Baltazar v. Court of Appeals
NEW DOCTRINEFacts
The Antecedents: Two parcels of land, one 873 sq. meters and another 24,448 sq. meters, located in Paranaque, were adjudicated to Lorenzo Molera in 1959, and titled under OCT No. 1866. Good Earth Enterprises, Inc. acquired these lands on August 15, 1965, from Molera's successors-in-interest, and obtained TCT No. 191048. On March 22, 1977, Artemio Baltazar filed Civil Case No. 5552-P against Good Earth for declaration of ownership and reconveyance, claiming title from a Spanish land grant and a subsequent deed of sale from Pedro Asedillo. Baltazar alleged that Asedillo's mother was his tenant on the lots. Procedural History: Summons and complaint were attempted to be served on Good Earth at 666 Muelle de Binondo, Manila, but Deputy Sheriff Pre certified that the corporation was not found there and its present address was unknown. Baltazar moved for service by publication, which the trial court granted. Summons was published in the Times Journal on August 6, 13, and 20, 1977. Good Earth failed to file an answer within sixty days from the last publication. Consequently, the trial court declared Good Earth in default and, on November 3, 1977, rendered a judgment by default, declaring Baltazar the owner, ordering reconveyance, cancellation of Good Earth's title, and issuance of a new title in Baltazar's name. TCT No. 191048 was canceled and TCT No. 63805 was issued to Baltazar. Baltazar subsequently sold one parcel to Aurora Galvez and subdivided the other, selling portions to Rizaliana Garments, Inc. and BGB Development Corporation. On August 9, 1979, Good Earth filed Civil Case No. PQ-7410-P to annul the default judgment, arguing lack of jurisdiction due to improper service of summons. The trial court dismissed Good Earth's complaint. On appeal, the Court of Appeals reversed the trial court's decision, ordering the cancellation of titles issued to Baltazar and his vendees, reinstating Good Earth's title, and directing reconveyance. The Petition: Petitioners Artemio Baltazar and Aurora Galvez seek to annul the Court of Appeals' decision. Rizaliana Garments, Inc. and BGB Development Corporation sought to intervene but were denied leave to file a petition for review as they had not filed one.
Issue(s)
Whether the service of summons by publication upon respondent Good Earth in Civil Case No. 5552-P was proper and effective to vest jurisdiction upon the trial court. Whether the vendees of petitioner Baltazar acquired any rights independent of Baltazar's purported title, considering the invalidity of the judgment by default.
Ruling
The Petition for Review is DENIED. The Decision dated January 14, 1987, of the Court of Appeals in C.A. — G.R. CV No. 00104 is AFFIRMED. Costs against petitioners. Dispositive Portion: The Court of Appeals reversed the trial court's decision and ordered the Registry of Deeds of Rizal to cancel the transfer certificates of title issued in the names of Baltazar, Galvez, Rizaliana Garments, Inc. and BGB Developments Corporation, reinstated Transfer Certificate of Title No. 191048 which had stood in the name of Good Earth and directed the defendants to reconvey the parcels of land in question to Good Earth free from all liens and encumbrances.
Ratio Decidendi
On the propriety of service of summons by publication: The Court held that the service of summons by publication upon Good Earth in Civil Case No. 5552-P was legally and constitutionally vitiated and thus invalid and ineffective to vest jurisdiction over the person of Good Earth upon the trial court. The Court emphasized that for a domestic corporation, the regular mode of service is personal service upon its president, manager, secretary, cashier, agent, or any of its directors, as provided in Section 13 of Rule 14 of the Revised Rules of Court. While service by publication is allowed under Section 16 of Rule 14 for unknown defendants or when the address is unknown and cannot be ascertained by diligent inquiry, the facts showed a lack of diligent inquiry. Deputy Sheriff Pre's actions, including receiving the summons late and relying on a security guard's information, did not constitute diligent inquiry. The Court stressed that a litigant or process server must check the Securities and Exchange Commission (SEC) records for the corporation's correct address and its officers' addresses to satisfy the requirement of diligent inquiry. The hasty manner in which the proceedings were conducted further cast doubt on the diligence exercised. Therefore, the judgment by default rendered against Good Earth was null and void. On the rights of the vendees of petitioner Baltazar: The Court ruled that the vendees of petitioner Baltazar acquired no rights superior to those of Good Earth, the lawful registered owner. Since the judgment by default against Good Earth was void for lack of jurisdiction, Baltazar acquired no valid title to the properties. Consequently, he had no transmissible rights to convey to his vendees, Aurora Galvez, Rizaliana Garments, Inc., and BGB Development Corporation. The Court reiterated the principle that even if the vendees claim to be purchasers in good faith and for value, their rights cannot be superior to the lawful registered owner, especially when the vendor had no valid title to begin with. Citing cases like C.N. Hodges v. Dy Buncio & Co., Inc. and Treasurer of the Philippines v. Court of Appeals, the Court explained that a void title cannot be the source of valid rights, and subsequent transferees, even if in good faith, cannot acquire rights superior to the original registered owner who was not negligent. The burden of proving the status of a purchaser in good faith and for value lies upon the claimant, and invoking the ordinary presumption of good faith is insufficient. Therefore, the vendees' recourse, if any, would be against Baltazar himself.
Main Doctrine
Service of summons by publication upon a domestic corporation is invalid if the server fails to exercise diligent inquiry to ascertain the corporation's correct address, as required by Section 16 of Rule 14 of the Revised Rules of Court. Such invalid service fails to confer jurisdiction over the corporation, rendering any subsequent judgment void. Furthermore, transferees from a vendor who acquired no valid title cannot claim rights superior to the lawful registered owner, even if they claim to be purchasers in good faith.