangasinan, declaring that the respondent and her brother Oscar Layno were their neighbors; that the
respondent and her brother had been residents of Barangay Buenlag since their childhood; that although
the respondent left the country on several occasions, she returned to the Philippines and resided in her
house at No. 572 located in the said barangay; and (d) the Voter’s Registration Record of Oscar Layno,
approved on June 15, 1997.

After due proceedings, the trial court rendered a decision in favor of the respondent. It thus decided that
the MTC decision was null and void. The trial court declared that there was no valid service of the
complaint and summons on the respondent.

The petitioner appealed the decision to the CA which rendered judgment affirming the appealed decision
with modifications. The CA ruled that the first complaint was one for ejectment, which is an action quasi
in rem. The appellate court ruled that since the defendant therein was temporarily out of the country, the
summons and the complaint should have been served via extraterritorial service under Section 15 in
relation to Section 16, Rule 14 of the Rules of Court, which likewise requires prior leave of court.
Considering that there was no prior leave of court and none of the modes of service prescribed by the
Rules of Court was followed by the petitioner, the CA concluded that there was really no valid service of
summons and complaint upon the respondent.

Issue:

1. Whether the action is the first complaint is an action quasi in rem or in personam.
2. Whether there is proper service of summons.

Ruling:

1. The action is an action in personam. The ruling of the CA that the petitioner’s complaint for
forcible entry of the petitioner against the respondent in Civil Case No. 879 is an action quasi in
rem, is erroneous. The action of the petitioner for forcible entry is a real action and one in
personam.

The settled rule is that the aim and object of an action determine its character.

An action in personam is said to be one which has for its object a judgment against the person, as
distinguished from a judgment against the propriety to determine its state. It has been held that
an action in personam is a proceeding to enforce personal rights or obligations; such action is
brought against the person. As far as suits for injunctive relief are concerned, it is well-settled that
it is an injunctive act in personam. In Combs v. Combs, the appellate court held that proceedings
to enforce personal rights and obligations and in which personal judgments are rendered
 adjusting the rights and obligations between the affected parties is in personam. Actions for
recovery of real property are in personam.

On the other hand, a proceeding quasi in rem is one brought against persons seeking to subject
the property of such persons to the discharge of the claims assailed. In an action quasi in rem, an
individual is named as defendant and the purpose of the proceeding is to subject his interests
therein to the obligation or loan burdening the property. Actions quasi in rem deal with the status,
ownership or liability of a particular property but which are intended to operate on these
questions only as between the particular parties to the proceedings and not to ascertain or cut
off the rights or interests of all possible claimants. The judgments therein are binding only upon
the parties who joined in the action.

2. None. There is no valid service of summons as the action is in personam.

In an action in personam, jurisdiction over the person of the defendant is necessary for the court
to validly try and decide the case. Jurisdiction over the person of a resident defendant who does
not voluntarily appear in court can be acquired by personal service of summons as provided under
Section 7, Rule 14 of the Rules of Court. If he cannot be personally served with summons within a
reasonable time, substituted service may be made in accordance with Section 8 of said Rule. If he
is temporarily out of the country, any of the following modes of service may be resorted to: (a)
substituted service set forth in Section 8; (2) personal service outside the country, with leave of
court; (3) service by publication, also with leave of court; or (4) any other manner the court may
deem sufficient.

In the present case, the records show that the respondent, before and after his marriage to Jarl Jensen on
August 23, 1987, remained a resident of Barangay Buenlag, Calasiao, Pangasinan. This can be gleaned
from the Deed of Absolute Sale dated August 26, 1992 in which she declared that she was a resident of
said barangay. Moreover, in the Real Estate Mortgage Contract dated February 9, 1999, ten days before
the complaint in Civil Case No. 879 was filed, the petitioner categorically stated that she was a Filipino and
a resident of Barangay Buenlag, Calasiao, Pangasinan. Considering that the respondent was in Oslo,
Norway, having left the Philippines on February 17, 1999, the summons and complaint in Civil Case No.
879 may only be validly served on her through substituted service under Section 7, Rule 14 of the Rules
of Court, which reads:

SEC. 7. Substituted service. — If, for justifiable causes, the defendant cannot be served within a reasonable
time as provided in the preceding section, service may be effected (a) by leaving copies of the summons
at the defendant’s residence with some person of suitable age and discretion then residing therein, or (b)
by leaving the copies at defendant’s office or regular place of business with some competent person in
charge thereof.

Strict compliance with the mode of service is required in order that the court may acquire jurisdiction over
the person of the defendant.34 The statutory requirement of substituted service must be followed
faithfully and strictly and any substituted service other than that authorized by the statute is rendered
ineffective.35 As the Court held in Hamilton v. Levy :36

… The pertinent facts and circumstances attendant to the service of summons must be stated in the proof
of service or Officer’s Return; otherwise, any substituted service made in lieu of personal service cannot
be upheld. This is necessary because substituted service is in derogation of the usual method of service.
It is a method extraordinary in character and hence may be used only as prescribed and in the
circumstances authorized by statute. Here, no such explanation was made. Failure to faithfully, strictly,
and fully comply with the requirements of substituted service renders said service ineffective.37

In Keister v. Narcereo,38 the Court held that the term "dwelling house" or "residence" are generally held
to refer to the time of service; hence, it is not sufficient to leave the summons at the former’s dwelling
house, residence or place of abode, as the case may be. Dwelling house or residence refers to the place
where the person named in the summons is living at the time when the service is made, even though he
may be temporarily out of the country at the time. It is, thus, the service of the summons intended for the
defendant that must be left with the person of suitable age and discretion residing in the house of the
defendant. Compliance with the rules regarding the service of summons is as much important as the issue
of due process as of jurisdiction.

PER SHERIFF’S RETURN, there is no showing that as of April 5, 1999, the house where the Sheriff found
Oscar Layno was the latter’s residence or that of the respondent herein. Neither is there any showing that
the Sheriff tried to ascertain where the residence of the respondent was on the said date. It turned out
that the occupant of the house was a lessor, Eduardo Gonzales, and that Oscar Layno was in the premises
only to collect the rentals from him. The service of the summons on a person at a place where he was a
visitor is not considered to have been left at the residence or place or abode, where he has another place
at which he ordinarily stays and to which he intends to return.

The Voter’s Registration Record of Oscar Layno dated June 15, 1997 wherein he declared that he was a
resident of No. 572 Barangay Buenlag, Calasiao, Pangasinan, as well as the Joint Affidavit of Vicenta Peralta
and Orlando Macasalda cannot prevail over the Contract of Lease the respondent had executed in favor
of Eduardo Gonzales showing that the latter had resided and occupied the house of the respondent as
lessee since November 24, 1997, and the affidavit of Eduardo Gonzales that Oscar Layno was not residing
in the said house on April 5, 1999.

The decision of of the MTC is null and void as there is no valid service of summons.

[G.R. NO. 161417 : February 8, 2007]

MA. TERESA CHAVES BIACO, Petitioner, v. PHILIPPINE COUNTRYSIDE RURAL BANK, Respondent.

FACTS:

Ernesto Biaco is the husband of petitioner Ma. Teresa Chaves Biaco. While employed in the Philippine
Countryside Rural Bank (PCRB) as branch manager, Ernesto obtained several loans from the respondent
bank as evidenced by separate promissory notes.

Ernesto executed a real estate mortgage in favor of the bank covering the parcel of land described in
Original Certificate of Title (OCT) No. P-14423. The real estate mortgages bore the signatures of the
spouses Biaco.
When Ernesto failed to settle the above-mentioned loans on its due date, respondent bank through
counsel sent him a written demand.

However, demand was unheeded.

The Bank filed a complaint for foreclosure of mortgage against the spouses Ernesto and Teresa Biaco
before the RTC of Misamis Oriental. Summons was served to the spouses Biaco through Ernesto at his
office (Export and Industry Bank) located at Jofelmor Bldg., Mortola Street, Cagayan de Oro City.

Ernesto received the summons but for unknown reasons, he failed to file an answer. Hence, the spouses
Biaco were declared in default upon motion of the respondent bank. The respondent bank was allowed
to present its evidence ex parte before the Branch Clerk of Court who was then appointed by the court as
Commissioner.

Arturo Toring, the branch manager of the respondent bank, testified that the spouses Biaco had been
obtaining loans from the bank since 1996 to 1998. The loans for the years 1996-1997 had already been
paid by the spouses Biaco, leaving behind a balance of P1,260,304.33 representing the 1998 loans. The
amount being claimed is inclusive of interests, penalties and service charges as agreed upon by the parties.
The appraisal value of the land subject of the mortgage is only P150,000.00 as reported by the Assessor's
Office.

Based on the report of the Commissioner, the respondent judge ordered Spouses to pay the plaintiff.

The sheriff personally served the above-mentioned judgment to Ernesto Biaco at his office at Export and
Industry Bank. The spouses Biaco did not appeal from the adverse decision of the trial court. On October
13, 2000, the respondent bank filed an ex parte motion for execution to direct the sheriff to sell the
mortgaged lot at public auction. The respondent bank alleged that the order of the court requiring the
spouses Biaco to pay within a period of 90 days had passed, thus making it necessary to sell the mortgaged
lot at public auction, as previously mentioned in the order of the court. The motion for execution was
granted by the trial court.

The sheriff served a copy of the writ of execution to the spouses Biaco at their residence in #92 9th Street,
Nazareth, Cagayan de Oro City. The writ of execution was personally received by Ernesto. By virtue of the
writ of execution issued by the trial court, the mortgaged property was sold at public auction in favor of
the respondent bank.

Petitioner sought the annulment of the Regional Trial Court decision contending that extrinsic fraud
prevented her from participating in the judicial foreclosure proceedings. According to her, she came to
know about the judgment in the case only after the lapse of more than six (6) months after its finality. She
claimed that extrinsic fraud was perpetrated against her because the bank failed to verify the authenticity
of her signature on the real estate mortgage and did not inquire into the reason for the absence of her
signature on the promissory notes. She moreover asserted that the trial court failed to acquire jurisdiction
because summons were served on her through her husband without any explanation as to why personal
service could not be made.

The Court of Appeals considered the two circumstances that kept petitioner in the dark about the judicial
foreclosure proceedings: (1) the failure of the sheriff to personally serve summons on petitioner; and (2)
petitioner's husband's concealment of his knowledge of the foreclosure proceedings. On the validity of
the service of summons, the appellate court ruled that judicial foreclosure proceedings are actions quasi
in rem. As such, jurisdiction over the person of the defendant is not essential as long as the court acquires
jurisdiction over the res. Noting that the spouses Biaco were not opposing parties in the case, the Court
of Appeals further ruled that the fraud committed by one against the other cannot be considered extrinsic
fraud.

Her motion for reconsideration having been denied, petitioner filed the instant Petition for Review,4
asserting that even if the action is quasi in rem, personal service of summons is essential in order to afford
her due process. The substituted service made by the sheriff at her husband's office cannot be deemed
proper service absent any explanation that efforts had been made to personally serve summons upon her
but that such efforts failed. Petitioner contends that extrinsic fraud was perpetrated not so much by her
husband, who did not inform her of the judicial foreclosure proceedings, but by the sheriff who allegedly
connived with her husband to just leave a copy of the summons intended for her at the latter's office.

Petitioner further argues that the deficiency judgment is a personal judgment which should be deemed
void for lack of jurisdiction over her person.

Issue:

Whether or not trial court has acquired jurisdiction over the person of Teresa Biaco.

Ruling:

NO.

An action in personam is an action against a person on the basis of his personal liability. An action in rem
is an action against the thing itself instead of against the person. An action quasi in rem is one wherein an
individual is named as defendant and the purpose of the proceeding is to subject his interest therein to
the obligation or lien burdening the property.

In an action in personam, jurisdiction over the person of the defendant is necessary for the court to validly
try and decide the case. In a proceeding in rem or quasi in rem, jurisdiction over the person of the
defendant is not a prerequisite to confer jurisdiction on the court provided that the court acquires
jurisdiction over the res. Jurisdiction over the res is acquired either (1) by the seizure of the property under
legal process, whereby it is brought into actual custody of the law; or (2) as a result of the institution of
legal proceedings, in which the power of the court is recognized and made effective.15

Nonetheless, summons must be served upon the defendant not for the purpose of vesting the court with
jurisdiction but merely for satisfying the due process requirements.

In this case, the judicial foreclosure proceeding instituted by respondent PCRB undoubtedly vested the
trial court with jurisdiction over the res. A judicial foreclosure proceeding is an action quasi in rem. As
such, jurisdiction over the person of petitioner is not required, it being sufficient that the trial court is
vested with jurisdiction over the subject matter.
There is a dimension to this case though that needs to be delved into. Petitioner avers that she was not
personally served summons. Instead, summons was served to her through her husband at his office
without any explanation as to why the particular surrogate service was resorted to.

Without ruling on petitioner's allegation that her husband and the sheriff connived to prevent summons
from being served upon her personally, we can see that petitioner was denied due process and was not
able to participate in the judicial foreclosure proceedings as a consequence. The violation of petitioner's
constitutional right to due process arising from want of valid service of summons on her warrants the
annulment of the judgment of the trial court.

There is more, the trial court granted respondent PCRB's ex-parte motion for deficiency judgment and
ordered the issuance of a writ of execution against the spouses Biaco to satisfy the remaining balance of
the award. In short, the trial court went beyond its jurisdiction over the res and rendered a personal
judgment against the spouses Biaco. This cannot be countenanced.

Significantly, the Court went on to rule, citing De Midgely v. Ferandos, et. al.20 and Perkins v. Dizon, et
al.21 that in a proceeding in rem or quasi in rem, the only relief that may be granted by the court against
a defendant over whose person it has not acquired jurisdiction either by valid service of summons or by
voluntary submission to its jurisdiction, is limited to the res.

Similarly, in this case, while the trial court acquired jurisdiction over the res, its jurisdiction is limited to a
rendition of judgment on the res. It cannot extend its jurisdiction beyond the res and issue a judgment
enforcing petitioner's personal liability. In doing so without first having acquired jurisdiction over the
person of petitioner, as it did, the trial court violated her constitutional right to due process, warranting
the annulment of the judgment rendered in the case.

RULE 15: MOTIONS

G.R. No. 176697 September 10, 2014

CESAR V. AREZA and LOLITA B. AREZA, Petitioners,

vs.
EXPRESS SAVINGS BANK, INC. and MICHAEL POTENCIANO, Respondents.

FACTS:

Petitioners Cesar V. Areza and LolitaB. Areza maintained two bank deposits with respondent Express
Savings Bank’s Biñan branch: 1) Savings Account No. 004-01-000185-5 and 2) Special Savings Account No.
004-02-000092-3.

They were engaged in the business of "buy and sell" of brand new and second-hand motor vehicles. On 2
May 2000, they received an order from a certain Gerry Mambuay (Mambuay) for the purchase of a
second-hand Mitsubishi Pajero and a brand-new Honda CRV.
The buyer, Mambuay, paid petitioners with nine (9) Philippine Veterans Affairs Office (PVAO) checks
payable to different payees and drawn against the Philippine Veterans Bank (drawee), each valued at Two
Hundred Thousand Pesos (₱200,000.00) for a total of One Million Eight Hundred Thousand Pesos
(₱1,800,000.00).

About this occasion, petitioners claimed that Michael Potenciano (Potenciano), the branch manager of
respondent Express Savings Bank (the Bank) was present during the transaction and immediately offered
the services of the Bank for the processing and eventual crediting of the said checks to petitioners’
account.4 On the other hand,Potenciano countered that he was prevailed upon to accept the checks by
way of accommodation of petitioners who were valued clients of the Bank.5

On 3 May 2000, petitioners deposited the said checks in their savings account with the Bank. The Bank,
inturn, deposited the checks with its depositary bank, Equitable-PCI Bank, in Biñan,Laguna. Equitable-PCI
Bank presented the checks to the drawee, the Philippine Veterans Bank, which honored the checks.

On 6 May 2000, Potenciano informedpetitioners that the checks they deposited with the Bank
werehonored. He allegedly warned petitioners that the clearing of the checks pertained only to the
availability of funds and did not mean that the checks were not infirmed.6 Thus, the entire amount of
₱1,800,000.00 was credited to petitioners’ savings account. Based on this information, petitioners
released the two cars to the buyer.

Sometime in July 2000, the subjectchecks were returned by PVAO to the drawee on the ground that the
amount on the face of the checks was altered from the original amount of ₱4,000.00 to ₱200,000.00. The
drawee returned the checks to Equitable-PCI Bank by way of Special Clearing Receipts. In August 2000,
the Bank was informed by Equitable-PCI Bank that the drawee dishonored the checks onthe ground of
material alterations. Equitable-PCI Bank initially filed a protest with the Philippine Clearing House. In
February 2001, the latter ruled in favor of the drawee Philippine Veterans Bank. Equitable-PCI Bank, in
turn, debited the deposit account of the Bank in the amount of ₱1,800,000.00.

The Bank insisted that they informed petitioners of said development in August 2000 by furnishing them
copies of the documents given by its depositary bank.7 On the other hand, petitioners maintained that
the Bank never informed them of these developments.

On 9 March 2001, petitioners issued a check in the amount of ₱500,000.00. Said check was dishonored by
the Bank for the reason "Deposit Under Hold." According topetitioners, the Bank unilaterally and
unlawfully put their account with the Bank on hold. On 22 March 2001, petitioners’ counsel sent a demand
letter asking the Bank to honor their check. The Bank refused to heed their request and instead, closed
the Special Savings Account of the petitioners with a balance of ₱1,179,659.69 and transferred said
amount to their savings account. The Bank then withdrew the amount of ₱1,800,000.00representing the
returned checks from petitioners’ savings account.

Acting on the alleged arbitrary and groundless dishonoring of their checks and the unlawful and unilateral
withdrawal from their savings account, petitioners filed a Complaint for Sum of Money with Damages
against the Bank and Potenciano with the RTC of Calamba.

On 15 January 2004, the RTC, through Judge Antonio S. Pozas, ruled in favor of petitioners.
Respondents filed a motion for reconsideration while petitioners filed a motion for execution from the
Decision of the RTC on the ground that respondents’ motion for reconsideration did not conform with
Section 5, Rule 16 of the Rules of Court; hence, it was a mere scrap of paper that did not toll the running
of the period to appeal.

On 22 April 2004, the RTC, through Pairing Judge Romeo C. De Leon granted the motion for
reconsideration, set aside the Pozas Decision, and dismissed the complaint. The trial court awarded
respondents their counterclaim of moral and exemplary damages of ₱100,000.00 each. The trial court
first applied the principle of liberality when it disregarded the alleged absence of a notice of hearing in
respondents’ motion for reconsideration.

On appeal, the Court of Appeals affirmed the ruling of the trial court but deleted the award of damages.

Any argument as to the notice of hearing has been resolved when the pairing judge issued the order on
February 24, 2004 setting the hearing on March 26, 2004. A perusal of the notice of hearing shows that
request was addressed to the Clerk of Court and plaintiffs’ counsel for hearing to be set on March 26,
2004.

CA agrees with appellants that they should not pay moral and exemplary damages to each of the appellees
for lack of basis. The appellants were not shown to have acted in bad faith.

Petitioners filed the present petition for review on certiorari arising both procedural and substantive
issues.

Issue:

Whether or not Court of Appeals committed a reversible error of law and grave abuse of discretion in in
upholding the legality and/or propriety of the Motion for Reconsideration filed in violation of Section 5,
Rule 15 ofthe Rules on Civil Procedure

Ruling:

NO.

Sections 5, Rule 15 of the Rules of Court states:

Section 5. Notice of hearing. – The notice of hearing shall be addressed to all parties concerned, and shall
specify the time and date of the hearing which must not be later than ten (10) days after the filing of the
motion.

Petitioners claim that the notice of hearing was addressed to the Clerk of Court and not to the adverse
party as the rules require. Petitioners add that the hearing on the motion for reconsideration was
scheduled beyond 10 days from the date of filing.

As held in Maturan v. Araula, the rule requiring that the notice be addressed to the adverse party has
beensubstantially complied with when a copy of the motion for reconsideration was furnished to the
counsel of the adverse party, coupled with the fact that the trial court acted on said notice of hearing and,
as prayed for, issued an order setting the hearing of the motion on 26 March 2004.

We would reiterate later that there is substantial compliance with the foregoing Rule if a copy of the said
motion for reconsideration was furnished to the counsel of the adverse party.

G.R. No. 205800 September 10, 2014

MICROSOFT CORPORATION and ADOBE SYSTEMS INCORPORATED, Petitioners,

vs.
SAMIR FARAJALLAH, VIRGILIO D.C. HERCE, RACHEL P. FOLLOSCO, JESUSITO G. MORALLOS, and MA.
GERALDINE S. GARCIA (directors and officers of NEW FIELDS (ASIA PACIFIC), INC.), Respondents.

FACTS:

Samir Farajallah, Virgilio D.C. Herce, Rachel P. Follosco, Jesusito G. Morallos and Ma. Geraldine S. Garcia
(respondents) are the directors and officers of New Fields (Asia Pacific), Inc., a domestic corporation with
principal office at Unit 1603, East Tower, PhilippineStock Exchange Center, Exchange Road, Ortigas Center,
Pasig City.

Petitioners claim that in September 2009, they were informed that New Fields was unlawfully reproducing
and using unlicensed versions of their software. Orion Support, Inc.(OSI) was engaged by petitioners to
assist in the verification of this information. Two OSI Market Researchers, Norma L. Serrano (Serrano) and
Michael A. Moradoz (Moradoz) were assigned to confirm the informant's tip. Serrano and Moradoz were
trained to detect unauthorized copies of Adobe and Microsoft software.5

On 17 March 2010, counsel for petitioners filed a letter-complaint with the Chief of the Philippine National
Police Criminal Investigation and Detection Group. The case was assigned to Police Senior Inspector
Ernesto V. Padilla (Padilla).6

On 26 March 2010, Padilla, Serrano, and Moradoz went to the office of respondents. Using a legitimate
business pretext, they were able to use two computers owned by New Fields and obtained the following
information regarding the installed Microsoft and Adobe software.

Padilla was trained to distinguish original from counterfeit software,7 and he saw the screens of the
computers used by the OSI staff, including the product I.D. Nos. of the installed software.

After being informed of the results of the investigation, petitioners then issued certifications that they
have not authorized New Fields to "copy, print, reproduce and/or publish unauthorized copies of
Microsoft and Adobe software products."

An application for search warrants was filed by Padilla on 20 May 2010, before Judge Amor Reyes in her
capacity as Executive Judge of the RTC. Search Warrant Nos. 10-15912 and 10-15913 were issued on the
same date.
The warrants were served on respondents on 24 May 2010. New Fields employees witnessed the search
conducted by the authorities. Several items were seized, including 17 CD installers and 83 computers
containing unauthorized copies of Microsoft and/or Adobe software.

On 6 June 2010, New Fields filed a motion seeking to quash one of the two warrants served (Search
Warrant No. 10-15912).11 The motion was received by petitioners on 10 June 2010 and was set for
hearing on 11 June 2010. During the hearing on the motion, petitioners were allowed by the RTC to file
their Comment/Opposition on or before 21 June 2010.

In their Comment/Opposition dated 21 June 2010,13 petitioners alleged that:

The Motion [to Quash] failed to comply with the mandatory 3-day notice rule under the Rules of Court.
Hence it is nothing but a worthless piece of paper.

In this case, the Motion of Respondents was scheduled for hearing on 11 June 2010. However,
Respondents only furnished [petitioners] a copy of the Motion on 10 June 2010, or just1 day before the
scheduled hearing, which was in clear violation of the 3-day notice rule.

On 29 June 2010, the RTC issued an Order quashing both warrants and directing that "allthe items seized
from the respondents be returned x x x." According to the RTC, petitioners should have identified which
specific computer had the pirated software. The RTC added that no criminal charge has been filed yet,
despite the fact that the seized items have been in petitioners’ possession for several weeks since the
warrants were issued. Lastly, the RTC dismissed the petitioners’ contention that the threeday notice rule
was not complied with because petitioners were already notified of the motion personally.

Petitioners filed a petition for certiorari26 under Rule 65 on 8 November 2010 before the Court of Appeals.
Petitioners alleged that the RTC committed grave abuse of discretion in granting the Motion to Quash
despite: (1) respondents’ failure to comply with the three-day notice requirement; and (2) the existence
of probable cause, and personal knowledge of the warrant applicant.

The CA denied the petition for certiorari. It ruled that when the court a quo ordered petitioners to submit
their comment on the motion to quash, it was, in effect, giving petitioners their day in court. Thus, while
the [three]-day notice rule was not strictly observed, its purpose was still satisfied when respondent judge
did not immediately rule on the motion giving petitioners x x x the opportunity to study and oppose the
arguments stated in the motion.

Issue:

Whether or not RTC committed grave abuse of discretion when it grant the motion to quash when
respondent’s failed to comply with the three day notice requirement.

Ruling:

NO. SC ruled that strict compliance with the three-day notice rule may be relaxed in this case. However,
it sustain petitioners’ contention that there was probable cause for issuance of a warrant, and the RTC
and CA should have upheld the validity of both warrants.
In Anama v. Court of Appeals,29 we ruled that the three-day notice rule is not absolute. The purpose of
the ruleis to safeguard the adverse party’s right to due process. Thus, if the adverse party was given a
reasonable opportunity to study the motion and oppose it, then strict compliance with the three-day
notice rule may be dispensed with.

As correctly pointed out by the CA:

In the instant case, when the court a quoordered petitioners to submit their comment on the motion
toquash, it was, in effect, giving petitioners their day in court. Thus, while the [three]-day notice rule was
not strictly observed, its purpose was still satisfied when respondent judge did not immediately rule on
the motion giving petitioners x x x the opportunity to study and oppose the arguments stated in the
motion.